SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


FORM 8-K/A1

 


Amendment No. 1

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) March 9, 2007

 


WASHINGTON REAL ESTATE INVESTMENT TRUST

(Exact name of registrant as specified in its charter)

 


 

Maryland   1-6622   53-0261100

(State or other jurisdiction

of incorporation)

  (Commission File Number)  

IRS Employer

Identification Number)

 

6110 Executive Boulevard, Suite 800, Rockville, Maryland   20852
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code (301) 984- 9400

 


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 



ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

The undersigned registrant, in order to provide the financial statements required to be included in the Current Report on Form 8-K dated March 9, 2007 in connection with the acquisition of certain assets and the borrowing under the lines of credit to pay for the acquisitions of 270 Technology Park, Monument II and 2440 M Street hereby amends the following items, as set forth in the pages attached hereto.

 

Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS

 

  (a) Financial Statements of Businesses Acquired

 

  1. 270 Technology Park- Audited Historical Summary of Gross Income and Direct Operating Expenses for the year ended December 31, 2006.

 

  2. Monument II - Audited Historical Summary of Gross Income and Direct Operating Expenses for the year ended December 31, 2006.

 

  3. 2440 M Street - Audited Historical Summary of Gross Income and Direct Operating Expenses for the year ended December 31, 2006.

In acquiring the properties listed above, Washington Real Estate Investment Trust (“WRIT”) evaluated among other things, sources of revenue (including but not limited to, competition in the rental market, comparative rents and occupancy rates) and expenses (including but not limited to, utility rates, ad valorem tax rates, maintenance expenses and anticipated capital expenditures). After reasonable inquiry, management is not aware of any material factors affecting these properties that would cause the reported financial information not to be indicative of their future operating results.

 

  (b) Pro Forma Financial Information

The following pro forma financial statements for the property acquisitions listed above (as defined in Regulation S-X) are filed as an exhibit hereto:

 

  1. WRIT Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2006.

 

  2. WRIT Unaudited Pro Forma Condensed Consolidated Statements of Operations for the year ended December 31, 2006.

 

  (d) Exhibits

 

  23. Consent of Independent Public Accounting Firm


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

WASHINGTON REAL ESTATE INVESTMENT TRUST
 

(Registrant)

By:  

/s/ Laura M. Franklin

 

(Signature)

  Laura M. Franklin
  Senior Vice President Accounting,
  Administration and Corporate Secretary

May 25, 2007

(Date)


REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Trustees of

  Washington Real Estate Investment Trust

We have audited the accompanying Historical Summary of Gross Income and Direct Operating Expenses of 270 Technology Park (“Historical Summary”) for the year ended December 31, 2006. This Historical Summary is the responsibility of the Property’s management. Our responsibility is to express an opinion on the Historical Summary based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion.

The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in Note 2, and is not intended to be a complete presentation of 270 Technology Park’s revenues and expenses.

In our opinion, the Historical Summary referred to above presents fairly, in all material respects, the gross income and direct operating expenses described in Note 2 of 270 Technology Park for the year ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

/s/ ARGY, WILTSE & ROBINSON, P.C.

McLean, Virginia

May 17, 2007


270 TECHNOLOGY PARK

HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES

YEAR ENDED DECEMBER 31, 2006

 

     2006

Gross income:

  

Base rents

   $ 1,917,981

Expense recoveries

     386,168

Other

     1,773
      

Total gross income

     2,305,922
      

Direct operating expenses:

  

Real estate taxes

     168,939

Repairs, maintenance and supplies

     146,087

Utilities

     28,742

Insurance

     19,960
      

Total direct operating expenses

     363,728
      

Gross income in excess of direct operating expenses

   $ 1,942,194
      

The accompanying notes are an integral part of this historical summary.


270 TECHNOLOGY PARK

NOTES TO THE HISTORICAL SUMMARY OF GROSS INCOME AND

DIRECT OPERATING EXPENSES

YEAR ENDED DECEMBER 31, 2006

NOTE 1 - NATURE OF BUSINESS

270 Technology Park consists of five single-story flex buildings containing a total of approximately 157,000 rentable square feet plus 595 parking spaces, located within 270 Technology Park in Frederick, Maryland. The operations of 270 Technology Park consist of leasing space to various business tenants.

