Attached files
| file | filename |
|---|---|
| 8-K - 8-K - WASHINGTON REAL ESTATE INVESTMENT TRUST | q42014earningsrelease8-k.htm |
| EX-99.1 - EXHIBIT 99.1 - WASHINGTON REAL ESTATE INVESTMENT TRUST | q42014earningsrelease.htm |
| EX-10.1 - EXHIBIT 10.1 - WASHINGTON REAL ESTATE INVESTMENT TRUST | franklinseparationagreement.htm |
 | ||||||
Washington Real Estate Investment Trust | ||||||
Fourth Quarter 2014 | ||||||
 | ||||||
Supplemental Operating and Financial Data | ||||||
Contact: | 1775 Eye Street, NW | |||||
William T. Camp | Suite 1000 | |||||
Executive Vice President and | Washington, DC 20006 | |||||
Chief Financial Officer | (202) 774-3200 | |||||
E-mail: bcamp@washreit.com | (301) 984-9610 fax | |||||
Company Background and Highlights |
Fourth Quarter 2014 |
Washington REIT (Washington Real Estate Investment Trust - NYSE: WRE) is a self-administered, self-managed, equity real estate investment trust investing in income-producing properties in the greater Washington, DC region. Washington REIT is diversified, as it invests in office, retail, and multifamily properties and land for development.
2014 Highlights
During 2014, the remainder of the capital from the Medical Office Portfolio was reinvested. Approximately $300 million of assets were acquired, all located in Washington, DC. Washington REIT continued to improve the quality of its portfolio by acquiring a well-located assets in urban in-fill locations.
For the year, Washington REIT posted same-store GAAP rental rate growth of 0.8% and achieved 5.3% same-store GAAP net operating income growth. In 2014, over 1.4 million square feet of commercial lease transactions were executed including renewals of our large tenants, World Bank and Booz Allen Hamilton, Inc.
Washington REIT, through a joint venture with Crimson Partners, has completed the major construction work of The Maxwell development, a six-story, 163-unit mid-rise apartment community with 2,200 square feet of retail in Arlington, VA with the first tenant having taken occupancy in January. The Maxwell is located at the corner of North Glebe Road and North Carlin Springs Road, across from Ballston Common Mall and within walking distance of the Ballston Metro Station. The total cost of the project is estimated to be $50 million.
Washington REIT commenced a $35.0 million renovation of Silverline Center (formerly 7900 Westpark), a 530,000 square foot office complex located in Tysons, Virginia. The renovation will reposition the property to take advantage of its close proximity to the newly constructed I-495 Express Lanes and the completed Tysons Corner Metro Station (Silver Line). The renovation is anticipated to be completed in the first quarter of 2015.
Fourth Quarter 2014 Update and Recent Activity
During the fourth quarter, Washington REIT acquired Spring Valley Retail Center, a 75,000 square foot retail shopping center located in Northwest Washington, DC for $40.5 million in an off-market transaction. Spring Valley Retail Center consists of five separate buildings of multi-level retail space in the 4800 block of Massachusetts Avenue located in the affluent Spring Valley neighborhood.
In the fourth quarter, the Company also announced plans to relocate its corporate headquarters from Rockville, MD to Washington, DC. This was completed on January 20, 2015. The new headquarters is located in the Central Business District of Washington, DC at 1775 Eye Street, NW, which Washington REIT acquired in 2014. 1775 Eye Street is directly across the street from Farragut West (Blue and Orange Lines) and two blocks from Farragut North (Red Line) Metro stations.
During the fourth quarter and through January 6, 2015, Washington REIT issued 1,308,853 shares at a weighted average price of $27.93 per share through its Sales Agency Financing Agreement with BNY Mellon Capital Markets, LLC, generating approximately $36.5 million in proceeds. These proceeds were used for general corporate purposes.
Washington REIT signed commercial leases totaling approximately 724,000 square feet, including 103,000 square feet of new leases and 621,000 square feet of renewal leases. New leases had an average rental rate increase of 25.6% over expiring lease rates on a GAAP basis and an average lease term of 8.6
years. Commercial tenant improvements costs were $45.78 per square foot and leasing commissions and incentives were $34.88 per square foot for new leases. Renewal leases had an average rental rate increase of 5.0% over expiring lease rates on a GAAP basis and an average lease term of 6.1 years. Commercial tenant improvements costs were $24.15 per square foot and leasing commissions and incentives were $14.96 per square foot for renewal leases.
On January 20, 2015, Washington REIT announced the appointment of Mr. Stephen E. Riffee as Chief Financial Officer-elect. Mr. Riffee will succeed Bill Camp who, as previously disclosed, is stepping down as CFO after the year-end reporting period. Prior to joining Washington REIT, Mr. Riffee served as Executive Vice President and Chief Financial Officer for Corporate Office Properties Trust (COPT), a public office REIT. In this role, he oversaw all financial functions, the legal department and information technology. Before joining COPT in 2006, he was Executive Vice President and Chief Financial Officer for CarrAmerica Realty Corporation, a national public office REIT. At CarrAmerica, he developed one of the industry’s leading financial and IT teams.
On January 27, 2015, Washington REIT announced the election of Mr. Thomas H. Nolan, Jr., an additional independent member, to the Board of Trustees. Mr. Nolan currently serves as the Chairman of the Board and Chief Executive Officer of Spirit Realty Capital, Inc., a publicly traded REIT that invests primarily in single-tenant, operationally essential real estate.
As of December 31, 2014, Washington REIT owned a diversified portfolio of 56 properties totaling approximately 7 million square feet of commercial space and 3,053 multifamily units, and land held for development. These 56 properties consist of 25 office properties, 17 retail centers and 14 multifamily properties. Washington REIT shares are publicly traded on the New York Stock Exchange (NYSE: WRE).
Company Background and Highlights |
Fourth Quarter 2014 |
Net Operating Income Contribution by Sector - Fourth Quarter 2014
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 Securities and Exchange Commission, including our 2013 Form 10-K filed on March 3, 2014 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.
Supplemental Financial and Operating Data Table of Contents | ||
December 31, 2014 | ||
Schedule | Page | |
Key Financial Data | ||
Consolidated Statements of Operations | ||
Medical Office Portfolio | ||
Consolidated Balance Sheets | ||
Funds From Operations | ||
Funds Available for Distribution | ||
Adjusted Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) | ||
Capital Analysis | ||
Long-Term Debt Analysis | ||
Long-Term Debt Maturities | ||
Debt Covenant Compliance | ||
Capital Analysis | ||
Portfolio Analysis | ||
Same-Store Portfolio Net Operating Income (NOI) Growth & Rental Rate Growth | ||
Same-Store Portfolio Net Operating Income (NOI) Detail for the Quarter | ||
Same-Store Portfolio Net Operating Income (NOI) Detail for the Year | ||
Net Operating Income (NOI) by Region | ||
Same-Store Portfolio & Overall Physical Occupancy Levels by Sector | ||
Same-Store Portfolio & Overall Economic Occupancy Levels by Sector | ||
Growth and Strategy | ||
Acquisition and Disposition Summary | ||
Development/Redevelopment Summary | ||
Tenant Analysis | ||
Commercial Leasing Summary- New Leases | ||
Commercial Leasing Summary- Renewal Leases | ||
10 Largest Tenants - Based on Annualized Rent | ||
Industry Diversification | ||
Lease Expirations | ||
Appendix | ||
Schedule of Properties | ||
Supplemental Definitions | ||
Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) | |
Twelve Months Ended | Three Months Ended | ||||||||||||||||||||||||||
OPERATING RESULTS | 12/31/2014 | 12/31/2013 | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||||||||||||
Real estate rental revenue | $ | 288,637 | $ | 263,024 | $ | 74,359 | $ | 73,413 | $ | 72,254 | $ | 68,611 | $ | 66,721 | |||||||||||||
Real estate expenses | (103,695 | ) | (93,293 | ) | (25,911 | ) | (25,914 | ) | (25,528 | ) | (26,342 | ) | (23,826 | ) | |||||||||||||
184,942 | 169,731 | 48,448 | 47,499 | 46,726 | 42,269 | 42,895 | |||||||||||||||||||||
Real estate depreciation and amortization | (96,011 | ) | (85,740 | ) | (24,503 | ) | (24,354 | ) | (24,401 | ) | (22,753 | ) | (22,412 | ) | |||||||||||||
Income from real estate | 88,931 | 83,991 | 23,945 | 23,145 | 22,325 | 19,516 | 20,483 | ||||||||||||||||||||
General and administrative expenses | (19,761 | ) | (17,535 | ) | (5,981 | ) | (4,523 | ) | (4,828 | ) | (4,429 | ) | (5,818 | ) | |||||||||||||
Acquisition costs | (5,710 | ) | (1,265 | ) | (663 | ) | (69 | ) | (1,933 | ) | (3,045 | ) | (817 | ) | |||||||||||||
Interest expense | (59,785 | ) | (63,573 | ) | (15,183 | ) | (15,087 | ) | (14,985 | ) | (14,530 | ) | (15,629 | ) | |||||||||||||
Other income | 825 | 926 | 191 | 192 | 219 | 223 | 221 | ||||||||||||||||||||
Gain on sale of real estate | 570 | — | — | — | 570 | — | — | ||||||||||||||||||||
Loss on extinguishment of debt | — | (2,737 | ) | — | — | — | — | (2,737 | ) | ||||||||||||||||||
Income (loss) from continuing operations | 5,070 | (193 | ) | 2,309 | 3,658 | 1,368 | (2,265 | ) | (4,297 | ) | |||||||||||||||||
Discontinued operations: | |||||||||||||||||||||||||||
Income from operations of properties sold or held for sale | 546 | 15,395 | — | — | — | 546 | 4,256 | ||||||||||||||||||||
Gain (loss) on sale of real estate | 105,985 | 22,144 | — | — | (288 | ) | 106,273 | 18,949 | |||||||||||||||||||
Income (loss) from discontinued operations | 106,531 | 37,539 | — | — | (288 | ) | 106,819 | 23,205 | |||||||||||||||||||
Net income | 111,601 | 37,346 | 2,309 | 3,658 | 1,080 | 104,554 | 18,908 | ||||||||||||||||||||
Less: Net loss from noncontrolling interests | 38 | — | 21 | 10 | 7 | — | — | ||||||||||||||||||||
Net income attributable to the controlling interests | $ | 111,639 | $ | 37,346 | $ | 2,330 | $ | 3,668 | $ | 1,087 | $ | 104,554 | $ | 18,908 | |||||||||||||
