Exhibit 99.2

LOGO

Supplemental Information

June 30, 2006

 

Contact:    6110 Executive Boulevard
Sara Grootwassink    Suite 800
Chief Financial Officer    Rockville, MD 20852
Direct Dial: (301) 255-0820    (301) 984-9400
E-mail: sgrootwassink@writ.com    (301) 984-9610 fax


Washington Real Estate Investment Trust

Supplemental Information

Table of Contents

June 30, 2006

 

Schedule

   Page

About the Trust

   2

Consolidated Statements of Operations

   3

Consolidated Balance Sheets

   4

Funds From Operations and Funds Available for Distribution

   5

Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)

   6

Long-Term Debt Analysis

   7

Capital Analysis

   8

Core Portfolio Net Operating Income (NOI) Growth & Rental Rate Growth

   9

Core Portfolio Net Operating Income (NOI) Summary

   10

Core Portfolio Net Operating Income (NOI) Detail

   11

Core Portfolio & Overall Occupancy Levels by Sector

   12

Schedule of Properties

   13

Schedule of Properties (continued)

   14

Commercial Leasing Summary

   15

10 Largest Tenants - Based on Annualized Base Rent

   16

Industry Diversification

   17

Lease Expirations as of June 30, 2006

   18

2006 Acquisition Summary

   19

2006 Development Summary

   20

12, 36 and 60 Month Total Returns Chart

   21

Reporting Definitions

   22


Washington Real Estate Investment Trust

About the Trust

Mission Statement

Washington Real Estate Investment Trust, founded in 1960 and headquartered in Rockville, Maryland, invests in a diversified range of income-producing property types. Our purpose is to acquire, develop and manage real estate investments in markets we know well and protect our assets from single property-type value fluctuations through diversified holdings. Our goal is to continue to safely increase earnings and shareholder value.

Company Background

We are a self-administered, self-managed, equity real estate investment trust investing in income-producing properties in the greater Washington-Baltimore region. We own a diversified portfolio of 78 properties consisting of 14 retail centers, 21 office properties, 12 medical office properties, 22 industrial/flex properties and 9 multifamily properties. We also own land for development.

Our dividends have increased every year for 36 consecutive years and our Funds From Operations (“FFO”) per share has increased every year for 33 consecutive years. WRIT shares are publicly traded on the New York Stock Exchange (symbol: WRE).

Certain statements in the supplemental disclosures which follow 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, and other risks and uncertainties detailed from time to time in our filings with the SEC, including our 2005 Form 10-K. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

 

2


Washington Real Estate Investment Trust

Consolidated Statements of Operations

(In thousands, except per share data)

(unaudited)

 

     Three Months Ended  

OPERATING RESULTS

   06/30/06     03/31/06     12/31/05     09/30/05     06/30/05  

Real estate rental revenue

   $ 52,916     $ 50,767     $ 49,112     $ 48,769     $ 46,410  

Real estate expenses

     (15,574 )     (15,424 )     (14,956 )     (14,836 )     (13,870 )
                                        
     37,342       35,343       34,156       33,933       32,540  

Real estate depreciation and amortization

     (12,955 )     (11,938 )     11,662       (11,950 )     (12,903 )
                                        

Income from real estate

     24,387       23,405       22,494       21,983       19,637  

Other income

     175       170       263       335       207  

Other income from property settlement

     —         —         —         —         504  

Interest expense

     (11,604 )     (10,322 )     (10,074 )     (9,798 )     (9,283 )

General and administrative

     (5,276 )     (2,655 )     (1,644 )     (2,037 )     (2,093 )
                                        

Income from continuing operations

     7,682       10,598       11,039       10,483       8,973  

Discontinued operations:

          

Income (loss) from operations of properties sold or held for sale

     37       34       29       (60 )     19  

Gain on sale of real estate investment

     —         —         —         3,038       1,883  
                                        

Income (loss) from discontinued operations

     37       34       29       2,978       1,902  

Net Income

   $ 7,719     $ 10,632     $ 11,068     $ 13,461     $ 10,875  
                                        

Per Share Data

          

Net Income

   $ 0.18     $ 0.25     $ 0.26     $ 0.32     $ 0.26  

Fully diluted weighted average shares outstanding

     43,037       42,197       42,131       42,147       42,059  

Percentage of Revenues:

          

Real estate expenses

     29.4 %     30.4 %     30.5 %     30.4 %     29.9 %

General and administrative

     10.0 %     5.2 %     3.3 %     4.2 %     4.5 %

Ratios:

          

EBITDA / Interest expense

     2.8 x     3.2 x     3.2 x     3.3 x     3.3 x

Income from continuing operations/Total real estate revenue

     14.5 %     20.9 %     22.5 %     21.5 %     19.3 %

Net income/Total real estate revenue

     14.6 %     20.9 %     22.5 %     27.6 %     23.4 %

 

3


Washington Real Estate Investment Trust

Consolidated Balance Sheets

(In thousands)

(unaudited)

 

     June 30,
2006
    March 31,
2006
    December 31,
2005
    September 30,
2005
    June 30,
2005
 

Assets

          

Land

   $ 266,329     $ 232,085     $ 225,038     $ 225,037     $ 217,552  

Income producing property

     1,155,280       1,045,007       1,022,160       1,011,996       947,162  
                                        
     1,421,609       1,277,092       1,247,198       1,237,033       1,164,714  

Accumulated depreciation and amortization

     (262,150 )     (250,156 )     (239,051 )     (228,418 )     (218,138 )
                                        

