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Washington Real Estate Investment Trust Announces Fourth Quarter And Year-End Financial And Operating Results For 2012

Stocks in this article: WRE

Multifamily Acquisitions: none;

Office Acquisition: Fairgate at Ballston;

Medical Office Acquisition: Lansdowne Medical Office Building;

Retail Acquisitions: none.

Also excluded from Same-Store Properties in Q4 2011 and Q4 2010 are:

Held for Sale and Sold Properties: The Atrium Building, 1700 Research Boulevard, Plumtree Medical Center, Northern Virginia Industrial Park II, 6100 Columbia Park Road and Dulles Business Park I and II.

 
WASHINGTON REAL ESTATE INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
(Unaudited)
   
Three Months Ended December 31, Year Ended December 31,
OPERATING RESULTS   2012   2011 2012   2011
Revenue
Real estate rental revenue $ 77,071 $ 75,413 $ 304,983 $ 284,156
Expenses
Real estate expenses 25,791 25,666 103,276 95,342
Depreciation and amortization 26,131 25,029 103,067 91,805
Acquisition costs 90 36 234 3,607
Real estate impairment 2,097 14,526 2,097 14,526
General and administrative 4,545   4,140   15,488   15,728  
58,654   69,397   224,162   221,008  
Real estate operating income 18,417 6,016 80,821 63,148
Other income (expense):
Interest expense (17,411 ) (16,142 ) (64,697 ) (66,214 )
Other income 242 258 975 1,144
Loss on extinguishment of debt   (976 )   (976 )
(17,169 ) (16,860 ) (63,722 ) (66,046 )
Income (loss) from continuing operations 1,248 (10,844 ) 17,099 (2,898 )
Discontinued operations:
Income from operations of properties sold or held for sale 310 1,090 1,485 11,923
Income tax expense (1,138 )
Gain on sale of real estate 1,400   40,852   5,124   97,491  
Net income 2,958 31,098 23,708 105,378
Less: Income from operations attributable to noncontrolling interests in subsidiaries (9 ) (94 )
Less: Gain on sale of real estate attributable to noncontrolling interests in subsidiaries   (400 )   (400 )
Net income attributable to the controlling interests $ 2,958   $ 30,689   $ 23,708   $ 104,884  
 
Income (loss) from continuing operations attributable to the controlling interests $ 1,248 $ (10,844 ) $ 17,099 $ (2,898 )
Continuing operations real estate depreciation and amortization 26,131   25,029   103,067   91,805  
Funds from continuing operations (1) 27,379   14,185   120,166   88,907  
 
Discontinued Operations:
Income from operations of properties sold or held for sale 310 1,090 1,485 11,923
Income from operations attributable to noncontrolling interests in subsidiaries (9 ) (94 )
Real estate impairment 599
Real estate depreciation and amortization   369   867   8,723  
Funds from discontinued operations 310   1,450   2,352   21,151  
 
Funds from operations (1) $ 27,689   $ 15,635   $ 122,518   $ 110,058  
 
Tenant improvements (4,901 ) (5,100 ) (16,540 ) (11,889 )
External and internal leasing commissions capitalized (2,334 ) (1,485 ) (9,157 ) (8,692 )
Recurring capital improvements (1,414 ) (1,626 ) (7,307 ) (7,537 )
Straight-line rents, net (738 ) (776 ) (3,265 ) (2,734 )
Non-cash fair value interest expense 253 (53 ) 926 462
Non real estate depreciation & amortization of debt costs 911 845 3,854 3,733
Amortization of lease intangibles, net 41 (32 ) 6 (1,052 )
Amortization and expensing of restricted share and unit compensation 1,842 1,459 5,786 5,580
Real estate impairment 2,097   14,526   2,097   14,526  
Funds available for distribution (4) $ 23,446   $ 23,393   $ 98,918   $ 102,455  
 
Note: Certain prior period amounts have been reclassified to conform to the current presentation.
     