Per Share Data: | |||||||||||||||||||||||||||
Net income attributable to the controlling interests | $ | 1.67 | $ | 0.55 | $ | 0.03 | $ | 0.05 | $ | 0.02 | $ | 1.56 | $ | 0.28 | |||||||||||||
Fully diluted weighted average shares outstanding | 66,837 | 66,580 | 67,065 | 66,790 | 66,761 | 66,701 | 66,591 | ||||||||||||||||||||
Percentage of Revenues: | |||||||||||||||||||||||||||
Real estate expenses | 35.9 | % | 35.5 | % | 34.8 | % | 35.3 | % | 35.3 | % | 38.4 | % | 35.7 | % | |||||||||||||
General and administrative expenses | 6.8 | % | 6.7 | % | 8.0 | % | 6.2 | % | 6.7 | % | 6.5 | % | 8.7 | % | |||||||||||||
Ratios: | |||||||||||||||||||||||||||
Adjusted EBITDA / Interest expense | 2.7 | x | 2.8 | x | 2.8 | x | 2.9 | x | 2.7 | x | 2.5 | x | 2.6 | x | |||||||||||||
Income (loss) from continuing operations/Total real estate revenue | 1.8 | % | (0.1 | )% | 3.1 | % | 5.0 | % | 1.9 | % | (3.3 | )% | (6.4 | )% | |||||||||||||
Net income attributable to the controlling interest/Total real estate revenue | 38.7 | % | 14.2 | % | 3.1 | % | 5.0 | % | 1.5 | % | 152.4 | % | 28.3 | % | |||||||||||||
Note: Certain prior period amounts have been reclassified to conform to the current period presentation. | |||||||||||||||||||||||||||
4
Medical Office Portfolio (In thousands) (Unaudited) | |
Twelve Months Ended | Three Months Ended | ||||||||||||||||||||||||||
Income from Medical Office Portfolio (1): | 12/31/2014 | 12/31/2013 | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||||||||||||
Real estate rental revenue | $ | 892 | $ | 45,445 | $ | — | $ | — | $ | — | $ | 892 | $ | 8,651 | |||||||||||||
Real estate expenses | (346 | ) | (16,878 | ) | — | — | — | (346 | ) | (4,184 | ) | ||||||||||||||||
546 | 28,567 | — | — | — | 546 | 4,467 | |||||||||||||||||||||
Real estate depreciation and amortization | — | (12,161 | ) | — | — | — | — | — | |||||||||||||||||||
Interest expense | — | (1,196 | ) | — | — | — | — | (211 | ) | ||||||||||||||||||
Income from operations of Medical Office Portfolio (1) | 546 | 15,210 | — | — | — | 546 | 4,256 | ||||||||||||||||||||
Income from operations of non medical office portfolio sold properties (2) | — | 185 | — | — | — | — | — | ||||||||||||||||||||
Gain on sale of real estate | 105,985 | 22,144 | — | — | (288 | ) | 106,273 | 18,949 | |||||||||||||||||||
Income (loss) from discontinued operations | $ | 106,531 | $ | 37,539 | $ | — | $ | — | $ | (288 | ) | $ | 106,819 | $ | 23,205 | ||||||||||||
As of | |||||||||||||||||||||||||||
Investment in Medical Office Portfolio (1): | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||||||||||||||
Medical Office | $ | — | $ | — | $ | — | $ | — | $ | 125,967 | |||||||||||||||||
Less accumulated depreciation | — | — | — | — | (46,066 | ) | |||||||||||||||||||||
Investment in Medical Office Portfolio (1) | $ | — | $ | — | $ | — | $ | — | $ | 79,901 | |||||||||||||||||
(1) Medical Office Portfolio: |
Office - Woodholme Center and 6565 Arlington Boulevard |
Medical Office - 2440 M Street, 15001 Shady Grove Road, 15505 Shady Grove Road, 19500 at Riverside Park )formerly Lansdowne Medical Office Building), 9707 Medical Center Drive, CentreMed I and II, 8301 Arlington Boulevard, Sterling Medical Office Building, Shady Grove Medical Village II, Alexandria Professional Center, Ashburn Farm Office Park I, II and III, Woodholme Medical Office Building, Woodburn Medical Park I and II, and Prosperity Medical Center I, II and III |
Washington REIT entered into four separate contracts with a single buyer to sell all of the held for sale properties (collectively, the "Medical Office Portfolio") for a combined sales price of $500.8 million. The first two separate sale transactions of its medical office portfolio closed on November 21 and November 22, 2013 for an aggregate sales price of $307.2 million. The second two sales transactions closed on January 21, 2014 for an aggregate sales price of $193.6 million. |
(2) Non medical office portfolio sold or help for sale properties: |
The Atrium Building (sold on March 19, 2013) |
5
Consolidated Balance Sheets (In thousands) (Unaudited) | |
12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||
Assets | |||||||||||||||||||
Land | $ | 543,546 | $ | 519,859 | $ | 519,859 | $ | 472,056 | $ | 426,575 | |||||||||
Income producing property | 1,927,407 | 1,867,752 | 1,853,982 | 1,784,850 | 1,675,652 | ||||||||||||||
2,470,953 | 2,387,611 | 2,373,841 | 2,256,906 | 2,102,227 | |||||||||||||||
Accumulated depreciation and amortization | (640,434 | ) | (620,279 | ) | (600,171 | ) | (581,644 | ) | (565,342 | ) | |||||||||
Net income producing property | 1,830,519 | 1,767,332 | 1,773,670 | 1,675,262 | 1,536,885 | ||||||||||||||
Development in progress, including land held for development | 76,235 | 99,500 | 83,970 | 68,963 | 61,315 | ||||||||||||||
Total real estate held for investment, net | 1,906,754 | 1,866,832 | 1,857,640 | 1,744,225 | 1,598,200 | ||||||||||||||
Investment in real estate held for sale, net | — | — | — | — | 79,901 | ||||||||||||||
Cash and cash equivalents | 15,827 | 8,571 | 23,009 | 62,080 | 130,343 | ||||||||||||||
Restricted cash | 10,299 | 9,496 | 11,369 | 107,039 | 9,189 | ||||||||||||||
Rents and other receivables, net of allowance for doubtful accounts | 59,745 | 58,135 | 55,583 | 52,736 | 48,756 | ||||||||||||||
Prepaid expenses and other assets | 121,082 | 116,345 | 112,548 | 109,092 | 105,004 | ||||||||||||||
Other assets related to properties sold or held for sale | — | — | — | — | 4,100 | ||||||||||||||
Total assets | $ | 2,113,707 | $ | 2,059,379 | $ | 2,060,149 | $ | 2,075,172 | $ | 1,975,493 | |||||||||
Liabilities | |||||||||||||||||||
Notes payable | $ | 747,208 | $ | 747,082 | $ | 746,956 | $ | 746,830 | $ | 846,703 | |||||||||
Mortgage notes payable | 418,525 | 413,330 | 406,975 | 404,359 | 294,671 | ||||||||||||||
Lines of credit/short-term note payable | 50,000 | 5,000 | — | — | — | ||||||||||||||
Accounts payable and other liabilities | 54,318 | 64,153 | 59,719 | 56,804 | 51,742 | ||||||||||||||
Advance rents | 12,528 | 12,211 | 13,172 | 14,688 | 13,529 | ||||||||||||||
Tenant security deposits | 8,899 | 8,625 | 8,686 | 8,402 | 7,869 | ||||||||||||||
Other liabilities related to properties sold or held for sale | — | — | — | — | 1,533 | ||||||||||||||
Total liabilities | 1,291,478 | 1,250,401 | 1,235,508 | 1,231,083 | 1,216,047 | ||||||||||||||
Equity | |||||||||||||||||||
Preferred shares; $0.01 par value; 10,000 shares authorized | — | — | — | — | — | ||||||||||||||
Shares of beneficial interest, $0.01 par value; 100,000 shares authorized | 678 | 667 | 666 | 666 | 665 | ||||||||||||||
Additional paid-in capital | 1,184,395 | 1,153,344 | 1,152,647 | 1,151,353 | 1,151,174 | ||||||||||||||
Distributions in excess of net income | (365,518 | ) | (347,724 | ) | (331,373 | ) | (312,417 | ) | (396,880 | ) | |||||||||
Total shareholders' equity | 819,555 | 806,287 | 821,940 | 839,602 | 754,959 | ||||||||||||||
Noncontrolling interests in subsidiaries | 2,674 | 2,691 | 2,701 | 4,487 | 4,487 | ||||||||||||||
Total equity | 822,229 | 808,978 | 824,641 | 844,089 | 759,446 | ||||||||||||||
Total liabilities and equity | $ | 2,113,707 | $ | 2,059,379 | $ | 2,060,149 | $ | 2,075,172 | $ | 1,975,493 | |||||||||
Total Debt / Total Market Capitalization | 0.39 | :1 | 0.41 | :1 | 0.40 | :1 | 0.42 | :1 | 0.42 | :1 | |||||||||
6
Funds from Operations (In thousands, except per share data) (Unaudited) | |
Twelve Months Ended | Three Months Ended | ||||||||||||||||||||||||||
12/31/2014 | 12/31/2013 | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||||||||
Funds from operations (FFO)(1) | |||||||||||||||||||||||||||
Net Income | $ | 111,601 | $ | 37,346 | $ | 2,309 | $ | 3,658 | $ | 1,080 | $ | 104,554 | $ | 18,908 | |||||||||||||
Real estate depreciation and amortization | 96,011 | 85,740 | 24,503 | 24,354 | 24,401 | 22,753 | 22,412 | ||||||||||||||||||||
Gain on sale of real estate (classified as continuing operations) | (570 | ) | — | — | — | (570 | ) | — | — | ||||||||||||||||||
Discontinued operations: | |||||||||||||||||||||||||||
Gain on sale of real estate | (105,985 | ) | (22,144 | ) | — | — | 288 | (106,273 | ) | (18,949 | ) | ||||||||||||||||
Real estate depreciation and amortization | — | 12,161 | — | — | — | — | — | ||||||||||||||||||||
FFO | $ | 101,057 | $ | 113,103 | $ | 26,812 | $ | 28,012 | $ | 25,199 | $ | 21,034 | $ | 22,371 | |||||||||||||
Loss on extinguishment of debt | — | 2,737 | — | — | — | — | 2,737 | ||||||||||||||||||||
Real estate impairment | — | 92 | — | — | — | — | 92 | ||||||||||||||||||||
Severance expense | 1,600 | 2,490 | 582 | 394 | 576 | 48 | 2,157 | ||||||||||||||||||||
Relocation expense | 764 | — | 764 | — | — | — | — | ||||||||||||||||||||
Acquisition costs | 5,710 | 1,265 | 663 | 69 | 1,933 | 3,045 | 817 | ||||||||||||||||||||
Core FFO (1) | $ | 109,131 | $ | 119,687 | $ | 28,821 | $ | 28,475 | $ | 27,708 | $ | 24,127 | $ | 28,174 | |||||||||||||
Allocation to participating securities(2) | $ | (317 | ) | $ | (415 | ) | $ | (53 | ) | $ | (44 | ) | $ | (17 | ) | $ | (295 | ) | $ | (44 | ) | ||||||
FFO per share - basic | $ | 1.51 | $ | 1.69 | $ | 0.40 | $ | 0.42 | $ | 0.38 | $ | 0.31 | $ | 0.34 | |||||||||||||
FFO per share - fully diluted | $ | 1.51 | $ | 1.69 | $ | 0.40 | $ | 0.42 | $ | 0.38 | $ | 0.31 | $ | 0.34 | |||||||||||||
Core FFO per share - fully diluted | $ | 1.63 | $ | 1.79 | $ | 0.43 | $ | 0.43 | $ | 0.41 | $ | 0.36 | $ | 0.42 | |||||||||||||
Common dividend per share | $ | 1.2000 | $ | 1.2000 | $ | 0.3000 | $ | 0.3000 | $ | 0.3000 | $ | 0.3000 | $ | 0.3000 | |||||||||||||
Average shares - basic | 66,795 | 66,580 | 67,002 | 66,738 | 66,732 | 66,701 | 66,591 | ||||||||||||||||||||
Average shares - fully diluted | 66,837 | 66,609 | 67,065 | 66,790 | 66,761 | 66,750 | 66,634 | ||||||||||||||||||||
(1) See "Supplemental Definitions" on page 32 of this supplemental for the definitions of FFO and Core FFO. | |||||||||||||||||||||||||||
(2) Adjustment to the numerators for FFO and Core FFO per share calculations when applying the two-class method for calculating EPS. | |||||||||||||||||||||||||||
7
Funds Available for Distribution (In thousands, except per share data) (Unaudited) | |