Net income producing property

     1,159,459       1,026,936       1,008,147       1,008,615       949,576  

Development in progress

     90,612       69,820       58,241       23,222       17,427  
                                        

Total investment in real estate, net

     1,250,071       1,096,756       1,066,388       1,031,837       964,003  

Investment in real estate sold or held for sale, net

     3,244       2,984       2,620       2,576       5,394  

Cash and cash equivalents

     13,970       2,981       4,938       5,255       16,455  

Restricted cash

     2,540       2,401       1,764       7,535       6,558  

Rents and other receivables, net of allowance for doubtful accounts

     29,047       26,941       25,240       24,046       22,482  

Prepaid expenses and other assets

     46,931       42,727       40,270       41,001       34,063  

Other assets related to properties sold or held for sale

     31       49       66       91       93  
                                        

Total Assets

   $ 1,345,834     $ 1,174,839     $ 1,141,286     $ 1,112,341     $ 1,049,048  
                                        

Liabilities and Shareholders’ Equity

          

Accounts payable and other liabilities

   $ 54,783     $ 37,121     $ 32,714     $ 28,429     $ 30,130  

Advance rents

     6,279       5,425       5,461       5,492       5,173  

Tenant security deposits

     8,445       7,507       7,325       7,153       6,237  

Other liabilities related to properties sold or held for sale

     184       188       193       107       84  

Mortgage notes payable

     178,834       168,965       169,617       170,393       196,960  

Lines of credit/short-term note payable

     19,000       59,000       24,000       93,500       —    

Notes payable

     620,000       520,000       520,000       420,000       420,000  
                                        

Total Liabilities

     887,525       798,206       759,310       725,074       658,584  
                                        

Minority interest

     1,699       1,687       1,670       1,656       1,646  
                                        

Shareholders’ Equity

          

Shares of beneficial interest, $0.01 par value;

          

100,000 shares authorized

     450       422     $ 421     $ 421     $ 421  

Additional paid-in capital

     498,577       406,098       405,112       404,551       404,275  

Distributions in excess of net income

     (42,417 )     (31,574 )     (25,227 )     (19,361 )     (15,878 )
                                        

Total Shareholders’ Equity

     456,610       374,946       380,306       385,611       388,818  
                                        

Total Liabilities and Shareholders’ Equity

   $ 1,345,834     $ 1,174,839     $ 1,141,286     $ 1,112,341     $ 1,049,048  
                                        

Total Debt / Total Market Capitalization

     0.33:1       0.35:1       0.36:1       0.34:1       0.32:1  
                                        

Note: Certain prior quarter amounts have been reclassified to conform to the current quarter presentation.

 

4


Washington Real Estate Investment Trust

Funds From Operations and Funds Available for Distribution

(In thousands, except per share data)

(unaudited)

 

     Three Months Ended  
     6/30/2006     03/31/06     12/31/05     09/30/05     06/30/05  

Funds From Operations(1)

          

Net Income

     7,719     $ 10,632     $ 11,068     $ 13,461     $ 10,875  

Real estate depreciation and amortization

     12,955       11,938       11,662       11,949       12,903  

Discontinued operations:

          

Gain on property disposed

     —         —         —         (3,038 )     (1,883 )

Other income from property settlement

     —         —         —         0       (504 )

Real estate depreciation and amortization

     35       30       32       57       64  
                                        

Funds From Operations (FFO)

     20,709       22,600       22,762       22,429       21,455  
                                        

FFO per share - basic

   $ 0.48     $ 0.54     $ 0.54     $ 0.53     $ 0.51  

FFO per share - fully diluted

   $ 0.48     $ 0.54     $ 0.54     $ 0.53     $ 0.51  

Funds Available for Distribution(2)

          

Tenant Improvements

     (2,033 )     (2,695 )     (3,520 )     (1,544 )     (2,063 )

External and Internal Leasing Commissions Capitalized

     (1,477 )     (960 )     (1,004 )     (1,111 )     (1,094 )

Recurring Capital Improvements

     (2,724 )     (2,295 )     (2,445 )     (2,129 )     (2,360 )

Straight-Line Rent, Net

     (686 )     (804 )     (730 )     (982 )     (661 )

Non-real estate depreciation and amortization

     554       495       479       431       428  

Amortization of lease intangibles

     (24 )     5       (17 )     (17 )     (33 )

Amortization of restricted share compensation

     1,487       340       299       368       467  

Other

     7       —         7       —         301  
                                        

Funds Available for Distribution (FAD)

   $ 15,813     $ 16,686     $ 15,831     $ 17,445     $ 16,440  
                                        

Total Dividends Paid

   $ 18,562     $ 16,979     $ 16,963     $ 16,955     $ 16,956  

Average shares - basic

     42,852       42,052       42,013       42,005       41,932  

Average shares - fully diluted

     43,037       42,197       42,131       42,147       42,059  

(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 diminishes 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. FFO is a non-GAAP measure.
(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 (3) non-real estate depreciation and amortization and adding or subtracting the amortization of lease intangibles as appropriate. 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.

 

5


Washington Real Estate Investment Trust

Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)

(In thousands)

(unaudited)

 

     Three Months Ended  
     06/30/06     03/31/06     12/31/05     09/30/05     06/30/05  

EBITDA(1)

          

Net income

   $ 7,719     $ 10,632     $ 11,068     $ 13,461     $ 10,875  

Add:

          

Interest expense

     11,604       10,322       10,074       9,798       9,283  

Real estate depreciation and amortization

     12,955       11,922       11,655       11,949       12,903  

Non-real estate depreciation

     87       73       71       75       80  

Less:

          

Gain on sale of real estate

     —         —         —         (3,038 )     (1,883 )

Other income

     (175 )     (170 )     (263 )     (335 )     (207 )

Other income from property settlement

     —         —         —         —         (504 )
                                        

EBITDA

   $ 32,190     $ 32,789     $ 32,605     $ 31,910     $ 30,547  
                                        

(1) EBITDA is earnings before interest, taxes, depreciation and amortization. We consider EBITDA to be an appropriate supplemental performance measure because it eliminates depreciation, interest and the gain (loss) from property dispositions, which permits investors to view income from operations without the effect of non-cash depreciation or the cost of debt. EBITDA is a non-GAAP measure.

