<PAGE> 1
Rule 424(b)(1)
Registration No. 33-60581
PROSPECTUS
3,500,000 SHARES
[WRIT LOGO]
WASHINGTON REAL ESTATE INVESTMENT TRUST
SHARES OF BENEFICIAL INTEREST
------------------------
The shares of beneficial interest (the "Shares") of Washington Real Estate
Investment Trust ("WRIT" or the "Trust") are listed on the American Stock
Exchange under the symbol "WRE." On July 18, 1995, the last reported sale price
of the Shares on the American Stock Exchange was $14 3/4 per Share.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT (1) TRUST(2)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share................................ $14.75 $.795 $13.955
- --------------------------------------------------------------------------------------------------
Total(3)................................. $51,625,000 $2,782,500 $48,842,500
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) The Trust has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting".
(2) Before deducting expenses of the offering estimated at $210,000, payable by
the Trust.
(3) The Trust has granted the Underwriters a 30-day option to purchase up to an
additional 525,000 Shares to cover over-allotments, if any. If all of such
Shares are purchased, the total Price to Public, Underwriting Discount and
Proceeds to Trust will be $59,368,750, $3,199,875 and $56,168,875,
respectively. See "Underwriting".
------------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
------------------------
The Shares are offered by the several Underwriters, subject to prior sale,
when, as and if delivered to and accepted by them, subject to approval of
certain legal matters by counsel for the Underwriters. The Underwriters reserve
the right to withdraw, cancel or modify such offer and to reject orders in whole
or in part. It is expected that the delivery of the Shares offered hereby will
be made in New York, New York on or about July 24, 1995.
------------------------
MERRILL LYNCH & CO.
ALEX. BROWN & SONS
INCORPORATED
A.G. EDWARDS & SONS, INC.
LEGG MASON WOOD WALKER
INCORPORATED
------------------------
The date of this Prospectus is July 18, 1995.
<PAGE> 2
WRIT
GROWTH OF
FUNDS FROM OPERATIONS AND
DIVIDENDS PAID
<TABLE>
<CAPTION>
DIVIDENDS FUNDS FROM
YEAR PAID OPERATIONS
---- ---- ----------
<S> <C> <C>
1980 3,484,210 4,990,351
1981 4,526,737 6,074,430
1982 4,929,329 6,590,953
1983 5,134,851 8,002,590
1984 8,053,184 9,889,957
1985 8,344,614 10,919,494
1986 9,822,265 12,703,890
1987 12,028,949 13,277,702
1988 13,087,538 14,587,538
1989 15,341,742 17,280,718
1990 17,030,987 19,229,034
1991 19,672,408 21,707,672
1992 22,513,368 23,850,876
1993 24,380,361 26,162,021
1994 25,981,388 27,100,541
</TABLE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE TRUST'S SHARES
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE> 3
PROSPECTUS SUMMARY
This summary is qualified in its entirety by reference to the more detailed
information and financial statements appearing elsewhere in this Prospectus or
incorporated herein by reference. Unless otherwise indicated, the information
presented herein assumes that the Underwriters' over-allotment option is not
exercised.
THE TRUST
Washington Real Estate Investment Trust ("WRIT" or the "Trust"), founded in
1960, is an equity real estate investment trust investing in income-producing
properties principally in the Greater Washington-Baltimore region. The Trust
owns a diversified portfolio of 38 properties consisting of 13 office buildings,
11 shopping centers, five high-rise apartment buildings and nine industrial
distribution properties.
WRIT's principal objective is to increase operating income by investing in
high quality real estate with strong growth potential in prime locations and
aggressively managing these properties with active leasing and capital
improvement programs.
The percentage leased at March 31, 1995 for the Trust's properties was 91%
for office buildings, 94% for shopping centers, 96% for apartment buildings and
95% for industrial distribution properties.
Total debt (all medium-term) on June 30, 1995 was $43,000,000, which
represented approximately 10% of the market capitalization of the Trust.
WRIT's income from operations and funds from operations have increased for
29 consecutive years. WRIT concentrates on increasing its funds from operations
to achieve its objective of paying increasing dividends to its shareholders.
Consecutive quarterly dividends have been paid for 33 years and the annual
dividend paid has increased every year since 1970. The most recent dividend
increase was to $.25 per Share payable June 30, 1995 to shareholders of record
on June 16, 1995, representing an indicated current annual rate of $1.00. Since
1980, combined Share splits have totaled 10-for-1.
The principal offices of the Trust are located at 10400 Connecticut Avenue,
Kensington, Maryland 20895, telephone (301) 929-5900/(800) 565-9748.
THE OFFERING
<TABLE>
<S> <C>
Shares Offered............................... 3,500,000
Shares to be Outstanding after the
Offering................................... 31,742,544
Use of Proceeds.............................. To repay certain indebtedness outstanding
under lines of credit, to acquire the
Frederick County Square Shopping Center and
to acquire and/or renovate, expand or
improve income producing properties. See
"Use of Proceeds".
American Stock Exchange Symbol............... WRE
</TABLE>
3
<PAGE> 4
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------ --------------------
1990 1991 1992 1993 1994 1994 1995
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA
Real estate rental revenue... $ 30,233 $ 33,311 $ 34,132 $ 39,375 $ 45,511 $ 11,312 $ 12,464
Income before gain on sale of
real estate................ 16,122 18,386 20,429 22,506 23,122 5,805 6,159
Gain on sale of real
estate..................... 0 0 0 741 0 0 0
Net income................... 16,122 18,386 20,429 23,247 23,122 5,805 6,159
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------------------------------ --------------------
1990 1991 1992 1993 1994 1994 1995
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Real estate (at cost)........ $113,317 $117,576 $155,765 $170,461 $206,378 $172,711 $225,585
Total assets................. 106,955 135,741 185,673 162,011 178,806 162,418 195,034
Mortgages payable............ 12,379 11,329 1,115 0 0 0 0
Lines of credit payable/
Short-term bank loan....... 0 0 21,000 0 18,000 0 34,000
Shareholders' equity......... 90,621 119,944 159,027 157,348 154,659 156,801 154,040
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------ --------------------
1990 1991 1992 1993 1994 1994 1995
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA
Funds from operations (1).... $ 19,187 $ 21,675 $ 23,817 $ 26,122 $ 27,055 $ 6,727 $ 7,234
Dividends paid............... 17,031 19,672 22,513 24,380 25,981 6,495 6,778
Dividends paid per share
(2)........................ 0.73 0.79 0.84 0.89 0.92 0.23 0.24
</TABLE>
- ---------------
(1) Funds from Operations ("FFO"), as defined by the National Association of
Real Estate Investment Trusts ("NAREIT"), is net income adjusted for
depreciation and amortization and gains or losses from property sales. FFO
does not represent cash flows from operations as defined by generally
accepted accounting principles, should be considered along with, but not as
an alternative to, net income as an indicator of the Company's operating
performance and is not indicative of cash available to fund all cash flow
needs. In March 1995, NAREIT issued a clarification of its definition of
FFO. The clarification provides that amortization of deferred financing
costs and depreciation of non-real estate assets are no longer to be added
back to net income in arriving at FFO and that extraordinary, nonrecurring
items should be adjusted out of net income. The amounts reflected in this
Prospectus have been adjusted to incorporate that clarification.
