Exhibit 99.1

 

LOGO    NEWS RELEASE

 

CONTACT:

William T. Camp

Executive Vice President and

  

6110 Executive Blvd., Suite 800

Rockville, Maryland 20852

Tel 301-984-9400

Chief Financial Officer    Fax 301-984-9610
E-Mail: bcamp@writ.com    www.writ.com
   July 28, 2011

WASHINGTON REAL ESTATE INVESTMENT TRUST ANNOUNCES

SECOND QUARTER FINANCIAL AND OPERATING RESULTS

Washington Real Estate Investment Trust (“WRIT” or the “Company”) (NYSE: WRE), a leading owner and operator of diversified properties in the Washington, DC region, reported financial and operating results today for the quarter ended June 30, 2011:

 

   

Core Funds from Operations(1), defined as Funds from Operations(1) (“FFO”) excluding acquisition expense, gains or losses on extinguishment of debt and impairment, was $33.5 million, or $0.51 per diluted share for the quarter ended June 30, 2011, compared to $31.1 million, or $0.51 per diluted share for the prior year period. FFO for the quarter ended June 30, 2011 was $33.2 million, or $0.50 per share, compared to $30.7 million, or $0.50 per share, in the same period one year ago. Included in second quarter 2011 FFO and Core FFO is a $0.7 million, or $0.01 per share, write-off related to the probable liquidation of Borders at Centre at Hagerstown.

 

   

Net income attributable to the controlling interests for the quarter ended June 30, 2011 was $6.5 million, or $0.10 per diluted share, compared to $15.0 million, or $0.24 per diluted share, in the same period one year ago. Included in second quarter 2011 net income is income tax expense of $1.2 million, or $0.02 per share. Included in second quarter 2010 net income are gains on sale of real estate totaling $7.9 million, or $0.13 per share.

“Year to date, we have progressed with our strategy of repositioning our holdings toward properties inside the Beltway, near major transportation nodes and in areas with strong employment drivers and superior growth demographics. We have acquired $127 million of downtown Washington, DC office assets, we are under contract to purchase an office building at a future Tysons Corner metro station for $73.5 million, and we disposed of a suburban office building for $59 million. We announced a joint venture to develop a 150 unit apartment community in the heart of Arlington, Virginia. We continue to make good progress on the intended sale of our industrial portfolio. Finally, we executed a new 3-year $400 million credit facility, with the option of upsizing to $600 million in the future. Our balance sheet is well positioned to fund the various acquisition opportunities that we are pursuing,” said George “Skip” McKenzie, President and Chief Executive Officer of WRIT.

Acquisitions and Dispositions

In the second quarter of 2011, WRIT entered into a joint venture with Crimson Partners to develop a six-story, 150 unit mid-rise apartment community in Arlington, Virginia. The joint venture purchased the proposed development site, which is approximately 37,000 square feet and located at the corner of North Glebe Road and North Carlin Springs Road, across the street from Ballston Common Mall and within walking distance of the Ballston Metro Station and one of the busiest Harris Teeter grocery stores in the metro region. The total cost of the project is estimated to be $43.5 million, with a projected stabilized return on cost between 7.0-8.0%. WRIT will be a 90% owner of the joint venture. Crimson Partners will be a 10% owner and responsible for the development, construction and lease-up of the property, with WRIT having management and leasing responsibilities. Construction is projected to commence in second quarter 2012 and will last approximately 15-18 months.

As previously announced, WRIT is under contract to purchase John Marshall II, a 223,000 square foot office building located at 8283 Greensboro Drive in Tysons Corner, Virginia, for $73.5 million. The purchase is subject to the assumption of a $54.3 million 5.79% loan. WRIT anticipates closing on this acquisition in the third quarter of 2011.

WRIT also completed the sale of Dulles Station West Phase I, a 180,000 square foot office building in Herndon, Virginia, for $58.8 million. WRIT acquired the land for Dulles Station West Phases I and II in 2005 and completed construction on Phase I in 2007. It is 100% leased to tenants including IBM and National Student Clearinghouse. Phase II, which was not included in the transaction, is zoned for future development of a 340,000 square foot office building.


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Operating Results

The Company’s overall portfolio Net Operating Income (“NOI”)(2) was $54.4 million compared to $49.2 million in the same period one year ago and $52.1 million in the first quarter of 2011. Overall portfolio physical occupancy for the second quarter was 87.9%, compared to 88.9% in the same period one year ago and 88.5% in the first quarter of 2011.

