Exhibit 99.2
Supplemental Information
September 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
September 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 September 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 shareholders 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. As of quarter end we owned a diversified portfolio of 82 properties consisting of 14 retail centers, 24 office properties, 13 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 |
09/30/06 | 06/30/06 | 03/31/06 | 12/31/05 | 09/30/05 | |||||||||||||||
| Real estate rental revenue |
$ | 56,546 | $ | 52,916 | $ | 50,767 | $ | 49,112 | $ | 48,769 | ||||||||||
| Real estate expenses |
$ | (17,755 | ) | $ | (15,574 | ) | $ | (15,424 | ) | $ | (14,956 | ) | $ | (14,837 | ) | |||||
| $ | 38,791 | $ | 37,342 | $ | 35,343 | $ | 34,156 | $ | 33,932 | |||||||||||
| Real estate depreciation and amortization |
(14,138 | ) | (12,955 | ) | (11,938 | ) | (11,662 | ) | (11,950 | ) | ||||||||||
| Income from real estate |
24,653 | 24,387 | 23,405 | 22,494 | 21,982 | |||||||||||||||
| Other income |
293 | 175 | 170 | 263 | 335 | |||||||||||||||
| Other income from property settlement |
— | — | — | — | — | |||||||||||||||
| Interest expense |
(12,527 | ) | (11,604 | ) | (10,322 | ) | (10,074 | ) | (9,798 | ) | ||||||||||
| General and administrative |
(2,230 | ) | (5,276 | ) | (2,655 | ) | (1,644 | ) | (2,036 | ) | ||||||||||
| Income from continuing operations |
10,189 | 7,682 | 10,598 | 11,039 | 10,483 | |||||||||||||||
| Discontinued operations: |
||||||||||||||||||||
| Income (loss) from operations of properties sold or held for sale |
41 | 37 | 34 | 29 | (60 | ) | ||||||||||||||
| Gain on sale of real estate investment |
— | — | — | — | 3,038 | |||||||||||||||
| Income (loss) from discontinued operations |
41 | 37 | 34 | 29 | 2,978 | |||||||||||||||
| Net Income |
$ | 10,230 | $ | 7,719 | $ | 10,632 | $ | 11,068 | $ | 13,461 | ||||||||||
| Per Share Data |
||||||||||||||||||||
| Net Income |
$ | 0.23 | $ | 0.18 | $ | 0.25 | $ | 0.26 | $ | 0.32 | ||||||||||
| Fully diluted weighted average shares outstanding |
45,093 | 43,037 | 42,197 | 42,131 | 42,147 | |||||||||||||||
| Percentage of Revenues: |
||||||||||||||||||||
| Real estate expenses |
31.4 | % | 29.4 | % | 30.4 | % | 30.5 | % | 30.4 | % | ||||||||||
| General and administrative |
3.9 | % | 10.0 | % | 5.2 | % | 3.3 | % | 4.2 | % | ||||||||||
| Ratios: |
||||||||||||||||||||
| EBITDA / Interest expense |
2.9 | x | 2.8 | x | 3.2 | x | 3.2 | x | 3.3 | x | ||||||||||
| Income from continuing operations/Total real estate revenue |
18.0 | % | 14.5 | % | 20.9 | % | 22.5 | % | 21.5 | % | ||||||||||
| Net income/Total real estate revenue |
18.1 | % | 14.6 | % | 20.9 | % | 22.5 | % | 27.6 | % | ||||||||||
3
Washington Real Estate Investment Trust
Consolidated Balance Sheets
(In thousands)
(unaudited)
| September 30, 2006 |
June 30, 2006 |
March 31, 2006 |
December 31, 2005 |
September 30, 2005 |
||||||||||||||||
| Assets |
||||||||||||||||||||
| Land |
$ | 293,797 | $ | 266,329 | $ | 232,085 | $ | 225,038 | $ | 225,037 | ||||||||||
| Income producing property |
1,278,955 | 1,155,280 | 1,045,007 | 1,022,160 | 1,011,996 | |||||||||||||||
| 1,572,752 | 1,421,609 | 1,277,092 | 1,247,198 | 1,237,033 | ||||||||||||||||
| Accumulated depreciation and amortization |
(275,059 | ) | (262,150 | ) | (250,156 | ) | (239,051 | ) | (228,418 | ) | ||||||||||
| Net income producing property |
1,297,693 | 1,159,459 | 1,026,936 | 1,008,147 | 1,008,615 | |||||||||||||||
| Development in progress, including land held for development |
110,394 | 90,612 | 69,820 | 58,241 | 23,222 | |||||||||||||||
| Total investment in real estate, net |
1,408,087 | 1,250,071 | 1,096,756 | 1,066,388 | 1,031,837 | |||||||||||||||
| Investment in real estate sold or held for sale, net |
3,267 | 3,244 | 2,984 | 2,620 | 2,576 | |||||||||||||||
| Cash and cash equivalents |
11,832 | 13,970 | 2,981 | 4,938 | 5,255 | |||||||||||||||
| Restricted cash |
4,692 | 2,540 | 2,401 | 1,764 | 7,535 | |||||||||||||||
| Rents and other receivables, net of allowance for doubtful accounts |
30,400 | 29,047 | 26,941 | 25,240 | 24,046 | |||||||||||||||
| Prepaid expenses and other assets |
55,155 | 44,892 | 40,669 | 38,143 | 39,864 | |||||||||||||||
| Other assets related to properties sold or held for sale |
66 | 31 | 49 | 66 | 91 | |||||||||||||||
| Total Assets |
