UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________
FORM 8-K
___________________________________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 23, 2015
WASHINGTON REAL ESTATE
INVESTMENT TRUST
(Exact name of registrant as specified in its charter)
|
| | |
MARYLAND | 1-6622 | 53-0261100 |
(State of incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
1775 EYE STREET, NW, SUITE 1000, WASHINGTON, DC 20006
(Address of principal executive office) (Zip code)
Registrant’s telephone number, including area code: (202) 774-3200
___________________________________________________
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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
and
Item 7.01 Regulation FD Disclosure
A press release issued by Washington Real Estate Investment Trust (“Washington REIT”) on July 23, 2015 regarding earnings for the three and six months ended June 30, 2015, is attached as Exhibit 99.1. Also, certain supplemental information not included in the press release is attached as Exhibit 99.2. This information is being furnished pursuant to Item 7.01 and Item 2.02 of Form 8-K. This information is not deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities Act registration statements.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On July 20, 2015, the Board of Trustees of Washington REIT elected W. Drew Hammond as Vice President - Chief Accounting Officer and Controller, such election to take effect on the day after the filing of Washington REIT’s Form 10-Q for the second quarter of 2015. Upon the effectiveness of such election, Mr. Hammond will serve as Washington REIT’s principal accounting officer.
Mr. Hammond, 41, joined Washington REIT in October 2012 as Controller. Prior to joining Washington REIT, he served as the Controller of CapitalSource, Inc. (“CapitalSource”), from February 2007 to September 2012. His previous roles at CapitalSource were as Assistant Controller, from July 2004 to February 2007, and Manager of Financial Reporting, from December 2003 to July 2004. Prior to joining CapitalSource in 2003, Mr. Hammond was a Senior Manager at Ernst & Young LLP from May 2002 to December 2003, and held various positions in the assurance practice at Arthur Andersen LLP from 1995 to 2002. Mr. Hammond earned his undergraduate degree from Washington and Lee University in 1995 and is a certified public accountant.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
|
| | |
Exhibit Number | | Description |
| | |
99.1 | | Press release issued July 23, 2015 regarding earnings for the three and six months ended June 30, 2015 |
99.2 | | Certain supplemental information not included in the press release |
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.
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| | | | | | |
| | | WASHINGTON REAL ESTATE INVESTMENT TRUST | |
| | | (Registrant) | | |
| | | | | | |
| | | | | | |
| | | By: | /s/ Laura M. Franklin | | |
| | | | (Signature) | | |
| | | | | | |
| | | | Laura M. Franklin | | |
| | | | Executive Vice President | |
| | | | Accounting and Administration | |
| | | | | | |
| July 23, 2015 | | | | | |
| (Date) | | | | | |
EXHIBIT INDEX
|
| | |
Exhibit Number | | Description |
| | |
99.1 | | Press release issued July 23, 2015 regarding earnings for the three and six months ended June 30, 2015 |
99.2 | | Certain supplemental information not included in the press release |
|
| | |
| NEWS RELEASE |
CONTACT: | | 1775 Eye Street, NW |
Tejal R. Engman | Washington, DC 20006 |
Director of Investor Relations | Tel 202-774-3200 |
E-Mail: tengman@washreit.com | Fax 301-984-9610 |
| www.washreit.com |
| |
| | July 23, 2015 |
| | |
WASHINGTON REAL ESTATE INVESTMENT TRUST ANNOUNCES SECOND QUARTER FINANCIAL AND OPERATING RESULTS |
Company Posts Significant Quarter over Quarter NOI and FFO Growth and Announces 215th Consecutive Quarterly Dividend |
Washington Real Estate Investment Trust (“Washington REIT” or the “Company”) (NYSE: WRE), a leading owner and operator of commercial and multifamily properties in the Washington, DC area, reported financial and operating results today for the quarter ended June 30, 2015:
Second Quarter 2015 Highlights
| |
• | Generated Core Funds from Operations (FFO) of $0.42 per fully diluted share for the second quarter, a $0.04 increase over first quarter 2015 and a $0.01 increase over second quarter 2014 |
| |
• | Same-store Net Operating Income (NOI) modestly declined by 0.3%, while cash NOI grew by 1.3% over second quarter 2014 |
| |
• | Achieved overall same-store physical occupancy of 92.8%, 30 basis points higher than the second quarter of 2014 |
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• | Executed new and renewal commercial leases totaling 259,000 square feet at an average rental rate increase of 15.6% over in-place rents for new leases and an average rental rate increase of 14.9% over in-place rents for renewal leases |
| |
• | Subsequent to quarter end, acquired The Wellington, a 711-unit apartment community with on-site density to develop approximately 360 additional units, for $167 million |
| |
• | Tightened 2015 Core FFO guidance to $1.68 to $1.72 from $1.66 to $1.74 per fully diluted share |
"We continue to drive performance and operationally outperform in most of our sub-markets in what remains a highly competitive environment. Our second quarter results delivered improved occupancy, NOI and cash NOI growth in office and multifamily and strong rental rate increases in retail. We maintain the mid-point of our guidance while tightening the range by $0.04 to reflect our increased visibility on performance for the remainder of the year," said Paul T. McDermott, President and Chief Executive Officer. "We continue to make steady progress on our strategic plan to elevate the quality of the portfolio, both through value-add acquisitions like The Wellington as well as the continued sale of legacy assets, which we would look to further accelerate under the right market conditions."
Financial Highlights
Core Funds from Operations(1), was $28.5 million, or $0.42 per diluted share, for the quarter ended June 30, 2015, compared to $27.7 million, or $0.41 per diluted share, for the corresponding prior year period. Further detail will be provided by management on the earnings call.
FFO for the quarter ended June 30, 2015 was $22.6 million, or $0.33 per diluted share, compared to $25.2 million, or $0.38 per diluted share, for the corresponding prior year period. The decline in FFO is primarily driven by the recognition of a real estate impairment loss of $5.9 million, or $0.09 per diluted share, on an undeveloped parcel of land in the quarter ended June 30, 2015.
Net loss attributable to the controlling interests for the quarter ended June 30, 2015 was $2.5 million, or $0.04 per diluted share, compared to net income of $1.1 million, or $0.02 per diluted share, in the corresponding prior period, due to the aforementioned impairment loss.
Washington Real Estate Investment Trust
Page 2 of 11
Operating Results
The Company's overall portfolio NOI(2) was $47.0 million for the quarter ended June 30, 2015, compared to $46.7 million in the corresponding prior year period. Overall portfolio physical occupancy for the second quarter was at 90.0%, compared to 90.1% at the end of the second quarter last year and 89.5% at the end of the first quarter 2015.
Same-store(3) portfolio physical occupancy for the second quarter of 2015 was 92.8%, compared to 92.5% at June 30, 2014 and 93.0% at the end of the first quarter 2015. Same-store portfolio NOI for the second quarter of 2015 declined by 0.3%, while cash NOI grew by 1.3% compared to the corresponding prior period.
| |
▪ | Office: 56% of Total NOI - Office properties' same-store NOI and cash NOI for the second quarter increased 0.2% and 2.5%, respectively, compared to the corresponding prior period. Rental rate growth was 1.8% while same-store physical occupancy increased 90 basis points over last year to 91.8%. |
| |
▪ | Retail: 26% of Total NOI - Retail properties' same-store NOI and cash NOI for the second quarter decreased by 2.1% and 0.7%, respectively, compared to the corresponding prior year period. Rental rates increased 2.5% while same-store physical occupancy decreased 140 basis points over last year to 92.8%. Occupancy in retail is lower primarily due to known tenant move outs that are either leased or at letter of intent. |
| |
▪ | Multifamily: 18% of Total NOI - Multifamily properties' same-store NOI and cash NOI increased 0.5% and 0.7%, respectively, compared to the corresponding prior year period. Rental rates declined 2.7% while same-store physical occupancy increased 90 basis points over last year to 94.5%. |
Leasing Activity
During the second quarter, Washington REIT signed commercial leases totaling 259,000 square feet, including 93,000 square feet of new leases and 166,000 square feet of renewal leases, as follows (all dollar amounts are on a per square foot basis):
|
| | | | | | | | | | | | | | | |
| Square Feet | Weighted Average Term (in years) | Weighted Average Rental Rates | Weighted Average Rental Rate % Increase | Tenant Improvements | Leasing Commissions and Incentives |
New: | | | | | | |
Office | 58,000 |
| 6.8 |
| $ | 41.61 |
| 14.5 | % | $ | 38.29 |
| $ | 31.37 |
|
Retail | 35,000 |
| 9.6 |
| 28.17 |
| 18.5 | % | 16.88 |
| 16.88 |
|
Total | 93,000 |
| 7.8 |
| 36.53 |
| 15.6 | % | 30.19 |
| 25.89 |
|
| | | | | | |
Renewal: | | | | | | |
Office | 71,000 |
| 3.9 |
| $ | 32.43 |
| 4.9 | % | $ | 5.96 |
| $ | 5.19 |
|
Retail | 95,000 |
| 5.8 |
| 22.49 |
| 28.0 | % | 0.41 |
| 2.10 |
|
Total | 166,000 |
| 4.9 |
| 26.75 |
| 14.9 | % | 2.79 |
| 3.43 |
|
Acquisitions
On July 1, 2015, Washington REIT acquired The Wellington, an apartment community in Arlington, VA consisting of 711 units and on-site density to develop approximately 360 additional units, for $167 million. This acquisition provides a value-add opportunity to renovate over 680 units to generate rental growth, and a further opportunity to develop additional density in a sub-market with limited supply and a strong population of both Class A and B renters.
Originally built in 1960, The Wellington is a gated apartment community comprising three mid-rise buildings located on the eastern end of Columbia Pike, which features walkable restaurant and retail amenities, is proximate to four major highways and offers easy access to DC, The Pentagon and Crystal City. In the last four years, The Wellington has upgraded common areas, lobbies and facades and has added a rooftop fitness center.
Washington Real Estate Investment Trust
Page 3 of 11
Earnings Guidance
Management is tightening the 2015 Core FFO guidance range to $1.68 to $1.72 from $1.66 to $1.74 per fully diluted share. The following assumptions are incorporated into the tightened guidance range:
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• | Same-store NOI growth remains projected to range from (0.5)% to 2%, with same-store occupancy improving modestly |
| |
• | Same-store office NOI growth remains projected to range from 0% to 2%, excluding the redevelopment project at Silverline Center |
| |
• | Silverline Center continues to be expected to contribute NOI of $0.06 to $0.08 per share in the current year and to further progress lease up in 2016 |
| |
• | Same-store multifamily NOI growth remains projected to range from 0% to 1% |
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• | The Maxwell development is expected to contribute NOI of $0.01 in 2015. The Maxwell remains on track to stabilize by year-end but the delayed delivery at the beginning of the year has extended the timing of The Maxwell's expected contribution to NOI |
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• | Same-store retail NOI growth is projected to range from (1)% to 1% primarily due to adverse weather-related expenses at the beginning of the year, and the postponement of a few rent commencement dates to 2016 |
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• | Upon completion of the acquisition of The Wellington, our guidance does not anticipate closing any additional acquisitions in 2015 although we will continue to underwrite value-add acquisition opportunities |
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• | Dispositions for 2015 are expected to range from $140 to $150 million. We are presently preparing to bring additional legacy assets to market over the next eighteen months and intend to explore accelerating some of these additional asset sales into 2016 |
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• | General and administrative expense remains projected to range from $19 to $20 million excluding acquisition costs, severance and relocation expense |
| |
• | Interest expense is projected to be approximately $60 to $60.5 million |
Washington REIT's 2015 Core FFO guidance is also based on a number of other factors, many of which are outside its control and all of which are subject to change. Washington REIT may change its guidance during the year as actual and anticipated results vary from these assumptions.
Capital Update
Washington REIT favorably renewed its credit facility to extend maturity to June 22, 2019, and also has two six-month extension options. The new facility is better aligned with the company's value-add business model, has increased the available line of credit to $600 million, improved financial covenants and lowered pricing, which remains based upon the company's unsecured debt rating.
Dividends
On June 30, 2015, Washington REIT paid a quarterly dividend of $0.30 per share.
Washington REIT announced today that its Board of Trustees has declared a quarterly dividend of $0.30 per share to be paid on September 30, 2015 to shareholders of record on September 15, 2015.
Conference Call Information
The Conference Call for Second Quarter Earnings is scheduled for Friday, July 24, 2015 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 7, 2015 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
Washington Real Estate Investment Trust
Page 4 of 11
Conference ID: 13599919
The live on-demand webcast of the Conference Call will be available on the Investor section of Washington REIT's website at www.washreit.com. On-line playback of the webcast will be available for two weeks following the Conference Call.
About Washington REIT
Washington REIT is a self-administered, equity real estate investment trust investing in income-producing properties in the greater Washington metro region. Washington REIT owns a diversified portfolio of 56 properties, totaling approximately 7 million square feet of commercial space and 3,537 multifamily units, and land held for development. These 56 properties consist of 25 office properties, 17 retail centers and 14 multifamily properties. Washington REIT shares are publicly traded on the New York Stock Exchange (NYSE:WRE).
Note: Washington REIT's press releases and supplemental financial information are available on the company website at www.washreit.com or by contacting Investor Relations at (202) 774-3200.
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. Forward-looking statements include statements in this earnings release preceded by, followed by or that include the words “believe,” “expect,” “intend,” “anticipate,” “potential,” “project,” “will” and other similar expressions. 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 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 2014 Form 10-K and subsequent Quarterly Reports on 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, impairment of depreciable real estate and real estate depreciation and amortization. FFO is a non-GAAP measure and does not replace net income as a 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 Washington REIT's operating portfolio and affect the comparative measurement of Washington REIT's operating performance over time): (1) gains or losses on extinguishment of debt, (2) expenses related to acquisition and structuring activities, (3) executive transition costs and severance expense related to corporate reorganization and related to executive retirements or resignations, (4) property impairments not already excluded from FFO, as appropriate, and (5) relocation expense. 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 Washington REIT's ability to incur and service debt and to 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, general and administrative expenses, acquisition costs and real estate impairment. We also present NOI on a cash basis ("cash NOI") which is calculated as NOI less the impact of straight-lining of rent and amortization of market intangibles. 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 and excludes properties under redevelopment or development and properties purchased or sold at any time during the periods being compared. A non-same-store property is one that was acquired, under redevelopment or development, or placed into service during either of the periods being evaluated. We define redevelopment properties as those for which we expect to spend significant development and construction costs on existing or acquired buildings pursuant to a formal plan which has a current impact on operating results, occupancy and the ability to lease space with the intended result of a higher economic return on the property. Properties under redevelopment or development are included within the non-same-store properties beginning in the period during which redevelopment or development activities commence. Redevelopment and development properties are included in the same-store pool upon completion of the redevelopment or development, and the earlier of achieving 90% occupancy or two years after completion.
