Exhibit 99.1
NEWS RELEASE
| CONTACT: |  | 6110 Executive Blvd., Suite 800 | ||
Sara Grootwassink | Rockville, Maryland 20852 | |||
Chief Financial Officer | Tel 301-984-9400 | |||
Direct Dial: 301-255-0820 | Fax 301-984-9610 | |||
E-Mail:sgrootwassink@writ.com | www.writ.com |
Newspaper Quote:WRIT
| Page 1 of 7 | FOR IMMEDIATE RELEASE | April 17, 2007 |
WASHINGTON REAL ESTATE INVESTMENT TRUST ANNOUNCES
FIRST QUARTER 2007 RESULTS
Washington Real Estate Investment Trust (WRIT) (NYSE: WRE) reported financial and operating results today for the first quarter ended March 31, 2007:
| • | Net income for the quarter ended March 31, 2007 was $9.4 million, or $0.21 per diluted share, compared to $10.6 million, or $0.25 per diluted share in the same period one year ago. The decrease is primarily due to depreciation and amortization associated with owning more properties. Recent acquisitions increased revenue by $9.3 million, while interest expense increased $4.1 million, as the acquisitions were funded primarily by debt. |
• | Funds from Operations (FFO)(1) for the quarter ended March 31, 2007 was $26.2 million, or $0.58 per diluted share, an increase of $3.6 million, or $0.04 per diluted share from the prior year. Recent acquisitions increased revenue by $9.3 million, while interest expense increased $4.1 million, as the acquisitions were funded primarily by debt. |
Operating Results
Core Net Operating Income (NOI)(3) for the first quarter increased 2.6% compared to the same period one year ago, and increased 3.1% from the prior quarter. The increases in Core NOI are primarily due to increased economic occupancy and rental rate growth in WRIT’s general purpose office and retail sectors.
| • | General purpose office properties’ Core NOI increased 4.7% compared to the same period one year ago and increased 3.6% from the prior quarter. The gains are primarily due to increased occupancy, 230 bps higher than the same period the prior year and 60 bps higher than the prior quarter. |
| • | Retail properties’ Core NOI increased 7.3% compared to the same period one year ago and increased 13.9% from the prior quarter. The gains are due to rental rate increases associated with the completion of The Shoppes at Foxchase, a redevelopment project completed in fourth quarter 2006. |
| • | Medical office properties’ Core NOI decreased 0.5% compared to the same period one year ago and increased 7.6% from the prior quarter. Occupancy remains high for the medical office sector at 98.8% with no change from the prior year. |
| • | Multifamily properties’ Core NOI increased 1.3% compared to the same period one year ago and decreased 6.7% from the prior quarter. The decrease from the prior quarter is primarily due to the decline in occupancy and increased operating expenses for snow removal and real estate taxes. |
| • | Industrial properties’ Core NOI decreased 3.8% compared to the same period one year ago and decreased 4.8% from the prior quarter. The decrease is primarily due to increased operating expenses for snow removal, utilities and real estate taxes. |
Core occupancy was 94.2% during the first quarter of 2007, an increase of 50 bps from the same period the prior year.
Washington Real Estate Investment Trust
FOR IMMEDIATE RELEASE
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Development Activity
At quarter end, three development projects were in progress:
| • | Bennett Park, formerly Rosslyn Towers, is a ground-up development project in Arlington, VA consisting of high-rise and mid-rise class A apartment buildings with a total of 224 units and 5,900 square feet of retail space. Construction is anticipated to be complete on the high-rise building in fourth quarter 2007 and on the mid-rise in third quarter 2007. Total cost of the project is estimated to be $76.6 million. |
| • | The Clayborne Apartments, formerly South Washington Street, is a ground-up development project in Alexandria, VA, adjacent to our 800 South Washington retail property. This project is a 75-unit high-end apartment building that will include 2,600 square feet of additional retail space. Construction is anticipated to be completed on the building in second quarter 2007. Total cost of the project is estimated to be $32.7 million. |
| • | Dulles Station is a 180,000 square foot development project of office and retail space located in Herndon, VA. Phase One of the Dulles Station development is anticipated to be complete in the third quarter 2007 with an estimated cost of $52.0 million. |
Acquisition Activity
During the first quarter of 2007, WRIT acquired approximately $155 million of assets. Acquisitions this quarter included a portfolio of five industrial/flex buildings, one class A, general purpose office building, and one medical office building. The acquisitions were financed with cash from operations, borrowings on our line of credit, and proceeds from the January convertible note offering.