$ | 1,513,499 | $ | 1,343,795 | $ | 1,172,781 | $ | 1,139,159 | $ | 1,111,204 | ||||||||||
| Liabilities and Shareholders’ Equity |
||||||||||||||||||||
| Notes payable |
$ | 728,216 | $ | 618,662 | $ | 518,656 | $ | 518,600 | $ | 419,602 | ||||||||||
| Mortgage notes payable |
238,051 | 178,834 | 168,965 | 169,617 | 170,393 | |||||||||||||||
| Accounts payable and other liabilities |
52,309 | 54,082 | 36,407 | 31,988 | 27,690 | |||||||||||||||
| Advance rents |
6,543 | 6,279 | 5,425 | 5,461 | 5,492 | |||||||||||||||
| Tenant security deposits |
9,448 | 8,445 | 7,507 | 7,325 | 7,153 | |||||||||||||||
| Other liabilities related to properties sold or held for sale |
125 | 184 | 188 | 193 | 107 | |||||||||||||||
| Lines of credit/short-term note payable |
28,000 | 19,000 | 59,000 | 24,000 | 93,500 | |||||||||||||||
| Total Liabilities |
1,062,692 | 885,486 | 796,148 | 757,184 | 723,937 | |||||||||||||||
| Minority interest |
1,717 | 1,699 | 1,687 | 1,670 | 1,656 | |||||||||||||||
| Shareholders’ Equity |
||||||||||||||||||||
| Shares of beneficial interest, $0.01 par value; |
||||||||||||||||||||
| 100,000 shares authorized |
450 | 450 | 422 | $ | 421 | $ | 421 | |||||||||||||
| Additional paid-in capital |
499,393 | 498,577 | 406,098 | 405,112 | 404,551 | |||||||||||||||
| Distributions in excess of net income |
(50,753 | ) | (42,417 | ) | (31,574 | ) | (25,228 | ) | (19,361 | ) | ||||||||||
| Total Shareholders’ Equity |
449,090 | 456,610 | 374,946 | 380,305 | 385,611 | |||||||||||||||
| Total Liabilities and Shareholders’ Equity |
$ | 1,513,499 | $ | 1,343,795 | $ | 1,172,781 | $ | 1,139,159 | $ | 1,111,204 | ||||||||||
| Total Debt / Total Market Capitalization |
0.36:1 | 0.33:1 | 0.35:1 | 0.36:1 | 0.34:1 | |||||||||||||||
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 | ||||||||||||||||||||
| 9/30/2006 | 6/30/2006 | 03/31/06 | 12/31/05 | 09/30/05 | ||||||||||||||||
| Funds From Operations(1) |
||||||||||||||||||||
| Net Income |
$ | 10,230 | $ | 7,719 | $ | 10,632 | $ | 11,068 | $ | 13,461 | ||||||||||
| Real estate depreciation and amortization |
14,138 | 12,955 | 11,938 | 11,662 | 11,950 | |||||||||||||||
| Discontinued operations: |
||||||||||||||||||||
| Gain on property disposed |
— | — | — | — | (3,038 | ) | ||||||||||||||
| Other income from property settlement |
— | — | — | — | — | |||||||||||||||
| Real estate depreciation and amortization |
— | 35 | 30 | 32 | 56 | |||||||||||||||
| Funds From Operations (FFO) |
$ | 24,368 | $ | 20,709 | $ | 22,600 | $ | 22,762 | $ | 22,429 | ||||||||||
| FFO per share - basic |
$ | 0.54 | $ | 0.48 | $ | 0.54 | $ | 0.54 | $ | 0.53 | ||||||||||
| FFO per share - fully diluted |
$ | 0.54 | $ | 0.48 | $ | 0.54 | $ | 0.54 | $ | 0.53 | ||||||||||
| Funds Available for Distribution(2) |
||||||||||||||||||||
| Tenant Improvements |
(2,602 | ) | (2,033 | ) | (2,695 | ) | (3,520 | ) | (1,544 | ) | ||||||||||
| External and Internal Leasing Commissions Capitalized |
(1,604 | ) | (1,477 | ) | (960 | ) | (1,004 | ) | (1,111 | ) | ||||||||||
| Recurring Capital Improvements |
(2,019 | ) | (2,724 | ) | (2,295 | ) | (2,445 | ) | (2,129 | ) | ||||||||||
| Straight-Line Rent, Net |
(836 | ) | (686 | ) | (804 | ) | (730 | ) | (982 | ) | ||||||||||
| Non-real estate depreciation and amortization |
640 | 554 | 495 | 479 | 431 | |||||||||||||||
| Amortization of lease intangibles |
78 | (24 | ) | 5 | (17 | ) | (17 | ) | ||||||||||||
| Amortization and expensing of restricted share compensation |
556 | 1,487 | 340 | 299 | 368 | |||||||||||||||
| Other |
13 | 7 | — | 7 | — | |||||||||||||||
| Funds Available for Distribution (FAD) |
$ | 18,594 | $ | 15,813 | $ | 16,686 | $ | 15,831 | $ | 17,445 | ||||||||||
| Total Dividends Paid |
$ | 18,567 | $ | 18,562 | $ | 16,979 | $ | 16,963 | $ | 16,955 | ||||||||||
| Average shares - basic |
44,874 | 42,852 | 42,052 | 42,013 | 42,005 | |||||||||||||||
| Average shares - fully diluted |
45,093 | 43,037 | 42,197 | 42,131 | 42,147 | |||||||||||||||
| (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 | ||||||||||||||||||||
| 09/30/06 | 06/30/06 | 03/31/06 | 12/31/05 | 09/30/05 | ||||||||||||||||
| EBITDA(1) |
||||||||||||||||||||
| Net income |
$ | 10,230 | $ | 7,719 | $ | 10,632 | $ | 11,068 | $ | 13,461 | ||||||||||
| Add: |
||||||||||||||||||||
| Interest expense |
12,527 | 11,604 | 10,322 | 10,074 | 9,798 | |||||||||||||||
| Real estate depreciation and amortization |
14,138 | 12,990 | 11,968 | 11,694 | 12,006 | |||||||||||||||
