 | ||||||
| First Quarter 2012 | ||||||
 | ||||||
| Supplemental Operating and Financial Data | ||||||
| Contact: | 6110 Executive Boulevard | |||||
| William T. Camp | Suite 800 | |||||
| Executive Vice President and | Rockville, MD 20852 | |||||
| Chief Financial Officer | (301) 984-9400 | |||||
| E-mail: bcamp@writ.com | (301) 984-9610 fax | |||||
Company Background and Highlights First Quarter 2012 |
Washington Real Estate Investment Trust ("WRIT") is a self-administered, self-managed, equity real estate investment trust investing in income-producing properties in the greater Washington metro region. WRIT is diversified, as it invests in office, medical office, retail, and multifamily properties and land for development.
In the first quarter of 2012, WRIT signed commercial leases for 218,000 square feet with an average lease term of 5.7 years. The average rental rate increase on new and renewal leases was 8.6% on a GAAP basis and -3.1% on a cash basis. Commercial tenant improvement costs were $19.08 per square foot and leasing costs were $12.56 per square foot for the quarter.
Net Operating Income Contribution by Sector - First Quarter 2012
As of March 31, 2012, WRIT owned a diversified portfolio of 71 properties totaling approximately 9 million square feet of commercial space and 2,540 residential units, and land held for development. These 71 properties consist of 26 office properties, 18 medical office properties, 16 retail centers and 11 multifamily properties. WRIT shares are publicly traded on the New York Stock Exchange (NYSE: WRE).
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 effect of the current credit and financial market conditions, 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 2011 Form 10-K. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
Supplemental Financial and Operating Data Table of Contents March 31, 2012 | ||
| Schedule | Page | |
| Key Financial Data | ||
| Capital Analysis | ||
| Portfolio Analysis | ||
| Tenant Analysis | ||
| Appendix | ||
Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) |  |
| Three Months Ended | |||||||||||||||||||
| OPERATING RESULTS | 3/31/2012 | 12/31/2011 | 9/30/2011 | 6/30/2011 | 3/31/2011 | ||||||||||||||
| Real estate rental revenue | $ | 76,499 | $ | 76,708 | $ | 71,931 | $ | 71,684 | $ | 69,204 | |||||||||
| Real estate expenses | (26,013 | ) | (26,068 | ) | (24,070 | ) | (23,801 | ) | (23,253 | ) | |||||||||
| 50,486 | 50,640 | 47,861 | 47,883 | 45,951 | |||||||||||||||
| Real estate depreciation and amortization | (25,994 | ) | (25,398 | ) | (23,479 | ) | (22,526 | ) | (21,894 | ) | |||||||||
| Income from real estate | 24,492 | 25,242 | 24,382 | 25,357 | 24,057 | ||||||||||||||
| Interest expense | (15,895 | ) | (16,207 | ) | (16,508 | ) | (16,865 | ) | (16,893 | ) | |||||||||
| Other income | 244 | 258 | 270 | 310 | 306 | ||||||||||||||
| Acquisition costs | (54 | ) | (36 | ) | (1,600 | ) | (322 | ) | (1,649 | ) | |||||||||
| Real estate impairment | — | (14,526 | ) | — | — | ||||||||||||||
| Gain (loss) on extinguishment of debt | — | (976 | ) | — | — | — | |||||||||||||
| General and administrative | (3,606 | ) | (4,140 | ) | (3,837 | ) | (4,049 | ) | (3,702 | ) | |||||||||
| Income (loss) from continuing operations | 5,181 | (10,385 | ) | 2,707 | 4,431 | 2,119 | |||||||||||||
| Discontinued operations: | |||||||||||||||||||
| Income (loss) from operations of properties sold or held for sale | — | 631 | 3,655 | 3,298 | 2,569 | ||||||||||||||
| Gain on sale of real estate | — | 40,852 | 56,639 | — | — | ||||||||||||||
| Income tax benefit (expense) | — | — | 35 | (1,173 | ) | — | |||||||||||||
| Income from discontinued operations | — | 41,483 | 60,329 | 2,125 | 2,569 | ||||||||||||||
| Net income | 5,181 | 31,098 | 63,036 | 6,556 | 4,688 | ||||||||||||||
| Less: Net income from noncontrolling interests | — | (409 | ) | (28 | ) | (34 | ) | (23 | ) | ||||||||||
| Net income attributable to the controlling interests | $ | 5,181 | $ | 30,689 | $ | 63,008 | $ | 6,522 | $ | 4,665 | |||||||||
| Per Share Data: | |||||||||||||||||||
| Net income attributable to the controlling interests | $ | 0.08 | $ | 0.46 | $ | 0.95 | $ | 0.10 | $ | 0.07 | |||||||||
| Fully diluted weighted average shares outstanding | 66,328 | 66,069 | 66,064 | 65,989 | 65,907 | ||||||||||||||
| Percentage of Revenues: | |||||||||||||||||||
| Real estate expenses | 34.0 | % | 34.0 | % | 33.5 | % | 33.2 | % | 33.6 | % | |||||||||
| General and administrative | 4.7 | % | 5.4 | % | 5.3 | % | 5.6 | % | 5.3 | % | |||||||||
| Ratios: | |||||||||||||||||||
| Adjusted EBITDA / Interest expense | 3.0x | 3.0x | 2.9x | 3.0x | 2.8x | ||||||||||||||
| Income from continuing operations attributable to the controlling interest/Total real estate revenue | 6.8 | % | (13.5 | )% | 3.8 | % | 6.2 | % | 3.1 | % | |||||||||
| Net income attributable to the controlling interest/Total real estate revenue | 6.8 | % | 40.0 | % | 87.6 | % | 9.1 | % | 6.7 | % | |||||||||
| Note: Certain prior quarter amounts have been reclassified to conform to the current quarter presentation. | |||||||||||||||||||
4
Consolidated Balance Sheets (In thousands) (Unaudited) | |
| 3/31/2012 | 12/31/2011 | 9/30/2011 | 6/30/2011 | 3/31/2011 | |||||||||||||||
| Assets | |||||||||||||||||||
| Land | $ | 472,196 | $ | 472,196 | $ | 472,812 | $ | 424,647 | $ | 424,647 | |||||||||
| Income producing property | 1,947,630 | 1,934,587 | 1,924,526 | 1,754,493 | 1,744,993 | ||||||||||||||
| 2,419,826 | 2,406,783 | 2,397,338 | 2,179,140 | 2,169,640 | |||||||||||||||
| Accumulated depreciation and amortization | (556,833 | ) | (535,732 | ) | (516,319 | ) | (497,738 | ) | (479,090 | ) | |||||||||
| Net income producing property | 1,862,993 | 1,871,051 | 1,881,019 | 1,681,402 | 1,690,550 | ||||||||||||||
| Development in progress, including land held for development | 44,236 | 43,089 | 39,735 | 39,413 | 26,263 | ||||||||||||||
| Total real estate held for investment, net | 1,907,229 | 1,914,140 | 1,920,754 | 1,720,815 | 1,716,813 | ||||||||||||||
| Investment in real estate held for sale, net | — | — | 69,990 | 240,437 | 284,052 | ||||||||||||||
| Cash and cash equivalents | 17,809 | 12,765 | 40,751 | 42,886 | 12,480 | ||||||||||||||
| Restricted cash | 21,922 | 19,424 | 23,267 | 22,311 | 23,083 | ||||||||||||||
| Rents and other receivables, net of allowance for doubtful accounts | 54,727 | 53,828 | 52,396 | 48,472 | 46,864 | ||||||||||||||
| Prepaid expenses and other assets | 114,859 | 120,601 | 125,689 | 99,356 | 104,093 | ||||||||||||||
| Other assets related to properties sold or held for sale | — | — | 3,505 | 12,899 | 28,827 | ||||||||||||||
| Total assets | $ | 2,116,546 | $ | 2,120,758 | $ | 2,236,352 | $ | 2,187,176 | $ | 2,216,212 | |||||||||
| Liabilities | |||||||||||||||||||
| Notes payable | $ | 657,562 | $ | 657,470 | $ | 657,378 | $ | 659,934 | $ | 753,692 | |||||||||
| Mortgage notes payable | 426,485 | 427,710 | 428,909 | 360,493 | 361,189 | ||||||||||||||
| Lines of credit/short-term note payable | 109,000 | 99,000 | 193,000 | 245,000 | 160,000 | ||||||||||||||
| Accounts payable and other liabilities | 57,766 | 51,145 | 55,879 | 54,101 | 57,040 | ||||||||||||||
| Advance rents | 15,065 | 13,739 | 13,393 | 12,372 | 11,549 | ||||||||||||||
| Tenant security deposits | 8,949 | 8,862 | 8,751 | 8,027 | 8,024 | ||||||||||||||
| Other liabilities related to properties sold or held for sale | — | — | 19,229 | 24,528 | 24,902 | ||||||||||||||
| Total Liabilities | 1,274,827 | 1,257,926 | 1,376,539 | 1,364,455 | 1,376,396 | ||||||||||||||
| Equity | |||||||||||||||||||
| Shares of beneficial interest, $0.01 par value; 100,000 shares authorized | 662 | 662 | 661 | 661 | 660 | ||||||||||||||
| Additional paid-in capital | 1,141,062 | 1,138,478 | 1,136,240 | 1,133,823 | 1,130,297 | ||||||||||||||
| Distributions in excess of net income | (303,815 | ) | (280,096 | ) | (281,930 | ) | (316,134 | ) | (293,860 | ) | |||||||||
| Accumulated other comprehensive income (loss) | — | — | (160 | ) | (636 | ) | (1,057 | ) | |||||||||||
| Total shareholders' equity | 837,909 | 859,044 | 854,811 | 817,714 | 836,040 | ||||||||||||||
