Exhibit 99.2
First Quarter 2008
Supplemental Operating and Financial Data
for the Quarter Ended March 31, 2008
| Contact:
Sara Grootwassink
Executive Vice President and
Chief Financial Officer
E-mail: sgrootwassink@writ.com |
6110 Executive Boulevard
Suite 800
Rockville, MD 20852
(301) 984-9400
(301) 984-9610 fax |
Company Background and Highlights
First Quarter 2008
Washington Real Estate Investment Trust (the "Company") is a self-administered, self-managed, equity real estate investment trust (REIT) investing in income-producing properties in the greater Washington metropolitan region. WRIT is diversified, as it invests in multifamily, retail, industrial/flex, office, and medical office properties.
During first quarter 2008, WRIT focused on strengthening its balance sheet and maintaining its high occupancy levels, while achieving strong rental rate growth.
This quarter, WRIT increased its borrowing capacity, refinanced its only debt maturity during 2008, paid down a portion of its line outstandings, and announced its 185th consecutive quarterly dividend at equal or increasing rates. In January, WRIT exercised a portion of the accordion feature on one of its unsecured revolving credit facilities. WRIT's total borrowing capacity was increased to $337 million at a rate of LIBOR plus 0.425%. In February, WRIT completed an extinguishment of debt on $60 million of 10-year Mandatory Par Put Remarketed Securities ("MOPPRS"), resulting in an $8.4 million non-recurring charge. WRIT issued a $100 million 2-year term loan, which was swapped for a fixed rate of 4.45% to refinance the maturing 6.74% debt. The remaining proceeds were used to refinance a portion of line outstandings. By extinguishing the debt, WRIT estimates it will save approximately $5.6 million of interest expense in the first two years alone.
For the third consecutive quarter, WRIT successfully maintained its core occupancy level above 95%. Compared to first quarter 2007, core occupancy increased 150 bps to 95.3%. The greatest core occupancy gains were achieved in the office and multifamily sectors, which increased 280 bps to 95.4% and 210 bps to 92.7%, respectively. Rental rates on new and renewed leases increased 16.4% in the commercial portfolio. Residential rental rates increased 2.4%.
During the last year, WRIT completed several ground-up development projects for a total investment of $180 million. In second quarter 2007, WRIT completed base construction on Dulles Station, a 180,000 square foot development project of Class A office and retail space located in Herndon, VA. The building, prominently visible from the Dulles Toll Road, is part of a mixed-use development which will include 1,095 multifamily units and 56,000 square feet of retail and restaurant space.
In fourth quarter 2007, WRIT completed construction at Bennett Park. Bennett Park is a ground-up development project in Arlington, VA consisting of high-rise and mid-rise Class A apartment buildings with a total of 224 units and 5,800 square feet of retail space. The property was 39% leased at quarter-end.
This quarter WRIT began delivering units at The Clayborne Apartments. The Clayborne is a ground-up development project in Alexandria, VA, adjacent to our 800 South Washington retail property. The project consists of a 74-unit Class A apartment building that will include 2,700 square feet of additional retail space. The property was 15% leased at quarter-end.
On February 22, 2008, WRIT acquired 6100 Columbia Park Road, a 150,000 square foot industrial warehouse in Landover, Maryland for $11.2 million. The property is located inside the Capital Beltway adjacent to Route 50, between Interstate 95/495 and the Baltimore-Washington Parkway/MD 295. Upon acquisition, the property was 78% leased. With lease stabilization, the second-year cash return is expected to be 8.2%. The acquisition was funded with cash from operations and borrowings on WRIT's line of credit.
1
On February 28, 2008, WRIT entered into an agreement to acquire Lansdowne Medical Office Building, a five-story, 85,300 square foot medical office development currently under construction, for $19.5 million. The project is located at the intersection of Riverside Parkway and Lansdowne Boulevard in Loudoun County, Virginia, directly across from Inova Loudoun Hospital. WRIT will purchase the property upon completion of the base building, estimated to be in the first quarter of 2009.
As of March 31, 2008, WRIT owns a diversified portfolio of 91 properties consisting of 14 retail centers, 26 office properties, 16 medical office properties, 24 industrial/flex properties, 11 multi-family properties and land for development. WRIT’s dividends have increased every year for 37 consecutive years and its FFO per share has increased every year for 35 consecutive years. WRIT shares are publicly traded on the New York Stock Exchange (NYSE:WRE).
2
Net Operating Income Contribution by Sector – First Quarter 2008
With investments in the multifamily, retail, industrial/flex, office and medical office segments, WRIT is uniquely diversified. This balanced portfolio provides stability during market fluctuations in specific property types.
First Quarter 2008 Acquisitions
| 6100 Columbia Park Road Landover, MD
|
Lansdowne Medical Office (Development) Loudoun County, VA | |
 |
 |
3
Supplemental Financial and Operating Data
Table of Contents
March 31, 2008
| Schedule |
Page | |
| Key Financial Data | ||
| Consolidated Statements of Operations |
5 | |
| Consolidated Balance Sheets |
6 | |
| Funds From Operations and Funds Available for Distribution |
7 | |
| Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) |
8 | |
| Capital Analysis | ||
| Long-Term Debt Analysis |
9-10 | |
| Capital Analysis |
11 | |
| Portfolio Analysis | ||
| Core Portfolio Net Operating Income (NOI) Growth & Rental Rate Growth |
12 | |
| Core Portfolio Net Operating Income (NOI) Summary |
13 | |
| Core Portfolio Net Operating Income (NOI) Detail for the Quarter |
14-15 | |
| Core Portfolio & Overall Economic Occupancy Levels by Sector |
16 | |
| Tenant Analysis | ||
| Commercial Leasing Summary |
17-18 | |
| 10 Largest Tenants - Based on Annualized Base Rent |
19 | |
| Industry Diversification |
20 | |
| Lease Expirations as of March 31, 2008 |
21 | |
| Growth and Strategy | ||
| 2008 Acquisition and Disposition Summary |
22 | |
| 2008 Development Summary |
23 | |
| Appendix | ||
| Schedule of Properties |
24-25 | |
| Supplemental Definitions |
26 | |
Certain statements discussed in this Supplemental regarding anticipated operating results and future events are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although such statements and projections are based upon what we believe to be reasonable assumptions, actual results may differ from those projected. Key factors that could cause actual results to differ materially include changes in the economy, the successful and timely completion of acquisitions, changes in interest rates, leasing activities and other risks associated with the commercial real estate business and as detailed in our filings from time to time with the Securities and Exchange Commission.
Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
| Three Months Ended | ||||||||||||||||||||
| OPERATING RESULTS |
03/31/08 | 12/31/07 | 09/30/07 | 06/30/07 | 03/31/07 | |||||||||||||||
| Real estate rental revenue |
$ | 70,278 | $ | 67,528 | $ | 65,020 | $ | 63,255 | $ | 59,852 | ||||||||||
| Real estate expenses |
(23,133 | ) | (21,271 | ) | (20,395 | ) | (19,542 | ) | (18,706 | ) | ||||||||||
| 47,145 | 46,257 | 44,625 | 43,713 | 41,146 | ||||||||||||||||
| Real estate depreciation and amortization |
(20,525 | ) | (18,998 | ) | (18,019 | ) | (16,632 | ) | (16,126 | ) | ||||||||||
| Income from real estate |
26,620 | 27,259 | 26,606 | 27,081 | 25,020 | |||||||||||||||
| Other income |
238 | 480 | 357 | 420 | 618 | |||||||||||||||
| Other income from life insurance proceeds |
— | — | — | — | 1,303 | |||||||||||||||
| Loss on extinguishment of debt |
(8,449 | ) | — | — | — | — | ||||||||||||||
| Interest expense |
(17,664 | ) | (16,400 | ) | (15,824 | ) | (15,298 | ) | (14,384 | ) | ||||||||||
| General and administrative |
(3,080 | ) | (3,675 | ) | (3,174 | ) | (5,367 | ) | (2,883 | ) | ||||||||||
| Income (loss) from continuing operations |
(2,335 | ) | 7,664 | 7,965 | 6,836 | 9,674 | ||||||||||||||
| Discontinued operations: |
||||||||||||||||||||
| Income from operations of properties held for sale |
847 | 778 | 1,403 | 1,501 | 1,038 | |||||||||||||||
| Gain on sale of real estate investment |
— | — | 25,022 | — | — | |||||||||||||||
| Income from discontinued operations |
847 | 778 | 26,425 | 1,501 | 1,038 | |||||||||||||||
| Net Income (loss) |
$ | (1,488 | ) | $ | 8,442 | $ | 34,390 | $ | 8,337 | $ | 10,712 | |||||||||
| Per Share Data | ||||||||||||||||||||
| Net Income |
$ | (0.03 | ) | $ | 0.18 | $ | 0.73 | $ | 0.18 | $ | 0.24 | |||||||||
| Fully diluted weighted average shares outstanding |
46,819 | 46,822 | 46,802 | 45,658 | 45,153 | |||||||||||||||
| Percentage of Revenues: |
||||||||||||||||||||
| Real estate expenses |
32.9 | % | 31.5 | % | 31.4 | % | 30.9 | % | 31.3 | % | ||||||||||
| General and administrative |
4.4 | % | 5.4 | % | 4.9 | % | 8.5 | % | 4.8 | % | ||||||||||
| Ratios: |
||||||||||||||||||||
| EBITDA / Interest expense |
2.1 x | (1) | 2.7 x | 2.7 x | 2.6 x | 2.8 x | ||||||||||||||
| Income from continuing operations/Total real estate revenue |
-3.3 | % (1) | 11.3 | % | 12.3 | % | 10.8 | % | 16.2 | % | ||||||||||
| Net income/Total real estate revenue |
-2.1 | % (1) | 12.5 | % | 52.9 | % | 13.2 | % | 17.9 | % | ||||||||||
Note: Certain prior quarter amounts have been reclassified to conform to the current quarter presentation.
| (1) |
Includes the impact of the loss on extinguishment of debt of $8.4 million in the first quarter of 2008 |
5
Consolidated Balance Sheets
(In thousands)
(unaudited)
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| 2008 | 2007 | 2007 | 2007 | 2007 | ||||||||||||||||
| Assets |
||||||||||||||||||||
| Land |
$ | 336,710 | $ | 328,951 | $ | 334,484 | $ | 322,733 | $ | 312,550 | ||||||||||
| Income producing property |
1,674,319 | 1,635,169 | 1,496,731 | 1,448,874 | 1,369,005 | |||||||||||||||
| 2,011,029 | 1,964,120 | 1,831,215 | 1,771,607 | 1,681,555 | ||||||||||||||||
| Accumulated depreciation and amortization |
(349,926 | ) | (331,991 | ) | (315,444 | ) | (299,494 | ) | (284,750 | ) | ||||||||||
| Net income producing property |
1,661,103 | 1,632,129 | 1,515,771 | 1,472,113 | 1,396,805 | |||||||||||||||
| Development in progress, including land held for development |
58,784 | 98,321 | 138,093 | 151,393 | 136,831 | |||||||||||||||
| Total real estate held for investment, net |
1,719,887 | 1,730,450 | 1,653,864 | 1,623,506 | 1,533,636 | |||||||||||||||
| Investment in real estate held for sale, net |
23,614 | 23,843 | 23,382 | 52,907 | 52,912 | |||||||||||||||
| Cash and cash equivalents |
12,858 | 21,488 | 9,919 | 8,133 | 7,305 | |||||||||||||||
| Restricted cash |
7,637 | 6,030 | 46,002 | 6,835 | 5,143 | |||||||||||||||
| Rents and other receivables, net of allowance for doubtful accounts |
39,008 | 36,595 | 34,520 | 34,359 | 32,045 | |||||||||||||||
| Prepaid expenses and other assets |
87,515 | 78,517 | 76,689 | 68,179 | 70,111 | |||||||||||||||
| Other assets related to properties sold or held for sale |
1,679 | 1,403 | 1,425 | 3,276 | 3,488 | |||||||||||||||
| Total Assets |
$ | 1,892,198 | $ | 1,898,326 | $ | 1,845,801 | $ | 1,797,195 | $ | 1,704,640 | ||||||||||
| Liabilities and Shareholders’ Equity |
||||||||||||||||||||
| Notes payable |
$ | 918,783 | $ | 879,123 | $ | 879,094 | $ | 879,064 | $ | 879,035 | ||||||||||
| Mortgage notes payable |
251,539 | 252,484 | 253,500 | 254,324 | 228,367 | |||||||||||||||
| Lines of credit/short-term note payable |
174,500 | 192,500 | 128,500 | 95,500 | 91,200 | |||||||||||||||
| Accounts payable and other liabilities |
57,590 | 63,543 | 65,228 | 66,223 | 52,096 | |||||||||||||||
| Advance rents |
9,383 | 9,552 | 6,424 | 6,544 | 6,644 | |||||||||||||||
| Tenant security deposits |
10,462 | 10,487 | 9,961 | 10,262 | 9,395 | |||||||||||||||
| Other liabilities related to properties sold or held for sale |
417 | 317 | 358 | 1,360 | 1,502 | |||||||||||||||
| Total Liabilities |
1,422,674 | 1,408,006 | 1,343,065 | 1,313,277 | 1,268,239 | |||||||||||||||
| Minority interest |
3,786 | 3,776 | 5,593 | 1,776 | 1,758 | |||||||||||||||
| Shareholders’ Equity |
||||||||||||||||||||
| Shares of beneficial interest, $0.01 par value; 100,000 shares authorized |
468 | 468 | 467 | 467 | 451 | |||||||||||||||
| Additional paid-in capital |
563,174 | 561,492 | 560,695 | 560,276 | 501,325 | |||||||||||||||
| Distributions in excess of net income |
(96,660 | ) | (75,416 | ) | (64,019 | ) | (78,601 | ) | (67,133 | ) | ||||||||||
| Accumulated other comprehensive income (loss) |
(1,244 | ) | — | — | — | — | ||||||||||||||
| Total Shareholders’ Equity |
465,738 | 486,544 | 497,143 | 482,142 | 434,643 | |||||||||||||||
| Total Liabilities and Shareholders’ Equity |
$ | 1,892,198 | $ | 1,898,326 | $ | 1,845,801 | $ | 1,797,195 | $ | 1,704,640 | ||||||||||
| Total Debt / Total Market Capitalization |
0.46:1 | 0.47:1 | 0.44:1 | 0.44:1 | 0.42:1 | |||||||||||||||
Note: Certain prior quarter amounts have been reclassified to conform to the current quarter presentation.
