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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 22, 1995
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WASHINGTON REAL ESTATE INVESTMENT TRUST
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(Exact name of registrant as specified in its charter)
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District of Columbia 1-6622 53-0261100
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(State or other jurisdiction of (Commission File (IRS Employer
incorporation) Number) Identification Number)
10400 Connecticut Avenue, Kensington, Maryland 20895
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code (301) 929-5900
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 22, 1995 Washington Real Estate Investment Trust (WRIT)
purchased Frederick County Square, a 233,000 square foot shopping center
located on West Patrick Street (U.S. Route 40) in Frederick, Maryland from
Noro-Frederick Square Holdings, B.V., for a purchase price of $13,350,000. As
part of the purchase price, WRIT assumed an existing mortgage of approximately
$7,752,000, bearing interest at 9% and maturing on January 1, 2003. The cash
portion of the purchase price was paid out of working capital, which includes
the net proceeds of WRIT's recent public offering. On date of acquisition, the
center was 100% leased to 23 tenants and is anchored by K-Mart, MJ Designs, F&M
Drugs and Jo-Ann Fabrics.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The acquisition, when aggregated with previously reported
acquisitions completed on January 26, 1995 and May 17, 1995,
constitutes the acquisition of a "significant amount of
assets" as defined in regulation S-X. Financial statements
for a substantial majority of the assets acquired are as
follows:
1. 6110 Executive Boulevard - Audited Historical Summary of
Gross Income and Direct Operating Expenses for the year
ended December 31, 1994.
2. Norconcord Limited Partnership (Tech 100 Industrial Park)
- Audited Statement of Operations (not including
management, interest, depreciation and amortization
expenses) for the year ended December 31, 1994.
(b) Pro Forma Financial Information - reported for 6110 Executive
Boulevard and Norconcord Limited Partnership (Tech 100
Industrial Park) is per the attached pages 4 and 5,
respectively.
(c) Exhibits - none
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WASHINGTON REAL ESTATE INVESTMENT TRUST
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(Registrant)
By: /s/ Laura M. Franklin
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(Signature)
Laura M. Franklin
Vice President and
Chief Accounting Officer
November 6, 1995
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(Date)
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WASHINGTON REAL ESTATE INVESTMENT TRUST
PRO FORMA CONDENSED BALANCE SHEET AND STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
The pro forma Balance Sheet of December 31, 1994 presents combined
financial information as if these acquisitions had taken place as of December
31, 1994. The pro forma Statement of Operations for the year ended December
31, 1994 presents combined financial information as if these acquisitions had
taken place as of January 1, 1994. WRIT purchased 6110 Executive Boulevard on
January 26, 1995 and Tech 100 Industrial Park on May 17,1995.
The pro forma Statement of Operations shows higher earnings in the
amount of $729,922 due to certain pro forma adjustments required to reflect the
operating results as if both properties had been acquired at the beginning of
1994. These adjustments reflect higher pro forma operating income on the
acquired properties compared to the pro forma average cost of interest of 6.7%
on the $23,000,000 of borrowed funds and the reduction in investment income
used in the acquisition of 6110 Executive Boulevard.
PRO FORMA BALANCE SHEET
DECEMBER 31, 1994
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PRO
FORMA PRO
REGISTRANT ADJ'S FORMA
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Assets
Real estate at cost $206,377,733 (1) 23,346,145 229,723,878
Accumulated depreciation (36,588,540) (36,588,540)
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169,789,193 23,346,145 193,135,338
Mortgage note receivable 800,000 800,000
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Total Investment in Real Estate 170,589,193 23,346,145 193,935,338
Cash and cash equivalents, receivables,
prepaid expenses and other assets 6,782,127 (1) 157,535 6,939,662
Marketable investment securities 1,434,790 (1) (346,145) 1,088,645
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$178,806,110 $23,157,535 $201,963,645
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Liabilities
Line of credit payable 18,000,000 (1) 23,000,000 41,000,000
Accounts payable and other liabilities 4,629,248 4,629,248
Tenant security deposits 1,517,762 (1) 157,535 1,675,297
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$24,147,010 23,157,535 47,304,545
Shareholders' Equity
Shares of beneficial interest, unlimited
authorization, without par value 139,340,435 139,340,435
Undistributed gains on real estate
dispositions 15,318,665 15,318,665
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154,659,100 154,659,100
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$178,806,110 $23,157,535 $201,963,645
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(1) Adjustment to reflect 6110 Executive Boulevard purchase cost of
$16,516,213 funded with $516,213 of marketable securities proceeds and
$16,000,000 of short term debt and further adjusted to reflect Tech 100
purchase cost of $6,829,932 funded with $7,000,000 of short term debt.