| Non-real estate depreciation |
107 | 87 | 73 | 71 | 75 | |||||||||||||||
| Less: |
||||||||||||||||||||
| Gain on sale of real estate |
— | — | — | — | (3,038 | ) | ||||||||||||||
| Other income |
(293 | ) | (175 | ) | (170 | ) | (263 | ) | (335 | ) | ||||||||||
| EBITDA |
$ | 36,709 | $ | 32,225 | $ | 32,825 | $ | 32,644 | $ | 31,967 | ||||||||||
| (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)
| September 30, 2006 |
June 30, 2006 |
March 31, 2006 |
December 31, 2005 |
September 30, 2005 |
||||||||||||||||
| Balances Outstanding |
||||||||||||||||||||
| Secured |
||||||||||||||||||||
| Conventional fixed rate |
$ | 238,051 | $ | 178,834 | $ | 168,965 | $ | 169,617 | $ | 170,393 | ||||||||||
| Secured total |
238,051 | 178,834 | 168,965 | 169,617 | 170,393 | |||||||||||||||
| Unsecured |
||||||||||||||||||||
| Fixed rate bonds and notes |
728,216 | 618,662 | 518,656 | 518,600 | 419,602 | |||||||||||||||
| Credit facility |
28,000 | 19,000 | 59,000 | 24,000 | 93,500 | |||||||||||||||
| Unsecured total |
756,216 | 637,662 | 577,656 | 542,600 | 513,102 | |||||||||||||||
| Total |
$ | 994,267 | $ | 816,496 | $ | 746,621 | $ | 712,217 | $ | 683,495 | ||||||||||
| Average Interest Rates |
||||||||||||||||||||
| Secured |
||||||||||||||||||||
| Conventional fixed rate |
5.9 | % | 5.9 | % | 5.9 | % | 5.9 | % | 5.9 | % | ||||||||||
| Secured total |
5.9 | % | 5.9 | % | 5.9 | % | 5.9 | % | 5.9 | % | ||||||||||
| Unsecured |
||||||||||||||||||||
| Fixed rate bonds |
5.5 | % | 5.9 | % | 5.9 | % | 5.9 | % | 6.0 | % | ||||||||||
| Credit facilities |
5.9 | % | 5.9 | % | 5.3 | % | 5.0 | % | 4.5 | % | ||||||||||
| Unsecured total |
5.5 | % | 5.9 | % | 5.8 | % | 5.8 | % | 5.7 | % | ||||||||||
| Average |
5.6 | % | 5.9 | % | 5.9 | % | 5.9 | % | 5.8 | % | ||||||||||
| Maturity Schedule |
||||||||||||||||||||
| Future Maturities of Debt | ||||||||||||||||||||
| Year |
Secured Debt | Unsecured Debt(1) | Credit Facilities | Total Debt | Interest Rate | |||||||||||||||
| 2006 |
977 | — | — | 977 | 5.5 | % | ||||||||||||||
| 2007 |
11,264 | — | — | 11,264 | 6.4 | % | ||||||||||||||
| 2008 |
3,571 | 60,000 | 28,000 | 91,571 | 6.4 | % | ||||||||||||||
| 2009 |
53,768 | — | — | 53,768 | 7.0 | % | ||||||||||||||
| 2010 |
25,428 | — | — | 25,428 | 5.8 | % | ||||||||||||||
| 2011 |
12,763 | 150,000 | — | 162,763 | 5.9 | % | ||||||||||||||
| 2012 |
20,483 | 50,000 | — | 70,483 | 5.0 | % | ||||||||||||||
| 2013 |
105,396 | 60,000 | — | 165,396 | 5.5 | % | ||||||||||||||
| 2014 |
205 | 100,000 | — | 100,205 | 5.3 | % | ||||||||||||||
| Thereafter |
4,196 | 310,000 | — | 314,196 | 5.2 | % | ||||||||||||||
| Total maturities |
$ | 238,051 | $ | 730,000 | $ | 28,000 | $ | 996,051 | 5.6 | % | ||||||||||
Weighted average maturity = 8.4 years
| (1)Note: | The current balance outstanding of the fixed rate bonds and notes is shown net of discounts/premiums in the amount of $1.784 million. |
7
Washington Real Estate Investment Trust
Capital Analysis
(In thousands, except per share amounts)
| September 30, 2006 |
June 30, 2006 |
March 31, 2006 |
December 31, 2005 |
September 30, 2005 |
||||||||||||||||
| Market Data |
||||||||||||||||||||
| Shares Outstanding |
45,011 | 44,998 | 42,183 | 42,139 | 42,125 | |||||||||||||||
| Market Price per Share |
$ | 39.80 | $ | 36.70 | $ | 33.09 | $ | 30.35 | $ | 31.11 | ||||||||||
| Equity Market Capitalization |
$ | 1,791,438 | $ | 1,651,427 | $ | 1,395,835 | $ | 1,278,919 | $ | 1,310,509 | ||||||||||
| Total Debt |
$ | 994,267 | $ | 816,496 | $ | 746,621 | $ | 712,217 | $ | 683,495 | ||||||||||
| Total Market Capitalization |
$ | 2,785,705 | $ | 2,467,923 | $ | 2,142,456 | $ | 1,991,136 | $ | 1,994,004 | ||||||||||
| Total Debt to Market Capitalization |
0.36:1 | 0.33:1 | 0.35:1 | 0.36:1 | 0.34:1 | |||||||||||||||
| Earnings to Fixed Charges(1) |
1.7 | x | 1.6 | x | 1.9 | x | 2.0 | x | 2.0 | x | ||||||||||
| Debt Service Coverage Ratio(2) |
2.8 | x | 2.6 | x | 3.0 | x | 3.0 | x | 3.0 | x | ||||||||||
| Dividend Data |
||||||||||||||||||||
| Total Dividends Paid |
$ | 18,567 | $ | 18,562 | $ | 16,979 | $ | 16,963 | $ | 16,955 | ||||||||||
| Common Dividend per Share |
$ | 0.4125 | $ | 0.4125 | $ | 0.4025 | $ | 0.4025 | $ | 0.4025 | ||||||||||
| Payout Ratio (FFO per share basis) |
76.3 | % | 85.7 | % | 74.5 | % | 74.5 | % | 75.6 | % | ||||||||||
| (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
Q3 2006 vs. Q3 2005
Cash Basis
| Sector |
NOI Growth |
Rental Rate Growth |