(2) Adjusted to give effect to the 3-for-2 share split in May 1992.
4
<PAGE> 5
THE TRUST
GENERAL OPERATING PRACTICES
The Trust generally observes the following operating practices:
Selection of Real Estate Investments: The Trust purchases properties
principally in the Greater Washington-Baltimore region where its senior
management is located and knows, on a firsthand basis, the market and the
economic factors which affect it. In order to avoid the greater risks of
speculative development, the Trust generally buys existing income producing
properties.
Property Type Diversification: The Trust seeks to invest in properties
with different supply-demand cycles and growth periods and therefore seeks to
maintain a balanced and diversified portfolio of office buildings, shopping
centers, apartment buildings and industrial distribution properties. The
percentage contribution to the Trust's total real estate rental revenue by
property group for the first quarter of 1995 was as follows:
<TABLE>
<S> <C>
Office Buildings...................................................... 42%
Shopping Centers...................................................... 25%
Apartment Buildings................................................... 23%
Industrial Distribution Properties.................................... 10%
---
100%
</TABLE>
Tenant Diversification: The Trust also seeks to maintain a diversified
tenant base in its commercial properties in order to minimize the influence of
any one tenant on the Trust's revenues. As of May 31, 1995, WRIT's commercial
tenant base was diversified among approximately 900 tenants, with the average
tenant occupying less than 3,600 square feet and no single lease accounting for
more than 2.1% of the Trust's annual revenues. As of the same date, annual rents
attributable to all Federal Government tenants totaled approximately 5.0% of the
Trust's annual revenues.
Capitalization and Finance Strategy: Until recently, the Trust maintained
substantial cash reserves from the proceeds of Share offerings in lieu of
utilizing debt for acquisitions and capital improvements. As a result of changed
market conditions, the Trust now has commitments for bank lines of credit with
medium-term rather than short-term features. For the foreseeable future, the
Trust intends to utilize these credit facilities to fund acquisitions and major
capital improvements. The Trust intends to retire these debt obligations from
future Share offerings. The Trust's management believes this method of funding
for future investment provides greater flexibility for timing of public Share
offerings, reduces exposure to yield maintenance costs and avoids lock out from
prepayment features found in long-term debt agreements.
In determining its borrowing policy, the Trust also considers its debt
service coverage ratio (funds from operations plus debt service divided by the
debt service). A ratio of 3:1 is generally considered conservative and the Trust
intends to maintain its debt service coverage ratio in excess of this. Capital
market conditions may from time to time influence management to reconsider this
policy if it deems that a change is in the best interest of the Trust.
The Trust currently has unsecured bank lines of credit and commitments
totaling $75,000,000. These commitments permit the Trust to extend the term of
the loans outstanding for up to a period of 5 years at the Trust's option. At
June 30, 1995, $43,000,000 was outstanding on these lines at a weighted average
interest rate of 6.8%.
100% Ownership: The Trust currently owns 100% of the equity of all of its
properties and has no partners, participating mortgages or other equity or
income sharing arrangements.
Although management of the Trust anticipates that it will generally
continue to follow the foregoing practices, management is not bound to do so and
may change particular practices in light of future economic conditions and other
relevant factors.
5
<PAGE> 6
RECENT DEVELOPMENTS
Management Transition
In March of 1995, Arthur A. Birney, a co-founder and Trustee of the Trust,
became Chairman of the Board of Trustees and Edmund B. Cronin, Jr., President,
Chief Operating Officer and Trustee, became Chief Executive Officer, succeeding
B. Franklin Kahn, who had served as Chairman and Chief Executive Officer until
his retirement.
The Trust has also increased its senior management strength and depth with
the addition of Larry E. Finger, Senior Vice President and Chief Financial
Officer, in December 1993, Thomas L. Regnell, Vice President -- Acquisitions, in
January 1995 and Mary Beth Avedesian, Vice President -- Investments, in March
1995. See "Management".
Property Acquisitions
On June 30, 1995, the Trust entered into a contract to purchase the
Frederick County Square Shopping Center in the City of Frederick, Maryland for
$13,350,000. The 233,000 rentable square foot center is 100% leased to 23
tenants, including KMart, MJ Designs, F & M Drugs, Jo-Ann Fabrics, Burger King
and Sizzler. As part of the purchase price, the Trust expects to assume an
existing mortgage in the approximate amount of $7,755,000, bearing interest at
9% and maturing on January 1, 2003. The Trust anticipates that this property
will produce a first full year return on investment (funds from operations
divided by total investment) in excess of 10%. Closing on the property is
expected to occur on or before July 31, 1995. No assurance can be given,
however, that the proposed acquisition will be consummated.
During the past 12 months, the Trust acquired the following properties:
- Tycon Plaza II and III office buildings containing approximately 293,000
rentable square feet, in Tysons Corner, Virginia
- The Shoppes of Foxchase, a 128,000 rentable square foot shopping center,
in Alexandria, Virginia
- 6110 Executive Boulevard, a 198,000 rentable square foot office building,
in Rockville, Maryland
- Tech 100 Industrial Park, a 167,000 square foot industrial distribution
complex in Howard County, Maryland, three miles from Baltimore-Washington
International Airport.
The aggregate purchase price of these properties totaled approximately
$53,000,000, and the Trust anticipates that these properties (including capital
improvements) will produce an average first full year return on investment
(funds from operations divided by total investment) of 11.3%. See "Description
of Real Estate Investments".
