Washington Real Estate Investment Trust (“WashREIT” or the
“Company”) (NYSE: WRE), a leading owner and operator of multifamily
and commercial properties in the Washington, DC area, reported
financial and operating results today for the quarter ended
March 31, 2020:
Financial Results
- Net income attributable to controlling interests was $1.7
million, or $0.02 per diluted share
- NAREIT FFO(1) was $31.4 million, or $0.38 per diluted
share
- Core FFO(1) was $0.37 per diluted share
Operational Highlights
- Net Operating Income (NOI)(2) was $48.2 million
- Same-store(3) NOI declined 1.6% and cash NOI declined 1.1% over
first quarter 2019. The decline was primarily due to a same-store
office NOI decline of 6.6% over first quarter 2019, driven largely
by scheduled office lease expirations as well as lower expense
reimbursements
- Same-store multifamily NOI and cash NOI increased by 6.8% over
the prior year period
- Same-store multifamily blended lease rate growth was 2.3%
(4)
- Same-store other(5) NOI decreased by 4.5% and cash NOI
decreased by 3.2% over first quarter 2019
Transaction Activity
- Closed on the previously announced sale of John Marshall II in
Tyson's, VA, on April 21 for $57 million
- Engaged with members of our bank group to arrange for
additional liquidity through a new term loan of up to $150 million.
To date, $50 million of commitment has been obtained, with the
remaining commitments anticipated later this week. Subject to final
documentation, the term loan is expected to have an initial term of
one year with a one year extension option and bear interest at
LIBOR plus 150 basis points with a LIBOR floor of 50 basis
points.
Liquidity Position
- Prepaid $250 million 4.95% Senior Notes scheduled to mature in
October 2020, which became pre-payable without penalty on April 1,
2020
- Currently available liquidity of $370 million consisting of the
remaining capacity under the Company's $700 million revolving
credit facility and cash on hand. Available liquidity would further
increase to approximately $520 million assuming the completion of
the full $150 million term loan described above
- Following the prepayment of the above-described notes, there
are no major obligations to fund for the remainder of the year and
only $150 million of additional debt scheduled to mature in
2021
- The Company has no secured debt and has the ability to access
agency debt secured by multifamily assets if additional liquidity
were to be needed in the future
"After an excellent first quarter highlighted by
our 6.8% multifamily same-store NOI growth, we entered this period
of economic uncertainty in a solid position, having de-risked the
company in accordance with our 2019 Strategic Capital Allocation
Plan by reducing our retail assets and single tenant office assets
and investing in multifamily assets in strong submarkets,” said
Paul T. McDermott, President and CEO of WashREIT. “We finished the
quarter at the low end of prior debt to EBITDA expectations and
have a strong balance sheet and strong liquidity with no major
capital requirements for the balance of the year. While these are
difficult times, we believe WashREIT is well positioned to manage
through the economic disruption caused by this global
pandemic.”
Post-quarter Update (As of April 22,
2020)
- April rent payments represent the first round of monthly rent
collections to reflect the impact of government-mandated closures
and social distancing guidelines
- Collected 97% of April rent for the same-store multifamily
portfolio and 95% for the entire multifamily portfolio
- Collected 91% of April office rents; of $1.0 million that
remains uncollected, $0.7 million is being evaluated for potential
rent deferral
- Evaluating approximately $0.5 million of April rent not
received at retail properties for potential deferral
“While the effects of the COVID-19 pandemic did
not significantly impact our first quarter operating results, we
recognize that this is an unprecedented situation and the
government-imposed restrictions, as well as social distancing and
other efforts implemented to mitigate the outbreak, will have an
adverse impact on our residents and commercial tenants,” said Mr.
McDermott. “We will continue to communicate with our tenants, but
the scope and extent of the impact will depend on things like the
duration of the pandemic, as well as the timing and manner in which
stay-at-home restrictions are lifted and business activities begin
to pick up.”
First Quarter Operating
Results
The Company's overall portfolio NOI from
continuing operations was $48.2 million for the quarter ended
March 31, 2020 compared to $45.3 million in the corresponding
prior year period. The increase was primarily driven by multifamily
rent growth, offset in part by the impact of our net asset sales
during 2019, each of which was a result of our 2019 Strategic
Capital Allocation Plan.