Three Months Ended December 31, Year Ended December 31,
Per share data: 2012   2011 2012   2011
Income (loss) from continuing operations (Basic) $ 0.02 $ (0.16 ) $ 0.25 $ (0.04 )
(Diluted) $ 0.02 $ (0.16 ) $ 0.25 $ (0.04 )
Net income attributable to the controlling interests (Basic) $ 0.04 $ 0.46 $ 0.35 $ 1.58
(Diluted) $ 0.04 $ 0.46 $ 0.35 $ 1.58
Funds from continuing operations (Basic) $ 0.41 $ 0.21 $ 1.81 $ 1.35
(Diluted) $ 0.41 $ 0.21 $ 1.80 $ 1.35
Funds from operations (Basic) $ 0.42 $ 0.23 $ 1.84 $ 1.66
(Diluted) $ 0.42 $ 0.23 $ 1.84 $ 1.66
 
Dividends paid $ 0.3000 $ 0.4338 $ 1.4675 $ 1.7350
 
Weighted average shares outstanding 66,273 66,069 66,239 65,982
Fully diluted weighted average shares outstanding 66,416 66,069 66,376 65,982
 
WASHINGTON REAL ESTATE INVESTMENT TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
   
December 31,
2012 2011
Assets
Land $ 483,198 $ 465,445
Income producing property 1,979,348   1,899,440  
2,462,546 2,364,885
Accumulated depreciation and amortization (604,614 ) (521,503 )
Net income producing property 1,857,932 1,843,382
Development in progress 49,135   43,089  
Total real estate held for investment, net 1,907,067 1,886,471
Investment in real estate sold or held for sale 11,528 27,669
Cash and cash equivalents 19,324 12,765
Restricted cash 14,582 19,229
Rents and other receivables, net of allowance for doubtful accounts of $10,958 and $8,683, respectively 57,076 53,227
Prepaid expenses and other assets 114,541 120,075
Other assets related to property sold or held for sale 258   1,322  
Total assets $ 2,124,376   $ 2,120,758  
 
Liabilities
Notes payable $ 906,190 $ 657,470
Mortgage notes payable 342,970 423,291
Lines of credit 99,000
Accounts payable and other liabilities 52,823 51,079
Advance rents 16,096 13,584
Tenant security deposits 9,936 8,728
Other liabilities related to property sold or held for sale 218   4,774  
Total liabilities 1,328,233 1,257,926
 
Equity
Shareholders' equity
Preferred shares; $0.01 par value; 10,000 shares authorized; no shares issued or outstanding
Shares of beneficial interest, $0.01 par value; 100,000 shares authorized; 66,437 and 66,265 shares issued and outstanding, respectively 664 662
Additional paid-in capital 1,145,515 1,138,478
Distributions in excess of net income (354,122 ) (280,096 )
Total shareholders' equity 792,057 859,044
Noncontrolling interests in subsidiaries 4,086   3,788  
Total equity 796,143   862,832  
Total liabilities and equity $ 2,124,376   $ 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 (in thousands):
         
Medical
Quarter Ended December 31, 2012 Multifamily Office Office Retail Total
Same-store net operating income (3) $ 8,364 $ 24,394 $ 7,312 $ 10,273 $ 50,343
Add: Net operating income from non-same-store properties (3)   824   113     937  
Total net operating income (2) $ 8,364 $ 25,218 $ 7,425 $ 10,273 $ 51,280
Add/(deduct):
Other income 242
Acquisition costs (90 )
Interest expense (17,411 )
Depreciation and amortization (26,131 )
General and administrative expenses (4,545 )
Real estate impairment (2,097 )
Discontinued operations:
Income from operations of properties sold or held for sale 310
Gain on sale of real estate 1,400  
Net income 2,958
Less: Net income attributable to noncontrolling interests in subsidiaries  
Net income attributable to the controlling interests $ 2,958  
 