NOTE 2 - BASIS OF PRESENTATION

Washington Real Estate Investment Trust purchased 270 Technology Park in February, 2007. The Historical Summary has been prepared for the purpose of complying with Regulation S-X, Rule 3-14 of the Securities and Exchange Commission (“SEC”), which requires certain information with respect to real estate operations acquired to be included with certain filings with the SEC. This Historical Summary includes the historical gross income and direct operating expenses of 270 Technology Park, exclusive of the following expenses which may not be comparable to the proposed future operations:

 

  (a) Interest expense on existing mortgages and borrowings

 

  (b) Depreciation of property and equipment

 

  (c) Management and leasing fees

 

  (d) Certain corporate and administrative expenses

 

  (e) Provisions for income taxes

NOTE 3 - USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions regarding revenues and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results could differ from estimated amounts.

NOTE 4 - DESCRIPTION OF LEASING ARRANGEMENTS

All leases are classified as operating leases and expire at various dates through 2016. The following is a schedule by years of future minimum rents receivable on non-cancelable operating leases in effect as of December 31, 2006:

 

2007

   $ 1,811,000

2008

     1,396,000

2009

     977,000

2010

     902,000

2011

     778,000

Thereafter

     2,409,000
      
   $ 8,273,000
      

During the year ended December 31, 2006, three tenants accounted for approximately 35% of the total base rents.


REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Trustees of

  Washington Real Estate Investment Trust

We have audited the accompanying Historical Summary of Gross Income and Direct Operating Expenses of Monument II (“Historical Summary”) for the year ended December 31, 2006. This Historical Summary is the responsibility of the Property’s management. Our responsibility is to express an opinion on the Historical Summary based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion.

The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in Note 2, and is not intended to be a complete presentation of Monument II’s revenues and expenses.

In our opinion, the Historical Summary referred to above presents fairly, in all material respects, the gross income and direct operating expenses described in Note 2 of Monument II for the year ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

/s/ ARGY, WILTSE & ROBINSON, P.C.

McLean, Virginia

May 17, 2007


MONUMENT II

HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES

YEAR ENDED DECEMBER 31, 2006

 

     2006

Gross income:

  

Base rents

   $ 6,378,670

Expense recoveries

     290,614
      

Total gross income

     6,669,284
      

Direct operating expenses:

  

Real estate taxes

     534,630

Contract services

     411,411

Utilities

     290,131

Repairs, maintenance and supplies

     68,738

Insurance

     31,015

Other expenses

     42,398
      

Total direct operating expenses

     1,378,323
      

Gross income in excess of direct operating expenses

   $ 5,290,961
      

The accompanying notes are an integral part of this historical summary.


MONUMENT II

NOTES TO THE HISTORICAL SUMMARY OF GROSS INCOME AND

DIRECT OPERATING EXPENSES

YEAR ENDED DECEMBER 31, 2006

NOTE 1 - NATURE OF BUSINESS

Monument II is a class A, 205,000 square foot, eight-story building with a five-level parking garage located in Herndon, Virginia. The operations of Monument II consist of leasing offices to various business tenants.

NOTE 2 - BASIS OF PRESENTATION

Washington Real Estate Investment Trust purchased Monument II in March, 2007. The Historical Summary has been prepared for the purpose of complying with Regulation S-X, Rule 3-14 of the Securities and Exchange Commission (“SEC”), which requires certain information with respect to real estate operations acquired to be included with certain filings with the SEC. This Historical Summary includes the historical gross income and direct operating expenses of Monument II, exclusive of the following expenses which may not be comparable to the proposed future operations:

 

  (a) Interest expense on existing mortgages and borrowings

 

  (b) Depreciation of property and equipment

 

  (c) Management and leasing fees

 

  (d) Certain corporate and administrative expenses

 

  (e) Provisions for income taxes

NOTE 3 - USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions regarding revenues and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results could differ from estimated amounts.

NOTE 4 - DESCRIPTION OF LEASING ARRANGEMENTS

All leases are classified as operating leases and expire at various dates through 2011. The following is a schedule by years of future minimum rents receivable on non-cancelable operating leases in effect as of December 31, 2006:

 

2007

   $ 6,476,000

2008

     6,577,000

2009

     6,564,000

2010

     4,420,000

2011

     621,000
      
   $ 24,658,000
      

During the year ended December 31, 2006, three tenants accounted for approximately 80% of the total base rents.


REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Trustees of

  Washington Real Estate Investment Trust

We have audited the accompanying Historical Summary of Gross Income and Direct Operating Expenses of 2440 M Street (“Historical Summary”) for the year ended December 31, 2006. This Historical Summary is the responsibility of the Property’s management. Our responsibility is to express an opinion on the Historical Summary based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion.

The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in Note 2, and is not intended to be a complete presentation of 2440 M Street’s revenues and expenses.

In our opinion, the Historical Summary referred to above presents fairly, in all material respects, the gross income and direct operating expenses described in Note 2 of 2440 M Street for the year ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

/s/ ARGY, WILTSE & ROBINSON, P.C.

McLean, Virginia

May 17, 2007


2440 M STREET

HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES

YEAR ENDED DECEMBER 31, 2006

 

     2006

Gross income:

  

Base rents

   $ 3,490,215

Expense recoveries

     211,161
      

Total gross income

     3,701,376
      

Direct operating expenses:

  

Real estate taxes

     448,765

Utilities

     448,220

Contract services

     435,077

Repairs, maintenance and supplies

     158,741

Insurance

     26,223

Other expenses

     60,966
      

Total direct operating expenses

     1,577,992
      

Gross income in excess of direct operating expenses

   $ 2,123,384
      

The accompanying notes are an integral part of this historical summary.


2440 M STREET

NOTES TO THE HISTORICAL SUMMARY OF GROSS INCOME AND

DIRECT OPERATING EXPENSES

YEAR ENDED DECEMBER 31, 2006

NOTE 1 - NATURE OF BUSINESS

2440 M Street is a class A, 110,000 square foot medical office building with a three-level parking garage in northwest Washington, D.C. The operations of 2440 M Street consist of leasing offices primarily to medical related tenants.

NOTE 2 - BASIS OF PRESENTATION

Washington Real Estate Investment Trust purchased 2440 M Street in March, 2007. The Historical Summary has been prepared for the purpose of complying with Regulation S-X, Rule 3-14 of the Securities and Exchange Commission (“SEC”), which requires certain information with respect to real estate operations acquired to be included with certain filings with the SEC. This Historical Summary includes the historical gross income and direct operating expenses of 2440 M Street, exclusive of the following expenses which may not be comparable to the proposed future operations:

 

  (a) Interest expense on existing mortgages and borrowings
  (b) Depreciation of property and equipment
  (c) Management and leasing fees
  (d) Certain corporate and administrative expenses
  (e) Provisions for income taxes

NOTE 3 - USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions regarding revenues and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results could differ from estimated amounts.

NOTE 4 - DESCRIPTION OF LEASING ARRANGEMENTS

All leases are classified as operating leases and expire at various dates through 2019. The following is a schedule by years of future minimum rents receivable on non-cancelable operating leases in effect as of December 31, 2006:

 

2007

   $ 3,501,000

2008

   3,528,000

2009

   3,062,000

2010

   2,487,000

2011

   2,310,000

Thereafter

   9,269,000
    
   $24,157,000
    


WASHINGTON REAL ESTATE INVESTMENT TRUST

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AND

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

The pro forma balance sheet as of December 31, 2006 presents consolidated financial information as if the acquisitions had taken place on December 31, 2006. The pro forma statements of operations for the year ended December 31, 2006 present the pro forma results of operations as if the acquisitions had taken place as of the beginning of the reporting period. Both the balance sheets and statements of operations illustrate the operating results of each of the properties acquired as well as compilation of the pro forma adjustments that were necessary to develop the pro forma results for the registrant. Explanations or details of the pro forma adjustments are in the notes to each of the financial statements.

WRIT purchased these properties as follows during 2007:

 

Acquisition

      Date

  

Property

  Name

February 8, 2007

   270 Technology Park

March 1, 2007

   Monument II

March 9, 2007

   2440 M Street

The unaudited consolidated pro forma financial information is not necessarily indicative of what WRIT’s actual results of operations or financial position would have been had these transactions been consummated on the dates indicated, nor does it purport to represent WRIT’s results of operations or financial position for any future period. The results of operations for the period ended December 31, 2006 are not necessarily indicative of the operating results for the period.