6
Funds From Operations and Funds Available for Distribution
(In thousands, except per share data)
(unaudited)
| Three Months Ended | ||||||||||||||||||||
| 3/31/2008 | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | ||||||||||||||||
| Funds From Operations(1) |
||||||||||||||||||||
| Net Income (loss) |
$ | (1,488 | ) | $ | 8,442 | $ | 34,390 | $ | 8,337 | $ | 10,712 | |||||||||
| Real estate depreciation and amortization |
20,525 | 18,998 | 18,019 | 16,632 | 16,126 | |||||||||||||||
| Other income from life insurance proceeds |
— | — | — | — | (1,303 | ) | ||||||||||||||
| Discontinued operations: |
||||||||||||||||||||
| Gain on sale |
(25,022 | ) | — | — | ||||||||||||||||
| Real estate depreciation and amortization |
— | 87 | 266 | 248 | 649 | |||||||||||||||
| Funds From Operations (FFO) |
$ | 19,037 | $ | 27,527 | $ | 27,653 | $ | 25,217 | $ | 26,184 | ||||||||||
| FFO per share - basic |
$ | 0.41 | $ | 0.59 | $ | 0.59 | $ | 0.55 | $ | 0.58 | ||||||||||
| FFO per share - fully diluted |
$ | 0.41 | $ | 0.59 | $ | 0.59 | $ | 0.55 | $ | 0.58 | ||||||||||
| FFO per share - fully diluted, excluding loss on extinguishment of debt |
$ | 0.59 | $ | 0.59 | $ | 0.59 | $ | 0.55 | $ | 0.58 | ||||||||||
| Funds Available for Distribution(2) |
||||||||||||||||||||
| Tenant Improvements |
(2,110 | ) | (5,026 | ) | (4,215 | ) | (5,185 | ) | (2,161 | ) | ||||||||||
| External and Internal Leasing Commissions Capitalized |
(2,023 | ) | (1,613 | ) | (1,159 | ) | (1,165 | ) | (2,068 | ) | ||||||||||
| Recurring Capital Improvements |
(2,116 | ) | (3,899 | ) | (2,635 | ) | (3,425 | ) | (1,936 | ) | ||||||||||
| Straight-Line Rent, Net |
(744 | ) | (957 | ) | (988 | ) | (1,088 | ) | (1,171 | ) | ||||||||||
| Non-real estate depreciation and amortization |
1,000 | 1,011 | 987 | 824 | 750 | |||||||||||||||
| Amortization of lease intangibles, net |
(506 | ) | (191 | ) | (315 | ) | (280 | ) | (595 | ) | ||||||||||
| Amortization and expensing of restricted share and unit compensation |
699 | 850 | 882 | 1,574 | 782 | |||||||||||||||
| Other |
— | — | 102 | 1,201 | — | |||||||||||||||
| Funds Available for Distribution (FAD) |
$ | 13,237 | $ | 17,702 | $ | 20,312 | $ | 17,673 | $ | 19,785 | ||||||||||
| Total Dividends Paid |
$ | 19,724 | $ | 19,723 | $ | 19,716 | $ | 19,716 | $ | 18,581 | ||||||||||
| Average shares - basic |
46,623 | 46,604 | 46,596 | 45,490 | 44,931 | |||||||||||||||
| Average shares - fully diluted |
46,819 | 46,822 | 46,802 | 45,658 | 45,153 | |||||||||||||||
| (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. |
7
Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)
(In thousands)
(unaudited)
| Three Months Ended | ||||||||||||||||||||
| 03/31/08 | 12/31/07 | 09/30/07 | 06/30/07 | 03/31/07 | ||||||||||||||||
| EBITDA(1) |
||||||||||||||||||||
| Net income (loss) |
$ | (1,488 | ) | $ | 8,442 | $ | 34,390 | $ | 8,337 | $ | 10,712 | |||||||||
| Add: |
||||||||||||||||||||
| Interest expense |
17,664 | 16,400 | 15,824 | 15,298 | 14,376 | |||||||||||||||
| Real estate depreciation and amortization |
20,525 | 19,085 | 18,285 | 16,880 | 16,775 | |||||||||||||||
| Non-real estate depreciation |
276 | 277 | 261 | 202 | 136 | |||||||||||||||
| Less: |
||||||||||||||||||||
| Gain on sale of real estate |
(25,022 | ) | — | — | ||||||||||||||||
| Other income |
(238 | ) | (480 | ) | (357 | ) | (420 | ) | (1,921 | ) | ||||||||||
| EBITDA |
$ | 36,739 | $ | 43,724 | $ | 43,381 | $ | 40,297 | $ | 40,078 | ||||||||||
| (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. |
8
Long-Term Debt Analysis
(In thousands, except per share amounts)
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| 2008 | 2007 | 2007 | 2007 | 2007 | ||||||||||||||||
| Balances Outstanding |
||||||||||||||||||||
| Secured |
||||||||||||||||||||
| Conventional fixed rate |
$ | 251,539 | $ | 252,484 | $ | 253,500 | $ | 254,323 | $ | 228,367 | ||||||||||
| Secured total |
251,539 | 252,484 | 253,500 | 254,323 | 228,367 | |||||||||||||||
| Unsecured |
||||||||||||||||||||
| Fixed rate bonds and notes |
918,783 | 879,123 | 879,094 | 879,064 | 879,035 | |||||||||||||||
| Credit facility |
174,500 | 192,500 | 128,500 | 95,500 | 91,200 | |||||||||||||||
| Unsecured total |
1,093,283 | 1,071,623 | 1,007,594 | 974,564 | 970,235 | |||||||||||||||
| Total |
$ | 1,344,822 | $ | 1,324,107 | $ | 1,261,094 | $ | 1,228,887 | $ | 1,198,602 | ||||||||||
| Average Interest Rates |
||||||||||||||||||||
| Secured |
||||||||||||||||||||
| Conventional fixed rate |
5.8 | % | 5.8 | % | 5.8 | % | 5.8 | % | 5.9 | % | ||||||||||
| Secured total |
5.8 | % | 5.8 | % | 5.8 | % | 5.8 | % | 5.9 | % | ||||||||||
| Unsecured |
||||||||||||||||||||
| Fixed rate bonds |
4.5 | % | 5.2 | % | 5.2 | % | 5.2 | % | 5.2 | % | ||||||||||
| Credit facilities |
5.1 | % | 5.4 | % | 5.9 | % | 5.8 | % | 5.8 | % | ||||||||||
| Unsecured total |
4.6 | % | 5.2 | % | 5.3 | % | 5.3 | % | 5.3 | % | ||||||||||
| Average |
4.9 | % | 5.3 | % | 5.4 | % | 5.4 | % | 5.4 | % | ||||||||||
Note: The current balance outstanding of the fixed rate bonds and notes is shown net of discounts/premiums in the amount of $1,217,033.
