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Washington Real Estate Investment Trust Announces First Quarter Financial And Operating Results

Stocks in this article: WRE

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

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

(4) Funds Available for Distribution (“FAD”) is a non-GAAP measure. It is calculated by subtracting from FFO (1) recurring expenditures, tenant improvements and leasing costs that are capitalized and amortized and are necessary to maintain our properties and revenue stream and (2) straight-line rents, then adding (3) non-real estate depreciation and amortization, (4) amortization of restricted share and unit compensation, and adding or subtracting amortization of lease intangibles, as appropriate. We consider FAD to be a measure of a REIT's ability to incur and service debt and to distribute dividends to its shareholders. FAD is a non-standardized measure and may be calculated differently by other REITs.

 

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

    Physical Occupancy
Same-Store Properties   All Properties
1st QTR   1st QTR 1st QTR   1st QTR
Segment 2012 2011 2012 2011
Multifamily 95.2 % 95.3 % 95.2 % 95.3 %
Office 85.9 % 89.3 % 86.3 % 89.1 %
Medical Office 90.7 % 93.5 % 87.1 % 88.3 %
Retail 92.4 % 92.0 % 92.9 % 92.0 %
Industrial % % % 80.2 %
 
Overall Portfolio 90.1 % 91.8 % 89.7 % 88.5 %
 

(i) Same-Store properties include all stabilized properties that were owned for the entirety of the current and prior year reporting periods. For Q1 2012 and Q1 2011, same-store properties exclude: Residential Acquisitions: none; Office Acquisitions: 1140 Connecticut Ave, 1227 25th Street, Braddock Metro Center and John Marshall II; Medical Office Acquisition: Lansdowne Medical Office Building; Retail Acquisition: Olney Village Center.

Also excluded from Same-Store Properties in Q1 2012 and Q1 2011 are: Held for Sale and Sold Properties: Dulles Station, Phase I and the Industrial Portfolio (all industrial properties and the Crescent and Albemarle Point).

 
WASHINGTON REAL ESTATE INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
(Unaudited)
     
Three Months Ended March 31,
OPERATING RESULTS 2012 2011
Revenue
Real estate rental revenue $ 76,499 $ 69,204
Expenses
Real estate expenses 26,013 23,253
Depreciation and amortization 25,994 21,894
General and administrative 3,606   3,702  
55,613   48,849  
Real estate operating income 20,886 20,355
Other income (expense):
Interest expense (15,895 ) (16,893 )
Other income 244 306
Acquisition costs (54 ) (1,649 )
(15,705 ) (18,236 )
 
Income from continuing operations 5,181 2,119
 
Discontinued operations:
Income (loss) from operations of properties sold or held for sale   2,569  
Net income 5,181 4,688
Less: Net income attributable to noncontrolling interests in subsidiaries   (23 )
Net income attributable to the controlling interests $ 5,181   $ 4,665  
 
Income from continuing operations attributable to the controlling interests 5,181 2,119
Continuing operations real estate depreciation and amortization 25,994   21,894  
Funds from continuing operations (1) $ 31,175   $ 24,013  
 
Income (loss) from operations of properties sold or held for sale attributable to the controlling interests 2,546
Real estate impairment 599
Discontinued operations real estate depreciation and amortization   3,355  
Funds from discontinued operations   6,500  
 
Funds from operations (1) $ 31,175   $ 30,513  
 
Tenant improvements (4,066 ) (2,370 )
External and internal leasing commissions capitalized (2,557 ) (2,232 )
Recurring capital improvements (1,539 ) (691 )
Straight-line rents, net (992 ) (657 )
Non-cash fair value interest expense 228 179
Non real estate depreciation & amortization of debt costs 1,008 874
Amortization of lease intangibles, net (278 )
Amortization and expensing of restricted share and unit compensation 1,405   1,257  
Funds available for distribution (4) $ 24,662   $ 26,595  
 
Note: Certain prior period amounts have been reclassified to conform to the current presentation.
 