The unaudited consolidated pro forma financial information should be read in conjunction with WRIT’s Form 8-K filed with the Securities and Exchange Commission (“SEC”) on March 9, 2007, announcing the acquisitions; the consolidated financial statements and notes thereto included in WRIT’s Annual Report on Form 10-K for the year ended December 31, 2006; and the Historical Summary of Gross Income and Direct Operating Expenses and Notes included elsewhere in this Form 8-K/A1. In management’s opinion, all adjustments necessary to reflect these acquisitions and related transactions have been made.


WASHINGTON REAL ESTATE INVESTMENT TRUST

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2006

(In thousands)

 

     Registrant     270
Technology
Park
   Monument II    2440 M
Street
   

Pro

Forma

 

Assets

            

Land

   $ 294,977     $ 4,704    $ 10,244    $ 12,500 (1)   $ 322,425  

Income producing property

     1,300,824       21,049      65,241      37,184 (1)     1,424,298  

Accumulated depreciation

     (290,003 )             (290,003 )
                                      

Net income producing property

     1,305,798       25,753      75,485      49,684       1,456,720  

Development in progress

     120,656               120,656  
                                      

Total investment in real estate, net

     1,426,454       25,753      75,485      49,684       1,577,376  

Cash and cash equivalents

     8,721             (545 )(2)     8,176  

Restricted cash

     4,151               4,151  

Rents and other receivables, net of allowance for doubtful accounts

     32,632               32,632  

Prepaid expenses and other assets

     59,307       65      6      43 (2)     66,684  
       1,402      3,697      2,164 (1)  
                                      

Total assets

   $ 1,531,265     $ 27,220    $ 79,188    $ 51,346     $ 1,689,019  
                                      

Liabilities

            

Notes payable

   $ 728,255     $ 26,385    $ 47,521    $ —   (2)   $ 802,161  

Mortgage notes payable

     237,073               237,073  

Lines of credit/short-term note payable

     61,000          30,000      49,200 (2)     140,200  

Accounts payable and other liabilities

     45,291       620      1,518      1,647 (1)     49,269  
          87      106 (2)  

Advance rents

     6,325       128         159 (2)     6,612  

Tenant security deposits

     9,651       87      62      234 (2)     10,034  
                                      

Total liabilities

     1,087,595       27,220      79,188      51,346       1,245,349  
                                      

Minority interest

     1,739               1,739  
                                      

Shareholders’ Equity

            

Shares of beneficial interest; $.01 par value

     451               451  

Additional paid-in capital

     500,727               500,727  

Distributions in excess of net income

     (59,247 )             (59,247 )
                                      

Total Shareholders’ Equity

     441,931               441,931  
                                      

Total Liabilities and Shareholders’ Equity

   $ 1,531,265     $ 27,220    $ 79,188    $ 51,346     $ 1,689,019  
                                      


WASHINGTON REAL ESTATE INVESTMENT TRUST

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2006

(In thousands, except per share amounts)

NOTES TO PRO FORMA BALANCE SHEET

Note 1: WRIT accounted for the acquisitions using the purchase method of accounting. WRIT allocated the purchase price to the related physical assets (land, building and tenant improvements) and in-place leases (tenant origination costs, leasing commissions and absorption costs, and net lease intangible assets/liabilities) based on their fair values, in accordance with SFAS No. 141, “Business Combinations.”

 

     270
Technology
Park
    Monument II     2440 M
Street
 

Contract purchase price

   $ 26,441     $ 77,304     $ 50,000  

Acquisition costs

     94       360       201  
                        

Total purchase price

   $ 26,535     $ 77,664     $ 50,201  
                        

Amounts allocated to investment in real estate:

      

Amount allocated to building

   $ 20,098     $ 63,219     $ 35,199  

Amount allocated to land

     4,704       10,244       12,500  

Amount allocated to tenant origination costs

     951       2,022       1,985  
                        
     25,753       75,485       49,684  

Amounts allocated to other assets and liabilities:

      

Amount allocated to leasing commissions

     423       699       698  

Amount allocated to absorption costs

     950       2,975       1,466  

Amount allocated to net lease intangible asset

     29       23       —    

Amount allocated to net intangible lease liability

     (620 )     (1,518 )     (1,647 )
                        
     782       2,179       517  
                        

Total

   $ 26,535     $ 77,664     $ 50,201  
                        


Note 2: Adjustments to the Pro Forma Condensed Consolidated Balance Sheet represent funds raised through an equity offering, draws on the line of credit, cash paid and deposits applied at closing, and the assumption of certain assets and liabilities, including real estate and personal property taxes and security deposits.