Property Repositionings
In late 1994 and continuing into 1995, the Trust has repositioned the
following properties, through capital improvements, to enable them to compete at
higher rental levels in their markets:
- Chevy Chase Metro Plaza -- The Trust is adding 10,000 square feet of
rentable area within a previously occupied two-story theater along with
other building improvements. Resulting rental increases are expected to
increase this property's anticipated annual operating income by 55%.
- 1901 Pennsylvania Avenue, N.W., Washington, D.C. -- Major renovations,
expected to be completed in the third quarter of 1995, to the main lobby,
building hallways, common areas and restrooms, and modernizing of the
elevator equipment, elevator cabs and building mechanical systems are
expected to enable this building to compete successfully in the downtown
Washington, D.C. market.
Renovations, expansions and tenant improvements, including those listed
above, are currently underway or are anticipated at several of the Trust's
properties, the estimated aggregate cost of which is approximately $11,300,000
for 1995.
6
<PAGE> 7
See "Description of Real Estate Investments" below for further information
regarding the improvements made to certain properties.
GREATER WASHINGTON-BALTIMORE REAL ESTATE MARKET
The Greater Washington-Baltimore regional real estate market continues to
be one of the strongest in the United States. All sectors of the region's
commercial and multi-family real estate market are experiencing relatively high
occupancy levels. Rents have stabilized, concessions have substantially receded,
and little speculative development is taking place in the region. Though credit
for real estate acquisitions and development is more available now than in
recent years, the providers of credit continue to be very selective. This
situation reduces competition for acquisitions.
The CMSA (Consolidated Metropolitan Statistical Area) region which includes
metropolitan Washington-Baltimore is the fourth largest region in the United
States with a population in excess of 6.9 million. Additionally, the region is
ranked number one nationally in both median household income and population with
higher education at the undergraduate and post graduate level based on Bureau of
Census statistical data. The Greater Washington-Baltimore regional economy is
principally service industry oriented and, particularly in the case of the
Greater Washington area, is driven by the presence of the Federal Government.
There has been, and management expects there will continue to be, a shrinking in
the size of the Federal Government as evidenced by, among other things, a
decrease in direct Federal Government employment. However, to date, this
decrease has been more than offset by an increase in employment in the private
business sectors of the Greater Washington economy. While the Federal Government
workforce reductions to date have not resulted in any major negative impact on
the business of the Trust, no assurance can be given as to the effect on the
Trust of further cutbacks in Federal spending or employment.
The strength of the Greater Washington-Baltimore region is evidenced by the
research of such groups as the Metropolitan Council of Governments and The
Greater Washington Research Center, which demonstrates that as a result of the
increased outsourcing of government goods and services requirements the region
is experiencing positive growth, though at a slower rate than during 1980-1989.
As the chart below demonstrates, during 1994 regional Federal Government
employment declined by approximately 11,000 while private sector employment
increased by approximately 56,000.
WAGE AND SALARY EMPLOYMENT
WASHINGTON PMSA*
JANUARY 1994 AND 1995
(EMPLOYMENT IN THOUSANDS)
<TABLE>
<CAPTION>
AT AT
SECTOR 1/94 1/95 CHANGE
-------------------------------------------------- ------- ------- ------
<S> <C> <C> <C>
Private........................................... 1,684.8 1,740.5 55.7
Federal Government................................ 381.2 370.3 -10.9
</TABLE>
-------------------------------
* Primary Metropolitan Statistical Area (PMSA) employment data
reflect official re-benchmarked totals for 1994 and
preliminary 1995 estimates.
The Trust has historically focused its leasing efforts toward the private
sector smaller space user. Only 5% of the Trust's anticipated 1995 gross revenue
is generated from space leased to the Federal Government. Management believes
that the combination of a strong capital structure, access to capital, strong
organizational capabilities and firsthand knowledge of regional economic and
real estate trends uniquely positions the Trust to take advantage of attractive
acquisition opportunities. In particular, the Trust's property type
diversification, property management and enhancement and leasing capabilities
enable it to be very flexible in property selection with the goal of increasing
property operating income over the near term and property values over the long
term.
7
<PAGE> 8
USE OF PROCEEDS
The net proceeds to be received by the Trust from the issuance and sale of
the Shares offered hereby (the "Offering") are estimated at $48,632,500
($55,958,875 if the Underwriters' over-allotment option is exercised in full).
Approximately $18,000,000 of the net proceeds will be used to repay certain
borrowings outstanding under the Trust's lines of credit. Those borrowings were
used to acquire the Tycon Plaza and Foxchase properties and currently bear
interest at a rate of 6.94% and are due and payable on August 25, 1995 (subject
to extension until August 25, 1998 at the Trust's option). An additional
$5,700,000 of the net proceeds will be used in connection with the acquisition
of the Frederick County Square Shopping Center. See "The Trust -- Recent
Developments -- Property Acquisitions". The balance of the net proceeds may be
used to acquire and/or renovate, expand or improve income-producing properties
or to repay other indebtedness drawn under the lines of credit. It is expected
that properties purchased in the future will be of the same general character as
those presently held by the Trust.
Pending the uses described above, the net proceeds may be invested in
certificates of deposit, highly rated commercial paper or other similar
interest-bearing government or rated corporate securities.
CAPITALIZATION
The following table sets forth the capitalization of the Trust as of March
31, 1995, and as adjusted to give effect to an increase of approximately
$9,000,000 in amounts outstanding under the lines of credit since March 31, 1995
and the issuance and sale of the Shares offered hereby and the anticipated use
of $18,000,000 of the net proceeds to repay indebtedness outstanding under the
lines of credit.
<TABLE>
<CAPTION>
MARCH 31, 1995
----------------------
AS
ACTUAL ADJUSTED
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Lines of credit payable:........................................... $ 34,000 $ 25,000
-------- --------
Shareholders' equity:
Shares of beneficial interest; without par value; unlimited
authorization: 28,242,544 issued and outstanding, and
31,742,544, as adjusted....................................... 138,722 187,354
Undistributed gains on real estate dispositions.................. 15,319 15,319
-------- --------
Total shareholders' equity.................................. 154,041 202,673
-------- --------
Total capitalization........................................ $188,041 $227,673
======== ========
</TABLE>
8
<PAGE> 9
DIVIDENDS
The Trust's policy is to pay quarterly dividends aggregating annually at
least 95% of its ordinary taxable income. Decisions by the Trustees as to
distributions of capital gains are made on a case by case basis. The Trust's
policy complies with the current distribution provisions of federal income tax
laws applicable to real estate investment trusts and, assuming compliance with
other requirements, income so distributed is not taxable to the Trust under such
laws. The declaration of dividends is discretionary with the Trustees and
depends upon the Trust's distributable funds, financial requirements, tax
considerations and other factors. It is the present intention of the Trustees to
consider the payment of cash dividends each quarter, but no assurance can be
given that past dividend practices will be followed in the future.