9
Long-Term Debt Analysis
(In thousands, except per share amounts)
Continued from previous page
| Future Maturities of Debt | |||||||||||||||
| Year | Secured Debt | Unsecured Debt | Credit Facilities | Total Debt | Average Interest Rate | ||||||||||
| 2008 | $ | 3,112 | $ | — | $ | — | $ | 3,112 | 5.4 | % | |||||
| 2009 | 54,285 | — | — | 54,285 | 7.0 | % | |||||||||
| 2010 | 25,973 | 100,000 | 122,500 | 248,473 | 4.9 | % | |||||||||
| 2011 | 13,339 | 150,000 | 52,000 | 215,339 | 5.7 | % | |||||||||
| 2012 | 21,088 | 50,000 | — | 71,088 | 5.0 | % | |||||||||
| 2013 | 106,039 | 60,000 | — | 166,039 | 5.5 | % | |||||||||
| 2014 | 884 | 100,000 | — | 100,884 | 5.3 | % | |||||||||
| 2015 | 19,373 | 150,000 | — | 169,373 | 5.3 | % | |||||||||
| 2016 | 553 | — | — | 553 | 5.5 | % | |||||||||
| Thereafter | 6,893 | 310,000 | — | 316,893 | 4.5 | % | |||||||||
| Total maturities | $ | 251,539 | $ | 920,000 | $ | 174,500 | $ | 1,346,039 | 4.9 | % | |||||
Weighted average maturity = 7.6 years
10
Capital Analysis
(In thousands, except per share amounts)
| March 31, 2008 |
December 31, 2007 |
September 30, 2007 |
June 30, 2007 |
March 31, 2007 |
||||||||||||||||
| Market Data |
||||||||||||||||||||
| Shares Outstanding |
46,716 | 46,682 | 46,669 | 46,665 | 45,045 | |||||||||||||||
| Market Price per Share |
$ | 33.42 | $ | 31.41 | $ | 33.18 | $ | 34.00 | $ | 37.42 | ||||||||||
| Equity Market Capitalization |
$ | 1,561,249 | $ | 1,466,282 | $ | 1,548,477 | $ | 1,586,610 | $ | 1,685,584 | ||||||||||
| Total Debt |
$ | 1,344,822 | $ | 1,324,107 | $ | 1,261,094 | $ | 1,228,888 | $ | 1,198,602 | ||||||||||
| Total Market Capitalization |
$ | 2,906,071 | $ | 2,790,389 | $ | 2,809,571 | $ | 2,815,498 | $ | 2,884,186 | ||||||||||
| Total Debt to Market Capitalization |
0.46:1 | 0.47:1 | 0.44:1 | 0.44:1 | 0.42:1 | |||||||||||||||
| Earnings to Fixed Charges(1) |
0.8 | x(3) | 1.3 | x | 1.4 | x | 1.3 | x | 1.5 | x | ||||||||||
| Debt Service Coverage Ratio(2) |
1.9 | x(3) | 2.5 | x | 2.6 | x | 2.5 | x | 2.6 | x | ||||||||||
| Dividend Data |
||||||||||||||||||||
| Total Dividends Paid |
$ | 19,724 | $ | 19,723 | $ | 19,716 | $ | 19,716 | $ | 18,581 | ||||||||||
| Common Dividend per Share |
$ | 0.4225 | $ | 0.4225 | $ | 0.4225 | $ | 0.4225 | $ | 0.4125 | ||||||||||
| Payout Ratio (FFO per share basis) |
103.0 | % | 71.6 | % | 71.6 | % | 76.8 | % | 71.1 | % | ||||||||||
| (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. |
| (3) |
Includes the impact of the loss on extinguishment of debt of $8.4 million and write off of related note premium in the first quarter of 2008. |
11
Core Portfolio Net Operating Income (NOI) Growth & Rental Rate Growth
2008 vs. 2007
Cash Basis
| Sector |
First Quarter(1) | |||||
| NOI Growth |
Rental Rate Growth |
|||||
| Multifamily |
5.4 | % | 2.5 | % | ||
| Office Buildings |
6.6 | % | 2.5 | % | ||
| Medical Office Buildings |
1.5 | % | 3.4 | % | ||
| Retail Centers |
6.9 | % | 3.5 | % | ||
| Industrial / Flex Properties |
6.0 | % | 3.1 | % | ||
| Overall Core Portfolio |
5.8 | % | 2.9 | % | ||
GAAP Basis
| Sector |
First Quarter(1) | |||||
| NOI Growth |
Rental Rate Growth |
|||||
| Multifamily |
5.3 | % | 2.4 | % | ||
| Office Buildings |
3.0 | % | 1.1 | % | ||
| Medical Office Buildings |
-2.5 | % | 1.8 | % | ||
| Retail Centers |
-0.7 | % | -0.1 | % | ||
| Industrial / Flex Properties |
9.1 | % | 2.2 | % | ||
| Overall Core Portfolio |
2.8 | % | 1.4 | % | ||
| 1 |
Non-core properties were: |
2007 sold properties—Maryland Trade Centers I and II.
2007 & 2008 held for sale properties—Sullyfield Center and The Earhart Building.
2007 acquisitions—270 Technology Park, Monument II, 2440 M Street, Woodholme Medical Office Building, Woodholme Center, Ashburn Farm Office Park, CentreMed I & II, and 2000 M Street.
12
Core Portfolio Net Operating Income (NOI) Summary
(In thousands)
| Three Months Ended March 31, | |||||||||
| 2008 | 2007 | % Change | |||||||
| Cash Basis: |
|||||||||
| Multifamily |
$ | 4,795 | $ | 4,548 | 5.4 | % | |||
| Office Buildings |
15,697 | 14,719 | 6.6 | % | |||||
| Medical Office Buildings |
5,083 | 5,006 | 1.5 | % | |||||
| Retail Centers |
8,201 | 7,673 | 6.9 | % | |||||
| Industrial/Flex |
7,079 | 6,675 | 6.0 | % | |||||
| $ | 40,855 | $ | 38,621 | 5.8 | % | ||||
| GAAP Basis: |
|||||||||
| Multifamily |
$ | 4,797 | $ | 4,555 | 5.3 | % | |||
| Office Buildings |
15,833 | 15,375 | 3.0 | % | |||||
| Medical Office Buildings |
5,083 | 5,215 | -2.5 | % | |||||
| Retail Centers |
8,374 | 8,435 | -0.7 | % | |||||
| Industrial/Flex |
7,245 | 6,638 | 9.1 | % | |||||
| $ | 41,332 | $ | 40,218 | 2.8 | % | ||||
13
Core Portfolio Net Operating Income (NOI) Detail
(In thousands)
| Three Months Ended March 31, 2008 | ||||||||||||||||||||||||||||
| Multifamily | Office | Medical Office | Retail | Industrial | Corporate and Other |
Total | ||||||||||||||||||||||
| Real estate rental revenue |
||||||||||||||||||||||||||||
| Core Portfolio |
$ | 8,435 | $ | 24,267 | $ | 7,335 | $ | 10,646 | $ | 9,619 | $ | — | $ | 60,302 | ||||||||||||||
| Non-core—acquired and in development 1 |
379 | 5,435 | 3,399 | — | 763 | — | 9,976 | |||||||||||||||||||||
| Total |
8,814 | 29,702 | 10,734 | 10,646 | 10,382 | — | 70,278 | |||||||||||||||||||||
| Real estate expenses |
||||||||||||||||||||||||||||
| Core Portfolio |
3,638 | 8,434 | 2,252 | 2,272 | 2,374 | — | 18,970 | |||||||||||||||||||||
| Non-core—acquired and in development 1 |
607 | 2,111 | 1,258 | — | 187 | — | 4,163 | |||||||||||||||||||||
| Total |
4,245 | 10,545 | 3,510 | 2,272 | 2,561 | — | 23,133 | |||||||||||||||||||||
| Net Operating Income (NOI) |
||||||||||||||||||||||||||||
| Core Portfolio |
4,797 | 15,833 | 5,083 | 8,374 | 7,245 | — | 41,332 | |||||||||||||||||||||
| Non-core—acquired and in development 1 |
(228 | ) | 3,324 | 2,141 | — | 576 | — | 5,813 | ||||||||||||||||||||
| Total |
$ | 4,569 | $ | 19,157 | $ | 7,224 | $ | 8,374 | $ | 7,821 | $ | — | $ | 47,145 | ||||||||||||||
| Core Portfolio NOI GAAP Basis (from above) |
$ | 4,797 | $ | 15,833 | $ | 5,083 | $ | 8,374 | $ | 7,245 | $ | — | $ | 41,332 | ||||||||||||||
| Straight-line revenue, net for core properties |
(3 | ) | (144 | ) | (23 | ) | (23 | ) | (216 | ) | — | (409 | ) | |||||||||||||||
| FAS 141 Min Rent |
— | 3 | 23 | (153 | ) | 45 | — | (82 | ) | |||||||||||||||||||
| Amortization of lease intangibles for core properties 1 |
1 | 5 | — | 3 | 5 | — | 14 | |||||||||||||||||||||
| Core portfolio NOI, Cash Basis |
$ | 4,795 | $ | 15,697 | $ | 5,083 | $ | 8,201 | $ | 7,079 | $ | — | $ | 40,855 | ||||||||||||||
| Reconciliation of NOI to Net Income (loss) |
||||||||||||||||||||||||||||
| Total NOI |
$ | 4,569 | $ | 19,157 | $ | 7,224 | $ | 8,374 | $ | 7,821 | $ | — | $ | 47,145 | ||||||||||||||
| Other income |
— | — | — | — | — | 238 | 238 | |||||||||||||||||||||
| Other income from life insurance proceeds |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Interest expense |
(913 | ) | (852 | ) | (1,408 | ) | (335 | ) | (245 | ) | (13,911 | ) | (17,664 | ) | ||||||||||||||
| Depreciation and amortization |
(3,025 | ) | (9,013 | ) | (3,512 | ) | (1,829 | ) | (2,962 | ) | (184 | ) | (20,525 | ) | ||||||||||||||
| General and administrative |
— | — | — | — | — | (3,080 | ) | (3,080 | ) | |||||||||||||||||||
| Discontinued Operations2 |
— | — | — | — | 847 | — | 847 | |||||||||||||||||||||
| Loss on extinguishment of debt |
— | — | — | — | — | (8,449 | ) | (8,449 | ) | |||||||||||||||||||
| Net Income (loss) |
$ | 631 | $ | 9,292 | $ | 2,304 | $ | 6,210 | $ | 5,461 | $ | (25,386 | ) | $ | (1,488 | ) | ||||||||||||
| 1 |
Non-core acquired and in development properties: |
2007 in development—Bennett Park, Clayborne Apartments and Dulles Station.