 

     270
Technology
Park
    Monument II     2440 M
Street
 

Funding of purchase price:

      

Lines of credit

   $ —       $ (30,000 )   $ (49,200 )

Debt offering

     (26,385 )     (47,521 )     —    

Cash and cash equivalents

       —         (545 )

Prepaid expenses and other assets

     65       6       43  
                        
     (26,320 )     (77,515 )     (49,702 )

Other liabilities assumed:

      

Accounts payable and other liabilities

     —         (87 )     (106 )

Advance rents

     (128 )     —         (159 )

Tenant security deposits

     (87 )     (62 )     (234 )
                        
   $ (26,535 )   $ (77,664 )   $ (50,201 )
                        

Acquisition related borrowings on our credit facilities totaled $79.2 million. This was to fund $30 million of the purchase price for Monument II and $49.2 for the purchase of 2440 M Street. Advances under this agreement bear interest at WRIT’s option of LIBOR plus a spread based on the credit rating on our publicly issued debt or the higher of Wells Fargo Bank’s prime rate and the Federal Funds Rate in effect on that day plus 0.5%. All outstanding advances are due and payable upon maturity in November 2010.


WASHINGTON REAL ESTATE INVESTMENT TRUST

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2006

(In thousands, except per share amounts)

 

     Registrant     270
Technology
Park
    Monument II     2440 M
Street
   

Total

All
Properties

    Pro Forma  

Revenue

            

Real estate rental revenue

   $ 219,662     $ 2,306     $ 6,670     $ 3,701     $ 12,677     $ 233,926  

FAS 141

       139       428       431       998 (1),(6)  

Straight Line Rent

       77       226       286       589 (2),(6)  

Expenses

            

Real estate expenses

     67,269       364       1,378       1,578       3,320       70,943  
       58       191       105       354 (3),(6)  

Depreciation and amortization

     54,170       1,721       3,731       2,133       7,585 (4),(6)     61,755  

General and administrative

     12,622               12,622  
                                                
     134,061       2,143       5,300       3,816       11,259       145,320  
                                                

Real estate operating income

     85,601       379       2,024       602       3,005       88,606  
                                                

Other income (expense)

            

Interest expense

     (47,846 )     (1,027 )     (3,624 )     (2,915 )     (7,566 )(5),(6)     (55,412 )

Other income

     906               906  
                                                
     (46,940 )     (1,027 )     (3,624 )     (2,915 )     (7,566 )     (54,506 )
                                                

Income from continuing operations

     38,661       (648 )     (1,600 )     (2,313 )     (4,561 )     34,100  

Net Income

   $ 38,661     $ (648 )   $ (1,600 )   $ (2,313 )   $ (4,561 )     34,100  
                                                

Per share information based on the weighted average of shares outstanding

            

Shares – basic

     43,679               43,679  

Shares – diluted

     43,874               43,874  

Income from continuing operations per share – basic

   $ 0.89             $ 0.78  

Income from continuing operations per share –diluted

   $ 0.88             $ 0.78  

Net income per share – basic

   $ 0.89             $ 0.78  

Net income per share – diluted

   $ 0.88             $ 0.78  
                        


NOTES TO PRO FORMA STATEMENT OF OPERATIONS


(1) Represents amortization of the net intangible lease liability based on the average remaining life of the acquired leases.
(2) Represents straight-line revenue adjustment.
(3) Represents property management costs incurred by the properties
(4) Represents depreciation over 30 years, based upon the portion of the purchase price allocated to building and improvements, plus amortization of tenant origination costs and FAS 141 leasing commissions over the average remaining life of the acquired leases.
(5) Represents interest expense on the line of credit borrowings, used to fund the acquisitions—See Note 3 to the Balance Sheet and interest on assumed mortgages.
(6) The table below illustrates the corporate pro forma adjustments for each property (in thousands):

 

     270
Technology
Park
   Monument II    2440 M
Street
  

Total

All
Properties

(1) Amortization of lease intangibles, net

   $ 139    $ 428    $ 431    $ 998

(2) Straight line rent adjustment

   $ 77    $ 226    $ 286    $ 589

(3) Property management costs

   $ 58    $ 191    $ 105    $ 354

(4) Depreciation and amortization

   $ 1,721    $ 3,731    $ 2,133    $ 7,585

(5) Interest expense

   $ 1,027    $ 3,624    $ 2,915    $ 7,566