The tax status of 1994 dividends were reported as:
<TABLE>
<CAPTION>
RETURN
ORDINARY CAPITAL OF
INCOME GAINS CAPITAL TOTAL
-------- ------- ------- -----
<S> <C> <C> <C>
90.5% -- 9.5% 100%
</TABLE>
DIVIDEND REINVESTMENT PLAN
The Trust has a Dividend Reinvestment Plan (the "Plan") which allows
shareholders to acquire additional Shares by automatically reinvesting all or
part of their cash dividends. Shares are acquired pursuant to the Plan at a
price equal to the prevailing market price of such Shares, without payment of
any brokerage commission or service charge by the participant. The Plan also
allows participating shareholders to purchase Shares pursuant to the same terms
and in the same manner as cash dividends are invested in amounts of not less
than $100 nor more than $25,000 per calendar year, without payment of any
brokerage commission or service charge by the participant. Shareholders who do
not participate in the Plan continue to receive cash dividends, as declared.
9
<PAGE> 10
On Page 10 of the Prospectus there appears a map of the Greater
Washington, D.C. Metropolitan area indicating the location of the Trust's 38
properties and indicates whether each property is a shopping center, an office
building, industrial distribution property or an apartment building. There is
also a list of properties conforming to the list appearing on the following
pages of the Prospectus.
10
<PAGE> 11
INVESTMENTS OF THE TRUST
The following table describes the Trust's real estate investment portfolio.
All dollar amounts are in thousands and all information is as of March 31, 1995,
except for Tech 100 Industrial Park for which information is as of May 17, 1995,
the date of acquisition. Net square footage does not include garage or surface
parking. The percent leased is the percentage of net rentable space leased
including signed leases for space not yet occupied by the tenants.
<TABLE>
<CAPTION>
CAPITAL
REAL ESTATE INVESTMENTS NET IMPROVEMENTS
(CORRESPONDING NUMBER YEAR SQUARE PERCENT ACQUISITION SINCE TOTAL
ON PAGE 10 MAP) ACQUIRED FEET LEASED COST ACQUISITION INVESTMENT
- -------------------------------------- --------- --------- -------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
SHOPPING CENTERS
Takoma Park (1)....................... 1963 58,811 100% $ 1,500,000 $ 1,000 $ 1,501,000
Prince William Plaza (2).............. 1968 53,999 87 992,000 385,000 1,377,000
Westminster (3)....................... 1972 171,531 89 2,442,000 1,675,000 4,117,000
Dover Mart (4)........................ 1973 44,044 100 707,000 664,000 1,371,000
Concord Centre (5).................... 1973 76,383 91 1,263,000 2,605,000 3,868,000
Clairmont (6)......................... 1976 40,455 100 1,046,000 634,000 1,680,000
Wheaton Park (7)...................... 1977 46,716 100 1,480,000 690,000 2,170,000
Bradlee (8)........................... 1984 167,974 100 9,580,000 3,402,000 12,982,000
Chevy Chase Metro Plaza (9)........... 1985 49,893 93 5,854,000 2,344,000 8,198,000
Montgomery Village (10)............... 1992 196,464 93 20,730,000 458,000 21,188,000
Shoppes of Foxchase (11).............. 1994 127,564 94 8,818,000 261,000 9,079,000
--------- --- ------------ ----------- ------------
Sub-Total......................... 1,033,834 94% $ 54,412,000 $13,119,000 $ 67,531,000
--------- --- ------------ ----------- ------------
OFFICE BUILDINGS
1901 Pennsylvania Ave. (12)........... 1977 96,506 51%(a) $ 4,373,000 $ 3,243,000 $ 7,616,000
WRIT Building (13).................... 1979 65,885 96 1,912,000 2,900,000 4,812,000
One Metro Square (14)................. 1979 208,243 90 11,709,000 5,222,000 16,931,000
444 N. Frederick Ave. (15)............ 1989 65,809 90 4,630,000 1,196,000 5,826,000
7700 Leesburg Pike (16)............... 1990 122,222 95 7,670,000 2,107,000 9,777,000
Arlington Financial (17).............. 1992 51,655 100 6,293,000 136,000 6,429,000
515 King Street (18).................. 1992 78,073 98 8,034,000 605,000 8,639,000
Saratoga Office Bldg. (19)............ 1993 59,013 80 3,018,000 366,000 3,384,000
Lexington Office Bldg. (20)........... 1993 47,751 100 2,442,000 133,000 2,575,000
Brandywine Center (21)................ 1993 34,982 100 1,454,000 104,000 1,558,000
Tycon Plaza II (22)................... 1994 141,043 97 10,505,000 356,000 10,861,000
Tycon Plaza III (23).................. 1994 151,670 99 11,049,000 428,000 11,477,000
6110 Executive Boulevard (24)......... 1995 198,252 93 16,409,000 24,000 16,433,000
--------- --- ------------ ----------- ------------
Sub-Total......................... 1,321,104 91% $ 89,498,000 $16,820,000 $106,318,000
--------- --- ------------ ----------- ------------
APARTMENT BUILDINGS/UNITS
3801 Connecticut Avenue /307 (29)..... 1963 242,000 97% $ 3,098,000 $ 3,413,000 $ 6,511,000
Roosevelt Towers/191 (25)............. 1965 229,000 95 2,332,000 1,531,000 3,863,000
Park Adams/200 (26)................... 1969 210,000 99 1,940,000 2,308,000 4,248,000
Country Club Towers/227 (28).......... 1969 276,000 92 2,861,000 2,251,000 5,112,000
Munson Hill Towers/279 (27)(b)........ 1970 340,000 98 3,337,000 3,492,000 6,829,000
--------- --- ------------ ----------- ------------
Sub-Total (1,200 units)........... 1,297,000 96% $ 13,568,000 $12,995,000 $ 26,563,000
--------- --- ------------ ----------- ------------
INDUSTRIAL DISTRIBUTION PROPERTIES
Shirley I-395 (30).................... 1961 112,585 100% $ 1,917,000 $ 948,000 $ 2,865,000
Dept. of Commerce (31)................ 1971 105,000 100 1,356,000 1,261,000 2,617,000
V Street (33)......................... 1973 30,753 25 443,000 143,000 586,000
Capital Freeway (34).................. 1974 145,000 100 1,505,000 2,613,000 4,118,000
Fullerton (35)........................ 1985 103,339 95 4,267,000 606,000 4,873,000
Ravensworth Center (32)............... 1986 29,000 100 1,451,000 336,000 1,787,000
Pepsi-Cola (36)....................... 1987 68,750 100 2,552,000 1,514,000 4,066,000
Charleston (37)....................... 1993 85,267 92 4,136,000 126,000 4,262,000
Tech 100 (38)......................... 1995 167,267 96 6,832,000 N/A 6,832,000
--------- --- ------------ ----------- ------------
Sub-Total......................... 846,961 95% $ 24,459,000 $ 7,547,000 $ 32,006,000
--------- --- ------------ ----------- ------------
TOTAL................................. 4,498,899 94% $181,937,000 $50,481,000 $232,418,000
========= === ============ =========== ============
</TABLE>
- ---------------
(a) 1901 Pennsylvania Avenue is undergoing significant renovations; see "Recent
Developments" and "Description of Real Estate Investments".