 

6


Washington Real Estate Investment Trust

Long Term Debt Analysis

(in thousands)

 

     June 30,
2006
   

March 31,

2006

    December 31,
2005
    September 30,
2005
    June 30,
2005
 

Balances Outstanding

          

Secured

          

Conventional fixed rate

   $ 178,834     $ 168,965     $ 169,617     $ 170,393     $ 196,960  
                                        

Secured total

     178,834       168,965       169,617       170,393       196,960  
                                        

Unsecured

          

Fixed rate bonds and notes

     620,000       520,000       520,000       420,000       420,000  

Credit facility

     19,000       59,000       24,000       93,500       —    
                                        

Unsecured total

     639,000       579,000       544,000       513,500       420,000  
                                        

Total

   $ 817,834     $ 747,965     $ 713,617     $ 683,893     $ 616,960  
                                        

Average Interest Rates

          

Secured

          

Conventional fixed rate

     5.9 %     5.9 %     5.9 %     5.9 %     6.2 %
                                        

Secured total

     5.9 %     5.9 %     5.9 %     5.9 %     6.2 %
                                        

Unsecured

          

Fixed rate bonds

     5.9 %     5.9 %     5.9 %     6.0 %     6.0 %

Credit facilities

     5.9 %     5.3 %     5.0 %     4.5 %     0.0 %
                                        

Unsecured total

     5.9 %     5.8 %     5.8 %     5.7 %     6.0 %
                                        

Average

     5.9 %     5.9 %     5.9 %     5.8 %     6.0 %
                                        

Maturity Schedule

          
     Future Maturities of Debt  

Year

   Secured Debt     Unsecured Debt     Credit Facilities     Total Debt     Interest Rate  

2006

   $ 7,489     $ 50,000     $ —       $ 57,489       7.3 %

2007

     10,207       —         —         10,207       6.4 %

2008

     2,460       60,000       19,000       81,460       6.5 %

2009

     52,579       —         —         52,579       7.0 %

2010

     2,692       —         —         2,692       5.3 %

2011

     11,863       100,000       —         111,863       5.9 %

2012

     19,535       50,000       —         69,535       5.0 %

2013

     67,609       60,000       —         127,609       5.3 %

2014

     205       100,000       —         100,205       5.3 %

Thereafter

     4,195       200,000       —         204,195       5.9 %
                                        

Total maturities

   $ 178,834     $ 620,000     $ 19,000     $ 817,834       5.9 %
                                        

Weighted average maturity = 6.8 years

 

7


Washington Real Estate Investment Trust

Capital Analysis

(In thousands, except per share amounts)

 

     June 30,
2006
    March 31,
2006
    December 31,
2005
    September 30,
2005
    June 30,
2005
 

Market Data

          

Shares Outstanding

     44,998       42,183       42,139       42,125       42,123  

Market Price per Share

   $ 36.70     $ 33.09     $ 30.35     $ 31.11     $ 31.20  

Equity Market Capitalization

   $ 1,651,427     $ 1,395,829     $ 1,278,919     $ 1,310,509     $ 1,314,238  

Total Debt

   $ 817,834     $ 747,965     $ 713,617     $ 683,893     $ 616,960  

Total Market Capitalization

   $ 2,469,261     $ 2,143,794     $ 1,992,537     $ 1,994,401     $ 1,931,198  

Total Debt to Market Capitalization

     0.33:1       0.35:1       0.36:1       0.34:1       0.32:1  
                                        

Earnings to Fixed Charges(1)

     1.7 x     1.6 x     1.9 x     1.9 x     1.9 x

Debt Service Coverage Ratio(2)

     2.6 x     3.0 x     3.0 x     3.0 x     3.0 x

Dividend Data

          

Total Dividends Paid

   $ 18,562     $ 16,979     $ 16,963     $ 16,955     $ 16,956  

Common Dividend per Share

   $ 0.4125     $ 0.4025     $ 0.4025     $ 0.4025     $ 0.4025  

Payout Ratio (FFO per share basis)

     85.4 %     74.5 %     74.5 %     75.6 %     78.9 %

(1) The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, earnings consist of income from continuing operations plus fixed charges, less capitalized interest. Fixed charges consist of interest expense, including amortized costs of debt issuance, plus interest costs capitalized.
(2) Debt service coverage ratio is computed by dividing earnings before interest income and expense, depreciation, amortization and gain on sale of real estate by interest expense and principal amortization.

 

8


Washington Real Estate Investment Trust

Core Portfolio Net Operating Income (NOI) Growth & Rental Rate Growth

Q2 2006 vs. Q2 2005

Cash Basis

 

Sector

   NOI
Growth
    Rental Rate
Growth
 

Multifamily

   8.1 %   6.5 %

Office Buildings

   6.3 %   2.4 %

Medical Office Buildings

   3.7 %   2.7 %

Retail Centers

   10.8 %   7.9 %

Industrial / Flex Properties

   2.2 %   2.4 %
Overall Core Portfolio    6.5 %   4.0 %
    

GAAP Basis

 

Sector

   NOI
Growth
    Rental Rate
Growth
 

Multifamily

   8.2 %   6.5 %

Office Buildings

   5.8 %   2.3 %

Medical Office Buildings

   2.1 %   0.2 %

Retail Centers

   11.2 %   8.0 %

Industrial / Flex Properties

   0.1 %   2.1 %

Overall Core Portfolio

   5.8 %   3.7 %

 

9


Washington Real Estate Investment Trust

Core Portfolio Net Operating Income (NOI) Summary

(In Thousands)

 

     Three Months Ended June 30,  
     2006    2005    % Change  

Cash Basis:

        

Multifamily

   $ 4,938    $ 4,567    8.1 %

Office Buildings

     12,947      12,182    6.3 %

Medical Office Buildings

     3,308      3,190    3.7 %

Retail Centers

     6,840      6,170    10.8 %

Industrial/Flex

     5,726      5,605    2.2 %
                    
   $ 33,759    $ 31,714    6.5 %
                    

GAAP Basis:

        

Multifamily

   $ 4,943    $ 4,569    8.2 %

Office Buildings

     13,189      12,472    5.8 %

Medical Office Buildings

     3,357      3,286    2.1 %

Retail Centers

     7,058      6,345    11.2 %

Industrial/Flex

     5,709      5,704    0.1 %
                    
   $ 34,256    $ 32,376    5.8 %
                    

 

10


Washington Real Estate Investment Trust

Core Portfolio Net Operating Income (NOI) Detail

(In Thousands)

 

     Three Months Ended June 30, 2006  
     Multifamily     Office     Medical
Office
    Retail     Industrial     Corporate and
Other
    Total  

Real estate rental revenue

              

Core Portfolio

   $ 7,900     $ 19,756     $ 4,490     $ 8,939     $ 7,345     $ —       $ 48,430  

Non-core- acquired 1

     —         546       1,471       431       2,038       —         4,486  
                                                        

Total

     7,900       20,302       5,961       9,370       9,383       —         52,916  

Real estate expenses

              

Core Portfolio

     2,957       6,567       1,133       1,881       1,636       —         14,174  

Non-core- acquired 1

     —         173       546       91       590       —         1,400  
                                                        

Total

     2,957       6,740       1,679       1,972       2,226       —         15,574  

Net Operating Income (NOI)

              

Core Portfolio

     4,943       13,189       3,357       7,058       5,709       —         34,256  

Non-core- acquired 1

     —         373       925       340       1,448       —         3,086  
                                                        

Total

   $ 4,943     $ 13,562     $ 4,282     $ 7,398     $ 7,157     $ —       $ 37,342  
                                                        

Core Portfolio NOI GAAP Basis (from above)

   $ 4,943     $ 13,189     $ 3,357     $ 7,058     $ 5,709     $ —       $ 34,256  

Straight-line revenue, net for core properties

     (5 )     (216 )     (76 )     (146 )     (48 )     —         (491 )

Amortization of lease intangibles for core properties

     —         (26 )     27       (72 )     65       —         (6 )
                                                        

Core portfolio NOI, Cash Basis

   $ 4,938     $ 12,947     $ 3,308     $ 6,840     $ 5,726     $ —       $ 33,759  
                                                        

Reconciliation of NOI to Net Income

              

Total NOI

   $ 4,943     $ 13,562     $ 4,282     $ 7,398     $ 7,157     $ —       $ 37,342  

Other revenue

     —         —         —         —         —         175       175  

Other income from property settlement

     —         —         —         —         —         —         —    

Interest expense

     (913 )     —         (866 )     —         (494 )     (9,331 )     (11,604 )

Depreciation and amortization

     (1,512 )     (5,396 )     (1,703 )     (1,537 )     (2,719 )     (88 )     (12,955 )

General and administrative

     —         (3 )     —         —         —         (5,273 )     (5,276 )

Discontinued Operations 2

     —         37       —         —         —         —         37  
                                                        

Net Income

   $ 2,518     $ 8,200     $ 1,713     $ 5,861     $ 3,944     $ (14,517 )   $ 7,719  
                                                        
     Three Months Ended June 30, 2005  
     Multifamily     Office     Medical
Office
    Retail     Industrial     Corporate and
Other
    Total  

Real estate rental revenue

              

Core Portfolio

   $ 7,580     $ 18,677     $ 4,402     $ 8,132     $ 7,428     $ —       $ 46,219  

Non-core- acquired 1

     —         —         —         —         191       —         191  
                                                        

Total

     7,580       18,677       4,402       8,132       7,619       —         46,410  

Real estate expenses

              

Core Portfolio

     3,011       6,205       1,116       1,787       1,724       —         13,843  

Non-core- acquired 1

     —         —         —         —         27       —         27  
                                                        

Total

     3,011       6,205       1,116       1,787       1,751       —         13,870  

Net Operating Income (NOI)

              

Core Portfolio

     4,569       12,472       3,286       6,345       5,704       —         32,376  

Non-core- acquired 1

     —         —         —         —         164       —         164  
                                                        

Total

   $ 4,569     $ 12,472     $ 3,286     $ 6,345     $ 5,868     $ —       $ 32,540  
                                                        

Core Portfolio NOI GAAP Basis (from above)

   $ 4,569     $ 12,472     $ 3,286     $ 6,345     $ 5,704     $ —       $ 32,376  

Straight-line revenue, net for core properties

     (2 )     (242 )     (123 )     (106 )     (164 )     —         (637 )

Amortization of lease intangibles for core properties

     —         (48 )     27       (69 )     65       —         (25 )
                                                        

Core portfolio NOI, Cash Basis

   $ 4,567     $ 12,182     $ 3,190     $ 6,170     $ 5,605     $ —       $ 31,714  
                                                        

Reconciliation of NOI to Net Income

              

Total NOI

   $ 4,569     $ 12,472     $ 3,286     $ 6,345     $ 5,868     $ —       $ 32,540  

Other revenue

     —         —         —         —         —         207       207  

Non-Disposal Gain

     —         —         —         —         —         504       504  

Interest expense

     (1,062 )     —         (1,168 )     (350 )     (511 )     (6,192 )     (9,283 )

Depreciation and amortization

     (1,274 )     (4,992 )     (1,245 )     (3,215 )     (1,973 )     (204 )     (12,903 )

General and administrative

     —         —         —         —         —         (2,092 )     (2,092 )

Discontinued Operations 2

     —         1,913       —         —         (11 )     —         1,902  
                                                        

Net Income

   $ 2,233     $ 9,393     $ 873     $ 2,780     $ 3,373     $ (7,777 )   $ 10,875  
                                                        

1 Non-core acquired properties were Hampton Overlook, Hampton South, the Coleman Building, Albemarle Point, Alexandria Professional Center, 9707 Medical Center Dr., 15001 Shady Grove Rd., 104 Plum Tree, 12005 Nebel, 5520 Randolph and 9950 Business Parkway.
2 Discontinued operations consists of: Pepsi Distribution Center and Lexington.