Washington Real Estate Investment Trust
Page 5 of 11
(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 (excluding items contemplated prior to acquisition or associated with development / redevelopment of a property) and (2) straight line rents, then adding (3) non-real estate depreciation and amortization, (4) non-cash fair value interest expense and (5) amortization of restricted share compensation, then adding or subtracting the (6) amortization of lease intangibles, (7) real estate impairment and (8) non-cash gain/loss on extinguishment of debt, 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.
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| | | | | | | | | | | |
Physical Occupancy Levels by Same-Store Properties (i) and All Properties |
| Physical Occupancy |
| Same-Store Properties | | All Properties |
| 2nd QTR | | 2nd QTR | | 2nd QTR | | 2nd QTR |
Segment | 2015 | | 2014 | | 2015 | | 2014 |
Multifamily | 94.5 | % | | 93.6 | % | | 91.7 | % | | 93.7 | % |
Office | 91.8 | % | | 90.9 | % | | 87.6 | % | | 86.2 | % |
Retail | 92.8 | % | | 94.2 | % | | 92.9 | % | | 94.2 | % |
| | | | | | | |
Overall Portfolio | 92.8 | % | | 92.5 | % | | 90.0 | % | | 90.1 | % |
(i) Same-store properties include all stabilized properties that were owned for the entirety of the current and prior reporting periods, and exclude properties under redevelopment or development and properties purchased or sold at any time during the periods being compared. We define redevelopment properties as those for which we expect to spend significant development and construction costs on existing or acquired buildings pursuant to a formal plan which has a current impact on operating results, occupancy and the ability to lease space with the intended result of a higher economic return on the property. Redevelopment and development properties are included in the same-store pool upon completion of the redevelopment or development, and the earlier of achieving 90% occupancy or two years after completion. For Q2 2015 and Q2 2014, same-store properties exclude:
Multifamily Development: The Maxwell;
Office Acquisition: 1775 Eye Street, NW;
Office Redevelopment: Silverline Center;
Retail Acquisition: Spring Valley Retail Center.
Also excluded from same-store properties in Q2 2015 and Q2 2014 are:
Sold Properties:
Multifamily: Country Club Towers;
Retail: 5740 Columbia Road (parcel at Gateway Overlook).
Washington Real Estate Investment Trust
Page 6 of 11
|
| | | | | | | | | | | | | | | |
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 | 2015 | | 2014 | | 2015 | | 2014 |
Revenue | | | | | | | |
Real estate rental revenue | $ | 74,226 |
| | $ | 72,254 |
| | $ | 149,082 |
| | $ | 140,865 |
|
Expenses | | | | | | | |
Real estate expenses | 27,229 |
| | 25,528 |
| | 56,437 |
| | 51,870 |
|
Depreciation and amortization | 25,503 |
| | 24,401 |
| | 50,778 |
| | 47,154 |
|
Acquisition costs | 992 |
| | 1,933 |
| | 1,008 |
| | 4,978 |
|
General and administrative | 4,306 |
| | 4,828 |
| | 10,386 |
| | 9,257 |
|
Real estate impairment | 5,909 |
| | — |
| | 5,909 |
| | — |
|
| 63,939 |
| | 56,690 |
| | 124,518 |
| | 113,259 |
|
Other operating income | | | | | | | |
Gain on sale of real estate | 1,454 |
| | 570 |
| | 31,731 |
| | 570 |
|
Real estate operating income | 11,741 |
| | 16,134 |
| | 56,295 |
| | 28,176 |
|
Other income (expense): | | | | | | | |
Interest expense | (14,700 | ) | | (14,985 | ) | | (30,048 | ) | | (29,515 | ) |
Loss on extinguishment of debt | (119 | ) | | — |
| | (119 | ) | | — |
|
Other income | 192 |
| | 219 |
| | 384 |
| | 442 |
|
| (14,627 | ) | | (14,766 | ) | | (29,783 | ) | | (29,073 | ) |
| | | | | | | |
(Loss) income from continuing operations | (2,886 | ) | | 1,368 |
| | 26,512 |
| | (897 | ) |
| | | | | | | |
Discontinued operations: | | | | | | | |
Income from operations of properties sold or held for sale | — |
| | — |
| | — |
| | 546 |
|
(Loss) gain on sale of real estate | — |
| | (288 | ) | | — |
| | 105,985 |
|
(Loss) income from discontinued operations | — |
| | (288 | ) | | — |
| | 106,531 |
|
Net (loss) income | (2,886 | ) | | 1,080 |
| | 26,512 |
| | 105,634 |
|
Less: Net loss attributable to noncontrolling interests in subsidiaries | 340 |
| | 7 |
| | 448 |
| | 7 |
|
Net (loss) income attributable to the controlling interests | $ | (2,546 | ) | | $ | 1,087 |
| | $ | 26,960 |
| | $ | 105,641 |
|
| | | | | | | |
(Loss) income from continuing operations | (2,886 | ) | | 1,368 |
| | 26,512 |
| | (897 | ) |
Continuing operations real estate depreciation and amortization | 25,503 |
| | 24,401 |
| | 50,778 |
| | 47,154 |
|
Gain on sale of depreciable real estate | — |
| | (570 | ) | | (30,277 | ) | | (570 | ) |
Funds from continuing operations(1) | $ | 22,617 |
| | $ | 25,199 |
| | $ | 47,013 |
| | $ | 45,687 |
|
Income from operations of properties sold or held for sale | — |
| | — |
| | — |
| | 546 |
|
Funds from discontinued operations | — |
| | — |
| | — |
| | 546 |
|
NAREIT funds from operations(1) | $ | 22,617 |
| | $ | 25,199 |
| | $ | 47,013 |
| | $ | 46,233 |
|
| | | | | | | |
Non-cash loss on extinguishment of debt | 119 |
| | — |
| | 119 |
| | — |
|
Tenant improvements | (3,417 | ) | | (9,612 | ) | | (7,147 | ) | | (14,912 | ) |
External and internal leasing commissions capitalized | (1,149 | ) | | (1,721 | ) | | (2,755 | ) | | (2,960 | ) |
Recurring capital improvements | (737 | ) | | (1,610 | ) | | (1,426 | ) | | (2,498 | ) |
Straight-line rents, net | (538 | ) | | (723 | ) | | (131 | ) | | (1,076 | ) |
Non-cash fair value interest expense | 36 |
| | 30 |
| | 71 |
| | 225 |
|
Non real estate depreciation & amortization of debt costs | 1,123 |
| | 904 |
| | 2,061 |
| | 1,776 |
|
Amortization of lease intangibles, net | 970 |
| | 677 |
| | 1,738 |
| | 916 |
|
Amortization and expensing of restricted share and unit compensation | 1,195 |
| | 1,429 |
| | 3,021 |
| | 2,470 |
|
Funds available for distribution(4) | $ | 20,219 |
| | $ | 14,573 |
| | $ | 42,564 |
| | $ | 30,174 |
|
Washington Real Estate Investment Trust
Page 7 of 11
|
| | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
Per share data: | | 2015 | | 2014 | | 2015 | | 2014 |
(Loss) income from continuing operations | (Basic) | $ | (0.04 | ) | | $ | 0.02 |
| | $ | 0.39 |
| | $ | (0.01 | ) |
| (Diluted) | $ | (0.04 | ) | | $ | 0.02 |
| | $ | 0.39 |
| | $ | (0.01 | ) |
Net income | (Basic) | $ | (0.04 | ) | | $ | 0.02 |
| | $ | 0.39 |
| | $ | 1.58 |
|
| (Diluted) | $ | (0.04 | ) | | $ | 0.02 |
| | $ | 0.39 |
| | $ | 1.58 |
|
Funds from continuing operations | (Basic) | $ | 0.33 |
| | $ | 0.38 |
| | $ | 0.69 |
| | $ | 0.68 |
|
| (Diluted) | $ | 0.33 |
| | $ | 0.38 |
| | $ | 0.69 |
| | $ | 0.68 |
|
NAREIT funds from operations | (Basic) | $ | 0.33 |
| | $ | 0.38 |
| | $ | 0.69 |
| | $ | 0.69 |
|
| (Diluted) | $ | 0.33 |
| | $ | 0.38 |
| | $ | 0.69 |
| | $ | 0.69 |
|
| | | | | | | | |
Dividends paid | | $ | 0.30 |
| | $ | 0.30 |
| | $ | 0.60 |
| | $ | 0.60 |
|
| | | | | | | | |
Weighted average shares outstanding | | 68,176 |
| | 66,732 |
| | 68,159 |
| | 66,718 |
|
Fully diluted weighted average shares outstanding | | 68,176 |
| | 66,761 |
| | 68,283 |
| | 66,718 |
|
Fully diluted weighted average shares outstanding (for FFO) | 68,375 |
| | 66,761 |
| | 68,283 |
| | 66,744 |
|
Washington Real Estate Investment Trust
Page 8 of 11
|
| | | | | | | |
WASHINGTON REAL ESTATE INVESTMENT TRUST |
CONSOLIDATED BALANCE SHEETS |
(In thousands, except per share data) |
| | | |
| June 30, 2015 | | |
| (unaudited) | | December 31, 2014 |
Assets | | | |
Land | $ | 542,654 |
| | $ | 543,546 |
|
Income producing property | 1,966,612 |
| | 1,927,407 |
|
| 2,509,266 |
| | 2,470,953 |
|
Accumulated depreciation and amortization | (670,103 | ) | | (640,434 | ) |
Net income producing property | 1,839,163 |
| | 1,830,519 |
|
Properties under development or held for future development | 35,314 |
| | 76,235 |
|
Total real estate held for investment, net | 1,874,477 |
| | 1,906,754 |
|
Cash and cash equivalents | 22,778 |
| | 15,827 |
|
Restricted cash | 13,705 |
| | 10,299 |
|
Rents and other receivables, net of allowance for doubtful accounts of $2,975 and $3,392, respectively | 61,577 |
| | 59,745 |
|
Prepaid expenses and other assets | 117,657 |
| | 121,082 |
|
Total assets | $ | 2,090,194 |
| | $ | 2,113,707 |
|
| | | |
Liabilities | | | |
Notes payable | $ | 597,442 |
| | $ | 747,208 |
|
Mortgage notes payable | 419,755 |
| | 418,525 |
|
Lines of credit | 185,000 |
| | 50,000 |
|
Accounts payable and other liabilities | 50,281 |
| | 54,318 |
|
Advance rents | 13,733 |
| | 12,528 |
|
Tenant security deposits | 9,053 |
| | 8,899 |
|
Total liabilities | 1,275,264 |
| | 1,291,478 |
|
| | | |
Equity | | | |
Shareholders' equity | | | |
Preferred shares; $0.01 par value; 10,000 shares authorized; no shares issued and outstanding | — |
| | — |
|
Shares of beneficial interest, $0.01 par value; 100,000 shares authorized; 68,162 and 67,819 shares issued and outstanding, respectively | 682 |
| | 678 |
|
Additional paid-in capital | 1,191,594 |
| | 1,184,395 |
|
Distributions in excess of net income | (379,577 | ) | | (365,518 | ) |
Total shareholders' equity | 812,699 |
| | 819,555 |
|
| | | |
Noncontrolling interests in subsidiaries | 2,231 |
| | 2,674 |
|
Total equity | 814,930 |
| | 822,229 |
|
| | | |
Total liabilities and equity | $ | 2,090,194 |
| | $ | 2,113,707 |
|
Washington Real Estate Investment Trust
Page 9 of 11
|
| | | | | | | | | | | | | | | |
The following tables contain reconciliations of net income to same-store net operating income for the periods presented (in thousands): |
| | | | | | | |
Three months ended June 30, 2015 | Multifamily | | Office | | Retail | | Total |
Same-store net operating income(3) | $ | 8,702 |
| | $ | 24,415 |
| | $ | 11,270 |
| | $ | 44,387 |
|
Add: Net operating income from non-same-store properties(3) | (44 | ) | | 1,886 |
| | 768 |
| | 2,610 |
|
Total net operating income(2) | $ | 8,658 |
| | $ | 26,301 |
| | $ | 12,038 |
| | $ | 46,997 |
|
Add/(deduct): | | | | | | | |
Other income | | | | | | | 192 |
|
Acquisition costs | | | | | | | (992 | ) |
Interest expense | | | | | | | (14,700 | ) |
Depreciation and amortization | | | | | | | (25,503 | ) |
General and administrative expenses | | | | | | | (4,306 | ) |
Loss on extinguishment of debt | | | | | | | (119 | ) |
Gain on sale of real estate | | | | | | | 1,454 |
|
Real estate impairment | | | | | | | (5,909 | ) |
Net loss | | | | | | | (2,886 | ) |
Less: Net loss attributable to noncontrolling interests in subsidiaries | | | | | | | 340 |
|
Net loss attributable to the controlling interests | | | | | | | $ | (2,546 | ) |
| | | | | | | |
Three months ended June 30, 2014 | Multifamily | | Office | | Retail | | Total |
Same-store net operating income(3) | $ | 8,660 |
| | $ | 24,360 |
| | $ | 11,517 |
| | $ | 44,537 |
|
Add: Net operating income from non-same-store properties(3) | 485 |
| | 1,699 |
| | 5 |
| | 2,189 |
|
Total net operating income(2) | $ | 9,145 |
| | $ | 26,059 |
| | $ | 11,522 |
| | $ | 46,726 |
|
Add/(deduct): | | | | | | | |
Other income | | | | | | | 219 |
|
Acquisition costs | | | | | | | (1,933 | ) |
Interest expense | | | | | | | (14,985 | ) |
Depreciation and amortization | | | | | | | (24,401 | ) |
General and administrative expenses | | | | | | | (4,828 | ) |
Gain on sale of real estate | | | | | | | 570 |
|
Discontinued operations: | | | | | | | |
Gain on sale of real estate classified as discontinued operations | | | | | | | (288 | ) |
Net income | | | | | | | 1,080 |
|
Less: Net loss attributable to noncontrolling interests in subsidiaries | | | | | | | 7 |
|
Net income attributable to the controlling interests | | | | | | | $ | 1,087 |
|
Washington Real Estate Investment Trust
Page 10 of 11
|
| | | | | | | | | | | | | | | |
