WASHINGTON, July 27, 2017 (GLOBE NEWSWIRE) -- 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, 2017:

Second Quarter 2017 Highlights

Net income attributable to controlling interests was $7.9 million, or $0.10 per diluted share, compared to $31.8 million, or $0.44 per diluted share in the second quarter of 2016, which included the recognition of a $24.1 million gain from the first sale transaction of the suburban Maryland office portfolio. NAREIT Funds from Operations (FFO) was $37.1 million, or $0.48 per diluted share, compared to $32.9 million, or $0.46 per diluted share, in second quarter 2016. Additional highlights are as below:
  • Reported Core FFO of $0.48 per diluted share, compared to $0.46 per diluted share in second quarter 2016
  • Grew same-store Net Operating Income (NOI) by 8.8% year-over-year
  • Grew same-store NOI by 14.8% for the office, 4.6% for the retail and 2.6% for the multifamily portfolios year-over-year
  • Increased same-store economic occupancy by 470 basis points year-over-year to 93.7%
  • Raised the mid-point of 2017 Core FFO guidance by two cents per fully diluted share and tightened 2017 Core FFO guidance to a range of $1.80 to $1.84 from $1.76 to $1.84 per fully diluted share
  • Raised 2017 same-store NOI growth assumption to range from 5.75% to 6.25% year-over-year, driven by increased office, retail and multifamily same-store NOI year-over-year growth assumptions
  • Signed a 131,000 square foot, 15-year lease with the United States Department of Agriculture (USDA) at Braddock Metro Center in Alexandria, VA
  • Completed the acquisition of Watergate 600, a 289,000 square foot office building in Washington, DC for $135.0 million

"Washington REIT has delivered strong second-quarter and first half 2017 results. We achieved 9.6% year-over-year same-store NOI growth in the first half of the year, raised our 2017 same-store NOI growth assumptions across all three asset classes, raised our 2017 Core FFO guidance for the second time this year, acquired an iconic DC office asset with strong NAV growth potential, and signed a significant new office lease, thereby addressing all our large, near-term office lease expirations," said Paul T. McDermott, President and Chief Executive Officer. "Our positive momentum is driven by our research-based capital allocation, which has strategically positioned us to capitalize on attractive value-add growth opportunities in the Washington metro region and to generate strong risk-adjusted returns for our shareholders."

Operating Results

The Company's overall portfolio NOI (2) was $54.8 million for the quarter ended June 30, 2017, compared to $51.2 million in the corresponding prior year period. Overall portfolio ending occupancy (5) for the second quarter was at 93.4%, compared to 91.1% at the end of the second quarter last year and 93.5% at the end of first quarter 2017.

Same-store (3) portfolio ending occupancy for the second quarter of 2017 was 93.3%, compared to 90.8% at June 30, 2016 and 93.7% at the end of first quarter 2017. Same-store portfolio NOI for the second quarter increased by 8.8%, compared to the corresponding prior year period.
  • Office: 51% of Total NOI - Same-store NOI increased by 14.8% compared to the corresponding prior year period, primarily due to 870 basis points of economic occupancy (6) gains driven by lease commencements, of which approximately 60% occurred at the recently redeveloped Silverline Center with the rest spread across the same-store office portfolio. Periodic settlements of tenant recoveries were also higher. Same-store ending occupancy increased by 610 basis points year-over-year and declined by 10 basis points sequentially to 93.0% primarily due to a tenant move-out that has been re-leased to a cyber security tenant expected to commence in the third quarter. The office portfolio was 94% leased at the end of the second quarter.
  • Retail: 22% of Total NOI - Same-store NOI increased 4.6% compared to the corresponding prior year period, primarily due to 110 basis points of economic occupancy gains driven by lease commencements, as well as lower bad debt expense and lower utilities due to milder weather. Same-store ending occupancy decreased by 70 basis points year-over-year to 91.4%, and by 240 basis points sequentially, primarily due to the previously announced HHGregg bankruptcy as well as the move-out of a large commodity retailer, which has been backfilled by a supermarket chain whose lease commenced in the third quarter. The retail portfolio was 93% leased at the end of the second quarter.
  • Multifamily: 27% of Total NOI - Same-store NOI increased by 2.6% compared to the corresponding prior year period, driven by 180 basis points of rental growth. Same-store effective new lease rent trade-outs increased by 5.6% and same store effective renewal rent trade-outs increased by 3.3% year-over-year. Same-store ending occupancy on a unit basis increased by 80 basis points year-over-year and 60 basis points sequentially to 95.4%. The multifamily portfolio was 98% leased at the end of the second quarter.