2007 acquisitions—270 Technology Park, Monument II, 2440 M Street, Woodholme Medical Office Building, Woodholme Center, Ashburn Farm Office Park, CentreMed I & II and 2000 M Street.
2008 acquisitions—6100 Columbia Park Road.
| 2 |
Discontinued operations include: Sold Properties—Maryland Trade Center I and II, and Held For Sale Properties—Sullyfield Center and The Earhart Building. |
14
Core Portfolio Net Operating Income (NOI) Detail
(In thousands)
| Three Months Ended March 31, 2007 | ||||||||||||||||||||||||||||
| Multifamily | Office | Medical Office | Retail | Industrial | Corporate and Other |
Total | ||||||||||||||||||||||
| Real estate rental revenue |
||||||||||||||||||||||||||||
| Core Portfolio |
$ | 8,173 | $ | 23,212 | $ | 7,433 | $ | 10,689 | $ | 9,060 | $ | — | $ | 58,567 | ||||||||||||||
| Non-core—acquired and in development 1 |
— | 627 | 268 | — | 390 | — | 1,285 | |||||||||||||||||||||
| Total |
8,173 | 23,839 | 7,701 | 10,689 | 9,450 | — | 59,852 | |||||||||||||||||||||
| Real estate expenses |
||||||||||||||||||||||||||||
| Core Portfolio |
3,618 | 7,837 | 2,218 | 2,254 | 2,422 | — | 18,349 | |||||||||||||||||||||
| Non-core—acquired and in development 1 |
— | 159 | 93 | — | 105 | — | 357 | |||||||||||||||||||||
| Total |
3,618 | 7,996 | 2,311 | 2,254 | 2,527 | — | 18,706 | |||||||||||||||||||||
| Net Operating Income (NOI) |
||||||||||||||||||||||||||||
| Core Portfolio |
4,555 | 15,375 | 5,215 | 8,435 | 6,638 | — | 40,218 | |||||||||||||||||||||
| Non-core—acquired and in development 1 |
— | 468 | 175 | — | 285 | — | 928 | |||||||||||||||||||||
| Total |
$ | 4,555 | $ | 15,843 | $ | 5,390 | $ | 8,435 | $ | 6,923 | $ | — | $ | 41,146 | ||||||||||||||
| Core Portfolio NOI GAAP Basis (from above) |
$ | 4,555 | $ | 15,375 | $ | 5,215 | $ | 8,435 | $ | 6,638 | $ | — | $ | 40,218 | ||||||||||||||
| Straight-line revenue, net for core properties |
(7 | ) | (480 | ) | (78 | ) | (491 | ) | (31 | ) | — | (1,087 | ) | |||||||||||||||
| FAS 141 Min Rent |
— | (180 | ) | (131 | ) | (274 | ) | 64 | — | (521 | ) | |||||||||||||||||
| Amortization of lease intangibles for core properties |
— | 4 | — | 3 | 4 | — | 11 | |||||||||||||||||||||
| Core portfolio NOI, Cash Basis |
$ | 4,548 | $ | 14,719 | $ | 5,006 | $ | 7,673 | $ | 6,675 | $ | — | $ | 38,621 | ||||||||||||||
| Reconciliation of NOI to Net Income |
||||||||||||||||||||||||||||
| Total NOI |
$ | 4,555 | $ | 15,843 | $ | 5,390 | $ | 8,435 | $ | 6,923 | $ | — | $ | 41,146 | ||||||||||||||
| Other income |
— | — | — | — | — | 618 | 618 | |||||||||||||||||||||
| Other income from life insurance proceeds |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Interest expense |
(913 | ) | (857 | ) | (1,045 | ) | (336 | ) | (250 | ) | (10,983 | ) | (14,384 | ) | ||||||||||||||
| Depreciation and amortization |
(1,596 | ) | (6,839 | ) | (2,808 | ) | (1,954 | ) | (2,810 | ) | (119 | ) | (16,126 | ) | ||||||||||||||
| General and administrative |
— | — | — | — | — | (2,883 | ) | (2,883 | ) | |||||||||||||||||||
| Discontinued Operations2 |
— | 589 | — | — | 449 | — | 1,038 | |||||||||||||||||||||
| Other income from life insurance proceeds |
— | — | — | — | — | 1,303 | 1,303 | |||||||||||||||||||||
| Net Income |
$ | 2,046 | $ | 8,736 | $ | 1,537 | $ | 6,145 | $ | 4,312 | $ | (12,064 | ) | $ | 10,712 | |||||||||||||
| 1 |
Non-core acquired and in development properties were: |
2007 in development—Bennett Park, Clayborne Apartments and Dulles Station.
