SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A1

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) December 4, 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, filed on December 10, 2007 in connection with the acquisition of certain assets and borrowing under lines of credit to pay for the acquisition of 2000 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. Woodholme Centre and Woodholme Medical Office Building - Audited Historical Summary of Gross Income and Direct Operating Expenses for the year ended December 31, 2006 and unaudited Historical Summary of Gross Income and Direct Operating Expenses for the three months ended March 31, 2007.

 

  2. Ashburn Farm Park - Audited Historical Summary of Gross Income and Direct Operating Expenses for the year ended December 31, 2006 and unaudited Historical Summary of Gross Income and Direct Operating Expenses for the three months ended March 31, 2007.

 

  3. CentreMed I & II - Audited Historical Summary of Gross Income and Direct Operating Expenses for the year ended December 31, 2006 and unaudited Historical Summary of Gross Income and Direct Operating Expenses for the six months ended June 30, 2007.

 

  4. 2000 M Street - Audited Historical Summary of Gross Income and Direct Operating Expenses for the year ended December 31, 2006 and unaudited Historical Summary of Gross Income and Direct Operating Expenses for the nine months ended September 30, 2007.

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). The results of the interim periods are not necessarily indicative of the results to be obtained for the full fiscal year. However, 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 September 30, 2007.

 

  2. WRIT Unaudited Pro Forma Condensed Consolidated Statements of Operation for the year ended December 31, 2006 and the nine months ended September 30, 2007.

 

  (c) 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

Executive Vice President Accounting,

Administration and Corporate Secretary

February 19, 2008

      (Date)


HISTORICAL SUMMARY

2000 M STREET

DECEMBER 31, 2006 WITH

REPORT OF INDEPENDENT ACCOUNTANTS


ARGY, WILTSE & ROBINSON, P.C.

CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS CONSULTANTS

  

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 2000 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 2000 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 2000 M Street for the year ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

ARGY, WILTSE & ROBINSON, P.C.

McLean, Virginia

February 6, 2008

MEMBER OF THE LEADING EDGE ALLIANCE

 

 

800 Fairway Drive Suite 340    Deerfield Beach, Florida 33441    Phone: 954-312-4600     Fax: 954-596-4720    www.awr.com

8405 Greensboro Drive  7th Floor  Tysons Corner  McLean, Virginia 22102    Phone: 703-893-0600    Fax: 703-893-2766


2000 M STREET

HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES

YEAR ENDED DECEMBER 31, 2006 AND THE NINE MONTHS

ENDED SEPTEMBER 30, 2007 (UNAUDITED)

 

     Year Ended
December 31,
2006
   Nine Months
Ended
September 30,
2007
          (Unaudited)

Gross income

     

Base rents

   $ 8,116,391    $ 6,177,082

Expense recoveries

     625,063      789,626
             

Total gross income

     8,741,454      6,966,708
             

Direct operating expenses

     

Real estate taxes

     1,078,585      919,927

Utilities

     740,637      702,770

Contract services

     652,129      632,742

Insurance

     112,991      77,398

Repairs, maintenance and supplies

     236,886      103,213

Other expenses

     87,479      71,371
             

Total direct operating expenses

     2,908,707      2,507,421
             

Gross income in excess of direct operating expenses

   $ 5,832,747    $ 4,459,287
             

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


2000 M STREET

NOTES TO THE HISTORICAL SUMMARY OF GROSS INCOME AND

DIRECT OPERATING EXPENSES

YEAR ENDED DECEMBER 31, 2006 AND THE NINE MONTHS

ENDED SEPTEMBER 30, 2007 (UNAUDITED)

NOTE 1 - NATURE OF BUSINESS

2000 M Street is an eight-story office building located in Washington, D.C., consisting of 227,000 square feet of office space and a three-level parking garage. The operations of 2000 M Street consist of leasing offices primarily to business related tenants.