| Noncontrolling interests in subsidiaries | 3,810 | 3,788 | 5,002 | 5,007 | 3,776 | ||||||||||||||
| Total equity | 841,719 | 862,832 | 859,813 | 822,721 | 839,816 | ||||||||||||||
| Total liabilities and equity | $ | 2,116,546 | $ | 2,120,758 | $ | 2,236,352 | $ | 2,187,176 | $ | 2,216,212 | |||||||||
| Total Debt / Total Market Capitalization | 0.38 | :1 | 0.40 | :1 | 0.41 | :1 | 0.37 | :1 | 0.39 | :1 | |||||||||
5
Funds from Operations (In thousands, except per share data) (Unaudited) | |
| Three Months Ended | |||||||||||||||||||
| 3/31/2012 | 12/31/2011 | 9/30/2011 | 6/30/2011 | 3/31/2011 | |||||||||||||||
Funds from operations(1) | |||||||||||||||||||
| Net income (loss) attributable to the controlling interests | $ | 5,181 | $ | 30,689 | $ | 63,008 | $ | 6,522 | $ | 4,665 | |||||||||
| Real estate depreciation and amortization | 25,994 | 25,398 | 23,479 | 22,526 | 21,894 | ||||||||||||||
| Gain from non-disposal activities | — | — | — | — | — | ||||||||||||||
| Discontinued operations: | |||||||||||||||||||
| Gain on sale of real estate | — | (40,452 | ) | (56,639 | ) | — | — | ||||||||||||
| Income tax expense (benefit) | — | — | (35 | ) | 1,173 | — | |||||||||||||
| Real estate impairment | — | — | — | — | 599 | ||||||||||||||
| Real estate depreciation and amortization | — | — | 943 | 2,933 | 3,355 | ||||||||||||||
| Funds from operations (FFO) | $ | 31,175 | $ | 15,635 | $ | 30,756 | $ | 33,154 | $ | 30,513 | |||||||||
| Loss (gain) on extinguishment of debt | — | 976 | — | — | — | ||||||||||||||
| Real estate impairment | — | 14,526 | — | — | — | ||||||||||||||
| Acquisition costs | 54 | 36 | 1,600 | 322 | 1,649 | ||||||||||||||
Core FFO (1) | $ | 31,229 | $ | 31,173 | $ | 32,356 | $ | 33,476 | $ | 32,162 | |||||||||
Allocation to participating securities(2) | (188 | ) | (186 | ) | (385 | ) | (38 | ) | (46 | ) | |||||||||
| FFO per share - basic | $ | 0.47 | $ | 0.23 | $ | 0.46 | $ | 0.50 | $ | 0.46 | |||||||||
| FFO per share - fully diluted | $ | 0.47 | $ | 0.23 | $ | 0.46 | $ | 0.50 | $ | 0.46 | |||||||||
| Core FFO per share - fully diluted | $ | 0.47 | $ | 0.47 | $ | 0.48 | $ | 0.51 | $ | 0.49 | |||||||||
| Common dividend per share | $ | 0.43375 | $ | 0.43375 | $ | 0.43375 | $ | 0.43375 | $ | 0.43375 | |||||||||
| Average shares - basic | 66,194 | 66,069 | 66,017 | 65,954 | 65,885 | ||||||||||||||
| Average shares - fully diluted | 66,328 | 66,069 | 66,064 | 65,989 | 65,907 | ||||||||||||||
(1) See "Supplemental Definitions" on page 28 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. | |||||||||||||||||||
6
Funds Available for Distribution (In thousands, except per share data) (Unaudited) | |
| Three Months Ended | |||||||||||||||||||
| 3/31/2012 | 12/31/2011 | 9/30/2011 | 6/30/2011 | 3/31/2011 | |||||||||||||||
Funds available for distribution(1) | |||||||||||||||||||
| FFO | $ | 31,175 | $ | 15,635 | $ | 30,756 | $ | 33,154 | $ | 30,513 | |||||||||
| Tenant improvements | (4,066 | ) | (5,100 | ) | (2,469 | ) | (1,950 | ) | (2,370 | ) | |||||||||
| Leasing commissions and incentives | (2,557 | ) | (1,485 | ) | (3,859 | ) | (1,116 | ) | (2,232 | ) | |||||||||
| Recurring capital improvements | (1,539 | ) | (1,626 | ) | (2,148 | ) | (3,072 | ) | (691 | ) | |||||||||
| Straight-line rent, net | (992 | ) | (776 | ) | (715 | ) | (586 | ) | (657 | ) | |||||||||
| Non-cash fair value interest expense | 228 | (53 | ) | 145 | 191 | 179 | |||||||||||||
| Non-real estate depreciation and amortization | 1,008 | 845 | 1,126 | 888 | 874 | ||||||||||||||
| Amortization of lease intangibles, net | — | (32 | ) | (329 | ) | (413 | ) | (278 | ) | ||||||||||
| Amortization and expensing of restricted share and unit compensation | 1,405 | 1,459 | 1,376 | 1,488 | 1,257 | ||||||||||||||
| Real estate impairment | — | 14,526 | — | — | — | ||||||||||||||
| Funds available for distribution (FAD) | $ | 24,662 | $ | 23,393 | $ | 23,883 | $ | 28,584 | $ | 26,595 | |||||||||
| Cash loss (gain) on extinguishment of debt | — | 976 | — | — | — | ||||||||||||||
| Acquisition costs | 54 | 36 | 1,600 | 322 | 1,649 | ||||||||||||||
Core FAD (1) | $ | 24,716 | $ | 24,405 | $ | 25,483 | $ | 28,906 | $ | 28,244 | |||||||||
Allocation to participating securities(2) | (188 | ) | (186 | ) | (385 | ) | (38 | ) | (46 | ) | |||||||||
| FAD per share - basic | $ | 0.37 | $ | 0.35 | $ | 0.36 | $ | 0.43 | $ | 0.40 | |||||||||
| FAD per share - fully diluted | $ | 0.37 | $ | 0.35 | $ | 0.36 | $ | 0.43 | $ | 0.40 | |||||||||
| Core FAD per share - fully diluted | $ | 0.37 | $ | 0.37 | $ | 0.38 | $ | 0.44 | $ | 0.43 | |||||||||
| Common dividend per share | $ | 0.43375 | $ | 0.43375 | $ | 0.43375 | $ | 0.43375 | $ | 0.43375 | |||||||||
| Average shares - basic | 66,194 | 66,069 | 66,017 | 65,954 | 65,885 | ||||||||||||||
| Average shares - fully diluted | 66,328 | 66,069 | 66,064 | 65,989 | 65,907 | ||||||||||||||
(1) See "Supplemental Definitions" on page 28 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. | |||||||||||||||||||
7
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) (In thousands) (Unaudited) | |
| Three Months Ended | |||||||||||||||||||
| 3/31/2012 | 12/31/2011 | 9/30/2011 | 6/30/2011 | 3/31/2011 | |||||||||||||||
| Net income attributable to the controlling interests | $ | 5,181 | $ | 30,689 | $ | 63,008 | $ | 6,522 | $ | 4,665 | |||||||||
| Add: | |||||||||||||||||||
| Interest expense, including discontinued operations | 15,895 | 15,985 | 16,739 | 17,097 | 17,126 | ||||||||||||||
| Real estate depreciation and amortization, including discontinued operations | 25,994 | 25,398 | 24,422 | 25,459 | 25,249 | ||||||||||||||
| Income tax expense (benefit) | 13 | — | (27 | ) | 1,173 | — | |||||||||||||
| Real estate impairment | — | 14,526 | — | — | 599 | ||||||||||||||
| Non-real estate depreciation | 268 | 242 | 243 | 248 | 268 | ||||||||||||||
| Less: | |||||||||||||||||||
| Gain on sale of real estate | — | (40,452 | ) | (56,639 | ) | — | — | ||||||||||||
| Loss (gain) on extinguishment of debt | — | 976 | — | — | — | ||||||||||||||
| Gain from non-disposal activities | — | — | — | — | — | ||||||||||||||
Adjusted EBITDA (1) | $ | 47,351 | $ | 47,364 | $ | 47,746 | $ | 50,499 | $ | 47,907 | |||||||||
| (1) Adjusted EBITDA is earnings before interest expense, taxes, depreciation, amortization, gain on sale of real estate, gain/loss on extinguishment of debt and gain from non-disposal activities. 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, the cost of debt or non-operating gains and losses. Adjusted EBITDA is a non-GAAP measure. | |||||||||||||||||||
8
Long Term Debt Analysis (In thousands, except per share data) | |
| 3/31/2012 | 12/31/2011 | 9/30/2011 | 6/30/2011 | 3/31/2011 | |||||||||||||||
| Balances Outstanding | |||||||||||||||||||
| Secured | |||||||||||||||||||
| Conventional fixed rate | $ | 426,485 | $ | 427,710 | $ | 446,715 | $ | 378,469 | $ | 379,333 | |||||||||
| Secured total | 426,485 | 427,710 | 446,715 | 378,469 | 379,333 | ||||||||||||||
| Unsecured | |||||||||||||||||||
| Fixed rate bonds and notes | 657,562 | 657,470 | 657,378 | 659,934 | 753,692 | ||||||||||||||
| Credit facility | 109,000 | 99,000 | 193,000 | 245,000 | 160,000 | ||||||||||||||
| Unsecured total | 766,562 | 756,470 | 850,378 | 904,934 | 913,692 | ||||||||||||||
| Total | $ | 1,193,047 | $ | 1,184,180 | $ | 1,297,093 | $ | 1,283,403 | $ | 1,293,025 | |||||||||
| Average Interest Rates | |||||||||||||||||||
| Secured | |||||||||||||||||||
| Conventional fixed rate | 5.9 | % | 5.9 | % | 5.9 | % | 5.9 | % | 5.9 | % | |||||||||
| Secured total | 5.9 | % | 5.9 | % | 5.9 | % | 5.9 | % | 5.9 | % | |||||||||
| Unsecured | |||||||||||||||||||
| Fixed rate bonds | 5.4 | % | 5.4 | % | 5.4 | % | 5.4 | % | 5.4 | % | |||||||||
| Credit facilities | 0.9 | % | 0.9 | % | 2.1 | % | 1.4 | % | 1.8 | % | |||||||||
| Unsecured total | 4.7 | % | 4.8 | % | 4.6 | % | 4.3 | % | 4.8 | % | |||||||||
| Average | 5.2 | % | 5.2 | % | 5.1 | % | 4.8 | % | 5.1 | % | |||||||||
Note: The current balances outstanding of the secured and unsecured fixed rate bonds and notes are shown net of discounts/premiums in the amount of $4.2 million and $2.4 million, respectively.