Twelve Months Ended | Three Months Ended | ||||||||||||||||||||||||||
12/31/2014 | 12/31/2013 | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||||||||
Funds available for distribution (FAD)(1) | |||||||||||||||||||||||||||
FFO | $ | 101,057 | $ | 113,103 | $ | 26,812 | $ | 28,012 | $ | 25,199 | $ | 21,034 | $ | 22,371 | |||||||||||||
Non-cash loss on extinguishment of debt | — | 88 | — | — | — | — | 88 | ||||||||||||||||||||
Tenant improvements and leasing incentives | (29,664 | ) | (23,429 | ) | (7,103 | ) | (7,649 | ) | (9,612 | ) | (5,300 | ) | (8,256 | ) | |||||||||||||
Leasing commissions | (12,083 | ) | (12,915 | ) | (7,800 | ) | (1,323 | ) | (1,721 | ) | (1,239 | ) | (5,544 | ) | |||||||||||||
Recurring capital improvements | (6,029 | ) | (6,902 | ) | (1,811 | ) | (1,720 | ) | (1,610 | ) | (888 | ) | (1,953 | ) | |||||||||||||
Straight-line rent, net | (2,821 | ) | (1,757 | ) | (1,087 | ) | (658 | ) | (723 | ) | (353 | ) | (353 | ) | |||||||||||||
Non-cash fair value interest expense | 290 | 1,020 | 33 | 32 | 30 | 195 | 256 | ||||||||||||||||||||
Non-real estate depreciation and amortization | 4,348 | 3,736 | 1,578 | 994 | 904 | 872 | 906 | ||||||||||||||||||||
Amortization of lease intangibles, net | 2,349 | 475 | 729 | 704 | 677 | 239 | 219 | ||||||||||||||||||||
Amortization and expensing of restricted share and unit compensation | 4,911 | 6,211 | 1,134 | 1,307 | 1,429 | 1,041 | 2,623 | ||||||||||||||||||||
Real estate impairment | — | 92 | — | — | — | — | 92 | ||||||||||||||||||||
FAD | $ | 62,358 | $ | 79,722 | $ | 12,485 | $ | 19,699 | $ | 14,573 | $ | 15,601 | $ | 10,449 | |||||||||||||
Cash loss on extinguishment of debt | — | 2,649 | — | — | — | — | 2,649 | ||||||||||||||||||||
Non-share-based severance expense | 1,424 | 1,537 | 546 | 313 | 517 | 48 | 1,537 | ||||||||||||||||||||
Relocation expense | 85 | — | 85 | — | — | — | — | ||||||||||||||||||||
Acquisition costs | 5,710 | 1,265 | 663 | 69 | 1,933 | 3,045 | 817 | ||||||||||||||||||||
Core FAD (1) | $ | 69,577 | $ | 85,173 | $ | 13,779 | $ | 20,081 | $ | 17,023 | $ | 18,694 | $ | 15,452 | |||||||||||||
Allocation to participating securities(2) | $ | (317 | ) | $ | (415 | ) | $ | (53 | ) | $ | (44 | ) | $ | (17 | ) | $ | (295 | ) | $ | (44 | ) | ||||||
FAD per share - basic | $ | 0.93 | $ | 1.19 | $ | 0.19 | $ | 0.29 | $ | 0.22 | $ | 0.23 | $ | 0.16 | |||||||||||||
FAD per share - fully diluted | $ | 0.93 | $ | 1.19 | $ | 0.19 | $ | 0.29 | $ | 0.22 | $ | 0.23 | $ | 0.16 | |||||||||||||
Core FAD per share - fully diluted | $ | 1.04 | $ | 1.27 | $ | 0.20 | $ | 0.30 | $ | 0.25 | $ | 0.28 | $ | 0.23 | |||||||||||||
Common dividend per share | $ | 1.20 | $ | 1.20 | $ | 0.30 | $ | 0.30 | $ | 0.30 | $ | 0.30 | $ | 0.30 | |||||||||||||
Average shares - basic | 66,795 | 66,580 | 67,002 | 66,738 | 66,732 | 66,701 | 66,591 | ||||||||||||||||||||
Average shares - fully diluted | 66,837 | 66,609 | 67,065 | 66,790 | 66,761 | 66,750 | 66,634 | ||||||||||||||||||||
(1) See "Supplemental Definitions" on page 32 of this supplemental for the definitions of FAD and Core FAD. | |||||||||||||||||||||||||||
(2) Adjustment to the numerators for FAD and Core FAD per share calculations when applying the two-class method for calculating EPS. | |||||||||||||||||||||||||||
8
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) (In thousands) (Unaudited) | ||||
Twelve Months Ended | Three Months Ended | ||||||||||||||||||||||||||
12/31/2014 | 12/31/2013 | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||||||||
Adjusted EBITDA(1) | |||||||||||||||||||||||||||
Net income attributable to the controlling interests | $ | 111,639 | $ | 37,346 | $ | 2,330 | $ | 3,668 | $ | 1,087 | $ | 104,554 | $ | 18,908 | |||||||||||||
Add: | |||||||||||||||||||||||||||
Interest expense, including discontinued operations | 59,785 | 64,769 | 15,183 | 15,087 | 14,985 | 14,530 | 15,840 | ||||||||||||||||||||
Real estate depreciation and amortization, including discontinued operations | 96,011 | 97,901 | 24,503 | 24,354 | 24,401 | 22,753 | 22,412 | ||||||||||||||||||||
Income tax expense | 117 | 5 | — | 46 | 71 | — | (25 | ) | |||||||||||||||||||
Real estate impairment | — | 92 | — | — | — | — | 92 | ||||||||||||||||||||
Non-real estate depreciation | 1,279 | 810 | 793 | 113 | 180 | 193 | 196 | ||||||||||||||||||||
Less: | |||||||||||||||||||||||||||
Gain on sale of real estate | (106,555 | ) | (22,144 | ) | — | — | (282 | ) | (106,273 | ) | (18,949 | ) | |||||||||||||||
Loss on extinguishment of debt | — | 2,737 | — | — | — | — | 2,737 | ||||||||||||||||||||
Adjusted EBITDA | $ | 162,276 | $ | 181,516 | $ | 42,809 | $ | 43,268 | $ | 40,442 | $ | 35,757 | $ | 41,211 | |||||||||||||
(1) Adjusted EBITDA is earnings before interest expense, taxes, depreciation, amortization, gain on sale of real estate, real estate impairment, gain/loss on extinguishment of debt and gain from non-disposal activities. We consider Adjusted EBITDA to be an appropriate supplemental performance measure because it permits investors to view income from operations without the effect of depreciation, the cost of debt or non-operating gains and losses. Adjusted EBITDA is a non-GAAP measure. | |||||||||||||||||||||||||||
9
Long Term Debt Analysis (In thousands) | |
12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||
Balances Outstanding | |||||||||||||||||||
Secured | |||||||||||||||||||
Conventional fixed rate | $ | 418,525 | $ | 413,330 | $ | 406,975 | $ | 404,359 | $ | 294,671 | |||||||||
Unsecured | |||||||||||||||||||
Fixed rate bonds and notes | 747,208 | 747,082 | 746,956 | 746,830 | 846,703 | ||||||||||||||
Credit facility | 50,000 | 5,000 | — | — | — | ||||||||||||||
Unsecured total | 797,208 | 752,082 | 746,956 | 746,830 | 846,703 | ||||||||||||||
Total | $ | 1,215,733 | $ | 1,165,412 | $ | 1,153,931 | $ | 1,151,189 | $ | 1,141,374 | |||||||||
Average Interest Rates | |||||||||||||||||||
Secured | |||||||||||||||||||
Conventional fixed rate | 5.2 | % | 5.3 | % | 5.3 | % | 5.4 | % | 6.1 | % | |||||||||
Unsecured | |||||||||||||||||||
Fixed rate bonds | 4.9 | % | 4.9 | % | 4.9 | % | 4.9 | % | 4.9 | % | |||||||||
Credit facilities | 1.4 | % | 1.4 | % | — | % | — | % | — | % | |||||||||
Unsecured total | 4.7 | % | 4.8 | % | 4.9 | % | 4.9 | % | 4.9 | % | |||||||||
Average | 4.9 | % | 5.0 | % | 5.0 | % | 5.0 | % | 5.2 | % | |||||||||
Note: The current balances outstanding of the secured and unsecured fixed rate bonds and notes are shown net of discounts/premiums of $4.0 million and $2.8 million, respectively.
10
Long Term Debt Maturities | ||||
Future Maturities of Debt (in thousands, except for %) | |||||||||||||||||
Year | Secured Debt | Unsecured Debt | Credit Facilities | Total Debt | Average Interest Rate | ||||||||||||
2015 | $ | 150,000 | $ | 5,000 | $ | 155,000 | 5.3% | ||||||||||
2016 | $ | 159,456 | — | 45,000 | 204,456 | 4.3% | |||||||||||
2017 | 150,903 | — | 150,903 | 5.9% | |||||||||||||
2018 | — | — | —% | ||||||||||||||
2019 | 31,280 | — | 31,280 | 5.4% | |||||||||||||
2020 | 250,000 | 250,000 | 5.1% | ||||||||||||||
2021 | — | —% | |||||||||||||||
2022 | 44,517 | 300,000 | 344,517 | 4.0% | |||||||||||||
2023 | — | —% | |||||||||||||||
2024 | — | —% | |||||||||||||||
2025 | — | —% | |||||||||||||||
Thereafter | 50,000 | 50,000 | 7.4% | ||||||||||||||
Scheduled principal payments | $ | 386,156 | $ | 750,000 | $ | 50,000 | $ | 1,186,156 | 4.9% | ||||||||
Scheduled amortization payments | 28,344 | — | — | 28,344 | 4.7% | ||||||||||||
Net discounts/premiums | 4,025 | (2,792 | ) | — | 1,233 | —% | |||||||||||
Total maturities | $ | 418,525 | $ | 747,208 | $ | 50,000 | $ | 1,215,733 | 4.9% | ||||||||
Weighted average maturity = 4.8 years
11
Debt Covenant Compliance | ||||
Unsecured Notes Payable | Unsecured Line of Credit #1 ($100.0 million) | Unsecured Line of Credit #2 ($400.0 million) | ||||||||||||||
Quarter Ended December 31, 2014 | Covenant | Quarter Ended December 31, 2014 | Covenant | Quarter Ended December 31, 2014 | Covenant | |||||||||||
% of Total Indebtedness to Total Assets(1) | 43.8 | % | ≤ 65.0% | N/A | N/A | N/A | N/A | |||||||||
Ratio of Income Available for Debt Service to Annual Debt Service | 2.9 | ≥ 1.5 | N/A | N/A | N/A | N/A | ||||||||||
% of Secured Indebtedness to Total Assets(1) | 15.1 | % | ≤ 40.0% | N/A | N/A | N/A | N/A | |||||||||
Ratio of Total Unencumbered Assets(2) to Total Unsecured Indebtedness | 2.7 | ≥ 1.5 | N/A | N/A | N/A | N/A | ||||||||||
Tangible Net Worth(3) | N/A | N/A | $ | 905.8 | million | ≥ $673.4 million | $ | 907.1 | million | ≥ $671.9 million | ||||||
% of Total Liabilities to Gross Asset Value(5) | N/A | N/A | 52.7 | % | ≤ 60.0% | 52.7 | % | ≤ 60.0% | ||||||||
% of Secured Indebtedness to Gross Asset Value(5) | N/A | N/A | 17.1 | % | ≤ 35.0% | 17.1 | % | ≤ 35.0% | ||||||||
Ratio of EBITDA(4) to Fixed Charges(6) | N/A | N/A | 2.58 | ≥ 1.50 | 2.58 | ≥ 1.50 | ||||||||||
Ratio of Unencumbered Pool Value(7) to Unsecured Indebtedness | N/A | N/A | 2.44 | ≥ 1.67 | 2.44 | ≥ 1.67 | ||||||||||
Ratio of Unencumbered Net Operating Income to Unsecured Interest Expense | N/A | N/A | 3.60 | ≥ 2.00 | 3.60 | ≥ 2.00 | ||||||||||
Ratio of Investments(8) to Gross Asset Value(5) | N/A | N/A | 3.7 | % | ≤ 15.0% | 3.7 | % | ≤ 15.0% | ||||||||
(1) Total Assets is calculated by applying a capitalization rate of 7.50% to the EBITDA(4) from the last four consecutive quarters, excluding EBITDA from acquired, disposed, and non-stabilized development properties. | ||||||||||||||||
(2) Total Unencumbered Assets is calculated by applying a capitalization rate of 7.50% to the EBITDA(4) from unencumbered properties from the last four consecutive quarters, excluding EBITDA from acquired, disposed, and non-stabilized development properties. | ||||||||||||||||
(3) Tangible Net Worth is defined as shareholders equity less accumulated depreciation at the commitment start date plus current accumulated depreciation. | ||||||||||||||||
(4) EBITDA is defined in our debt covenants as earnings before minority interests, depreciation, amortization, interest expense, income tax expense, and extraordinary and nonrecurring gains and losses. | ||||||||||||||||