(b) The site of Munson Hill Towers apartments is rented under a ground lease
requiring annual payments of $22,590 until the expiration of the lease in
2060.
11
<PAGE> 12
DESCRIPTION OF REAL ESTATE INVESTMENTS
The Trust's portfolio of 38 properties consists of 13 office buildings with
approximately 1,321,000 rentable square feet, 11 shopping centers with
approximately 1,034,000 rentable square feet, five high-rise apartment buildings
with approximately 1,200 units and nine industrial distribution properties with
approximately 847,000 square feet. In the opinion of management, the Trust's
properties are adequately protected by "all risk" insurance coverage, have been
well maintained and are in good condition.
The following are descriptions of WRIT's most significant properties in
each property group, in terms of total investment.
OFFICE BUILDING GROUP:
Tycon Plaza II and III
8229-8245 Boone Boulevard
Tysons Corner, Virginia
In June 1994, the Trust purchased these two 8-story office buildings
containing a total of 293,000 rentable square feet plus on-site parking for 895
cars. At the time of purchase, the property was 71% leased and at March 31,
1995, was 98% leased. Over the past year, extensive improvements totaling
approximately $784,000 have been made in order to reposition the property in its
market.
One Metro Square
51 Monroe Street
Rockville, Maryland
One Metro Square, purchased in 1979, is a 22-story office building
containing 208,000 rentable square feet of office and retail space. The property
includes an indoor garage with 360 parking spaces. The building is connected by
elevated pedestrian bridges to the Montgomery County Office Building-Courthouse
complex and to a Washington Metro (subway) station. Portions of the roof are
leased for communications antennae, creating additional current annual income of
approximately $270,000.
6110 Executive Boulevard
Rockville, Maryland
In January 1995, the Trust purchased this 10-story office building
containing 198,000 rentable square feet. This property includes a detached
3-story parking deck and on-site parking area for 565 cars. At the time of
purchase, the property was 91% leased. At March 31, 1995, the property was 93%
leased, and new leases are being signed at rents of $17.50 per square foot,
which is above the building average of $15.86.
7700 Leesburg Pike
Falls Church, Virginia
In October 1990, WRIT purchased 7700 Leesburg Pike, a circular four-story
office building and parking deck with an interior wooded atrium and office tower
in the center. The property contains a total of 122,000 rentable square feet,
and is located just inside the Capital Beltway (I-495) near Tysons Corner,
Virginia. There are approximately 465 decked and open parking spaces. The
building won an American Institute of Architecture award and is set in a wooded
campus environment on seven acres of land. The existing building was 95% leased
at March 31, 1995, and there is strong leasing interest from prospective tenants
for additional space. Plans and specifications are now complete for the addition
of 20,000 square feet of office space to the top deck of the parking structure.
Completion of the construction of the addition is expected in the fourth quarter
of 1995.
12
<PAGE> 13
1901 Pennsylvania Avenue, N.W.
Washington, D.C.
1901 Pennsylvania Avenue is an 11-story office building with 97,000
rentable square feet located three blocks west of the White House and two blocks
from a Washington Metro station. As the result of three lease expirations in
late 1994 and early 1995, this property was 51% leased at March 31, 1995. Though
this occupancy level is not acceptable, it provides the Trust with an
opportunity to make major capital improvements to this 35-year old building. The
Trust has remodeled the lobby, replaced the roof and is in the process of
modernizing the hallways, elevators, mechanical systems and restrooms. The
Pennsylvania Avenue location and the desire of the Trust to lease to small space
users, along with the upgraded building features, are expected to reposition
this property in its market.
SHOPPING CENTER GROUP:
Montgomery Village Center
Montgomery Village Avenue
Gaithersburg, Maryland
In December 1992, the Trust purchased Montgomery Village Center, a Giant
Food supermarket anchored shopping center, containing 169,000 square feet of
retail space, 28,000 square feet of townhouse-type office space and on-site
parking for 791 cars. At March 31, 1995, this property was 93% leased. This
property is located in the Montgomery Village Planned Unit Development
("P.U.D."), and its value is substantially enhanced by the controlled nature of
the zoning restrictions in the P.U.D. and in the Gaithersburg, Maryland area in
general with its existing restrictions on commercial growth and lack of
available building sites.
Bradlee Shopping Center
3600 King Street
Alexandria, Virginia
The Bradlee Shopping Center contains 168,000 square feet of rentable area,
and existing tenants include Giant Food, G.C. Murphy, Rite-Aid and 43 other
tenants. As the Trust has expanded and improved the shopping center and its
tenancy, annual rents have increased from $1,124,000 in 1985, the first full
year of the property's operations under WRIT, to $3,614,000 in 1995. Located in
a densely populated area with few vacant building sites, this property was 100%
leased at March 31, 1995.
The Shoppes of Foxchase
4600 Duke Street
Alexandria, Virginia
In 1994, the Trust purchased the Shoppes of Foxchase containing 128,000
rentable square feet, plus on-site parking for 583 cars. The center is anchored
by Rite-Aid and Magruder's stores and was 94% leased at March 31, 1995. The
timing of various lease expirations affords the Trust opportunities to enhance
the property's gross revenues over the near term. In the meantime, the property
is earning a 12% return on investment (funds from operations divided by total
investment).