9
Long Term Debt Maturities (In thousands, except per share amounts) | |
| Future Maturities of Debt | |||||||||||||||||
| Year | Secured Debt | Unsecured Debt | Credit Facilities | Total Debt | Average Interest Rate | ||||||||||||
| 2012 | $ | 25,547 | $ | 50,000 | 74,000 | $ | 149,547 | 3.0% | |||||||||
| 2013 | 87,580 | 60,000 | — | 147,580 | 5.4% | ||||||||||||
| 2014 | 3,724 | 100,000 | 35,000 | 138,724 | 4.4% | ||||||||||||
| 2015 | 22,390 | 150,000 | — | 172,390 | 5.4% | ||||||||||||
| 2016 | 134,943 | — | — | 134,943 | 5.7% | ||||||||||||
| 2017 | 104,953 | — | — | 104,953 | 7.2% | ||||||||||||
| 2018 | 3,277 | — | — | 3,277 | 5.1% | ||||||||||||
| 2019 | 34,060 | — | — | 34,060 | 5.3% | ||||||||||||
| 2020 | 2,818 | 250,000 | — | 252,818 | 5.1% | ||||||||||||
| 2021 | 2,997 | — | — | 2,997 | 5.1% | ||||||||||||
| 2022 | 3,187 | — | — | 3,187 | 5.1% | ||||||||||||
| Thereafter | 5,256 | 50,000 | — | 55,256 | 7.2% | ||||||||||||
| Total maturities | $ | 430,732 | $ | 660,000 | $ | 109,000 | $ | 1,199,732 | 5.2% | ||||||||
Weighted average maturity = 4.7 years
10
Debt Covenant Compliance | |
| Unsecured Notes Payable | Unsecured Line of Credit #1 ($75.0 million) | Unsecured Line of Credit #2 ($400.0 million) | ||||||||||||
| Quarter Ended March 31, 2012 | Covenant | Quarter Ended March 31, 2012 | Covenant | Quarter Ended March 31, 2012 | Covenant | |||||||||
% of Total Indebtedness to Total Assets(1) | 41.8 | % | ≤ 65.0% | N/A | N/A | N/A | N/A | |||||||
| Ratio of Income Available for Debt Service to Annual Debt Service | 3.1 | ≥ 1.5 | N/A | N/A | N/A | N/A | ||||||||
% of Secured Indebtedness to Total Assets(1) | 15 | % | ≤ 40.0% | N/A | N/A | N/A | N/A | |||||||
Ratio of Total Unencumbered Assets(2) to Total Unsecured Indebtedness | 2.7 | ≥ 1.5 | N/A | N/A | N/A | N/A | ||||||||
Tangible Net Worth(3) | N/A | N/A | $1.1 billion | ≥ $808.6 million | $843.0 million | ≥ $671.9 million | ||||||||
% of Total Liabilities to Gross Asset Value(5) | N/A | N/A | 50.9 | % | ≤ 60.0% | 49.3 | % | ≤ 60.0% | ||||||
% of Secured Indebtedness to Gross Asset Value(5) | N/A | N/A | 17 | % | ≤ 35.0% | 16.5 | % | ≤ 35.0% | ||||||
Ratio of EBITDA(4) to Fixed Charges(6) | N/A | N/A | 2.61 | ≥ 1.75 | 2.61 | ≥ 1.50 | ||||||||
Ratio of Unencumbered Pool Value(8) to Unsecured Indebtedness | N/A | N/A | 2.43 | ≥ 1.67 | 2.45 | ≥ 1.67 | ||||||||
| Ratio of Unencumbered Net Operating Income to Unsecured Interest Expense | N/A | N/A | N/A | N/A | 3.60 | ≥ 2.00 | ||||||||
% of Development in Progress to Gross Asset Value(5) | N/A | N/A | 1.8 | % | ≤ 30.0% | N/A | N/A | |||||||
% of Non-Wholly Owned Assets(7) to Gross Asset Value(5) | N/A | N/A | 0.8 | % | ≤ 15.0% | N/A | N/A | |||||||
Ratio of Investments(9) to Gross Asset Value(5) | N/A | N/A | N/A | N/A | 1.7 | % | ≤ 15.0% | |||||||
(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) Tangible Net Worth is defined as shareholders equity less accumulated depreciation at the commitment start date plus current accumulated depreciation. | ||||||||||||||
(4) EBITDA is defined in our debt covenants as earnings before minority interests, depreciation, amortization, interest expense, income tax expense, and extraordinary and nonrecurring gains and losses. | ||||||||||||||
(5) Gross Asset Value is calculated by applying a capitalization rate to the annualized EBITDA(4) from the most recently ended quarter, excluding EBITDA from disposed properties and current quarter acquisitions. To this amount, the purchase price of current quarter acquisitions, cash and cash equivalents and development in progress is added. | ||||||||||||||
(6) Fixed Charges consist of interest expense, principal payments, ground lease payments and replacement reserve payments. | ||||||||||||||
(7) Non-Wholly Owned Assets is calculated by applying a capitalization rate of 7.50% to the EBITDA(4) from properties subject to a joint operating agreement (i.e. NVIP I&II). We add to this amount the development in progress subject to a joint operating agreement (i.e. 4661 Kenmore Avenue). | ||||||||||||||
(8) Unencumbered Pool Value is calculated by applying a capitalization rate of 7.75% to the net operating income from unencumbered properties owned for the entire quarter. To this we add the purchase price of unencumbered acquisitions during the current quarter and, for Unsecured Line of Credit #1 only, development in progress. | ||||||||||||||
(9) Investments is defined as development in progress, including land held for development, plus budgeted development costs upon commencement of construction, if any. | ||||||||||||||
11
Capital Analysis (In thousands, except per share amounts) | |
| 3/31/2012 | 12/31/2011 | 9/30/2011 | 6/30/2011 | 3/31/2011 | |||||||||||||||
| Market Data | |||||||||||||||||||
| Shares Outstanding | 66,309 | 66,265 | 66,066 | 66,017 | 65,941 | ||||||||||||||
| Market Price per Share | $ | 29.70 | $ | 27.35 | $ | 28.18 | $ | 32.52 | $ | 31.09 | |||||||||
| Equity Market Capitalization | $ | 1,969,377 | $ | 1,812,348 | $ | 1,861,740 | $ | 2,146,873 | $ | 2,050,106 | |||||||||
| Total Debt | $ | 1,193,047 | $ | 1,184,180 | $ | 1,297,093 | $ | 1,283,403 | $ | 1,293,025 | |||||||||
| Total Market Capitalization | $ | 3,162,424 | $ | 2,996,528 | $ | 3,158,833 | $ | 3,430,276 | $ | 3,343,131 | |||||||||
| Total Debt to Market Capitalization | 0.38 | :1 | 0.40 | :1 | 0.41 | :1 | 0.37 | :1 | 0.39 | :1 | |||||||||
Earnings to Fixed Charges(1) | 1.3x | 0.3x | 1.1x | 1.3x | 1.1x | ||||||||||||||
Debt Service Coverage Ratio(2) | 2.7x | 2.7x | 2.7x | 2.8x | 2.6x | ||||||||||||||
| Dividend Data | |||||||||||||||||||
| Total Dividends Paid | $ | 28,746 | $ | 28,669 | $ | 28,641 | $ | 28,621 | $ | 28,587 | |||||||||
| Common Dividend per Share | $ | 0.43375 | $ | 0.43375 | $ | 0.43375 | $ | 0.43375 | $ | 0.43375 | |||||||||
| Payout Ratio (Core FFO per share basis) | 92.3 | % | 92.3 | % | 90.4 | % | 85.0 | % | 88.5 | % | |||||||||
| Payout Ratio (Core FAD per share basis) | 117.2 | % | 117.2 | % | 114.1 | % | 98.6 | % | 100.9 | % | |||||||||
| Payout Ratio (FAD per share basis) | 117.2 | % | 123.9 | % | 120.5 | % | 100.9 | % | 108.4 | % | |||||||||
(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. | |||||||||||||||||||
12
Same-Store Portfolio Net Operating Income (NOI) Summary (In thousands) | |
| Three Months Ended March 31, | |||||||||||||
| 2012 | 2011 | % Change | Rental Rate Growth | ||||||||||
| Cash Basis: | |||||||||||||