The following tables contain reconciliations of net income to same-store net operating income for the periods presented (in thousands): |
| | | | | | | |
Six Months Ended June 30, 2015 | Multifamily | | Office | | Retail | | Total |
Same-store net operating income(3) | $ | 15,489 |
| | $ | 45,879 |
| | $ | 22,190 |
| | $ | 83,558 |
|
Add: Net operating income from non-same-store properties(3) | 1,921 |
| | 5,775 |
| | 1,391 |
| | 9,087 |
|
Total net operating income(2) | $ | 17,410 |
| | $ | 51,654 |
| | $ | 23,581 |
| | $ | 92,645 |
|
Add/(deduct): | | | | | | | |
Other income | | | | | | | 384 |
|
Acquisition costs | | | | | | | (1,008 | ) |
Interest expense | | | | | | | (30,048 | ) |
Depreciation and amortization | | | | | | | (50,778 | ) |
General and administrative expenses | | | | | | | (10,386 | ) |
Loss on extinguishment of debt | | | | | | | (119 | ) |
Gain on sale of real estate | | | | | | | 31,731 |
|
Real estate impairment | | | | | | | (5,909 | ) |
Net income | | | | | | | 26,512 |
|
Less: Net loss attributable to noncontrolling interests in subsidiaries | | | | | | | 448 |
|
Net income attributable to the controlling interests | | | | | | | $ | 26,960 |
|
| | | | | | | |
Six Months Ended June 30, 2014 | Multifamily | | Office | | Retail | | Total |
Same-store net operating income(3) | $ | 15,435 |
| | $ | 45,049 |
| | $ | 21,890 |
| | $ | 82,374 |
|
Add: Net operating income from non-same-store properties(3) | 2,217 |
| | 4,378 |
| | 26 |
| | 6,621 |
|
Total net operating income(2) | $ | 17,652 |
| | $ | 49,427 |
| | $ | 21,916 |
| | $ | 88,995 |
|
Add/(deduct): | | | | | | | |
Other income | | | | | | | 442 |
|
Acquisition costs | | | | | | | (4,978 | ) |
Interest expense | | | | | | | (29,515 | ) |
Depreciation and amortization | | | | | | | (47,154 | ) |
General and administrative expenses | | | | | | | (9,257 | ) |
Gain on sale of real estate | | | | | | | 570 |
|
Discontinued operations: | | | | | | | |
Income from operations of properties sold or held for sale | | | | | | | 546 |
|
Gain on sale of real estate classified as discontinued operations | | | | | | | 105,985 |
|
Net income | | | | | | | 105,634 |
|
Less: Net loss attributable to noncontrolling interests in subsidiaries | | | | | | | 7 |
|
Net income attributable to the controlling interests | | | | | | | $ | 105,641 |
|
Washington Real Estate Investment Trust
Page 11 of 11
|
| | | | | | | | | | | | | | | | |
The following table contains a reconciliation of net income attributable to the controlling interests to core funds from operations for the periods presented (in thousands, except per share data): |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
Net (loss) income | | $ | (2,886 | ) | | $ | 1,080 |
| | $ | 26,512 |
| | $ | 105,634 |
|
Add/(deduct): | | | | | | | | |
Real estate depreciation and amortization | | 25,503 |
| | 24,401 |
| | 50,778 |
| | 47,154 |
|
Gain on sale of depreciable real estate | | — |
| | (570 | ) | | (30,277 | ) | | (570 | ) |
Discontinued operations: | | | | | | | | |
Loss (gain) on sale of real estate | | — |
| | 288 |
| | — |
| | (105,985 | ) |
NAREIT funds from operations(1) | | 22,617 |
| | 25,199 |
| | 47,013 |
| | 46,233 |
|
Add/(deduct): | | | | | | | | |
Real estate impairment | | 5,909 |
| | — |
| | 5,909 |
| | — |
|
Acquisition and structuring expenses | | 1,264 |
| | 1,933 |
| | 1,498 |
| | 4,978 |
|
Gain on sale of non-depreciable real estate | | (1,454 | ) | | — |
| | (1,454 | ) | | — |
|
Loss on extinguishment of debt | | 119 |
| | — |
| | 119 |
| | — |
|
Severance expense | | — |
| | 576 |
| | 1,001 |
| | 624 |
|
Relocation expense | | 26 |
| | — |
| | 90 |
| | — |
|
Core funds from operations(1) | | $ | 28,481 |
| | $ | 27,708 |
| | $ | 54,176 |
| | $ | 51,835 |
|
| | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
Per share data: | | 2015 | | 2014 | | 2015 | | 2014 |
NAREIT FFO | (Basic) | $ | 0.33 |
| | $ | 0.38 |
| | $ | 0.69 |
| | $ | 0.69 |
|
| (Diluted) | $ | 0.33 |
| | $ | 0.38 |
| | $ | 0.69 |
| | $ | 0.69 |
|
Core FFO | (Basic) | $ | 0.42 |
| | $ | 0.42 |
| | $ | 0.79 |
| | $ | 0.77 |
|
| (Diluted) | $ | 0.42 |
| | $ | 0.41 |
| | $ | 0.79 |
| | $ | 0.77 |
|
| | | | | | | | |
Weighted average shares outstanding | | 68,176 |
| | 66,732 |
| | 68,159 |
| | 66,718 |
|
Fully diluted weighted average shares outstanding (for FFO) | | 68,375 |
| | 66,761 |
| | 68,283 |
| | 66,744 |
|
|
| | | | | | |
| |
| Washington Real Estate Investment Trust | |
| Second Quarter 2015 | |
| | |
| Supplemental Operating and Financial Data | |
| Contact: | | 1775 Eye Street, NW | |
| Tejal R. Engman | | Suite 1000 | |
| Director of Investor Relations | | Washington, DC 20006 | |
| E-mail: tengman@washreit.com | | (202) 774-3200 | |
| | | (301) 984-9610 fax | |
| | | | | | |
|
|
Company Background and Highlights |
Second Quarter 2015 |
Washington Real Estate Investment Trust ("Washington REIT") is a self-administered equity real estate investment trust investing in income-producing properties in the greater Washington, DC region. Washington REIT has a diversified portfolio with investments in office, retail, and multifamily properties and land for development.
Second Quarter 2015 Highlights
| |
• | Generated Core Funds from Operations (FFO) of $0.42 per fully diluted share for the quarter, a $0.04 increase over first quarter 2015 and a $0.01 increase over second quarter 2014 |
| |
• | Same-store cash Net Operating Income (NOI) grew by 1.3% over second quarter 2014 |
| |
• | Achieved overall same-store physical occupancy of 92.8%, 30 basis points higher than the second quarter of 2014 |
| |
• | Executed new and renewal commercial leases totaling 259,000 square feet at an average rental rate increase of 15.6% over in-place rents for new leases and an average rental rate increase of 14.9% over in-place rents for renewal leases |
| |
• | Subsequent to quarter end, acquired The Wellington, a 711-unit apartment community with on-site density to develop approximately 360 additional units, for $167 million |
| |
• | Tightened 2015 Core FFO guidance to $1.68 to $1.72 from $1.66 to $1.74 per fully diluted share |
Washington REIT signed commercial leases totaling 259,000 square feet, including 93,000 square feet of new leases and 166,000 square feet of renewal leases. New leases had an average rental rate increase of 15.6% over expiring lease rates and a weighted average lease term of 7.8 years. Commercial tenant improvement costs were $30.19 per square foot and leasing commissions and incentives were $25.89 per square foot for new leases. Renewal leases had an average rental rate increase of 14.9% over expiring lease rates and a weighted average lease term of 4.9 years. Commercial tenant improvement costs were $2.79 per square foot and leasing commissions and incentives were $3.43 per square foot for renewal leases.
On July 1, 2015, Washington REIT acquired The Wellington, an apartment community in Arlington, VA consisting of 711 units and on-site density to develop approximately 360 additional units, for $167 million. The acquisition also provides an opportunity to renovate over 680 units to generate additional rental rate growth. Originally built in 1960, The Wellington is a gated apartment community comprising three mid-rise buildings located on the eastern end of Columbia Pike, which features walkable restaurant and retail amenities, is proximate to four major highways and offers easy access to DC, The Pentagon and Crystal City.
As of June 30, 2015, Washington REIT owned a diversified portfolio of 55 properties, totaling approximately 7 million square feet of commercial space and 2,826 multifamily units, and land held for development. These 55 properties consist of 25 office properties, 17 retail centers and 13 multifamily properties. Washington REIT shares are publicly traded on the New York Stock Exchange (NYSE:WRE)
|
|
Company Background and Highlights |
Second Quarter 2015 |
Net Operating Income Contribution by Sector - Second Quarter 2015
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 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 2014 Form 10-K. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
![](supplementalpiechart4.jpg)
|
| | |
Supplemental Financial and Operating Data
Table of Contents |
June 30, 2015 |
| | |
Schedule | Page |
Key Financial Data | |
| | |
| | |
| | |
| | |
| | |
Capital Analysis | |
| | |
| | |
| | |
| | |
Portfolio Analysis | |
| | |
| | |
| | |
| | |
| | |
Growth and Strategy | |
| | |
| | |
Tenant Analysis | |
| | |
| | |
| | |
| | |
| | |
Appendix | |
| | |
| | |
|
| |
Consolidated Statements of Operations (In thousands, except per share data) (Unaudited)
| |
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
OPERATING RESULTS | 6/30/2015 | | 3/31/2015 | | 12/31/2014 | | 9/30/2014 | | 6/30/2014 |
Real estate rental revenue | $ | 74,226 |
| | $ | 74,856 |
| | $ | 74,359 |
| | $ | 73,413 |
| | $ | 72,254 |
|
Real estate expenses | (27,229 | ) | | (29,208 | ) | | (25,911 | ) | | (25,914 | ) | | (25,528 | ) |
| 46,997 |
| | 45,648 |
| | 48,448 |
| | 47,499 |
| | 46,726 |
|
Real estate depreciation and amortization | (25,503 | ) | | (25,275 | ) | | (24,503 | ) | | (24,354 | ) | | (24,401 | ) |
Income from real estate | 21,494 |
| | 20,373 |
| | 23,945 |
| | 23,145 |
| | 22,325 |
|
Interest expense | (14,700 | ) | | (15,348 | ) | | (15,183 | ) | | (15,087 | ) | | (14,985 | ) |
Other income | 192 |
| | 192 |
| | 191 |
| | 192 |
| | 219 |
|
Acquisition costs | (992 | ) | | (16 | ) | | (663 | ) | | (69 | ) | | (1,933 | ) |
Real estate impairment | (5,909 | ) | | — |
| | — |
| | — |
| | — |
|
Gain on sale of real estate | 1,454 |
| | 30,277 |
| | — |
| | — |
| | 570 |
|
Loss on extinguishment of debt | (119 | ) | | — |
| | — |
| | — |
| | — |
|
General and administrative | (4,306 | ) | | (6,080 | ) | | (5,981 | ) | | (4,523 | ) | | (4,828 | ) |
(Loss) income from continuing operations | (2,886 | ) | | 29,398 |
| | 2,309 |
| | 3,658 |
| | 1,368 |
|
Discontinued operations: | | | | | | | | | |
Loss on sale of real estate | — |
| | — |
| | — |
| | — |
| | (288 | ) |
Loss from discontinued operations | — |
| | — |
| | — |
| | — |
| | (288 | ) |
| | | | | | | | | |
Net (loss) income | (2,886 | ) | | 29,398 |
| | 2,309 |
| | 3,658 |
| | 1,080 |
|
Less: Net loss from noncontrolling interests | 340 |
| | 108 |
| | 21 |
| | 10 |
| | 7 |
|
Net (loss) income attributable to the controlling interests | $ | (2,546 | ) | | $ | 29,506 |
| | $ | 2,330 |
| | $ | 3,668 |
| | $ | 1,087 |
|
Per Share Data: | | | | | | | | | |
Net (loss) income | $ | (0.04 | ) | | $ | 0.43 |
| | $ | 0.03 |
| | $ | 0.05 |
| | $ | 0.02 |
|
Fully diluted weighted average shares outstanding | 68,176 |
| | 68,191 |
| | 67,065 |
| | 66,790 |
| | 66,761 |
|
Percentage of Revenues: | | | | | | | | | |
Real estate expenses | 36.7 | % | | 39.0 | % | | 34.8 | % | | 35.3 | % | | 35.3 | % |
General and administrative | 5.8 | % | | 8.1 | % | | 8.0 | % | | 6.2 | % | | 6.7 | % |
Ratios: | | | | | | | | | |
Adjusted EBITDA / Interest expense | 3.0 | x | | 2.7 | x | | 3.0 | x | | 2.9 | x | | 2.9 | x |
Income from continuing operations/Total real estate revenue | (3.9 | )% | | 39.3 | % | | 3.1 | % | | 5.0 | % | | 1.9 | % |
Net income /Total real estate revenue | (3.4 | )% | | 39.4 | % | | 3.1 | % | | 5.0 | % | | 1.5 | % |
|
| |
Consolidated Balance Sheets (In thousands) (Unaudited) | |
|
| | | | | | | | | | | | | | | | | | | |
| 6/30/2015 | | 3/31/2015 | | 12/31/2014 | | 9/30/2014 | | 6/30/2014 |
Assets | | | | | | | | | |
Land | $ | 542,654 |
| | $ | 543,247 |
| | $ | 543,546 |
| | $ | 519,859 |
| | $ | 519,859 |
|
Income producing property | 1,966,612 |
| | 1,932,908 |
| | 1,927,407 |
| | 1,867,752 |
| | 1,853,982 |
|
| 2,509,266 |
| | 2,476,155 |
| | 2,470,953 |
| | 2,387,611 |
| | 2,373,841 |
|