 

11


Washington Real Estate Investment Trust

Core Portfolio & Overall Occupancy Levels by Sector

Q2 2006 vs. Q2 2005

GAAP Basis

 

      Core Portfolio     All Properties  

Sector

   2nd QTR
2006
    2nd QTR
2005
    2nd QTR
2006
    2nd QTR
2005
 

Multifamily

   90.4 %(1)   93.7 %   90.4 %   93.7 %

Office Buildings

   92.8 %   88.2 %   92.4 %   87.9 %

Medical Office Buildings

   98.5 %   98.5 %   98.7 %   98.5 %

Retail Centers

   99.0 %   97.2 %   96.1 %   97.2 %

Industrial / Flex Properties

   92.4 %   93.6 %   92.5 %   92.9 %
                        

Overall Portfolio

   93.8 %   92.3 %   93.3 %   92.0 %

(1) Mulitfamily occupancy level for Q2 ‘06 is 91.2% without the impact of units off-line for planned renovations at Bethesda Hilll. The overall portfolio is 94.0% without this impact.

 

12


Washington Real Estate Investment Trust

Schedule of Properties

June 30, 2006

 

PROPERTIES

   LOCATION    YEAR
ACQUIRED
   YEAR
CONSTRUCTED
  NET RENTABLE
SQUARE FEET

Office Buildings

          

1901 Pennsylvania Avenue

   Washington, DC    1977    1960   97,000

51 Monroe Street

   Rockville, MD    1979    1975   209,000

515 King Street

   Alexandria, VA    1992    1966   76,000

The Lexington Building

   Rockville, MD    1993    1970   46,000

The Saratoga Building

   Rockville, MD    1993    1977   58,000

Brandywine Center

   Rockville, MD    1993    1969   35,000

6110 Executive Boulevard

   Rockville, MD    1995    1971   197,000

1220 19th Street

   Washington, DC    1995    1976   102,000

Maryland Trade Center I

   Greenbelt, MD    1996    1981   184,000

Maryland Trade Center II

   Greenbelt, MD    1996    1984   158,000

1600 Wilson Boulevard

   Arlington, VA    1997    1973   166,000

7900 Westpark Drive

   McLean, VA    1997    1972/1986/19991   519,000

600 Jefferson Plaza

   Rockville, MD    1999    1985   112,000

1700 Research Boulevard

   Rockville, MD    1999    1982   101,000

Parklawn Plaza

   Rockville, MD    1999    1986   40,000

Wayne Plaza

   Silver Spring, MD    2000    1970   91,000

Courthouse Square

   Alexandria, VA    2000    1979   113,000

One Central Plaza

   Rockville, MD    2001    1974   267,000

The Atrium Building

   Rockville, MD    2002    1980   81,000

1776 G Street

   Washington, DC    2003    1979   263,000

Albemarle Point

   Chantilly, VA    2005    2001   90,000
            

Subtotal

           3,005,000

Medical Office Buildings

          

Woodburn Medical Park I

   Annandale, VA    1998    1984   71,000

Woodburn Medical Park II

   Annandale, VA    1998    1988   96,000

Prosperity Medical Center I

   Merrifield, VA    2003    2000   92,000

Prosperity Medical Center II

   Merrifield, VA    2003    2001   88,000

Prosperity Medical Center III

   Merrifield, VA    2003    2002   75,000

Shady Grove Medical Village II

   Rockville, MD    2004    1999   66,000

8301 Arlington Boulevard

   Fairfax, VA    2004    1965   50,000

Alexandria Professional Center

   Alexandria, VA    2006    1964   113,000

9707 Medical Center Drive

   Rockville, MD    2006    1994   38,000

15001 Shady Grove Road

   Rockville, MD    2006    1999   51,000

Plumtree

   Bel Air, MD    2006    1991   33,000
            

Subtotal

           773,000
            

Retail Centers

          

Takoma Park

   Takoma Park, MD    1963    1962   51,000

Westminster

   Westminster, MD    1972    1969   151,000

Concord Centre

   Springfield, VA    1973    1960   76,000

Wheaton Park

   Wheaton, MD    1977    1967   72,000

Bradlee

   Alexandria, VA    1984    1955   168,000

Chevy Chase Metro Plaza

   Washington, DC    1985    1975   50,000

Montgomery Village Center

   Gaithersburg, MD    1992    1969   170,000

Shoppes of Foxchase2

   Alexandria, VA    1994    1960   127,000

Frederick County Square

   Frederick, MD    1995    1973   227,000

800 S. Washington Street3

   Alexandria, VA    1998/2003    1955/1959   45,000

Centre at Hagerstown

   Hagerstown, MD    2002    2000   334,000

Frederick Crossing

   Frederick, MD    2005    1999/2003   295,000

Randolph Shopping Center

   Rockville, MD    2006    1970   82,000

Montrose Shopping Center

   Rockville, MD    2006    1970   145,000
            

Subtotal

           1,993,000
            

1 A 49,000 square foot addition to 7900 Westpark Drive was completed in September 1999.
2 Approximately 60,000 square feet of the center is under redevelopment
3 South Washington Street includes 718 Jefferson Street, acquired in May 2003 to complete the ownership of the entire block of 800 S. Washington Street. See Development Summary on page 19.

 

13


Washington Real Estate Investment Trust

Schedule of Properties (Cont.)