2007 acquisitions—270 Technology Park, Monument II, 2440 M Street, Woodholme Medical Office Building, Woodholme Center, Ashburn Farm Office Park, CentreMed I & II, and 2000 M Street.
| 2 |
Discontinued operations include: Sold Properties—Maryland Trade Center I and II, and Held For Sale Properties—Sullyfield Center and The Earhart Building. |
15
Core Portfolio & Overall Economic Occupancy Levels by Sector
Q1 2008 vs. Q1 2007
GAAP Basis
| Core Portfolio | All Properties | |||||||||||
| Sector |
1st QTR 2008 | 1st QTR 2007 | 1st QTR 2008 | 1st QTR 2007 | ||||||||
| Multifamily |
92.7 | % | 90.6 | % | 79.6 | % | 90.6 | % | ||||
| Office Buildings |
95.4 | % | 92.6 | % | 95.5 | % | 92.8 | % | ||||
| Medical Office Buildings |
98.4 | % | 99.2 | % | 97.9 | % | 99.2 | % | ||||
| Retail Centers |
95.3 | % | 94.6 | % | 95.3 | % | 94.6 | % | ||||
| Industrial / Flex Properties |
95.0 | % | 95.1 | % | 93.8 | % | 94.2 | % | ||||
| Overall Portfolio |
95.3 | % | 93.8 | % | 93.0 | % | 93.7 | % | ||||
16
Commercial Leasing Summary
Three months ended 3/31/08
| 1st Quarter 2008 | ||||||||
| Gross Leasing Square Footage |
||||||||
| Office Buildings |
150,363 | |||||||
| Medical Office Buildings |
12,712 | |||||||
| Retail Centers |
17,401 | |||||||
| Industrial Centers |
89,086 | |||||||
| Total |
269,562 | |||||||
| Weighted Average Term (yrs) |
||||||||
| Office Buildings |
4.9 | |||||||
| Medical Office Buildings |
5.6 | |||||||
| Retail Centers |
4.9 | |||||||
| Industrial Centers |
4.5 | |||||||
| Total |
4.8 | |||||||
| GAAP | CASH | |||||||
| Rental Rate Increases: |
||||||||
| Rate on expiring leases |
||||||||
| Office Buildings |
$ | 32.21 | $ | 33.15 | ||||
| Medical Office Buildings |
29.35 | 30.13 | ||||||
| Retail Centers |
22.65 | 24.28 | ||||||
| Industrial Centers |
15.51 | 15.93 | ||||||
| Total |
$ | 25.94 | $ | 26.74 | ||||
| Rate on new and renewal leases |
||||||||
| Office Buildings |
$ | 38.03 | $ | 36.29 | ||||
| Medical Office Buildings |
34.55 | 32.40 | ||||||
| Retail Centers |
27.72 | 25.96 | ||||||
| Industrial Centers |
16.79 | 15.71 | ||||||
| Total |
$ | 30.18 | $ | 28.64 | ||||
| Percentage Increase |
||||||||
| Office Buildings |
18.09 | % | 9.48 | % | ||||
| Medical Office Buildings |
17.69 | % | 7.53 | % | ||||
| Retail Centers |
22.36 | % | 6.90 | % | ||||
| Industrial Centers |
8.25 | % | -1.40 | % | ||||
| Total |
16.36 | % | 7.08 | % | ||||
17
Commercial Leasing Summary
Continued from previous page
Three months ended 3/31/08
| 1st Quarter 2008 | ||||||
| Total Dollars | Dollars per Square Foot | |||||
| Tenant Improvements |
||||||
| Office Buildings |
$ | 1,086,710 | $ | 7.23 | ||
| Medical Office Buildings |
107,795 | 8.48 | ||||
| Retail Centers |
— | — | ||||
| Industrial Centers |
327,875 | 3.68 | ||||
| Subtotal |
$ | 1,522,380 | $ | 5.65 | ||
| Total Dollars | Dollars per Square Foot | |||||
| Leasing Costs |
||||||
| Office Buildings |
$ | 1,059,853 | $ | 7.05 | ||
| Medical Office Buildings |
51,382 | 4.04 | ||||
| Retail Centers |
25,150 | 1.45 | ||||
| Industrial Centers |
167,280 | 1.88 | ||||
| Subtotal |
$ | 1,303,665 | $ | 4.84 | ||
| Total Dollars | Dollars per Square Foot | |||||
| Tenant Improvements and Leasing Costs |
||||||
| Office Buildings |
$ | 2,146,563 | $ | 14.28 | ||
| Medical Office Buildings |
159,177 | 12.52 | ||||
| Retail Centers |
25,150 | 1.45 | ||||
| Industrial Centers |
495,155 | 5.56 | ||||
| Total |
$ | 2,826,045 | $ | 10.48 | ||
18
10 Largest Tenants—Based on Annualized Rent
March 31, 2008
| Tenant |
Number of Buildings |
Weighted Average Remaining Lease Term in Months |
Percentage of Aggregate Portfolio Annualized Rent |
Aggregate Rentable Square Feet |
Percentage of Aggregate Occupied Square Feet |
|||||||
| World Bank |
1 | 44 | 4.31 | % | 210,354 | 2.09 | % | |||||
| Sunrise Assisted Living, Inc. |
1 | 66 | 2.51 | % | 184,202 | 1.83 | % | |||||
| General Services Administration |
8 | 23 | 1.99 | % | 256,038 | 2.55 | % | |||||
| INOVA Health System Hospital |
6 | 32 | 1.52 | % | 93,038 | 0.93 | % | |||||
| URS Corporation |
1 | 69 | 1.38 | % | 97,208 | 0.97 | % | |||||
| Lafarge North America, Inc. |
1 | 28 | 1.32 | % | 80,610 | 0.80 | % | |||||
| George Washington University |
2 | 67 | 1.15 | % | 77,538 | 0.77 | % | |||||
| Westat, Inc. |
2 | 30 | 0.92 | % | 83,549 | 0.83 | % | |||||
| Sun Microsystems, Inc. |
1 | 45 | 0.91 | % | 65,443 | 0.65 | % | |||||
| United Communications Group, L.P. |
1 | 2 | 0.87 | % | 63,441 | 0.63 | % | |||||
| Total/Weighted Average |
41 | 16.88 | % | 1,211,421 | 12.05 | % | ||||||
19
Industry Diversification
March 31, 2008
| Industry Classification (NAICS) |
Annualized Base Rental Revenue |
Percentage of Aggregate Annualized Rent |
Aggregate Rentable Square Feet |
Percentage of Aggregate Square Feet |
|||||||
| Professional, Scientific and Technical Services |
$ | 46,015,955 | 22.31 | % | 1,966,464 | 19.55 | % | ||||
| Ambulatory Health Care Services |
38,514,391 | 18.67 | % | 1,317,184 | 13.10 | % | |||||
| Credit Intermediation and Related Activities |
15,275,657 | 7.41 | % | 423,976 | 4.22 | % | |||||
| Executive, Legislative & Other General Government |
8,342,144 | 4.04 | % | 423,309 | 4.21 | % | |||||
| Religious, Grantmaking, Civic, Professional |
6,464,284 | 3.13 | % | 208,545 | 2.07 | % | |||||
| Nursing and Residential Care Facilities |
5,720,577 | 2.77 | % | 209,671 | 2.09 | % | |||||
| Food Services and Drinking Places |
5,538,900 | 2.69 | % | 222,165 | 2.21 | % | |||||
| Educational Services |
5,263,671 | 2.55 | % | 210,165 | 2.09 | % | |||||
| Administrative and Support Services |
5,241,229 | 2.54 | % | 379,686 | 3.78 | % | |||||
| Food and Beverage Stores |
4,058,405 | 1.97 | % | 254,796 | 2.53 | % | |||||