Same-store portfolio by sector:
- Office Same-Store NOI - Same-store NOI
decreased by 6.6% and cash NOI decreased by 6.1% compared to the
corresponding prior year period, primarily due to scheduled tenant
move-outs and lower reimbursements due to timing. Same-store
average occupancy(6) declined 290 basis points year-over-year and
100 basis points sequentially, primarily due to expected lease
expirations. The same-store office portfolio was 87.2% occupied and
90.0% leased at quarter end.(7)
- Multifamily Same-Store NOI - Same-store NOI
and cash NOI increased by 6.8% compared to the corresponding prior
year period driven by rental rate growth and lower repairs and
maintenance expenses and real estate taxes. The Company achieved
2.3% percent of blended year-over-year lease rate growth(4)
comprised of 4.8% of renewal lease rate growth and a decline in new
lease rates of 0.9% reflecting an increase in resident retention
during the quarter and strong renewal lease rate growth. At quarter
end, the same-store multifamily portfolio was 95.3% occupied on a
unit basis.
- Other Same-Store NOI - Same-store NOI
decreased by 4.5% and cash NOI decreased by 3.2% compared to the
prior year period driven, in part, by approximately $78,000 of
write-offs for bad debt related to COVID-19. The same-store other
portfolio was 91.1% occupied and 92.4% leased at quarter end.
Leasing Activity
During the first quarter, WashREIT signed
commercial leases totaling 123,000 square feet, including 61,000
square feet of new leases and 62,000 square feet of renewal leases,
as follows (all dollar amounts are on a per square foot basis).
|
Square Feet |
Weighted Average Term(in
years) |
Weighted Average Free Rent Period(in
months) |
Weighted Average Rental Rates |
Weighted Average Rental Rate%
Increase |
Tenant Improvements |
Leasing Commissions |
New: |
|
|
|
|
|
|
|
Office |
46,000 |
|
4.4 |
|
1.1 |
|
$ |
47.20 |
|
8.8 |
% |
$ |
10.45 |
|
$ |
5.24 |
|
Retail |
15,000 |
|
5.5 |
|
1.1 |
|
21.31 |
|
18.7 |
% |
0.58 |
|
6.18 |
|
Total |
61,000 |
|
4.7 |
|
1.1 |
|
40.71 |
|
10.0 |
% |
7.98 |
|
5.47 |
|
|
|
|
|
|
|
|
|
Renewal: |
|
|
|
|
|
|
|
Office |
43,000 |
|
3.7 |
|
1.2 |
|
$ |
46.39 |
|
6.7 |
% |
$ |
1.86 |
|
$ |
4.92 |
|
Retail |
19,000 |
|
7.1 |
|
0.1 |
|
21.73 |
|
9.3 |
% |
6.48 |
|
1.78 |
|
Total |
62,000 |
|
4.8 |
|
1.0 |
|
38.69 |
|
7.2 |
% |
3.30 |
|
3.94 |
|
2020 Outlook
Our prior guidance was provided before the
COVID-19 pandemic began to have an impact on the U.S. generally,
and the Washington region in particular. Given the uncertainty
surrounding the social and economic impact from COVID-19, including
the duration and extent of the pandemic and associated mitigation
efforts, it is difficult to predict the impact on our tenants and
our ability to collect rental revenue for the remainder of 2020, as
well as the cumulative impact on our future financial
results. As such, the Company is withdrawing its previously
issued full-year 2020 Outlook which was included in its February
13, 2020 Earnings Release and is not providing updated guidance for
2020 at this time.
On its earnings call, in addition to discussing
its first quarter results, WashREIT will further discuss how it is
currently assessing and managing the economic impact of COVID-19,
as well as how the economic disruption has impacted its operations
post quarter-end, to the extent that the Company is able to assess
such impact. The Company will also discuss current expectations for
some of its key business drivers, including:
- Approximately 1.3% of the Company’s previous revenue
expectations for 2020 included speculative office lease
commencements that could be impacted by the current economic
disruption. While the degree and duration of impact remain
uncertain, approximately 70% of that leasing was expected to occur
in high-quality space across Class A buildings and Space+, where
leasing momentum had been the strongest.
- Assuming social isolation restrictions continue through the
summer months, parking income is expected to decline by
approximately $2 million in 2020. However this amount does not take
into account any potential increases in parking income that may
occur during the second half of the year in the event that a shift
in tenant transportation preferences result in higher than normal
demand for parking.
