Exhibit 99.1
[LETTERHEAD OF WASHINGTON REAL ESTATE INVESTMENT TRUST]
NEWS RELEASE
FOR IMMEDIATE RELEASE July 19, 2001
Page 1 of 9
WASHINGTON REAL ESTATE INVESTMENT TRUST
2nd Quarter 2001 EPS up 18%, FFO Per Share Up 11%
Washington Real Estate Investment Trust (WRIT) reported the following results
today:
Q2 2001 Q2 2000 % Change
------- ------- --------
Earnings Per Share $0.33 $0.28 17.9%
Funds From Operations Per Share $0.49 $0.44 11.4%
Funds Available for Distribution Per Share $0.44 $0.33 33.3%
(Details regarding the above amounts are contained in the following pages. All
amounts are diluted per share amounts.)
Edmund B. Cronin, Jr., Chairman, President and CEO, stated that, "Commencing
this quarter, WRIT is reporting Earnings Per Share, Funds From Operations Per
Share and Funds Available for Distribution Per Share in order to allow greater
comparability with other public companies and to improve transparency regarding
our dividend paying ability. WRIT's earnings growth is due to the excellent
performance of recent acquisitions, combined with the strong core portfolio net
operating income increase of 8.2%." WRIT's core portfolio excludes properties
not owned for the entirety of both periods being compared.
WRIT is a self-administered, self-managed, equity real estate investment trust
investing in income-producing properties in the greater Washington-Baltimore
region. The Trust owns a diversified portfolio of 58 properties consisting of
10 neighborhood retail centers, 24 office buildings, 15 industrial
distribution/flex properties and 9 multifamily properties.
WRIT's streak of 35 consecutive years of increased earnings per share and 28
consecutive years of increased FFO per share growth spans 4 recessions. WRIT's
dividends have increased every year for 30 consecutive years. During these 30
years, WRIT's dividends have increased 36 times, a record unmatched by any other
publicly traded real estate investment trust. WRIT shares are publicly traded on
the New York Stock Exchange (symbol: WRE).
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 and changes in
general and local economic and real estate market conditions and the timing and
pricing of lease transactions.
CONTINUED
FOR IMMEDIATE RELEASE July 19, 2001
Page 2 of 9
WASHINGTON REAL ESTATE INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
(in thousands except per share data)
Quarter Ended June 30, Six Months Ended June 30,
---------------------- -------------------------
OPERATING RESULTS 2001 2000 2001 2000
- ----------------------------------------------- ------------------ ------------------- --------------------- -------------------
Real estate rental revenue $ 37,418 $ 33,350 $ 72,743 $ 65,205
Real estate expenses (10,756) (9,633) (20,991) (18,971)
------------------ ------------------- --------------------- -------------------
26,662 23,717 51,752 46,234
Real estate depreciation and amortization (6,680) (5,624) (12,894) (11,054)
------------------ ------------------- --------------------- -------------------
Income from real estate $ 19,982 $ 18,093 38,858 $ 35,180
Other income 750 242 949 391
Interest expense (6,771) (6,311) (13,447) (12,402)
General and administrative (1,567) (2,061) (3,239) (3,843)
------------------ ------------------- --------------------- -------------------
Income before gain on sale of real estate $ 12,394 $ 9,963 $ 23,121 $ 19,326
Gain on sale of real estate 0 0 0 1,498
------------------ ------------------- --------------------- -------------------
Net Income $ 12,394 $ 9,963 $ 23,121 $ 20,824
================== =================== ===================== ===================
Gain on Sale of Real Estate 0 0 0 (1,498)
Divestiture Sharing Distribution (515) 0 (515) 0
Real Estate depreciation and amortization 6,680 5,624 12,894 11,054
------------------ ------------------- --------------------- -------------------
Funds From Operations $ 18,559 $ 15,587 $ 35,500 $ 30,380
================== =================== ===================== ===================
Tenant Improvements (851) (974) (1,789) (2,440)
Recurring Capital Improvements (1,075) (2,239) (2,780) (3,642)
Leasing Commissions Capitalized (223) (411) (513) (999)
Straight Line Rents, Net of Reserve (642) (762) (1,276) (1,122)
Non Real Estate Depreciation 453 451 910 866
