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Washington Real Estate Investment Trust Announces 2013 Strategic Initiatives, Expected CEO Retirement At End Of 2013 And 2013 Guidance

Washington Real Estate Investment Trust (WRIT) (NYSE: WRE) announced several major developments, as follows.

Proposed Sale of Medical Office Division

WRIT is exploring a 2013 disposition of its Medical Office Division. The disposition will simplify WRIT’s business model to focus on its core office, multifamily and retail sectors. Upon the completion of the transaction, WRIT’s business will consist entirely of properties where people work, live and shop in one of the strongest real estate markets in the world.

The Medical Office Division totals approximately 1.3 million square feet and 17 properties and, as of third quarter 2012, contributed 15% of WRIT’s total net operating income. The Medical Office Division represents the largest portfolio of institutional quality medical office assets in the Washington, DC region, with all of the assets in affluent communities or urban centers or near major medical centers such as INOVA Fairfax, Shady Grove Adventist and George Washington Hospital. The portfolio has very low leverage, with only three encumbered properties totaling approximately $24 million in mortgage debt.

“We believe we have a unique opportunity to capture embedded value for our shareholders and streamline our investment thesis, both operationally and from a capital allocation standpoint. Beginning in earnest in 2003, we have assembled a one-of-a-kind medical office portfolio that now encompasses 20% of institutional grade medical office assets in the DC metro area. Given the successful execution of our industrial portfolio sale in 2011 and our DC market expertise, we expect to be able to reinvest the medical office portfolio sale proceeds into high quality office, multifamily and retail assets in core submarkets,” said George F. “Skip” McKenzie, President and Chief Executive Officer of WRIT.

Other 2013 Strategic Initiatives
  • Breaking ground on two previously announced apartment joint ventures
    • 650 N. Glebe Road, Arlington, Virginia: 163 unit project with a $49.5 million budget, expected to break ground first quarter 2013 with substantial completion on or about fourth quarter 2014
    • 1219 First Street, Alexandria, Virginia: 270 unit project with a $95.3 million budget, expected to break ground first quarter 2013 with substantial completion on or about first quarter 2015
  • Continuing to upgrade existing properties, including lobby and common area renovations at 1901 Pennsylvania Avenue, 1220 19 th Street, 1140 Connecticut Avenue, 1600 Wilson Boulevard, 6110 Executive Boulevard and 51 Monroe Street, and multifamily unit renovations upon turnover
  • Continuing to sell non-strategic assets, including an anticipated sale of the Atrium office building in Rockville, Maryland, in the first quarter

Expected CEO Retirement

George F. “Skip” McKenzie has communicated to WRIT’s Board of Trustees his decision to retire from WRIT by the end of 2013. The WRIT Board has requested that Mr. McKenzie remain with WRIT in order to oversee the sale of the Medical Office Division and the reinvestment of proceeds, and Mr. McKenzie has agreed to do so. The WRIT Board intends to commence a search for a successor chief executive promptly, with the goal of announcing a selection in the coming months.

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