Exhibit 99.1
WASHINGTON REAL ESTATE INVESTMENT TRUST
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 2011
(IN THOUSANDS, EXCEPT PER SHARE DATA)
| WRIT | Disposition Group | Pro Forma | ||||||||||
Assets | ||||||||||||
Land | $ | 475,458 | $ | (50,811 | ) (a) | $ | 424,647 | |||||
Income producing property | 2,022,986 | (268,493 | ) (a) | 1,754,493 | ||||||||
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| 2,498,444 | (319,304 | ) | 2,179,140 | |||||||||
Accumulated depreciation and amortization | (576,605 | ) | 78,867 | (a) | (497,738 | ) | ||||||
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Net income producing property | 1,921,839 | (240,437 | ) | 1,681,402 | ||||||||
Development in progress, including land held for development | 39,413 | — | 39,413 | |||||||||
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Total real estate held for investment, net | 1,961,252 | (240,437 | ) | 1,720,815 | ||||||||
Cash and cash equivalents | 42,886 | 327,242 | (b) | 370,128 | ||||||||
Restricted cash | 23,550 | (1,237 | ) (a) | 22,313 | ||||||||
Rents and other receivables, net of allowance for doubtful accounts | 56,461 | (3,961 | ) (a) | 52,500 | ||||||||
Prepaid expenses and other assets | 103,027 | (3,637 | ) (a) | 99,390 | ||||||||
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Total assets | $ | 2,187,176 | 77,970 | $ | 2,265,146 | |||||||
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Liabilities | ||||||||||||
Notes payable | $ | 659,934 | $ | — | $ | 659,934 | ||||||
Mortgage notes payable | 378,469 | (17,976 | ) (a), (c) | 360,493 | ||||||||
Lines of credit | 245,000 | — | 245,000 | |||||||||
Accounts payable and other liabilities | 57,445 | (763 | ) (a) | 56,682 | ||||||||
Advance rents | 13,619 | — | 13,619 | |||||||||
Tenant security deposits | 9,988 | — | 9,988 | |||||||||
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Total liabilities | 1,364,455 | (18,739 | ) | 1,345,716 | ||||||||
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Equity | ||||||||||||
Shareholders’ equity | ||||||||||||
Shares of beneficial interest, $0.01 par value; 100,000 shares authorized | 661 | — | 661 | |||||||||
Additional paid-in capital | 1,133,823 | — | 1,133,823 | |||||||||
Distributions in excess of net income | (316,134 | ) | 98,636 | (d) | (217,498 | ) | ||||||
Accumulated other comprehensive income (loss) | (636 | ) | — | (636 | ) | |||||||
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Total shareholders’ equity | 817,714 | 98,636 | 916,350 | |||||||||
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Noncontrolling interests in subsidiaries | 5,007 | (1,927 | ) (e) | 3,080 | ||||||||
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Total equity | 822,721 | 96,709 | 919,430 | |||||||||
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Total liabilities and shareholders’ equity | $ | 2,187,176 | $ | 77,970 | $ | 2,265,146 | ||||||
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See note 3 to the pro forma condensed consolidated financial statements.
WASHINGTON REAL ESTATE INVESTMENT TRUST
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2011
(IN THOUSANDS, EXCEPT PER SHARE DATA)
| WRIT | Disposition Group | Pro Forma | ||||||||||
Revenue | ||||||||||||
Real estate rental revenue | $ | 158,725 | $ | (17,837 | )(f) | $ | 140,888 | |||||
Expenses | ||||||||||||
Real estate expenses | 52,302 | (5,249 | ) (f) | 47,053 | ||||||||
Real estate depreciation and amortization | 50,209 | (5,788 | ) (f) | 44,421 | ||||||||
General and administrative | 7,751 | 7,751 | ||||||||||
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| 110,262 | (11,037 | ) | 99,225 | |||||||||
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Real estate operating income | 48,463 | (6,800 | ) | 41,663 | ||||||||
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Other income (expense) | ||||||||||||
Other income | 616 | 616 | ||||||||||
Acquisition costs | (1,971 | ) | (1,971 | ) | ||||||||
Interest expense | (34,223 | ) | 465 | (c),(f) | (33,758 | ) | ||||||
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| (35,578 | ) | 465 | (35,113 | ) | ||||||||
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Income from continuing operations | 12,885 | (6,335 | ) | 6,550 | ||||||||
Less: Income from continuing operations attributable to noncontrolling interests | (57 | ) | 57 | (f) | — | |||||||
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Income from continuing operations attributable to the controlling interests | 12,828 | 6,550 | ||||||||||
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Income from continuing operations attributable to the controlling interests per share: | ||||||||||||
Basic | $ | 0.19 | $ | 0.10 | ||||||||
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Diluted | $ | 0.19 | $ | 0.10 | ||||||||
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Weighted average shares outstanding - basic | 65,920 | 65,920 | ||||||||||
Weighted average shares outstanding - diluted | 65,948 | 65,948 | ||||||||||
See note 3 to the pro forma condensed consolidated financial statements.