||||
| Multifamily | 11.0 | % | 6.6 | % | ||
| Office Buildings | 4.6 | % | 2.2 | % | ||
| Medical Office Buildings | 4.1 | % | 2.9 | % | ||
| Retail Centers | 2.3 | % | 8.1 | % | ||
| Industrial / Flex Properties | 0.8 | % | 3.8 | % | ||
| Overall Core Portfolio |
4.2 | % | 4.2 | % | ||
GAAP Basis
| Sector |
NOI Growth |
Rental Rate Growth |
||||
| Multifamily | 11.1 | % | 6.7 | % | ||
| Office Buildings | 1.2 | % | 2.0 | % | ||
| Medical Office Buildings | -3.1 | % | 0.8 | % | ||
| Retail Centers | 3.4 | % | 8.0 | % | ||
| Industrial / Flex Properties | 0.9 | % | 2.1 | % | ||
| Overall Core Portfolio |
2.5 | % | 3.6 | % | ||
9
Washington Real Estate Investment Trust
Core Portfolio Net Operating Income (NOI) Summary
(In Thousands)
| Three Months Ended September 30, | |||||||||
| 2006 | 2005 | % Change | |||||||
| Cash Basis: |
|||||||||
| Multifamily |
$ | 4,926 | $ | 4,438 | 11.0 | % | |||
| Office Buildings |
12,567 | 12,018 | 4.6 | % | |||||
| Medical Office Buildings |
3,304 | 3,175 | 4.1 | % | |||||
| Retail Centers |
6,633 | 6,486 | 2.3 | % | |||||
| Industrial/Flex |
5,998 | 5,950 | 0.8 | % | |||||
| $ | 33,428 | $ | 32,067 | 4.2 | % | ||||
| GAAP Basis: |
|||||||||
| Multifamily |
$ | 4,935 | $ | 4,444 | 11.1 | % | |||
| Office Buildings |
12,780 | 12,624 | 1.2 | % | |||||
| Medical Office Buildings |
3,325 | 3,432 | -3.1 | % | |||||
| Retail Centers |
6,803 | 6,582 | 3.4 | % | |||||
| Industrial/Flex |
6,087 | 6,030 | 0.9 | % | |||||
| $ | 33,930 | $ | 33,112 | 2.5 | % | ||||
10
Washington Real Estate Investment Trust
Core Portfolio Net Operating Income (NOI) Detail
(In Thousands)
| Three Months Ended September 30, 2006 | ||||||||||||||||||||||||||||
| Multifamily | Office | Medical Office |
Retail | Industrial | Corporate and Other |
Total | ||||||||||||||||||||||
| Real estate rental revenue |
||||||||||||||||||||||||||||
| Core Portfolio |
$ | 8,354 | $ | 19,963 | $ | 4,563 | $ | 8,710 | $ | 7,847 | $ | — | $ | 49,437 | ||||||||||||||
| Non-core- acquired 1 |
— | 1,915 | 2,482 | 789 | 1,923 | — | 7,109 | |||||||||||||||||||||
| Total |
8,354 | 21,878 | 7,045 | 9,499 | 9,770 | — | 56,546 | |||||||||||||||||||||
| Real estate expenses |
||||||||||||||||||||||||||||
| Core Portfolio |
3,419 | 7,183 | 1,238 | 1,907 | 1,760 | — | 15,507 | |||||||||||||||||||||
| Non-core- acquired 1 |
— | 606 | 949 | 172 | 521 | — | 2,248 | |||||||||||||||||||||
| Total |
3,419 | 7,789 | 2,187 | 2,079 | 2,281 | — | 17,755 | |||||||||||||||||||||
| Net Operating Income (NOI) |
||||||||||||||||||||||||||||
| Core Portfolio |
4,935 | 12,780 | 3,325 | 6,803 | 6,087 | — | 33,930 | |||||||||||||||||||||
| Non-core- acquired 1 |
— | 1,309 | 1,533 | 617 | 1,402 | — | 4,861 | |||||||||||||||||||||
| Total |
$ | 4,935 | $ | 14,089 | $ | 4,858 | $ | 7,420 | $ | 7,489 | $ | — | $ | 38,791 | ||||||||||||||
| Core Portfolio NOI GAAP Basis (from above) |
$ | 4,935 | $ | 12,780 | $ | 3,325 | $ | 6,803 | $ | 6,087 | $ | — | $ | 33,930 | ||||||||||||||
| Straight-line revenue, net for core properties |
(9 | ) | (222 | ) | (21 | ) | (170 | ) | (93 | ) | — | (515 | ) | |||||||||||||||
| Amortization of lease intangibles for core properties |
— | 9 | — | — | 4 | — | 13 | |||||||||||||||||||||
| Core portfolio NOI, Cash Basis |
$ | 4,926 | $ | 12,567 | $ | 3,304 | $ | 6,633 | $ | 5,998 | $ | — | $ | 33,428 | ||||||||||||||
| Reconciliation of NOI to Net Income |
||||||||||||||||||||||||||||
| Total NOI |
$ | 4,935 | $ | 14,089 | $ | 4,858 | $ | 7,420 | $ | 7,489 | $ | — | $ | 38,791 | ||||||||||||||
| Other revenue |
— | — | — | — | — | 293 | 293 | |||||||||||||||||||||
| Other income from property settlement |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Interest expense |
(913 | ) | (305 | ) | (1,105 | ) | (347 | ) | (401 | ) | (9,456 | ) | (12,527 | ) | ||||||||||||||
| Depreciation and amortization |
(1,569 | ) | (6,004 | ) | (2,028 | ) | (1,661 | ) | (2,772 | ) | (104 | ) | (14,138 | ) | ||||||||||||||
| General and administrative |
— | — | — | — | — | (2,230 | ) | (2,230 | ) | |||||||||||||||||||
| Discontinued Operations 2 |
— | 41 | — | — | — | — | 41 | |||||||||||||||||||||
| Net Income |
$ | 2,453 | $ | 7,821 | $ | 1,725 | $ | 5,412 | $ | 4,316 | $ | (11,497 | ) | $ | 10,230 | |||||||||||||
| Three Months Ended September 30, 2005 | ||||||||||||||||||||||||||||
| Multifamily | Office | Medical Office |
Retail | Industrial | Corporate and Other |
Total | ||||||||||||||||||||||