Chevy Chase Metro Plaza
5252 Wisconsin Avenue, N.W.
Washington, D.C.
The Trust has recently repositioned this property. Beginning in the fourth
quarter of 1994, with completion expected in the third quarter of 1995, the
property is being increased in size by the addition of 10,000 square feet
through the termination of a movie theater lease, installation of two floors in
the theater area and the renovation of other vacant space in the building. The
property now contains 49,000 square feet of retail space. All of the new
addition and renovation area, totaling 31,500 square feet, has been leased to
T.J. Maxx. Riggs National Bank and two restaurants occupy the balance of the
leased space. There is strong tenant interest in leasing the remaining 10,000
square feet in the property. Interior parking is provided in the
13
<PAGE> 14
attached three deck parking garage containing 133 parking spaces. This property
was formerly known as Jenifer One Shopping Center and is located in the Chevy
Chase area of the District of Columbia, adjacent to a Metro entrance. Nearby
shopping anchored by Lord & Taylor, Saks Fifth Avenue and Neiman-Marcus provides
substantial retail traffic.
APARTMENT BUILDING GROUP:
Munson Hill Towers
6129 Leesburg Pike
Falls Church, Virginia
Munson Hill Towers is a luxury, architecture award-winning, 12-story
apartment building that contains 279 apartments and is located approximately
eight miles from downtown Washington, D.C. The 12 1/2 acre property upon which
the building is situated includes a swimming pool, tennis court and other
recreational facilities. In addition, there are 450 on-site parking spaces. This
property was 98% leased at March 31, 1995.
3801 Connecticut Avenue, N.W.
Washington, D.C.
3801 Connecticut Avenue is a nine-story apartment building containing 307
apartment units and 3,150 square feet of office space. The building has 92
indoor parking spaces. The apartments are subject to District of Columbia rent
control laws, which allow landlords to make rent increases tied to the rate of
inflation (subject to an annual maximum of 10%) and also allow additional rent
increases as units are re-rented to new tenants. This property was 97% leased at
March 31, 1995.
INDUSTRIAL DISTRIBUTION PROPERTY GROUP:
Tech 100 Industrial Park
N/E/C Route #100 and Route #1
Howard County, Maryland
In May 1995, the Trust purchased the Tech 100 Industrial Park, a 3-building
industrial distribution complex containing 167,000 square feet plus on-site
parking for 331 cars. Tech 100 is located 25 miles northeast of Washington, D.C.
and 7 miles southwest of Baltimore, Maryland, in the Route 100 Industrial Park
which contains 2.5 million square feet of industrial distribution space within 3
miles of Baltimore-Washington International Airport. Route 100 is a major
arterial road connecting Interstate 95 with Interstate 97 and Route 301. At the
time of acquisition, the property was 96% leased. With leases beginning to
mature, the Trust expects to renew tenant leases at current market rental rates,
which it believes are above existing rates on maturing leases.
Fullerton Business Center
7401 Fullerton Road
Springfield, Virginia
Fullerton Business Center is located in the 2,000,000 square foot Fullerton
Industrial Park. This multi-tenanted property contains 103,000 square feet plus
on-site parking for 247 cars. At March 31, 1995, the property was 95% leased.
14
<PAGE> 15
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth selected financial data for the Trust and
should be read in conjunction with the Financial Statements and Notes
incorporated herein by reference.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------- ---------------------
1990 1991 1992 1993 1994 1994 1995
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA
Real estate rental revenue.... $ 30,233 $ 33,311 $ 34,132 $ 39,375 $ 45,511 $ 11,312 $ 12,464
Real estate expenses.......... (9,557) (10,089) (10,330) (11,830) (14,031) (3,280) (3,897)
-------- -------- -------- -------- -------- -------- --------
20,676 23,222 23,802 27,545 31,480 8,032 8,567
Depreciation.................. (3,065) (3,289) (3,388) (3,616) (3,933) (922) (1,075)
-------- -------- -------- -------- -------- -------- --------
Income from real estate....... 17,611 19,933 20,414 23,929 27,547 7,110 7,492
Other income (expense)........ 2,213 2,326 3,311 1,496 (550) (654) 102
Interest expense.............. (1,053) (1,080) (454) (61) (614) 0 (532)
General and administrative.... (2,649) (2,793) (2,842) (2,858) (3,261) (651) (903)
-------- -------- -------- -------- -------- -------- --------
Income before gain on sale of
real estate................. 16,122 18,386 20,429 22,506 23,122 5,805 6,159
Gain on sale of real estate... 0 0 0 741 0 0 0
-------- -------- -------- -------- -------- -------- --------
Net income.................... $ 16,122 $ 18,386 $ 20,429 $ 23,247 $ 23,122 $ 5,805 $ 6,159
======== ======== ======== ======== ======== ======== ========
Income before gain on sale of
real estate per share (1)... $ 0.69 $ 0.74 $ 0.76 $ 0.80 $ 0.82 $ 0.21 $ 0.22
======== ======== ======== ======== ======== ======== ========
Net income per share (1)...... $ 0.69 $ 0.74 $ 0.76 $ 0.82 $ 0.82 $ 0.21 $ 0.22
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
-------------------------------------------------------- ---------------------
1990 1991 1992 1993 1994 1994 1995
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Real estate (at cost)......... $113,317 $117,576 $155,765 $170,461 $206,378 $172,711 $225,585
Total assets.................. 106,955 135,741 185,673 162,011 178,806 162,418 195,034
Mortgages payable............. 12,379 11,329 1,115 0 0 0 0
Lines of credit payable/
Short-term bank loan........ 0 0 21,000 0 18,000 0 34,000
Shareholders' equity.......... 90,621 119,944 159,027 157,348 154,659 156,801 154,040
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------- ---------------------
1990 1991 1992 1993 1994 1994 1995
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA
Funds from operations (2)..... $ 19,187 $ 21,675 $ 23,817 $ 26,122 $ 27,055 $ 6,727 $ 7,234
Weighted average number of
shares outstanding (1)...... 23,223 24,708 26,910 28,223 28,239 28,233 28,243
Dividends paid................ $ 17,031 $ 19,672 $ 22,513 $ 24,380 $ 25,981 $ 6,495 $ 6,778
Dividends paid per share
(1)......................... $ 0.73 $ 0.79 $ 0.84 $ 0.89 $ 0.92 $ 0.23 $ 0.24
</TABLE>
- ---------------
(1) Adjusted to give effect to the 3-for-2 share split in May 1992.
