NEWS RELEASE
| CONTACT: |
 |
6110 Executive Blvd., Suite 800 | ||
| Sara Grootwassink |
Rockville, Maryland 20852 | |||
| Chief Financial Officer |
Tel 301-984-9400 | |||
| Direct Dial: 301-255-0820 |
Fax 301-984-9610 | |||
| E-Mail: sgrootwassink@writ.com |
www.writ.com |
| Newspaper Quote: WRIT | ||||
| Page 1 of 5 | FOR IMMEDIATE RELEASE | July 21, 2004 | ||
WASHINGTON REAL ESTATE INVESTMENT TRUST ANNOUNCES RESULTS FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2004
Washington Real Estate Investment Trust (WRIT) reported the following results today:
| For the three months ended June 30, |
For the six months ended June 30, | |||||||||||
| 2004 |
2003 |
2004 |
2003 | |||||||||
| Net Income Per Share – Diluted |
$ | 0.26 | $ | 0.29 | $ | 0.54 | $ | 0.57 | ||||
| Funds from Operations (“FFO”) Per Share - Diluted |
$ | 0.51 | $ | 0.50 | $ | 1.01 | $ | 0.99 | ||||
| • | Net Income per fully diluted share for the three months ended June 30, 2004 was $0.26, compared to $0.29 for the same period in 2003, a 10.3% decrease. Net Income per fully diluted share was $0.54 and $0.57 for the six months ended June 30, 2004 and 2003, respectively, a 5.3% decrease. |
| • | Funds from Operations (“FFO”) per fully diluted share, a non-GAAP financial measure, for the three months ended June 30, 2004 was $0.51, representing a 2.0% increase over FFO per fully diluted share of $0.50 for the three months ended June 30, 2003. FFO per fully diluted share for the six months ended June 30, 2004 was $1.01, representing a 2.0% increase over FFO per fully diluted share of $0.99 for the six months ended June 30, 2003. |
A reconciliation of net income to funds from operations is provided on the attached income statement.
Edmund B. Cronin, Jr., Chairman, President and CEO, stated, “In the second quarter, we were pleased to announce our 34th consecutive year of dividend increases. Our diversified portfolio and regional focus allows WRIT to continue to increase cash flow available to shareholders despite the slower than expected improvement in the economy.”
Company Information
WRIT is a self-administered, self-managed, equity real estate investment trust investing in income-producing properties in the greater Washington/Baltimore metropolitan region. WRIT owns a diversified portfolio of 67 properties consisting of 11 retail centers, 29 office properties, 18 industrial properties and 9 multifamily properties.
WRIT’s dividends have increased every year for 34 consecutive years. WRIT’s FFO per share has increased every year for 31 consecutive years. WRIT shares are publicly traded on the New York Stock Exchange (symbol: WRE).
Note: WRIT’s press releases and supplemental financial information are available on the company website at www.writ.com or by contacting Investor Relations at 301-984-9400.
Certain statements in this press release and the supplemental disclosures attached hereto are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such risks, uncertainties and other factors include, but are not limited to, fluctuations in interest rates, availability of raw materials and labor costs, levels of competition, the effect of government regulation, the availability of capital, weather conditions, the timing and pricing of lease transactions and changes in general and local economic and real estate market conditions.