WASHINGTON REAL ESTATE INVESTMENT TRUST
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2010
(IN THOUSANDS, EXCEPT PER SHARE DATA)
| WRIT | Dulles Station, Phase I | Disposition Group | Pro Forma | |||||||||||||
Revenue | ||||||||||||||||
Real estate rental revenue | $ | 297,977 | $ | (4,427 | )(g) | $ | (35,060 | )(f) | $ | 258,490 | ||||||
Expenses | ||||||||||||||||
Real estate expenses | 98,922 | (1,961 | )(g) | (10,301 | )(f) | 86,660 | ||||||||||
Real estate depreciation and amortization | 93,992 | (1,974 | )(g) | (11,952 | )(f) | 80,066 | ||||||||||
General and administrative | 14,406 | 14,406 | ||||||||||||||
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| 207,320 | (3,935 | ) | (22,253 | ) | 181,132 | |||||||||||
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Real estate operating income | 90,657 | (492 | ) | (12,807 | ) | 77,358 | ||||||||||
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Other income (expense) | ||||||||||||||||
Interest expense | (68,389 | ) | 1,160 | (c), (f) | (67,229 | ) | ||||||||||
Other income | 1,193 | 1,193 | ||||||||||||||
Acquisition costs | (1,161 | ) | (1,161 | ) | ||||||||||||
Loss on extinguishment of debt, net | (9,176 | ) | (9,176 | ) | ||||||||||||
Gain from non-disposal activities | 7 | 7 | ||||||||||||||
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| (77,526 | ) | 1,160 | (76,366 | ) | ||||||||||||
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Income from continuing operations | 13,131 | (492 | ) | (11,647 | ) | 992 | ||||||||||
Less: Income from continuing operations attributable to noncontrolling interests | (133 | ) | 133 | (f) | — | |||||||||||
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Income from continuing operations attributable to the controlling interests | 12,998 | 992 | ||||||||||||||
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Income from continuing operations attributable to the controlling interests per share: | ||||||||||||||||
Basic | $ | 0.21 | $ | 0.01 | ||||||||||||
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Diluted | $ | 0.21 | $ | 0.01 | ||||||||||||
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Weighted average shares outstanding - basic | 62,140 | 62,140 | ||||||||||||||
Weighted average shares outstanding - diluted | 62,264 | �� | 62,264 | |||||||||||||
See note 3 to the pro forma condensed consolidated financial statements.