| Multifamily | $ | 7,872 | $ | 7,466 | 5.4 | % | 4.0 | % | |||||
| Office Buildings | 19,505 | 20,611 | (5.4 | )% | 0.6 | % | |||||||
| Medical Office Buildings | 7,396 | 7,309 | 1.2 | % | 2.0 | % | |||||||
| Retail Centers | 8,594 | 8,331 | 3.2 | % | 1.8 | % | |||||||
Overall Same-Store Portfolio (1) | $ | 43,367 | $ | 43,717 | (0.8 | )% | 1.7 | % | |||||
| GAAP Basis: | |||||||||||||
| Multifamily | $ | 8,065 | $ | 7,665 | 5.2 | % | 4.0 | % | |||||
| Office Buildings | 19,778 | 21,123 | (6.4 | )% | 0.3 | % | |||||||
| Medical Office Buildings | 7,618 | 7,505 | 1.5 | % | 1.8 | % | |||||||
| Retail Centers | 8,962 | 8,605 | 4.1 | % | 0.9 | % | |||||||
Overall Same-Store Portfolio (1) | $ | 44,423 | $ | 44,898 | (1.1 | )% | 1.3 | % | |||||
(1) Non same-store properties were: |
| Acquisitions: |
| Office - 1140 Connecticut Avenue, 1227 25th Street, Braddock Metro Center and John Marshall II |
| Retail - Olney Village Center |
| Medical Office - Lansdowne Medical Office Building |
| Held for sale and sold properties: |
| Office - Dulles Station, Phase I |
| Industrial/Office - Industrial Portfolio (see Supplemental Definitions for list of properties) |
13
Same-Store Portfolio Net Operating Income (NOI) Detail (In thousands) | |
| Three Months Ended March 31, 2012 | |||||||||||||||||||||||
| Multifamily | Office | Medical Office | Retail | Corporate and Other | Total | ||||||||||||||||||
| Real estate rental revenue | |||||||||||||||||||||||
| Same-store portfolio | $ | 12,996 | $ | 30,781 | $ | 11,198 | $ | 12,098 | — | $ | 67,073 | ||||||||||||
Non same-store - acquired and in development (1) | — | 7,848 | 230 | 1,348 | — | 9,426 | |||||||||||||||||
| Total | 12,996 | 38,629 | 11,428 | 13,446 | — | 76,499 | |||||||||||||||||
| Real estate expenses | |||||||||||||||||||||||
| Same-store portfolio | 4,931 | 11,003 | 3,580 | 3,136 | — | 22,650 | |||||||||||||||||
Non same-store - acquired and in development (1) | — | 2,891 | 164 | 308 | — | 3,363 | |||||||||||||||||
| Total | 4,931 | 13,894 | 3,744 | 3,444 | — | 26,013 | |||||||||||||||||
| Net Operating Income (NOI) | |||||||||||||||||||||||
| Same-store portfolio | 8,065 | 19,778 | 7,618 | 8,962 | — | 44,423 | |||||||||||||||||
Non same-store - acquired and in development (1) | — | 4,957 | 66 | 1,040 | — | 6,063 | |||||||||||||||||
| Total | $ | 8,065 | $ | 24,735 | $ | 7,684 | $ | 10,002 | — | $ | 50,486 | ||||||||||||
| Same-store portfolio NOI GAAP basis (from above) | $ | 8,065 | $ | 19,778 | $ | 7,618 | $ | 8,962 | — | $ | 44,423 | ||||||||||||
| Straight-line revenue, net for same-store properties | (2 | ) | (253 | ) | (143 | ) | (317 | ) | — | (715 | ) | ||||||||||||
| FAS 141 Min Rent | (191 | ) | (148 | ) | (89 | ) | (100 | ) | — | (528 | ) | ||||||||||||
| Amortization of lease intangibles for same-store properties | — | 128 | 10 | 49 | — | 187 | |||||||||||||||||
| Same-store portfolio NOI, cash basis | $ | 7,872 | $ | 19,505 | $ | 7,396 | $ | 8,594 | — | $ | 43,367 | ||||||||||||
| Reconciliation of NOI to net income | |||||||||||||||||||||||
| Total NOI | $ | 8,065 | $ | 24,735 | $ | 7,684 | $ | 10,002 | — | $ | 50,486 | ||||||||||||
| Depreciation and amortization | (3,123 | ) | (15,175 | ) | (3,877 | ) | (3,583 | ) | (236 | ) | (25,994 | ) | |||||||||||
| General and administrative | — | — | — | — | (3,606 | ) | (3,606 | ) | |||||||||||||||
| Interest expense | (1,697 | ) | (3,044 | ) | (1,169 | ) | (602 | ) | (9,383 | ) | (15,895 | ) | |||||||||||
| Other income | — | — | — | — | 244 | 244 | |||||||||||||||||
| Acquisition costs | — | — | — | — | (54 | ) | (54 | ) | |||||||||||||||
| Net Income | 3,245 | 6,516 | 2,638 | 5,817 | (13,035 | ) | 5,181 | ||||||||||||||||
| Net income attributable to noncontrolling interests | — | — | — | — | — | — | |||||||||||||||||
| Net income attributable to the controlling interests | $ | 3,245 | $ | 6,516 | $ | 2,638 | $ | 5,817 | $ | (13,035 | ) | $ | 5,181 | ||||||||||
(1) For a list of non-same-store properties and held for sale and sold properties, see page 13 of this Supplemental. | |||||||||||||||||||||||
14
Same-Store Net Operating Income (NOI) Detail (In thousands) | |
| Three Months Ended March 31, 2011 | |||||||||||||||||||||||||||
| Multifamily | Office | Medical Office | Retail | Industrial/Flex | Corporate and Other | Total | |||||||||||||||||||||
| Real estate rental revenue | |||||||||||||||||||||||||||
| Same-store portfolio | $ | 12,493 | $ | 31,583 | $ | 11,023 | $ | 12,147 | $ | — | — | $ | 67,246 | ||||||||||||||
Non same-store - acquired and in development (1) | — | 1,850 | 108 | — | — | — | 1,958 | ||||||||||||||||||||
| Total | 12,493 | 33,433 | 11,131 | 12,147 | — | — | 69,204 | ||||||||||||||||||||
| Real estate expenses | |||||||||||||||||||||||||||
| Same-store portfolio | 4,828 | 10,460 | 3,518 | 3,542 | — | — | 22,348 | ||||||||||||||||||||
Non same-store - acquired and in development (1) | — | 754 | 151 | — | — | — | 905 | ||||||||||||||||||||
| Total | 4,828 | 11,214 | 3,669 | 3,542 | — | — | 23,253 | ||||||||||||||||||||
| Net Operating Income (NOI) | |||||||||||||||||||||||||||
| Same-store portfolio | 7,665 | 21,123 | 7,505 | 8,605 | — | — | 44,898 | ||||||||||||||||||||
Non same-store - acquired and in development (1) | — | 1,096 | (43 | ) | — | — | — | 1,053 | |||||||||||||||||||
| Total | $ | 7,665 | $ | 22,219 | $ | 7,462 | $ | 8,605 | $ | — | — | $ | 45,951 | ||||||||||||||
| Same-store portfolio NOI GAAP basis (from above) | $ | 7,665 | $ | 21,123 | $ | 7,505 | $ | 8,605 | $ | — | — | $ | 44,898 | ||||||||||||||
| Straight-line revenue, net for same-store properties | (8 | ) | (346 | ) | (113 | ) | (184 | ) | — | — | (651 | ) | |||||||||||||||
| FAS 141 Min Rent | (191 | ) | (294 | ) | (93 | ) | (105 | ) | — | — | (683 | ) | |||||||||||||||
| Amortization of lease intangibles for same-store properties | — | 128 | 10 | 15 | — | — | 153 | ||||||||||||||||||||
| Same-store portfolio NOI, cash basis | $ | 7,466 | $ | 20,611 | $ | 7,309 | $ | 8,331 | $ | — | — | $ | 43,717 | ||||||||||||||
| Reconciliation of NOI to net income | |||||||||||||||||||||||||||
| Total NOI | $ | 7,665 | $ | 22,219 | $ | 7,462 | $ | 8,605 | $ | — | — | $ | 45,951 | ||||||||||||||
| Depreciation and amortization | (3,134 | ) | (11,960 | ) | (3,827 | ) | (2,662 | ) | — | (311 | ) | (21,894 | ) | ||||||||||||||
| General and administrative | — | — | — | — | — | (3,702 | ) | (3,702 | ) | ||||||||||||||||||