(2) Funds from Operations ("FFO"), as defined by the National Association of
Real Estate Investment Trusts ("NAREIT"), is net income adjusted for
depreciation and amortization and gains or losses from property sales. FFO
does not represent cash flows from operations as defined by generally
accepted accounting principles, should be considered along with, but not as
an alternative to, net income as an indicator of the Company's operating
performance and is not indicative of cash available to fund all cash flow
needs. In March 1995, NAREIT issued a clarification of its definition of
FFO. The clarification provides that amortization of deferred financing
costs and depreciation of non-real estate assets are no longer to be added
back to net income in arriving at FFO and that extraordinary, nonrecurring
items should be adjusted out of net income. The amounts reflected in this
Prospectus have been adjusted to incorporate that clarification.
15
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
WRIT's fundamental emphasis is on the growth of cash flow from operating
activities. Dividends to shareholders are based upon these cash flows. WRIT's
capital improvements, leasing and management, and acquisitions of additional
properties are the major contributors to sustained growth of cash flows.
Occupancy rates have a major impact on rental revenue. Other factors such
as new or renewal leases at market rates, Consumer Price Index based annual
rental rate increases, increases in rentable area, timing of new property
acquisitions and certain other capital expenditures also influence rental
revenue.
Three Months Ended March 31, 1995 and 1994:
Income from real estate in the first quarter of 1995 of $7,492,497
increased 5% compared with $7,110,032 for the first quarter of 1994. This
increase is primarily attributable to the Tycon Plaza II and III office
buildings acquired June 1, 1994, the Shoppes of Foxchase acquired June 30, 1994
and the 6110 Executive Boulevard office building acquired January 26, 1995. Net
income for the three months ended March 31, 1995 in the amount of $6,159,411 or
$.22 per share increased 6% from $5,805,007 or $.21 per share from the
comparable quarter of 1994.
The average occupancy of 95% for the year 1994 decreased to 93% for the
first quarter of 1995. This decrease is due primarily to vacancies at one of
WRIT's office buildings, 1901 Pennsylvania Avenue and one shopping center, Chevy
Chase Metro Plaza. In late 1994, WRIT commenced a major capital improvement
program at 1901 Pennsylvania Avenue in order to promote the expeditious lease-up
of this property. On March 23, 1995, T.J. Maxx, a national retailer, took
possession of 31,500 square feet of space at Chevy Chase Metro Plaza. This
increased the occupancy level from 39% on March 22, 1995 to 90% on the date of
possession. The term of this lease is ten years.
Real estate operating expenses as a percentage of revenue were 31% for the
three months ended March 31, 1995 as compared to 29% for the comparable period
of 1994. This increase is attributable to the decline in occupancy levels in the
first quarter of 1995 as compared to the first quarter of 1994 and to the fact
that operating expenses as a percentage of revenues are higher for office
building properties than all other property types within the WRIT portfolio.
WRIT's percentage of office buildings within its entire real estate portfolio
has increased from 39% at March 31, 1994 to 42% as of March 31, 1995 based on
revenues. This increase is primarily attributable to the acquisitions of the
Tycon Plaza II and III office buildings in June 1994 and the 6110 Executive
Boulevard office building in January 1995.
In the first quarter of 1994, a marketable investment security was written
down to its estimated realizable value, resulting in a charge of $799,571 to
operations. This amount is included in the $654,209 of other expense in the
statement of operations at March 31, 1994.
Investment income declined for the three months ended March 31, 1995
compared to the same period of 1994 due to substantial funds previously invested
in marketable securities being utilized for property acquisitions.
Interest expense was $531,625 for the quarter ended March 31, 1995 as a
result of the $18,000,000 of outstanding advances on the line of credit obtained
in June 1994 and $16,000,000 of outstanding advances obtained in connection with
the January 26, 1995 acquisition of the 6110 Executive Boulevard office
building.
General and administrative expenses increased $252,573 or 39% for the three
months ended March 31, 1995 as compared to the same period in 1994. The majority
of this increase is the result of personnel additions since June 1994 and annual
increases in officers' salaries effective January 1, 1995. These personnel
additions include WRIT's current president and chief executive officer who
joined WRIT in June 1994 as president and chief operating officer.
16
<PAGE> 17
Twelve Months Ended December 31, 1994:
The percentage increase in real estate rental revenue from 1993 to 1994 by
property type was as follows:
<TABLE>
<S> <C>
Office Buildings...................................................... 34%
Apartment Buildings................................................... 4%
Shopping Centers...................................................... 5%
Industrial Distribution Properties.................................... 17%
</TABLE>
During 1994, WRIT's office building group achieved increases of 34% in
revenues and 36% in operating income, mostly due to the acquisitions of the
three Heritage office buildings in November 1993 and the two Tycon Plaza office
buildings in June 1994.
The Tycon office buildings were 71% leased at acquisition in June 1994, 90%
leased at December 31, 1994 and 98% leased as of March 31, 1995. The Heritage
properties were acquired in November 1993 and include three office buildings
(the Lexington, Saratoga and Brandywine), and one industrial distribution
property (the Charleston). At December 31, 1994, the Lexington and Brandywine
office buildings were 100% leased and the Saratoga 96% leased.
The income growth from office buildings owned for all of 1993 and 1994 was
due to increases in rental rates and improved occupancy levels at 7700 Leesburg
Pike. This growth was partially offset by a substantial increase in vacancy
during 1994 at the 1901 Pennsylvania Avenue property, which lost 3 major tenants
resulting in an occupancy level of 52% at year end. The Trust commenced a major
capital improvement program at 1901 Pennsylvania Avenue in 1994 in order to
promote the expeditious lease-up of this property. See "Description of Real
Estate Investments".
During 1994, WRIT's apartment building group showed increases of 4% in
revenues and 7% in operating income due to the combination of a 2% increase in
rental rates and an overall increase in occupancy to 97% in 1994 from 95% in
1993, together with an increase in operating expenses of only 1%.
During 1994, WRIT's shopping center group showed an increase of 5% in
revenues and 3% in operating income due to the acquisition of the Shoppes of
Foxchase in June 1994.