June 30, 2006

 

PROPERTIES

   LOCATION    YEAR
ACQUIRED
   YEAR
CONSTRUCTED
  NET RENTABLE*
SQUARE FEET

Multifamily Buildings * / # units

          

3801 Connecticut Avenue / 307

   Washington, DC    1963    1951   177,000

Roosevelt Towers / 190

   Falls Church, VA    1965    1964   168,000

Country Club Towers / 227

   Arlington, VA    1969    1965   159,000

Park Adams / 200

   Arlington, VA    1969    1959   172,000

Munson Hill Towers / 279

   Falls Church, VA    1970    1963   259,000

The Ashby at McLean / 250

   McLean, VA    1996    1982   244,000

Walker House Apartments / 212

   Gaithersburg, MD    1996   

1971/20034

  154,000

Bethesda Hill Apartments / 194

   Bethesda, MD    1997    1986   226,000

Avondale / 236

   Laurel, MD    1999    1987   170,000
            

Subtotal (2,095 units)

           1,729,000
            

Industrial Distribution / Flex Properties

          

Fullerton Business Center

   Springfield, VA    1985    1980   104,000

Charleston Business Center

   Rockville, MD    1993    1973   85,000

Tech 100 Industrial Park

   Elkridge, MD    1995    1990   167,000

Crossroads Distribution Center

   Elkridge, MD    1995    1987   83,000

The Alban Business Center

   Springfield, VA    1996    1981/1982   87,000

The Earhart Building

   Chantilly, VA    1996    1987   93,000

Ammendale Technology Park I

   Beltsville, MD    1997    1985   167,000

Ammendale Technology Park II

   Beltsville, MD    1997    1986   108,000

Pickett Industrial Park

   Alexandria, VA    1997    1973   246,000

Northern Virginia Industrial Park

   Lorton, VA    1998    1968/1991   788,000

8900 Telegraph Road

   Lorton, VA    1998    1985   32,000

Dulles South IV

   Chantilly, VA    1999    1988   83,000

Sully Square

   Chantilly, VA    1999    1986   95,000

Amvax

   Beltsville, MD    1999    1986   31,000

Sullyfield Center

   Chantilly, VA    2001    1985   244,000

Fullerton Industrial Center

   Springfield, VA    2003    1980   137,000

8880 Gorman Road

   Laurel, MD    2004    2000   141,000

Dulles Business Park Portfolio

   Chantilly, VA    2004/2005    1999-2005   325,000

Albemarle Point

   Chantilly, VA    2005    2001/2003/2005   206,000

Hampton Overlook

   Capital Heights, MD    2006    1989   134,000

Hampton South

   Capital Heights, MD    2006    1989/2005   168,000

9950 Business Parkway

   Lanham, MD    2006    2005   101,000
            

Subtotal

           3,625,000
            

TOTAL

           11,125,000
            

* Multifamily buildings are presented in gross square feet.
4 A 16 unit addition referred to as The Gardens at Walker House was completed in October 2003.

 

14


Washington Real Estate Investment Trust

Commercial Leasing Summary

Three months and Six months ended 06/30/06

 

     2nd Quarter 2006    YTD 2006

Gross Leasing Square Footage

     

Office Buildings

   129,148    348,674

Medical Office Buildings

   11,682    19,052

Retail Centers

   49,720    74,137

Industrial Centers

   142,566    335,392
         

Total

   333,116    777,255
         

Weighted Average Term (yrs)

     

Office Buildings

   4.2    4.1

Medical Office Buildings

   5.9    5.7

Retail Centers

   4.6    4.8

Industrial Centers

   3.9    5.1
         

Total

   4.3    4.7
         

 

Rental Rate Increases:

   GAAP     CASH     GAAP     CASH  

Rate on expiring leases

        

Office Buildings

   $ 25.54     $ 26.61     $ 25.47     $ 26.41  

Medical Office Buildings

     28.78       29.74       28.03       29.11  

Retail Centers

     18.51       18.85       21.97       22.62  

Industrial Centers

     7.53       7.83       7.78       8.13  
                                

Total

   $ 16.90     $ 17.52     $ 17.56     $ 18.23  
                                

Rate on new and renewal leases

        

Office Buildings

   $ 27.57     $ 26.30     $ 26.68     $ 25.38  

Medical Office Buildings

     32.68       30.14       32.09       29.85  

Retail Centers

     22.73       21.60       27.11       25.72  

Industrial Centers

     8.43       8.05       8.80       8.26  
                                

Total

   $ 18.84     $ 17.92     $ 19.14     $ 18.13  
                                

Percentage Increase

        

Office Buildings

     7.95 %     -1.16 %     4.75 %     -3.90 %

Medical Office Buildings

     13.55 %     1.34 %     14.48 %     2.54 %

Retail Centers

     22.80 %     14.59 %     23.40 %     13.70 %

Industrial Centers

     11.95 %     2.81 %     13.11 %     1.60 %
                                

Total

     11.48 %     2.28 %     9.00 %     -0.55 %
                                
     Total Dollars     Dollars per
Square Foot
    Total Dollars     Dollars per
Square Foot
 

Tenant Improvements and Leasing Costs

        

Office Buildings

   $ 1,701,185     $ 13.17     $ 4,405,559     $ 12.64  

Medical Office Buildings

     320,482       27.43       536,640       28.17  

Retail Centers

     179,907       3.62       284,545       3.84  

Industrial Centers

     717,058       5.03       1,649,952       4.92  
                                

Total

   $ 2,918,632     $ 8.76     $ 6,876,696     $ 8.85  
                                

 

15


Washington Real Estate Investment Trust

10 Largest Tenants - Based on Annualized Rent

June 30, 2006

 

Tenant

   Number of
Buildings
   Weighted
Average
Remaining
Lease Term
in Months
   Percentage
of Aggregate
Portfolio
Annualized
Rent
    Aggregate
Rentable
Square Feet
   Percentage
of Aggregate
Occupied
Square Feet
 

World Bank

   1    47    5.32 %   210,354    2.41 %

Sunrise Senior Living, Inc.

   1    87    3.01 %   180,066    2.06 %

General Services Administration

   8    37    2.30 %   279,738    3.20 %

Sun Microsystems, Inc.

