Exhibit 12
As discussed in Note 2 to the consolidated financial statements, effective January 1, 2009, we adopted FASB Staff Position No. APB 14-1 (“FSP 14-1”), Accounting for Convertible Debt Instruments that may be Settled in Cash Upon Conversion, SFAS No. 160 (“FAS 160”), Noncontrolling Interests in Consolidated Financial Statements and FASB Staff Position No. EITF 03-6-1 (“FSP 03-6-1”), Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities. These accounting pronouncements require retrospective application. As discussed in Note 3 to the consolidated financial statements, as of March 2009 we classified Charleston Business as held for sale in accordance with SFAS No. 144 (“FAS 144”), Accounting for Impairment or Disposal of Long-Lived Assets, and must consequently present the revenues and expenses associated with Charleston Business Center as discontinued operations. The impacts of these standards are reflected in Exhibit 12 below.
WASHINGTON REAL ESTATE INVESTMENT TRUST
Computation of Ratio of Earnings to Fixed Charges
(In thousands)
| Q1 2008 | Q2 2008 | Q3 2008 | Q4 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||||||||
| Income (loss) from continuing operations |
$ | (3,799 | ) | $ | 3,756 | $ | 4,189 | $ | 4,802 | $ | 8,948 | $ | 26,432 | $ | 33,779 | $ | 36,552 | $ | 37,407 | |||||||||||||||||
| Additions: |
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| Fixed charges |
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| Interest expense |
18,900 | 18,840 | 18,446 | 18,855 | 75,041 | 66,336 | 47,873 | 36,821 | 33,284 | |||||||||||||||||||||||||||
| Capitalized interest |
831 | 741 | 477 | 298 | 2,347 | 6,672 | 3,782 | 1,127 | 703 | |||||||||||||||||||||||||||
| 19,731 | 19,581 | 18,923 | 19,153 | 77,388 | 73,008 | 51,655 | 37,948 | 33,987 | ||||||||||||||||||||||||||||
| Deductions: |
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| Capitalized interest |
(831 | ) | (741 | ) | (477 | ) | (298 | ) | (2,347 | ) | (6,672 | ) | (3,782 | ) | (1,127 | ) | (703 | ) | ||||||||||||||||||
| Net income attributable to noncontrolling interests |
(57 | ) | (53 | ) | (48 | ) | (53 | ) | (211 | ) | (217 | ) | (204 | ) | (172 | ) | (155 | ) | ||||||||||||||||||
| Adjusted earnings |
$ | 15,044 | $ | 22,543 | $ | 22,587 | $ | 23,604 | $ | 83,778 | $ | 92,551 | $ | 81,448 | $ | 73,201 | $ | 70,536 | ||||||||||||||||||
| Fixed Charges (from above) |
$ | 19,731 | $ | 19,581 | $ | 18,923 | $ | 19,153 | $ | 77,388 | $ | 73,008 | $ | 51,655 | $ | 37,948 | $ | 33,987 | ||||||||||||||||||
| Ratio of Earnings to Fixed Charges |
(a | ) | 1.15 | 1.19 | 1.23 | 1.08 | 1.27 | 1.58 | 1.93 | 2.08 | ||||||||||||||||||||||||||
(a) Due to our loss from continuing operations during Q1 2008, the coverage ratio was less than l:l. WRIT must generate additional earnings of $4.7 million to achieve a coverage of 1:1. The loss in Q1 2008 reflects the impact of a loss on extinguishment of debt of $8.4 million.
Note: Q4 2008 reflects the impact of a gain on extinguishment of debt of $2.9 million. YTD 2008 reflects the impact of a net loss on extinguishment of debt of $5.6 million. See Note 6 to the consolidated financial statements for further discussion.