(5) Gross Asset Value is calculated by applying a capitalization rate to the annualized EBITDA(4) from the most recently ended quarter, excluding EBITDA from disposed properties and current quarter acquisitions. To this amount, the purchase price of current quarter acquisitions, cash and cash equivalents and development in progress is added. | ||||||||||||||||
(6) Fixed Charges consist of interest expense, principal payments, ground lease payments and replacement reserve payments. | ||||||||||||||||
(7) Unencumbered Pool Value is calculated by applying a capitalization rate of 7.50% to the net operating income from unencumbered properties owned for the entire quarter. To this we add the purchase price of unencumbered acquisitions during the current quarter. | ||||||||||||||||
(8) Investments is defined as development in progress, including land held for development, plus budgeted redevelopment and development costs upon commencement of construction, if any. | ||||||||||||||||
12
Capital Analysis (In thousands, except per share amounts) | |
12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||
Market Data | |||||||||||||||||||
Shares Outstanding | 67,819 | 66,663 | 66,636 | 66,630 | 66,531 | ||||||||||||||
Market Price per Share | $ | 27.66 | $ | 25.38 | $ | 25.98 | $ | 23.88 | $ | 23.36 | |||||||||
Equity Market Capitalization | $ | 1,875,874 | $ | 1,691,907 | $ | 1,731,203 | $ | 1,591,124 | $ | 1,554,164 | |||||||||
Total Debt | $ | 1,215,733 | $ | 1,165,412 | $ | 1,153,931 | $ | 1,151,189 | $ | 1,141,374 | |||||||||
Total Market Capitalization | $ | 3,091,607 | $ | 2,857,319 | $ | 2,885,134 | $ | 2,742,313 | $ | 2,695,538 | |||||||||
Total Debt to Market Capitalization | 0.39 | :1 | 0.41 | :1 | 0.40 | :1 | 0.42 | :1 | 0.42 | :1 | |||||||||
Earnings to Fixed Charges(1) | 1.1x | 1.2x | 1.1x | 0.8x | 0.7x | ||||||||||||||
Debt Service Coverage Ratio(2) | 2.6x | 2.7x | 2.5x | 2.3x | 2.5x | ||||||||||||||
Dividend Data | |||||||||||||||||||
Total Dividends Paid | $ | 20,124 | $ | 20,019 | $ | 20,042 | $ | 20,092 | $ | 19,972 | |||||||||
Common Dividend per Share | $ | 0.30 | $ | 0.30 | $ | 0.30 | $ | 0.30 | $ | 0.30 | |||||||||
Payout Ratio (Core FFO per share basis) | 69.8 | % | 69.8 | % | 73.2 | % | 83.3 | % | 71.4 | % | |||||||||
Payout Ratio (Core FAD per share basis) | 150.0 | % | 100.0 | % | 120.0 | % | 107.1 | % | 130.4 | % | |||||||||
Payout Ratio (FAD per share basis) | 157.9 | % | 103.4 | % | 136.4 | % | 130.4 | % | 187.5 | % | |||||||||
(1) The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, earnings consist of income from continuing operations attributable to the controlling interests plus fixed charges, less capitalized interest. Fixed charges consist of interest expense, including amortized costs of debt issuance, plus interest costs capitalized. | |||||||||||||||||||
(2) Debt service coverage ratio is computed by dividing Adjusted EBITDA (see page 9) by interest expense and principal amortization. | |||||||||||||||||||
13
Same-Store Portfolio Net Operating Income (NOI) Growth & Rental Rate Growth 2014 vs. 2013 | |
Three Months Ended December 31, (1) | Twelve Months Ended December 31, (2) | |||||||||||||||||||||||||||
2014 | 2013 | % Change | Rental Rate Growth | 2014 | 2013 | % Change | Rental Rate Growth | |||||||||||||||||||||
Cash Basis: | ||||||||||||||||||||||||||||
Multifamily | $ | 8,848 | $ | 8,339 | 6.1 | % | (1.6 | )% | $ | 31,706 | $ | 31,247 | 1.5 | % | (0.4 | )% | ||||||||||||
Office | 23,501 | 21,902 | 7.3 | % | 1.6 | % | 91,761 | 86,195 | 6.5 | % | 1.3 | % | ||||||||||||||||
Retail | 11,821 | 10,589 | 11.6 | % | (0.5 | )% | 45,068 | 42,197 | 6.8 | % | 0.2 | % | ||||||||||||||||
Overall Same-Store Portfolio | $ | 44,170 | $ | 40,830 | 8.2 | % | 0.4 | % | $ | 168,535 | $ | 159,639 | 5.6 | % | 0.7 | % | ||||||||||||
GAAP Basis: | ||||||||||||||||||||||||||||
Multifamily | $ | 8,854 | $ | 8,476 | 4.5 | % | (1.7 | )% | $ | 31,822 | $ | 31,788 | 0.1 | % | (0.4 | )% | ||||||||||||
Office | 23,562 | 22,119 | 6.5 | % | 1.5 | % | 92,276 | 87,058 | 6.0 | % | 1.4 | % | ||||||||||||||||
Retail | 12,106 | 10,643 | 13.7 | % | 0.2 | % | 45,617 | 42,308 | 7.8 | % | 0.5 | % | ||||||||||||||||
Overall Same-Store Portfolio | $ | 44,522 | $ | 41,238 | 8.0 | % | 0.5 | % | $ | 169,715 | $ | 161,154 | 5.3 | % | 0.8 | % | ||||||||||||
(1) Non same-store properties were:
Acquisitions:
Multifamily - Yale West
Office - Army Navy Club and 1775 Eye Street, NW
Retail - Spring Valley Retail Center
Development/Redevelopment:
Office - Silverline Center (formerly 7900 Westpark Drive)
Held for sale and sold properties classified as continuing operations:
Retail - 5740 Columbia Road (parcel at Gateway Overlook)
Held for sale and sold properties classified as discontinued operations:
Medical Office/Office - The Medical Office Portfolio (see Supplemental Definitions on page 32 for list of properties included in the Medical Office Portfolio) |
(2) Non same-store properties were the same listed above in footnote 1, with the addition of The Paramount, a multifamily acquisition in 2013.
14
Same-Store Portfolio Net Operating Income (NOI) Detail (In thousands) | |
Three Months Ended December 31, 2014 | |||||||||||||||||||
Multifamily | Office | Retail | Corporate and Other | Total | |||||||||||||||
Real estate rental revenue | |||||||||||||||||||
Same-store portfolio | $ | 14,329 | $ | 37,050 | $ | 15,255 | $ | — | $ | 66,634 | |||||||||
Non same-store - acquired and in development(1) | 1,428 | 5,498 | 799 | — | 7,725 | ||||||||||||||
Total | 15,757 | 42,548 | 16,054 | — | 74,359 | ||||||||||||||
Real estate expenses | |||||||||||||||||||
Same-store portfolio | 5,475 | 13,488 | 3,149 | — | 22,112 | ||||||||||||||
Non same-store - acquired and in development(1) | 762 | 2,836 | 201 | — | 3,799 | ||||||||||||||
Total | 6,237 | 16,324 | 3,350 | — | 25,911 | ||||||||||||||
Net Operating Income (NOI) | |||||||||||||||||||
Same-store portfolio | 8,854 | 23,562 | 12,106 | — | 44,522 | ||||||||||||||
Non same-store - acquired and in development(1) | 666 | 2,662 | 598 | — | 3,926 | ||||||||||||||
Total | $ | 9,520 | $ | 26,224 | $ | 12,704 | $ | — | $ | 48,448 | |||||||||
Same-store portfolio NOI GAAP basis (from above) | $ | 8,854 | $ | 23,562 | $ | 12,106 | $ | — | $ | 44,522 | |||||||||
Straight-line revenue, net for same-store properties | — | (534 | ) | (290 | ) | — | (824 | ) | |||||||||||
FAS 141 Min Rent | (6 | ) | 66 | (58 | ) | — | 2 | ||||||||||||
Amortization of lease intangibles for same-store properties | — | 407 | 63 | — | 470 | ||||||||||||||
Same-store portfolio NOI, cash basis | $ | 8,848 | $ | 23,501 | $ | 11,821 | $ | — | $ | 44,170 | |||||||||
Reconciliation of NOI to net income: | |||||||||||||||||||
Total NOI | $ | 9,520 | $ | 26,224 | $ | 12,704 | $ | — | $ | 48,448 | |||||||||
Depreciation and amortization | (3,997 | ) | (16,580 | ) | (3,690 | ) | (236 | ) | (24,503 | ) | |||||||||
General and administrative expenses | — | — | — | (5,981 | ) | (5,981 | ) | ||||||||||||
Acquisition costs | — | — | — | (663 | ) | (663 | ) | ||||||||||||
Interest expense | (2,524 | ) | (3,019 | ) | (242 | ) | (9,398 | ) | (15,183 | ) | |||||||||
Other income | — | — | — | 191 | 191 | ||||||||||||||
Net Income | 2,999 | 6,625 | 8,772 | (16,087 | ) | 2,309 | |||||||||||||
Net income attributable to noncontrolling interests | — | — | — | 21 | 21 | ||||||||||||||
Net income attributable to the controlling interests | $ | 2,999 | $ | 6,625 | $ | 8,772 | $ | (16,066 | ) | $ | 2,330 | ||||||||
(1) For a list of non-same-store properties and held for sale and sold properties, see page 14 of this Supplemental. | |||||||||||||||||||
15
Same-Store Net Operating Income (NOI) Detail (In thousands) | |
Three Months Ended December 31, 2013 | |||||||||||||||||||||||
Multifamily | Office | Medical Office | Retail | Corporate and Other | Total | ||||||||||||||||||
Real estate rental revenue | |||||||||||||||||||||||
Same-store portfolio | $ | 14,147 | $ | 35,470 | $ | — | $ | 14,050 | $ | — | $ | 63,667 | |||||||||||
Non same-store - acquired and in development(1) | — | 3,020 | — | 34 | — | 3,054 | |||||||||||||||||
Total | 14,147 | 38,490 | — | 14,084 | — | 66,721 | |||||||||||||||||
Real estate expenses | |||||||||||||||||||||||
Same-store portfolio | 5,671 | 13,351 | — | 3,407 | — | 22,429 | |||||||||||||||||
Non same-store - acquired and in development(1) | 146 | 1,245 | — | 6 | — | 1,397 | |||||||||||||||||
Total | 5,817 | 14,596 | — | 3,413 | — | 23,826 | |||||||||||||||||
Net Operating Income (NOI) | |||||||||||||||||||||||
Same-store portfolio | 8,476 | 22,119 | — | 10,643 | — | 41,238 | |||||||||||||||||
Non same-store - acquired and in development(1) | (146 | ) | 1,775 | — | 28 | — | 1,657 | ||||||||||||||||
Total | $ | 8,330 | $ | 23,894 | $ | — | $ | 10,671 | $ | — | $ | 42,895 | |||||||||||
Same-store portfolio NOI GAAP basis (from above) | $ | 8,476 | $ | 22,119 | $ | — | $ | 10,643 | $ | — | $ | 41,238 | |||||||||||
Straight-line revenue, net for same-store properties | (4 | ) | (455 | ) | — | (65 | ) | — | (524 | ) | |||||||||||||
FAS 141 Min Rent | (133 | ) | 67 | — | (54 | ) | — | (120 | ) | ||||||||||||||
Amortization of lease intangibles for same-store properties | — | 171 | — | 65 | — | 236 | |||||||||||||||||
Same-store portfolio NOI, cash basis | $ | 8,339 | $ | 21,902 | $ | — | $ | 10,589 | $ | — | $ | 40,830 | |||||||||||
Reconciliation of NOI to net income: | |||||||||||||||||||||||
Total NOI | $ | 8,330 | $ | 23,894 | $ | — | $ | 10,671 | $ | — | $ | 42,895 | |||||||||||
Depreciation and amortization | (3,700 | ) | (14,961 | ) | — | (3,440 | ) | (311 | ) | (22,412 | ) | ||||||||||||
General and administrative expense | — | — | — | — | (5,818 | ) | (5,818 | ) | |||||||||||||||
Acquisition costs | — | — | — | — | (817 | ) | (817 | ) | |||||||||||||||
Interest expense | (1,912 | ) | (2,579 | ) | — | (261 | ) | (10,877 | ) | (15,629 | ) | ||||||||||||
Other income | — | — | — | — | 221 | 221 | |||||||||||||||||
Loss on extinguishment of debt | — | — | — | — | (2,737 | ) | (2,737 | ) | |||||||||||||||
Discontinued operations: | |||||||||||||||||||||||
Income from operations of properties sold or held for sale(1) | — | 292 | 3,964 | — | — | 4,256 | |||||||||||||||||
Gain on sale of real estate | — | — | — | — | 18,949 | 18,949 | |||||||||||||||||
Net income | 2,718 | 6,646 | 3,964 | 6,970 | (1,390 | ) | 18,908 | ||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | — | — | |||||||||||||||||
