Washington Real Estate Investment Trust (“WRIT” or the
“Company”) (NYSE: WRE), a leading owner and operator of diversified
properties in the Washington, D.C. region, reported financial and
operating results today for the quarter and year ended
December 31, 2012.
Strategic Initiatives
WRIT announced last month a simplification of its diversified
strategy to focus on office, multifamily and retail assets -
committing to a “live, work and shop in Washington, DC” focus for
future investment. To accelerate this strategy, WRIT announced that
it is exploring a 2013 disposition of its 1.3 million square foot
Medical Office Division.
“WRIT's 53 year history of successfully owning and operating a
diversified Washington, DC property portfolio has served its
investors well. As we look forward to the next 50 years, we see our
strategy of focusing on the “live, work and shop” assets in urban
locations, typically inside the beltway or near Metro, as the best
way to continue to provide future growth for our shareholders.
Keeping future investment decisions to three divisions; office,
multifamily and retail assets, we simplify our business model and
narrow our capital allocation process while we continue to improve
the quality and location of our assets,” stated John P. McDaniel,
Chairman of WRIT's Board of Trustees.
WRIT anticipates capturing embedded value through the potential
Medical Office Division sale, which should provide a lower cost of
capital to continue to improve the quality, age and location of
WRIT's properties in its core office, multifamily and retail
sectors. The Medical Office Division represents the largest
portfolio of institutional quality medical office assets in the
Washington, DC region, with all of the assets in affluent
communities or urban centers or near major medical centers such as
INOVA Fairfax, Shady Grove Adventist and George Washington
Hospital.
Financial Results
- Core Funds from Operations(1), defined
as Funds from Operations(1) (“FFO”) excluding acquisition expense,
gains or losses on extinguishment of debt, property impairment, and
severance expense related to corporate reorganization, was $1.90
per diluted share for the year and $0.47 per diluted share for the
quarter ended December 31, 2012, respectively, as compared to $1.95
per diluted share and $0.47 per diluted share for the corresponding
periods in 2011.
- Included in fourth quarter 2011 results
was a $0.01 per diluted share charge related to a lawsuit with a
former tenant at Westminster Shopping Center.
- FFO for the year ended December 31,
2012 was $122.5 million, or $1.84 per diluted share, compared to
$110.1 million, or $1.66 per diluted share, in 2011. FFO for the
quarter ended December 31, 2012 was $27.7 million, or $0.42 per
diluted share, compared to $15.6 million, or $0.23 per diluted
share, in the same period one year ago.
- Included in full year 2012 and fourth
quarter 2012 FFO is a real estate impairment of $2.1 million, or
$0.03 per diluted share, which reflects the write-down of WRIT's
investment in land at 4661 Kenmore Avenue to its estimated fair
market value. Also included in full year 2012 and fourth quarter
2012 FFO is a severance expense of $1.6 million, or $0.02 per
diluted share, related to corporate reorganization. Included in
full year 2011 and fourth quarter 2011 FFO is a real estate
impairment of $14.5 million, or $0.22 per diluted share, which
reflects the write-down of WRIT's investment in the office
development at Dulles Station, Phase II to its estimated fair
market value.
- Net income attributable to the
controlling interests for the year ended December 31, 2012 was
$23.7 million, or $0.35 per diluted share, compared to $104.9
million, or $1.58 per diluted share, in 2011. Included in 2012 net
income are gains on sale of real estate of $5.1 million, or $0.08
per diluted share, and real estate impairment of $2.1 million, or
$0.03 per diluted share. Included in 2011 net income are gains on
sale of real estate of $97.5 million, or $1.48 per diluted share,
real estate impairment of $14.5 million, or $0.22 per diluted
share, acquisition costs of $3.6 million, or $0.05 per diluted
share, and loss on extinguishment of debt of $1.0 million, or $0.01
per diluted share.
- Net income attributable to the
controlling interests for the quarter ended December 31, 2012 was
$3.0 million, or $0.04 per diluted share, compared to $30.7
million, or $0.46 per diluted share, in the same period one year
ago. Included in fourth quarter 2012 net income are gains on sale
of real estate of $1.4 million, or $0.02 per share, and real estate
impairment of $2.1 million, or $0.03 per share. Included in fourth
quarter 2011 net income are gains on sale of real estate of $40.9
million, or $0.62 per share, real estate impairment of $14.5
million, or $0.22 per share, and loss on extinguishment of debt of
$1.0 million, or $0.01 per share.