Divestiture Sharing Distribution 515 0 515 0
------------------ ------------------- --------------------- -------------------
Funds Available for Distribution $ 16,736 $ 11,652 $ 30,567 $ 23,043
================== =================== ===================== ===================
Per Share Data
- --------------
Income before gain on real estate (Basic) $ 0.33 $ 0.28 $ 0.63 $ 0.54
(Diluted) $ 0.33 $ 0.28 $ 0.63 $ 0.54
Net Income (Basic) $ 0.33 $ 0.28 $ 0.63 $ 0.58
(Diluted) $ 0.33 $ 0.28 $ 0.63 $ 0.58
Funds From Operations (Basic) $ 0.49 $ 0.44 $ 0.97 $ 0.85
(Diluted) $ 0.49 $ 0.44 $ 0.96 $ 0.85
Funds Available for Distribution (Basic) $ 0.44 $ 0.33 $ 0.83 $ 0.64
(Diluted) $ 0.44 $ 0.33 $ 0.82 $ 0.64
Dividends paid $ 0.3325 $ 0.3125 $ 0.6450 $ 0.6050
Weighted average shares outstanding 37,667,843 35,733,793 36,727,848 35,733,793
Fully diluted weighted average shares 38,071,916 35,810,460 37,118,178 35,810,460
outstanding
CONTINUED
Washington Real Estate Investment Trust
Q2 2001 Supplemental Disclosures
Page 3 of 9
WASHINGTON REAL ESTATE INVESTMENT TRUST
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
June 30, December 31,
2001 2000
---------- --------------
Assets
Real estate, at cost $ 748,951 $ 698,513
Accumulated depreciation (112,757) (100,906)
---------- --------------
Total investment in real estate, net 636,194 597,607
Cash and cash equivalents 22,445 6,426
Rents and other receivables, net of allowance for doubtful accounts of $2,146
and $1,743, respectively 11,982 9,796
Prepaid expenses and other assets 17,764 19,587
---------- --------------
Total assets $ 688,385 $ 633,416
========== ==============
Liabilities and shareholders' equity
Accounts payable and other liabilities $ 14,660 $ 13,048
Advance rents 3,256 3,270
Tenant security deposits 6,108 5,624
Mortgage notes payable 85,851 86,260
Notes payable 265,000 265,000
---------- --------------
Total liabilities 374,875 373,202
---------- --------------
Minority interest 1,584 1,558
---------- --------------
Shareholders' equity
Shares of beneficial interest, $.01 par value; 100,000 shares authorized: 38,329
and 35,740 shares issued and outstanding, respectively 383 357
Additional paid in capital 311,543 258,299
---------- --------------
Total shareholders' equity 311,926 258,656
---------- --------------
Total liabilities and shareholders' equity $ 688,385 $ 633,416
========== ==============
CONTINUED
Washington Real Estate Investment Trust
Q2 2001 Supplemental Disclosures
Page 4 of 9
WRIT's FFO Per Share Growth has averaged 540 basis points greater than the REIT
- -------------------------------------------------------------------------------
Industry average over the last 8 quarters
- -----------------------------------------
As reflected in the following graph WRIT's FFO per share growth, as compared to
the corresponding quarter in the preceding calendar year, continues to
significantly outperform the industry.
WRIT vs. REIT Industry FFO Per Share Growth
Over Last 8 Quarters
[GRAPH]
REIT
WRIT INDUSTRY
---- --------
Q3 1999 11.8% 8.2%
Q4 1999 13.6% 7.9%
Q1 2000 12.2% 8.4%
Q2 2000 10.6% 8.5%
Q3 2000 15.8% 7.9%
Q4 2000 15.0% 7.5%
Q1 2001 12.5% 6.9%
Q2 2001 14.6% N/A
Average 13.3% 7.9%
*WRIT growth is shown excluding accounting change to straight-line rents in Q4
1999. Were straight line rents to be included, WRIT's average growth would be
higher.
**REIT Industry data for Q3 1999 - Q1 2001 is actual FFO per share growth per
Credit Suisse First Boston Equity REIT Research. Q2 2001 Industry data is not
yet available and therefore the industry average is the average over Q3 1999 -
Q1 2001.
Core Portfolio Operating Income (NOI) Growth and Rental Rate Growth - Q2 2001
- -----------------------------------------------------------------------------
vs. Q2 2000
- -----------
Including Straight Line Rents Excluding Straight Line Rents
----------------------------- -----------------------------
Rental Rate Rental Rate
Sector NOI Growth Growth NOI Growth Growth
------ ---------- ------ ---------- ------
Apartments 6.5% 8.4% 7.2% 8.4%
Office Buildings 5.8% 2.9% 6.8% 4.4%
Retail Centers 10.0% 7.0% 9.1% 6.8%
Industrial/Flex Centers 16.4% 4.6% 16.4% 5.0%
----- ---- ----- ----
Overall Core Portfolio 8.2% 4.8% 8.7% 5.6%
Core portfolio operating expenses increased 4.3% in Q2 2001 vs. Q2 2000.