Net income attributable to the controlling interests | $ | 2,718 | $ | 6,646 | $ | 3,964 | $ | 6,970 | $ | (1,390 | ) | $ | 18,908 | ||||||||||
(1) For a list of non-same-store properties and held for sale and sold properties, see page 14 of this Supplemental. | |||||||||||||||||||||||
16
Same-Store Net Operating Income (NOI) Detail (In thousands) | |
Twelve Months Ended December 31, 2014 | |||||||||||||||||||||||
Multifamily | Office | Medical Office | Retail | Corporate and Other | Total | ||||||||||||||||||
Real estate rental revenue | |||||||||||||||||||||||
Same-store portfolio | $ | 53,647 | $ | 146,542 | $ | — | $ | 59,418 | $ | — | $ | 259,607 | |||||||||||
Non same-store - acquired and in development 1 | 8,611 | 19,574 | — | 845 | — | 29,030 | |||||||||||||||||
Total | 62,258 | 166,116 | — | 60,263 | — | 288,637 | |||||||||||||||||
Real estate expenses | |||||||||||||||||||||||
Same-store portfolio | 21,825 | 54,266 | — | 13,801 | — | 89,892 | |||||||||||||||||
Non same-store - acquired and in development 1 | 3,945 | 9,637 | — | 221 | — | 13,803 | |||||||||||||||||
Total | 25,770 | 63,903 | — | 14,022 | — | 103,695 | |||||||||||||||||
Net Operating Income (NOI) | |||||||||||||||||||||||
Same-store portfolio | 31,822 | 92,276 | — | 45,617 | — | 169,715 | |||||||||||||||||
Non same-store - acquired and in development 1 | 4,666 | 9,937 | — | 624 | — | 15,227 | |||||||||||||||||
Total | $ | 36,488 | $ | 102,213 | $ | — | $ | 46,241 | $ | — | $ | 184,942 | |||||||||||
Same-store portfolio NOI GAAP basis (from above) | $ | 31,822 | $ | 92,276 | $ | — | $ | 45,617 | $ | — | $ | 169,715 | |||||||||||
Straight-line revenue, net for same-store properties | 11 | (1,843 | ) | — | (594 | ) | — | (2,426 | ) | ||||||||||||||
FAS 141 Min Rent | (127 | ) | 228 | — | (213 | ) | — | (112 | ) | ||||||||||||||
Amortization of lease intangibles for same-store properties | — | 1,100 | — | 258 | — | 1,358 | |||||||||||||||||
Same-store portfolio NOI, cash basis | $ | 31,706 | $ | 91,761 | $ | — | $ | 45,068 | $ | — | $ | 168,535 | |||||||||||
Reconciliation of NOI to net income: | |||||||||||||||||||||||
Total NOI | $ | 36,488 | $ | 102,213 | $ | — | $ | 46,241 | $ | — | $ | 184,942 | |||||||||||
Depreciation and amortization | (17,999 | ) | (63,768 | ) | — | (13,282 | ) | (962 | ) | (96,011 | ) | ||||||||||||
General and administrative expenses | — | — | — | — | (19,761 | ) | (19,761 | ) | |||||||||||||||
Acquisition costs | — | — | — | — | (5,710 | ) | (5,710 | ) | |||||||||||||||
Interest expense | (9,313 | ) | (11,606 | ) | — | (997 | ) | (37,869 | ) | (59,785 | ) | ||||||||||||
Other income | — | — | — | — | 825 | 825 | |||||||||||||||||
Gain on sale of real estate | — | — | — | — | 570 | 570 | |||||||||||||||||
Discontinued operations: | |||||||||||||||||||||||
Income from operations of properties sold or held for sale (1) | — | 546 | — | — | 546 | ||||||||||||||||||
Gain on sale of real estate | — | — | — | — | 105,985 | 105,985 | |||||||||||||||||
Income tax expense on sale of real estate | — | — | — | — | — | ||||||||||||||||||
Net Income | 9,176 | 26,839 | 546 | 31,962 | 43,078 | 111,601 | |||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | 38 | 38 | |||||||||||||||||
Net income attributable to the controlling interests | $ | 9,176 | $ | 26,839 | $ | 546 | $ | 31,962 | $ | 43,116 | $ | 111,639 | |||||||||||
(1) For a list of non-same-store properties and held for sale and sold properties, see page 14 of this Supplemental. | |||||||||||||||||||||||
17
Same-Store Net Operating Income (NOI) Detail (In thousands) | |
Twelve Months Ended December 31, 2013 | |||||||||||||||||||||||
Multifamily | Office | Medical Office | Retail | Corporate and Other | Total | ||||||||||||||||||
Real estate rental revenue | |||||||||||||||||||||||
Same-store portfolio | $ | 53,589 | $ | 139,270 | $ | — | $ | 56,055 | $ | — | $ | 248,914 | |||||||||||
Non same-store - acquired and in development 1 | 907 | 13,069 | — | 134 | — | 14,110 | |||||||||||||||||
Total | 54,496 | 152,339 | — | 56,189 | — | 263,024 | |||||||||||||||||
Real estate expenses | |||||||||||||||||||||||
Same-store portfolio | 21,801 | 52,212 | — | 13,747 | — | 87,760 | |||||||||||||||||
Non same-store - acquired and in development 1 | 431 | 5,081 | — | 21 | — | 5,533 | |||||||||||||||||
Total | 22,232 | 57,293 | — | 13,768 | — | 93,293 | |||||||||||||||||
Net Operating Income (NOI) | |||||||||||||||||||||||
Same-store portfolio | 31,788 | 87,058 | — | 42,308 | — | 161,154 | |||||||||||||||||
Non same-store - acquired and in development 1 | 476 | 7,988 | — | 113 | — | 8,577 | |||||||||||||||||
Total | $ | 32,264 | $ | 95,046 | $ | — | $ | 42,421 | $ | — | $ | 169,731 | |||||||||||
Same-store portfolio NOI GAAP basis (from above) | $ | 31,788 | $ | 87,058 | $ | — | $ | 42,308 | $ | — | $ | 161,154 | |||||||||||
Straight-line revenue, net for same-store properties | 6 | (1,672 | ) | — | (67 | ) | — | (1,733 | ) | ||||||||||||||
FAS 141 Min Rent | (547 | ) | 223 | — | (289 | ) | — | (613 | ) | ||||||||||||||
Amortization of lease intangibles for same-store properties | — | 586 | — | 245 | — | 831 | |||||||||||||||||
Same-store portfolio NOI, cash basis | $ | 31,247 | $ | 86,195 | $ | — | $ | 42,197 | $ | — | $ | 159,639 | |||||||||||
Reconciliation of NOI to Net Income | |||||||||||||||||||||||
Total NOI | $ | 32,264 | $ | 95,046 | $ | — | $ | 42,421 | $ | — | $ | 169,731 | |||||||||||
Depreciation and amortization | (12,691 | ) | (58,183 | ) | — | (13,730 | ) | (1,136 | ) | (85,740 | ) | ||||||||||||
General and administrative expenses | — | — | — | — | (17,535 | ) | (17,535 | ) | |||||||||||||||
Acquisition costs | — | — | — | — | (1,265 | ) | (1,265 | ) | |||||||||||||||
Interest expense | (6,973 | ) | (10,332 | ) | — | (1,072 | ) | (45,196 | ) | (63,573 | ) | ||||||||||||
Other income | — | — | — | — | 926 | 926 | |||||||||||||||||
Loss on extinguishment of debt | — | — | — | — | (2,737 | ) | (2,737 | ) | |||||||||||||||
Discontinued operations: | |||||||||||||||||||||||
Income from operations of properties sold or held for sale (1) | — | 1,351 | 14,044 | — | — | 15,395 | |||||||||||||||||
Gain on sale of real estate | — | — | — | — | 22,144 | 22,144 | |||||||||||||||||
Net income | 12,600 | 27,882 | 14,044 | 27,619 | (44,799 | ) | 37,346 | ||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | — | — | |||||||||||||||||
Net income attributable to the controlling interests | $ | 12,600 | $ | 27,882 | $ | 14,044 | $ | 27,619 | $ | (44,799 | ) | $ | 37,346 | ||||||||||
(1) For a list of non-same-store properties and held for sale and sold properties, see page 14 of this Supplemental. | |||||||||||||||||||||||
18
Net Operating Income (NOI) by Region | |
Washington REIT Portfolio | ||||||
Maryland/Virginia/DC | ||||||
Percentage of Q4 2014 GAAP NOI | Percentage of YTD 2014 GAAP NOI | |||||
DC | ||||||
Multifamily | 5.9 | % | 5.4 | % | ||
Office | 24.5 | % | 24.7 | % | ||
Retail | 2.0 | % | 1.1 | % | ||
32.4 | % | 31.2 | % | |||
Maryland | ||||||
Multifamily | 2.7 | % | 2.7 | % | ||
Office | 10.8 | % | 10.8 | % | ||
Retail | 17.7 | % | 17.2 | % | ||
31.2 | % | 30.7 | % | |||
Virginia | ||||||
Multifamily | 11.0 | % | 11.6 | % | ||
Office | 18.9 | % | 19.8 | % | ||
Retail | 6.5 | % | 6.7 | % | ||
36.4 | % | 38.1 | % | |||
Total Portfolio | 100.0 | % | 100.0 | % | ||
19
Same-Store and Overall Physical Occupancy Levels by Sector | |
Physical Occupancy - Same-Store Properties (1) | |||||||||||||||
Sector | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||
Multifamily | 93.9 | % | 94.3 | % | 94.3 | % | 92.5 | % | 92.1 | % | |||||
Office | 92.1 | % | 91.8 | % | 90.6 | % | 86.9 | % | 86.6 | % | |||||
Retail | 94.5 | % | 94.4 | % | 94.2 | % | 93.6 | % | 91.3 | % | |||||
Overall Portfolio | 93.2 | % | 93.2 | % | 92.6 | % | 90.2 | % | 89.3 | % | |||||
Physical Occupancy - All Properties | |||||||||||||||
Sector | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||
Multifamily | 93.8 | % | 94.3 | % | 93.7 | % | 92.2 | % | 92.1 | % | |||||
Office | 86.9 | % | 87.1 | % | 86.2 | % | 83.7 | % | 85.7 | % | |||||
Medical Office | — | % | — | % | — | % | — | % | 89.0 | % | |||||
Retail | 94.4 | % | 94.4 | % | 94.2 | % | 93.6 | % | 91.3 | % | |||||
Overall Portfolio | 90.5 | % | 90.7 | % | 90.1 | % | 88.4 | % | 88.8 | % | |||||
(1) Non same-store properties were:
Acquisitions:
Multifamily - Yale West
Office - The Army Navy Club Building and 1775 Eye Street, NW
Retail - Spring Valley Shopping Center
Redevelopment:
Office - Silverline Center (formally 7900 Westpark Drive)
Sold properties:
Retail - 5740 Columbia Road (parcel at Gateway Overlook)
Medical Office/Office - Transaction III and IV Medical Office Portfolio (Woodburn Medical Park I & II and Prosperity Medical Center I, II & III).
20
Same-Store Portfolio and Overall Economic Occupancy Levels by Sector | |
Economic Occupancy - Same-Store Properties(1) | |||||||||||||||
Sector | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||
Multifamily | 94.2 | % | 94.5 | % | 93.3 | % | 91.7 | % | 92.2 | % | |||||
Office | 92.8 | % | 92.5 | % | 90.4 | % | 88.2 | % | 87.3 | % | |||||
Retail | 94.9 | % | 94.9 | % | 93.9 | % | 92.9 | % | 91.9 | % | |||||
Overall Portfolio | 93.6 | % | 93.5 | % | 91.8 | % | 90.0 | % | 89.4 | % | |||||
Economic Occupancy - All Properties | |||||||||||||||
Sector | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||
Multifamily | 94.2 | % | 94.1 | % | 92.6 | % | 91.6 | % | 92.2 | % | |||||
Office | 86.8 | % | 87.0 | % | 86.0 | % | 85.4 | % | 86.0 | % | |||||
Medical Office | — | % | — | % | — | % | 87.4 | % | 89.4 | % | |||||
Retail | 94.5 | % | 94.9 | % | 93.9 | % | 92.9 | % | 92.0 | % | |||||
Overall Portfolio | 89.8 | % | 90.0 | % | 88.9 | % | 88.2 | % | 88.6 | % | |||||
(1) Non same-store properties were:
Acquisitions:
Multifamily - Yale West
Office - The Army Navy Club Building and 1775 Eye Street, NW
Retail - Spring Valley Shopping Center
Redevelopment:
Office - Silverline Center (formally 7900 Westpark Drive)
Held for sale and sold properties:
Retail - 5740 Columbia Road (parcel at Gateway Overlook)
Medical Office/Office - Transaction III and IV Medical Office Portfolio (Woodburn I & II and Prosperity I, II & III).