| Interest expense | (1,686 | ) | (2,231 | ) | (1,313 | ) | (306 | ) | — | (11,357 | ) | (16,893 | ) | ||||||||||||||
| Other income | — | — | — | — | — | 306 | 306 | ||||||||||||||||||||
| Acquisition costs | — | — | — | — | — | (1,649 | ) | (1,649 | ) | ||||||||||||||||||
Income from operations of properties sold or held for sale (1) | — | (389 | ) | — | — | 2,958 | — | 2,569 | |||||||||||||||||||
| Net income | 2,845 | 7,639 | 2,322 | 5,637 | 2,958 | (16,713 | ) | 4,688 | |||||||||||||||||||
| Net income attributable to noncontrolling interests | — | — | — | — | — | (23 | ) | (23 | ) | ||||||||||||||||||
| Net income attributable to the controlling interests | $ | 2,845 | $ | 7,639 | $ | 2,322 | $ | 5,637 | $ | 2,958 | $ | (16,736 | ) | $ | 4,665 | ||||||||||||
(1) For a list of non-same-store properties and held for sale and sold properties, see page 13 of this Supplemental. | |||||||||||||||||||||||||||
15
Net Operating Income (NOI) by Region | |
| WRIT Portfolio | WRIT Portfolio | |||||
| Maryland/Virginia/DC | Inside & Outside the Beltway | |||||
| Percentage of GAAP NOI | Percentage of GAAP NOI | |||||
| Q1 2012 | Q1 2012 | |||||
| DC | Inside the Beltway | |||||
| Multifamily | 3.8 | % | Multifamily | 15.1 | % | |
| Office | 17.4 | % | Office | 27.4 | % | |
| Medical Office | 1.7 | % | Medical Office | 3.0 | % | |
| Retail | 0.7 | % | Retail | 6.3 | % | |
| 23.6 | % | 51.8 | % | |||
| Maryland | Outside the Beltway | |||||
| Multifamily | 2.3 | % | Multifamily | 0.8 | % | |
| Office | 11.4 | % | Office | 21.7 | % | |
| Medical Office | 4.2 | % | Medical Office | 12.2 | % | |
| Retail | 13.9 | % | Retail | 13.5 | % | |
| 31.8 | % | 48.2 | % | |||
| Virginia | Total Portfolio | 100.0 | % | |||
| Multifamily | 9.8 | % | ||||
| Office | 20.3 | % | ||||
| Medical Office | 9.3 | % | ||||
| Retail | 5.2 | % | ||||
| 44.6 | % | |||||
| Total Portfolio | 100.0 | % | ||||
16
Same-Store and Overall Physical Occupancy Levels by Sector | | |||
Physical Occupancy - Same-Store Properties (1) | ||||||||||||||
| Sector | 3/31/2012 | 12/31/2011 | 9/30/2011 | 6/30/2011 | 3/31/2011 | |||||||||
| Multifamily | 95.2 | % | 94.9 | % | 94.0 | % | 95.6 | % | 95.3 | % | ||||
| Office Buildings | 85.9 | % | 88.8 | % | 88.1 | % | 88.4 | % | 89.3 | % | ||||
| Medical Office | 90.7 | % | 90.6 | % | 91.3 | % | 91.7 | % | 93.5 | % | ||||
| Retail Centers | 92.4 | % | 92.7 | % | 91.6 | % | 92.0 | % | 92.0 | % | ||||
| Industrial / Flex | — | % | — | % | — | % | — | % | — | % | ||||
| Overall Portfolio | 90.1 | % | 91.3 | % | 90.8 | % | 91.3 | % | 91.8 | % | ||||
| Physical Occupancy - All Properties | ||||||||||||||
| Sector | 3/31/2012 | 12/31/2011 | 9/30/2011 | 6/30/2011 | 3/31/2011 | |||||||||
| Multifamily | 95.2 | % | 94.9 | % | 94.0 | % | 95.6 | % | 95.3 | % | ||||
| Office Buildings | 86.3 | % | 89.0 | % | 88.6 | % | 88.1 | % | 89.1 | % | ||||
| Medical Office | 87.1 | % | 86.5 | % | 87.2 | % | 87.3 | % | 88.3 | % | ||||
| Retail Centers | 92.9 | % | 93.3 | % | 92.3 | % | 92.0 | % | 92.0 | % | ||||
| Industrial / Flex | — | % | — | % | 75.4 | % | 78.4 | % | 80.2 | % | ||||
| Overall Portfolio | 89.7 | % | 90.8 | % | 89.0 | % | 87.7 | % | 88.5 | % | ||||
(1) Non same-store properties were: |
| Acquisitions: |
| Office - 1140 Connecticut Avenue, 1227 25th Street, Braddock Metro Center and John Marshall II |
| Retail - Olney Village Center |
| Medical Office - Lansdowne Medical Office Building |
| Held for sale and sold properties: |
| Office - Dulles Station, Phase I |
| Industrial/Office - Industrial Portfolio (see Supplemental Definitions for list of properties) |
17
Same-Store Portfolio and Overall Economic Occupancy Levels by Sector | | |||
Economic Occupancy - Same-Store Properties(1) | ||||||||||||||
| Sector | 3/31/2012 | 12/31/2011 | 9/30/2011 | 6/30/2011 | 3/31/2011 | |||||||||
| Multifamily | 94.0 | % | 94.2 | % | 94.1 | % | 94.9 | % | 94.8 | % | ||||
| Office Buildings | 88.0 | % | 89.8 | % | 89.2 | % | 90.2 | % | 90.3 | % | ||||
| Medical Office Buildings | 93.5 | % | 92.4 | % | 92.8 | % | 94.0 | % | 94.2 | % | ||||
| Retail Centers | 94.0 | % | 92.3 | % | 92.1 | % | 92.3 | % | 92.0 | % | ||||
| Industrial / Flex | — | % | — | % | — | % | — | % | — | % | ||||
| Overall Portfolio | 91.1 | % | 91.5 | % | 91.2 | % | 92.1 | % | 92.1 | % | ||||
| Economic Occupancy - All Properties | ||||||||||||||
| Sector | 3/31/2012 | 12/31/2011 | 9/30/2011 | 6/30/2011 | 3/31/2011 | |||||||||
| Multifamily | 94.0 | % | 94.2 | % | 94.1 | % | 94.9 | % | 94.8 | % | ||||
| Office Buildings | 87.8 | % | 89.4 | % | 88.5 | % | 89.7 | % | 90.7 | % | ||||
| Medical Office Buildings | 90.8 | % | 89.5 | % | 89.9 | % | 90.5 | % | 90.5 | % | ||||
| Retail Centers | 94.3 | % | 93.0 | % | 92.3 | % | 92.3 | % | 92.0 | % | ||||
| Industrial / Flex | — | % | 79.3 | % | 80.8 | % | 81.9 | % | 81.4 | % | ||||
| Overall Portfolio | 90.3 | % | 90.8 | % | 89.5 | % | 90.2 | % | 90.5 | % | ||||
(1) Non same-store properties were: |
| Acquisitions: |
| Office - 1140 Connecticut Avenue, 1227 25th Street, Braddock Metro Center and John Marshall II |
| Retail - Olney Village Center |
| Medical Office - Lansdowne Medical Office Building |
| Held for sale and sold properties: |
| Office - Dulles Station, Phase I |
| Industrial/Office - Industrial Portfolio (see Supplemental Definitions for list of properties) |
18
Commercial Leasing Summary | |
| 1st Quarter 2012 | 4th Quarter 2011 | 3rd Quarter 2011 | 2nd Quarter 2011 | First Quarter 2011 | |||||||||||||||||||||||||||||||||||
| Gross Leasing Square Footage | |||||||||||||||||||||||||||||||||||||||
| Office Buildings | 136,234 | 175,032 | 152,900 | 160,318 | 138,083 | ||||||||||||||||||||||||||||||||||
| Medical Office Buildings | 69,171 | 65,162 | 29,070 | 61,374 | 43,355 | ||||||||||||||||||||||||||||||||||
| Retail Centers | 12,574 | 23,375 | 59,910 | 38,482 | 78,669 | ||||||||||||||||||||||||||||||||||
| Total | 217,979 | 263,569 | 241,880 | 260,174 | 260,107 | ||||||||||||||||||||||||||||||||||
| Weighted Average Term (yrs) | |||||||||||||||||||||||||||||||||||||||
| Office Buildings | 5.6 | 4.8 | 4.3 | 7.5 | 3.6 | ||||||||||||||||||||||||||||||||||
| Medical Office Buildings | 5.3 | 4.4 | 4.9 | 5.5 | 6.0 | ||||||||||||||||||||||||||||||||||
| Retail Centers | 8.3 | 5.9 | 5.9 | 8.2 | 4.5 | ||||||||||||||||||||||||||||||||||
| Total | 5.7 | 4.8 | 4.7 | 7.1 | 4.3 | ||||||||||||||||||||||||||||||||||
| Rental Rate Increases: | GAAP | CASH | GAAP | CASH | GAAP | CASH | GAAP | CASH | GAAP | CASH | |||||||||||||||||||||||||||||