WASHINGTON REAL ESTATE INVESTMENT TRUST
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2009
(IN THOUSANDS, EXCEPT PER SHARE DATA)
| WRIT | Dulles Station, Phase I | Disposition Group | Pro Forma | |||||||||||||
Revenue | ||||||||||||||||
Real estate rental revenue | $ | 298,161 | $ | (3,945 | ) (g) | $ | (37,667 | ) (f) | $ | 256,549 | ||||||
Expenses | ||||||||||||||||
Real estate expenses | 101,304 | (1,515 | ) (g) | (10,500 | ) (f) | 89,289 | ||||||||||
Real estate depreciation and amortization | 91,668 | (1,981 | ) (g) | (12,138 | ) (f) | 77,549 | ||||||||||
General and administrative | 13,118 | 13,118 | ||||||||||||||
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| 206,090 | (3,496 | ) | (22,638 | ) | 179,956 | |||||||||||
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Real estate operating income | 92,071 | (449 | ) | (15,029 | ) | 76,593 | ||||||||||
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Other income (expense) | ||||||||||||||||
Interest expense | (74,074 | ) | 1,380 | (c), (f) | (72,694 | ) | ||||||||||
Other income | 1,205 | 1,205 | ||||||||||||||
Acquisition costs | (788 | ) | (788 | ) | ||||||||||||
Gain on extinguishment of debt, net | 5,336 | 5,336 | ||||||||||||||
Gain from non-disposal activities | 73 | (2 | ) (f) | 71 | ||||||||||||
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| (68,248 | ) | 1,378 | (66,870 | ) | ||||||||||||
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Income from continuing operations | 23,823 | (449 | ) | (13,651 | ) | 9,723 | ||||||||||
Less: Income from continuing operations attributable to noncontrolling interests | (203 | ) | 203 | (f) | — | |||||||||||
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Income from continuing operations attributable to the controlling interests | 23,620 | 9,723 | ||||||||||||||
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Income from continuing operations attributable to the controlling interests per share: | ||||||||||||||||
Basic | $ | 0.41 | $ | 0.17 | ||||||||||||
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Diluted | $ | 0.41 | $ | 0.17 | ||||||||||||
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Weighted average shares outstanding - basic | 56,894 | 56,894 | ||||||||||||||
Weighted average shares outstanding - diluted | 56,968 | 56,968 | ||||||||||||||
See note 3 to the pro forma condensed consolidated financial statements.
WASHINGTON REAL ESTATE INVESTMENT TRUST
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2008
(IN THOUSANDS, EXCEPT PER SHARE DATA)
| WRIT | Dulles Station, Phase I | Disposition Group | Pro Forma | |||||||||||||
Revenue | ||||||||||||||||
Real estate rental revenue | $ | 268,709 | $ | (1,122 | )(g) | $ | (38,091 | )(f) | $ | 229,496 | ||||||
Expenses | ||||||||||||||||
Real estate expenses | 90,222 | (924 | )(g) | (9,987 | )(f) | 79,311 | ||||||||||
Real estate depreciation and amortization | 82,982 | (1,089 | )(g) | (12,156 | )(f) | 69,737 | ||||||||||
General and administrative | 12,110 | 12,110 | ||||||||||||||
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| 185,314 | (2,013 | ) | (22,143 | ) | 161,158 | |||||||||||
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Real estate operating income | 83,395 | 891 | (15,948 | ) | 68,338 | |||||||||||
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Other income (expense) | ||||||||||||||||
Interest expense | (74,095 | ) | 1,408 | (c), (f) | (72,687 | ) | ||||||||||
Other income | 1,073 | 1,073 | ||||||||||||||
Loss on extinguishment of debt, net | (5,583 | ) | (5,583 | ) | ||||||||||||
Gain from non-disposal activities | 17 | (f) | 17 | |||||||||||||
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| (78,588 | ) | 1,408 | (77,180 | ) | ||||||||||||
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Income (loss) from continuing operations | 4,807 | 891 | (14,540 | ) | (8,842 | ) | ||||||||||
Less: Income from continuing operations attributable to noncontrolling interests | (211 | ) | 211 | (f) | - | |||||||||||
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Income from continuing operations attributable to the controlling interests | 4,596 | (8,842 | ) | |||||||||||||
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Income from continuing operations attributable to the controlling interests per share: | ||||||||||||||||
Basic | $ | 0.09 | $ | (0.18 | ) | |||||||||||
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Diluted | $ | 0.09 | $ | (0.18 | ) | |||||||||||
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Weighted average shares outstanding - basic | 49,138 | 49,138 | ||||||||||||||
Weighted average shares outstanding - diluted | 49,217 | 49,138 | ||||||||||||||
See note 3 to the pro forma condensed consolidated financial statements.
WASHINGTON REAL ESTATE INVESTMENT TRUST
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
Note 1: Basis of Presentation
The accompanying unaudited pro forma condensed consolidated statement of income for the six months ended June 30, 2011 of Washington Real Estate Investment Trust (“WRIT”) gives effect to the disposition of WRIT’s entire industrial segment and two office properties as if the dispositions had occurred on January 1, 2008. The accompanying unaudited pro forma consolidated balance sheet at June 30, 2011 gives effect to these dispositions as if they had occurred on June 30, 2011.