Accumulated depreciation and amortization | (670,103 | ) | | (649,279 | ) | | (640,434 | ) | | (620,279 | ) | | (600,171 | ) |
Net income producing property | 1,839,163 |
| | 1,826,876 |
| | 1,830,519 |
| | 1,767,332 |
| | 1,773,670 |
|
Development in progress, including land held for development | 35,314 |
| | 65,656 |
| | 76,235 |
| | 99,500 |
| | 83,970 |
|
Total real estate held for investment, net | 1,874,477 |
| | 1,892,532 |
| | 1,906,754 |
| | 1,866,832 |
| | 1,857,640 |
|
Cash and cash equivalents | 22,778 |
| | 40,025 |
| | 15,827 |
| | 8,571 |
| | 23,009 |
|
Restricted cash | 13,705 |
| | 13,095 |
| | 10,299 |
| | 9,496 |
| | 11,369 |
|
Rents and other receivables, net of allowance for doubtful accounts | 61,577 |
| | 60,215 |
| | 59,745 |
| | 58,135 |
| | 55,583 |
|
Prepaid expenses and other assets | 117,657 |
| | 117,367 |
| | 121,082 |
| | 116,345 |
| | 112,548 |
|
Total assets | $ | 2,090,194 |
| | $ | 2,123,234 |
| | $ | 2,113,707 |
| | $ | 2,059,379 |
| | $ | 2,060,149 |
|
Liabilities | | | | | | | | | |
Notes payable | $ | 597,442 |
| | $ | 747,335 |
| | $ | 747,208 |
| | $ | 747,082 |
| | $ | 746,956 |
|
Mortgage notes payable | 419,755 |
| | 419,250 |
| | 418,525 |
| | 413,330 |
| | 406,975 |
|
Lines of credit | 185,000 |
| | 30,000 |
| | 50,000 |
| | 5,000 |
| | — |
|
Accounts payable and other liabilities | 50,281 |
| | 65,447 |
| | 54,318 |
| | 64,153 |
| | 59,719 |
|
Advance rents | 13,733 |
| | 14,471 |
| | 12,528 |
| | 12,211 |
| | 13,172 |
|
Tenant security deposits | 9,053 |
| | 8,892 |
| | 8,899 |
| | 8,625 |
| | 8,686 |
|
Total liabilities | 1,275,264 |
| | 1,285,395 |
| | 1,291,478 |
| | 1,250,401 |
| | 1,235,508 |
|
Equity | | | | | | | | | |
Preferred shares; $0.01 par value; 10,000 shares authorized | — |
| | — |
| | — |
| | — |
| | — |
|
Shares of beneficial interest, $0.01 par value; 100,000 shares authorized | 682 |
| | 681 |
| | 678 |
| | 667 |
| | 666 |
|
Additional paid-in capital | 1,191,594 |
| | 1,191,123 |
| | 1,184,395 |
| | 1,153,344 |
| | 1,152,647 |
|
Distributions in excess of net income | (379,577 | ) | | (356,531 | ) | | (365,518 | ) | | (347,724 | ) | | (331,373 | ) |
Total shareholders' equity | 812,699 |
| | 835,273 |
| | 819,555 |
| | 806,287 |
| | 821,940 |
|
Noncontrolling interests in subsidiaries | 2,231 |
| | 2,566 |
| | 2,674 |
| | 2,691 |
| | 2,701 |
|
Total equity | 814,930 |
| | 837,839 |
| | 822,229 |
| | 808,978 |
| | 824,641 |
|
Total liabilities and equity | $ | 2,090,194 |
| | $ | 2,123,234 |
| | $ | 2,113,707 |
| | $ | 2,059,379 |
| | $ | 2,060,149 |
|
Total Debt / Total Market Capitalization | 0.40 | :1 | | 0.39 | :1 | | 0.39 | :1 | | 0.41 | :1 | | 0.40 | :1 |
|
| |
Funds from Operations (In thousands, except per share data) (Unaudited)
| |
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| 6/30/2015 | | 3/31/2015 | | 12/31/2014 | | 9/30/2014 | | 6/30/2014 |
Funds from operations(1) | | | | | | | | | |
Net (loss) income | $ | (2,886 | ) | | $ | 29,398 |
| | $ | 2,309 |
| | $ | 3,658 |
| | $ | 1,080 |
|
Real estate depreciation and amortization | 25,503 |
| | 25,275 |
| | 24,503 |
| | 24,354 |
| | 24,401 |
|
Gain on sale of real estate | — |
| | (30,277 | ) | | — |
| | — |
| | (570 | ) |
Discontinued operations: | | | | | | | | | |
Loss on sale of real estate | — |
| | — |
| | — |
| | — |
| | 288 |
|
NAREIT funds from operations (FFO) | 22,617 |
| | 24,396 |
| | 26,812 |
| | 28,012 |
| | 25,199 |
|
Loss on extinguishment of debt | 119 |
| | — |
| | — |
| | — |
| | — |
|
Real estate impairment | 5,909 |
| | — |
| | — |
| | — |
| | — |
|
Gain on sale of real estate | (1,454 | ) | | — |
| | — |
| | — |
| | — |
|
Severance expense | — |
| | 1,001 |
| | 582 |
| | 394 |
| | 576 |
|
Relocation expense | 26 |
| | 64 |
| | 764 |
| | — |
| | — |
|
Acquisition and structuring expenses | 1,264 |
| | 234 |
| | 663 |
| | 69 |
| | 1,933 |
|
Core FFO (1) | $ | 28,481 |
| | $ | 25,695 |
| | $ | 28,821 |
| | $ | 28,475 |
| | $ | 27,708 |
|
| | | | | | | | | |
Allocation to participating securities(2) | (80 | ) | | (108 | ) | | (53 | ) | | (44 | ) | | (17 | ) |
| | | | | | | | | |
NAREIT FFO per share - basic | $ | 0.33 |
| | $ | 0.36 |
| | $ | 0.40 |
| | $ | 0.42 |
| | $ | 0.38 |
|
NAREIT FFO per share - fully diluted | $ | 0.33 |
| | $ | 0.36 |
| | $ | 0.40 |
| | $ | 0.42 |
| | $ | 0.38 |
|
Core FFO per share - fully diluted | $ | 0.42 |
| | $ | 0.38 |
| | $ | 0.43 |
| | $ | 0.43 |
| | $ | 0.41 |
|
| | | | | | | | | |
Common dividend per share | $ | 0.30 |
| | $ | 0.30 |
| | $ | 0.30 |
| | $ | 0.30 |
| | $ | 0.30 |
|
| | | | | | | | | |
Average shares - basic | 68,176 |
| | 68,141 |
| | 67,002 |
| | 66,738 |
| | 66,732 |
|
Average shares - fully diluted (for FFO and FAD) | 68,375 |
| | 68,191 |
| | 67,065 |
| | 66,790 |
| | 66,761 |
|
(1) See "Supplemental Definitions" on page 30 of this supplemental for the definitions of FFO and Core FFO. |
(2) Adjustment to the numerators for FFO and Core FFO per share calculations when applying the two-class method for calculating EPS. |
|
| |
Funds Available for Distribution (In thousands, except per share data) (Unaudited)
| |
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| 6/30/2015 | | 3/31/2015 | | 12/31/2014 | | 9/30/2014 | | 6/30/2014 |
Funds available for distribution(1) | | | | | | | | | |
NAREIT FFO | $ | 22,617 |
| | $ | 24,396 |
| | $ | 26,812 |
| | $ | 28,012 |
| | $ | 25,199 |
|
Non-cash loss on extinguishment of debt | 119 |
| | — |
| | — |
| | — |
| | — |
|
Tenant improvements and incentives | (3,417 | ) | | (3,730 | ) | | (7,103 | ) | | (7,649 | ) | | (9,612 | ) |
Leasing commissions | (1,149 | ) | | (1,606 | ) | | (7,800 | ) | | (1,323 | ) | | (1,721 | ) |
Recurring capital improvements | (737 | ) | | (689 | ) | | (1,811 | ) | | (1,720 | ) | | (1,610 | ) |
Straight-line rent, net | (538 | ) | | 407 |
| | (1,087 | ) | | (658 | ) | | (723 | ) |
Non-cash fair value interest expense | 36 |
| | 35 |
| | 33 |
| | 32 |
| | 30 |
|
Non-real estate depreciation and amortization | 1,123 |
| | 938 |
| | 1,578 |
| | 994 |
| | 904 |
|
Amortization of lease intangibles, net | 970 |
| | 768 |
| | 729 |
| | 704 |
| | 677 |
|
Amortization and expensing of restricted share and unit compensation | 1,195 |
| | 1,826 |
| | 1,134 |
| | 1,307 |
| | 1,429 |
|
Funds available for distribution (FAD) | 20,219 |
| | 22,345 |
| | 12,485 |
| | 19,699 |
| | 14,573 |
|
Gain on sale of real estate | (1,454 | ) | | — |
| | — |
| | — |
| | — |
|
Non-share-based severance expense | — |
| | 196 |
| | 546 |
| | 313 |
| | 517 |
|
Relocation expense | 26 |
| | 81 |
| | 85 |
| | — |
| | — |
|
Acquisition and structuring expenses | 1,264 |
| | 234 |
| | 663 |
| | 69 |
| | 1,933 |
|
Real estate impairment | 5,909 |
| | — |
| | — |
| | — |
| | — |
|
Core FAD (1) | $ | 25,964 |
| | $ | 22,856 |
| | $ | 13,779 |
| | $ | 20,081 |
| | $ | 17,023 |
|
| | | | | | | | | |
Allocation to participating securities(2) | (80 | ) | | (108 | ) | | (53 | ) | | (44 | ) | | (17 | ) |
| | | | | | | | | |
FAD per share - basic | $ | 0.30 |
| | $ | 0.33 |
| | $ | 0.19 |
| | $ | 0.29 |
| | $ | 0.22 |
|
FAD per share - fully diluted | $ | 0.29 |
| | $ | 0.33 |
| | $ | 0.19 |
| | $ | 0.29 |
| | $ | 0.22 |
|
Core FAD per share - fully diluted | $ | 0.38 |
| | $ | 0.33 |
| | $ | 0.20 |
| | $ | 0.30 |
| | $ | 0.25 |
|
| | | | | | | | | |
Common dividend per share | $ | 0.30 |
| | $ | 0.30 |
| | $ | 0.30 |
| | $ | 0.30 |
| | $ | 0.30 |
|
| | | | | | | | | |
Average shares - basic | 68,176 |
| | 68,141 |
| | 67,002 |
| | 66,738 |
| | 66,732 |
|
Average shares - fully diluted (for FFO and FAD) | 68,375 |
| | 68,191 |
| | 67,065 |
| | 66,790 |
| | 66,761 |
|
(1) See "Supplemental Definitions" on page 30 of this supplemental for the definitions of FAD and Core FAD. (2) Adjustment to the numerators for FAD and Core FAD per share calculations when applying the two-class method for calculating EPS. |
|
| |
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) (In thousands) (Unaudited) | |
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| 6/30/2015 | | 3/31/2015 | | 12/31/2014 | | 9/30/2014 | | 6/30/2014 |
Adjusted EBITDA (1) | | | | | | | | | |
| | | | | | | | | |
Net (loss) income | $ | (2,886 | ) | | $ | 29,398 |
| | $ | 2,309 |
| | $ | 3,658 |
| | $ | 1,080 |
|
Add: | | | | | | | | | |
Interest expense, including discontinued operations | 14,700 |
| | 15,348 |
| | 15,183 |
| | 15,087 |
| | 14,985 |
|
Real estate depreciation and amortization, including discontinued operations | 25,503 |
| | 25,275 |
| | 24,503 |
| | 24,354 |
| | 24,401 |
|
Income tax expense | 28 |
| | — |
| | — |
| | 46 |
| | 71 |
|
Real estate impairment | 5,909 |
| | — |
| | — |
| | — |
| | — |
|
Non-real estate depreciation | 178 |
| | 103 |
| | 793 |
| | 113 |
| | 180 |
|
Severance expense | — |
| | 1,001 |
| | 582 |
| | 394 |
| | 576 |
|
Relocation expense | 26 |
| | 64 |
| | 764 |
| | — |
| | — |
|
Acquisition and structuring expenses | 1,264 |
| | 234 |
| | 663 |
| | 69 |
| | 1,933 |
|
Less: | | | | | | | | | |
Net gain on sale of real estate | (1,454 | ) | | (30,277 | ) | | — |
| | — |
| | (282 | ) |
Loss on extinguishment of debt | 119 |
| | — |
| | — |
| | — |
| | — |
|
Adjusted EBITDA | $ | 43,387 |
| | $ | 41,146 |
| | $ | 44,797 |
| | $ | 43,721 |
| | $ | 42,944 |
|
| | | | | | | | | |
(1) Adjusted EBITDA is earnings before interest expense, taxes, depreciation, amortization, gain on sale of real estate, real estate impairment, gain/loss on extinguishment of debt, severance expense, relocation expense, acquisition and structuring expenses, gain from non-disposal activities and allocations to noncontrolling interests. We consider Adjusted EBITDA to be an appropriate supplemental performance measure because it permits investors to view income from operations without the effect of depreciation, and the cost of debt or non-operating gains and losses. Adjusted EBITDA is a non-GAAP measure. |
| | | | | | | | | |
Note: We have changed our definition of Adjusted EBITDA this quarter to exclude severance expense, relocation expense, acquisition and structuring expenses, and allocations to noncontrolling interests. We made this change to make our definition of Adjusted EBITDA similar to Adjusted EBITDA as defined in our debt covenants. The calculation of Adjusted EBITDA for prior quarters has been updated to conform with the revised definition. |
|
| |
Long Term Debt Analysis ($'s in thousands) | |
|
| | | | | | | | | | | | | | | | | | | |
| 6/30/2015 | | 3/31/2015 | | 12/31/2014 | | 9/30/2014 | | 6/30/2014 |
Balances Outstanding | | | | | | | | | |
| | | | | | | | | |
Secured | | | | | | | | | |
Conventional fixed rate | $ | 419,755 |
| | $ | 419,250 |
| | $ | 418,525 |
| | $ | 413,330 |
| | $ | 406,975 |
|
Unsecured | | | | | | | | | |
Fixed rate bonds and notes | 597,442 |
| | 747,335 |
| | 747,208 |
| | 747,082 |
| | 746,956 |
|
Credit facility | 185,000 |
| | 30,000 |
| | 50,000 |
| | 5,000 |
| | — |
|
Unsecured total | 782,442 |
| | 777,335 |
| | 797,208 |
| | 752,082 |
| | 746,956 |
|
Total | $ | 1,202,197 |
| | $ | 1,196,585 |
| | $ | 1,215,733 |
| | $ | 1,165,412 |
| | $ | 1,153,931 |
|
| | | | | | | | | |
Average Interest Rates | | | | | | | | | |
| | | | | | | | | |
Secured | | | | | | | | | |
Conventional fixed rate | 5.2 | % | | 5.2 | % | | 5.2 | % | | 5.3 | % | | 5.3 | % |
Unsecured | | | | | | | | | |
Fixed rate bonds | 4.7 | % | | 4.9 | % | | 4.9 | % | | 4.9 | % | | 4.9 | % |
Credit facilities | 1.2 | % | | 1.4 | % | | 1.4 | % | | 1.4 | % | | — | % |
Unsecured total | 3.9 | % | | 4.7 | % | | 4.7 | % | | 4.8 | % | | 4.9 | % |
Average | 4.4 | % | | 4.9 | % | | 4.9 | % | | 5.0 | % | | 5.0 | % |
Note: The current balances outstanding of the secured and unsecured fixed rate bonds and notes are shown net of discounts/premiums of $4.1 million and $2.6 million, respectively.