| Furniture and Home Furnishing Stores |
3,736,606 | 1.81 | % | 235,933 | 2.35 | % | |||||
| Specialty Trade Contractors |
3,637,465 | 1.76 | % | 413,161 | 4.11 | % | |||||
| Miscellaneous Store Retailers |
3,572,776 | 1.73 | % | 263,571 | 2.62 | % | |||||
| Merchant Wholesalers-Durable Goods |
3,495,214 | 1.69 | % | 373,404 | 3.71 | % | |||||
| Nonmetallic Mineral Product Manufacturing |
3,082,484 | 1.49 | % | 119,474 | 1.19 | % | |||||
| Broadcasting (except Internet) |
3,005,968 | 1.46 | % | 87,939 | 0.87 | % | |||||
| Personal and Laundry Services |
2,819,676 | 1.37 | % | 131,962 | 1.31 | % | |||||
| Publishing Industries (except Internet) |
2,517,873 | 1.22 | % | 92,808 | 0.92 | % | |||||
| Health & Personal Care Services |
2,311,507 | 1.12 | % | 80,881 | 0.80 | % | |||||
| Miscellaneous Manufacturing |
2,286,756 | 1.11 | % | 243,698 | 2.42 | % | |||||
| Clothing & Clothing Accessories Stores |
2,198,523 | 1.07 | % | 141,286 | 1.41 | % | |||||
| Real Estate |
2,194,000 | 1.06 | % | 84,424 | 0.84 | % | |||||
| Amusement, Gambling and Recreation Industries |
1,942,407 | 0.94 | % | 142,136 | 1.41 | % | |||||
| Merchant Wholesalers-Non Durable Goods |
1,850,977 | 0.90 | % | 200,491 | 1.99 | % | |||||
| Transportation Equipment Manufacturing |
1,803,699 | 0.87 | % | 101,578 | 1.01 | % | |||||
| Hospitals |
1,803,179 | 0.87 | % | 58,297 | 0.58 | % | |||||
| Sporting Goods/Books/Hobby/Music Stores |
1,766,073 | 0.86 | % | 134,228 | 1.34 | % | |||||
| Insurance Carriers and Related Activities |
1,656,859 | 0.80 | % | 83,427 | 0.83 | % | |||||
| Construction of Buildings |
1,653,262 | 0.80 | % | 111,142 | 1.11 | % | |||||
| General Merchandise Stores |
1,511,641 | 0.73 | % | 216,330 | 2.15 | % | |||||
| Telecommunications |
1,145,208 | 0.56 | % | 36,220 | 0.36 | % | |||||
| Electronics/Appliance Stores |
1,130,941 | 0.55 | % | 90,414 | 0.90 | % | |||||
| Other |
14,715,274 | 7.15 | % | 997,802 | 9.92 | % | |||||
| Total |
$ | 206,273,581 | 100.00 | % | 10,056,567 | 100.00 | % | ||||
20
Lease Expirations
March 31, 2008
| Year |
Number of Leases |
Rentable Square Feet |
Percent of Rentable Square Feet |
Annualized Rent * |
Average Rental Rate |
Percent of Annualized Rent * |
||||||||||
| Office: |
||||||||||||||||
| 2008 | 67 | 278,726 | 7.88 | % | $ | 7,887,491 | $ | 28.30 | 7.73 | % | ||||||
| 2009 | 105 | 490,217 | 13.87 | % | 13,345,389 | 27.22 | 13.07 | % | ||||||||
| 2010 | 107 | 851,807 | 24.09 | % | 25,444,487 | 29.87 | 24.92 | % | ||||||||
| 2011 | 87 | 532,948 | 15.07 | % | 16,409,343 | 30.79 | 16.07 | % | ||||||||
| 2012 | 49 | 312,054 | 8.83 | % | 8,698,146 | 27.87 | 8.52 | % | ||||||||
| 2013 and thereafter | 99 | 1,069,780 | 30.26 | % | 30,307,827 | 28.33 | 29.69 | % | ||||||||
| 514 | 3,535,532 | 100.00 | % | $ | 102,092,683 | $ | 28.88 | 100.00 | % | |||||||
| Medical Office: |
||||||||||||||||
| 2008 | 36 | 97,623 | 8.41 | % | $ | 3,071,255 | $ | 31.46 | 8.42 | % | ||||||
| 2009 | 44 | 124,737 | 10.74 | % | 3,820,327 | 30.63 | 10.48 | % | ||||||||
| 2010 | 49 | 175,573 | 15.12 | % | 5,681,641 | 32.36 | 15.58 | % | ||||||||
| 2011 | 59 | 222,195 | 19.14 | % | 7,055,282 | 31.75 | 19.35 | % | ||||||||
| 2012 | 39 | 134,571 | 11.59 | % | 4,496,525 | 33.41 | 12.33 | % | ||||||||
| 2013 and thereafter | 95 | 406,310 | 35.00 | % | 12,343,719 | 30.38 | 33.84 | % | ||||||||
| 322 | 1,161,009 | 100.00 | % | $ | 36,468,749 | $ | 31.41 | 100.00 | % | |||||||
| Retail: |
||||||||||||||||
| 2008 | 28 | 149,259 | 8.20 | % | $ | 1,293,297 | $ | 8.66 | 4.14 | % | ||||||
| 2009 | 43 | 148,265 | 8.14 | % | 3,194,906 | 21.55 | 10.22 | % | ||||||||
| 2010 | 53 | 309,244 | 16.98 | % | 5,457,572 | 17.65 | 17.45 | % | ||||||||
| 2011 | 29 | 154,408 | 8.48 | % | 2,760,673 | 17.88 | 8.83 | % | ||||||||
| 2012 | 39 | 168,906 | 9.27 | % | 3,252,230 | 19.25 | 10.40 | % | ||||||||
| 2013 and thereafter | 91 | 891,184 | 48.93 | % | 15,315,708 | 17.19 | 48.96 | % | ||||||||
| 283 | 1,821,266 | 100.00 | % | $ | 31,274,386 | $ | 17.17 | 100.00 | % | |||||||
| Industrial: |
||||||||||||||||
| 2008 | 52 | 451,219 | 12.75 | % | $ | 4,727,195 | $ | 10.48 | 12.97 | % | ||||||
| 2009 | 56 | 648,711 | 18.33 | % | 6,540,638 | 10.08 | 17.95 | % | ||||||||
| 2010 | 55 | 365,627 | 10.33 | % | 4,033,344 | 11.03 | 11.07 | % | ||||||||
| 2011 | 43 | 486,995 | 13.76 | % | 4,180,846 | 8.58 | 11.47 | % | ||||||||
| 2012 | 28 | 471,241 | 13.32 | % | 5,004,003 | 10.62 | 13.73 | % | ||||||||
| 2013 and thereafter | 50 | 1,114,967 | 31.51 | % | 11,951,737 | 10.72 | 32.81 | % | ||||||||
| 284 | 3,538,760 | 100.00 | % | $ | 36,437,763 | $ | 10.30 | 100.00 | % | |||||||
| Total: |
||||||||||||||||
| 2008 | 183 | 976,827 | 9.71 | % | $ | 16,979,238 | $ | 17.38 | 8.23 | % | ||||||
| 2009 | 248 | 1,411,930 | 14.04 | % | 26,901,260 | 19.05 | 13.04 | % | ||||||||
| 2010 | 264 | 1,702,251 | 16.93 | % | 40,617,044 | 23.86 | 19.69 | % | ||||||||
| 2011 | 218 | 1,396,546 | 13.89 | % | 30,406,144 | 21.77 | 14.74 | % | ||||||||
| 2012 | 155 | 1,086,772 | 10.81 | % | 21,450,904 | 19.74 | 10.40 | % | ||||||||
| 2013 and thereafter | 335 | 3,482,241 | 34.62 | % | 69,918,991 | 20.08 | 33.90 | % | ||||||||
| 1,403 | 10,056,567 | 100.00 | % | $ | 206,273,581 | $ | 20.51 | 100.00 | % | |||||||
| * | Annualized Rent is as of March 31, 2008 rental revenue (cash basis) multiplied by 12. |
21
2007 Acquisition and Disposition Summary
as of March 31, 2008
($’s in thousands)
Acquisition Summary
| Acquisition Date |
Square Feet |
Leased Percentage at Acquisition |
March 31, 2008 Leased Percentage |
Investment | |||||||||||
| 6100 Columbia Park Road |
Landover, MD | February 22, 2008 | 150,000 | 78 | % | 78 | % | $ | 11,200 | ||||||
| Total |
150,000 | $ | 11,200 | ||||||||||||