FOR IMMEDIATE RELEASE
Page 2 of 5
WASHINGTON REAL ESTATE INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||||
| OPERATING RESULTS |
||||||||||||||||||
| Revenue |
||||||||||||||||||
| Real estate rental revenue |
$ | 44,829 | $ | 39,481 | $ | 89,205 | $ | 78,442 | ||||||||||
| Other income |
115 | 132 | 180 | 240 | ||||||||||||||
| 44,944 | 39,613 | 89,385 | 78,682 | |||||||||||||||
| Expenses |
||||||||||||||||||
| Real estate expenses |
(13,400 | ) | (11,235 | ) | (26,863 | ) | (22,838 | ) | ||||||||||
| Interest expense |
(8,614 | ) | (7,581 | ) | (17,189 | ) | (14,628 | ) | ||||||||||
| Depreciation and amortization |
(10,121 | ) | (8,245 | ) | (19,993 | ) | (16,318 | ) | ||||||||||
| General and administrative |
(1,727 | ) | (1,264 | ) | (2,956 | ) | (2,396 | ) | ||||||||||
| (33,862 | ) | (28,325 | ) | (67,001 | ) | (56,180 | ) | |||||||||||
| Net Income |
11,082 | 11,288 | 22,384 | 22,502 | ||||||||||||||
| Real estate depreciation and amortization |
10,121 | 8,245 | 19,993 | 16,318 | ||||||||||||||
| Funds from operations(1) |
21,203 | 19,533 | 42,377 | 38,820 | ||||||||||||||
| Accretive: |
||||||||||||||||||
| Tenant improvements(3) |
(2,022 | ) | (1,696 | ) | (4,814 | ) | (3,309 | ) | ||||||||||
| Leasing commissions capitalized |
(624 | ) | (372 | ) | (1,257 | ) | (1,791 | ) | ||||||||||
| Non-Accretive: |
||||||||||||||||||
| Recurring capital improvements |
(2,357 | ) | (1,519 | ) | (3,785 | ) | (2,384 | ) | ||||||||||
| Straight line rents, net of reserve |
(520 | ) | (473 | ) | (1,085 | ) | (791 | ) | ||||||||||
| Non real estate depreciation & amortization |
426 | 453 | 874 | 929 | ||||||||||||||
| Amortization of lease intangibles |
(6 | ) | — | (71 | ) | — | ||||||||||||
| Funds Available for Distribution(2) |
$ | 16,100 | $ | 15,926 | $ | 32,239 | $ | 31,474 | ||||||||||
| Per Share Data |
||||||||||||||||||
| Net income |
(Basic) | $ | 0.27 | $ | 0.29 | $ | 0.54 | $ | 0.57 | |||||||||
| (Diluted) | $ | 0.26 | $ | 0.29 | $ | 0.54 | $ | 0.57 | ||||||||||
| Funds from operations |
(Basic) | $ | 0.51 | $ | 0.50 | $ | 1.02 | $ | 0.99 | |||||||||
| (Diluted) | $ | 0.51 | $ | 0.50 | $ | 1.01 | $ | 0.99 | ||||||||||
| Dividends paid |
$ | 0.3925 | $ | 0.3725 | $ | 0.7650 | $ | 0.7250 | ||||||||||
| Weighted average shares outstanding |
41,638 | 39,241 | 41,605 | 39,207 | ||||||||||||||
| Fully diluted weighted average shares outstanding |
41,838 | 39,452 | 41,831 | 39,387 | ||||||||||||||
| (1) | Funds From Operations (“FFO”) – The National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) defines FFO (April, 2002 White Paper) as net income (computed in accordance with generally accepted accounting principles (“GAAP”)) excluding gains (or losses) from sales of property plus real estate depreciation and amortization. We consider FFO to be a standard supplemental measure for equity real estate investment trusts (“REITs”) because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which historically assumes that the value of real estate assets diminish predictably over time. Since real estate values have instead historically risen or fallen with market conditions, we believe that FFO more accurately provides investors an indication of our ability to incur and service debt, make capital expenditures and fund other needs. |
| (2) | Funds Available for Distribution (“FAD”) is calculated by subtracting from FFO (1) recurring expenditures, tenant improvements and leasing costs, that are capitalized and amortized and are necessary to maintain our properties and revenue stream and (2) straight line rents, then adding non-real estate depreciation and amortization. FAD is included herein, because we consider it to be a measure of a REIT’s ability to incur and service debt and to distribute dividends to its shareholders. FAD is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs. |
| (3) | Tenant improvements for the six months ended June 30, 2004 include payments to one tenant of $1.1 million in the first quarter of 2004 in connection with the tenant’s March 2003 renewal and expansion of its 48,775 square foot lease to 116,338 square feet for a term of 10 years. |
FOR IMMEDIATE RELEASE
Page 3 of 5
WASHINGTON REAL ESTATE INVESTMENT TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