Leasing Activity

During the second quarter, Washington REIT signed commercial leases totaling 367,000 square feet, including 228,000 square feet of new leases and 139,000 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 Free Rent Period (in months) Weighted Average Rental Rates Weighted Average Rental Rate % Increase Tenant Improvements Leasing Commissions
New:              
Office 192,000   11.7   12.5   $ 31.14   (14.2 )% $ 61.00   $ 16.96  
Retail 36,000   11.6   6.9   36.28   66.4 % 54.06   17.44  
Total 228,000   11.7   11.6   31.92   (6.5 )% 59.91   17.04  
               
Renewal:              
Office 22,000   6.5   3.0   $ 58.15   14.8 % $ 12.71   $ 8.94  
Retail 117,000   5.0     23.43   11.1 % 0.20   0.51  
Total 139,000   5.3   0.9   28.94   12.2 % 2.18   1.85  

Included in the new office leasing during the quarter, is a 131,000 square foot, 15-year lease with the USDA to backfill the space being vacated by Engility at Braddock Metro Center in Alexandria, VA, an asset that is being redeveloped.

Subsequent to quarter-end, the recently redeveloped Army Navy Building in Washington, DC, leased approximately 17,000 square feet and is now 71% leased.

Acquisition Activity

On April 4, 2017, Washington REIT completed the acquisition of Watergate 600, a 289,000 square foot iconic office building on the Potomac riverfront in Washington, DC for $135.0 million in a transaction that was structured to include the issuance of operating partnership units for a portion of the purchase price.

Capital Update

Year-to-date, the Company issued 2,070,000 shares at an average price of $31.44 per share through the Company's At-the-Market (ATM) program, raising gross proceeds of $65.1 million to maintain balance sheet strength.

Earnings Guidance

Management is raising the mid-point of 2017 Core FFO guidance by two cents per fully diluted share and tightening 2017 Core FFO guidance to a range of $1.80 to $1.84 from $1.76 to $1.84 per fully diluted share. The following assumptions are incorporated into the tightened guidance range:
  • Same-store NOI growth is raised to a projected range of 5.75% to 6.25%, from a previous range of 4.75% to 5.25%
  • Same-store office NOI growth is raised to a projected range of 9.0% to 9.5%, from a previous range of 7.25% to 7.75%
  • Same-store retail NOI growth is raised to a projected range of 2.5% to 3.0%, from a previous range of 2.0% to 2.5%
  • Same-store multifamily NOI growth is raised to a projected range of 3.0% to 3.5%, from a previous range of 2.5% to 3.0%
  • The Company's acquisition assumptions currently reflect Watergate 600, although it continues to seek further value-add opportunities
  • The Company assumes dispositions of assets ranging from $70 to $100 million, including Walker House, a multifamily asset located in Gaithersburg, MD
  • Interest expense is now projected to be approximately $47.5 to $48.0 million considering the acquisition of Watergate 600 and the anticipated timing of the assumed dispositions
  • General and administrative expense is now projected to range from $22.0 to $22.5 million
  • Non same-store office NOI, which includes Watergate 600, is now projected to range between $18.5 to $19.5 million
  • Non same-store multifamily NOI is now projected to range between $13.0 to $13.5 million

Non same-store properties in 2017 consist of Riverside Apartments, a multifamily asset acquired in 2016, The Army Navy Building and Braddock Metro Center, two office assets that are being repositioned in 2017, and Watergate 600, an office asset that was acquired in the second quarter of 2017.

Washington REIT's 2017 Core FFO guidance is based on a number of 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.

2017 Guidance Reconciliation Table (a)

A reconciliation of projected net income attributable to the controlling interests per diluted share to projected Core FFO per diluted share for the year ending December 31, 2017 is as follows:
  Low High
Net income attributable to the controlling interests per diluted share $ 0.31   $ 0.35  
Real estate depreciation and amortization 1.49   1.49  
NAREIT FFO per diluted share 1.80   1.84  
Core adjustments    
Core FFO per diluted share $ 1.80   $ 1.84  
(a) Does not include gains or losses on sales of assets as these will be added as known and incurred. The only assumed asset purchase is the recently-closed acquisition of Watergate 600 in Washington, DC.