| Real estate rental revenue |
||||||||||||||||||||||||||||
| Core Portfolio |
$ | 7,829 | $ | 19,219 | $ | 4,599 | $ | 8,280 | $ | 7,734 | $ | — | $ | 47,661 | ||||||||||||||
| Non-core- acquired 1 |
— | 377 | — | — | 731 | — | 1,108 | |||||||||||||||||||||
| Total |
7,829 | 19,596 | 4,599 | 8,280 | 8,465 | — | 48,769 | |||||||||||||||||||||
| Real estate expenses |
||||||||||||||||||||||||||||
| Core Portfolio |
3,385 | 6,595 | 1,167 | 1,698 | 1,704 | — | 14,549 | |||||||||||||||||||||
| Non-core- acquired 1 |
— | 92 | — | — | 195 | — | 287 | |||||||||||||||||||||
| Total |
3,385 | 6,687 | 1,167 | 1,698 | 1,899 | — | 14,836 | |||||||||||||||||||||
| Net Operating Income (NOI) |
||||||||||||||||||||||||||||
| Core Portfolio |
4,444 | 12,624 | 3,432 | 6,582 | 6,030 | — | 33,112 | |||||||||||||||||||||
| Non-core- acquired 1 |
— | 285 | — | — | 536 | — | 821 | |||||||||||||||||||||
| Total |
$ | 4,444 | $ | 12,909 | $ | 3,432 | $ | 6,582 | $ | 6,566 | $ | — | $ | 33,933 | ||||||||||||||
| Core Portfolio NOI GAAP Basis (from above) |
$ | 4,444 | $ | 12,624 | $ | 3,432 | $ | 6,582 | $ | 6,030 | $ | — | $ | 33,112 | ||||||||||||||
| Straight-line revenue, net for core properties |
(6 | ) | (607 | ) | (284 | ) | (95 | ) | (80 | ) | — | (1,072 | ) | |||||||||||||||
| Amortization of lease intangibles for core properties |
— | — | 27 | — | — | — | 27 | |||||||||||||||||||||
| Core portfolio NOI, Cash Basis |
$ | 4,438 | $ | 12,017 | $ | 3,175 | $ | 6,487 | $ | 5,950 | $ | — | $ | 32,067 | ||||||||||||||
| Reconciliation of NOI to Net Income |
||||||||||||||||||||||||||||
| Total NOI |
$ | 4,444 | $ | 12,909 | $ | 3,432 | $ | 6,582 | $ | 6,566 | $ | — | $ | 33,933 | ||||||||||||||
| Other revenue |
— | — | — | — | — | 335 | 335 | |||||||||||||||||||||
| Non-Disposal Gain |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Interest expense |
(986 | ) | — | (1,112 | ) | (353 | ) | (506 | ) | (6,841 | ) | (9,798 | ) | |||||||||||||||
| Depreciation and amortization |
(1,272 | ) | (5,177 | ) | (1,140 | ) | (1,871 | ) | (2,380 | ) | (110 | ) | (11,950 | ) | ||||||||||||||
| General and administrative |
— | — | — | — | — | (2,037 | ) | (2,037 | ) | |||||||||||||||||||
| Discontinued Operations 2 |
— | 37 | — | — | 2,941 | — | 2,978 | |||||||||||||||||||||
| Net Income |
$ | 2,186 | $ | 7,769 | $ | 1,180 | $ | 4,358 | $ | 6,621 | $ | (8,653 | ) | $ | 13,461 | |||||||||||||
| 1 | Non-core acquired properties were Hampton Overlook, Hampton South, Albemarle Point, Alexandria Professional Center, 9707 Medical Center Dr., 15001 Shady Grove Rd., Plumtree Medical Center, Randolph Shopping Center, Montrose Shopping Center, 9950 Business Parkway, 15005 Shady Grove Road, 6565 Arlington Blvd, West Gude Drive, The Ridges and The Crescent. |
| 2 | Discontinued operations consists of: Pepsi Distribution Center and Lexington. |
11
Washington Real Estate Investment Trust
Core Portfolio & Overall Occupancy Levels by Sector
Q3 2006 vs. Q3 2005
GAAP Basis
| Core Portfolio | All Properties | |||||||||||
| Sector |
3rd QTR 2006 |
3rd QTR 2005 |
3rd QTR 2006 |
3rd QTR 2005 |
||||||||
| Multifamily |
94.4 | %(1) | 94.9 | % | 94.4 | % | 94.9 | % | ||||
| Office Buildings |
93.2 | % | 88.9 | % | 92.6 | % | 88.8 | % | ||||
| Medical Office Buildings |
99.3 | % | 98.1 | % | 99.5 | % | 98.1 | % | ||||
| Retail Centers |
99.3 | % | 98.2 | % | 94.0 | % | 98.2 | % | ||||
| Industrial / Flex Properties |
94.5 | % | 93.9 | % | 94.4 | % | 93.8 | % | ||||
| Overall Portfolio |
95.2 | % | 93.0 | % | 94.2 | % | 92.9 | % | ||||
| (1) | Mulitfamily occupancy level for Q3 ‘06 is 95.0% without the impact of units off-line for planned renovations at Bethesda Hill. The overall portfolio is 95.3% occupied without this impact. |
12
Washington Real Estate Investment Trust
Schedule of Properties
September 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 | ||||
| 6565 Arlington Blvd |
Falls Church, VA | 2006 | 1967/1998 | 139,000 | ||||
| West Gude Drive |
Rockville, MD | 2006 | 1984/1986/1988 | 289,000 | ||||
| The Ridges |
Gaithersburg, MD | 2006 | 1990 | 104,000 | ||||
| Subtotal |
3,537,000 | |||||||
| 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 Medical Center |
Bel Air, MD | 2006 | 1991 | 33,000 | ||||
| 15005 Shady Grove Road |
Rockville, MD | 2006 | 2002 | 52,000 | ||||
| The Crescent |
Gaithersburg, MD | 2006 | 1989 | 49,000 | ||||
| Subtotal |
874,000 | |||||||
| 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.)