- The Company currently expects multifamily operating expense
saving initiatives to substantially offset the reduction to
multifamily rental income due to lower new and renewal lease rate
growth in 2020. While move-in and other fee income is likely to be
impacted by lower turnover, it is too early to determine the
duration and extent of that impact.
- The Trove, WashREIT's recently delivered multifamily
development, began leasing up in the first quarter prior to the
COVID-19 economic disruptions and is currently signing leases
through virtual tour technology. We expect continued disruption in
lease-up activities at the Trove to delay the break-even point of
lease-up to the fourth quarter of 2020. Although, the uncertainties
around the extent and duration of the COVID-19 impacts make it
difficult to predict lease-up rates at this time. If the break-even
point of the lease-up were to occur in the fourth quarter 2020, we
currently expect a loss in 2020 attributable to such delay in the
range of $0.6 to $0.7 million.
- Having substantially collected rents due through April, it is
difficult to predict the impact of COVID-19 on residents' and
tenants' ability to pay rent for the remainder of 2020, therefore,
the Company is not providing guidance for potential future bad debt
expenses.
- The Company plans to provide details regarding expected
decreases in capital spending for the balance of 2020 on its
earnings call.
These expectations are based on a number of
factors, many of which are outside the Company’s control and all of
which are subject to change. In particular, uncertainty regarding
the scope, severity and duration of disruptions caused by the
COVID-19 pandemic make it difficult to assess future impacts with
any degree of certainty. The Company may provide updates to these
expectations during the year as actual anticipated results vary
from these expectations, but undertakes no obligation to do so.
Dividends
On March 31, 2020, WashREIT paid a quarterly
dividend of $0.30 per share.
WashREIT announced today that its Board of
Trustees has declared a quarterly dividend of $0.30 per share to be
paid on July 6, 2020 to shareholders of record on June 22,
2020.
Conference Call Information
The Conference Call for First Quarter 2020
Earnings is scheduled for Thursday, April 23, 2020 at 11:00
A.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 May 7, 2020 at 11:00 P.M. Eastern Time. Instant
replay access information is as follows:
USA Toll Free
Number: |
1-877-481-4010 |
International Toll Number: |
1-919-882-2331 |
Conference ID: |
56870 |
The live on-demand webcast of the Conference
Call will be available on the Investor section of WashREIT's
website at www.washreit.com. Online playback of the webcast will be
available following the Conference Call.
About WashREIT
WashREIT owns and operates uniquely positioned
real estate assets in the Washington D.C. market. Backed by decades
of experience, expertise and ambition, we create value by
transforming insights into strategy and strategy into action. As of
April 22, 2020, the Company's portfolio of 45 properties includes
approximately 3.7 million square feet of commercial space and 6,861
multifamily apartment units. These 45 properties consist of 22
multifamily properties,15 office properties, and 8 retail centers.
Our shares trade on the NYSE and our company currently has an
enterprise value of approximately $3 billion. With a track record
of driving returns and delivering satisfaction, we are a trusted
authority in one of the nation's most competitive real estate
markets.
Note: WashREIT's press releases and supplemental
financial information are available on the Company website at
www.washreit.com or by contacting Investor Relations at (202)
774-3200.
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.