Dividends

On June 30, 2017, 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, 2017 to shareholders of record on September 15, 2017.

Conference Call Information

The Conference Call for Second Quarter Earnings is scheduled for Friday, July 28, 2017 at 11:00 A.M. Eastern Time. Conference Call access information is as follows:

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

The instant replay of the Conference Call will be available until Friday, August 11, 2017, at 11:59 P.M. Eastern Time. Instant replay access information is as follows:                                               

USA Toll Free Number: 1-877-481-4010International Toll Number: 1-919-882-2331Conference ID: 10050

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 50 properties, totaling approximately 6.3 million square feet of commercial space and 4,480 multifamily units, and land held for development.  These 50 properties consist of 20 office properties, 16 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, changes in general and local economic and real estate market conditions, the potential for federal government budget reductions, the risk of failure to complete contemplated acquisitions and dispositions, 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, and other risks and uncertainties detailed from time to time in our filings with the SEC, including our 2016 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 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, casualty gains, and gains or losses 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 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, 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 straight-lining of rent and amortization of market intangibles. We provide each of NOI and cash NOI as a supplement to net income calculated in accordance with GAAP. As such, neither should be considered an alternative to net income as an indication of our operating performance. They are the primary performance measures 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". Same-store properties include all 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. 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. 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. (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 performance 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. (5) Ending Occupancy is calculated as occupied square footage as a percentage of total square footage as of the last day of that period. (6) 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.

Ending Occupancy Levels by Same-Store Properties (i) and All Properties
  Ending Occupancy
  Same-Store Properties   All Properties
  2nd QTR   2nd QTR   2nd QTR   2nd QTR
Segment 2017   2016   2017   2016
Multifamily 95.1 %   94.2 %   94.9 %   94.4 %
Office 93.0 %   86.9 %   92.9 %   87.5 %
Retail 91.4 %   92.1 %   91.4 %   92.1 %
               
Overall Portfolio 93.3 %   90.8 %   93.4 %   91.1 %

(i) Same-Store properties include all stabilized properties that were owned for the entirety of 2017 and the prior  year, and exclude properties under redevelopment or development and properties purchased or sold at any time during 2017 or the prior year. 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 with the non-same-store properties beginning in the period during which redevelopment or development activities commence. We consider properties to no longer be under redevelopment or development upon substantial completion of redevelopment or development activities, and the earlier of achieving 90% occupancy or two years after substantial completion. For Q2 2017 and Q2 2016, same-store properties exclude: 

Office Acquisition: Watergate 600; Multifamily Acquisition: Riverside Apartments; and Office Redevelopment: The Army Navy Building and Braddock Metro Center.

Also excluded from same-store properties in Q2 2017 and Q2 2016 are: Sold Properties:Office: 6110 Executive Boulevard, Wayne Plaza, 600 Jefferson Plaza, West Gude Drive, 51 Monroe Street and One Central Plaza.

 WASHINGTON REAL ESTATE INVESTMENT TRUST AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
(Unaudited)
               
  Three Months EndedJune 30,   Six Months Ended June 30,
OPERATING RESULTS 2017   2016   2017   2016
Revenue              
Real estate rental revenue $ 83,456     $ 79,405     $ 160,957     $ 156,542  
Expenses              
Real estate expenses 28,691     28,175     56,554     56,909  
Depreciation and amortization 29,261     25,161     55,330     51,199  
Acquisition costs     1,024         1,178  
General and administrative 5,759     4,968     11,385     10,479  
Casualty gain     (676 )       (676 )
  63,711     58,652     123,269     119,089  
Other operating income              
Gain on sale of real estate     24,112         24,112  
Real estate operating income 19,745     44,865     37,688     61,565  
Other income (expense):              
Interest expense (12,053 )   (13,820 )   (23,458 )   (28,180 )
Other income 48     83     125     122  
Income tax benefit 107     693     107     693  
  (11,898 )   (13,044 )   (23,226 )   (27,365 )
               