|
| |
Long Term Debt Maturities (in thousands, except average interest rates) | |
, except per share data)![](q22015suppl_chart-31398.jpg)
|
| | | | | | | | | | | | | | | | | |
| Future Maturities of Debt |
Year | Secured Debt | | Unsecured Debt | | Credit Facilities | | Total Debt | | Avg Interest Rate |
2015 | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | |
2016 | 162,880 |
| | — |
| | — |
| | 162,880 |
| | 5.1% |
2017 | 150,903 |
| | — |
| | — |
| | 150,903 |
| | 5.9% |
2018 | — |
| | — |
| | — |
| | — |
| | |
2019 | 31,280 |
| | — |
| | 185,000 |
| | 216,280 |
| | 2.0% |
2020 | — |
| | 250,000 |
| | — |
| | 250,000 |
| | 5.1% |
2021 | — |
| | — |
| | — |
| | — |
| | |
2022 | 44,517 |
| | 300,000 |
| | — |
| | 344,517 |
| | 4.0% |
2023 | — |
| | — |
| | — |
| | — |
| | |
2024 | — |
| | — |
| | — |
| | — |
| | |
2025 | — |
| | — |
| | — |
| | — |
| | |
Thereafter | — |
| | 50,000 |
| | — |
| | 50,000 |
| | 7.4% |
Scheduled principal payments | $ | 389,580 |
| | $ | 600,000 |
| | $ | 185,000 |
| | $ | 1,174,580 |
| | 4.4% |
Scheduled amortization payments | 26,078 |
| | — |
| | — |
| | 26,078 |
| | 4.7% |
Net discounts/premiums | 4,097 |
| | (2,558 | ) | | — |
| | 1,539 |
| | |
Total maturities | $ | 419,755 |
| | $ | 597,442 |
| | $ | 185,000 |
| | $ | 1,202,197 |
| | 4.4% |
Weighted average maturity =4.9 years
|
| | | | | | | | | |
| Unsecured Notes Payable | | Unsecured Line of Credit ($600.0 million) |
| Quarter Ended June 30, 2015 | | Covenant | | Quarter Ended June 30, 2015 | | Covenant |
% of Total Indebtedness to Total Assets(1) | 42.4 | % | | ≤ 65.0% | | N/A |
| | N/A |
Ratio of Income Available for Debt Service to Annual Debt Service | 3.0 |
| | ≥ 1.5 | | N/A |
| | N/A |
% of Secured Indebtedness to Total Assets(1) | 14.6 | % | | ≤ 40.0% | | N/A |
| | N/A |
Ratio of Total Unencumbered Assets(2) to Total Unsecured Indebtedness | 2.8 |
| | ≥ 1.5 | | N/A |
| | N/A |
% of Net Consolidated Total Indebtedness to Consolidated Total Asset Value(3) | N/A |
| | N/A | | 39.3 | % | | ≤ 60.0% |
Ratio of Consolidated Adjusted EBITDA(4) to Consolidated Fixed Charges(5) | N/A |
| | N/A | | 2.89 |
| | ≥ 1.50 |
% of Consolidated Secured Indebtedness to Consolidated Total Asset Value(3) | N/A |
| | N/A | | 13.8 | % | | ≤ 40.0% |
% of Consolidated Unsecured Indebtedness to Unencumbered Pool Value(6) | N/A |
| | N/A | | 33.1 | % | | ≤ 60.0% |
Ratio of Unencumbered Adjusted Net Operating Income to Consolidated Unsecured Interest Expense | N/A |
| | N/A | | 3.96 |
| | ≥ 1.75 |
| | | | | | | |
(1) Total Assets is calculated by applying a capitalization rate of 7.50% to the EBITDA(4) from the last four consecutive quarters, excluding EBITDA from acquired, disposed, and non-stabilized development properties. |
(2) Total Unencumbered Assets is calculated by applying a capitalization rate of 7.50% to the EBITDA(4) from unencumbered properties from the last four consecutive quarters, excluding EBITDA from acquired, disposed, and non-stabilized development properties. |
(3) Consolidated Total Asset Value is the sum of unrestricted cash plus the quotient of applying a capitalization rate to the annualized NOI from the most recently ended quarter for each asset class, excluding NOI from disposed properties, acquisitions during the past 6 quarters, development, major redevelopment and low occupancy properties. To this amount, we add the purchase price of acquisitions during the past 6 quarters plus values for development, major redevelopment and low occupancy properties. |
(4) Consolidated Adjusted EBITDA is defined as earnings before noncontrolling interests, depreciation, amortization, interest expense, income tax expense, acquisition costs, extraordinary, unusual or nonrecurring transactions including sale of assets, impairment, gains and losses on extinguishment of debt and other non-cash charges. |
(5) Consolidated Fixed Charges consist of interest expense excluding capitalized interest and amortization of deferred financing costs, principal payments and preferred dividends, if any. |
(6) Unencumbered Pool Value is the sum of unrestricted cash plus the quotient of applying a capitalization rate to the annualized NOI from unencumbered properties from the most recently ended quarter for each asset class excluding NOI from disposed properties, acquisitions during the past 6 quarters, development, major redevelopment and low occupancy properties. To this we add the purchase price of unencumbered acquisitions during the past 6 quarters and values for unencumbered development, major redevelopment and low occupancy properties. |
|
| |
Capital Analysis (In thousands, except per share amounts) | |
|
| | | | | | | | | | | | | | | | | | | |
| 6/30/2015 | | 3/31/2015 | | 12/31/2014 | | 9/30/2014 | | 6/30/2014 |
Market Data | | | | | | | | | |
| | | | | | | | | |
Shares Outstanding | $ | 68,162 |
| | $ | 68,126 |
| | $ | 67,819 |
| | $ | 66,663 |
| | $ | 66,636 |
|
Market Price per Share | 25.95 |
| | 27.63 |
| | 27.66 |
| | 25.38 |
| | 25.98 |
|
Equity Market Capitalization | $ | 1,768,804 |
| | $ | 1,882,321 |
| | $ | 1,875,874 |
| | $ | 1,691,907 |
| | $ | 1,731,203 |
|
| | | | | | | | | |
Total Debt | $ | 1,202,197 |
| | $ | 1,196,585 |
| | $ | 1,215,733 |
| | $ | 1,165,412 |
| | $ | 1,153,931 |
|
Total Market Capitalization | $ | 2,971,001 |
| | $ | 3,078,906 |
| | $ | 3,091,607 |
| | $ | 2,857,319 |
| | $ | 2,885,134 |
|
| | | | | | | | | |
Total Debt to Market Capitalization | 0.40 | :1 | | 0.39 | :1 | | 0.39 | :1 | | 0.41 | :1 | | 0.40 | :1 |
| | | | | | | | | |
Earnings to Fixed Charges(1) | 0.8x |
| | 2.9x |
| | 1.1x |
| | 1.2x |
| | 1.1x |
|
Debt Service Coverage Ratio(2) | 2.7x |
| | 2.5x |
| | 2.8x |
| | 2.7x |
| | 2.7x |
|
| | | | | | | | | |
Dividend Data | | | | | | | | | |
| | | | | | | | | |
Total Dividends Paid | $ | 20,500 |
| | $ | 20,519 |
| | $ | 20,124 |
| | $ | 20,019 |
| | $ | 20,042 |
|
Common Dividend per Share | $ | 0.30 |
| | $ | 0.30 |
| | $ | 0.30 |
| | $ | 0.30 |
| | $ | 0.30 |
|
Payout Ratio (Core FFO per share basis) | 71.4 | % | | 78.9 | % | | 69.8 | % | | 69.8 | % | | 73.2 | % |
Payout Ratio (Core FAD per share basis) | 78.9 | % | | 90.9 | % | | 150.0 | % | | 100.0 | % | | 120.0 | % |
| | | | | | | | | |
(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 attributable to the controlling interests 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 Adjusted EBITDA (see page 8) by interest expense and principal amortization. |
|
| |
Same-Store Portfolio Net Operating Income (NOI) Growth & Rental Growth 2015 vs. 2014 | |
|
| | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | Rental Rate |
| 2015 | | 2014 | | % Change | | Growth |
Cash NOI: | | | | | | | |
Multifamily | $ | 8,705 |
| | $ | 8,647 |
| | 0.7 | % | | (2.7 | )% |
Office | 24,894 |
| | 24,281 |
| | 2.5 | % | | 2.4 | % |
Retail | 11,347 |
| | 11,430 |
| | (0.7 | )% | | 2.2 | % |
Overall Same-Store Portfolio (1) | $ | 44,946 |
| | $ | 44,358 |
| | 1.3 | % | | 1.2 | % |
| | | | | | | |
NOI: | | | | | | | |
Multifamily | $ | 8,702 |
| | $ | 8,660 |
| | 0.5 | % | | (2.7 | )% |
Office | 24,415 |
| | 24,360 |
| | 0.2 | % | | 1.8 | % |
Retail | 11,270 |
| | 11,517 |
| | (2.1 | )% | | 2.5 | % |
Overall Same-Store Portfolio (1) | $ | 44,387 |
| | $ | 44,537 |
| | (0.3 | )% | | 0.9 | % |
|
|
(1) Non same-store properties were: |
Acquisitions: |
Office - 1775 Eye Street, NW |
Retail - Spring Valley Retail Center |
Development/Redevelopment: |
Multifamily - The Maxwell |
Office - Silverline Center |
Sold properties classified as continuing operations: |
Multifamily - Country Club Towers |
Retail - 5740 Columbia Road (parcel at Gateway Overlook) |
|
| |
Same-Store Portfolio Net Operating Income (NOI) Detail (In thousands) | |
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2015 |
| Multifamily | | Office | | Retail | | Corporate and Other | | Total |
Real estate rental revenue | | | | | | | | | |
Same-store portfolio | $ | 14,934 |
| | $ | 38,929 |
| | $ | 14,766 |
| | $ | — |
| | $ | 68,629 |
|
Non same-store - acquired and in development (1) | 409 |
| | 4,214 |
| | 974 |
| | — |
| | 5,597 |
|
Total | 15,343 |
| | 43,143 |
| | 15,740 |
| | — |
| | 74,226 |
|
Real estate expenses | | | | | | | | | |
Same-store portfolio | 6,232 |
| | 14,514 |
| | 3,496 |
| | — |
| | 24,242 |
|
Non same-store - acquired and in development (1) | 453 |
| | 2,328 |
| | 206 |
| | — |
| | 2,987 |
|
Total | 6,685 |
| | 16,842 |
| | 3,702 |
| | — |
| | 27,229 |
|
Net Operating Income (NOI) | | | | | | | | | |
Same-store portfolio | 8,702 |
| | 24,415 |
| | 11,270 |
| | — |
| | 44,387 |
|
Non same-store - acquired and in development (1) | (44 | ) | | 1,886 |
| | 768 |
| | — |
| | 2,610 |
|
Total | $ | 8,658 |
| | $ | 26,301 |
| | $ | 12,038 |
| | $ | — |
| | $ | 46,997 |
|
| | | | | | | | | |
Same-store portfolio NOI (from above) | $ | 8,702 |
| | $ | 24,415 |
| | $ | 11,270 |
| | $ | — |
| | $ | 44,387 |
|
Straight-line revenue, net for same-store properties | 2 |
| | (352 | ) | | 46 |
| | — |
| | (304 | ) |
FAS 141 Min Rent | 1 |
| | 291 |
| | (34 | ) | | — |
| | 258 |
|
Amortization of lease intangibles for same-store properties | — |
| | 540 |
| | 65 |
| | — |
| | 605 |
|
Same-store portfolio cash NOI | $ | 8,705 |
| | $ | 24,894 |
| | $ | 11,347 |
| | $ | — |
| | $ | 44,946 |
|
Reconciliation of NOI to net income | | | | | | | | | |
Total NOI | $ | 8,658 |
| | $ | 26,301 |
| | $ | 12,038 |
| | $ | — |
| | $ | 46,997 |
|
Depreciation and amortization | (4,425 | ) | | (17,085 | ) | | (3,741 | ) | | (252 | ) | | (25,503 | ) |
General and administrative | — |
| | — |
| | — |
| | (4,306 | ) | | (4,306 | ) |
Interest expense | (2,441 | ) | | (2,984 | ) | | (232 | ) | | (9,043 | ) | | (14,700 | ) |
Other income | — |
| | — |
| | — |
| | 192 |
| | 192 |
|
Acquisition costs | — |
| | — |
| | — |
| | (992 | ) | | (992 | ) |
Gain on sale of real estate | — |
| | — |
| | — |
| | 1,454 |
| | 1,454 |
|
Real estate impairment | — |
| | — |
| | — |
| | (5,909 | ) | | (5,909 | ) |
Loss on extinguishment of debt | — |
| | — |
| | — |
| | (119 | ) | | (119 | ) |
Net income | 1,792 |
| | 6,232 |
| | 8,065 |
| | (18,975 | ) | | (2,886 | ) |
Net loss attributable to noncontrolling interests | — |
| | — |
| | — |
| | 340 |
| | 340 |
|
Net income attributable to the controlling interests | $ | 1,792 |
| | $ | 6,232 |
| | $ | 8,065 |
| | $ | (18,635 | ) | | $ | (2,546 | ) |
(1) For a list of non-same-store properties and held for sale and sold properties, see page 13 of this Supplemental. | | |
|
| |
Same-Store Net Operating Income (NOI) Detail (In thousands) | |
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2014 |
| Multifamily | | Office | | Retail | | Corporate and Other | | Total |
Real estate rental revenue | | | | | | | | | |
Same-store portfolio | $ | 14,658 |
| | $ | 38,276 |
| | $ | 14,748 |
| | $ | — |
| | $ | 67,682 |
|
Non same-store - acquired and in development (1) | 961 |
| | 3,600 |
| | 11 |
| | — |
| | 4,572 |
|
Total | 15,619 |
| | 41,876 |
| | 14,759 |
| | — |
| | 72,254 |
|
| | | | | | | | | |
Real estate expenses | | | | | | | | | |
Same-store portfolio | 5,998 |
| | 13,916 |
| | 3,231 |
| | — |
| | 23,145 |
|
Non same-store - acquired and in development (1) | 476 |
| | 1,901 |
| | 6 |
| | — |
| | 2,383 |