Forward-looking statements relate to expectations, beliefs,
projections, future plans and strategies, anticipated events or
trends and similar expressions concerning matters that are not
historical facts. In some cases, you can identify forward looking
statements by the use of forward-looking terminology such as “may,”
“will,” “should,” “expects,” “intends,” “plans,” “anticipates,”
“believes,” “estimates,” “predicts,” or “potential” or the negative
of these words and phrases or similar words or phrases which are
predictions of or indicate future events or trends and which do not
relate solely to historical matters. Such statements involve known
and unknown risks, uncertainties, and other factors which may cause
the actual results, performance, or achievements of WashREIT to be
materially different from future results, performance or
achievements expressed or implied by such forward-looking
statements. Currently, one of the most significant factors is the
potential adverse effect of the COVID-19 virus and ensuing economic
turmoil on the financial condition, results of operations, cash
flows and performance of the WashREIT, particularly our ability to
collect rent, on the financial condition, results of operations,
cash flows and performance of our tenants, and on the global
economy and financial markets. The extent to which COVID-19 impacts
WashREIT and its tenants will depend on future developments, which
are highly uncertain and cannot be predicted with confidence,
including the scope, severity and duration of the pandemic, the
actions taken to contain the pandemic or mitigate its impact, and
the direct and indirect economic effects of the pandemic and
containment measures, among others. Moreover, investors are
cautioned to interpret many of the risks identified in the risk
factors discussed in our Annual Report on Form 10-K for the year
ended December 31, 2019, as amended by Amendment No. 1 to the
Annual Report on Form 10-K, filed on March 6, 2020, as well as the
risks set forth below, as being heightened as a result of the
ongoing and numerous adverse impacts of COVID-19. Additional
factors which may cause the actual results, performance, or
achievements of WashREIT to be materially different from future
results, performance or achievements expressed or implied by such
forward-looking statements include, but are not limited to the
risks associated with the ownership of real estate in general and
our real estate assets in particular; the economic health of the
greater Washington metro region; the risk of failure to enter
into/and or complete contemplated acquisitions and dispositions at
all, within the price ranges anticipated and on the terms and
timing anticipated; changes in the composition of our portfolio;
fluctuations in interest rates; reductions in or actual or
threatened changes to the timing of federal government spending;
the risks related to use of third-party providers and joint venture
partners; the ability to control our operating expenses; the
economic health of our tenants; the supply of competing properties;
shifts away from brick and mortar stores to e-commerce; the
availability and terms of financing and capital (including risk
associated with completing the new $150 million term loan discussed
in this release) and the general volatility of securities markets;
compliance with applicable laws, including those concerning the
environment and access by persons with disabilities; terrorist
attacks or actions and/or cyber-attacks; weather conditions,
natural disasters and pandemics; ability to maintain key personnel;
failure to qualify and maintain our qualification as a REIT and the
risks of changes in laws affecting REITs; and other risks and
uncertainties detailed from time to time in our filings with the
SEC, including our 2019 Form 10-K, as amended by Amendment No. 1 to
the Annual Report on Form 10-K, filed on March 6, 2020, and
subsequent Quarterly Reports on Form 10-Q. While forward-looking
statements reflect our good faith beliefs, they are not guarantees
of future performance. We undertake no obligation to update our
forward-looking statements or risk factors to reflect new
information, future events, or otherwise.
This Earnings Release also includes certain
forward-looking non-GAAP information. Due to the high variability
and difficulty in making accurate forecasts and projections of some
of the information excluded from these estimates, together with
some of the excluded information not being ascertainable or
accessible, the Company is unable to quantify certain amounts that
would be required to be included in the most directly comparable
GAAP financial measures without unreasonable efforts
(1) NAREIT Funds From Operations (“FFO”) is
defined by the National Association of Real Estate Investment
Trusts, Inc. (“NAREIT”) in its NAREIT FFO White Paper - 2018
Restatement as net income (computed in accordance with GAAP)
excluding gains (or losses) associated with sales of properties,
impairments of depreciable real estate, and real estate
depreciation and amortization. We consider NAREIT 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 NAREIT FFO more
accurately provides investors an indication of our ability to incur
and service debt, make capital expenditures and fund other needs.
Our NAREIT FFO may not be comparable to FFO reported by other
REITs. These other REITs may not define the term in accordance with
the current NAREIT definition or may interpret the current NAREIT
definition differently. NAREIT 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 WashREIT's
operating portfolio and affect the comparative measurement of
WashREIT's operating performance over time): (1) gains or losses on
extinguishment of debt, (2) expenses related to acquisition and
structuring activities, (3) executive transition costs,
severance expenses and other expenses related to corporate
restructuring and related to executive retirements or resignations,
(4) property impairments, casualty gains, and gains or losses on
sale not already excluded from FFO, as appropriate, and (5)
relocation expense. 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
WashREIT'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 or loss on sale, if any), plus interest expense, depreciation
and amortization, lease origination expenses, general and
administrative expenses, real estate impairment and gain or loss on
extinguishment of debt. We also present NOI on a cash basis ("cash
NOI") which is calculated as NOI less the impact of straight-lining
of rent and amortization of market intangibles. We believe that NOI
and cash NOI are useful performance measures because, when compared
across periods, they reflect the impact on operations of trends in
occupancy rates, rental rates and operating costs on an unleveraged
basis, providing perspective not immediately apparent from net
income. NOI and cash NOI excludes certain components from net
income in order to provide results more closely related to a
property’s results of operations. For example, interest expense is
not necessarily linked to the operating performance of a real
estate asset. In addition, depreciation and amortization, because
of historical cost accounting and useful life estimates, may
distort operating performance at the property level. As a result of
the foregoing, we provide each of NOI and cash NOI as a supplement
to net income, calculated in accordance with GAAP. Neither
represents net income or income from continuing operations, in
either case calculated in accordance with GAAP. As such, NOI and
cash NOI should not be considered alternatives to these measures as
an indication of our operating performance.