21
Acquisition and Disposition Summary | |
December 31, 2014 | |
($'s in thousands) | |
Acquisition Summary | |||||||||||||||||||
Acquisition Date | # of units | Square Feet | 12/31/2014 Leased Percentage | Investment | Mortgage Assumed | ||||||||||||||
Yale West | Washington, DC | February 21, 2014 | 216 | 95.4 | % | $ | 73,000 | $ | 48,221 | ||||||||||
The Army Navy Club Building | Washington, DC | March 26, 2014 | 108,000 | 97.5 | % | 79,000 | 52,640 | ||||||||||||
1775 Eye Street, NW | Washington, DC | May 1, 2014 | 185,000 | 65.4 | % | 104,500 | N/A | ||||||||||||
Spring Valley Retail Center | Washington, DC | October 1, 2014 | 75,000 | 92.8 | % | 40,500 | N/A | ||||||||||||
368,000 | $ | 297,000 | $ | 100,861 | |||||||||||||||
Disposition Summary | |||||||||||||||||||
Disposition Date | Property Type | Square Feet | Contract Sales Price | GAAP Gain | |||||||||||||||
Medical Office Portfolio Transactions III & IV | January 21, 2014 | Medical Office | 427,011 | $ | 193,561 | $ | 105,985 | ||||||||||||
5740 Columbia Road | May 2, 2014 | Retail | 3,000 | 1,600 | 570 | ||||||||||||||
430,011 | $ | 195,161 | $ | 106,555 | |||||||||||||||
22
Development/Redevelopment Summary | |
December 31, 2014 | |
(in thousands) | |
Property and Location | Total Rentable Square Feet or # of Units | Anticipated Total Cost | Cash Cost to Date | Draws on Construction Loan to Date | Construction Completion Date | Leased % | ||||||
Development Summary | ||||||||||||
The Maxwell, Arlington, VA | 163 units & 2,200 square feet retail | $ | 49,904 | $ | 44,314 | $ | 27,690 | fourth quarter 2014 | N/A (1) | |||
Redevelopment Summary | ||||||||||||
Silverline Center (formerly 7900 Westpark Drive), Tysons, VA | 529,000 square feet | $ | 35,000 | $ | 25,058 | N/A | anticipated in first quarter 2015 | 59.7% | ||||
(1) Major construction activities at The Maxwell ended during December 2014. As of December 31, 2014, only two of the six residential floors were available for occupancy.
23
Commercial Leasing Summary - New Leases | ||||
4th Quarter 2014 | 3rd Quarter 2014 | 2nd Quarter 2014 | 1st Quarter 2014 | 4th Quarter 2013 | |||||||||||||||||||||||||||||||||||
Gross Leasing Square Footage | |||||||||||||||||||||||||||||||||||||||
Office | 92,349 | 37,852 | 69,367 | 43,243 | 144,675 | ||||||||||||||||||||||||||||||||||
Medical Office | — | — | — | — | 3,826 | ||||||||||||||||||||||||||||||||||
Retail | 10,965 | 10,408 | 32,191 | 29,527 | 22,631 | ||||||||||||||||||||||||||||||||||
Total | 103,314 | 48,260 | 101,558 | 72,770 | 171,132 | ||||||||||||||||||||||||||||||||||
Weighted Average Term (yrs) | |||||||||||||||||||||||||||||||||||||||
Office | 8.5 | 7.4 | 5.8 | 7.3 | 7.2 | ||||||||||||||||||||||||||||||||||
Medical Office | 0.0 | 0.0 | 0.0 | 0.0 | 10.3 | ||||||||||||||||||||||||||||||||||
Retail | 9.2 | 9.8 | 10.2 | 9.6 | 7.8 | ||||||||||||||||||||||||||||||||||
Total | 8.6 | 7.9 | 7.1 | 8.2 | 7.3 | ||||||||||||||||||||||||||||||||||
Rental Rate Increases: | GAAP | CASH | GAAP | CASH | GAAP | CASH | GAAP | CASH | GAAP | CASH | |||||||||||||||||||||||||||||
Rate on expiring leases | |||||||||||||||||||||||||||||||||||||||
Office | $ | 30.37 | $ | 31.66 | $ | 31.50 | $ | 32.62 | $ | 31.14 | $ | 32.00 | $ | 28.65 | $ | 30.53 | $ | 31.31 | $ | 32.29 | |||||||||||||||||||
Medical Office | — | — | — | — | — | — | — | — | 29.56 | 31.13 | |||||||||||||||||||||||||||||
Retail | 34.95 | 35.52 | 36.96 | 37.29 | 22.59 | 23.39 | 25.27 | 25.96 | 26.23 | 26.91 | |||||||||||||||||||||||||||||
Total | $ | 30.85 | $ | 32.07 | $ | 32.68 | $ | 33.63 | $ | 28.24 | $ | 29.08 | $ | 27.28 | $ | 28.68 | $ | 30.42 | $ | 31.35 | |||||||||||||||||||
Rate on new leases | |||||||||||||||||||||||||||||||||||||||
Office | $ | 38.39 | $ | 34.43 | $ | 33.77 | $ | 30.68 | $ | 35.71 | $ | 33.40 | $ | 32.53 | $ | 29.86 | $ | 33.78 | $ | 31.31 | |||||||||||||||||||
Medical Office | — | — | — | — | — | — | — | — | 34.78 | 30.43 | |||||||||||||||||||||||||||||
Retail | 41.82 | 37.65 | 43.69 | 38.76 | 22.07 | 21.36 | 30.77 | 27.66 | 27.74 | 26.04 | |||||||||||||||||||||||||||||
Total | $ | 38.75 | $ | 34.77 | $ | 35.91 | $ | 32.43 | $ | 30.79 | $ | 29.04 | $ | 31.81 | $ | 28.97 | $ | 32.78 | $ | 30.39 | |||||||||||||||||||
Percentage Increase | |||||||||||||||||||||||||||||||||||||||
Office | 26.4 | % | 8.8 | % | 7.2 | % | (5.9 | )% | 14.7 | % | 4.4 | % | 13.6 | % | (2.2 | )% | 7.9 | % | (3.0 | )% | |||||||||||||||||||
Medical Office | — | % | — | % | — | % | — | % | — | % | — | % | — | % | — | % | 17.7 | % | (2.3 | )% | |||||||||||||||||||
Retail | 19.7 | % | 6.0 | % | 18.2 | % | 4.0 | % | (2.3 | )% | (8.7 | )% | 21.7 | % | 6.5 | % | 5.8 | % | (3.2 | )% | |||||||||||||||||||
Total | 25.6 | % | 8.4 | % | 9.9 | % | (3.6 | )% | 9.0 | % | (0.1 | )% | 16.6 | % | 1.0 | % | 7.8 | % | (3.1 | )% | |||||||||||||||||||
Tenant Improvements | Total Dollars | Dollars per Square Foot | Total Dollars | Dollars per Square Foot | Total Dollars | Dollars per Square Foot | Total Dollars | Dollars per Square Foot | Total Dollars | Dollars per Square Foot | |||||||||||||||||||||||||||||
Office Buildings | $ | 4,609,137 | $ | 49.91 | $ | 1,499,573 | $ | 39.62 | $ | 2,330,006 | $ | 33.59 | $ | 1,955,769 | $ | 45.23 | $ | 6,189,544 | $ | 42.78 | |||||||||||||||||||
Medical Office Buildings | — | — | — | — | — | — | — | — | 63,587 | 16.62 | |||||||||||||||||||||||||||||
Retail Centers | 120,600 | 11.00 | 162,180 | 15.58 | 1,616,068 | 50.20 | 38,923 | 1.32 | 215,340 | 9.52 | |||||||||||||||||||||||||||||
Subtotal | $ | 4,729,737 | $ | 45.78 | $ | 1,661,753 | $ | 34.43 | $ | 3,946,074 | $ | 38.86 | $ | 1,994,692 | $ | 27.41 | $ | 6,468,471 | $ | 37.80 | |||||||||||||||||||
Leasing Commissions and Incentives | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 3,328,304 | $ | 36.04 | $ | 1,345,301 | $ | 35.54 | $ | 1,512,211 | $ | 21.80 | $ | 1,207,798 | $ | 27.93 | $ | 4,353,688 | $ | 30.09 | |||||||||||||||||||
Medical Office Buildings | — | — | — | — | — | — | — | — | 91,665 | 23.96 | |||||||||||||||||||||||||||||
Retail Centers | 275,428 | 25.12 | 291,731 | 28.03 | 300,287 | 9.33 | 388,220 | 13.15 | 180,197 | 7.96 | |||||||||||||||||||||||||||||
Subtotal | $ | 3,603,732 | $ | 34.88 | $ | 1,637,032 | $ | 33.92 | $ | 1,812,498 | $ | 17.84 | $ | 1,596,018 | $ | 21.93 | $ | 4,625,550 | $ | 27.03 | |||||||||||||||||||
Tenant Improvements and Leasing Commissions and Incentives | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 7,937,441 | $ | 85.95 | $ | 2,844,874 | $ | 75.16 | $ | 3,842,217 | $ | 55.39 | $ | 3,163,567 | $ | 73.16 | $ | 10,543,232 | $ | 72.87 | |||||||||||||||||||
Medical Office Buildings | — | — | — | — | — | — | — | — | 155,252 | 40.58 | |||||||||||||||||||||||||||||
Retail Centers | 396,028 | 36.12 | 453,911 | 43.61 | 1,916,355 | 59.53 | 427,143 | 14.47 | 395,537 | 17.48 | |||||||||||||||||||||||||||||
Total | $ | 8,333,469 | $ | 80.66 | $ | 3,298,785 | $ | 68.35 | $ | 5,758,572 | $ | 56.70 | $ | 3,590,710 | $ | 49.34 | $ | 11,094,021 | $ | 64.83 | |||||||||||||||||||
24
Commercial Leasing Summary - Renewal Leases | |
4th Quarter 2014 | 3rd Quarter 2014 | 2nd Quarter 2014 | 1st Quarter 2014 | 4th Quarter 2013 | |||||||||||||||||||||||||||||||||||
Gross Leasing Square Footage | |||||||||||||||||||||||||||||||||||||||
Office Buildings | 575,499 | 44,214 | 109,686 | 60,108 | 201,109 | ||||||||||||||||||||||||||||||||||
Medical Office Buildings | — | — | — | — | 12,232 | ||||||||||||||||||||||||||||||||||
Retail Centers | 45,084 | 170,568 | 10,645 | 27,100 | 38,995 | ||||||||||||||||||||||||||||||||||
Total | 620,583 | 214,782 | 120,331 | 87,208 | 252,336 | ||||||||||||||||||||||||||||||||||
Weighted Average Term (yrs) | |||||||||||||||||||||||||||||||||||||||
Office Buildings | 6.1 | 7.4 | 4.8 | 7.0 | 5.8 | ||||||||||||||||||||||||||||||||||
Medical Office Buildings | 0.0 | 0.0 | 0.0 | 0.0 | 7.8 | ||||||||||||||||||||||||||||||||||
Retail Centers | 6.8 | 5.1 | 4.3 | 3.3 | 4.0 | ||||||||||||||||||||||||||||||||||
Total | 6.1 | 5.6 | 4.8 | 5.8 | 5.7 | ||||||||||||||||||||||||||||||||||
Rental Rate Increases: | GAAP | CASH | GAAP | CASH | GAAP | CASH | GAAP | CASH | GAAP | CASH | |||||||||||||||||||||||||||||
Rate on expiring leases | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 35.87 | $ | 37.53 | $ | 32.89 | $ | 35.79 | $ | 33.89 | $ | 35.42 | $ | 32.71 | $ | 35.31 | $ | 30.12 | $ | 33.00 | |||||||||||||||||||
Medical Office Buildings | — | — | — | — | — | — | — | — | 32.36 | 34.47 | |||||||||||||||||||||||||||||
Retail Centers | 33.21 | 35.65 | 13.65 | 13.86 | 45.12 | 47.17 | 27.54 | 30.66 | 17.51 | 18.22 | |||||||||||||||||||||||||||||
Total | $ | 35.67 | $ | 37.39 | $ | 17.61 | $ | 18.37 | $ | 34.89 | $ | 36.46 | $ | 31.26 | $ | 34.05 | $ | 28.28 | $ | 30.79 | |||||||||||||||||||
Rate on new leases | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 37.25 | $ | 35.44 | $ | 44.95 | $ | 41.11 | $ | 36.12 | $ | 34.39 | $ | 37.02 | $ | 34.06 | $ | 35.30 | $ | 32.88 | |||||||||||||||||||
Medical Office Buildings | — | — | — | — | — | — | — | — | 36.28 | 33.16 | |||||||||||||||||||||||||||||
Retail Centers | 40.26 | 37.30 | 14.67 | 14.47 | 50.91 | 48.51 | 30.92 | 30.08 | 17.91 | 17.62 | |||||||||||||||||||||||||||||
Total | $ | 37.46 | $ | 35.57 | $ | 20.90 | $ | 19.95 | $ | 37.42 | $ | 35.64 | $ | 35.36 | $ | 33.03 | $ | 32.66 | $ | 30.53 | |||||||||||||||||||
Percentage Increase | |||||||||||||||||||||||||||||||||||||||
Office Buildings | 3.9 | % | (5.6 | )% | 36.7 | % | 14.9 | % | 6.6 | % | (2.9 | )% | 13.2 | % | (3.6 | )% | 17.2 | % | (0.4 | )% | |||||||||||||||||||
Medical Office Buildings | — | % | — | % | — | % | — | % | — | % | — | % | — | % | — | % | 12.1 | % | (3.8 | )% | |||||||||||||||||||
Retail Centers | 21.2 | % | 4.6 | % | 7.4 | % | 4.4 | % | 12.8 | % | 2.8 | % | 12.3 | % | (1.9 | )% | 2.3 | % | (3.3 | )% | |||||||||||||||||||
Total | 5.0 | % | (4.9 | )% | 18.7 | % | 8.6 | % | 7.3 | % | (2.3 | )% | 13.1 | % | (3.0 | )% | 15.5 | % | (0.8 | )% | |||||||||||||||||||
Total Dollars | Dollars per Square Foot | Total Dollars | Dollars per Square Foot | Total Dollars | Dollars per Square Foot | Total Dollars | Dollars per Square Foot | Total Dollars | Dollars per Square Foot | ||||||||||||||||||||||||||||||
Tenant Improvements | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 14,952,993 | $ | 25.98 | $ | 595,757 | $ | 13.47 | $ | 1,897,016 | $ | 17.29 | $ | 896,712 | $ | 14.92 | $ | 7,573,493 | $ | 37.66 | |||||||||||||||||||