“We ended the year operationally on a steady note, with core FFO
of $0.47 in line with our expectations. Our balance sheet is
strong, with minimal maturities in 2013 and ample capacity to fund
acquisition and development opportunities in the coming months. We
are looking forward to executing our 2013 strategic initiatives,”
said George F. “Skip” McKenzie, President and Chief Executive
Officer of WRIT.
Operating Results
The Company's overall portfolio Net Operating Income (“NOI”)(2)
was $51.3 million compared to $49.7 million in the same period one
year ago and $50.2 million in the third quarter of 2012. Overall
portfolio physical occupancy for the fourth quarter was 88.1%,
compared to 90.8% in the same period one year ago and 89.2% in the
third quarter of 2012.
Same-store(3) portfolio physical occupancy for the fourth
quarter was 88.7%, compared to 91.5% in the same period one year
ago. Sequentially, same-store physical occupancy decreased 100
basis points (bps) compared to the third quarter of 2012.
Same-store portfolio NOI for the fourth quarter increased 1.2% and
rental rate growth was 1.4% compared to the same period one year
ago.
- Office: 49.2% of Total NOI -
Office properties' same-store NOI for the fourth quarter decreased
1.1% compared to the same period one year ago. Rental rate growth
was 0.9% while same-store physical occupancy decreased 430 bps to
84.9%. Sequentially, same-store physical occupancy decreased 140
bps compared to the third quarter of 2012.
- Retail: 20.0% of Total NOI -
Retail properties' same-store NOI for the fourth quarter increased
8.2% compared to the same period one year ago. Included in fourth
quarter 2011 results was a $0.01 per diluted share charge related
to a lawsuit with a former tenant at Westminster Shopping Center.
Rental rate growth was 0.3% while same-store physical occupancy
decreased 210 bps to 91.2%. Sequentially, same-store physical
occupancy decreased 160 bps compared to the third quarter of
2012.
- Multifamily: 16.3% of Total NOI
- Multifamily properties' same-store NOI for the fourth quarter
increased 4.1% compared to the same period one year ago. Rental
rate growth was 4.1% while same-store physical occupancy decreased
80 bps to 94.1%. Sequentially, same-store physical occupancy
decreased 70 bps compared to the third quarter of 2012.
- Medical Office: 14.5% of Total NOI
- Medical office properties' same-store NOI for the fourth
quarter decreased 3.1% compared to the same period one year ago.
Rental rate growth was 1.3% while same-store physical occupancy
decreased 140 bps to 89.1%. Sequentially, same-store physical
occupancy increased 110 bps compared to the third quarter of
2012.
Leasing Activity
During the fourth quarter, WRIT signed commercial leases for
270,492 square feet with an average rental rate increase of 9.5%
over expiring lease rates on a GAAP basis, an average lease term of
6.2 years, tenant improvement costs of $19.71 per square foot and
leasing costs of $9.83 per square foot.
- Rental rates for new and renewed office
leases increased 11.8% to $33.67 per square foot, with $26.06 per
square foot in tenant improvement costs and $12.72 per square foot
in leasing costs. Weighted average term for new and renewed leases
was 6.2 years.
- Rental rates for new and renewed retail
leases increased 5.8% to $20.64 per square foot, with $2.27 per
square foot in tenant improvement costs and $1.26 per square foot
in leasing costs. Weighted average term for new and renewed leases
was 5.5 years.
- Rental rates for new and renewed
medical office leases increased 4.8% to $35.03 per square foot,
with $27.25 per square foot in tenant improvement costs and $14.35
per square foot in leasing costs. Weighted average term for new and
renewed leases was 7.3 years.
Dispositions
In the fourth quarter, WRIT sold Plumtree Professional Center, a
33,000 square foot medical office building in Bel Air, Maryland,
for $8.75 million and recorded a net book gain of $1.4 million. The
property was built in 1991 and acquired by WRIT as part of a
portfolio acquisition in 2006. The unleveraged internal rate of
return over the holding period was 13%.