(3) For purposes of evaluating comparative
operating performance, we categorize our properties as
“same-store”, “non-same-store” or discontinued operations.
Same-store properties include properties that were owned for the
entirety of the year being compared, and exclude properties under
redevelopment or development and properties acquired, sold or
classified as held for sale during the year being compared. We
define development properties as those for which we have planned or
ongoing major construction activities on existing or acquired land
pursuant to an authorized development plan. We consider a
property's development activities to be complete when the property
is ready for its intended use. The property is categorized as
same-store when it has been ready for its intended use for the
entirety of the year being compared. We define redevelopment
properties as those for which have planned or ongoing significant
development and construction activities on existing or acquired
buildings pursuant to an authorized plan, which has an impact on
current operating results, occupancy and the ability to lease space
with the intended result of a higher economic return on the
property. We categorize a redevelopment property as same-store when
redevelopment activities have been complete for the majority of
each year being compared.
(4) Lease rate growth, which we sometimes
refer to as "trade-out", is defined as the average percentage
change in effective rent (net of concessions) for a new or renewed
lease compared to the prior lease based on the move-in date.
(5) Consists of retail centers not
classified as discontinued operations: Takoma Park, Westminster,
Concord Centre, Chevy Chase Metro Plaza, 800 S. Washington Street,
Randolph Shopping Center, Montrose Shopping Center and Spring
Valley Village. Pursuant to our Strategic Capital Allocation Plan,
and following completion of the above described dispositions of our
retail assets, we no longer report “Retail” as a separate operating
segment.
(6) Average Occupancy is based on monthly
occupied net rentable square footage or monthly occupied
multifamily units as a percentage of total net rentable square
footage or total multifamily units, respectively.
(7) Ending Occupancy is calculated as occupied
square footage or multifamily units as a percentage of total square
footage or multifamily units, respectively, as of the last day of
that period.
Ending Occupancy (i) Levels by Same-Store Properties (ii)
and All Properties |
|
|
|
Ending Occupancy |
|
Same-Store Properties |
|
All Properties |
|
1st QTR |
|
1st QTR |
|
1st QTR |
|
1st QTR |
Segment |
2020 |
|
2019 |
|
2020 |
|
2019 |
Multifamily |
95.3 |
% |
|
95.5 |
% |
|
89.9 |
% |
|
95.5 |
% |
Office |
87.2 |
% |
|
89.9 |
% |
|
88.1 |
% |
|
89.6 |
% |
Other
(iii) |
91.1 |
% |
|
90.0 |
% |
|
91.1 |
% |
|
91.9 |
% |
|
|
|
|
|
|
|
|
Overall
Portfolio |
91.6 |
% |
|
92.7 |
% |
|
89.9 |
% |
|
92.3 |
% |
(i) Ending occupancy is calculated as occupied
square footage as a percentage of total square footage as of the
last day of that period, except for the row labeled "Multifamily,"
on which ending occupancy is calculated as occupied units as a
percentage of total available units as of the last day of that
period. The occupied square footage for office and other properties
includes short-term lease agreements.
(ii) Same-store properties include properties
that were owned for the entirety of the years being compared, and
exclude properties under redevelopment or development and
properties acquired, sold or classified as held for sale during the
years being compared. We define development properties as those for
which we have planned or are ongoing major construction activities
on existing or acquired land pursuant to an authorized development
plan. We consider a property's development activities to be
complete when the property is ready for its intended use. The
property is categorized as same-store when it has been ready for
its intended use for the entirety of the years being compared. We
define redevelopment properties as those for which we have planned
or are ongoing significant development and construction activities
on existing or acquired buildings pursuant to an authorized plan,
which has an impact on current operating results, occupancy and the
ability to lease space with the intended result of a higher
economic return on the property. We categorize a redevelopment
property as same-store when redevelopment activities have been
complete for the majority of each year being compared. For Q1 2020
and Q1 2019, same-store properties exclude:
Acquisitions: |
Multifamily - Assembly Alexandria, Assembly Manassas, Assembly
Dulles, Assembly Leesburg, Assembly Herndon, Assembly Germantown,
Assembly Watkins Mill and Cascade at Landmark |
|
Development: |
Multifamily - The Trove |
Held for sale: |
Office - John Marshall II |
Sold properties: |
Office - Quantico Corporate Center and 1776 G Street |
Discontinued Operations: |
Retail - Wheaton Park, Bradlee Shopping Center, Shoppes at
Foxchase, Gateway Overlook, Olney Village Center, Frederick County
Square, Centre at Hagerstown and Frederick Crossing |
(iii) Same-Store Other consists of retail
properties not classified as discontinued operations: Takoma Park,
Westminster, Concord Centre, Chevy Chase Metro Plaza, 800 S.