   1    6    1.94 %   110,184    1.26 %

INOVA Health Care Services

   5    50    1.73 %   84,088    0.96 %

George Washington University

   2    25    1.38 %   68,286    0.78 %

IQ Solutions

   1    47    1.21 %   58,473    0.67 %

Lockheed Corporation

   2    32    1.13 %   81,315    0.93 %

United Communications Group

   1    23    1.09 %   63,441    0.73 %

Westat, Inc.

   2    43    1.08 %   81,711    0.94 %
                         

Total/Weighted Average

      43    20.19 %   1,217,656    13.94 %
                         

 

16


Washington Real Estate Investment Trust

Industry Diversification

June 30, 2006

 

Industry Classification (NAICS)

   Annualized
Base Rental
Revenue
   Percentage
of Aggregate
Annualized
Rent
    Aggregate
Rentable
Square Feet
   Percentage
of Aggregate
Square Feet
 

Professional, Scientific and Technical Serivces

   $ 35,847,904    22.31 %   1,717,857    19.68 %

Ambulatory Health Care Services

     24,449,915    15.22 %   910,373    10.43 %

Credit Intermediation and Related Activities

     14,763,330    9.19 %   445,750    5.11 %

Executive, Legislative & Other General Government Support

     6,734,230    4.19 %   393,144    4.50 %

Nursing and Residential Care Facilities

     5,298,924    3.30 %   203,324    2.33 %

Food Services and Drinking Places

     5,039,918    3.14 %   217,776    2.50 %

Religious, Grantmaking, Civic, Professional & Similar Org.

     4,630,866    2.88 %   166,816    1.91 %

Food and Beverage Stores

     4,030,729    2.51 %   261,009    2.99 %

Administrative and Support Services

     3,939,821    2.45 %   263,052    3.01 %

Educational Services

     3,754,695    2.34 %   145,482    1.67 %

Furniture and Home Furnishing Stores

     3,562,371    2.22 %   265,195    3.04 %

Miscellaneous Store Retailers

     3,086,874    1.92 %   243,905    2.79 %

Specialty Trade Contractors

     2,828,733    1.76 %   364,151    4.17 %

Personal and Laundry Services

     2,601,133    1.62 %   124,664    1.43 %

Computer & Electronic Product Manufacturing

     2,562,389    1.59 %   214,555    2.46 %

Merchant Wholesalers-Durable Goods

     2,442,810    1.52 %   263,698    3.02 %

Transportation Equipment Manufacturing

     2,353,748    1.46 %   120,633    1.38 %

Clothing & Clothing Accessories Stores

     2,295,319    1.43 %   147,945    1.70 %

Publishing Industries (except Internet)

     2,180,839    1.36 %   86,423    0.99 %

Other

     28,278,462    17.59 %   2,171,389    24.89 %
                        

Total

     160,683,010    100.00 %   8,727,141    100.00 %
                        

 

17


Washington Real Estate Investment Trust

Lease Expirations

June 30, 2006

 

Year

   Number of
Leases
   Rentable
Square Feet
   Percent of
Rentable
Square Feet
    Annualized
Rent *
   Average
Rental
Rate
   Percent of
Annualized
Rent *
 

Office:

                

2006

   44    227,208    8.21 %   $ 6,216,898    $ 27.36    8.22 %

2007

   77    293,452    10.61 %     7,835,830      26.70    10.37 %

2008

   71    330,594    11.95 %     9,202,395      27.84    12.17 %

2009

   95    491,151    17.75 %     13,149,824      26.77    17.39 %

2010

   75    562,921    20.35 %     16,187,451      28.76    21.41 %

2011 and thereafter

   125    861,012    31.13 %     23,010,382      26.72    30.44 %
                                    
   487    2,766,338    100.00 %   $ 75,602,780    $ 27.33    100.00 %
                                    

Medical Office:

                

2006

   10    19,417    2.52 %   $ 590,273    $ 30.40    2.56 %

2007

   24    73,049    9.48 %     2,034,436      27.85    8.83 %

2008

   27    89,608    11.63 %     2,786,863      31.10    12.10 %

2009

   25    98,135    12.74 %     2,695,734      27.47    11.70 %

2010

   32    151,024    19.60 %     4,622,853      30.61    20.07 %

2011 and thereafter

   74    339,163    44.03 %     10,308,500      30.39    44.74 %
                                    
   192    770,396    100.00 %   $ 23,038,659    $ 29.90    100.00 %
                                    

Retail:

                

2006

   16    56,962    3.03 %   $ 1,071,453    $ 18.81    3.52 %

2007

   60    193,636    10.30 %     4,029,515      20.81    13.25 %

2008

   37    203,315    10.82 %     2,115,645      10.41    6.95 %

2009

   41    155,515    8.27 %     3,285,332      21.13    10.80 %

2010

   47    288,270    15.34 %     4,981,248      17.28    16.37 %

2011 and thereafter

   94    981,820    52.24 %     14,941,290      15.22    49.11 %
                                    
   295    1,879,518    100.00 %   $ 30,424,483    $ 16.19    100.00 %
                                    

Industrial:

                

2006

   35    318,556    9.62 %   $ 2,729,057    $ 8.57    8.63 %

2007

   41    406,945    12.29 %     3,864,771      9.50    12.22 %

2008

   56    645,927    19.51 %     6,142,682      9.51    19.43 %

2009

   46    564,533    17.05 %     5,378,367      9.53    17.01 %

2010

   30    248,422    7.50 %     2,728,280      10.98    8.63 %

2011 and thereafter

   61    1,126,506    34.03 %     10,773,931      9.56    34.08 %
                                    
   269    3,310,889    100.00 %   $ 31,617,088    $ 9.55    100.00 %
                                    

Total:

                

2006

   105    622,143    7.13 %   $ 10,607,681    $ 17.05    6.60 %

2007

   202    967,082    11.08 %     17,764,552      18.37    11.06 %

2008

   191    1,269,444    14.55 %     20,247,585      15.95    12.60 %

2009

   207    1,309,334    15.00 %     24,509,257      18.72    15.25 %

2010

   184    1,250,637    14.33 %     28,519,832      22.80    17.75 %

2011 and thereafter

   354    3,308,501    37.91 %     59,034,103      17.84    36.74 %
                                    
   1,243    8,727,141    100.00 %   $ 160,683,010    $ 18.41    100.00 %
                                    

* Annualized Rent is as of June 30, 2006 rental revenue (cash basis) multiplied by 12.