| • | On February 8, 2007, WRIT acquired a portfolio of five single-story flex buildings, consisting of 157,000 square feet, within 270 Technology Park in Frederick, Maryland for $26.5 million. 270 Technology Park presents a solid investment opportunity in high-quality flex buildings ideally located with excellent visibility just south of the City of Frederick along I-270 in one of Frederick’s fast-growing development areas. |
| • | On March 1, 2007, WRIT acquired the 100% leased Monument II, a class A, 205,000 square foot, eight-story office building with a detached five-level parking garage located along the Dulles Toll Road in Herndon, Virginia for $78.2 million. Monument II was completed in 2000 as part of the Monument at Worldgate complex, a mixed-use development consisting of class A office, retail, restaurants, hotels, health clubs, and residential buildings. |
| • | On March 9, 2007, WRIT acquired 2440 M Street, a class A medical office building, consisting of 110,000 square feet, with a three-level parking garage in northwest Washington, D.C. for $50.0 million. 2440 M Street is well-positioned in the West End business district, just three blocks from George Washington University Hospital and 1 1/2 miles from Georgetown University Hospital. |
Capital Structure
On January 17, 2007, WRIT issued $135 million of 3 7/8% Convertible Senior Notes due 2026. WRIT used the net proceeds from the offering to repay borrowings under its lines of credit and for general corporate purposes. The $15 million over-allotment option was exercised and closed on January 30, 2007.
On February 14, 2007, the Trustees of WRIT announced a quarterly dividend of $.4125 per share to be paid on March 30, 2007 to shareholders of record on March 14, 2007. This is WRIT’s 181st consecutive quarterly dividend at equal or increasing rates. WRIT dividends have increased every year for 36 consecutive years.
As of March 31, 2007 WRIT had a total capitalization of $2.9 billion.
Earnings Guidance
WRIT is increasing its previously issued 2007 FFO per share guidance to $2.23-$2.26 from $2.17-$2.20. The increase in FFO is due to the repayment of higher interest rate debt with the January convertible note offering and our accelerated acquisition pace.
Washington Real Estate Investment Trust
FOR IMMEDIATE RELEASE
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Annual Meeting
WRIT’s annual shareholders’ meeting will be held at the Bethesda North Marriott Hotel & Conference Center, 5701 Marinelli Road, North Bethesda, Maryland (Northwest corner of Rockville Pike and Marinelli Rd., across the street from the White Flint Metro Stop) on Thursday, May 17, 2007 at 11:00 a.m.
Conference Call Information
WRIT will conduct a Conference/Webcast Call to discuss 1st Quarter Earnings on Wednesday, April 18, 2007 at 11:00 A.M., Eastern Time. Conference call access information is as follows:
USA Toll Free Number: | 1-888-271-8857 | |
International Toll Number: | 1-706-679-7697 | |
Leader: | Sara Grootwassink | |
Conference ID: | 4033352 |
The instant replay of the Conference Call will be available until May 2, 2007 at 11:59 PM Eastern Time. Instant Replay access information is as follows:
USA Toll Free Number: | 1-800-642-1687 | |
International Toll Number: | 1-706-645-9291 | |
Conference ID: | 4033352 |
The live on-demand webcast of the Conference Call will also be available on WRIT’s website atwww.writ.com. On-line playback of the webcast will be available athttp://www.writ.com for two weeks following the Conference Call.
About WRIT
WRIT is a self-administered, self-managed, equity real estate investment trust investing in income-producing properties in the greater Washington/Baltimore metropolitan region. WRIT owns a diversified portfolio of 85 properties consisting of 14 retail centers, 25 general purpose office properties, 14 medical office properties, 23 industrial/flex properties, 9 multi-family properties and land for development. WRIT’s dividends have increased every year for 36 consecutive years and FFO per share has increased every year for 34 consecutive years. WRIT shares are publicly traded on the New York Stock Exchange (symbol: WRE).
Note: WRIT’s press releases and supplemental financial information are available on the company website atwww.writ.com or by contacting Investor Relations at (301) 984-9400.