   
Three Months Ended March 31,
Per share data attributable to the controlling interests: 2012   2011
Income from continuing operations (Basic) $ 0.08 $ 0.03
(Diluted) $ 0.08 $ 0.03
Net income (Basic) $ 0.08 $ 0.07
(Diluted) $ 0.08 $ 0.07
Funds from continuing operations (Basic) $ 0.47 $ 0.36
(Diluted) $ 0.47 $ 0.36
Funds from operations (Basic) $ 0.47 $ 0.46
(Diluted) $ 0.47 $ 0.46
 
Dividends paid $ 0.4338 $ 0.4338
 
Weighted average shares outstanding 66,194 65,885
Fully diluted weighted average shares outstanding 66,328 65,907
 
 
WASHINGTON REAL ESTATE INVESTMENT TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
 
March 31, 2012 December 31, 2011
Assets
Land $ 472,196 $ 472,196
Income producing property 1,947,630   1,934,587  
2,419,826 2,406,783
Accumulated depreciation and amortization (556,833 ) (535,732 )
Net income producing property 1,862,993 1,871,051
Development in progress 44,236   43,089  
Total real estate held for investment, net 1,907,229 1,914,140
Cash and cash equivalents 17,809 12,765
Restricted cash 21,922 19,424
Rents and other receivables, net of allowance for doubtful accounts of $9,653 and $8,921 respectively 54,727 53,828
Prepaid expenses and other assets 114,859   120,601  
Total assets $ 2,116,546   $ 2,120,758  
 
Liabilities
Notes payable $ 657,562 $ 657,470
Mortgage notes payable 426,485 427,710
Lines of credit 109,000 99,000
Accounts payable and other liabilities 57,766 51,145
Advance rents 15,065 13,739
Tenant security deposits 8,949   8,862  
Total liabilities 1,274,827   1,257,926  
 
Equity
Shareholders' equity

Shares of beneficial interest, $0.01 par value; 100,000 shares authorized; 66,310 and 66,265 shares issued and 66,309 and 66,265 shares outstanding at March 31, 2012 and December 31, 2011, respectively

662 662
Additional paid-in capital 1,141,062 1,138,478
Distributions in excess of net income (303,815 ) (280,096 )
Total shareholders' equity 837,909 859,044
 
Noncontrolling interests in subsidiaries 3,810   3,788  
Total equity 841,719 862,832
 
Total liabilities and equity $ 2,116,546   $ 2,120,758  
 
Note: Certain prior year amounts have been reclassified to conform to the current year presentation.
 
 
The following tables contain reconciliations of net income to same-store net operating income for the periods presented:
           

Medical

Quarter Ended March 31, 2012 Multifamily Office

Office

Retail Total
Same-store net operating income (3) $ 8,065 $ 19,778 $ 7,618 $ 8,962 $ 44,423
Add: Net operating income from non-same-store properties (3)   4,957   66   1,040   6,063  
Total net operating income (2) $ 8,065 $ 24,735 $ 7,684 $ 10,002 $ 50,486
Add/(deduct):
Other income 244
Acquisition costs (54 )
Interest expense (15,895 )
Depreciation and amortization (25,994 )
General and administrative expenses (3,606 )
Income (loss) from operations of properties sold or held for sale  
Net income 5,181
Less: Net income attributable to noncontrolling interests in subsidiaries  
Net income attributable to the controlling interests $ 5,181  
 

Medical

Quarter Ended March 31, 2011 Multifamily Office

Office

Retail Total
Same-store net operating income (3) $ 7,665 $ 21,123 $ 7,505 $ 8,605 $ 44,898
Add: Net operating income from non-same-store properties (3)   1,096   (43 )   1,053  
Total net operating income (2) $ 7,665 $ 22,219 $ 7,462 $ 8,605 $ 45,951
Add/(deduct):
Other income 306
Acquisition costs (1,649 )
Interest expense (16,893 )
Depreciation and amortization (21,894 )
General and administrative expenses (3,702 )
Income (loss) from operations of properties sold or held for sale 2,569  
Net income 4,688
Less: Net income attributable to noncontrolling interests in subsidiaries (23 )
Net income attributable to the controlling interests $ 4,665  
 

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

 

 
    Three Months Ended March 31,
2012 2011
Net income attributable to the controlling interests $ 5,181 $ 4,665
Add/(deduct):
Real estate depreciation and amortization 25,994 21,894
Discontinued operations:
Real estate impairment 599
Real estate depreciation and amortization 3,355
Funds from operations (1) 31,175 30,513
Add/(deduct):
Acquisition costs 54 1,649
Core funds from operations (1) $ 31,229 $ 32,162
 
Three Months Ended March 31,
Per share data attributable to the controlling interests: 2012 2011
Funds from operations (Basic) $ 0.47 $ 0.46
(Diluted) $ 0.47 $ 0.46
Core FFO (Basic) $ 0.47 $ 0.49
(Diluted) $ 0.47 $ 0.49
 
Weighted average shares outstanding 66,194 65,885
Fully diluted weighted average shares outstanding 66,328 65,907
 




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