<PAGE> 5
WASHINGTON REAL ESTATE INVESTMENT TRUST
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
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PRO
6110 FORMA PRO
REGISTRANT EXEC. BLVD. TECH 100 ADJ'S FORMA
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Real Estate Revenue $45,511,482 $3,190,048 $1,001,480 49,703,010
Real Estate Expenses (14,030,844) (1,305,934) (177,226) (1) (82,468) (15,596,472)
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31,480,638 1,884,114 824,254 (82,468) 34,106,538
Depreciation (3,978,301) (2) (277,314) (4,255,615)
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Income From Real Estate 27,502,337 1,884,114 824,254 (359,782) 29,850,923
Other Income (Expense)
Investment Income (550,276) (3) (15,403) (565,679)
Interest Expense (614,162) (4) (1,603,261) (2,217,423)
General and Administrative (3,215,659) (3,215,659)
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Net Income $23,122,240 $1,884,114 $824,254 ($1,978,446) $23,852,162
============== ============= ============= ============ ==============
Net Income Per Share 0.82 0.84
Weighted Average Number
of Shares 28,239,420 28,239,420
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(1) Property Management Fees based on rate schedule paid by Registrant.
(2) Depreciation over 30 years, based upon the portion of the puchase
price allocated to building and improvements.
(3) Reduction of Investment Income attibutable to $516,000 portion of
purchase cost funded with proceeds of Registrant's marketable
securities for the acquisition of 6110 Executive Boulevard and excess
proceeds of $170,000 from borrowings for the acquisition of Tech 100.
In summary, a net reduction in marketable securities of $346,000. In
1994, the Registrant's effective rate of interest on marketable
investment securities was approximately 4.45%.
(4) Interest expense of $1,153,511 based on Registrant's borrowing at
prime of 9% for 67 days and 6.8% thereafter, on $16,000,000 borrowed
for the acquisition of 6110 Executive Boulevard. Interest expense of
$449,750 at the Registrant's rate of 6.425% on $7,000,000 borrowed
for the acquisition of Tech 100 for a total interest expense of
$1,603,261.
Note: The above statement does not give effect to the July 18, 1995
Underwriting of the Registrant of which, a portion of the proceeds
were used to repay a portion of the $23,000,000 of borrowings used
to finance the above acquisitions.
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6110 EXECUTIVE BOULEVARD
CONTENTS
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Page
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Independent Auditors' Report 1
Historical Summary of Gross Income and Direct Operating Expenses 2
Notes to Historical Summary of Gross Income and Direct Operating Expenses 3
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[STOY-MALONE LOGO] Stoy, Malone & Company, P.C.
Certified Public Accountants
Independent Auditors' Report
To the Board of Trustees of
Washington Real Estate Investment Trust
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses of 6110 Executive Boulevard ("Historical Summary") for the
year ended December 31, 1994. This Historical Summary is the responsibility of
the Building's management. Our responsibility is to express an opinion on the
Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission as
described in Note 2, and is not intended to be a complete presentation of the
Building's revenue and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in Note 2 of 6110 Executive Boulevard for the year ended December 31, 1994, in
conformity with generally accepted accounting principles.
/s/ STOY, MALONE & COMPANY, P.C.
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STOY, MALONE & COMPANY, P.C.
Bethesda, Maryland
October 11, 1995
1
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6110 EXECUTIVE BOULEVARD
HISTORICAL SUMMARY OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
Year Ended December 31, 1994
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Gross income:
Base rent $ 2,806,168
Expense recoveries 119,517
Parking 228,161
Other 36,202
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Total gross income $ 3,190,048
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Direct operating expenses:
Administrative 84,762
Cleaning 190,575
Grounds maintenance 32,248
Insurance 14,548
Real estate taxes 177,056
Repairs and maintenance 372,362
Security 12,213
Utilities 420,820
Other 1,350
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Total direct operating expenses $ 1,305,934
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The Notes to Historical Summary of Gross Income and Direct Operating Expenses
are an Integral part of this summary.