Certain statements in this press release and the supplemental disclosures attached hereto 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, fluctuations in interest rates, availability of raw materials and labor costs, levels of competition, the effect of government regulation, the availability of capital, weather conditions, the timing and pricing of lease transactions and changes in general and local economic and real estate market conditions, and other risks and uncertainties detailed from time to time in our filings with the SEC, including our 2006 Form 10-K. 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) from sales of property 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. |
(2) | 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) amortization of restricted share and unit compensation, and adding or subtracting amortization of lease intangibles, as appropriate. FAD is included herein, because we consider it to be a measure of a REIT’s ability to incur |
Washington Real Estate Investment Trust
FOR IMMEDIATE RELEASE
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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. |
(3) | For purposes of evaluating comparative operating performance, we categorize our properties as “core” or “non-core”. Core Operating NOI is calculated as real estate rental revenue less real estate operating expenses for those properties owned for the entirety of the periods being evaluated. Core Operating NOI is a non-GAAP measure. |
Economic Occupancy Levels by Core Portfolio(i)and All Properties | ||||||||||||
| Core Portfolio | All Properties | |||||||||||
Sector | 1ST QTR 2007 | 1ST QTR 2006 | 1ST QTR 2007 | 1ST QTR 2006 | ||||||||
Multifamily | 90.6 | % (ii) | 90.8 | % | 90.6 | % | 90.8 | % | ||||
Office Buildings | 93.7 | % | 91.4 | % | 92.9 | % | 91.1 | % | ||||
Medical Office | 98.8 | % | 98.8 | % | 98.9 | % | 98.8 | % | ||||
Retail Centers | 97.3 | % | 99.5 | % | 94.8 | % (iii) | 99.5 | % | ||||
Industrial/Flex Centers | 93.9 | % | 94.0 | % | 94.2 | % | 93.5 | % | ||||
Overall Portfolio | 94.2 | % | 93.7 | % | 93.8 | % | 93.4 | % | ||||
(i) | Core portfolio properties include all properties that were owned for the entirety of the current and prior year reporting periods. For Q1 2007 and Q1 2006, core portfolio properties exclude:Office Acquisitions: Monument II, 6565 Arlington Blvd, West Gude Office Park and The Ridges;Medical Office Acquisitions: 2440 M Street, Alexandria Professional Center, 9707 Medical Center Drive, 15001 Shady Grove Rd, Plumtree Medical Center, 15005 Shady Grove Rd and The Crescent;Retail Acquisitions:Randolph Shopping Center and Montrose Shopping Center, andIndustrial Acquisitions: 270 Technology Park, Hampton Overlook, Hampton South and 9950 Business Parkway. |
(ii) | Multifamily occupancy level for Q107 is 91.3% without the impact of units off-line for planned renovations. The overall portfolio occupancy is 94.4% without this impact. |
(iii) | Montrose Shopping Center was 58% leased when purchased in May 2006. |
Washington Real Estate Investment Trust
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FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended March 31, | ||||||||
OPERATING RESULTS | 2007 | 2006 | ||||||
Revenue | ||||||||
Real estate rental revenue | $ | 60,798 | $ | 49,220 | ||||
Expenses | ||||||||
Real estate expenses | 18,959 | 14,777 | ||||||
Depreciation and amortization | 16,378 | 11,496 | ||||||
General and administrative | 2,883 | 2,656 | ||||||
| 38,220 | 28,929 | |||||||
Other (expense) income: | ||||||||
Interest expense | (14,376 | ) | (10,322 | ) | ||||
Other income | 618 | 170 | ||||||
| (13,758 | ) | (10,152 | ) | |||||
Income from continuing operations | 8,820 | 10,139 | ||||||
Discontinued operations: | ||||||||
Income from operations of properties sold or held for sale | 589 | 493 | ||||||
Net Income | $ | 9,409 | $ | 10,632 | ||||
Income from continuing operations | $ | 8,820 | $ | 10,139 | ||||
Continuing operations real estate depreciation and amortization | 16,378 | 11,496 | ||||||