22
2008 Development Summary
as of March 31, 2008
($’s in thousands)
| Property and Location |
Total Rentable Square Feet or # of Units |
Percentage Leased or Committed |
Anticipated Total Cash Cost |
Cash Cost to Date |
Anticipated Construction Completion Date | ||||||||||
| Development |
|||||||||||||||
| The Clayborne Apartments |
74 units & 2,700 sq ft. retail | 15 | % | $ | 36,300 | 1,3 | $ | 34,853 | 1,3 | Complete | |||||
| Alexandria, VA |
|||||||||||||||
| Dulles Station Phase II |
360,000 sq ft office | TBD | $ | 24,748 | 1,2 | TBD | |||||||||
| Herndon, VA |
|||||||||||||||
| Total | $ | 36,300 | $ | 59,601 | |||||||||||
| 1 |
Includes land cost. |
| 2 |
Dulles Station Phase II cost includes land allocation of $16.1M and allocation of the parking garage structure of 7.2M. |
| 3 |
Includes approximately $6.2M of construction costs for the garage to benefit our 800 South Washington Street shopping center. |
23
Schedule of Properties
March 31, 2008
| 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 | 210,000 | ||||
| 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 | 198,000 | ||||
| 1220 19th Street |
Washington, DC | 1995 | 1976 | 102,000 | ||||
| 1600 Wilson Boulevard |
Arlington, VA | 1997 | 1973 | 166,000 | ||||
| 7900 Westpark Drive |
McLean, VA | 1997 | 1972/1986/1999 | 523,000 | ||||
| 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 | 80,000 | ||||
| 1776 G Street |
Washington, DC | 2003 | 1979 | 263,000 | ||||
| Albemarle Point |
Chantilly, VA | 2005 | 2001 | 89,000 | ||||
| 6565 Arlington Blvd |
Falls Church, VA | 2006 | 1967/1998 | 140,000 | ||||
| West Gude Drive |
Rockville, MD | 2006 | 1984/1986/1988 | 289,000 | ||||
| The Ridges |
Gaithersburg, MD | 2006 | 1990 | 104,000 | ||||
| The Crescent |
Gaithersburg, MD | 2006 | 1989 | 49,000 | ||||
| Monument II |
Herndon, VA | 2007 | 2000 | 205,000 | ||||
| Woodholme Center |
Pikesville, MD | 2007 | 1989 | 73,000 | ||||
| 2000 M Street |
Washington, DC | 2007 | 1971 | 227,000 | ||||
| Subtotal |
3,754,000 | |||||||
| 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 | 49,000 | ||||
| Alexandria Professional Center |
Alexandria, VA | 2006 | 1968 | 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 | ||||
| 2440 M Street |
Washington, DC | 2007 | 1986/2006 | 110,000 | ||||
| Woodholme Medical Office Building |
Pikesville, MD | 2007 | 1996 | 125,000 | ||||
| Ashburn Office Park |
Ashburn, VA | 2007 | 1998/2000/2002 | 75,000 | ||||
| CentreMed I & II |
Centreville, VA | 2007 | 1998 | 52,000 | ||||
| Subtotal |
1,186,000 | |||||||
| 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 | 49,000 | ||||
| Montgomery Village Center |
Gaithersburg, MD | 1992 | 1969 | 198,000 | ||||
| Shoppes of Foxchase1 |
Alexandria, VA | 1994 | 1960 | 134,000 | ||||
| Frederick County Square |
Frederick, MD | 1995 | 1973 | 227,000 | ||||
| 800 S. Washington Street |
Alexandria, VA | 1998/2003 | 1955/1959 | 44,000 | ||||
| Centre at Hagerstown |
Hagerstown, MD | 2002 | 2000 | 332,000 | ||||
| Frederick Crossing |
Frederick, MD | 2005 | 1999/2003 | 295,000 | ||||
| Randolph Shopping Center |
Rockville, MD | 2006 | 1972 | 82,000 | ||||
| Montrose Shopping Center |
Rockville, MD | 2006 | 1970 | 143,000 | ||||
| Subtotal |
2,022,000 | |||||||
| 1 |
Development on approximately 60,000 square feet of the center was completed in December 2006. |
24
Schedule of Properties (Cont.)
March 31, 2008
| PROPERTIES |
LOCATION |
YEAR ACQUIRED | YEAR CONSTRUCTED | NET RENTABLE SQUARE FEET* | ||||
| Multifamily Buildings * / # units |
||||||||
| 3801 Connecticut Avenue / 307 |
Washington, DC | 1963 | 1951 | 179,000 | ||||
| Roosevelt Towers / 191 |
Falls Church, VA | 1965 | 1964 | 170,000 | ||||
| Country Club Towers / 227 |
Arlington, VA | 1969 | 1965 | 163,000 | ||||
| Park Adams / 200 |
Arlington, VA | 1969 | 1959 | 173,000 | ||||
| Munson Hill Towers / 279 |
Falls Church, VA | 1970 | 1963 | 259,000 | ||||
| The Ashby at McLean / 253 |
McLean, VA | 1996 | 1982 | 252,000 | ||||
| Walker House Apartments / 212 |
Gaithersburg, MD | 1996 | 1971/20032 | 159,000 | ||||
| Bethesda Hill Apartments / 195 |
Bethesda, MD | 1997 | 1986 | 226,000 | ||||
| Avondale / 237 |
Laurel, MD | 1999 | 1987 | 170,000 | ||||
| Bennett Park / 224 |
Arlington, VA | 2007 | 2007 | 268,000 | ||||
| Clayborne / 74 |
Alexandria, VA | 2008 | 2008 | 87,000 | ||||
| Subtotal (2,399 units) |
2,106,000 | |||||||
| 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 | 166,000 | ||||
| Crossroads Distribution Center |
Elkridge, MD | 1995 | 1987 | 85,000 | ||||
| The Alban Business Center |
Springfield, VA | 1996 | 1981/1982 | 87,000 | ||||
| The Earhart Building |
Chantilly, VA | 1996 | 1987 | 92,000 | ||||
| Ammendale Technology Park I |
Beltsville, MD | 1997 | 1985 | 167,000 | ||||
| Ammendale Technology Park II |
Beltsville, MD | 1997 | 1986 | 107,000 | ||||
| Pickett Industrial Park |
Alexandria, VA | 1997 | 1973 | 246,000 | ||||
| Northern Virginia Industrial Park |
Lorton, VA | 1998 | 1968/1991 | 787,000 | ||||
| 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 | 324,000 | ||||
| Albemarle Point |
Chantilly, VA | 2005 | 2001/2003/2005 | 207,000 | ||||
| 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 | 102,000 | ||||
| 270 Technology Park |
Frederick, MD | 2007 | 1986-1987 | 157,000 | ||||
| 6100 Columbia Park Road |
Landover, MD | 2008 | 1969 | 150,000 | ||||
| Subtotal |
3,931,000 | |||||||
| TOTAL |
12,999,000 | |||||||
| * | Multifamily buildings are presented in gross square feet. |
| 2 |
A 16 unit addition referred to as The Gardens at Walker House was completed in October 2003. |
25
Supplemental Definitions
March 31, 2008
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.
26