Medical
Quarter Ended December 31, 2011 Multifamily Office Office Retail Total
Same-store net operating income (3) $ 8,033 $ 24,667 $ 7,549 $ 9,492 $ 49,741
Add: Net operating income (loss) from non-same-store properties (3)   (47 ) 53     6  
Total net operating income (2) $ 8,033 $ 24,620 $ 7,602 $ 9,492 $ 49,747
Add/(deduct):
Other income 258
Acquisition costs (36 )
Interest expense (16,142 )
Depreciation and amortization (25,029 )
General and administrative expenses (4,140 )
Loss on extinguishment of debt (976 )
Real estate impairment (14,526 )
Discontinued operations:
Income from operations of properties sold or held for sale 1,090
Gain on sale of real estate 40,852  
Net income 31,098
Less: Net income attributable to noncontrolling interests in subsidiaries (409 )
Net income attributable to the controlling interests $ 30,689  
 
The following tables contain reconciliations of net income to same-store net operating income for the periods presented (in thousands):
         
Medical
Year Ended December 31, 2012 Multifamily Office Office Retail Total
Same-store net operating income (3) $ 32,420 $ 77,087 $ 29,296 $ 37,806 $ 176,609
Add: Net operating income from non-same-store properties (3)   20,716   384   3,998   25,098  
Total net operating income (2) $ 32,420 $ 97,803 $ 29,680 $ 41,804 $ 201,707
Add/(deduct):
Other income 975
Acquisition costs (234 )
Interest expense (64,697 )
Depreciation and amortization (103,067 )
General and administrative expenses (15,488 )
Real estate impairment (2,097 )
Discontinued operations:
Income from operations of properties sold or held for sale 1,485
Gain on sale of real estate 5,124  
Net income 23,708
Less: Net income attributable to noncontrolling interests in subsidiaries  
Net income attributable to the controlling interests $ 23,708  
 
Medical
Year Ended December 31, 2011 Multifamily Office Office Retail Total
Same-store net operating income (3) $ 31,262 $ 80,795 $ 30,336 $ 34,764 $ 177,157
Add: Net operating income from non-same-store properties (3)   10,241   32   1,384   11,657  
Total net operating income (2) $ 31,262 $ 91,036 $ 30,368 $ 36,148 $ 188,814
Add/(deduct):
Other income (expense) 1,144
Acquisition costs (3,607 )
Interest expense (66,214 )
Depreciation and amortization (91,805 )
General and administrative expenses (15,728 )
Loss on extinguishment of debt (976 )
Real estate impairment (14,526 )
Discontinued operations:
Income from operations of properties sold or held for sale 11,923
Income tax expense (1,138 )
Gain on sale of real estate 97,491  
Net income 105,378
Less: Net income attributable to noncontrolling interests in subsidiaries (494 )
Net income attributable to the controlling interests $ 104,884  
 

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 amounts):

 

    Three Months Ended December 31,   Year Ended December 31,
2012   2011 2012   2011
Net income attributable to the controlling interests $ 2,958 $ 30,689 $ 23,708 $ 104,884
Add/(deduct):
Real estate depreciation and amortization 26,131 25,029 103,067 91,805
Discontinued operations:
Gain on sale of real estate (1,400 ) (40,852 ) (5,124 ) (97,491 )
Gain on sale of real estate attributable to the noncontrolling interests 400 400
Income tax expense 1,138
Real estate impairment 599
Real estate depreciation and amortization   369   867   8,723  
Funds from operations (1) 27,689 15,635 122,518 110,058
Add/(deduct):
Loss on extinguishment of debt 976 976
Real estate impairment 2,097 14,526 2,097 14,526
Severance expense 1,583 1,583
Acquisition costs 90   36   234   3,607  
 
Core funds from operations (1) $ 31,459   $ 31,173   $ 126,432   $ 129,167  
 
 
Three Months Ended December 31, Year Ended December 31,
Per share data attributable to the controlling interests: 2012 2011 2012 2011
Funds from operations (Basic) $ 0.42 $ 0.23 $ 1.84 $ 1.66
(Diluted) $ 0.42 $ 0.23 $ 1.84 $ 1.66
Core FFO (Basic) $ 0.47 $ 0.47 $ 1.90 $ 1.95
(Diluted) $ 0.47 $ 0.47 $ 1.90 $ 1.95
 
Weighted average shares outstanding 66,273 66,069 66,239 65,982
Fully diluted weighted average shares outstanding 66,416 66,069 66,376 65,982




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