Financing Activity
In the fourth quarter, WRIT prepaid without penalty five
mortgage notes with an aggregate principal amount of $58.8 million,
including 15005 Shady Grove Road, 9707 Medical Center Drive,
8501-8503 Arlington Boulevard, 8505 Arlington Boulevard and
Plumtree Professional Center. The weighted average interest rate on
these five notes was 5.43%. Subsequent to quarter end, WRIT prepaid
without penalty the West Gude mortgage note, having a principal
amount of $30.0 million and an interest rate of 5.855%, primarily
using borrowings from our unsecured lines of credit.
Dividends
On December 31, 2012, WRIT paid a quarterly dividend of $0.30
per share.
Conference Call Information
The Conference Call for 4th Quarter Earnings is scheduled for
Thursday, February 14, 2013 at 2:00 P.M. Eastern time. Conference
Call access information is as follows:
USA Toll Free Number: 1-877-407-9205
International Toll Number: 1-201-689-8054
The instant replay of the Conference Call will be available
until February 28, 2013 at 11:59 P.M. Eastern time. Instant replay
access information is as follows:
USA Toll Free Number: 1-877-660-6853
International Toll Number: 1-201-612-7415 Conference ID: 406970
The live on-demand webcast of the Conference Call will be
available on the Investor section of WRIT's website at
www.writ.com. On-line playback of the webcast will be available 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 metro region. WRIT owns a diversified portfolio
of 70 properties, totaling approximately 9 million square feet of
commercial space and 2,540 residential units, and land held for
development. These 70 properties consist of 26 office properties,
17 medical office properties, 16 retail centers and 11 multifamily
properties. WRIT shares are publicly traded on the New York Stock
Exchange (NYSE: WRE).
Note: WRIT's press releases and supplemental financial
information are available on the company website at www.writ.com or
by contacting Investor Relations at (301) 984-9400.
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 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 and our
subsequent Quarterly Reports on Form 10-Q. We assume no obligation
to update or supplement forward-looking statements that become
untrue because of subsequent events.
(1) Funds From Operations (“FFO”) - The National Association of
Real Estate Investment Trusts, Inc. (“NAREIT”) defines FFO (April,
2002 White Paper) as net income (computed in accordance with
generally accepted accounting principles (“GAAP”)) excluding gains
(or losses) associated with sales of property, impairment of
depreciable real estate and real estate depreciation and
amortization. FFO is a non-GAAP measure and does not replace net
income as a measure of performance or net cash provided by
operating activities as a measure of liquidity. We consider FFO to
be a standard supplemental measure for 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.
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, (3) severance
expense related to corporate reorganization, and (4) 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 to distribute dividends to its
shareholders. Core FFO is a non-GAAP and non-standardized measure
and may be calculated differently by other REITs.
(2) Net Operating Income (“NOI”), defined as real estate rental
revenue less real estate expenses, is a non-GAAP measure. NOI is
calculated as net income, less non-real estate revenue and the
results of discontinued operations (including the gain on sale, if
any), plus interest expense, depreciation and amortization, general
and administrative expenses, acquisition costs and real estate
impairment. We provide NOI as a supplement to net income calculated
in accordance with GAAP. As such, it should not be considered an
alternative to net income as an indication of our operating
performance. It is the primary performance measure we use to assess
the results of our operations at the property level.
(3) For purposes of evaluating comparative operating
performance, we categorize our properties as “same-store” or
“non-same-store”. A same-store property was owned for the entirety
of the periods being evaluated and is stabilized from an occupancy
standpoint. A non-same-store property is one that was acquired or
placed into service during either of the periods being evaluated,
or is not stabilized from an occupancy standpoint.
(4) Funds Available for Distribution (“FAD”) is a non-GAAP
measure. It is calculated by subtracting from FFO (1) recurring
expenditures, tenant improvements and leasing costs that are
capitalized and amortized and are necessary to maintain our
properties and revenue stream 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.
We consider FAD 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-standardized measure and may be calculated differently by
other REITs.