|
Total | 6,474 |
| | 15,817 |
| | 3,237 |
| | — |
| | 25,528 |
|
| | | | | | | | | |
Net Operating Income (NOI) | | | | | | | | | |
Same-store portfolio | 8,660 |
| | 24,360 |
| | 11,517 |
| | — |
| | 44,537 |
|
Non same-store - acquired and in development (1) | 485 |
| | 1,699 |
| | 5 |
| | — |
| | 2,189 |
|
Total | $ | 9,145 |
| | $ | 26,059 |
| | $ | 11,522 |
| | $ | — |
| | $ | 46,726 |
|
| | | | | | | | | |
Same-store portfolio NOI (from above) | $ | 8,660 |
| | $ | 24,360 |
| | $ | 11,517 |
| | $ | — |
| | $ | 44,537 |
|
Straight-line revenue, net for same-store properties | (2 | ) | | (567 | ) | | (99 | ) | | — |
| | (668 | ) |
FAS 141 Min Rent | (11 | ) | | 246 |
| | (52 | ) | | — |
| | 183 |
|
Amortization of lease intangibles for same-store properties | — |
| | 242 |
| | 64 |
| | — |
| | 306 |
|
Same-store portfolio cash NOI | $ | 8,647 |
| | $ | 24,281 |
| | $ | 11,430 |
| | $ | — |
| | $ | 44,358 |
|
| | | | | | | | | |
Reconciliation of NOI to net income | | | | | | | | | |
Total NOI | $ | 9,145 |
| | $ | 26,059 |
| | $ | 11,522 |
| | $ | — |
| | $ | 46,726 |
|
Depreciation and amortization | (5,123 | ) | | (15,938 | ) | | (3,124 | ) | | (216 | ) | | (24,401 | ) |
General and administrative | — |
| | — |
| | — |
| | (4,828 | ) | | (4,828 | ) |
Interest expense | (2,297 | ) | | (3,005 | ) | | (252 | ) | | (9,431 | ) | | (14,985 | ) |
Other income | — |
| | — |
| | — |
| | 219 |
| | 219 |
|
Acquisition costs | — |
| | — |
| | — |
| | (1,933 | ) | | (1,933 | ) |
Gain on sale of real estate | — |
| | — |
| | — |
| | 570 |
| | 570 |
|
Discontinued operations: | | | | | | | | | |
Loss on sale of real estate classified as discontinued operations | — |
| | — |
| | — |
| | (288 | ) | | (288 | ) |
Net income | 1,725 |
| | 7,116 |
| | 8,146 |
| | (15,907 | ) | | 1,080 |
|
Net income attributable to noncontrolling interests | — |
| | — |
| | — |
| | 7 |
| | 7 |
|
Net income attributable to the controlling interests | $ | 1,725 |
| | $ | 7,116 |
| | $ | 8,146 |
| | $ | (15,900 | ) | | $ | 1,087 |
|
(1) For a list of non-same-store properties and held for sale and sold properties, see page 13 of this Supplemental. | | |
|
| |
Net Operating Income (NOI) by Region | |
|
| | | | | | | |
| | | | | |
| | Percentage of NOI | |
| | Q2 2015 | | YTD 2015 | |
| DC | | | | |
| Multifamily | 5.6 | % | | 5.7 | % | |
| Office | 25.1 | % | | 25.8 | % | |
| Retail | 2.0 | % | | 2.1 | % | |
| | 32.7 | % | | 33.6 | % | |
| Maryland | | | | |
| Multifamily | 2.4 | % | | 2.5 | % | |
| Office | 11.4 | % | | 10.5 | % | |
| Retail | 15.6 | % | | 15.2 | % | |
| | 29.4 | % | | 28.2 | % | |
| Virginia | | | | |
| Multifamily | 10.4 | % | | 10.6 | % | |
| Office | 19.4 | % | | 19.5 | % | |
| Retail | 8.1 | % | | 8.1 | % | |
| | 37.9 | % | | 38.2 | % | |
| | | | | |
| Total Portfolio | 100.0 | % | | 100.0 | % | |
|
| | | | |
Same-Store and Overall Physical Occupancy Levels by Sector
| |
|
| | | | | | | | | | | | | | | |
| | Physical Occupancy - Same-Store Properties (1) |
Sector | | 6/30/2015 | | 3/31/2015 | | 12/31/2014 | | 9/30/2014 | | 6/30/2014 |
Multifamily | | 94.5 | % | | 94.0 | % | | 93.8 | % | | 94.2 | % | | 93.6 | % |
Office | | 91.8 | % | | 91.3 | % | | 92.2 | % | | 92.0 | % | | 90.9 | % |
Retail | | 92.8 | % | | 94.7 | % | | 94.5 | % | | 94.4 | % | | 94.2 | % |
| | | | | | | | | | |
Overall Portfolio | | 92.8 | % | | 93.0 | % | | 93.3 | % | | 93.2 | % | | 92.5 | % |
| | | | | | | | | | |
| | Physical Occupancy - All Properties |
Sector | | 6/30/2015 | | 3/31/2015 | | 12/31/2014 | | 9/30/2014 | | 6/30/2014 |
Multifamily | | 91.7 | % | | 89.5 | % | | 93.8 | % | | 94.3 | % | | 93.7 | % |
Office | | 87.6 | % | | 86.7 | % | | 86.9 | % | | 87.1 | % | | 86.2 | % |
Retail | | 92.9 | % | | 94.7 | % | | 94.4 | % | | 94.4 | % | | 94.2 | % |
| | | | | | | | | | |
Overall Portfolio | | 90.0 | % | | 89.5 | % | | 90.5 | % | | 90.7 | % | | 90.1 | % |
|
|
(1) Non same-store properties were: |
Acquisitions: |
Office - 1775 Eye Street, NW |
Retail - Spring Valley Retail Center |
Development/Redevelopment: |
Multifamily - The Maxwell |
Office - Silverline Center |
Sold properties classified as continuing operations: |
Retail - 5740 Columbia Road (parcel at Gateway Overlook) |
Multifamily - Country Club Towers |
|
| | | | |
Same-Store Portfolio and Overall Economic Occupancy Levels by Sector | |
|
| | | | | | | | | | | | | | | |
| | Economic Occupancy - Same-Store Properties(1) |
Sector | | 6/30/2015 | | 3/31/2015 | | 12/31/2014 | | 9/30/2014 | | 6/30/2014 |
Multifamily | | 95.7 | % | | 94.9 | % | | 94.2 | % | | 94.0 | % | | 92.5 | % |
Office | | 92.4 | % | | 92.3 | % | | 93.1 | % | | 92.8 | % | | 90.7 | % |
Retail | | 92.8 | % | | 93.8 | % | | 94.9 | % | | 94.9 | % | | 93.9 | % |
| | | | | | | | | | |
Overall Portfolio | | 93.2 | % | | 93.2 | % | | 93.7 | % | | 93.5 | % | | 91.8 | % |
| | | | | | | | | | |
| | Economic Occupancy - All Properties |
Sector | | 6/30/2015 | | 3/31/2015 | | 12/31/2014 | | 9/30/2014 | | 6/30/2014 |
Multifamily | | 90.6 | % | | 88.4 | % | | 94.2 | % | | 94.1 | % | | 92.6 | % |
Office | | 87.2 | % | | 86.5 | % | | 86.8 | % | | 87.0 | % | | 86.0 | % |
Retail | | 92.9 | % | | 93.5 | % | | 94.5 | % | | 94.9 | % | | 93.9 | % |
| | | | | | | | | | |
Overall Portfolio | | 89.0 | % | | 88.2 | % | | 89.8 | % | | 90.0 | % | | 88.9 | % |
|
|
(1) Non same-store properties were: |
Acquisitions: |
Office - 1775 Eye Street, NW |
Retail - Spring Valley Shopping Center |
Development/Redevelopment: |
Multifamily - The Maxwell |
Office - Silverline Center |
Sold properties classified as continuing operations: |
Multifamily - Country Club Towers |
Retail - 5740 Columbia Road (parcel at Gateway Overlook) |
|
| |
Disposition Summary | |
2015 |
($ in thousands) |
0,
012
|
| | | | | | | | | | | | | | | |
Disposition Summary | | | | | | | | | | |
| | Disposition Date | | Property Type | | # of units | | Contract Sales Price | | GAAP Gain |
Country Club Towers | | March 20, 2015 | | Multifamily | | 227 |
| | $ | 37,800 |
| | $ | 30,277 |
|
|
| |
Development/Re-Development Summary | |
June 30, 2015 |
($ in thousands) |
|
| | | | | | | | | | | | |
Property and Location | Total Rentable Square Feet or # of Units | Anticipated Total Cost | Cost to Date | Draws on Construction Loan to Date | Construction Completion Date | Leased % |
Development Summary | | | | | | |
The Maxwell, Arlington, VA | 163 units & 2,200 square feet retail | $ | 49,904 |
| $ | 47,434 |
| $ | 31,115 |
| fourth quarter 2014 | 54% |
| | | | | | |
Re-Development Summary | | | | | | |
Silverline Center,Tysons, VA | 532,000 square feet | $ | 35,000 |
| $ | 34,045 |
| N/A |
| first quarter 2015 | 61% |
|
| |
Commercial Leasing Summary - New Leases | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2nd Quarter 2015 | | 1st Quarter 2015 | | 4th Quarter 2014 | | 3rd Quarter 2014 | | 2nd Quarter 2014 |
Gross Leasing Square Footage | | | | | | | | | | | | | | | | | | | |
Office Buildings | 57,693 | | | 61,141 | | | 92,349 | | | 37,852 | | | 69,367 | |
Retail Centers | 35,095 | | | 10,853 | | | 10,965 | | | 10,408 | | | 32,191 | |
Total | 92,788 | |
| 71,994 | |
| 103,314 | | | 48,260 | | | 101,558 | |
Weighted Average Term (yrs) | | | | | | | | | | | | | | | | | | | |
Office Buildings | 6.8 | | | 7.5 | | | 8.5 | | | 7.4 | | | 5.8 | |
Retail Centers | 9.6 | | | 11.0 | | | 9.2 | | | 9.8 | | | 10.2 | |
Total | 7.8 | | | 8.0 | | | 8.6 | | | 7.9 | | | 7.1 | |
| | | | | | | | | | | | | | | | | | | |
Rental Rate Increases: | GAAP | | CASH | | GAAP | | CASH | | GAAP | | CASH | | GAAP | | CASH | | GAAP | | CASH |
Rate on expiring leases | | | | | | | | | | | | | | | | | | | |
Office Buildings | $ | 36.35 |
| | $ | 38.06 |
| | $ | 31.43 |
| | $ | 33.14 |
| | $ | 30.37 |
| | $ | 31.66 |
| | $ | 31.50 |
| | $ | 32.62 |
| | $ | 31.14 |
| | $ | 32.00 |
|
Retail Centers | 23.77 |
| | 25.30 |
| | 41.57 |
| | 41.85 |
| | 34.95 |
| | 35.52 |
| | 36.96 |
| | 37.29 |
| | 22.59 |
| | 23.39 |
|
Total | $ | 31.59 |
| | $ | 33.23 |
| | $ | 32.96 |
| | $ | 34.45 |
| | $ | 30.85 |
| | $ | 32.07 |
| | $ | 32.68 |
| | $ | 33.63 |
| | $ | 28.24 |
| | $ | 29.08 |
|
| | | | | | | | | | | | | | | | | | | |
Rate on new leases | | | | | | | | | | | | | | | | | | | |
Office Buildings | $ | 41.61 |
| | $ | 38.11 |
| | $ | 35.39 |
| | $ | 32.49 |
| | $ | 38.39 |
| | $ | 34.43 |
| | $ | 33.77 |
| | $ | 30.68 |
| | $ | 35.71 |
| | $ | 33.40 |
|
Retail Centers | 28.17 |
| | 26.42 |
| | 52.79 |
| | 46.99 |
| | 41.82 |
| | 37.65 |
| | 43.69 |
| | 38.76 |
| | 22.07 |
| | 21.36 |
|
Total | $ | 36.53 |
| | $ | 33.69 |
| | $ | 38.01 |
| | $ | 34.68 |
| | $ | 38.75 |
| | $ | 34.77 |
| | $ | 35.91 |
| | $ | 32.43 |
| | $ | 30.79 |
| | $ | 29.04 |
|
| | | | | | | | | | | | | | | | | | | |
Percentage Increase | | | | | | | | | | | | | | | | | | | |
Office Buildings | 14.5 | % | | 0.2 | % | | 12.6 | % | | (2.0 | )% | | 26.4 | % | | 8.8 | % | | 7.2 | % | | (5.9 | )% | | 14.7 | % | | 4.4 | % |
Retail Centers | 18.5 | % | | 4.4 | % | | 27.0 | % | | 12.3 | % | | 19.7 | % | | 6.0 | % | | 18.2 | % | | 4.0 | % | | (2.3 | )% | | (8.7 | )% |
Total | 15.6 | % | | 1.4 | % | | 15.3 | % | | 0.7 | % | | 25.6 | % | | 8.4 | % | | 9.9 | % | | (3.6 | )% | | 9.0 | % | | (0.1 | )% |
| | | | | | | | | | | | | | | | | | | |
| Total Dollars | | $ per Sq Ft | | Total Dollars | | $ per Sq Ft | | Total Dollars | | $ per Sq Ft | | Total Dollars | | $ per Sq Ft | | Total Dollars | | $ per Sq Ft |
Tenant Improvements | | | | | | | | | | | | | | | | | | | |
Office Buildings | $ | 2,209,271 |
| | $ | 38.29 |
| | $ | 3,255,324 |
| | $ | 53.24 |
| | $ | 4,609,137 |
| | $ | 49.91 |
| | $ | 1,499,573 |
| | $ | 39.62 |
| | $ | 2,330,006 |
| | $ | 33.59 |
|
Retail Centers | 592,351 |
| | 16.88 |
| | 353,335 |
| | 32.56 |
| | 120,600 |
| | 11.00 |
| | 162,180 |
| | 15.58 |
| | 1,616,068 |
| | 50.20 |
|
Subtotal | $ | 2,801,622 |
| | $ | 30.19 |
| | $ | 3,608,659 |
| | $ | 50.12 |
| | $ | 4,729,737 |
| | $ | 45.78 |
| | $ | 1,661,753 |
| | $ | 34.43 |
| | $ | 3,946,074 |
| | $ | 38.86 |
|
Leasing Commissions and Incentives | | | | | | | | | | | | | | | | |
Office Buildings | $ | 1,809,746 |
| | $ | 31.37 |
| | $ | 2,092,175 |
| | $ | 34.22 |
| | $ | 3,328,304 |
| | $ | 36.04 |
| | $ | 1,345,301 |
| | $ | 35.54 |
| | $ | 1,512,211 |
| | $ | 21.80 |
|
Retail Centers | 592,483 |
| | 16.88 |
| | 754,661 |
| | 69.53 |
| | 275,428 |
| | 25.12 |
| | 291,731 |
| | 28.03 |
| | 300,287 |
| | 9.33 |
|
Subtotal | $ | 2,402,229 |
| | $ | 25.89 |
| | $ | 2,846,836 |
| | $ | 39.54 |
| | $ | 3,603,732 |
| | $ | 34.88 |
| | $ | 1,637,032 |
| | $ | 33.92 |
| | $ | 1,812,498 |
| | $ | 17.84 |
|
Tenant Improvements and Leasing Commissions and Incentives | | | | | | | | | | |
Office Buildings | $ | 4,019,017 |
| | $ | 69.66 |
| | $ | 5,347,499 |
| | $ | 87.46 |
| | $ | 7,937,441 |
| | $ | 85.95 |
| | $ | 2,844,874 |
| | $ | 75.16 |
| | $ | 3,842,217 |
| | $ | 55.39 |
|
Retail Centers | 1,184,834 |
| | 33.76 |
| | 1,107,996 |
| | 102.09 |
| | 396,028 |
| | 36.12 |
| | 453,911 |
| | 43.61 |
| | 1,916,355 |
| | 59.53 |
|
Total | $ | 5,203,851 |
| | $ | 56.08 |
| | $ | 6,455,495 |
| | $ | 89.66 |
| | $ | 8,333,469 |
| | $ | 80.66 |
| | $ | 3,298,785 |
| | $ | 68.35 |
| | $ | 5,758,572 |
| | $ | 56.70 |
|
|
| |