Funds from continuing operations | $ | 25,198 | $ | 21,635 | ||||
Income from discontinued operations before gain on disposal | 589 | 493 | ||||||
Discontinued operations real estate depreciation and amortization | 397 | 472 | ||||||
Funds from discontinued operations | 986 | 965 | ||||||
Funds from operations(1) | $ | 26,184 | $ | 22,600 | ||||
Tenant improvements | (2,161 | ) | (2,695 | ) | ||||
External and internal leasing commissions capitalized | (2,068 | ) | (960 | ) | ||||
Recurring capital improvements | (1,936 | ) | (2,295 | ) | ||||
Straight-line rents, net | (1,171 | ) | (812 | ) | ||||
Non real estate depreciation & amortization of debt costs | 750 | 495 | ||||||
Amortization of lease intangibles, net | (595 | ) | 13 | |||||
Amortization and expensing of restricted share and unit compensation | 782 | 340 | ||||||
Funds Available for Distribution(2) | $ | 19,785 | $ | 16,686 | ||||
Certain prior year amounts have been reclassified to conform to the current presentation. | ||||||||
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| Three Months Ended March 31, | ||||||||
Per Share Data | 2007 | 2006 | ||||||
Income from continuing operations | (Basic) | $ | 0.20 | $ | 0.24 | |||
(Diluted) | $ | 0.20 | $ | 0.24 | ||||
Net income | (Basic) | $ | 0.21 | $ | 0.25 | |||
(Diluted) | $ | 0.21 | $ | 0.25 | ||||
Funds from continuing operations | (Basic) | $ | 0.56 | $ | 0.51 | |||
(Diluted) | $ | 0.56 | $ | 0.51 | ||||
Funds from operations | (Basic) | $ | 0.58 | $ | 0.54 | |||
(Diluted) | $ | 0.58 | $ | 0.54 | ||||
Dividends paid | $ | 0.4125 | $ | 0.4025 | ||||
Weighted average shares outstanding | 44,931 | 42,052 | ||||||
Fully diluted weighted average shares outstanding | 45,153 | 42,197 | ||||||
Washington Real Estate Investment Trust
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WASHINGTON REAL ESTATE INVESTMENT TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands)
| (Unaudited) | ||||||||
| March 31, | December 31, | |||||||
| 2007 | 2006 | |||||||
Assets | ||||||||
Land | $ | 316,269 | $ | 288,821 | ||||
Income producing property | 1,394,944 | 1,264,442 | ||||||
| 1,711,213 | 1,553,263 | |||||||
Accumulated depreciation and amortization | (290,663 | ) | (277,016 | ) | ||||
Net income producing property | 1,420,550 | 1,276,247 | ||||||
Development in progress (4) | 136,831 | 120,656 | ||||||
Total investment in real estate, net | 1,557,381 | 1,396,903 | ||||||
Investment in real estate sold or held for sale | 29,167 | 29,551 | ||||||
Cash and cash equivalents | 7,305 | 8,721 | ||||||
Restricted cash | 5,143 | 4,151 | ||||||
Rents and other receivables, net of allowance for doubtful accounts of $3,735 and $3,464, respectively | 33,342 | 31,649 | ||||||
Prepaid expenses and other assets | 68,960 | 58,192 | ||||||
Other assets related to properties sold or held for sale | 2,039 | 2,098 | ||||||
Total Assets | $ | 1,703,337 | $ | 1,531,265 | ||||
Liabilities | ||||||||
Notes payable | $ | 879,035 | $ | 728,255 | ||||
Mortgage notes payable | 228,367 | 237,073 | ||||||
Lines of credit | 91,200 | 61,000 | ||||||
Accounts payable and other liabilities | 52,227 | 45,089 | ||||||
Advance rents | 6,838 | 5,894 | ||||||
Tenant security deposits | 9,510 | 9,231 | ||||||
Other liabilities related to property sold or held for sale | 1,062 | 1,053 | ||||||
Total Liabilities | 1,268,239 | 1,087,595 | ||||||
Minority interest | 1,758 | 1,739 | ||||||
Shareholders’ Equity | ||||||||
Shares of beneficial interest, $.01 par value; 100,000 shares authorized: 45,045 and 45,042 shares issued and outstanding, respectively | 451 | 451 | ||||||
Additional paid-in capital | 501,325 | 500,727 | ||||||
Distributions in excess of net income | (68,436 | ) | (59,247 | ) | ||||
Total Shareholders’ Equity | 433,340 | 441,931 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 1,703,337 | $ | 1,531,265 | ||||
Note: Certain prior year amounts have been reclassified to conform to the current year presentation.
(4) | Includes cost of land acquired for development. |