September 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 | 1971/2003 4 | 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 |
11,758,000 | |||||||
| * | 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 Nine months ended 09/30/06
| 3rd Quarter 2006 | YTD 2006 | |||
| Gross Leasing Square Footage |
||||
| Office Buildings |
166,576 | 515,250 | ||
| Medical Office Buildings |
46,819 | 65,871 | ||
| Retail Centers |
35,239 | 109,376 | ||
| Industrial Centers |
301,208 | 636,600 | ||
| Total |
549,842 | 1,327,097 | ||
| Weighted Average Term (yrs) |
||||
| Office Buildings |
5.3 | 4.5 | ||
| Medical Office Buildings |
8.3 | 7.6 | ||
| Retail Centers |
5.6 | 5.0 | ||
| Industrial Centers |
2.9 | 4.1 | ||
| Total |
4.3 | 4.5 | ||
| GAAP | CASH | GAAP | CASH | |||||||||||||
| Rental Rate Increases: |
||||||||||||||||
| Rate on expiring leases |
||||||||||||||||
| Office Buildings |
$ | 24.67 | $ | 26.12 | $ | 25.21 | $ | 26.31 | ||||||||
| Medical Office Buildings |
28.81 | 29.28 | 28.58 | 29.23 | ||||||||||||
| Retail Centers |
13.98 | 21.53 | 19.40 | 22.27 | ||||||||||||
| Industrial Centers |
8.63 | 8.95 | 8.18 | 8.52 | ||||||||||||
| Total |
$ | 15.55 | $ | 16.69 | $ | 16.73 | $ | 17.59 | ||||||||
| Rate on new and renewal leases |
||||||||||||||||
| Office Buildings |
$ | 28.23 | $ | 26.58 | $ | 27.18 | $ | 25.77 | ||||||||
| Medical Office Buildings |
36.00 | 31.87 | 34.87 | 31.28 | ||||||||||||
| Retail Centers |
15.38 | 22.91 | 23.33 | 24.81 | ||||||||||||
| Industrial Centers |
9.77 | 9.44 | 9.26 | 8.82 | ||||||||||||
| Total |
$ | 17.95 | $ | 17.41 | $ | 18.65 | $ | 17.83 | ||||||||
| Percentage Increase |
||||||||||||||||
| Office Buildings |
14.43 | % | 1.76 | % | 7.81 | % | -2.05 | % | ||||||||
| Medical Office Buildings |
24.96 | % | 8.85 | % | 22.01 | % | 7.01 | % | ||||||||
| Retail Centers |
10.01 | % | 6.41 | % | 20.26 | % | 11.41 | % | ||||||||
| Industrial Centers |
13.21 | % | 5.47 | % | 13.20 | % | 3.52 | % | ||||||||
| Total |
15.43 | % | 4.31 | % | 11.48 | % | 1.36 | % | ||||||||
| Total Dollars | Dollars per Square Foot |
Total Dollars | Dollars per Square Foot |
|||||||||||||
| Tenant Improvements and Leasing Costs |
||||||||||||||||
| Office Buildings |
$ | 4,243,376 | $ | 25.47 | $ | 8,648,935 | $ | 16.79 | ||||||||
| Medical Office Buildings |
1,038,422 | 22.18 | 1,575,062 | 23.91 | ||||||||||||
| Retail Centers |
296,687 | 8.42 | 581,232 | 5.31 | ||||||||||||
| Industrial Centers |
636,382 | 2.11 | 2,286,334 | 3.59 | ||||||||||||
| Total |
$ | 6,214,867 | $ | 11.30 | $ | 13,091,563 | $ | 9.86 | ||||||||
15
Washington Real Estate Investment Trust
10 Largest Tenants - Based on Annualized Rent
September 30, 2006
| Tenant |
Number of Buildings |
Weighted Average Remaining Lease Term in Months |
Percentage of Aggregate Portfolio Annualized Rent |
Aggregate Rentable Square Feet |
Percentage Feet |
|||||||
| World Bank |
1 | 44 | 4.90 | % | 210,354 | 2.25 | % | |||||
| Sunrise Senior Living, Inc. |
1 | 84 | 2.80 | % | 180,066 | 1.92 | % | |||||
| General Services Administration |
8 | 34 | 2.31 | % | 286,434 | 3.06 | % | |||||
| Sun Microsystems, Inc.** |
1 | 3 | 1.77 | % | 110,184 | 1.18 | % | |||||
| INOVA Health Care Services |
5 | 46 | 1.60 | % | 84,088 | 0.90 | % | |||||
| URS Corporation |
1 | 87 | 1.54 | % | 97,208 | 1.04 | % | |||||
| George Washington University |
2 | 22 | 1.26 | % | 68,286 | 0.73 | % | |||||
| Lockheed Corporation |
2 | 29 | 1.00 | % | 81,315 | 0.87 | % | |||||
| United Communications Group |
1 | 20 | 0.99 | % | 63,441 | 0.68 | % | |||||
| Westat, Inc. |
2 | 40 | 0.99 | % | 81,711 | 0.87 | % | |||||
| Total/Weighted Average |
44 | 19.16 | % | 1,263,087 | 13.50 | % | ||||||
| ** | Sun Microsystems has renewed 65,443sf for 60 months at $28.00psf. |
16
Washington Real Estate Investment Trust
Industry Diversification
September 30, 2006
| Industry Classification (NAICS) |
Annualized Base Rental Revenue |
Percentage of Aggregate Annualized Rent |