| Rate on expiring leases | |||||||||||||||||||||||||||||||||||||||
| Office Buildings | $ | 28.97 | $ | 30.31 | $ | 30.22 | $ | 31.94 | $ | 36.04 | $ | 37.87 | $ | 25.59 | $ | 26.66 | $ | 31.41 | $ | 32.26 | |||||||||||||||||||
| Medical Office Buildings | 28.31 | 29.70 | 34.70 | 37.70 | 34.63 | 36.79 | 30.74 | 32.36 | 32.91 | 34.90 | |||||||||||||||||||||||||||||
| Retail Centers | 14.13 | 14.13 | 22.12 | 23.02 | 14.14 | 17.39 | 23.67 | 24.20 | 15.64 | 15.91 | |||||||||||||||||||||||||||||
| Total | $ | 27.90 | $ | 29.18 | $ | 30.61 | $ | 32.57 | $ | 30.19 | $ | 32.41 | $ | 26.53 | $ | 27.65 | $ | 26.89 | $ | 27.76 | |||||||||||||||||||
| Rate on new leases | |||||||||||||||||||||||||||||||||||||||
| Office Buildings | $ | 31.87 | $ | 29.73 | $ | 31.38 | $ | 29.66 | $ | 39.53 | $ | 37.76 | $ | 29.06 | $ | 26.64 | $ | 30.97 | $ | 29.91 | |||||||||||||||||||
| Medical Office Buildings | 29.94 | 27.98 | 38.91 | 37.13 | 37.76 | 35.79 | 36.13 | 33.64 | 37.24 | 34.76 | |||||||||||||||||||||||||||||
| Retail Centers | 15.13 | 14.24 | 28.89 | 26.86 | 18.56 | 21.96 | 25.88 | 24.34 | 16.48 | 16.30 | |||||||||||||||||||||||||||||
| Total | $ | 30.29 | $ | 28.28 | $ | 33.02 | $ | 31.26 | $ | 33.71 | $ | 33.24 | $ | 30.25 | $ | 27.96 | $ | 27.63 | $ | 26.60 | |||||||||||||||||||
| Percentage Increase | |||||||||||||||||||||||||||||||||||||||
| Office Buildings | 10.0 | % | (1.9 | )% | 3.8 | % | (7.2 | )% | 9.7 | % | (0.3 | )% | 13.6 | % | (0.1 | )% | (1.4 | )% | (7.3 | )% | |||||||||||||||||||
| Medical Office Buildings | 5.8 | % | (5.8 | )% | 12.1 | % | (1.5 | )% | 9.0 | % | (2.7 | )% | 17.5 | % | 4.0 | % | 13.1 | % | (0.4 | )% | |||||||||||||||||||
| Retail Centers | 7.1 | % | 0.8 | % | 30.6 | % | 16.7 | % | 31.3 | % | 26.3 | % | 9.3 | % | 0.6 | % | 5.4 | % | 2.4 | % | |||||||||||||||||||
| Total | 8.6 | % | (3.1 | )% | 7.9 | % | (4.0 | )% | 11.7 | % | 2.6 | % | 14.1 | % | 1.1 | % | 2.8 | % | (4.2 | )% | |||||||||||||||||||
19
Commercial Leasing Summary Tenant Improvements and Leasing Costs | |
| 1st Quarter 2012 | 4th Quarter 2011 | 3rd Quarter 2011 | 2nd Quarter 2011 | First Quarter 2011 | |||||||||||||||||||||||||||||||||||
| Total Dollars | Dollars per Square Foot | Total Dollars | Dollars per Square Foot | Total Dollars | Dollars per Square Foot | Total Dollars | Dollars per Square Foot | Total Dollars | Dollars per Square Foot | ||||||||||||||||||||||||||||||
| Tenant Improvements | |||||||||||||||||||||||||||||||||||||||
| Office Buildings | $ | 2,938,313 | $ | 21.57 | $ | 3,691,099 | $ | 21.09 | $ | 2,067,782 | $ | 13.52 | $ | 3,019,025 | $ | 18.83 | $ | 535,261 | $ | 3.88 | |||||||||||||||||||
| Medical Office Buildings | 1,220,567 | 17.65 | 788,535 | 12.10 | 112,145 | 3.86 | 893,785 | 14.56 | 384,334 | 8.86 | |||||||||||||||||||||||||||||
| Retail Centers | — | — | 25,740 | 1.10 | 1,424,151 | 23.77 | 265,135 | 6.89 | — | — | |||||||||||||||||||||||||||||
| Subtotal | $ | 4,158,880 | $ | 19.08 | $ | 4,505,374 | $ | 17.09 | $ | 3,604,078 | $ | 14.90 | $ | 4,177,945 | $ | 16.06 | $ | 919,595 | $ | 3.54 | |||||||||||||||||||
| Leasing Costs | |||||||||||||||||||||||||||||||||||||||
| Office Buildings | $ | 2,363,552 | $ | 17.35 | $ | 2,133,927 | $ | 12.19 | $ | 1,596,565 | $ | 10.44 | $ | 2,189,912 | $ | 13.66 | $ | 582,007 | $ | 4.21 | |||||||||||||||||||
| Medical Office Buildings | 365,614 | 5.29 | 400,976 | 6.15 | 206,298 | 7.10 | 716,648 | 11.68 | 530,073 | 12.23 | |||||||||||||||||||||||||||||
| Retail Centers | 9,232 | 0.73 | 178,127 | 7.62 | 504,673 | 8.42 | 269,557 | 7.00 | 77,260 | 0.98 | |||||||||||||||||||||||||||||
| Subtotal | $ | 2,738,398 | $ | 12.56 | $ | 2,713,030 | $ | 10.29 | $ | 2,307,536 | $ | 9.54 | $ | 3,176,117 | $ | 12.21 | $ | 1,189,340 | $ | 4.57 | |||||||||||||||||||
| Tenant Improvements and Leasing Costs | |||||||||||||||||||||||||||||||||||||||
| Office Buildings | $ | 5,301,865 | $ | 38.92 | $ | 5,825,026 | $ | 33.28 | $ | 3,664,347 | $ | 23.96 | $ | 5,208,937 | $ | 32.49 | $ | 1,117,268 | $ | 8.09 | |||||||||||||||||||
| Medical Office Buildings | 1,586,181 | 22.94 | 1,189,511 | 18.25 | 318,443 | 10.96 | 1,610,433 | 26.24 | 914,407 | 21.09 | |||||||||||||||||||||||||||||
| Retail Centers | 9,232 | 0.73 | 203,867 | 8.72 | 1,928,824 | 32.19 | 534,692 | 13.89 | 77,260 | 0.98 | |||||||||||||||||||||||||||||
| Total | $ | 6,897,278 | $ | 31.64 | $ | 7,218,404 | $ | 27.38 | $ | 5,911,614 | $ | 24.44 | $ | 7,354,062 | $ | 28.27 | $ | 2,108,935 | $ | 8.11 | |||||||||||||||||||
20
10 Largest Tenants - Based on Annualized Rent March 31, 2012 | |
| Tenant | Number of Buildings | Weighted Average Remaining Lease Term in Months | Percentage of Aggregate Portfolio Annualized Rent | Aggregate Rentable Square Feet | Percentage of Aggregate Occupied Square Feet | ||||||||
| World Bank | 1 | 39 | 5.07 | % | 210,354 | 2.88 | % | ||||||
| General Services Administration | 6 | 31 | 2.97 | % | 170,834 | 2.34 | % | ||||||
| Advisory Board Company | 1 | 86 | 2.87 | % | 180,925 | 2.48 | % | ||||||
| Booz Allen Hamilton, Inc. | 1 | 46 | 2.27 | % | 222,989 | 3.06 | % | ||||||
| L-3 Services, Inc | 1 | 66 | 2.22 | % | 140,400 | 1.93 | % | ||||||
| Patton Boggs LLP | 1 | 61 | 2.04 | % | 110,566 | 1.52 | % | ||||||
| INOVA Health System | 7 | 47 | 1.98 | % | 110,422 | 1.51 | % | ||||||
| Sunrise Assisted Living, Inc. | 1 | 18 | 1.62 | % | 115,289 | 1.58 | % | ||||||
| Children's Hospital | 3 | 79 | 1.28 | % | 77,858 | 1.07 | % | ||||||
| General Dynamics | 2 | 27 | 1.21 | % | 88,359 | 1.21 | % | ||||||
| Total/Weighted Average | 50 | 23.53 | % | 1,427,996 | 19.58 | % | |||||||
21
Industry Diversification March 31, 2012 | |
| 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 | $ | 67,758,432 | 31.57 | % | 2,200,640 | 30.11 | % | |||||
| Ambulatory Health Care Services | 38,958,187 | 18.15 | % | 1,140,848 | 15.61 | % | ||||||
| Credit Intermediation and Related Activities | 16,664,102 | 7.77 | % | 326,289 | 4.46 | % | ||||||
| Executive, Legislative, and Other General Government Support | 9,712,937 | 4.53 | % | 286,949 | 3.93 | % | ||||||
| Food Services and Drinking Places | 8,174,298 | 3.81 | % | 265,560 | 3.63 | % | ||||||
| Religious, Grantmaking, Civic, Professional, and Similar Organizations | 6,815,743 | 3.18 | % | 205,294 | 2.81 | % | ||||||
| Educational Services | 6,005,498 | 2.80 | % | 205,639 | 2.81 | % | ||||||
| Food and Beverage Stores | 5,905,126 | 2.75 | % | 338,881 | 4.64 | % | ||||||