Medical Office Buildings | — | — | — | — | — | — | — | — | 183,219 | 14.98 | |||||||||||||||||||||||||||||
Retail Centers | 33,370 | 0.74 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Subtotal | $ | 14,986,363 | $ | 24.15 | $ | 595,757 | $ | 2.77 | $ | 1,897,016 | $ | 15.76 | $ | 896,712 | $ | 10.28 | $ | 7,756,712 | $ | 30.74 | |||||||||||||||||||
Leasing Commissions and Incentives | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 9,087,273 | $ | 15.79 | $ | 532,789 | $ | 12.05 | $ | 1,517,271 | $ | 13.83 | $ | 1,318,800 | $ | 21.94 | $ | 4,065,164 | $ | 20.21 | |||||||||||||||||||
Medical Office Buildings | — | — | — | — | — | — | — | — | 143,190 | 11.71 | |||||||||||||||||||||||||||||
Retail Centers | 192,343 | 4.27 | 51,270 | 0.30 | 27,278 | 2.56 | 32,300 | 1.19 | 32,725 | 0.84 | |||||||||||||||||||||||||||||
Subtotal | $ | 9,279,616 | $ | 14.96 | $ | 584,059 | $ | 2.72 | $ | 1,544,549 | $ | 12.84 | $ | 1,351,100 | $ | 15.49 | $ | 4,241,079 | $ | 16.80 | |||||||||||||||||||
Tenant Improvements and Leasing Commissions and Incentives | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 24,040,266 | $ | 41.77 | $ | 1,128,546 | $ | 25.52 | $ | 3,414,287 | $ | 31.12 | $ | 2,215,512 | $ | 36.86 | $ | 11,638,657 | $ | 57.87 | |||||||||||||||||||
Medical Office Buildings | — | — | — | — | — | — | — | — | 326,409 | 26.69 | |||||||||||||||||||||||||||||
Retail Centers | 225,713 | 5.01 | 51,270 | 0.30 | 27,278 | 2.56 | 32,300 | 1.19 | 32,725 | 0.84 | |||||||||||||||||||||||||||||
Total | $ | 24,265,979 | $ | 39.11 | $ | 1,179,816 | $ | 5.49 | $ | 3,441,565 | $ | 28.60 | $ | 2,247,812 | $ | 25.77 | $ | 11,997,791 | $ | 47.54 | |||||||||||||||||||
25
10 Largest Tenants - Based on Annualized Commercial Income | |
December 31, 2014 | |
Tenant | Number of Buildings | Weighted Average Remaining Lease Term in Months | Percentage of Aggregate Portfolio Annualized Rent | Aggregate Rentable Square Feet | Percentage of Aggregate Occupied Square Feet | |||||||
World Bank | 1 | 72 | 5.96 | % | 210,354 | 3.35 | % | |||||
Advisory Board Company | 2 | 53 | 3.80 | % | 199,762 | 3.18 | % | |||||
Booz Allen Hamilton, Inc. | 1 | 133 | 2.73 | % | 222,989 | 3.55 | % | |||||
Engility Corporation | 1 | 33 | 2.57 | % | 134,126 | 2.14 | % | |||||
Squire Patton Boggs (USA) LLP | 1 | 28 | 2.44 | % | 110,566 | 1.76 | % | |||||
Epstein Becker & Green, PC | 1 | 24 | 1.36 | % | 53,427 | 0.85 | % | |||||
General Services Administration | 3 | 47 | 1.28 | % | 52,282 | 0.83 | % | |||||
George Washington University | 2 | 20 | 1.28 | % | 69,775 | 1.11 | % | |||||
Alexandria City School Board | 1 | 173 | 1.19 | % | 87,883 | 1.40 | % | |||||
Hughes Hubbard & Reed LLP | 1 | 38 | 1.18 | % | 53,208 | 0.85 | % | |||||
Total/Weighted Average | 71 | 23.79 | % | 1,194,372 | 19.02 | % | ||||||
26
Industry Diversification | |
December 31, 2014 | |
Industry Classification (NAICS) | Annualized Base Rental Revenue | Percentage of Aggregate Annualized Rent | Aggregate Rentable Square Feet | Percentage of Aggregate Square Feet | ||||||||
Professional, Scientific, and Technical Services | $ | 72,743,514 | 37.73 | % | 2,163,074 | 34.06 | % | |||||
Credit Intermediation and Related Activities | 18,380,776 | 9.53 | % | 339,960 | 5.35 | % | ||||||
Religious, Grantmaking, Civic, Professional, and Similar Organizations | 11,860,775 | 6.15 | % | 327,523 | 5.16 | % | ||||||
Food Services and Drinking Places | 8,712,295 | 4.52 | % | 280,044 | 4.41 | % | ||||||
Educational Services | 8,091,335 | 4.20 | % | 274,371 | 4.32 | % | ||||||
Food and Beverage Stores | 6,625,178 | 3.44 | % | 334,922 | 5.27 | % | ||||||
Ambulatory Health Care Services | 4,983,312 | 2.59 | % | 158,583 | 2.50 | % | ||||||
Executive, Legislative, and Other General Government Support | 4,895,705 | 2.54 | % | 132,521 | 2.09 | % | ||||||
Furniture and Home Furnishings Stores | 4,395,442 | 2.28 | % | 216,318 | 3.41 | % | ||||||
Health and Personal Care Stores | 3,919,474 | 2.03 | % | 107,853 | 1.70 | % | ||||||
Securities, Commodity Contracts, and Other Financial Investments and Related Activities | 3,675,793 | 1.91 | % | 102,022 | 1.61 | % | ||||||
Personal and Laundry Services | 3,583,878 | 1.86 | % | 111,799 | 1.76 | % | ||||||
Sporting Goods, Hobby, Book, and Music Stores | 3,318,522 | 1.72 | % | 201,827 | 3.18 | % | ||||||
Electronics and Appliance Stores | 3,067,458 | 1.59 | % | 169,094 | 2.66 | % | ||||||
Administrative and Support Services | 2,986,850 | 1.55 | % | 82,199 | 1.29 | % | ||||||
Miscellaneous Store Retailers | 2,923,561 | 1.52 | % | 152,620 | 2.40 | % | ||||||
Broadcasting (except Internet) | 2,881,734 | 1.49 | % | 70,672 | 1.11 | % | ||||||
Publishing Industries (except Internet) | 2,763,105 | 1.43 | % | 79,659 | 1.25 | % | ||||||
Clothing and Clothing Accessories Stores | 2,602,345 | 1.35 | % | 134,838 | 2.12 | % | ||||||
Amusement, Gambling, and Recreation Industries | 2,327,309 | 1.21 | % | 123,998 | 1.95 | % | ||||||
General Merchandise Stores | 2,050,440 | 1.06 | % | 235,965 | 3.72 | % | ||||||
Nursing and Residential Care Facilities | 1,837,275 | 0.95 | % | 66,810 | 1.05 | % | ||||||
Telecommunications | 1,583,739 | 0.82 | % | 41,334 | 0.65 | % | ||||||
Real Estate | 1,520,177 | 0.79 | % | 46,541 | 0.73 | % | ||||||
Merchant Wholesalers, Durable Goods | 1,077,752 | 0.56 | % | 32,539 | 0.51 | % | ||||||
Social Assistance | 962,910 | 0.50 | % | 40,408 | 0.64 | % | ||||||
Chemical Manufacturing | 918,560 | 0.48 | % | 20,036 | 0.32 | % | ||||||
Building Material and Garden Equipment and Supplies Dealers | 912,397 | 0.47 | % | 29,470 | 0.46 | % | ||||||
Insurance Carriers and Related Activities | 799,607 | 0.41 | % | 25,182 | 0.40 | % | ||||||
Construction of Buildings | 647,536 | 0.34 | % | 21,965 | 0.35 | % | ||||||
Motor Vehicle and Parts Dealers | 601,815 | 0.31 | % | 36,832 | 0.58 | % | ||||||
Transportation Equipment Manufacturing | 542,685 | 0.28 | % | 19,864 | 0.31 | % | ||||||
Repair and Maintenance | 510,500 | 0.26 | % | 22,449 | 0.35 | % | ||||||
Other | 4,088,993 | 2.13 | % | 147,924 | 2.33 | % | ||||||
Total | $ | 192,792,747 | 100.00 | % | 6,351,216 | 100.00 | % | |||||
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Lease Expirations | |
December 31, 2014 | |
Year | Number of Leases | Rentable Square Feet | Percent of Rentable Square Feet | Annualized Rent (1) | Average Rental Rate | Percent of Annualized Rent (1) | ||||||||||||||
Office: | ||||||||||||||||||||
2015 | 90 | 388,741 | 9.22 | % | $ | 13,758,719 | $ | 35.39 | 8.18 | % | ||||||||||
2016 | 104 | 411,138 | 9.75 | % | 16,061,685 | 39.07 | 9.55 | % | ||||||||||||
2017 | 84 | 520,648 | 12.35 | % | 20,385,122 | 39.15 | 12.12 | % | ||||||||||||
2018 | 78 | 429,471 | 10.19 | % | 16,184,108 | 37.68 | 9.62 | % | ||||||||||||
2019 | 83 | 620,918 | 14.73 | % | 25,429,569 | 40.95 | 15.12 | % | ||||||||||||
2020 and thereafter | 195 | 1,845,861 | 43.76 | % | 76,372,587 | 41.38 | 45.41 | % | ||||||||||||
634 | 4,216,777 | 100.00 | % | $ | 168,191,790 | 39.89 | 100.00 | % | ||||||||||||
Retail: | ||||||||||||||||||||
2015 | 48 | 216,599 | 9.49 | % | $ | 4,908,465 | $ | 22.66 | 9.22 | % | ||||||||||
2016 | 30 | 211,969 | 9.29 | % | 4,580,313 | 21.61 | 8.61 | % | ||||||||||||
2017 | 48 | 261,640 | 11.46 | % | 7,076,420 | 27.05 | 13.29 | % | ||||||||||||
2018 | 41 | 366,907 | 16.07 | % | 5,347,095 | 14.57 | 10.05 | % | ||||||||||||
2019 | 37 | 166,823 | 7.31 | % | 4,975,812 | 29.83 | 9.35 | % | ||||||||||||
2020 and thereafter | 117 | 1,058,552 | 46.38 | % | 26,339,497 | 24.88 | 49.48 | % | ||||||||||||
321 | 2,282,490 | 100.00 | % | $ | 53,227,602 | 23.32 | 100.00 | % | ||||||||||||
Total: | ||||||||||||||||||||
2015 | 138 | 605,340 | 9.31 | % | $ | 18,667,184 | $ | 30.84 | 8.43 | % | ||||||||||
2016 | 134 | 623,107 | 9.59 | % | 20,641,998 | 33.13 | 9.32 | % | ||||||||||||
2017 | 132 | 782,288 | 12.04 | % | 27,461,542 | 35.10 | 12.40 | % | ||||||||||||
2018 | 119 | 796,378 | 12.25 | % | 21,531,203 | 27.04 | 9.72 | % | ||||||||||||
2019 | 120 | 787,741 | 12.12 | % | 30,405,381 | 38.60 | 13.73 | % | ||||||||||||
2020 and thereafter | 312 | 2,904,413 | 44.69 | % | 102,712,084 | 35.36 | 46.40 | % | ||||||||||||
955 | 6,499,267 | 100.00 | % | $ | 221,419,392 | 34.07 | 100.00 | % | ||||||||||||
(1) Annualized Rent is equal to the rental rate effective at lease expiration (cash basis) multiplied by 12. | ||||||||||||||||||||
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Schedule of Properties | |
December 31, 2014 | |
PROPERTIES | LOCATION | YEAR ACQUIRED | YEAR CONSTRUCTED | NET RENTABLE SQUARE FEET(1) | |||||
Office Buildings | |||||||||
1901 Pennsylvania Avenue | Washington, DC | 1977 | 1960 | 101,000 | |||||
51 Monroe Street | Rockville, MD | 1979 | 1975 | 221,000 | |||||
515 King Street | Alexandria, VA | 1992 | 1966 | 75,000 | |||||
6110 Executive Boulevard | Rockville, MD | 1995 | 1971 | 201,000 | |||||
1220 19th Street | Washington, DC | 1995 | 1976 | 103,000 | |||||
1600 Wilson Boulevard | Arlington, VA | 1997 | 1973 | 166,000 | |||||
Silverline Center (formerly 7900 Westpark Drive) | Tysons, VA | 1997 | 1972/1986/1999/2014 | 526,000 | |||||
600 Jefferson Plaza | Rockville, MD | 1999 | 1985 | 113,000 | |||||
Wayne Plaza | Silver Spring, MD | 2000 | 1970 | 99,000 | |||||
Courthouse Square | Alexandria, VA | 2000 | 1979 | 116,000 | |||||
One Central Plaza | Rockville, MD | 2001 | 1974 | 267,000 | |||||
1776 G Street | Washington, DC | 2003 | 1979 | 263,000 | |||||
West Gude Drive | Rockville, MD | 2006 | 1984/1986/1988 | 276,000 | |||||
Monument II | Herndon, VA | 2007 | 2000 | 208,000 | |||||
2000 M Street | Washington, DC | 2007 | 1971 | 230,000 | |||||
2445 M Street | Washington, DC | 2008 | 1986 | 290,000 | |||||
925 Corporate Drive | Stafford, VA | 2010 | 2007 | 133,000 | |||||
1000 Corporate Drive | Stafford, VA | 2010 | 2009 | 136,000 | |||||
1140 Connecticut Avenue | Washington, DC | 2011 | 1966 | 183,000 | |||||
1227 25th Street | Washington, DC | 2011 | 1988 | 135,000 | |||||
Braddock Metro Center | Alexandria, VA | 2011 | 1985 | 353,000 | |||||
John Marshall II | Tysons, VA | 2011 | 1996/2010 | 223,000 | |||||
Fairgate at Ballston | Arlington, VA | 2012 | 1988 | 142,000 | |||||
Army Navy Club Building | Washington, DC | 2014 | 1912/1987 | 108,000 | |||||
1775 Eye Street, NW | Washington, DC | 2014 | 1964 | 185,000 | |||||
Subtotal | 4,853,000 | ||||||||
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Schedule of Properties | |