2
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6110 EXECUTIVE BOULEVARD
NOTES TO HISTORICAL SUMMARY OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
NOTE I - NATURE OF BUSINESS:
6110 Executive Boulevard (the "Building") is an office building located in
Rockville, Maryland. The Building has approximately 198,000 square feet of
rentable space.
The Building's operations consist of leasing commercial office space to various
tenants. Expense recoveries represent operating expenses, including real
estate taxes, billed to the tenants and are recognized in the period the
expenses are incurred.
All leases are classified as operating leases and expire at various dates prior
to 2005. The following is a schedule by years of future minimum rents
receivable on noncancelable operating leases as of December 31, 1994:
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1995 $2,778,877
1996 2,076,572
1997 1,848,221
1998 1,490,961
1999 1,024,202
Thereafter 454,851
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During the year ended December 31, 1994, one tenant accounted for approximately
13% of the base rents recognized in the Historical Summary.
NOTE 2 - BASIS OF PRESENTATION:
Washington Real Estate Investment Trust purchased the Building in January,
1995. The accompanying Historical Summary has been prepared for the purpose of
complying with Regulation S-X, Rule 3-14 of the Securities and Exchange
Commission ("SEC"), which requires certain information with respect to real
estate operations acquired to be included with certain filings with the SEC.
This Historical Summary includes the historical gross income and direct
operating expenses of the Building, exclusive of the following expenses which
may not be comparable to the proposed future operations of the Building:
(a) Interest expense on existing mortgages and
borrowings
(b) Depreciation of property and equipment
(c) Management and leasing fees
(d) Provisions for income taxes
3
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NORCONCORD LIMITED PARTNERSHIP
TECH 100 INDUSTRIAL PARK
FINANCIAL STATEMENT
DECEMBER 31, 1994
PAUL BROWNER, Chartered - Certified Public Accountants 932 HUNGERFORD DRIVE
#17 ROCKVILLE, MD. 20850 301-340-3340
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[PAUL BROWNER, CPA LETTERHEAD]
October 18, 1995
Larry Finger
Washington Real Estate Investment Trust
10400 Connecticut Ave,
Kensington, MD 20895
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying Statement of Operations (not
including management, interest, depreciation and amortization) of NORCONCORD
LIMITED PARTNERSHIP (TECH 100 INDUSTRIAL PARK) for the year ended December 31,
1994. These financial statements are the responsibility of the organization's
ownership and management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by the owners and management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the results of operations (not including
management, interest, depreciation and amortization) of the NORCONCORD LIMITED
PARTNERSHIP (TECH 100 INDUSTRIAL PARK) for the year ended December 31, 1994, in
conformity with generally accepted accounting principles.
/s/ PAUL BROWNER, CHTD.
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Paul Browner, Chtd.
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NORCONCORD LIMITED PARTNERSHIP
TECH 100 INDUSTRIAL PARK
STATEMENT OF OPERATIONS
(NOT INCLUDING MANAGEMENT, INTEREST, DEPRECIATION, AND AMORTIZATION EXPENSES)
FOR THE YEAR ENDED DECEMBER 31, 1994
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INCOME
Rental-base 891,787
Rental-recoveries 102,114
Other 7,579
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Total 1,001,480
EXPENSES
Administrative 11,396
General 441
Insurance 15,255
Repairs and maintenance 33,809
Security 1,684
Taxes 76,133
Telephone 1,338
Utilities 37,170
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Total 177,226
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NET INCOME 824,254
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(Not including Management, Interest, Depreciation and Amortization expenses)
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See independent auditor's report
See accompanying footnotes
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NORCONCORD LIMITED PARTNERSHIP
TECH 100 INDUSTRIAL PARK
FOOTNOTES TO FINANCIAL STATEMENT
(NOT INCLUDING MANAGEMENT, INTEREST, DEPRECIATION, AND AMORTIZATION EXPENSES)
FOR THE YEAR ENDED DECEMBER 31, 1994
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1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The partnership keeps its books and records, and prepares its financial statements
and tax returns on the accrual basis of accounting.
Tenant leases provide for a base rent plus a sharing of such expenses as real estate
taxes, insurance, structural, common area maintenance and utilities.
2 NATURE OF BUSINESS
The partnership owns and operates an Industrial Park in Howard County, Maryland.
There are three, one-story buildings with 14 tenants and 167,267 square feet
on 15.173 acres.
3 INCOME TAX
No Federal or Maryland Income Tax is reflected on these financial statements as each
partner is responsible for the tax on their share of taxable income.
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See independent auditor's report