| Administrative and Support Services | 4,131,830 | 1.93 | % | 116,212 | 1.59 | % | ||||||
| Nursing and Residential Care Facilities | 4,088,465 | 1.91 | % | 116,935 | 1.60 | % | ||||||
| Health and Personal Care Stores | 3,380,349 | 1.58 | % | 103,182 | 1.41 | % | ||||||
| Clothing and Clothing Accessories Stores | 3,281,042 | 1.53 | % | 169,042 | 2.31 | % | ||||||
| Miscellaneous Store Retailers | 3,215,478 | 1.50 | % | 172,247 | 2.36 | % | ||||||
| Broadcasting (except Internet) | 3,167,033 | 1.48 | % | 89,083 | 1.22 | % | ||||||
| Electronics and Appliance Stores | 2,869,736 | 1.34 | % | 166,345 | 2.28 | % | ||||||
| Furniture and Home Furnishings Stores | 2,730,691 | 1.27 | % | 133,851 | 1.83 | % | ||||||
| Personal and Laundry Services | 2,629,038 | 1.23 | % | 84,223 | 1.15 | % | ||||||
| Hospitals | 2,525,109 | 1.18 | % | 70,909 | 0.97 | % | ||||||
| Sporting Goods, Hobby, Book, and Music Stores | 2,481,728 | 1.16 | % | 157,094 | 2.15 | % | ||||||
| General Merchandise Stores | 1,839,527 | 0.86 | % | 221,503 | 3.03 | % | ||||||
| Real Estate | 1,766,175 | 0.82 | % | 59,560 | 0.81 | % | ||||||
| Computer and Electronic Product Manufacturing | 1,586,739 | 0.74 | % | 55,956 | 0.77 | % | ||||||
| Amusement, Gambling, and Recreation Industries | 1,372,852 | 0.64 | % | 83,112 | 1.14 | % | ||||||
| Securities, Commodity Contracts, and Other Financial Investments and Related Activities | 1,211,771 | 0.56 | % | 44,232 | 0.61 | % | ||||||
| Printing and Related Support Activities | 1,190,611 | 0.55 | % | 50,727 | 0.69 | % | ||||||
| Insurance Carriers and Related Activities | 934,647 | 0.44 | % | 36,026 | 0.49 | % | ||||||
22
Industry Diversification (continued) March 31, 2012 | |
| Industry Classification (NAICS) | Annualized Base Rental Revenue | Percentage of Aggregate Annualized Rent | Aggregate Rentable Square Feet | Percentage of Aggregate Square Feet | ||||||||
| Transportation Equipment Manufacturing | $ | 846,384 | 0.39 | % | 31,840 | 0.44 | % | |||||
| Publishing Industries (except Internet) | 780,210 | 0.36 | % | 30,565 | 0.42 | % | ||||||
| Merchant Wholesalers, Durable Goods | 737,328 | 0.34 | % | 41,421 | 0.57 | % | ||||||
| Motor Vehicle and Parts Dealers | 647,725 | 0.30 | % | 39,057 | 0.53 | % | ||||||
| Social Assistance | 574,153 | 0.27 | % | 19,241 | 0.26 | % | ||||||
| Building Material and Garden Equipment and Supplies Dealers | 560,875 | 0.26 | % | 28,060 | 0.38 | % | ||||||
| Construction of Buildings | 508,632 | 0.24 | % | 19,070 | 0.26 | % | ||||||
| Merchant Wholesalers, Nondurable Goods | 450,766 | 0.21 | % | 27,786 | 0.38 | % | ||||||
| Other | 5,098,180 | 2.35 | % | 171,979 | 2.35 | % | ||||||
| Total | 214,601,397 | 100.00 | % | 7,309,358 | 100.00 | % | ||||||
23
Lease Expirations March 31, 2012 | |
| Year | Number of Leases | Rentable Square Feet | Percent of Rentable Square Feet | Annualized Rent * | Average Rental Rate | Percent of Annualized Rent * | ||||||||||||||
| Office: | ||||||||||||||||||||
| 2012 | 65 | 289,683 | 7.20 | % | $ | 9,537,164 | $ | 32.92 | 6.58 | % | ||||||||||
| 2013 | 97 | 487,467 | 12.12 | % | 15,265,539 | 31.32 | 10.54 | % | ||||||||||||
| 2014 | 98 | 788,727 | 19.60 | % | 27,195,307 | 34.48 | 18.77 | % | ||||||||||||
| 2015 | 86 | 566,686 | 14.08 | % | 23,111,687 | 40.78 | 15.95 | % | ||||||||||||
| 2016 | 78 | 575,885 | 14.31 | % | 17,870,741 | 31.03 | 12.33 | % | ||||||||||||
| 2017 and thereafter | 130 | 1,315,247 | 32.69 | % | 51,911,482 | 39.47 | 35.83 | % | ||||||||||||
| 554 | 4,023,695 | 100.00 | % | $ | 144,891,920 | $ | 36.01 | 100.00 | % | |||||||||||
| Medical Office: | ||||||||||||||||||||
| 2012 | 40 | 106,871 | 9.52 | % | $ | 3,962,771 | $ | 37.08 | 8.92 | % | ||||||||||
| 2013 | 57 | 171,171 | 15.25 | % | 5,999,763 | 35.05 | 13.50 | % | ||||||||||||
| 2014 | 47 | 143,192 | 12.75 | % | 5,621,099 | 39.26 | 12.65 | % | ||||||||||||
| 2015 | 29 | 84,473 | 7.52 | % | 3,409,553 | 40.36 | 7.67 | % | ||||||||||||
| 2016 | 45 | 156,636 | 13.95 | % | 5,914,686 | 37.76 | 13.31 | % | ||||||||||||
| 2017 and thereafter | 114 | 460,394 | 41.01 | % | 19,534,608 | 42.43 | 43.95 | % | ||||||||||||
| 332 | 1,122,737 | 100.00 | % | $ | 44,442,480 | $ | 39.58 | 100.00 | % | |||||||||||
| Retail: | ||||||||||||||||||||
| 2012 | 56 | 143,933 | 6.93 | % | $ | 3,774,764 | $ | 26.23 | 8.37 | % | ||||||||||
| 2013 | 48 | 411,728 | 19.83 | % | 6,346,580 | 15.41 | 14.07 | % | ||||||||||||
| 2014 | 32 | 133,913 | 6.45 | % | 2,876,055 | 21.48 | 6.38 | % | ||||||||||||
| 2015 | 34 | 299,173 | 14.41 | % | 5,953,691 | 19.90 | 13.20 | % | ||||||||||||
| 2016 | 22 | 189,965 | 9.15 | % | 3,945,257 | 20.77 | 8.75 | % | ||||||||||||
| 2017 and thereafter | 101 | 897,150 | 43.23 | % | 22,203,143 | 24.75 | 49.23 | % | ||||||||||||
| 293 | 2,075,862 | 100.00 | % | $ | 45,099,490 | $ | 21.73 | 100.00 | % | |||||||||||
| Total: | ||||||||||||||||||||
| 2012 | 161 | 540,487 | 7.48 | % | $ | 17,274,699 | $ | 31.96 | 7.37 | % | ||||||||||
| 2013 | 202 | 1,070,366 | 14.82 | % | 27,611,882 | 25.80 | 11.78 | % | ||||||||||||
| 2014 | 177 | 1,065,832 | 14.76 | % | 35,692,461 | 33.49 | 15.22 | % | ||||||||||||
| 2015 | 149 | 950,332 | 13.16 | % | 32,474,931 | 34.17 | 13.85 | % | ||||||||||||
| 2016 | 145 | 922,486 | 12.77 | % | 27,730,684 | 30.06 | 11.83 | % | ||||||||||||
| 2017 and thereafter | 345 | 2,672,791 | 37.01 | % | 93,649,233 | 35.04 | 39.95 | % | ||||||||||||
| 1,179 | 7,222,294 | 100.00 | % | $ | 234,433,890 | $ | 32.46 | 100.00 | % | |||||||||||
| Note: Lease expiration data exclude properties classified as sold or held for sale. | ||||||||||||||||||||
| * Annualized Rent is equal to the rental rate effective at lease expiration (cash basis) multiplied by 12. | ||||||||||||||||||||
24
Schedule of Properties March 31, 2012 | |
| PROPERTIES | LOCATION | YEAR ACQUIRED | YEAR CONSTRUCTED | NET RENTABLE SQUARE FEET* | |||||
| Office Buildings | |||||||||
| 1901 Pennsylvania Avenue | Washington, DC | 1977 | 1960 | 98,000 | |||||
| 51 Monroe Street | Rockville, MD | 1979 | 1975 | 218,000 | |||||
| 515 King Street | Alexandria, VA | 1992 | 1966 | 73,000 | |||||
| 6110 Executive Boulevard | Rockville, MD | 1995 | 1971 | 199,000 | |||||
| 1220 19th Street | Washington, DC | 1995 | 1976 | 102,000 | |||||
| 1600 Wilson Boulevard | Arlington, VA | 1997 | 1973 | 168,000 | |||||
| 7900 Westpark Drive | McLean, VA | 1997 | 1972/1986/1999 | 533,000 | |||||
| 600 Jefferson Plaza | Rockville, MD | 1999 | 1985 | 113,000 | |||||