| June 30, 2004 |
December 31, 2003 (1) |
|||||||
| Assets |
||||||||
| Land |
$ | 212,993 | $ | 210,366 | ||||
| Building |
864,101 | 842,501 | ||||||
| Total real estate, at cost |
$ | 1,077,094 | $ | 1,052,867 | ||||
| Accumulated depreciation |
(195,749 | ) | (177,640 | ) | ||||
| Total investment in real estate, net |
881,345 | 875,227 | ||||||
| Cash and cash equivalents |
8,336 | 5,486 | ||||||
| Rents and other receivables, net of allowance for doubtful accounts of $2,772 and $2,674, respectively |
20,983 | 18,397 | ||||||
| Prepaid expenses and other assets |
26,802 | 28,979 | ||||||
| Total Assets |
$ | 937,466 | $ | 928,089 | ||||
| Liabilities |
||||||||
| Accounts payable and other liabilities |
$ | 22,912 | $ | 19,068 | ||||
| Advance rents |
5,363 | 5,322 | ||||||
| Tenant security deposits |
6,229 | 6,168 | ||||||
| Mortgage notes payable |
141,271 | 142,182 | ||||||
| Line of credit payable |
13,250 | — | ||||||
| Notes payable |
375,000 | 375,000 | ||||||
| Total Liabilities |
564,025 | 547,740 | ||||||
| Minority interest |
1,615 | 1,601 | ||||||
| Shareholders’ Equity |
||||||||
| Shares of beneficial interest, $0.01 par value; 100,000 shares authorized: 41,769 and 41,607 shares issued and outstanding, respectively |
418 | 416 | ||||||
| Additional paid-in capital |
400,713 | 396,462 | ||||||
| Distributions in excess of net income |
(25,840 | ) | (16,272 | ) | ||||
| Less: Deferred compensation on restricted shares |
(3,465 | ) | (1,858 | ) | ||||
| Total Shareholders’ Equity |
371,826 | 378,748 | ||||||
| Total Liabilities and Shareholders’ Equity |
$ | 937,466 | $ | 928,089 | ||||
| (1) | Certain prior year amounts have been reclassified to conform to the current year presentation. |
Washington Real Estate Investment Trust
FOR IMMEDIATE RELEASE
Page 4 of 5
Occupancy Levels by Core Portfolio(1) and All Properties
| Core Portfolio |
All Properties |
|||||||||||
| 2nd QTR 2004 |
2nd QTR 2003 |
2nd QTR 2004 |
2nd QTR 2003 |
|||||||||
| Sector |
||||||||||||
| Multifamily * |
90.4 | % | 91.1 | % | 90.4 | % | 91.1 | % | ||||
| Office Buildings |
86.5 | % | 89.6 | % | 88.9 | % | 89.6 | % | ||||
| Retail Centers |
94.6 | % | 95.8 | % | 94.6 | % | 95.8 | % | ||||
| Industrial/Flex Centers |
92.3 | % | 87.2 | % | 92.6 | % | 87.2 | % | ||||
| Overall Portfolio |
89.2 | % | 90.4 | % | 90.3 | % | 90.5 | % | ||||
| * | As of June 30, 2004, 3 units at The Ashby at McLean remained off the market for complete renovation. |
| (1) | Core portfolio properties include all properties that were owned for the entirety of the current and prior year reporting periods. For Q2 2004 and Q2 2003, core portfolio properties exclude 718 Jefferson Street, 1776 G Street, Prosperity Medical Center and 8880 Gorman Road. |
2004 Acquisition Summary
| Acquisition Date |
Square Feet |
Occupied Sq. Ft. at Acquisition |
Occupancy Percentage at Acquisition |
June 30, 2004 Leased Percentage |
Investment | ||||||||||
| 8880 Gorman Road |
3/10/04 | 140,700 | 140,700 | 100 | % | 100 | % | $ | 11,500,000 | ||||||
Subsequent Event
On July 21, 2004, WRIT closed on a new $50 million line of credit with Bank One, NA and Wells Fargo Bank, National Association. This facility replaces the previous $25 million line of credit with Bank One, NA.
Washington Real Estate Investment Trust
FOR IMMEDIATE RELEASE
Page 5 of 5
Conference Call Information
WRIT will conduct a Conference/Webcast Call to discuss 2nd Quarter on Thursday, July 22, 2004 at 3:00 PM, Eastern Time. Conference call access information is as follows:
| USA Toll Free Number: |
1-888-271-8857 | |
| International Toll Number: |
1-706-679-7697 | |
| Leader: |
Sara Grootwassink | |
| Passcode: |
8676200 |
The instant replay of the Conference Call will be available until August 5, 2004 at 11:59 PM Eastern Time. Instant Replay access information is as follows:
| USA Toll Free Number: |
1-800-642-1687 | |
| International Toll Number: |
1-706-645-9291 | |
| Passcode: |
8676200 |
The live on-demand webcast of the Conference Call will also be available on WRIT’s website at www.writ.com. The on-line playback of the webcast will be available at www.writ.com for 30 days following the Conference Call.