CONTINUED
Washington Real Estate Investment Trust
Q2 2001 Supplemental Disclosures
Page 5 of 9
Core Portfolio & Overall Occupancy Levels By Sector
- --------------------------------------------------
Core Portfolio All Properties
------------------------------------------------
2nd QTR 2nd QTR 2nd QTR 2nd QTR
Sector 2001 2000 2001 2000
- ------ ---- ---- ---- ----
Apartments 94.6% 97.2% 94.6% 97.2%
Office Buildings 98.1% 97.0% 98.2% 96.9%
Retail Centers 95.0% 94.4% 95.0% 94.3%
Industrial/Flex Centers 99.1% 96.7% 99.1% 96.9%
----- ----- ----- -----
Overall Portfolio 97.1% 96.7% 97.2% 96.6%
WRIT's Core Portfolio NOI Growth has averaged 200 basis points greater than the
- -------------------------------------------------------------------------------
REIT Industry average over the last 8 quarters
- ----------------------------------------------
As reflected in the following graph WRIT's core portfolio NOI growth, as
compared to the corresponding quarter in the preceding calendar year, continues
to significantly outperform the industry.
WRIT vs. REIT Industry
Core Portfolio NOI Growth
Over Last 8 Quarters
[GRAPH]
REIT
WRIT INDUSTRY
---- --------
Q3 1999 6.8% 5.4%
Q4 1999 7.4% 5.6%
Q1 2000 9.3% 6.2%
Q2 2000 7.4% 6.3%
Q3 2000 10.4% 6.8%
Q4 2000 8.2% 6.8%
Q1 2001 7.5% 6.1%
Q2 2001 8.7% N/A
Average 8.2% 6.2%
*WRIT growth is shown excluding accounting change to straight-line rents in Q4
1999. Were straight line rents to be included, WRIT's average growth would be
higher.
**REIT Industry Same Store NOI growth data is per Salomon Smith Barney Equity
REIT Research. Q2 2001 Industry data is not yet available and therefore the
industry average is the average over Q3 1999 - Q1 2001.
CONTINUED
Washington Real Estate Investment Trust
Q2 2001 Supplemental Disclosures
Page 6 of 9
Straight Line Rents
- -------------------
The following disclosure is provided to improve comparability between Q2 2001
and prior quarters (all amounts except per share amounts are in $000's):
Including Straight Line Excluding Straight Line
Rents Rents
-------------------------------------------------------------------------
2nd QTR 2nd QTR 2nd QTR 2nd QTR
2001 2000 2001 2000
---- ---- ---- ----
Straight Line Rent, Net 642 762 N/A N/A
FFO 18,559 15,587 17,917 14,825
FFO Per Share $0.493 $ 0.436 $ 0.476 $ 0.415
Nominal FFO Per Share Growth 12.95% 14.65%
Unrounded FFO Per Share Growth 11.36% 14.63%
Core Portfolio Operating Income
(NOI) Growth 8.2% _____ 8.7%
Q2 2001 Commercial Leasing Activity
- -----------------------------------
In Q2 2001, WRIT executed leases for 189,000 square feet of commercial space at
a weighted average increase over the prior rent in place of 20.2% on a cash
basis and 28.0% on a straight line basis. Details by sector are as follows:
Cash Basis Cash Basis
Previous New Cash Basis Straight Line
---------- -------------
Sector Square Feet Face Rent Face Rent % Increase % Increase
- ------ ----------- --------- --------- ---------- ----------
Office 85,265 $22.42 $25.66 15.3% 23.5%
Retail 43,425 12.43 17.52 40.9% 46.5%
Industrial/Flex 60,257 6.31 7.26 15.5% 23.6%
----------- --------- --------- ---------- ----------
Overall 188,947 $14.99 $18.02 20.2% 28.0%
Avg Term Avg Tenant
Sector (Years) Imp/SF
- ------ ------- ------
Office 3.4 $ 3.49
Retail 5.6 10.64
Industrial/Flex 3.2 .02
------- ------
Overall 3.9 $ 4.03
CONTINUED
Washington Real Estate Investment Trust
Q2 2001 Supplemental Disclosures
Page 7 of 9
Acquisitions
- ------------
One Central Plaza located at 11300 Rockville Pike (Route 355) in North Bethesda,
Maryland was acquired for $44.4 million on April 19, 2001. One Central Plaza is
a twelve-story building containing 274,000 rentable square feet of office space
on eight levels and 763 parking spaces on a four-level parking garage. The
building was 100% leased at June 30, 2001. At a purchase price of $162 per
square foot, the building was acquired at a substantial discount to replacement
cost.