Washington Street, Randolph Shopping Center, Montrose Shopping
Center and Spring Valley Village. Other also includes discontinued
operations.
(8) 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 (excluding items contemplated prior
to acquisition or associated with development / redevelopment of a
property) 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 performance 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.
WASHINGTON REAL ESTATE INVESTMENT TRUST AND
SUBSIDIARIES |
FINANCIAL HIGHLIGHTS |
(In thousands, except per share data) |
(Unaudited) |
|
Three Months Ended March 31, |
OPERATING RESULTS |
2020 |
|
2019 |
Revenue |
|
|
|
Real estate rental revenue |
$ |
76,792 |
|
|
$ |
71,434 |
|
Expenses |
|
|
|
Real estate expenses |
28,639 |
|
|
26,143 |
|
Depreciation and amortization |
29,720 |
|
|
27,057 |
|
General and administrative expenses |
6,337 |
|
|
7,807 |
|
Real estate impairment |
— |
|
|
8,374 |
|
|
64,696 |
|
|
69,381 |
|
|
|
|
|
Real estate
operating income |
12,096 |
|
|
2,053 |
|
Other
expense: |
|
|
|
Interest expense |
(10,845 |
) |
|
(12,496 |
) |
Gain on extinguishment of debt |
468 |
|
|
— |
|
|
(10,377 |
) |
|
(12,496 |
) |
Income (loss)
from continuing operations |
1,719 |
|
|
(10,443 |
) |
Discontinued
operations: |
|
|
|
Income from operations of properties sold or held for sale |
— |
|
|
6,038 |
|
Income from discontinued operations |
— |
|
|
6,038 |
|
Net income
(loss) |
1,719 |
|
|
(4,405 |
) |
Less: Net income
attributable to noncontrolling interests in subsidiaries |
— |
|
|
— |
|
Net income (loss)
attributable to the controlling interests |
$ |
1,719 |
|
|
$ |
(4,405 |
) |
|
|
|
|
Income (loss)
from continuing operations |
$ |
1,719 |
|
|
$ |
(10,443 |
) |
Depreciation and
amortization |
29,720 |
|
|
27,057 |
|
Real estate
impairment |
— |
|
|
8,374 |
|
Funds from continuing operations |
$ |
31,439 |
|
|
$ |
24,988 |
|
Income from
discontinued operations |
— |
|
|
6,038 |
|
Discontinued
operations real estate depreciation and amortization |
— |
|
|
2,490 |
|
Funds from discontinued operations |
— |
|
|
8,528 |
|
NAREIT funds from
operations (1) |
$ |
31,439 |
|
|
$ |
33,516 |
|
|
|
|
|
Non-cash gain on
extinguishment of debt |
(1,381 |
) |
|
— |
|
Tenant
improvements and incentives |
(1,072 |
) |
|
(2,269 |
) |
External and
internal leasing commissions capitalized |
(529 |
) |
|
(503 |
) |
Recurring capital
improvements |
(988 |
) |
|
(318 |
) |
Straight-line
rents, net |
(663 |
) |
|
(824 |
) |
Non-cash fair
value interest expense |
(59 |
) |
|
(212 |
) |
Non-real estate
depreciation & amortization of debt costs |
942 |
|
|
1,001 |
|
Amortization of
lease intangibles, net |
457 |
|
|
578 |
|
Amortization and
expensing of restricted share and unit compensation |
1,778 |
|
|
2,826 |
|
Funds available
for distribution |
$ |
29,924 |
|
|
$ |
33,795 |
|
|
|
Three Months Ended March 31, |
Per share data: |
|
2020 |
|
2019 |
Income (loss)
from continuing operations |
(Basic) |
$ |
0.02 |
|
|
$ |
(0.13 |
) |
|
(Diluted) |
$ |
0.02 |
|
|
$ |
(0.13 |
) |
Net income
(loss) attributable to the controlling interests |