| 1700 Research Boulevard | Rockville, MD | 1999 | 1982 | 101,000 | |||||
| Wayne Plaza | Silver Spring, MD | 2000 | 1970 | 94,000 | |||||
| Courthouse Square | Alexandria, VA | 2000 | 1979 | 114,000 | |||||
| One Central Plaza | Rockville, MD | 2001 | 1974 | 267,000 | |||||
| The Atrium Building | Rockville, MD | 2002 | 1980 | 80,000 | |||||
| 1776 G Street | Washington, DC | 2003 | 1979 | 262,000 | |||||
| 6565 Arlington Boulevard | Falls Church, VA | 2006 | 1967/1998 | 130,000 | |||||
| West Gude Drive | Rockville, MD | 2006 | 1984/1986/1988 | 275,000 | |||||
| Monument II | Herndon, VA | 2007 | 2000 | 207,000 | |||||
| Woodholme Center | Pikesville, MD | 2007 | 1989 | 75,000 | |||||
| 2000 M Street | Washington, DC | 2007 | 1971 | 239,000 | |||||
| 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 | 185,000 | |||||
| 1227 25th Street | Washington, DC | 2011 | 1988 | 132,000 | |||||
| Braddock Metro Center | Alexandria, VA | 2011 | 1985 | 345,000 | |||||
| John Marshall II | Tysons Corner, VA | 2011 | 1996/2010 | 223,000 | |||||
| Subtotal | 4,793,000 | ||||||||
25
Schedule of Properties (continued) March 31, 2012 | |
| Medical Office Buildings | |||||||||
| Woodburn Medical Park I | Annandale, VA | 1998 | 1984 | 73,000 | |||||
| Woodburn Medical Park II | Annandale, VA | 1998 | 1988 | 96,000 | |||||
| Prosperity Medical Center I | Merrifield, VA | 2003 | 2000 | 92,000 | |||||
| Prosperity Medical Center II | Merrifield, VA | 2003 | 2001 | 89,000 | |||||
| Prosperity Medical Center III | Merrifield, VA | 2003 | 2002 | 75,000 | |||||
| Shady Grove Medical Village II | Rockville, MD | 2004 | 1999 | 66,000 | |||||
| 8301 Arlington Boulevard | Fairfax, VA | 2004 | 1965 | 49,000 | |||||
| Alexandria Professional Center | Alexandria, VA | 2006 | 1968 | 114,000 | |||||
| 9707 Medical Center Drive | Rockville, MD | 2006 | 1994 | 38,000 | |||||
| 15001 Shady Grove Road | Rockville, MD | 2006 | 1999 | 51,000 | |||||
| Plumtree Medical Center | Bel Air, MD | 2006 | 1991 | 33,000 | |||||
| 15005 Shady Grove Road | Rockville, MD | 2006 | 2002 | 52,000 | |||||
| 2440 M Street | Washington, DC | 2007 | 1986/2006 | 112,000 | |||||
| Woodholme Medical Office Building | Pikesville, MD | 2007 | 1996 | 123,000 | |||||
| Ashburn Office Park | Ashburn, VA | 2007 | 1998/2000/2002 | 75,000 | |||||
| CentreMed I & II | Centreville, VA | 2007 | 1998 | 52,000 | |||||
| Sterling Medical Office Building | Sterling, VA | 2008 | 1986/2000 | 36,000 | |||||
| Lansdowne Medical Office Building | Leesburg, VA | 2009 | 2009 | 85,000 | |||||
| Subtotal | 1,311,000 | ||||||||
26
Schedule of Properties (continued) March 31, 2012 | |
| 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 | Alexandria, VA | 1984 | 1955 | 168,000 | |||||
| Chevy Chase Metro Plaza | Washington, DC | 1985 | 1975 | 49,000 | |||||
| Montgomery Village Center | Gaithersburg, MD | 1992 | 1969 | 198,000 | |||||
Shoppes of Foxchase (1) | Alexandria, VA | 1994 | 1960 | 134,000 | |||||
| Frederick County Square | Frederick, MD | 1995 | 1973 | 227,000 | |||||
| 800 S. Washington Street | Alexandria, VA | 1998/2003 | 1955/1959 | 47,000 | |||||
| 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 | 223,000 | |||||
| Olney Village Center | Olney, MD | 2011 | 1979/2003 | 198,000 | |||||
| Subtotal | 2,449,000 | ||||||||
| Multifamily Buildings * / # units | |||||||||
| 3801 Connecticut Avenue / 308 | Washington, DC | 1963 | 1951 | 179,000 | |||||
| Roosevelt Towers / 191 | Falls Church, VA | 1965 | 1964 | 170,000 | |||||
| Country Club Towers / 227 | Arlington, VA | 1969 | 1965 | 159,000 | |||||
| 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 (2) | 158,000 | |||||
| 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 | |||||
| Subtotal (2,540 units) | 2,139,000 | ||||||||
| TOTAL | 10,692,000 | ||||||||
* Multifamily buildings are presented in gross square feet. (1) Development on approximately 60,000 square feet of the center was completed in December 2006. (2) A 16 unit addition referred to as The Gardens at Walker House was completed in October 2003. | |||||||||
27
Supplemental Definitions March 31, 2012 | |
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 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 and 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 from the balance sheet divided by the sum of total debt from the balance sheet 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 WRIT’s operating portfolio and affect the comparative measurement of WRIT’s operating performance over time): (1) gains or losses on extinguishment of debt, (2) costs related to the acquisition of properties and (3) property impairments not already excluded from FFO, as appropriate. 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 WRIT’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 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 WRIT’s operating portfolio and affect the comparative measurement of WRIT’s operating performance over time): (1) gains or losses on extinguishment of debt, (2) costs related to the acquisition of properties and (3) property impairments not already excluded from FAD, as appropriate. 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 WRIT’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. |
The Industrial Portfolio consists of every industrial property, as well as two office properties, the Crescent and Albemarle Point. We executed the sale in three phases. Phase I of the Industrial Portfolio sale consisted of industrial properties (8880 Gorman Road, Dulles South IV, Fullerton Business Center, Hampton Overlook, Alban Business Center, Pickett Industrial Park, Northern Virginia Industrial Park I, 270 Technology Park, Fullerton Industrial Center, Sully Square, 9950 Business Parkway, Hampton South and 8900 Telegraph Road) and two office properties (Crescent and Albemarle Point). On October 3, 2011 we closed on Phase II of the Industrial Portfolio sale, consisting of Northern Virginia Industrial Park II. We closed on Phase III of the Industrial Portfolio sale on November 1, 2011, consisting of 6100 Columbia Park Road and Dulles Business Park. |
Physical occupancy is calculated as occupied square footage as a percentage of total square footage as of the last day of that period. |
28
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 properties that were owned for the entirety of the current and prior year reporting periods. |
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. |
29