Same-store(3) portfolio physical occupancy for the second quarter was 88.1%, compared to 89.4% in the same period one year ago. Sequentially, same-store physical occupancy decreased 60 basis points (bps) compared to the first quarter of 2011. Same-store portfolio NOI for the second quarter increased 0.9% and rental rate growth was 1.9% compared to the same period one year ago.

 

   

Multifamily: 14.4% of Total NOI – Multifamily properties’ same-store NOI for the second quarter increased 6.2% compared to the same period one year ago. Rental rate growth was 3.8% while same-store physical occupancy for the second quarter of 2011 compared to 2010 increased 60 bps to 95.6%. Sequentially, same-store physical occupancy increased 30 bps compared to the first quarter of 2011.

 

   

Office: 43.8% of Total NOI – Office properties’ same-store NOI for the second quarter decreased 1.2% compared to the same period one year ago. Rental rate growth was 0.6% while same-store physical occupancy decreased 180 bps to 88.1%. Sequentially, same-store physical occupancy decreased by 20 bps compared to the first quarter of 2011.

 

   

Medical: 14.9% of Total NOI – Medical office properties’ same-store NOI for the second quarter increased 4.2% compared to the same period one year ago. Rental rate growth was 4.0% while same-store physical occupancy decreased 240 bps to 91.7%. Sequentially, same-store physical occupancy decreased 180 bps compared to the first quarter of 2011 primarily due to move-outs totaling approximately 41,000 square feet at Prosperity Medical Center, 8301 Arlington Boulevard and Woodholme Medical Office.

 

   

Retail: 15.9% of Total NOI – Retail properties’ same-store NOI for the second quarter decreased 7.4% compared to the same period one year ago, primarily due to write-offs taken in the second quarter of 2011 associated with the bankruptcy of Borders Books at Centre at Hagerstown. Rental rate growth was 1.9% while same-store physical occupancy decreased 210 bps to 92.3%. Sequentially, same-store physical occupancy was unchanged compared to the first quarter of 2011.

 

   

Industrial: 11.0% of Total NOI – Industrial properties’ same-store NOI for the second quarter increased 8.2% compared to the same period one year ago. Rental rate growth was 1.2% while same-store physical occupancy decreased 90 bps to 78.4%. Sequentially, same-store physical occupancy decreased 180 bps compared to the first quarter of 2011.

Leasing Activity

During the second quarter, WRIT signed commercial leases for 414,313 square feet with an average rental rate increase of 11.0% over expiring lease rates on a GAAP basis, an average lease term of 6.1 years, tenant improvement costs of $12.99 per square foot and leasing costs of $8.92 per square foot.

 

   

Rental rates for new and renewed office leases increased 12.1% to $26.87 per square foot, with $18.23 per square foot in tenant improvement costs and $10.91 per square foot in leasing costs.

 

   

Rental rates for new and renewed medical office leases increased 17.5% to $36.13 per square foot, with $14.56 per square foot in tenant improvement costs and $11.68 per square foot in leasing costs.

 

   

Rental rates for new and renewed retail leases increased 9.3% to $25.88 per square foot, with $6.89 per square foot in tenant improvement costs and $7.00 per square foot in leasing costs.

 

   

Rental rates for new and renewed industrial/flex leases decreased 3.8% to $10.96 per square foot, with $2.65 per square foot in tenant improvement costs and $3.45 per square foot in leasing costs.


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Financing Activity

Subsequent to quarter end, WRIT replaced and expanded one of its two unsecured credit facilities, increasing its size from $262 million to $400 million. An accordion feature allows WRIT to increase the facility to $600 million, subject to additional lender commitments. The new facility matures July 1, 2014 with a one-year extension option and bears interest at a rate of LIBOR plus a margin of 122.5 basis points based on WRIT’s current credit rating. The lead arranger and bookrunner for the facility is Wells Fargo Securities, LLC. Wells Fargo Bank, National Association, is administrative agent and issuing bank.

Dividends

On June 30, 2011, WRIT paid a quarterly dividend of $0.43375 per share for its 198th consecutive quarterly dividend at equal or increasing rates.

Conference Call Information

The Conference Call for 2nd Quarter Earnings is scheduled for Friday, July 29, 2011 at 11:00 A.M. Eastern time. Conference Call access information is as follows:

 

USA Toll Free Number:    1-877-407-9205
International Toll Number:    1-201-689-8054

The instant replay of the Conference Call will be available until August 12, 2011 at 11:59 P.M. Eastern time. Instant replay access information is as follows:

 

USA Toll Free Number:    1-877-660-6853
International Toll Number:    1-201-612-7415
Account:    286
Conference ID:    374221

The live on-demand webcast of the Conference Call will be available on the Investor section of WRIT’s website at www.writ.com. On-line playback of the webcast will be available for two weeks following the Conference Call.