NOTE 2 - BASIS OF PRESENTATION

Washington Real Estate Investment Trust acquired the leasehold interest for 2000 M Street in December 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 2000 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) Land lease expense

 

  (d) Management and leasing fees

 

  (e) Certain corporate and administrative expenses

 

  (f) 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 of future minimum rents receivable on noncancelable operating leases in effect as of December 31, 2006:

 

Year Ending December 31,

    

2007

   $ 8,189,000

2008

     7,365,000

2009

     7,333,000

2010

     7,162,000

2011

     5,151,000

Thereafter

     10,676,000
      
   $ 45,876,000
      

During the year ended December 31, 2006, one tenant accounted for approximately 13% of the total base rents.

NOTE 5 - INTERIM UNAUDITED FINANCIAL INFORMATION

The Historical Summary for the nine months ended September 30, 2007 is unaudited; however, in the opinion of management, all adjustments (consisting solely of normal, recurring adjustments) necessary for the fair presentation of the Historical Summary for the interim period have been included. The results of the interim period are not necessarily indicative of the results to be obtained for a full fiscal year.


HISTORICAL SUMMARY

CENTREMED I AND II

DECEMBER 31, 2006 WITH

REPORT OF INDEPENDENT ACCOUNTANTS


ARGY, WILTSE & ROBINSON, P.C.

CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS CONSULTANTS

  

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 CentreMed I and 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 CentreMed I and 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 CentreMed I and II for the year ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

 

ARGY, WILTSE & ROBINSON, P.C.
 

McLean, Virginia

February 6, 2008

MEMBER OF THE LEADING EDGE ALLIANCE

 

 

800 Fairway Drive Suite 340    Deerfield Beach, Florida 33441    Phone: 954-312-4600     Fax: 954-596-4720    www.awr.com

8405 Greensboro Drive  7th Floor  Tysons Corner  McLean, Virginia 22102    Phone: 703-893-0600    Fax: 703-893-2766


CENTREMED I AND II

HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES

YEAR ENDED DECEMBER 31, 2006 AND THE SIX MONTHS

ENDED JUNE 30, 2007 (UNAUDITED)

 

     Year Ended
December 31,
2006
   Six Months
Ended
June 30,
2007
          (Unaudited)

Gross income

     

Base rents

   $ 1,321,052    $ 660,383

Expense recoveries

     191,773      100,465
             

Total gross income

     1,512,825      760,848
             

Direct operating expenses

     

Real estate taxes

     100,026      55,247

Utilities

     42,222      24,738

Contract services

     159,815      90,798

Insurance

     3,408      1,752

Repairs, maintenance and supplies

     24,399      12,874

Other expenses

     43,473      22,288
             

Total direct operating expenses

     373,343      207,697
             

Gross income in excess of direct operating expenses

   $ 1,139,482    $ 553,151
             

The accompanying notes are integral part of this historical summary.


CENTREMED I AND II

NOTES TO THE HISTORICAL SUMMARY OF GROSS INCOME AND

DIRECT OPERATING EXPENSES

YEAR ENDED DECEMBER 31, 2006 AND THE SIX MONTHS

ENDED JUNE 30, 2007 (UNAUDITED)

NOTE 1 - NATURE OF BUSINESS

CentreMed I and II are medical office buildings located in Centreville, Virginia, consisting of 52,000 square feet of office space and 258 parking spaces. The operations of CentreMed I and II consist of leasing offices primarily to medical related tenants.

NOTE 2 - BASIS OF PRESENTATION

Washington Real Estate Investment Trust purchased CentreMed I and II in August 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 CentreMed I and 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 2016, The following is a schedule of future minimum rents receivable on noncancelable operating leases in effect as of December 31, 2006:

 

Year Ending December 31,

    

2007

   $ 1,360,000

2008

     1,263,000

2009

     1,008,000

2010

     975,000

2011

     935,000

Thereafter

     1,757,000
      
   $ 7,298,000
      

During the year ended December 31, 2006, two tenants accounted for approximately 43% of the total base rents.

NOTE 5 - INTERIM UNAUDITED FINANCIAL INFORMATION

The Historical Summary for the six months ended June 30, 2007 is unaudited; however, in the opinion of management, all adjustments (consisting solely of normal, recurring adjustments) necessary for the fair presentation of the Historical Summary for the interim period have been included. The results of the interim period are not necessarily indicative of the results to be obtained for a full fiscal year.