(Basic) |
$ |
0.02 |
|
|
$ |
(0.06 |
) |
|
(Diluted) |
$ |
0.02 |
|
|
$ |
(0.06 |
) |
NAREIT
FFO |
(Basic) |
$ |
0.38 |
|
|
$ |
0.42 |
|
|
(Diluted) |
$ |
0.38 |
|
|
$ |
0.42 |
|
|
|
|
|
|
Dividends
paid |
|
$ |
0.30 |
|
|
$ |
0.30 |
|
|
|
|
|
|
Weighted
average shares outstanding - basic |
|
82,086 |
|
|
79,881 |
|
Weighted
average shares outstanding - diluted |
|
82,287 |
|
|
79,881 |
|
Weighted average shares outstanding - diluted (for NAREIT FFO) |
82,287 |
|
|
79,979 |
|
WASHINGTON REAL ESTATE INVESTMENT TRUST AND
SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(In thousands, except per share data) |
|
|
|
|
|
March 31, 2020 |
|
|
|
(unaudited) |
|
December 31, 2019 |
Assets |
|
|
|
Land |
$ |
574,025 |
|
|
$ |
566,807 |
|
Income producing property |
2,444,525 |
|
|
2,392,415 |
|
|
3,018,550 |
|
|
2,959,222 |
|
Accumulated depreciation and amortization |
(719,446 |
) |
|
(693,610 |
) |
Net income producing property |
2,299,104 |
|
|
2,265,612 |
|
Properties under development or held for future development |
89,791 |
|
|
124,193 |
|
Total real estate held for investment, net |
2,388,895 |
|
|
2,389,805 |
|
Investment in real estate held for sale, net |
57,028 |
|
|
57,028 |
|
Cash and cash equivalents |
20,601 |
|
|
12,939 |
|
Restricted cash |
634 |
|
|
1,812 |
|
Rents and other receivables |
64,617 |
|
|
65,259 |
|
Prepaid expenses and other assets |
84,722 |
|
|
95,149 |
|
Other assets related to properties held for sale |
6,123 |
|
|
6,336 |
|
Total assets |
$ |
2,622,620 |
|
|
$ |
2,628,328 |
|
|
|
|
|
Liabilities |
|
|
|
Notes payable, net |
$ |
997,075 |
|
|
$ |
996,722 |
|
Mortgage notes payable, net |
— |
|
|
47,074 |
|
Line of credit |
148,000 |
|
|
56,000 |
|
Accounts payable and other liabilities |
98,966 |
|
|
71,136 |
|
Dividend payable |
— |
|
|
24,668 |
|
Advance rents |
8,681 |
|
|
9,353 |
|
Tenant security deposits |
10,875 |
|
|
10,595 |
|
Other liabilities related to properties held for sale |
875 |
|
|
718 |
|
Total liabilities |
1,264,472 |
|
|
1,216,266 |
|
|
|
|
|
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; 82,315 and 82,099 shares issued and
outstanding, as of March 31, 2020 and December 31, 2019,
respectively |
823 |
|
|
821 |
|
Additional paid-in capital |
1,596,242 |
|
|
1,592,487 |
|
Distributions in excess of net income |
(206,506 |
) |
|
(183,405 |
) |
Accumulated other comprehensive (loss) income |
(32,744 |
) |
|
1,823 |
|
Total shareholders' equity |
1,357,815 |
|
|
1,411,726 |
|
|
|
|
|
Noncontrolling interests in subsidiaries |
333 |
|
|
336 |
|
Total equity |
1,358,148 |
|
|
1,412,062 |
|
|
|
|
|
Total liabilities and equity |
$ |
2,622,620 |
|
|
$ |
2,628,328 |
|
The
following tables contain reconciliations of net income to
same-store net operating income for the periods presented (in
thousands): |
|
|
|
|
|
|
|
|
Three
months ended March 31, 2020 |
Multifamily |
|
Office |
|
Corporate and other |
|
Total |
Same-store net
operating income (3) |
$ |
15,877 |
|
|
$ |
21,247 |
|
|
$ |
3,207 |
|
|
$ |
40,331 |
|
Add: Net operating income from non-same-store properties (3) |