About WRIT

WRIT is a self-administered, self-managed, equity real estate investment trust investing in income-producing properties in the greater Washington metro region. WRIT owns a diversified portfolio of 86 properties totaling approximately 11 million square feet of commercial space and 2,540 residential units, and land held for development. These 86 properties consist of 26 office properties, 16 industrial/flex properties, 18 medical office properties, 15 retail centers and 11 multi-family properties. WRIT shares are publicly traded on the New York Stock Exchange (NYSE:WRE).

Note: WRIT’s press releases and supplemental financial information are available on the company website at www.writ.com or by contacting Investor Relations at (301) 984-9400.

Certain statements in our earnings release and on our conference call are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially. Such risks, uncertainties and other factors include, but are not limited to, the potential for federal government budget reductions, changes in general and local economic and real estate market conditions, the timing and pricing of lease transactions, the effect of the current credit and financial market conditions, the availability and cost of capital, fluctuations in interest rates, tenants’ financial conditions, levels of competition, the effect of government regulation, the impact of newly adopted accounting principles, and other risks and uncertainties detailed from time to time in our filings with the SEC, including our 2010 Form 10-K and first quarter 2011 Form 10-Q. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

 

(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) associated with sales of property plus real estate depreciation and amortization. FFO is a non-GAAP measure and does not replace net income as a


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  measure of performance or net cash provided by operating activities as a measure of liquidity. 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.

Core Funds From Operations (“Core FFO”) is calculated by adjusting FFO for the following items (which we believe are not indicative of the performance of WRIT’s operating portfolio and affect the comparative measurement of WRIT’s operating performance over time): (1) gains or losses on extinguishment of debt, (2) costs related to the acquisition of properties and (3) real estate impairments, as appropriate. These items can vary greatly from period to period, depending upon the volume of our acquisition activity and debt retirements, among other factors. We believe that by excluding these items, Core FFO serves as a useful, supplementary measure of WRIT’s ability to incur and service debt, and distribute dividends to its shareholders. Core FFO is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs.

 

(2) 

Net Operating Income (“NOI”), defined as real estate rental revenue less real estate expenses, is a non-GAAP measure. NOI is calculated as net income, less non-real estate revenue and the results of discontinued operations (including the gain on sale, if any), plus interest expense, depreciation and amortization and general and administrative expenses. We provide NOI as a supplement to net income calculated in accordance with GAAP. As such, it should not be considered an alternative to net income as an indication of our operating performance. It is the primary performance measure we use to assess the results of our operations at the property level.

 

(3) 

For purposes of evaluating comparative operating performance, we categorize our properties as “same-store” or “non-same-store”. A same-store property is one that was owned for the entirety of the periods being evaluated. A non-same-store property is one that was acquired or placed into service during either of the periods being evaluated.

 

(4) 

Funds Available for Distribution (“FAD”) is a non-GAAP measure. It 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, (4) real estate impairments, (5) amortization of restricted share and unit compensation, and adding or subtracting amortization of lease intangibles, as appropriate. We consider FAD 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-standardized measure and may be calculated differently by other REITs.

Physical Occupancy Levels by Same-Store Properties (i) and All Properties

 

     Physical Occupancy  
     Same-Store Properties     All Properties  
     2nd QTR
2011
    2nd QTR
2010
    2nd QTR
2011
    2nd QTR
2010
 

Segment

      

Multifamily

     95.6     95.0     95.6     95.0

Office

     88.1     89.9     88.7     90.8

Medical Office

     91.7     94.1     87.3     88.0

Retail

     92.3     94.4     92.0     94.4

Industrial

     78.4     79.3     78.4     79.2

Overall Portfolio

     88.1     89.4     87.9     88.9

 

(i) 

Same-Store properties include all properties that were owned for the entirety of the current and prior year reporting periods. For Q2 2011 and Q2 2010, same-store properties exclude:

Residential Acquisitions: none;

Office Acquisitions: Quantico Corporate Center, 1140 Connecticut Ave and 1227 25th Street;

Medical Office Acquisition: Lansdowne Medical Office Building;

Retail Acquisition: Gateway Overlook Shopping Center;

Industrial Acquisitions: none.