WRIT expects this acquisition to produce a first year return on investment of
10.4% on a cash basis and 11.0% on a GAAP basis. From 2001 through 2004,
expiring leases average only 8% of the building's square footage per year.
However, as the rents in these leases average 24% below current market rents,
the cash return on investment is projected to grow to 11.7% over this period.
One Central Plaza, built in 1974, is a landmark on Rockville Pike in the heart
of Montgomery County, Maryland. The property is located directly across from the
entrance to White Flint Mall and two blocks south of the White Flint Metro
Station. Leasing and operational synergies are anticipated at One Central Plaza
as WRIT now owns eight office buildings containing a total of 1.1 million square
feet in the 17 million square foot North Bethesda/Rockville submarket.
Dispositions
- ------------
None
Equity Offering
- ---------------
On April 24, 2001 WRIT completed a public offering of 2,535,000 Shares of
Beneficial Interest priced at $22.15 per share. The 2,535,000 shares included
235,000 shares issued pursuant to the exercise of the underwiter's
overallottment option. Merrill Lynch & Co., Inc., Credit Suisse First Boston,
A.G. Edwards & Sons, Inc., Legg Mason Wood Walker, Inc., and BB&T Capital
Markets co-managed the offering.
The $53,000,000 net proceeds from the sale of the shares were used to repay
$43,000,000 in borrowings under the Trust's lines of credit related to WRIT's
acquisition of One Central Plaza on April 19, 2001. The balance has been
invested in marketable securities with the intent to be utilized for the
acquisition of income-producing properties, to expand and/or renovate presently
owned properties and for general corporate purposes.
CONTINUED
Washington Real Estate Investment Trust
Q2 2001 Supplemental Disclosures
Page 8 of 9
Capital Improvements Summary
- ----------------------------
During Q2 2001, WRIT invested $2.3 million in real estate capital improvements.
A breakdown of these improvements is as follows (in 000's):
Accretive Capital Improvements
Acquisition Related $ 326
Expansions & Major Renovations --
Tenant Improvements 851
-----
Total Accretive Capital Improvements 1,177
Recurring Capital Improvements 1,075
-----
Total Capital Improvements $2,252
Leasing Commissions Capitalized $ 223
June 30, 2001 Debt Summary
- --------------------------
At June 30, 2001, WRIT's debt was as follows (in $millions):
Wtd Avg Wtd Avg
Amount Maturity (Yrs) Interest Rate
------ -------------- -------------
Secured $ 85.9 6.3 7.5%
Senior Notes & MTNs $ 265.0 8.6 7.4%
------------------------------------------
Subtotal $ 350.9 8.0 7.4%
Lines of Credit* $ 0
------------------------------------------
Total Debt $ 350.9 8.0 7.4%
*WRIT's Lines of Credit total $75 million of capacity at LIBOR+ 70bp.
No more than $60 million of debt matures in any one year and less than $1
million matures in each year until 2003.
Supplemental Debt Information at June 30, 2001
- ----------------------------------------------
Debt to Total Market Capitalization: 28.6%
Earnings to Fixed Charges Ratio: 3.62x
Debt Service Coverage Ratio: 3.62x
CONTINUED
Washington Real Estate Investment Trust
Q2 2001 Supplemental Disclosures
Page 9 of 9
REIT Industry Issues
- --------------------
In light of recent issues raised in the REIT industry, WRIT makes the following
disclosures:
1. WRIT has no non-income producing land held for development and no
construction in process.
2. WRIT has only one theatre lease in its portfolio. This lease runs
through 6/30/02 at rent that WRIT estimates to be less than 1/3 of
current market rent.
3. WRIT has no capital investments in technology ventures or companies.
Conference Call Information
- ---------------------------
WRIT will conduct a Conference Call to discuss 2nd Quarter Earnings on Friday,
July 20, 2001 at 11:00 A.M. EasternTime. Conference Call access information is
as follows:
USA Toll Free Number: 888-391-6583
International Toll Number: 312-470-0017
Pass Code: Washington REIT
Conference Leader: Mr. Larry Finger
A replay of the Conference Call will be available for two weeks, commencing one
hour after the Conference Call and concluding on August 3, 2001 at 5:00 P.M.
Eastern Time. Instant Replay access information is as follows:
USA Toll Free Number: 888-568-0361
International Toll Number: 402-530-7904
A live on-demand webcast of the Conference Call will also be available on WRIT's
website at www.writ.com. An on-line playback of the webcast will be available at
------------
www.writ.com for 30 days following the Conference Call.
- ------------
END