Commercial Leasing Summary - Renewal Leases | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2nd Quarter 2015 | | 1st Quarter 2015 | | 4th Quarter 2014 | | 3rd Quarter 2014 | | 2nd Quarter 2014 |
Gross Leasing Square Footage | | | | | | | | | | | | | | | | | | | |
Office Buildings | 71,112 | | | 135,134 | | | 575,499 | | | 44,214 | | | 109,686 | |
Retail Centers | 95,048 | | | 111,342 | | | 45,084 | | | 170,568 | | | 10,645 | |
Total | 166,160 | | | 246,476 | | | 620,583 | | | 214,782 | | | 120,331 | |
Weighted Average Term (yrs) | | | | | | | | | | | | | | | | | | | |
Office Buildings | 3.9 | | | 4.8 | | | 6.1 | | | 7.4 | | | 4.8 | |
Retail Centers | 5.8 | | | 5.4 | | | 6.8 | | | 5.1 | | | 4.3 | |
Total | 4.9 | | | 5.1 | | | 6.1 | | | 5.6 | | | 4.8 | |
| | | | | | | | | | | | | | | | | | | |
Rental Rate Increases: | GAAP | | CASH | | GAAP | | CASH | | GAAP | | CASH | | GAAP | | CASH | | GAAP | | CASH |
Rate on expiring leases | | | | | | | | | | | | | | | | | | | |
Office Buildings | $ | 30.91 |
| | $ | 33.07 |
| | $ | 35.26 |
| | $ | 36.79 |
| | $ | 35.87 |
| | $ | 37.53 |
| | $ | 32.89 |
| | $ | 35.79 |
| | $ | 33.89 |
| | $ | 35.42 |
|
Retail Centers | 17.57 |
| | 18.54 |
| | 16.14 |
| | 16.71 |
| | 33.21 |
| | 35.65 |
| | 13.65 |
| | 13.86 |
| | 45.12 |
| | 47.17 |
|
Total | $ | 23.28 |
| | $ | 24.76 |
| | $ | 26.63 |
| | $ | 27.72 |
| | $ | 35.67 |
| | $ | 37.39 |
| | $ | 17.61 |
| | $ | 18.37 |
| | $ | 34.89 |
| | $ | 36.46 |
|
| | | | | | | | | | | | | | | | | | | |
Rate on new leases | | | | | | | | | | | | | | | | | | | |
Office Buildings | $ | 32.43 |
| | $ | 31.37 |
| | $ | 37.98 |
| | $ | 35.99 |
| | $ | 37.25 |
| | $ | 35.44 |
| | $ | 44.95 |
| | $ | 41.11 |
| | $ | 36.12 |
| | $ | 34.39 |
|
Retail Centers | 22.49 |
| | 21.25 |
| | 17.06 |
| | 16.64 |
| | 40.26 |
| | 37.30 |
| | 14.67 |
| | 14.47 |
| | 50.91 |
| | 48.51 |
|
Total | $ | 26.75 |
| | $ | 25.58 |
| | $ | 28.53 |
| | $ | 27.25 |
| | $ | 37.46 |
| | $ | 35.57 |
| | $ | 20.90 |
| | $ | 19.95 |
| | $ | 37.42 |
| | $ | 35.64 |
|
| | | | | | | | | | | | | | | | | | | |
Percentage Increase | | | | | | | | | | | | | | | | | | | |
Office Buildings | 4.9 | % | | (5.1 | )% | | 7.7 | % | | (2.2 | )% | | 3.9 | % | | (5.6 | )% | | 36.7 | % | | 14.9 | % | | 6.6 | % | | (2.9 | )% |
Retail Centers | 28.0 | % | | 14.6 | % | | 5.7 | % | | (0.4 | )% | | 21.2 | % | | 4.6 | % | | 7.4 | % | | 4.4 | % | | 12.8 | % | | 2.8 | % |
Total | 14.9 | % | | 3.3 | % | | 7.2 | % | | (1.7 | )% | | 5.0 | % | | (4.9 | )% | | 18.7 | % | | 8.6 | % | | 7.3 | % | | (2.3 | )% |
| | | | | | | | | | | | | | | | | | | |
| Total Dollars | | $ per Sq Ft | | Total Dollars | | $ per Sq Ft | | Total Dollars | | $ per Sq Ft | | Total Dollars | | $ per Sq Ft | | Total Dollars | | $ per Sq Ft |
Tenant Improvements | | | | | | | | | | | | | | | | | | | |
Office Buildings | $ | 423,589 |
| | $ | 5.96 |
| | $ | 550,948 |
| | $ | 4.08 |
| | $ | 14,952,993 |
| | $ | 25.98 |
| | $ | 595,757 |
| | $ | 13.47 |
| | $ | 1,897,016 |
| | $ | 17.29 |
|
Retail Centers | 39,183 |
| | 0.41 |
| | 152,391 |
| | 1.37 |
| | 33,370 |
| | 0.74 |
| | — |
| | — |
| | — |
| | — |
|
Subtotal | $ | 462,772 |
| | $ | 2.79 |
| | $ | 703,339 |
| | $ | 2.85 |
| | $ | 14,986,363 |
| | $ | 24.15 |
| | $ | 595,757 |
| | $ | 2.77 |
| | $ | 1,897,016 |
| | $ | 15.76 |
|
Leasing Commissions and Incentives | | | | | | | | | | | | | | | | | | |
Office Buildings | $ | 368,593 |
| | $ | 5.19 |
| | $ | 929,511 |
| | $ | 6.88 |
| | $ | 9,087,273 |
| | $ | 15.79 |
| | $ | 532,789 |
| | $ | 12.05 |
| | $ | 1,517,271 |
| | $ | 13.83 |
|
Retail Centers | 199,976 |
| | 2.10 |
| | 243,602 |
| | 2.19 |
| | 192,343 |
| | 4.27 |
| | 51,270 |
| | 0.30 |
| | 27,278 |
| | 2.56 |
|
Subtotal | $ | 568,569 |
| | $ | 3.43 |
| | $ | 1,173,113 |
| | $ | 4.76 |
| | $ | 9,279,616 |
| | $ | 14.96 |
| | $ | 584,059 |
| | $ | 2.72 |
| | $ | 1,544,549 |
| | $ | 12.84 |
|
Tenant Improvements and Leasing Commissions and Incentives | | | | | | | | | | |
Office Buildings | $ | 792,182 |
| | $ | 11.15 |
| | $ | 1,480,459 |
| | $ | 10.96 |
| | $ | 24,040,266 |
| | $ | 41.77 |
| | $ | 1,128,546 |
| | $ | 25.52 |
| | $ | 3,414,287 |
| | $ | 31.12 |
|
Retail Centers | 239,159 |
| | 2.51 |
| | 395,993 |
| | 3.56 |
| | 225,713 |
| | 5.01 |
| | 51,270 |
| | 0.30 |
| | 27,278 |
| | 2.56 |
|
Total | $ | 1,031,341 |
| | $ | 6.22 |
| | $ | 1,876,452 |
| | $ | 7.61 |
| | $ | 24,265,979 |
| | $ | 39.11 |
| | $ | 1,179,816 |
| | $ | 5.49 |
| | $ | 3,441,565 |
| | $ | 28.60 |
|
|
| |
10 Largest Tenants - Based on Annualized Commercial Income | |
June 30, 2015 |
|
| | | | | | | | | | | | | |
Tenant | Number of Buildings | | Weighted Average Remaining Lease Term in Months | | Percentage of Aggregate Portfolio Annualized Commercial Income | | Aggregate Rentable Square Feet | | Percentage of Aggregate Occupied Square Feet |
World Bank | 1 | | 66 |
| | 5.79 | % | | 210,354 |
| | 3.29 | % |
Advisory Board Company | 2 | | 47 |
| | 3.71 | % | | 199,762 |
| | 3.12 | % |
Booz Allen Hamilton, Inc. | 1 | | 127 |
| | 2.72 | % | | 222,989 |
| | 3.49 | % |
Engility Corporation | 1 | | 27 |
| | 2.50 | % | | 134,126 |
| | 2.10 | % |
Squire Patton Boggs (USA) LLP | 1 | | 22 |
| | 2.43 | % | | 110,566 |
| | 1.73 | % |
Epstein, Becker & Green, P.C. | 1 | | 18 |
| | 1.32 | % | | 53,427 |
| | 0.84 | % |
General Services Administration | 3 | | 41 |
| | 1.24 | % | | 52,282 |
| | 0.82 | % |
Alexandria City School Board | 1 | | 167 |
| | 1.18 | % | | 84,693 |
| | 1.32 | % |
Hughes Hubbard & Reed LLP | 1 | | 32 |
| | 1.16 | % | | 53,208 |
| | 0.83 | % |
Cozen O'Connor | 1 | | 10 |
| | 1.15 | % | | 36,574 |
| | 0.57 | % |
Total/Weighted Average | | | 66 |
| | 23.20 | % | | 1,157,981 |
| | 18.11 | % |
|
| |
Industry Diversification | |
June 30, 2015 |
|
| | | | | | | | | | | | |
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 | $ | 76,640,158 |
| | 38.37 | % | | 2,220,632 |
| | 34.49 | % |
Credit Intermediation and Related Activities | 18,673,676 |
| | 9.35 | % | | 334,486 |
| | 5.20 | % |
Religious, Grantmaking, Civic, Professional, and Similar Organizations | 11,914,402 |
| | 5.97 | % | | 315,621 |
| | 4.90 | % |
Food Services and Drinking Places | 8,555,158 |
| | 4.28 | % | | 268,156 |
| | 4.17 | % |
Educational Services | 8,272,354 |
| | 4.14 | % | | 271,809 |
| | 4.22 | % |
Food and Beverage Stores | 6,773,934 |
| | 3.39 | % | | 337,778 |
| | 5.25 | % |
Ambulatory Health Care Services | 5,683,619 |
| | 2.85 | % | | 176,670 |
| | 2.74 | % |
Executive, Legislative, and Other General Government Support | 5,516,989 |
| | 2.76 | % | | 155,732 |
| | 2.42 | % |
Furniture and Home Furnishings Stores | 4,574,704 |
| | 2.29 | % | | 216,089 |
| | 3.36 | % |
Health and Personal Care Stores | 4,065,520 |
| | 2.04 | % | | 107,960 |
| | 1.68 | % |
Personal and Laundry Services | 3,988,057 |
| | 2.00 | % | | 123,400 |
| | 1.92 | % |
Securities, Commodity Contracts, and Other Financial Investments and Related Activities | 3,828,711 |
| | 1.92 | % | | 106,772 |
| | 1.66 | % |
Sporting Goods, Hobby, Book, and Music Stores | 3,353,849 |
| | 1.68 | % | | 201,827 |
| | 3.13 | % |
Electronics and Appliance Stores | 3,142,604 |
| | 1.57 | % | | 169,094 |
| | 2.63 | % |
Broadcasting (except Internet) | 2,980,042 |
| | 1.49 | % | | 70,672 |
| | 1.10 | % |
Administrative and Support Services | 2,864,373 |
| | 1.43 | % | | 77,896 |
| | 1.21 | % |
Miscellaneous Store Retailers | 2,841,647 |
| | 1.42 | % | | 149,440 |
| | 2.32 | % |
Publishing Industries (except Internet) | 2,802,806 |
| | 1.40 | % | | 79,659 |
| | 1.24 | % |
General Merchandise Stores | 2,333,709 |
| | 1.17 | % | | 265,366 |
| | 4.12 | % |
Amusement, Gambling, and Recreation Industries | 2,110,815 |
| | 1.06 | % | | 116,418 |
| | 1.81 | % |
Clothing and Clothing Accessories Stores | 1,985,855 |
| | 0.99 | % | | 103,610 |
| | 1.61 | % |
Nursing and Residential Care Facilities | 1,888,051 |
| | 0.95 | % | | 66,810 |
| | 1.04 | % |
Telecommunications | 1,532,630 |
| | 0.77 | % | | 38,926 |
| | 0.60 | % |
Real Estate | 1,419,558 |
| | 0.71 | % | | 40,825 |
| | 0.63 | % |
Social Assistance | 1,258,560 |
| | 0.63 | % | | 50,270 |
| | 0.78 | % |
Building Material and Garden Equipment and Supplies Dealers | 1,167,246 |
| | 0.58 | % | | 38,330 |
| | 0.60 | % |
|
| |
Industry Diversification (continued) | |
June 30, 2015 |
|
| | | | | | | | | | | | | |
Industry Classification (NAICS) | Annualized Base Rental Revenue | | Percentage of Aggregate Annualized Rent | | Aggregate Rentable Square Feet | | Percentage of Aggregate Square Feet |
Chemical Manufacturing | 936,612 |
| | 0.47 | % | | 20,036 |
| | 0.31 | % |
Merchant Wholesalers, Durable Goods | 839,559 |
| | 0.42 | % | | 23,765 |
| | 0.37 | % |
Insurance Carriers and Related Activities | 821,068 |
| | 0.41 | % | | 25,324 |
| | 0.39 | % |
Merchant Wholesalers, Nondurable Goods | 771,297 |
| | 0.39 | % | | 48,208 |
| | 0.75 | % |
Construction of Buildings | 665,461 |
| | 0.33 | % | | 21,965 |
| | 0.34 | % |
Motor Vehicle and Parts Dealers | 646,701 |
| | 0.32 | % | | 36,832 |
| | 0.57 | % |
Transportation Equipment Manufacturing | 558,973 |
| | 0.28 | % | | 19,864 |
| | 0.31 | % |
Other | 4,305,788 |
| | 2.17 | % | | 137,806 |
| | 2.13 | % |
Total | $ | 199,714,486 |
| | 100.00 | % | | $ | 6,438,048 |
| | 100.00 | % |
|
| |
Lease Expirations | |
June 30, 2015 |
|
| | | | | | | | | | | | | | | | | | | | |
Year | | Number of Leases | | Rentable Square Feet | | Percent of Rentable Square Feet | | Annualized Rent * | | Average Rental Rate | | Percent of Annualized Rent * |
Office: | | | | | | | | | | | | |
2015 | | 48 |
| | 201,640 |
| | 4.72 | % | | $ | 6,959,354 |
| | $ | 34.51 |
| | 4.05 | % |
2016 | | 106 |
| | 441,591 |
| | 10.34 | % | | 17,317,585 |
| | 39.22 |
| | 10.08 | % |
2017 | | 86 |
| | 554,049 |
| | 12.97 | % | | 21,565,923 |
| | 38.92 |
| | 12.55 | % |
2018 | | 84 |
| | 440,623 |
| | 10.31 | % | | 16,522,472 |
| | 37.50 |
| | 9.62 | % |
2019 | | 85 |
| | 622,635 |
| | 14.58 | % | | 25,296,810 |
| | 40.63 |
| | 14.72 | % |
2020 and thereafter | | 239 |
| | 2,011,432 |
| | 47.08 | % | | 84,170,283 |
| | 41.85 |
| | 48.98 | % |
| | 648 |
| | 4,271,970 |
| | 100.00 | % | | $ | 171,832,427 |
| | 40.22 |
| | 100.00 | % |
Retail: | | | | | | | | | | | | |
2015 | | 27 |
| | 67,024 |
| | 2.95 | % | | $ | 1,964,796 |
| | 29.31 |
| | 3.64 | % |
2016 | | 28 |
| | 148,182 |
| | 6.52 | % | | 3,756,874 |
| | 25.35 |
| | 6.97 | % |
2017 | | 46 |
| | 256,920 |
| | 11.30 | % | | 6,837,341 |
| | 26.61 |
| | 12.68 | % |
2018 | | 43 |
| | 368,184 |
| | 16.19 | % | | 5,375,251 |
| | 14.60 |
| | 9.97 | % |
2019 | | 39 |
| | 173,299 |
| | 7.62 | % | | 5,134,558 |
| | 29.63 |
| | 9.52 | % |
2020 and thereafter | | 143 |
| | 1,260,430 |
| | 55.42 | % | | 30,859,730 |
| | 24.48 |
| | 57.22 | % |
| | 326 |
| | 2,274,039 |
| | 100.00 | % | | $ | 53,928,550 |
| | 23.71 |
| | 100.00 | % |
Total: | | | | | | | | | | | | |
2015 | | 75 |
| | 268,664 |
| | 4.10 | % | | 8,924,150 |
| | 33.22 |
| | 3.95 | % |
2016 | | 134 |
| | 589,773 |
| | 9.01 | % | | 21,074,459 |
| | 35.73 |
| | 9.34 | % |
2017 | | 132 |
| | 810,969 |
| | 12.39 | % | | 28,403,264 |
| | 35.02 |
| | 12.58 | % |
2018 | | 127 |
| | 808,807 |
| | 12.36 | % | | 21,897,723 |
| | 27.07 |
| | 9.70 | % |
2019 | | 124 |
| | 795,934 |
| | 12.16 | % | | 30,431,368 |