HISTORICAL SUMMARY

ASHBURN FARM PARK

DECEMBER 31, 2006 WITH

REPORT OF INDEPENDENT ACCOUNTANTS


ARGY, WILTSE & ROBINSON, P.C.

CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS CONSULTANTS

  

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 Ashburn Farm 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 Ashburn Farm 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 Ashburn Farm Park for the year ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

ARGY, WILTSE & ROBINSON, P.C.

McLean, Virginia

February 6, 2008

MEMBER OF THE LEADING EDGE ALLIANCE

 

 

800 Fairway Drive Suite 340    Deerfield Beach, Florida 33441    Phone: 954-312-4600     Fax: 954-596-4720    www.awr.com

8405 Greensboro Drive  7th Floor  Tysons Corner  McLean, Virginia 22102    Phone: 703-893-0600    Fax: 703-893-2766


ASHBURN FARM PARK

HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES

YEAR ENDED DECEMBER 31, 2006 AND THE THREE MONTHS

ENDED MARCH 31, 2007 (UNAUDITED)

 

     Year Ended
December 31,
2006
   Three Months
Ended
March 31,
2007
          (Unaudited)

Gross income

     

Base rents

   $ 2,125,225    $ 545,694

Expense recoveries

     257,284      89,172
             

Total gross income

     2,382,509      634,866
             

Direct operating expenses

     

Real estate taxes

     148,834      47,148

Utilities

     176,434      44,379

Contract services

     214,335      41,830

Insurance

     22,358      4,882

Repairs, maintenance and supplies

     72,851      9,358

Other expenses

     9,528      35,170
             

Total direct operating expenses

     644,340      182,767
             

Gross income in excess of direct operating expenses

   $ 1,738,169    $ 452,099
             

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


ASHBURN FARM PARK

NOTES TO THE HISTORICAL SUMMARY OF GROSS INCOME AND

DIRECT OPERATING EXPENSES

YEAR ENDED DECEMBER 31, 2006 AND THE THREE MONTHS

ENDED MARCH 31, 2007 (UNAUDITED)

NOTE 1 - NATURE OF BUSINESS

Ashburn Farm Park consists of three multi-story medical office buildings located in Ashburn, Virginia, containing a total of 75,400 square feet of office space and 250 parking spaces. The operations of Ashburn Farm Park consist of leasing offices primarily to medical related tenants.

NOTE 2 - BASIS OF PRESENTATION

Washington Real Estate Investment Trust purchased Ashburn Farm Park in June 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 Ashburn Farm 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 2017. The following is a schedule of future minimum rents receivable on noncancelable operating leases in effect as of December 31, 2006:

 

Year Ending December 31,

    

2007

   $ 2,068,000

2008

     2,111,000

2009

     1,915,000

2010

     1,586,000

2011

     1,443,000

Thereafter

     3,297,000
      
   $ 12,420,000
      

NOTE 5 - INTERIM UNAUDITED FINANCIAL INFORMATION

The Historical Summary for the three months ended March 31, 2007 is unaudited; however, in the opinion of management, all adjustments (consisting solely of normal, recurring adjustments) necessary for the fair presentation of the Historical Summary for the interim period have been included. The results of the interim period are not necessarily indicative of the results to be obtained for a full fiscal year.


HISTORICAL SUMMARY

WOODHOLME CENTRE AND

WOODHOLME MEDICAL OFFICE

BUILDING

DECEMBER 31, 2006 WITH

REPORT OF INDEPENDENT ACCOUNTANTS


ARGY, WILTSE & ROBINSON, P.C.

CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS CONSULTANTS

  

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 Woodholme Centre and Woodholme Medical Office Building (“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 Woodholme Centre and Woodholme Medical Office Building’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 Woodholme Centre and Woodholme Medical Office Building for the year ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

 

ARGY, WILTSE & ROBINSON, P.C.
McLean, Virginia

February 6, 2008

MEMBER OF THE LEADING EDGE ALLIANCE

 

 

800 Fairway Drive Suite 340    Deerfield Beach, Florida 33441    Phone: 954-312-4600     Fax: 954-596-4720    www.awr.com

8405 Greensboro Drive  7th Floor  Tysons Corner  McLean, Virginia 22102    Phone: 703-893-0600    Fax: 703-893-2766


WOODHOLME CENTRE AND WOODHOLME MEDICAL OFFICE BUILDING

HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES

YEAR ENDED DECEMBER 31, 2006 AND THE THREE MONTHS

ENDED MARCH 31, 2007 (UNAUDITED)

 

     Year Ended
December 31,
2006
   Three Months
Ended
March 31,
2007
          (Unaudited)

Gross income

     

Base rents

   $ 5,078,937    $ 1,295,168

Expense recoveries

     479,056      114,159
             

Total gross income

     5,557,993      1,409,327
             

Direct operating expenses

     

Real estate taxes

     249,795      62,724

Utilities

     873,961      193,211

Contract services

     483,735      156,687

Insurance

     41,952      11,244

Repairs, maintenance and supplies

     201,932      42,340

Other expenses

     74,054      24,551
             

Total direct operating expenses

     1,925,429      490,757
             

Gross income in excess of direct operating expenses

   $ 3,632,564    $ 918,570
             

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


WOODHOLME CENTRE AND WOODHOLME MEDICAL OFFICE BUILDING

NOTES TO THE HISTORICAL SUMMARY OF GROSS INCOME AND

DIRECT OPERATING EXPENSES

YEAR ENDED DECEMBER 31, 2006 AND THE THREE MONTHS

ENDED MARCH 31, 2007 (UNAUDITED)

NOTE 1 – NATURE OF BUSINESS

Woodholme Centre and Woodholme Medical Office Building located in Baltimore County, Maryland, contains a total of 198,000 square feet of space. The operations of Woodholme Centre and Woodholme Medical Office Building consist of leasing offices to a variety of tenants.

NOTE 2 – BASIS OF PRESENTATION

Washington Real Estate Investment Trust purchased Woodholme Centre and Woodholme Medical Office Building in June 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 Woodholme Centre and Woodholme Medical Office Building, 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 2017. The following is a schedule of future minimum rents receivable on noncancelable operating leases in effect as of December 31, 2006:

 

Year Ending December 31,

    

2007

   $ 4,971,000

2008

     4,298,000

2009

     3,664,000

2010

     3,495,000

2011

     2,996,000

Thereafter

     10,281,000
      
   $ 29,705,000
      

During the year ended December 31, 2006, one tenant accounted for approximately 14% of the total base rents.

NOTE 5 – INTERIM UNAUDITED FINANCIAL INFORMATION

The Historical Summary for the three months ended March 31, 2007 is unaudited; however, in the opinion of management, all adjustments (consisting solely of normal, recurring adjustments) necessary for the fair presentation of the Historical Summary for the interim period have been included. The results of the interim period are not necessarily indicative of the results to be obtained for a full fiscal year.


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 September 30, 2007 presents consolidated financial information as if the acquisitions had taken place on September 30, 2007. The pro forma statements of operations for the year ended December 31, 2006, and the nine months ended September 30, 2007, present the pro forma results of operations as if the acquisitions had taken place as of the beginning of the respective reporting periods. Both the balance sheet and statements of operations illustrate the operating results of Woodholme Centre and Woodholme Medical Office Building, Ashburn Farm Park, CentreMed I & II, and 2000 M Street as well as the operating results of a substantial majority of the properties previously acquired during 2007 (the “Prior Properties”) 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

June 1, 2007

   Woodholme Centre and Woodholme Medical Office Building

June 1, 2007

   Ashburn Farm Park

August 16, 2007

   CentreMed I & II

December 4, 2007

   2000 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 periods ended December 31, 2006 and September 30, 2007 are not necessarily indicative of the operating results for these periods.