Also excluded from Same-Store Properties in Q2 2011 and Q2 2010 are:

Sold Properties: Charleston Business Center, Parklawn Plaza, Lexington, Saratoga, The Ridges, Ammendale I & II , Amvax and Dulles Station, Phase I;

Held for Sale Properties: none.


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WASHINGTON REAL ESTATE INVESTMENT TRUST

FINANCIAL HIGHLIGHTS

(In thousands, except per share data)

(Unaudited)

 

     Three Months Ended June 30,     Six Months Ended June 30,  

OPERATING RESULTS

   2011     2010     2011     2010  

Revenue

        

Real estate rental revenue

   $ 80,570      $ 72,402      $ 158,725      $ 145,953   

Expenses

        

Real estate expenses

     26,214        23,172        52,302        49,341   

Depreciation and amortization

     25,459        22,720        50,209        45,307   

General and administrative

     4,049        3,519        7,751        7,302   
                                
     55,722        49,411        110,262        101,950   
                                

Real estate operating income

     24,848        22,991        48,463        44,003   

Other income (expense):

        

Interest expense

     (17,097     (16,785     (34,223     (33,623

Gain (loss) on extinguishment of debt

     —          —          —          (42

Acquisition costs

     (322     (409     (1,971     (464

Other income

     310        297        616        586   
                                
     (17,109     (16,897     (35,578     (33,543
                                

Income from continuing operations

     7,739        6,094        12,885        10,460   

Discontinued operations:

        

Income (loss) from operations of properties sold or held for sale

     (10     985        (468     1,884   

Income tax expense

     (1,173     —          (1,173     —     

Gain on sale of real estate

     —          7,942        —          7,942   
                                

Net income

     6,556        15,021        11,244        20,286   

Less: Net income attributable to noncontrolling interests in subsidiaries

     (34     (27     (57     (76
                                

Net income attributable to the controlling interests

   $ 6,522      $ 14,994      $ 11,187      $ 20,210   
                                

Income from continuing operations attributable to the controlling interests

     7,705        6,067        12,828        10,384   

Continuing operations real estate depreciation and amortization

     25,459        22,720        50,209        45,307   
                                

Funds from continuing operations(1)

   $ 33,164      $ 28,787      $ 63,037      $ 55,691   
                                

Income (loss) from operations of properties sold or held for sale

     (10     985        (468     1,884   

Discontinued operations real estate depreciation and amortization

     —          949        499        1,970   
                                

Funds from discontinued operations

     (10     1,934        31        3,854   
                                

Funds from operations(1)

   $ 33,154      $ 30,721      $ 63,068      $ 59,545   
                                

Non-cash (gain) loss on extinguishment of debt

     —          —          —          42   

Tenant improvements

     (1,950     (2,331     (4,320     (4,343

External and internal leasing commissions capitalized

     (1,116     (1,767     (3,348     (4,035

Recurring capital improvements

     (3,072     (1,999     (3,763     (2,863

Straight-line rents, net

     (586     (812     (1,243     (1,420

Non-cash fair value interest expense

     191        783        370        1,559   

Non real estate depreciation & amortization of debt costs

     888        993        1,762        1,986   

Amortization of lease intangibles, net

     (413     (405     (691     (967

Amortization and expensing of restricted share and unit compensation

     1,488        1,355        2,745        2,988   

Real estate impairment

     —          —          599        —     
                                

Funds available for distribution(4)

   $ 28,584      $ 26,538      $ 55,179      $ 52,492   
                                

Note: Certain prior period amounts have been reclassified to conform to the current presentation.


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         Three Months Ended June 30,      Six Months Ended June 30,  

Per share data attributable to the controlling interests:

       2011      2010      2011      2010  

Income from continuing operations

 

(Basic)

   $ 0.12       $ 0.10       $ 0.19       $ 0.17   
 

(Diluted)

   $ 0.12       $ 0.10       $ 0.19       $ 0.17   

Net income

 

(Basic)

   $ 0.10       $ 0.24       $ 0.17       $ 0.33   
 

(Diluted)

   $ 0.10       $ 0.24       $ 0.17       $ 0.33   

Funds from continuing operations

 

(Basic)

   $ 0.50       $ 0.47       $ 0.96       $ 0.92   
 

(Diluted)

   $ 0.50       $ 0.47       $ 0.95       $ 0.92   

Funds from operations

 

(Basic)

   $ 0.50       $ 0.50       $ 0.96       $ 0.98   
 

(Diluted)