| | 38.23 |
| | 13.48 | % |
2020 and thereafter | | 382 |
| | 3,271,862 |
| | 49.98 | % | | 115,030,013 |
| | 35.16 |
| | 50.95 | % |
| | 974 |
| | 6,546,009 |
| | 100.00 | % | | $ | 225,760,977 |
| | 34.49 |
| | 100.00 | % |
| | |
* Annualized Rent is equal to the rental rate effective at lease expiration (cash basis) multiplied by 12. | | |
|
| |
Schedule of Properties | |
June 30, 2015 |
|
| | | | | | | | | |
PROPERTIES | | LOCATION | | YEAR ACQUIRED | | YEAR CONSTRUCTED | | NET RENTABLE SQUARE FEET |
Office Buildings | | | | | | | | |
1901 Pennsylvania Avenue | | Washington, DC | | 1977 | | 1960 | | 101,000 |
|
51 Monroe Street | | Rockville, MD | | 1979 | | 1975 | | 223,000 |
|
515 King Street | | Alexandria, VA | | 1992 | | 1966 | | 75,000 |
|
6110 Executive Boulevard | | Rockville, MD | | 1995 | | 1971 | | 201,000 |
|
1220 19th Street | | Washington, DC | | 1995 | | 1976 | | 104,000 |
|
1600 Wilson Boulevard | | Arlington, VA | | 1997 | | 1973 | | 168,000 |
|
Silverline Center | | Tysons, VA | | 1997 | | 1972/1986/1999 | | 532,000 |
|
600 Jefferson Plaza | | Rockville, MD | | 1999 | | 1985 | | 113,000 |
|
Wayne Plaza | | Silver Spring, MD | | 2000 | | 1970 | | 99,000 |
|
Courthouse Square | | Alexandria, VA | | 2000 | | 1979 | | 115,000 |
|
One Central Plaza | | Rockville, MD | | 2001 | | 1974 | | 267,000 |
|
1776 G Street | | Washington, DC | | 2003 | | 1979 | | 263,000 |
|
West Gude Drive | | Rockville, MD | | 2006 | | 1984/1986/1988 | | 276,000 |
|
Monument II | | Herndon, VA | | 2007 | | 2000 | | 208,000 |
|
2000 M Street | | Washington, DC | | 2007 | | 1971 | | 231,000 |
|
2445 M Street | | Washington, DC | | 2008 | | 1986 | | 290,000 |
|
925 Corporate Drive | | Stafford, VA | | 2010 | | 2007 | | 134,000 |
|
1000 Corporate Drive | | Stafford, VA | | 2010 | | 2009 | | 136,000 |
|
1140 Connecticut Avenue | | Washington, DC | | 2011 | | 1966 | | 183,000 |
|
1227 25th Street | | Washington, DC | | 2011 | | 1988 | | 135,000 |
|
Braddock Metro Center | | Alexandria, VA | | 2011 | | 1985 | | 350,000 |
|
John Marshall II | | Tysons, VA | | 2011 | | 1996/2010 | | 223,000 |
|
Fairgate at Ballston | | Arlington, VA | | 2012 | | 1988 | | 143,000 |
|
The Army Navy Club Building | | Washington, DC | | 2014 | | 1912/1987 | | 108,000 |
|
1775 Eye Street, NW | | Washington, DC | | 2014 | | 1964 | | 185,000 |
|
Subtotal | | | | | | | | 4,863,000 |
|
|
| |
Schedule of Properties (continued) | |
June 30, 2015 |
|
| | | | | | | | | |
PROPERTIES | | LOCATION | | YEAR ACQUIRED | | YEAR CONSTRUCTED | | NET RENTABLE SQUARE FEET |
Retail Centers | | | | | | | | |
Takoma Park | | Takoma Park, MD | | 1963 | | 1962 | | 51,000 |
|
Westminster | | Westminster, MD | | 1972 | | 1969 | | 150,000 |
|
Concord Centre | | Springfield, VA | | 1973 | | 1960 | | 76,000 |
|
Wheaton Park | | Wheaton, MD | | 1977 | | 1967 | | 74,000 |
|
Bradlee Shopping Center | | Alexandria, VA | | 1984 | | 1955 | | 171,000 |
|
Chevy Chase Metro Plaza | | Washington, DC | | 1985 | | 1975 | | 49,000 |
|
Montgomery Village Center | | Gaithersburg, MD | | 1992 | | 1969 | | 197,000 |
|
Shoppes of Foxchase | | Alexandria, VA | | 1994 | | 1960/2006 | | 134,000 |
|
Frederick County Square | | Frederick, MD | | 1995 | | 1973 | | 227,000 |
|
800 S. Washington Street | | Alexandria, VA | | 1998/2003 | | 1955/1959 | | 46,000 |
|
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 | | 145,000 |
|
Gateway Overlook | | Columbia, MD | | 2010 | | 2007 | | 220,000 |
|
Olney Village Center | | Olney, MD | | 2011 | | 1979/2003 | | 199,000 |
|
Spring Valley Retail Center | | Washington, DC | | 2014 | | 1941/1950 | | 75,000 |
|
Subtotal | | | | | | | | 2,523,000 |
|
|
| |
Schedule of Properties (continued) | |
June 30, 2015 |
|
| | | | | | | | | |
PROPERTIES | | LOCATION | | YEAR ACQUIRED | | YEAR CONSTRUCTED | | NET RENTABLE SQUARE FEET (1) |
Multifamily Buildings / # units | | | | | | | | |
3801 Connecticut Avenue / 307 | | Washington, DC | | 1963 | | 1951 | | 178,000 |
|
Roosevelt Towers / 191 | | Falls Church, VA | | 1965 | | 1964 | | 170,000 |
|
Park Adams / 200 | | Arlington, VA | | 1969 | | 1959 | | 173,000 |
|
Munson Hill Towers / 279 | | Falls Church, VA | | 1970 | | 1963 | | 258,000 |
|
The Ashby at McLean / 256 | | McLean, VA | | 1996 | | 1982 | | 274,000 |
|
Walker House Apartments / 212 | | Gaithersburg, MD | | 1996 | | 1971/2003 | | 157,000 |
|
Bethesda Hill Apartments / 195 | | Bethesda, MD | | 1997 | | 1986 | | 226,000 |
|
Bennett Park / 224 | | Arlington, VA | | 2007 | | 2007 | | 214,000 |
|
Clayborne / 74 | | Alexandria, VA | | 2008 | | 2008 | | 60,000 |
|
Kenmore Apartments / 374 | | Washington, DC | | 2008 | | 1948 | | 268,000 |
|
The Paramount / 135 | | Arlington, VA | | 2013 | | 1984 | | 141,000 |
|
Yale West / 216 | | Washington, DC | | 2014 | | 2011 | | 173,000 |
|
The Maxwell / 163 | | Arlington, VA | | 2014 | | 2014 | | 139,000 |
|
Subtotal (2,826 units) | | | | | | | | 2,431,000 |
|
TOTAL | | | | | | | | 9,817,000 |
|
(1) Multifamily buildings are presented in gross square feet. |
|
| |
Supplemental Definitions | |
June 30, 2015 |
|
|
Adjusted EBITDA (a non-GAAP measure) is earnings attributable to the controlling interest before interest expense, taxes, depreciation, amortization, real estate impairment, gain on sale of real estate, gain/loss on extinguishment of debt, severance expense, relocation expense, acquisition and structuring expenses and gain/loss from non-disposal activities. |
Annualized base rent ("ABR") is calculated as monthly base rent (cash basis) per the lease, as of the reporting period, multiplied by 12. |
Debt service coverage ratio is computed by dividing earnings attributable to the controlling interest before interest expense, taxes, depreciation, amortization, real estate impairment, gain on sale of real estate, gain/loss on extinguishment of debt, severance expense, relocation expense, acquisition and structuring expensesand gain/loss from non-disposal activities by interest expense (including interest expense from discontinued operations) and principal amortization. |
Debt to total market capitalization is total debt divided by the sum of total debt plus the market value of shares outstanding at the end of the period. |
Earnings to fixed charges ratio is computed by dividing earnings attributable to the controlling interest 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 (excluding interest expense from discontinued operations), including amortized costs of debt issuance, plus interest costs capitalized. |
Economic occupancy is calculated as actual real estate rental revenue recognized for the period indicated as a percentage of gross potential real estate rental revenue for that period. We determine gross potential real estate rental revenue by valuing occupied units or square footage at contract rates and vacant units or square footage at market rates for comparable properties. We do not consider percentage rents and expense reimbursements in computing economic occupancy percentages. |
Funds from operations ("FFO") is defined by The National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) in an 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 and impairment of depreciable real estate, 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. |
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 Washington REIT’s operating portfolio and affect the comparative measurement of Washington REIT’s operating performance over time): (1) gains or losses on extinguishment of debt, (2) expenses related to acquisition and structuring activities, (3) executive transition costs and severance expense related to corporate reorganization and related to executive retirements or resignations, (4) property impairments and gains on sale, not already excluded from FFO, as appropriate, and (5) relocation expense. 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 Washington REIT’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. |
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 (excluding items contemplated prior to acquisition or associated with development / redevelopment of a property) and (2) straight line rents, then adding (3) non-real estate depreciation and amortization, (4) non-cash fair value interest expense and (5) amortization of restricted share compensation, then adding or subtracting the (6) amortization of lease intangibles, (7) real estate impairment and (8) non-cash gain/loss on extinguishment of debt, 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. |
Core Funds Available for Distribution ("Core FAD") is calculated by adjusting FAD for the following items (which we believe are not indicative of the performance of Washington REIT’s operating portfolio and affect the comparative measurement of Washington REIT’s operating performance over time): (1) gains or losses on extinguishment of debt, (2) costs related to the acquisition of properties, (3) non-share-based severance expense related to corporate reorganization and related to executive retirements or resignations, (4) property impairments and gains on sale, not already excluded from FAD, as appropriate, and (5) relocation expense. 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 FAD serves as a useful, supplementary measure of Washington REIT’s ability to incur and service debt, and distribute dividends to its shareholders. Core FAD is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs. |
Net Operating Income (“NOI”) is a non-GAAP measure defined as real estate rental revenue less real estate expenses. 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, general and administrative expenses, acquisition costs, real estate impairment and gain or loss on extinguishment of debt. We also present NOI on a cash basis ("Cash NOI") which is calculated as NOI less the impact of straightlining of rent and amortization of market intangibles. 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. |
Physical occupancy is calculated as occupied square footage as a percentage of total square footage as of the last day of that period. |
|
|
Recurring capital expenditures represent 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. |
Same-store portfolio properties include all stabilized properties that were owned for the entirety of the current and prior reporting periods, and exclude properties under redevelopment or development and properties purchased or sold at any time during the periods being compared. We define redevelopment properties as those for which we expect to spend significant development and construction costs on existing or acquired buildings pursuant to a formal plan which has a current impact on operating results, occupancy and the ability to lease space with the intended result of a higher economic return on the property. Redevelopment and development properties are included in the same-store pool upon completion of the redevelopment or development, and the earlier of achieving 90% occupancy or two years after completion. |
Same-store portfolio net operating income (NOI) growth is the change in the NOI of the same-store portfolio properties from the prior reporting period to the current reporting period. |
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