December 31, 2014 | |
PROPERTIES | LOCATION | YEAR ACQUIRED | YEAR CONSTRUCTED | NET RENTABLE SQUARE FEET (1) | |||||
Retail Centers | |||||||||
Takoma Park | Takoma Park, MD | 1963 | 1962 | 51,000 | |||||
Westminster | Westminster, MD | 1972 | 1969 | 150,000 | |||||
Concord Centre | Springfield, VA | 1973 | 1960 | 76,000 | |||||
Wheaton Park | Wheaton, MD | 1977 | 1967 | 74,000 | |||||
Bradlee Shopping Center | Alexandria, VA | 1984 | 1955 | 171,000 | |||||
Chevy Chase Metro Plaza | Washington, DC | 1985 | 1975 | 49,000 | |||||
Montgomery Village Center | Gaithersburg, MD | 1992 | 1969 | 197,000 | |||||
Shoppes of Foxchase | Alexandria, VA | 1994 | 1960/2006 | 134,000 | |||||
Frederick County Square | Frederick, MD | 1995 | 1973 | 227,000 | |||||
800 S. Washington Street | Alexandria, VA | 1998/2003 | 1955/1959 | 47,000 | |||||
Centre at Hagerstown | Hagerstown, MD | 2002 | 2000 | 332,000 | |||||
Frederick Crossing | Frederick, MD | 2005 | 1999/2003 | 295,000 | |||||
Randolph Shopping Center | Rockville, MD | 2006 | 1972 | 82,000 | |||||
Montrose Shopping Center | Rockville, MD | 2006 | 1970 | 145,000 | |||||
Gateway Overlook | Columbia, MD | 2010 | 2007 | 220,000 | |||||
Olney Village Center | Olney, MD | 2011 | 1979/2003 | 199,000 | |||||
Spring Valley Retail Center | Washington, DC | 2014 | 1941/1950 | 75,000 | |||||
Subtotal | 2,524,000 | ||||||||
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Schedule of Properties | |
December 31, 2014 | |
PROPERTIES | LOCATION | YEAR ACQUIRED | YEAR CONSTRUCTED | NET RENTABLE SQUARE FEET (1) | |||||
Multifamily Buildings / # units | |||||||||
3801 Connecticut Avenue / 307 | Washington, DC | 1963 | 1951 | 179,000 | |||||
Roosevelt Towers / 191 | Falls Church, VA | 1965 | 1964 | 170,000 | |||||
Country Club Towers / 227 | Arlington, VA | 1969 | 1965 | 159,000 | |||||
Park Adams / 200 | Arlington, VA | 1969 | 1959 | 173,000 | |||||
Munson Hill Towers / 279 | Falls Church, VA | 1970 | 1963 | 258,000 | |||||
The Ashby at McLean / 256 | McLean, VA | 1996 | 1982 | 274,000 | |||||
Walker House Apartments / 212 | Gaithersburg, MD | 1996 | 1971/2003 | 157,000 | |||||
Bethesda Hill Apartments / 195 | Bethesda, MD | 1997 | 1986 | 225,000 | |||||
Bennett Park / 224 | Arlington, VA | 2007 | 2007 | 214,000 | |||||
Clayborne / 74 | Alexandria, VA | 2008 | 2008 | 60,000 | |||||
Kenmore Apartments / 374 | Washington, DC | 2008 | 1948 | 268,000 | |||||
The Paramount/ 135 | Arlington, VA | 2013 | 1984 | 141,000 | |||||
Yale West / 216 | Washington, DC | 2014 | 2011 | 173,000 | |||||
The Maxwell/163 | Arlington, VA | 2014 | 2014 | 143,000 | |||||
Subtotal (3,053 units) | 2,594,000 | ||||||||
TOTAL | 9,971,000 | ||||||||
(1) Multifamily buildings are presented in gross square feet.
31
Supplemental Definitions | |
December 31, 2014 | |
Adjusted EBITDA (a non-GAAP measure) is earnings attributable to the controlling interest before interest expense, taxes, depreciation, amortization, real estate impairment, gain on sale of real estate, gain/loss on extinguishment of debt and gain/loss from non-disposal activities. |
Annualized base rent ("ABR") is calculated as monthly base rent (cash basis) per the lease, as of the reporting period, multiplied by 12. |
Debt service coverage ratio is computed by dividing earnings attributable to the controlling interest before interest expense, taxes, depreciation, amortization, real estate impairment, gain on sale of real estate, gain/loss on extinguishment of debt and gain/loss from non-disposal activities by interest expense (including interest expense from discontinued operations) and principal amortization. |
Debt to total market capitalization is total debt divided by the sum of total debt plus the market value of shares outstanding at the end of the period. |
Earnings to fixed charges ratio is computed by dividing earnings attributable to the controlling interest by fixed charges. For this purpose, earnings consist of income from continuing operations (or net income if there are no discontinued operations) plus fixed charges, less capitalized interest. Fixed charges consist of interest expense (excluding interest expense from discontinued operations), including amortized costs of debt issuance, plus interest costs capitalized. |
Economic occupancy is calculated as actual real estate rental revenue recognized for the period indicated as a percentage of gross potential real estate rental revenue for that period. We determine gross potential real estate rental revenue by valuing occupied units or square footage at contract rates and vacant units or square footage at market rates for comparable properties. We do not consider percentage rents and expense reimbursements in computing economic occupancy percentages. |
Funds from operations ("FFO") is defined by The National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) in an 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 and impairment of depreciable real estate, plus real estate depreciation and amortization. We consider FFO to be a standard supplemental measure for equity real estate investment trusts (“REITs”) because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which historically assumes that the value of real estate assets diminishes predictably over time. Since real estate values have instead historically risen or fallen with market conditions, we believe that FFO more accurately provides investors an indication of our ability to incur and service debt, make capital expenditures and fund other needs. 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 Washington REIT’s operating portfolio and affect the comparative measurement of Washington REIT’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 related to executive retirements or resignations, (4) property impairments 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 Washington REIT’s ability to incur and service debt, and distribute dividends to its shareholders. Core FFO is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs. |
Funds Available for Distribution ("FAD") is calculated by subtracting from FFO (1) recurring expenditures, tenant improvements and leasing costs, that are capitalized and amortized and are necessary to maintain our properties and revenue stream and (2) straight line rents, then adding (3) non-real estate depreciation and amortization, (4) 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 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. |
Core Funds Available for Distribution ("Core FAD") is calculated by adjusting FAD for the following items (which we believe are not indicative of the performance of Washington REIT’s operating portfolio and affect the comparative measurement of Washington REIT’s operating performance over time): (1) gains or losses on extinguishment of debt, (2) costs related to the acquisition of properties, (3) non-share-based severance expense related to corporate reorganization and related to executive retirements or resignations, (4) property impairments not already excluded from FAD, 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 FAD serves as a useful, supplementary measure of Washington REIT’s ability to incur and service debt, and distribute dividends to its shareholders. Core FAD is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs. |
32
The Medical Office Portfolio consists of every medical property, as well as undeveloped land, 4661 Kenmore Ave, and two office properties, Woodholme Center and 6565 Arlington Boulevard. We entered into four separate purchase and sale agreements. Transaction I of the Medical Office Portfolio sale and purchase agreement consists of medical office properties (2440 M Street, 15001 Shady Grove Road, 15505 Shady Grove Road, 19500 at Riverside Park formerly Lansdowne Medical Office Building, 9707 Medical Center Drive, CentreMed I and II, 8301 Arlington Boulevard, Sterling Medical Office Building, Shady Grove Medical Village II, Alexandria Professional Center, Ashburn Farm Office Park I, Ashburn Farm Office Park II, Ashburn Farm Office Park III and Woodholme Medical Office Building) and two office properties (6565 Arlington Boulevard and Woodholme Center). Transaction II of the Medical Office Portfolio purchase and sale agreement consists of undeveloped land (4661 Kenmore Ave). Transaction III of the Medical Office Portfolio purchase and sale agreement consists of medical office properties (Woodburn Medical Park I and Woodburn Medical Park II). Transaction IV of the Medical Office Portfolio purchase and sale agreement consists of a medical office properties (Prosperity Medical Center I and II, and Prosperity Medical Center III). |
Physical occupancy is calculated as occupied square footage as a percentage of total square footage as of the last day of that period. |
Recurring capital expenditures represent non-accretive building improvements and leasing costs required to maintain current revenues. Recurring capital expenditures do not include acquisition capital that was taken into consideration when underwriting the purchase of a building or which are incurred to bring a building up to "operating standard." |
Rent increases on renewals and rollovers are calculated as the difference, weighted by square feet, of the net ABR due the first month after a term commencement date and the net ABR due the last month prior to the termination date of the former tenant's term. |
Same-store portfolio properties include all stabilized properties that were owned for the entirety of the current and prior reporting periods, and exclude properties under redevelopment or development and properties purchased or sold at any time during the periods being compared. We define redevelopment properties as those for which we expect to spend significant development and construction costs on existing or acquired buildings pursuant to a formal plan which has a current impact on operating results, occupancy and the ability to lease space with the intended result of a higher economic return on the property. Redevelopment and development properties are included in the same-store pool upon completion of the redevelopment or development, and the earlier of achieving 90% occupancy or two years after completion. |
Same-store portfolio net operating income (NOI) growth is the change in the NOI of the same-store portfolio properties from the prior reporting period to the current reporting period. |
33