Physical
Occupancy Levels by Same-Store Properties (i) and All
Properties
Physical Occupancy Same-Store
Properties All Properties Segment
4th
QTR 4th QTR 4th QTR 4th QTR 2012
2011 2012 2011 Multifamily 94.1 % 94.9 % 94.1
% 94.9 % Office 84.9 % 89.2 % 84.5 % 89.0 % Medical Office 89.1 %
90.5 % 85.6 % 86.5 % Retail 91.2 % 93.3 % 91.2 % 93.3 %
Overall Portfolio 88.7 % 91.5 % 88.1 % 90.8 %
(i) Same-Store properties include all stabilized properties that
were owned for the entirety of the current and prior year reporting
periods. For Q4 2012 and Q4 2011, same-store properties
exclude:
Multifamily Acquisitions: none;
Office Acquisition: Fairgate at
Ballston;
Medical Office Acquisition:
Lansdowne Medical Office Building;
Retail Acquisitions: none.
Also excluded from Same-Store Properties in Q4 2011 and Q4 2010
are:
Held for Sale and Sold Properties:
The Atrium Building, 1700 Research Boulevard, Plumtree Medical
Center, Northern Virginia Industrial Park II, 6100 Columbia Park
Road and Dulles Business Park I and II.
WASHINGTON REAL ESTATE INVESTMENT TRUST FINANCIAL
HIGHLIGHTS (In thousands, except per share data)
(Unaudited) Three Months Ended December
31, Year Ended December 31, OPERATING RESULTS
2012 2011 2012
2011 Revenue Real estate rental revenue $ 77,071 $ 75,413 $
304,983 $ 284,156 Expenses Real estate expenses 25,791 25,666
103,276 95,342 Depreciation and amortization 26,131 25,029 103,067
91,805 Acquisition costs 90 36 234 3,607 Real estate impairment
2,097 14,526 2,097 14,526 General and administrative 4,545
4,140 15,488 15,728 58,654 69,397
224,162 221,008 Real estate operating income
18,417 6,016 80,821 63,148 Other income (expense): Interest expense
(17,411 ) (16,142 ) (64,697 ) (66,214 ) Other income 242 258 975
1,144 Loss on extinguishment of debt — (976 ) — (976
) (17,169 ) (16,860 ) (63,722 ) (66,046 ) Income (loss) from
continuing operations 1,248 (10,844 ) 17,099 (2,898 ) Discontinued
operations: Income from operations of properties sold or held for
sale 310 1,090 1,485 11,923 Income tax expense — — — (1,138 ) Gain
on sale of real estate 1,400 40,852 5,124
97,491 Net income 2,958 31,098 23,708 105,378 Less: Income
from operations attributable to noncontrolling interests in
subsidiaries — (9 ) — (94 ) Less: Gain on sale of real estate
attributable to noncontrolling interests in subsidiaries —
(400 ) — (400 ) Net income attributable to the controlling
interests $ 2,958 $ 30,689 $ 23,708 $ 104,884
Income (loss) from continuing operations attributable
to the controlling interests $ 1,248 $ (10,844 ) $ 17,099 $ (2,898
) Continuing operations real estate depreciation and amortization
26,131 25,029 103,067 91,805 Funds from
continuing operations (1) 27,379 14,185 120,166
88,907 Discontinued Operations: Income from
operations of properties sold or held for sale 310 1,090 1,485
11,923 Income from operations attributable to noncontrolling
interests in subsidiaries — (9 ) — (94 ) Real estate impairment — —
— 599 Real estate depreciation and amortization — 369
867 8,723 Funds from discontinued operations 310
1,450 2,352 21,151 Funds from
operations (1) $ 27,689 $ 15,635 $ 122,518 $
110,058 Tenant improvements (4,901 ) (5,100 ) (16,540
) (11,889 ) External and internal leasing commissions capitalized
(2,334 ) (1,485 ) (9,157 ) (8,692 ) Recurring capital improvements
(1,414 ) (1,626 ) (7,307 ) (7,537 ) Straight-line rents, net (738 )
(776 ) (3,265 ) (2,734 ) Non-cash fair value interest expense 253
(53 ) 926 462 Non real estate depreciation & amortization of
debt costs 911 845 3,854 3,733 Amortization of lease intangibles,
net 41 (32 ) 6 (1,052 ) Amortization and expensing of restricted
share and unit compensation 1,842 1,459 5,786 5,580 Real estate
impairment 2,097 14,526 2,097 14,526
Funds available for distribution(4) $ 23,446 $ 23,393
$ 98,918 $ 102,455 Note: Certain prior period
amounts have been reclassified to conform to the current
presentation.