Net income 7,847     31,821     14,462     34,200  
Less: Net loss attributable to noncontrolling interests in subsidiaries 17     15     36     20  
Net income attributable to the controlling interests $ 7,864     $ 31,836     $ 14,498     $ 34,220  
               
Net income 7,847     31,821     14,462     34,200  
Depreciation and amortization 29,261     25,161     55,330     51,199  
Gain on sale of depreciable real estate     (24,112 )       (24,112 )
NAREIT funds from operations (1) $ 37,108     $ 32,870     $ 69,792     $ 61,287  
               
Tenant improvements and incentives (2,630 )   (7,639 )   (8,572 )   (9,182 )
External and internal leasing commissions capitalized (1,414 )   (3,350 )   (3,937 )   (4,365 )
Recurring capital improvements (663 )   (1,237 )   (1,068 )   (2,145 )
Straight-line rents, net (1,106 )   (880 )   (1,955 )   (1,563 )
Non-cash fair value interest expense (224 )   44     (526 )   86  
Non real estate depreciation & amortization of debt costs 815     876     1,714     1,826  
Amortization of lease intangibles, net 585     853     1,435     1,796  
Amortization and expensing of restricted share and unit compensation 1,186     850     2,316     2,369  
Funds available for distribution (4) $ 33,657     $ 22,387     $ 59,199     $ 50,109  

    Three Months EndedJune 30,   Six Months Ended June 30,
Per share data:   2017   2016   2017   2016
Net income attributable to the controlling interests (Basic) $ 0.10     $ 0.44     $ 0.19     $ 0.49  
  (Diluted) $ 0.10     $ 0.44     $ 0.19     $ 0.49  
NAREIT funds from operations (Basic) $ 0.48     $ 0.46     $ 0.92     $ 0.87  
  (Diluted) $ 0.48     $ 0.46     $ 0.92     $ 0.87  
                 
Dividends paid   $ 0.30     $ 0.30     $ 0.60     $ 0.60  
                 
Weighted average shares outstanding   76,705     71,719     75,785     70,010  
Fully diluted weighted average shares outstanding   76,830     71,912     75,903     70,200  
Fully diluted weighted average shares outstanding (for FFO) 76,830     71,912     75,903     70,200  

WASHINGTON REAL ESTATE INVESTMENT TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
  June 30, 2017 (unaudited)   December 31, 2016 
Assets      
Land $ 616,444     $ 573,315  
Income producing property 2,201,846     2,112,088  
  2,818,290     2,685,403  
Accumulated depreciation and amortization (691,515 )   (657,425 )
Net income producing property 2,126,775     2,027,978  
Properties under development or held for future development 46,154     40,232  
Total real estate held for investment, net 2,172,929     2,068,210  
Investment in real estate held for sale, net 6,983      
Cash and cash equivalents 13,237     11,305  
Restricted cash 1,506     6,317  
Rents and other receivables, net of allowance for doubtful accounts of $2,274 and $2,377, respectively 72,149     64,319  
Prepaid expenses and other assets 121,005     103,468  
Other assets related to properties sold or held for sale 303      
Total assets $ 2,388,112     $ 2,253,619  
       
Liabilities      
Notes payable $ 893,763     $ 843,084  
Mortgage notes payable 96,934     148,540  
Lines of credit 228,000     120,000  
Accounts payable and other liabilities 60,165     46,967  
Dividend payable     22,414  
Advance rents 11,956     11,750  
Tenant security deposits 9,263     8,802  
Liabilities related to properties sold or held for sale 322      
Total liabilities 1,300,403     1,201,557  
       
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; 76,926 and 74,606 shares issued and outstanding, respectively 769     746  
Additional paid-in capital 1,435,994     1,368,636  
Distributions in excess of net income (357,308 )   (326,047 )
Accumulated other comprehensive loss 6,857     7,611  
Total shareholders' equity 1,086,312     1,050,946  
       
Noncontrolling interests in subsidiaries 1,397     1,116  
Total equity 1,087,709     1,052,062  
       