   $ 0.50       $ 0.50       $ 0.96       $ 0.98   

Dividends paid

     $ 0.4338       $ 0.4325       $ 0.8675       $ 0.8650   

Weighted average shares outstanding

       65,954         61,171         65,920         60,538   

Fully diluted weighted average shares outstanding

       65,989         61,287         65,948         60,649   


Washington Real Estate Investment Trust

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WASHINGTON REAL ESTATE INVESTMENT TRUST

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

 

     June 30,     December 31,  
     2011     2010  

Assets

    

Land

   $ 475,458      $ 432,149   

Income producing property

     2,022,986        1,938,629   
  

 

 

   

 

 

 
     2,498,444        2,370,778   

Accumulated depreciation and amortization

     (576,605     (534,570
  

 

 

   

 

 

 

Net income producing property

     1,921,839        1,836,208   

Development in progress

     39,413        26,240   
  

 

 

   

 

 

 

Total real estate held for investment, net

     1,961,252        1,862,448   

Investment in real estate sold or held for sale

     —          41,892   

Cash and cash equivalents

     42,886        78,767   

Restricted cash

     23,550        21,552   

Rents and other receivables, net of allowance for doubtful accounts of $8,633 and $8,394 respectively

     56,461        49,227   

Prepaid expenses and other assets

     103,027        96,466   

Other assets related to property sold or held for sale

     —          17,529   
  

 

 

   

 

 

 

Total assets

   $ 2,187,176      $ 2,167,881   
  

 

 

   

 

 

 

Liabilities

    

Notes payable

   $ 659,934      $ 753,587   

Mortgage notes payable

     378,469        380,171   

Lines of credit

     245,000        100,000   

Accounts payable and other liabilities

     57,445        51,036   

Advance rents

     13,619        12,589   

Tenant security deposits

     9,988        9,418   

Other liabilities related to property sold or held for sale

     —          222   
  

 

 

   

 

 

 

Total liabilities

   $ 1,364,455      $ 1,307,023   
  

 

 

   

 

 

 

Shareholders’ equity

    

Shares of beneficial interest, $0.01 par value; 100,000

    

Shares authorized; 66,017 and 65,870 shares issued and outstanding, respectively

     661        659   

Additional paid-in capital

     1,133,823        1,127,825   

Distributions in excess of net income

     (316,134     (269,935

Accumulated other comprehensive income

     (636     (1,469
  

 

 

   

 

 

 

Total shareholders’ equity

     817,714        857,080   

Noncontrolling interests in subsidiaries

     5,007        3,778   
  

 

 

   

 

 

 

Total equity

     822,721        860,858   

Total liabilities and equity

   $ 2,187,176      $ 2,167,881   
  

 

 

   

 

 

 

Note: Certain prior year amounts have been reclassified to conform to the current year presentation.


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The following tables contain reconciliations of net income to same-store net operating income for the periods presented:

 

Three months ended June 30, 2011    Multifamily      Office      Medical
Office
    Retail      Industrial      Total  

Same-store net operating income(3)

   $ 7,850       $ 20,236       $ 8,113      $ 7,071       $ 5,978       $ 49,248   

Add: Net operating income from non-same-store properties(3)

     —           3,576         (15     1,547         —           5,108   
                                                    

Total net operating income(2)

   $ 7,850       $ 23,812       $ 8,098      $ 8,618       $ 5,978       $ 54,356   

Add/(deduct):

                

Other income

                   310   

Acquisition costs

                   (322

Interest expense

                   (17,097

Depreciation and amortization

                   (25,459

General and administrative expenses

                   (4,049

Income (loss) from operations of properties sold or held for sale

                   (10

Income tax expense

                   (1,173
                      

Net income

                   6,556   

Less: Net income attributable to noncontrolling interests in subsidiaries

                   (34
                      

Net income attributable to the controlling interests

                 $ 6,522   
                      
Three months ended June 30, 2010    Multifamily      Office      Medical
Office
    Retail      Industrial      Total  

Same-store net operating income(3)

   $ 7,391       $ 20,472       $ 7,785      $ 7,634       $ 5,525       $ 48,807   

Add: Net operating income from non-same-store properties(3)

     —           523         (100     —           —           423   
                                                    

Total net operating income(2)

   $ 7,391       $ 20,995       $ 7,685      $ 7,634       $ 5,525       $ 49,230   

Add/(deduct):

                