Aggregate Rentable Square Feet |
Percentage Feet |
|||||||
| Professional, Scientific and Technical Services |
$ | 42,336,081 | 23.97 | % | 1,977,382 | 21.12 | % | ||||
| Ambulatory Health Care Services |
28,104,235 | 15.91 | % | 1,032,441 | 11.03 | % | |||||
| Credit Intermediation and Related Activities |
15,022,921 | 8.51 | % | 452,100 | 4.83 | % | |||||
| Executive, Legislative & Other General Government Support |
7,323,399 | 4.15 | % | 409,103 | 4.37 | % | |||||
| Food Services and Drinking Places |
5,499,344 | 3.11 | % | 235,535 | 2.52 | % | |||||
| Administrative and Support Services |
5,449,304 | 3.09 | % | 323,218 | 3.45 | % | |||||
| Nursing and Residential Care Facilities |
5,414,988 | 3.07 | % | 203,324 | 2.17 | % | |||||
| Religious, Grantmaking, Civic, Professional & Similar Org. |
4,625,263 | 2.62 | % | 164,344 | 1.76 | % | |||||
| Educational Services |
4,241,358 | 2.40 | % | 166,851 | 1.78 | % | |||||
| Food and Beverage Stores |
4,055,128 | 2.30 | % | 257,483 | 2.75 | % | |||||
| Furniture and Home Furnishing Stores |
3,745,839 | 2.12 | % | 270,651 | 2.89 | % | |||||
| Miscellaneous Store Retailers |
3,235,338 | 1.83 | % | 253,857 | 2.71 | % | |||||
| Specialty Trade Contractors |
3,156,823 | 1.79 | % | 402,977 | 4.30 | % | |||||
| Personal and Laundry Services |
2,787,953 | 1.58 | % | 131,164 | 1.40 | % | |||||
| Merchant Wholesalers-Durable Goods |
2,787,095 | 1.58 | % | 298,158 | 3.18 | % | |||||
| Computer & Electronic Product Manufacturing |
2,609,461 | 1.48 | % | 209,784 | 2.24 | % | |||||
| Transportation Equipment Manufacturing |
2,604,276 | 1.47 | % | 141,171 | 1.51 | % | |||||
| Clothing & Clothing Accessories Stores |
2,191,993 | 1.24 | % | 143,245 | 1.53 | % | |||||
| Publishing Industries (except Internet) |
2,188,393 | 1.24 | % | 86,632 | 0.93 | % | |||||
| Other |
29,223,676 | 16.54 | % | 2,202,483 | 23.53 | % | |||||
| Total |
176,602,868 | 100.00 | % | 9,361,903 | 100.00 | % | |||||
17
Washington Real Estate Investment Trust
Lease Expirations
September 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 |
20 | 158,759 | 4.88 | % | $ | 3,867,442 | $ | 24.36 | 4.43 | % | ||||||
| 2007 |
84 | 292,212 | 8.97 | % | 8,052,673 | 27.56 | 9.23 | % | ||||||||
| 2008 |
76 | 345,815 | 10.62 | % | 9,731,019 | 28.14 | 11.15 | % | ||||||||
| 2009 |
103 | 544,521 | 16.72 | % | 14,661,927 | 26.93 | 16.80 | % | ||||||||
| 2010 |
82 | 686,049 | 21.07 | % | 18,996,107 | 27.69 | 21.77 | % | ||||||||
| 2011 and thereafter |
151 | 1,229,213 | 37.74 | % | 31,951,823 | 25.99 | 36.62 | % | ||||||||
| 516 | 3,256,569 | 100.00 | % | $ | 87,260,991 | $ | 26.80 | 100.00 | % | |||||||
| Medical Office: |
||||||||||||||||
| 2006 |
4 | 5,890 | 0.68 | % | $ | 161,948 | $ | 27.50 | 0.63 | % | ||||||
| 2007 |
29 | 87,247 | 10.09 | % | 2,309,645 | 26.47 | 8.90 | % | ||||||||
| 2008 |
27 | 72,275 | 8.35 | % | 2,283,569 | 31.60 | 8.80 | % | ||||||||
| 2009 |
28 | 108,469 | 12.54 | % | 2,952,948 | 27.22 | 11.38 | % | ||||||||
| 2010 |
33 | 155,663 | 17.99 | % | 4,760,340 | 30.58 | 18.34 | % | ||||||||
| 2011 and thereafter |
99 | 435,653 | 50.35 | % | 13,481,502 | 30.95 | 51.95 | % | ||||||||
| 220 | 865,197 | 100.00 | % | $ | 25,949,952 | $ | 29.99 | 100.00 | % | |||||||
| Retail: |
||||||||||||||||
| 2006 |
9 | 46,252 | 2.44 | % | $ | 707,715 | $ | 15.30 | 2.29 | % | ||||||
| 2007 |
62 | 194,624 | 10.27 | % | 4,030,368 | 20.71 | 13.05 | % | ||||||||
| 2008 |
38 | 204,570 | 10.79 | % | 2,156,819 | 10.54 | 6.98 | % | ||||||||
| 2009 |
41 | 155,515 | 8.21 | % | 3,295,552 | 21.19 | 10.67 | % | ||||||||
| 2010 |
48 | 291,910 | 15.40 | % | 4,971,881 | 17.03 | 16.09 | % | ||||||||
| 2011 and thereafter |
100 | 1,002,365 | 52.89 | % | 15,735,035 | 15.70 | 50.92 | % | ||||||||
| 298 | 1,895,236 | 100.00 | % | $ | 30,897,370 | $ | 16.30 | 100.00 | % | |||||||
| Industrial: |
||||||||||||||||
| 2006 |
13 | 87,683 | 2.62 | % | $ | 744,521 | $ | 8.49 | 2.29 | % | ||||||
| 2007 |
42 | 415,792 | 12.43 | % | 3,960,552 | 9.53 | 12.19 | % | ||||||||