 

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Washington Real Estate Investment Trust

2006 Acquisition Summary

as of June 30, 2006

($’s in thousands)

Acquisition Summary

 

           Acquisition
Date
   Square
Feet
   Leased
Percentage at
Acquisition
    June 30, 2006
Leased
Percentage
    Investment

Hampton Overlook

   Capital Heights, MD    02/15/06    134,770    88 %   88 %   $ 10,040

Hampton South

   Capital Heights, MD    02/15/06    168,300    63 %   73 %     13,060

Alexandria Professional Ctr

   Alexandria, VA    04/11/06    113,000    100 %   100 %     26,900

9707 Medical Center Drive

   Rockville, MD    04/13/06    38,300    100 %   100 %     15,800

15001 Shady Grove Rd

   Rockville, MD    04/29/06    51,100    100 %   100 %     21,000

Montrose Shopping Ctr

   Rockville, MD    05/16/06    145,100    58 %   58 %     33,200

Randolph Shopping Ctr

   Rockville, MD    05/16/06    82,100    91 %   93 %     17,100

9950 Business Parkway

   Lanham, MD    05/26/06    101,700    79 %   79 %     11,700

104 Plum Tree

   Bel Air, MD    06/22/06    33,400    100 %   100 %     7,700
                   

Total

                $ 156,500
                   

 

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Washington Real Estate Investment Trust

2006 Development Summary

as of June 30, 2006

($’s in thousands)

 

Property and Location

  

Total Rentable Square Feet or # of Units

  

Percentage
Leased

or Committed

   

Anticipated
Total

Cash Cost

    Cash
Cost to
Date
    Anticipated
Construction
Completion Date

Development

           

Rosslyn Towers 1

        $ 63,600     $ 29,201 3  

Arlington, VA

           

(High Rise)

   178 units, 1,600 sq ft. retail & 498 parking spaces underground (includes parking for existing office)    0 %       2Q 07

(Mid Rise)

   46 units, 4,300 sq ft. retail    0 %       4Q 06

South Washington Street 2

   75 units & 2,600 sq ft. retail    0 %   $ 32,700     $ 13,000 3   1Q 07

Alexandria, VA

           

Dulles Station 4 Phase I

   179,995 sq ft office    0 %   $ 51,000  5   $ 14,655 3   4Q 07

Herndon, VA Phase II

   360,005 sq ft office        TBD     $ 16,852 3   TBD
                       
      Total     $ 146,800     $ 73,708    
                       

Re-development

           

Foxchase Shopping Center 6

   133,000 sq ft.    97 %   $ 10,500     $ 5,962     4Q 06
                       

Alexandria, VA

           

1 Rosslyn Towers, formerly known as WRIT Rosslyn Center, is a planned 224 unit multifamily property. 1620 Wilson Boulevard was acquired in conjunction with the overall development plan for Rosslyn Towers.
2 718 E. Jefferson Street was acquired to complete our ownership of the entire block of 800 S. Washington Street. The surface parking lot on this block is in development. We refer to this development project as South Washington Street.
3 Includes land cost.
4 Dulles Station is 5.27 acres acquired in December, 2005.
5 Represents total costs associated with Phase I. We will concurrently build a portion of the structured garage, allocated to Phase II, which will cost an additional $5M.
6 Includes 60,600 square feet of redevelopment in connection with a lease executed in September 2004 with Harris Teeter.

 

20


WRIT vs. Morgan Stanley REIT Index & NAREIT All Equity Index & Russell 2000

12, 36, and 60 Month Total Returns

June 30, 2006

LOGO

Source: SNL Interactive

 

21


Washington Real Estate Investment Trust

Reporting Definitions

June 30, 2006

Annualized base rent (ABR) is calculated as monthly base rent (cash basis) per the lease, as of the reporting period, multiplied by 12.

Debt to total market capitalization is total debt from the balance sheet divided by the sum of total debt from the balance sheet plus the market value of shares outstanding at the end of the period.

 

EBITDA (a non-GAAP measure) is earnings before interest, taxes, depreciation and amortization.

Ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, earnings consist of income from continuing operations (or net income if there are no discontinued operations) plus fixed charges, less capitalized interest. Fixed charges consist of interest expense, including amortized costs of debt issuance, plus interest costs capitalized.

Debt service coverage ratio is computed by dividing earnings before interest income and expense, depreciation, amortization and gain on sale of real estate by interest expense and principal amortization.

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. FFO is a non-GAAP measure.

Funds Available for Distribution (FAD), a non-GAAP measure, is calculated by subtracting from FFO recurring expenditures, tenant improvements and leasing costs, that are capitalized and amortized and are necessary to maintain our properties and revenue stream and straight line rents, then adding non-real estate depreciation and amortization and adding or subtracting amortization of lease intangibles, as appropriate.

Recurring capital expenditures represents non-accretive building improvements and leasing costs required to maintain current revenues. Recurring capital expenditures do not include acquisition capital that was taken into consideration when underwriting the purchase of a building or which are incurred to bring a building up to “operating standard.”

Rent increases on renewals and rollovers are calculated as the difference, weighted by square feet, of the net ABR due the first month after a term commencement date and the net ABR due the last month prior to the termination date of the former tenant’s term.

Core portfolio properties include all properties that were owned for the entirety of the current and prior year reporting periods.

Core portfolio net operating income (NOI) growth is the change in the NOI of the core portfolio properties from the prior reporting period to the current reporting period.

 

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