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 December 10, 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

September 30, 2007

(In thousands, except per share amounts)

 

     REGISTRANT     2000 M
Street
    PRO
FORMA
 

Assets

      

Land

   $ 338,203     $ —       $ 338,203  

Income Producing Property

     1,522,790       74,128 (1)     1,596,918  
                        
     1,860,993       74,128       1,935,121  

Accumulated Depreciation and amortization

     (321,840 )       (321,840 )
                        

Net income producing property

     1,539,153       74,128       1,613,281  

Development in Progress

     138,093         138,093  
                        

Total Investment in Real Estate, net

     1,677,246       74,128       1,751,374  

Cash and cash equivalents

     9,919       —         9,919  

Restricted Cash

     46,002       (40,110 )(2)     5,892  

Rents and other receivables, net of allowance for doubtful accounts

     35,677         35,677  

Prepaid expenses and other assets

     76,957       100 (2)     77,057  
       6,314 (1)     6,314  
       (5,348 )(2)     (5,348 )
                        

Total assets

   $ 1,845,801     $ 35,084     $ 1,880,885  
                        

Liabilities

      

Notes payable

   $ 879,094     $ —       $ 879,094  

Mortgage notes payable

     253,500         253,500  

Line of credit

     128,500       28,500 (2)     157,000  

Accounts payable and other liabilities

     65,335       5,717 (1)     71,052  
       274 (2)     274  

Advance Rents

     6,561       71 (2)     6,632  

Tenant security deposits

     10,075       522 (2)     10,597  
                        

Total liabilities

     1,343,065       35,084       1,378,149  

Minority interest

     5,593         5,593  

Shareholders’ Equity

      

Shares of beneficial interest, $0.01 par value

     467         467  

Additional paid in capital

     560,695         560,695  

Distributions in excess of net income

     (64,019 )       (64,019 )
                        

Total Shareholders’ Equity

     497,143       —         497,143  
                        

Total Liabilities & Shareholders’ Equity

   $ 1,845,801     $ 35,084     $ 1,880,885  
                        


WASHINGTON REAL ESTATE INVESTMENT TRUST

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

September 30, 2007

(In thousands)

NOTES TO PRO FORMA BALANCE SHEET

Note 1: WRIT accounted for the acquisition 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, absorption costs, and net lease intangible assets/liabilities) based on their fair values, in accordance with SFAS No. 141, “Business Combinations.”

 

     2000 M Street  

Contract purchase price

   $ 73,500  

Acquisition costs

     1,225  
        

Total purchase price

   $ 74,725  
        

Amounts allocated to investment in real estate:

  

Amount allocated to building

   $ 70,647  

Amount allocated to land

     —    

Amount allocated to tenant origination costs

     3,481  
        
   $ 74,128  

Amounts allocated to investment in real estate:

  

Amount allocated to leasing commissions

     1,463  

Amount allocated to absorption costs

     4,846  

Amount allocated to net lease intangible

     5  

Amount allocated to net lease intangible liability

     (5,717 )
        
   $ 597  
        

Total

   $ 74,725  
        


WASHINGTON REAL ESTATE INVESTMENT TRUST

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

September 30, 2007

(In thousands)

NOTES TO PRO FORMA BALANCE SHEET

Note 2: Adjustments to Pro Forma Condensed Consolidated Balance Sheet represent draws on the line of credit, cash paid and security deposits collected at closing, and the assumption of certain assets and liabilities, including real estate and personal property taxes, tenant rents and security deposits.

 

     2000 M Street  

Funding of purchase price:

  

Lines of credit

   $ (28,500 )

Restricted cash

     (40,110 )

Cash deposits held in escrow

     (5,348 )

Prepaid expenses and other assets

     100  
        
     (73,858 )

Other assets and liabilities assumed:

  

Accounts payable and other liabilites

     (274 )

Advance rents

     (71 )

Tenant security deposits

     (522 )
        
   $ (74,725 )
        


WASHINGTON REAL ESTATE INVESTMENT TRUST

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007

(In thousands, except per share amounts)

 

    Registrant     270
Technology
Park (8)
    Monument II (8)     2440 M
Street (8)
    Woodholme (8)     Ashburn Farm (8)     CentreMed (8)     2000 M Street     Total
All
Properties
          Pro
Forma
 

Revenue

                     