Total liabilities and equity $ 2,388,112     $ 2,253,619  

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, 2017 Multifamily   Office   Retail   Total
Same-store net operating income (3) $ 11,366     $ 22,476     $ 11,915     $ 45,757  
Add: Net operating income from non-same-store properties (3) 3,228     5,780         9,008  
Total net operating income (2) $ 14,594     $ 28,256     $ 11,915     $ 54,765  
Add/(deduct):              
Other income             48  
Interest expense             (12,053 )
Depreciation and amortization             (29,261 )
General and administrative expenses             (5,759 )
Income tax benefit             107  
Net income             7,847  
Less: Net loss attributable to noncontrolling interests in subsidiaries             17  
Net income attributable to the controlling interests             $ 7,864  
               
Three months ended June 30, 2016 Multifamily   Office   Retail   Total
Same-store net operating income (3) $ 11,074     $ 19,582     $ 11,396     $ 42,052  
Add: Net operating income from non-same-store properties (3) 1,617     7,561         9,178  
Total net operating income (2) $ 12,691     $ 27,143     $ 11,396     $ 51,230  
Add/(deduct):              
Other income             83  
Acquisition costs             (1,024 )
Interest expense             (13,820 )
Depreciation and amortization             (25,161 )
General and administrative expenses             (4,968 )
Gain on sale of real estate             24,112  
Casualty gain             676  
Income tax benefit             693  
Net income             31,821  
Less: Net loss attributable to noncontrolling interests in subsidiaries             15  
Net income attributable to the controlling interests             $ 31,836  

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, 2017 Multifamily   Office   Retail   Total
Same-store net operating income (3) $ 22,478     $ 43,787     $ 23,757     $ 90,022  
Add: Net operating income from non-same-store properties (3) 6,299     8,082         14,381  
Total net operating income (2) $ 28,777     $ 51,869     $ 23,757     $ 104,403  
Add/(deduct):              
Other income             125  
Interest expense             (23,458 )
Depreciation and amortization             (55,330 )
General and administrative expenses             (11,385 )
Income tax benefit             107  
Net income             14,462  
Less: Net loss attributable to noncontrolling interests in subsidiaries             36  
Net income attributable to the controlling interests             $ 14,498  
               
Six months ended June 30, 2016 Multifamily   Office   Retail   Total
Same-store net operating income (3) $ 21,760     $ 38,025     $ 22,370     $ 82,155  
Add: Net operating income from non-same-store properties (3) 1,617     15,861         17,478  
Total net operating income (2) $ 23,377     $ 53,886     $ 22,370     $ 99,633  
Add/(deduct):              
Other income             122  
Acquisition costs             (1,178 )
Interest expense             (28,180 )
Depreciation and amortization             (51,199 )
General and administrative expenses             (10,479 )
Gain on sale of real estate             24,112  
Casualty gain             676  
Income tax benefit             693  
Net income             34,200  
Less: Net loss attributable to noncontrolling interests in subsidiaries             20  
Net income attributable to the controlling interests             $ 34,220  

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,
    2017   2016   2017   2016
Net income   $ 7,847     $ 31,821     $ 14,462     $ 34,200  
Add/(deduct):                
Real estate depreciation and amortization   29,261     25,161     55,330     51,199  
Gain on sale of depreciable real estate       (24,112 )       (24,112 )
NAREIT funds from operations (1)   37,108     32,870     69,792     61,287  
Add/(deduct):                
Casualty (gain)       (676 )       (676 )
Acquisition and structuring expenses   104     1,107     319     1,366  
Severance expense       126         586  
Core funds from operations (1)   $ 37,212     $ 33,427     $ 70,111     $ 62,563  
                 
    Three Months Ended  June 30,   Six Months Ended  June 30,
Per share data:   2017   2016   2017   2016
NAREIT FFO (Basic) $ 0.48     $ 0.46     $ 0.92     $ 0.87  
  (Diluted) $ 0.48     $ 0.46     $ 0.92     $ 0.87  
Core FFO (Basic) $ 0.48     $ 0.46     $ 0.92     $ 0.89  
  (Diluted) $ 0.48     $ 0.46     $ 0.92     $ 0.89  
                 
Weighted average shares outstanding   76,705     71,719     75,785     70,010  
Fully diluted weighted average shares outstanding (for FFO)   76,830     71,912     75,903     70,200  

 
CONTACT:Tejal R. EngmanVice President, Investor RelationsE-Mail:  tengman@washreit.com

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