The accompanying unaudited pro forma condensed consolidated statements of income for the years ended December 31, 2010, 2009 and 2008 give effect to the disposition of WRIT’s entire industrial segment and two office properties, as well as to the disposition of Dulles Station, Phase I, as if these dispositions had occurred on January 1, 2008.
This unaudited condensed consolidated pro forma financial information is not necessarily indicative of what WRIT’s actual results of operations or financial position would have been had these transactions been consummated on the dates indicated, nor does it purport to represent WRIT’s results of operations or financial position for any future period. The pro forma results of operations for the periods ended December 31, 2010, 2009 and 2008 and June 30, 2011 are not necessarily indicative of the operating results for these periods.
The unaudited condensed consolidated pro forma financial information should be read in conjunction with the consolidated financial statements and notes thereto included in WRIT’s Annual Report on Form 10-K for the year ended December 31, 2010 and WRIT’s Quarterly Report on Form 10-Q for the period ended June 30, 2011. In management’s opinion, all adjustments necessary to reflect these dispositions and related transactions have been made.
Note 2: Description of Transactions
Industrial Segment
On August 9, 2011, WRIT entered into five separate purchase and sale agreements with AP AG Portfolio, LLC to effectuate the sale of WRIT’s entire industrial portfolio and two office assets (collectively, the “Disposition Group”) encompassing in total approximately 3.1 million square feet. The sales prices under the five agreements aggregate to $350,000,000.
On September 2, 2011, Washington Real Estate Investment Trust (“WRIT”) closed on the first three of the purchase and sale agreements. The sales prices under the three agreements aggregate to $235,760,443. Projected closing dates for the two remaining transactions are October 3, 2011 (one transaction totaling $44,554,233) and November 1, 2011 (one transaction totaling $69,685,324).
The properties, purchase prices and projected closing dates under each of the purchase and sale agreements are as follows:
Purchase and Sale Agreement #1 ($51,674,074; closed on September 2, 2011):
1. 8880 Gorman Road
2. Dulles South IV
3. Fullerton Business Center
4. Hampton Overlook
5. Alban Business Center
Purchase and Sale Agreement #2 ($51,667,308; closed on September 2, 2011):
1. Pickett Industrial Park
2. Northern Virginia Industrial Park I
Purchase and Sale Agreement #3 ($132,419,061; closed on September 2, 2011):
1. Albemarle Point
2. 270 Technology Park I
3. 270 Technology Park II
4. The Crescent
5. Fullerton Industrial Center
6. Sully Square
7. 9950 Business Parkway
8. Hampton South Phase I
9. Hampton South Phase II
10. 8900 Telegraph Road
Purchase and Sale Agreement #4 ($44,554,233; closing expected on or about October 3, 2011):
1. Northern Virginia Industrial Park II
Purchase and Sale Agreement #5 ($69,685,324; closing expected on or about November 1, 2011):
1. 6100 Columbia Park Road
2. Dulles Business Park I
3. Dulles Business Park II
Dulles Station, Phase I
On April 5, 2011, WRIT settled on the sale of Dulles Station, Phase I, for the contract purchase price of $58.8 million.
Note 3: Unaudited Pro Forma Adjustments to Condensed Consolidated Financial Statements
(a) Reflects the elimination of assets and liabilities associated with the Disposition Group, as defined in note 2 to these pro forma consolidated financial statements.
(b) Reflects the estimated net sales proceeds for the disposition group.
(c) Reflects the elimination of mortgage notes secured by Dulles Business Park, and interest expense associated with mortgage notes secured by Dulles Business Park and the Crescent. The mortgage notes secured by Dulles Business Park will be assumed by the buyer of the Disposition Group.
(d) Reflects the estimated gain on of real estate for the disposition group.
(e) Reflects the elimination of noncontrolling interests related to an operating partnership agreement with a member of the entity that previously owned Northern Virginia Industrial Park, and associated net income attributable to noncontrolling interests.
(f) Reflects the elimination of income and expenses associated with the disposition group.
(g) Reflects the elimination of income and expenses associated with Dulles Station, Phase I.