Three Months Ended December
31, Year Ended December 31, Per share data:
2012 2011 2012 2011
Income (loss) from continuing operations (Basic) $ 0.02 $ (0.16 ) $
0.25 $ (0.04 ) (Diluted) $ 0.02 $ (0.16 ) $ 0.25 $ (0.04 ) Net
income attributable to the controlling interests (Basic) $ 0.04 $
0.46 $ 0.35 $ 1.58 (Diluted) $ 0.04 $ 0.46 $ 0.35 $ 1.58 Funds from
continuing operations (Basic) $ 0.41 $ 0.21 $ 1.81 $ 1.35 (Diluted)
$ 0.41 $ 0.21 $ 1.80 $ 1.35 Funds from operations (Basic) $ 0.42 $
0.23 $ 1.84 $ 1.66 (Diluted) $ 0.42 $ 0.23 $ 1.84 $ 1.66
Dividends paid $ 0.3000 $ 0.4338 $ 1.4675 $ 1.7350 Weighted
average shares outstanding 66,273 66,069 66,239 65,982 Fully
diluted weighted average shares outstanding 66,416 66,069 66,376
65,982
WASHINGTON REAL ESTATE INVESTMENT TRUST
CONSOLIDATED BALANCE SHEETS (In thousands, except per
share data) (Unaudited) December
31, 2012 2011 Assets Land $ 483,198 $ 465,445
Income producing property 1,979,348 1,899,440
2,462,546 2,364,885 Accumulated depreciation and amortization
(604,614 ) (521,503 ) Net income producing property 1,857,932
1,843,382 Development in progress 49,135 43,089 Total
real estate held for investment, net 1,907,067 1,886,471 Investment
in real estate sold or held for sale 11,528 27,669 Cash and cash
equivalents 19,324 12,765 Restricted cash 14,582 19,229 Rents and
other receivables, net of allowance for doubtful accounts of
$10,958 and $8,683, respectively 57,076 53,227 Prepaid expenses and
other assets 114,541 120,075 Other assets related to property sold
or held for sale 258 1,322 Total assets $ 2,124,376
$ 2,120,758 Liabilities Notes payable $
906,190 $ 657,470 Mortgage notes payable 342,970 423,291 Lines of
credit — 99,000 Accounts payable and other liabilities 52,823
51,079 Advance rents 16,096 13,584 Tenant security deposits 9,936
8,728 Other liabilities related to property sold or held for sale
218 4,774 Total liabilities 1,328,233 1,257,926
Equity Shareholders' equity Preferred shares; $0.01 par
value; 10,000 shares authorized; no shares issued or outstanding —
— Shares of beneficial interest, $0.01 par value; 100,000 shares
authorized; 66,437 and 66,265 shares issued and outstanding,
respectively 664 662 Additional paid-in capital 1,145,515 1,138,478
Distributions in excess of net income (354,122 ) (280,096 ) Total
shareholders' equity 792,057 859,044 Noncontrolling interests in
subsidiaries 4,086 3,788 Total equity 796,143
862,832 Total liabilities and equity $ 2,124,376 $
2,120,758 Note: Certain prior year amounts have been
reclassified to conform to the current year presentation.