6,716 |
|
|
1,106 |
|
|
— |
|
|
7,822 |
|
Total net
operating income (2) |
$ |
22,593 |
|
|
$ |
22,353 |
|
|
$ |
3,207 |
|
|
$ |
48,153 |
|
Add/(deduct): |
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
(10,845 |
) |
Depreciation and amortization |
|
|
|
|
|
|
(29,720 |
) |
General and administrative expenses |
|
|
|
|
|
|
(6,337 |
) |
Gain on extinguishment of debt |
|
|
|
|
|
|
468 |
|
Income from
continuing operations |
|
|
|
|
|
|
1,719 |
|
Discontinued
operations: |
|
|
|
|
|
|
|
Income from operations of properties sold or held for sale |
|
|
|
|
|
|
— |
|
Net
income |
|
|
|
|
|
|
1,719 |
|
Less: Net income attributable to noncontrolling interests in
subsidiaries |
|
|
|
|
|
|
— |
|
Net income
attributable to the controlling interests |
|
|
|
|
|
|
$ |
1,719 |
|
|
|
|
|
|
|
|
|
Three
months ended March 31, 2019 |
Multifamily |
|
Office |
|
Corporate and other |
|
Total |
Same-store net
operating income (3) |
$ |
14,865 |
|
|
$ |
22,756 |
|
|
$ |
3,357 |
|
|
$ |
40,978 |
|
Add: Net operating income from non-same-store properties (3) |
— |
|
|
4,313 |
|
|
— |
|
|
4,313 |
|
Total net
operating income (2) |
$ |
14,865 |
|
|
$ |
27,069 |
|
|
$ |
3,357 |
|
|
$ |
45,291 |
|
Deduct: |
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
(12,496 |
) |
Depreciation and amortization |
|
|
|
|
|
|
(27,057 |
) |
General and administrative expenses |
|
|
|
|
|
|
(7,807 |
) |
Real estate impairment |
|
|
|
|
|
|
(8,374 |
) |
Loss from
continuing operations |
|
|
|
|
|
|
(10,443 |
) |
Discontinued
operations: |
|
|
|
|
|
|
|
Income from operations of properties sold or held for sale |
|
|
|
|
|
|
6,038 |
|
Net loss |
|
|
|
|
|
|
(4,405 |
) |
Less: Net income attributable to noncontrolling interests in
subsidiaries |
|
|
|
|
|
|
— |
|
Net loss
attributable to the controlling interests |
|
|
|
|
|
|
$ |
(4,405 |
) |
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 data): |
|
|
Three Months Ended March 31, |
|
|
2020 |
|
2019 |
Net income
(loss) |
|
$ |
1,719 |
|
|
$ |
(4,405 |
) |
Add: |
|
|
|
|
Real estate depreciation and amortization |
|
29,720 |
|
|
27,057 |
|
Real estate impairment |
|
— |
|
|
8,374 |
|
Discontinued operations: |
|
|
|
|
Real estate depreciation and amortization |
|
— |
|
|
2,490 |
|
NAREIT funds from
operations (1) |
|
31,439 |
|
|
33,516 |
|
Add/(deduct): |
|
|
|
|
Restructuring expenses |
|
— |
|
|
1,896 |
|
(Gain) on extinguishment of debt |
|
(468 |
) |
|
— |
|
Core funds from
operations (1) |
|
$ |
30,971 |
|
|
$ |
35,412 |
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
Per share
data: |
|
2020 |
|
2019 |
NAREIT FFO |
(Basic) |
$ |
0.38 |
|
|
$ |
0.42 |
|
|
(Diluted) |
$ |
0.38 |
|
|
$ |
0.42 |
|
Core FFO |
(Basic) |
$ |
0.38 |
|
|
$ |
0.44 |
|
|
(Diluted) |
$ |
0.37 |
|
|
$ |
0.44 |
|
|
|
|
|
|
Weighted average
shares outstanding - basic |
|
82,086 |
|
|
79,881 |
|
Weighted average
shares outstanding - diluted(for NAREIT and Core FFO) |
|
82,287 |
|
|
79,979 |
|
CONTACT:Amy HopkinsVice President,
Investor RelationsE-Mail: ahopkins@washreit.com
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