Other income

                   297   

Acquisition costs

                   (409

Interest expense

                   (16,785

Depreciation and amortization

                   (22,720

General and administrative expenses

                   (3,519

Income (loss) from operations of properties sold or held for sale

                   985   

Gain on sale of real estate

                   7,942   
                      

Net income

                   15,021   

Less: Net income attributable to noncontrolling interests in subsidiaries

                   (27
                      

Net income attributable to the controlling interests

                 $ 14,994   
                      


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The following tables contain reconciliations of net income to same-store net operating income for the periods presented:

 

Six months ended June 30, 2011    Multifamily      Office      Medical
Office
    Retail      Industrial      Total  

Same-store net operating income(3)

   $ 15,515       $ 40,141       $ 15,618      $ 14,326       $ 11,698       $ 97,298   

Add: Net operating income from non-same-store properties(3)

     —           6,286         (58     2,897         —           9,125   
                                                    

Total net operating income(2)

   $ 15,515       $ 46,427       $ 15,560      $ 17,223       $ 11,698       $ 106,423   

Add/(deduct):

                

Other income (expense)

                   616   

Acquisition costs

                   (1,971

Interest expense

                   (34,223

Depreciation and amortization

                   (50,209

General and administrative expenses

                   (7,751

Income (loss) from operations of properties sold or held for sale

                   (468

Income tax expense

                   (1,173
                      

Net income

                   11,244   

Less: Net income attributable to noncontrolling interests in subsidiaries

                   (57
                      

Net income attributable to the controlling interests

                 $ 11,187   
                      
Six months ended June 30, 2010    Multifamily      Office      Medical
Office
    Retail      Industrial      Total  

Same-store net operating income(3)

   $ 14,130       $ 40,670       $ 15,388      $ 14,851       $ 11,289       $ 96,328   

Add: Net operating income from non-same-store properties(3)

     —           523         (239     —           —           284   
                                                    

Total net operating income(2)

   $ 14,130       $ 41,193       $ 15,149      $ 14,851       $ 11,289       $ 96,612   

Add/(deduct):

                

Other income (expense)

                   586   

Acquisition costs

                   (464

Interest expense

                   (33,623

Gain (loss) on extinguishment of debt

                   (42

Depreciation and amortization

                   (45,307

General and administrative expenses

                   (7,302

Income (loss) from operations of properties sold or held for sale

                   1,884   

Gain on sale of real estate

                   7,942   
                      

Net income

                   20,286   

Less: Net income attributable to noncontrolling interests in subsidiaries

                   (76
                      

Net income attributable to the controlling interests

                 $ 20,210   
                      


Washington Real Estate Investment Trust

Page 10 of 10

 

The following table contains a reconciliation of net income attributable to the controlling interests to core funds from operations for the periods presented:

 

         Three Months Ended June 30,     Six Months Ended June 30,  
         2011      2010     2011      2010  

Net income attributable to the controlling interests

     $ 6,522       $ 14,994      $ 11,187       $ 20,210   

Add/(deduct):

            

Real estate depreciation and amortization

       25,459         22,720        50,209         45,307   

Discontinued operations:

            

Gain on sale of real estate

       —           (7,942     —           (7,942

Income tax on gain on sale of real estate

       1,173         —          1,173         —     

Real estate depreciation and amortization

       —           949        499         1,970   
    

 

 

    

 

 

   

 

 

    

 

 

 

Funds from Operations(1)

       33,154         30,721        63,068         59,545   

Add/(deduct):

            

Real estate impairment

       —           —          599         —     

Loss (gain) on extinguishment of debt

       —           —          —           42   

Acquisition costs

       322         409        1,971         464   
    

 

 

    

 

 

   

 

 

    

 

 

 

Core funds from operations(1)

     $ 33,476       $ 31,130      $ 65,638       $ 60,051   
    

 

 

    

 

 

   

 

 

    

 

 

 
         Three Months Ended June 30,     Six Months Ended June 30,  
         2011      2010     2011      2010  

Per share data attributable to the controlling interests:

            

Funds from operations

 

(Basic)

   $ 0.50       $ 0.50      $ 0.96       $ 0.98   
 

(Diluted)

   $ 0.50       $ 0.50      $ 0.96       $ 0.98   

Core FFO

 

(Basic)

   $ 0.51       $ 0.51      $ 0.99       $ 0.99   
 

(Diluted)

   $ 0.51       $ 0.51      $ 0.99       $ 0.99   

Weighted average shares outstanding

       65,954         61,171        65,920         60,538   

Fully diluted weighted average shares outstanding

       65,989         61,287        65,948         60,649