The following tables contain reconciliations of net income to
same-store net operating income for the periods presented (in
thousands):
Medical
Quarter Ended December 31, 2012 Multifamily
Office Office Retail Total Same-store
net operating income(3) $ 8,364 $ 24,394 $ 7,312 $ 10,273 $ 50,343
Add: Net operating income from non-same-store properties(3) —
824 113 — 937 Total net
operating income(2) $ 8,364 $ 25,218 $ 7,425 $ 10,273 $ 51,280
Add/(deduct): Other income 242 Acquisition costs (90 ) Interest
expense (17,411 ) Depreciation and amortization (26,131 ) General
and administrative expenses (4,545 ) Real estate impairment (2,097
) Discontinued operations: Income from operations of properties
sold or held for sale 310 Gain on sale of real estate 1,400
Net income 2,958 Less: Net income attributable to noncontrolling
interests in subsidiaries — Net income attributable to the
controlling interests $ 2,958
Medical
Quarter Ended December 31, 2011 Multifamily
Office Office Retail Total Same-store
net operating income(3) $ 8,033 $ 24,667 $ 7,549 $ 9,492 $ 49,741
Add: Net operating income (loss) from non-same-store properties(3)
— (47 ) 53 — 6 Total net operating
income(2) $ 8,033 $ 24,620 $ 7,602 $ 9,492 $ 49,747 Add/(deduct):
Other income 258 Acquisition costs (36 ) Interest expense (16,142 )
Depreciation and amortization (25,029 ) General and administrative
expenses (4,140 ) Loss on extinguishment of debt (976 ) Real estate
impairment (14,526 ) Discontinued operations: Income from
operations of properties sold or held for sale 1,090 Gain on sale
of real estate 40,852 Net income 31,098 Less: Net income
attributable to noncontrolling interests in subsidiaries (409 ) Net
income attributable to the controlling interests $ 30,689
The following tables contain reconciliations of net income
to same-store net operating income for the periods presented (in
thousands):
Medical
Year Ended December 31, 2012 Multifamily
Office Office Retail Total Same-store
net operating income(3) $ 32,420 $ 77,087 $ 29,296 $ 37,806 $
176,609 Add: Net operating income from non-same-store properties(3)
— 20,716 384 3,998 25,098 Total
net operating income(2) $ 32,420 $ 97,803 $ 29,680 $ 41,804 $
201,707 Add/(deduct): Other income 975 Acquisition costs (234 )
Interest expense (64,697 ) Depreciation and amortization (103,067 )
General and administrative expenses (15,488 ) Real estate
impairment (2,097 ) Discontinued operations: Income from operations
of properties sold or held for sale 1,485 Gain on sale of real
estate 5,124 Net income 23,708 Less: Net income attributable
to noncontrolling interests in subsidiaries — Net income
attributable to the controlling interests $ 23,708
Medical Year Ended December 31, 2011
Multifamily Office Office Retail
Total Same-store net operating income(3) $ 31,262 $ 80,795 $
30,336 $ 34,764 $ 177,157 Add: Net operating income from
non-same-store properties(3) — 10,241 32 1,384
11,657 Total net operating income(2) $ 31,262 $
91,036 $ 30,368 $ 36,148 $ 188,814 Add/(deduct): Other income
(expense) 1,144 Acquisition costs (3,607 ) Interest expense (66,214
) Depreciation and amortization (91,805 ) General and
administrative expenses (15,728 ) Loss on extinguishment of debt
(976 ) Real estate impairment (14,526 ) Discontinued operations:
Income from operations of properties sold or held for sale 11,923
Income tax expense (1,138 ) Gain on sale of real estate 97,491
Net income 105,378 Less: Net income attributable to
noncontrolling interests in subsidiaries (494 ) Net income
attributable to the controlling interests $ 104,884
The following table contains a reconciliation of net income
attributable to the controlling interests to core funds from
operations for the periods presented (in thousands, except per
share amounts):
Three Months Ended December 31, Year
Ended December 31, 2012 2011 2012
2011 Net income attributable to the controlling
interests $ 2,958 $ 30,689 $ 23,708 $ 104,884 Add/(deduct): Real
estate depreciation and amortization 26,131 25,029 103,067 91,805
Discontinued operations: Gain on sale of real estate (1,400 )
(40,852 ) (5,124 ) (97,491 ) Gain on sale of real estate
attributable to the noncontrolling interests — 400 — 400 Income tax
expense — — — 1,138 Real estate impairment — — — 599 Real estate
depreciation and amortization — 369 867 8,723
Funds from operations(1) 27,689 15,635 122,518 110,058
Add/(deduct): Loss on extinguishment of debt — 976 — 976 Real
estate impairment 2,097 14,526 2,097 14,526 Severance expense 1,583
— 1,583 — Acquisition costs 90 36 234 3,607
Core funds from operations(1) $ 31,459 $
31,173 $ 126,432 $ 129,167
Three Months Ended December 31, Year Ended December
31, Per share data attributable to the controlling interests:
2012 2011 2012 2011 Funds from
operations (Basic) $ 0.42 $ 0.23 $ 1.84 $ 1.66 (Diluted) $ 0.42 $
0.23 $ 1.84 $ 1.66 Core FFO (Basic) $ 0.47 $ 0.47 $ 1.90 $ 1.95
(Diluted) $ 0.47 $ 0.47 $ 1.90 $ 1.95 Weighted average
shares outstanding 66,273 66,069 66,239 65,982 Fully diluted
weighted average shares outstanding 66,416 66,069 66,376 65,982
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