| 2008 |
61 | 749,767 | 22.42 | % | 7,123,704 | 9.50 | 21.92 | % | ||||||||
| 2009 |
51 | 641,865 | 19.19 | % | 6,298,120 | 9.81 | 19.38 | % | ||||||||
| 2010 |
31 | 252,259 | 7.54 | % | 2,772,443 | 10.99 | 8.53 | % | ||||||||
| 2011 and thereafter |
67 | 1,197,535 | 35.80 | % | 11,595,215 | 9.68 | 35.69 | % | ||||||||
| 265 | 3,344,901 | 100.00 | % | $ | 32,494,555 | $ | 9.71 | 100.00 | % | |||||||
| Total: |
||||||||||||||||
| 2006 |
46 | 298,584 | 3.19 | % | $ | 5,481,626 | $ | 18.36 | 3.10 | % | ||||||
| 2007 |
217 | 989,875 | 10.57 | % | 18,353,238 | 18.54 | 10.39 | % | ||||||||
| 2008 |
202 | 1,372,427 | 14.66 | % | 21,295,111 | 15.52 | 12.06 | % | ||||||||
| 2009 |
223 | 1,450,370 | 15.49 | % | 27,208,547 | 18.76 | 15.41 | % | ||||||||
| 2010 |
194 | 1,385,881 | 14.80 | % | 31,500,771 | 22.73 | 17.84 | % | ||||||||
| 2011 and thereafter |
417 | 3,864,766 | 41.29 | % | 72,763,575 | 18.83 | 41.20 | % | ||||||||
| 1,299 | 9,361,903 | 100.00 | % | $ | 176,602,868 | $ | 18.86 | 100.00 | % | |||||||
| * | Annualized Rent is as of September 30, 2006 rental revenue (cash basis) multiplied by 12. |
18
Washington Real Estate Investment Trust
2006 Acquisition Summary
as of September 30, 2006
($’s in thousands)
Acquisition Summary
| Acquisition Date |
Square Feet |
Leased Percentage at Acquisition |
September 30, Leased |
Investment | |||||||||||
| Hampton Overlook |
Capital Heights, MD | 02/15/06 | 134,770 | 88 | % | 100 | % | $ | 10,040 | ||||||
| Hampton South |
Capital Heights, MD | 02/15/06 | 168,300 | 63 | % | 74 | % | 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 | % | 66 | % | 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 | |||||||
| Plumtree Medical Center |
Bel Air, MD | 06/22/06 | 33,400 | 100 | % | 100 | % | 7,700 | |||||||
| 15005 Shady Grove Road |
Rockville, MD | 07/12/06 | 52,300 | 100 | % | 100 | % | 22,500 | |||||||
| 6565 Arlington Blvd |
Falls Church, VA | 08/11/06 | 139,600 | 82 | % | 82 | % | 30,000 | |||||||
| West Gude Drive |
Rockville, MD | 08/25/06 | 289,500 | 95 | % | 94 | % | 57,000 | |||||||
| The Ridges |
Gaithersburg, MD | 08/25/06 | 104,000 | 100 | % | 100 | % | 25,000 | |||||||
| The Crescent |
Gaithersburg, MD | 08/25/06 | 49,000 | 91 | % | 88 | % | 12,000 | |||||||
| Total |
$ | 303,000 | |||||||||||||
19
Washington Real Estate Investment Trust
2006 Development Summary
as of September 30, 2006
($’s in thousands)
| Property and Location |
Total Rentable Square Feet or # of Units |
Percentage or Committed |
Anticipated Cash Cost |
Cash Cost to |
Anticipated Construction Completion Date | |||||||||||
| Development |
||||||||||||||||
| Rosslyn Towers 1 |
$ | 76,600 | $ | 34,907 | 3 | |||||||||||
| Arlington, VA |
||||||||||||||||
| (High Rise) |
178 units, 1,600 sq ft. retail & 498 parking spaces underground (includes parking for existing office) | 0 | % | 3Q 07 | ||||||||||||
| (Mid Rise) |
46 units, 4,300 sq ft. retail | 0 | % | 2Q 07 | ||||||||||||
| South Washington Street 2 |
75 units & 2,600 sq ft. retail | 0 | % | $ | 32,700 | $ | 15,290 | 3 | 2Q 07 | |||||||
| Alexandria, VA |
||||||||||||||||
| Dulles Station 4 Phase I |
179,995 sq ft office | 0 | % | $ | 52,000 5 | $ | 22,724 | 3 | 3Q 07 | |||||||
| Herndon, VA Phase II |
360,005 sq ft office | TBD | $ | 19,015 | 3 | TBD | ||||||||||
| Total |
$ | 161,300 | $ | 91,936 | ||||||||||||
| Re-development |
||||||||||||||||
| Foxchase Shopping Center 6 |
133,000 sq ft. | 97 | % | $ | 10,500 | $ | 8,538 | 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 $5.8M. |
| 6 | Includes 60,600 square feet of redevelopment in connection with a lease executed in September 2004 with Harris Teeter. |
20
WRIT vs.
FTSE NAREIT Equity REITs, Morgan Stanley US REIT
& Russell 2000 Indices
12, 36, and 60 Month Total Returns
September 30, 2006
Sources: SNL Interactive and NAREIT
21
Washington Real Estate Investment Trust
Reporting Definitions
September 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.
22