Real estate rental revenue

  $ 191,028     $ 240     $ 1,078     $ 679     $ 2,365     $ 1,065     $ 955     $ 6,967     $ 13,349       $ 204,377  
      14       69       79       (2 )     54       (8 )     950       1,156     (1 ),(7)     1,156  
      8       37       52       (66 )     —         46       559       636     (2 ),(7)     636  
                                                                                 
    191,028       262       1,184       810       2,297       1,119       993       8,476       15,141         206,169  

Expenses

                     

Real estate expenses

    59,319       38       223       290       823       306       261       2,507       4,448         63,767  
      6       31       19       62       26       25       193       362     (3 ),(7)     362  
                  715       715     (6 ),(7)     715  

Depreciation and amortization

    51,543       179       603       392       1,000       438       466       2,844       5,922     (4 ),(7)     57,465  

General and administrative

    11,424                     —           11,424  
                                                                                 
    122,286       223       857       701       1,885       770       752       6,259       11,447         133,733  

Other income (expense)

                     

Interest expense

    (45,498 )     (107 )     (743 )     (522 )     (644 )     (412 )     (532 )     (1,222 )     (4,182 )   (5 ),(7)     (49,680 )

Other income

    1,395                     —           1,395  

Other income from life insurance proceeds

    1,303                     —           1,303  
                                                                                 
    (42,800 )     (107 )     (743 )     (522 )     (644 )     (412 )     (532 )     (1,222 )     (4,182 )       (46,982 )
                                                                                 

Income from continuing operations

    25,942       (68 )     (416 )     (413 )     (232 )     (63 )     (291 )     995       (488 )       25,454  

Discontinued operations

                     

Gain on sale of real estate

    25,022                         25,022  

Income from operations of properties held for sale

    2,475                         2,475  
                                                                                 

Net Income

  $ 53,439     $ (68 )   $ (416 )   $ (413 )   $ (232 )   $ (63 )   $ (291 )   $ 995     $ (488 )     $ 52,951  
                                                                                 

Basic net income per share

                     

Continuing operations

  $ 0.57                       $ 0.56  

Discontinued operations

    0.60                         0.60  
                                 

Basic net income per share

  $ 1.17                       $ 1.16  
                                 

Diluted net income per share

                     

Continuing operations

  $ 0.57                       $ 0.55  

Discontinued operations

    0.59                         0.60  
                                 

Diluted net income per share

  $ 1.16                       $ 1.15  
                                 

Weighted average shares outstanding - basic

    45,678                         45,678  

Weighted average shares outstanding - diluted

    45,877                         45,877  

 

28


WASHINGTON REAL ESTATE INVESTMENT TRUST

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007

(In thousands, except per share amounts)

NOTES TO PRO FORMA STATEMENT OF OPERATIONS

 

(1) Represents amortization of the net intangible lease asset or liability based on the remaining life of the acquired leases.

 

(2) Represents straight-line rent 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, FAS 141 leasing commissions and FAS 141 absorption over the remaining life of the acquired leases.

 

(5) Represents interest expense on the lines of credit used to fund the acquisition.

 

(6) Represents ground rent adjustment.

 

(7) The table below illustrates the pro forma adjustments for each property

 

     270
Technology
Park
    Monument
II
    2440 M
Street
    Woodholme      Ashburn
Farm
     CentreMed      2000 M
Street
     Total All
Properties
 

(1)    Amortization of lease intangibles, net

   $ 14     $ 69     $ 79     $ (2 )    $ 54      $ (8 )    $ 950      $ 1,156  

(2)    Straight line rent adjustment

   $ 8     $ 37     $ 52     $ (66 )    $ —        $ 46      $ 559      $ 636  

(3)    Property management costs

   $ 6     $ 31     $ 19     $ 62      $ 26      $ 25      $ 193      $ 362  

(4)    Depreciation and amortization

   $ 179     $ 603     $ 392     $ 1,000      $ 438      $ 466      $ 2,844      $ 5,922  

(5)    Interest expense

   $ (107 )   $ (743 )   $ (522 )   $ (644 )    $ (412 )    $ (532 )    $ (1,222 )    $ (4,182 )

(6)    Ground rent

   $ —       $ —       $ —       $ —        $ —        $ —        $ 715      $ 715  

 

(8) Represents adjustments for 1/1/07 through the date of acquisition.


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
     Woodholme      Ashburn
Farm
     CentreMed      2000 M
Street
     Total All
Properties
           Pro
Forma
 

Revenue

                            

Real estate rental revenue

   $ 219,662     $ 2,306     $ 6,670     $ 3,701      $ 5,558      $ 2,383      $ 1,513      $ 8,741      $ 30,872        $ 250,534  
       139       428       431        (4 )      130        (13 )      1,266        2,377      (1 ),(7)     2,377  
       77       226       286        (96 )      (64 )      46        216        691      (2 ),(7)     691  
                                                                                        
     219,662       2,522       7,324       4,418        5,458        2,449        1,546        10,223        33,940          253,602  

Expenses

                            

Real estate expenses

     67,269       364       1,378       1,578        1,925        644        373        2,909        9,171          76,440  
       58       191       105        147        59        39        238        837      (3 ),(7)     837  
                       953        953      (6 ),(7)     953  

Depreciation and amortization

     54,170       1,721       3,731       2,133        2,383        1,043        742        4,577        16,330      (4 ),(7)     70,500  

General and administrative

     12,622                          —            12,622  
                                                                                        
     134,061       2,143       5,300       3,816        4,455        1,746        1,154        8,677        27,291          161,352  

Other income (expense)

                            

Interest expense

     (47,846 )     (1,027 )     (3,624 )     (2,915 )      (1,495 )      (956 )      (821 )      (1,559 )      (12,397 )    (5 ),(7)     (60,243 )

Other income from property settlement

                          —         

Other income

     906                          —            906  
                                                                                        
     (46,940 )     (1,027 )     (3,624 )     (2,915 )      (1,495 )      (956 )      (821 )      (1,559 )      (12,397 )        (59,337 )
                                                                                        

Income from continuing operations

     38,661       (648 )     (1,600 )     (2,313 )      (492 )      (253 )      (429 )      (13 )      (5,748 )        32,913  
                                                                                        

Net Income

   $ 38,661     $ (648 )   $ (1,600 )   $ (2,313 )    $ (492 )    $ (253 )    $ (429 )    $ (13 )    $ (5,748 )      $ 32,913  
                                                                                        

Basic net income per share

   $ 0.89                             $ 0.75  

Diluted net income per share

   $ 0.88                             $ 0.75  

Weighted average shares outstanding - basic

     43,679                               43,679  

Weighted average shares outstanding - diluted

     43,874                               43,874  


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)

 

NOTES TO PRO FORMA STATEMENT OF OPERATIONS

 

(1) Represents amortization of the net intangible lease asset or liability based on the remaining life of the acquired leases.

 

(2) Represents straight-line rent 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, FAS 141 leasing commissions and FAS 141 absorption over the remaining life of the acquired leases.

 

(5) Represents interest expense on the lines of credit used to fund the acquisition.

 

(6) Represents ground rent adjustment.

 

(7) The table below illustrates the pro forma adjustments for each property

 

     270
Technology
Park
    Monument
II
    2440 M
Street
    Woodholme      Ashburn
Farm
     CentreMed      2000 M
Street
     Total All
Properties
 

(1)    Amortization of lease intangibles, net

   $ 139     $ 428     $ 431     $ (4 )    $ 130      $ (13 )    $ 1,266      $ 2,377  

(2)    Straight line rent adjustment

   $ 77     $ 226     $ 286     $ (96 )    $ (64 )    $ 46      $ 216      $ 691  

(3)    Property management costs

   $ 58     $ 191     $ 105     $ 147      $ 59      $ 39      $ 238      $ 837  

(4)    Depreciation and amortization

   $ 1,721     $ 3,731     $ 2,133     $ 2,383      $ 1,043      $ 742      $ 4,577      $ 16,330  

(5)    Interest expense

   $ (1,027 )   $ (3,624 )   $ (2,915 )   $ (1,495 )    $ (956 )    $ (821 )    $ (1,559 )    $ (12,397 )

(6)    Ground rent

   $ —       $ —       $ —       $ —        $ —        $ —        $ 953      $ 953