Excluding the Shoppes of Foxchase, shopping center revenue was down 1% and
operating income down 4% for 1994. Major elements of the decrease in operating
income included a 10% increase in overall operating expenses and the vacancy at
Chevy Chase Metro Plaza to accommodate renovations. See "Description of Real
Estate Investments". WRIT has leased the majority of the Chevy Chase Metro Plaza
vacancy to T.J. Maxx.
During 1994, WRIT's industrial distribution property group showed increases
of 17% in revenues and 15% in operating income due to the acquisition of the
Charleston Business Center in November 1993 and major occupancy increases at the
Fullerton and Department of Commerce Information Center properties, only
slightly offset by an occupancy decrease at the V Street property.
For 1994, excluding the Charleston Business Center, industrial distribution
property revenue was up 4% and operating income was up 3%. In 1994, rental rates
for these properties declined 1% from 1993, but overall occupancy increased to
94% in 1994 from 89% in 1993.
The average occupancy (for the entire real estate portfolio) was 95% for
1994.
Real estate operating expenses as a percentage of revenue was 31% during
1994.
In 1994, other income (expense) became an expense/charge to operations as a
result of the following:
a) A decline in interest income from 1993 to 1994 due to the use of
funds for properties acquired in 1994.
b) At March 31, 1994, a marketable investment security was written
down to its estimated realizable value, resulting in a charge of $800,000
to operations in the first quarter of 1994. This security was sold in May,
1994 for its March 31, 1994 realizable value.
17
<PAGE> 18
c) During 1994, WRIT was audited by a State Unclaimed Property
Division, resulting in an assessment to WRIT of $271,000. This amount was
charged to operations in the fourth quarter of 1994.
Interest expense was $614,000 for the year of 1994 as a result of the
$9,000,000 advance on the line of credit on June 1, 1994 for the acquisition of
Tycon Plaza II and III and an additional advance of $9,000,000 for the
acquisition of The Shoppes of Foxchase on June 30, 1994.
CAPITAL RESOURCES AND LIQUIDITY
WRIT has utilized the proceeds of Share offerings, long-term fixed interest
rate debt, lines of credit and cash flow from operations for its capital needs.
The WRIT philosophy has been to acquire income-producing real estate with strong
growth potential and to improve its real estate holdings through carefully
planned additions and improvements to control operating expenses and generate
higher rental income.
On January 26, 1995, WRIT acquired the 6110 Executive Boulevard office
building with approximately 198,000 rentable square feet of office space and a
detached three story parking deck in Rockville, Maryland, at a purchase price of
$16,380,000. Capital improvements (including tenant work) of $2,691,000 to
WRIT's various properties were completed in the first three months of 1995.
After the acquisition of 6110 Executive Boulevard in January 1995 and capital
improvements in the first quarter of 1995, the remainder of cash and marketable
investment securities was approximately $1,008,000 at March 31, 1995.
External sources of capital are available to WRIT from its existing
unsecured credit commitments and management believes that additional sources of
capital are available from selling additional Shares and/or the issuance of
debt. As of June 30, 1995, WRIT had line of credit commitments in place from
commercial banks for up to $75,000,000 of which $43,000,000 is currently
outstanding at a weighted average interest rate of 6.8% with maturities ranging
from August 25, 1995 (subject to extension until August 25, 1998 at WRIT's
option) to January 31, 1999. These lines of credit may be used to purchase
income-producing property or for capital improvements. Of these lines,
$25,000,000 are under a 4-year revolving credit agreement and $50,000,000 are
for 1 year with WRIT having the right to extend the maturity date of advances
for up to 4 years. Both lines of credit are therefore considered medium-term
rather than short-term.
Cash flow from operating activities totaled $8,300,000 for the three months
ended March 31, 1995 including net income of $6,200,000 and depreciation of
$1,100,000. Rental revenue has been the principal source of funds to pay the
Trust's operating expenses, interest expense and dividends to shareholders. The
Trust paid a dividend of $6,800,000 during the first quarter.
Net cash used in investing activities for the three months ended March 31,
1995 was $17,800,000, including the acquisition of 6110 Executive Boulevard for
$16,500,000 and capital improvements to the Trust's properties of $2,700,000,
less $1,400,000 provided by the maturity and or sale of marketable securities.
Financing activities provided $16,000,000 from borrowings under the Trust's
lines of credit.
Management believes that it has the liquidity and the access to capital
necessary to meet all of its known obligations and to make additional property
acquisitions when appropriate. WRIT continues to pursue acquisition
opportunities and capital improvement projects to enhance long-term growth.
18
<PAGE> 19
MANAGEMENT
The Trustees and executive officers of the Trust are:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------- --- -----------------------------------------
<S> <C> <C>
Arthur A. Birney......................... 67 Trustee and Chairman of the Board
Edmund B. Cronin, Jr. ................... 58 Trustee, President and Chief Executive
Officer
Mary Beth Avedesian...................... 35 Vice President -- Investments
William N. Cafritz....................... 69 Trustee (President, William Cafritz
Development Corp., a real estate
development company)
Benjamin H. Dorsey....................... 71 Trustee, Secretary and General Counsel
Larry E. Finger.......................... 42 Senior Vice President and Chief Financial
Officer
Laura M. Franklin........................ 34 Vice President and Chief Accounting
Officer
Sandra T. Hunt........................... 43 Vice President -- Leasing
B. Franklin Kahn......................... 70 Trustee and Chairman Emeritus (President,
Benjamin Franklin Corporation)
David M. Osnos........................... 63 Trustee (Senior partner, Arent Fox
Kintner Plotkin & Kahn (legal counsel to
the Trust); Director, VSE Corporation,
an engineering company; Director,
EastGroup Properties, a real estate
company)
Kenneth C. Reed.......................... 42 Vice President -- Property Management
Thomas L. Regnell........................ 38 Vice President -- Acquisitions
Stanley P. Snyder........................ 60 Trustee (Chairman, Snyder, Kamerow &
Associates, P.C., Certified Public
Accountants)
</TABLE>
Mr. Arthur A. Birney, a founding Trustee, is Managing Partner and Chief
Executive Officer of Washington Brick & Terra Cotta Company, a real estate
investment and holding company founded in 1892, and President of Port Annapolis
Marina, Inc.
Mr. Edmund B. Cronin, Jr. has 35 years of real estate investment,
operations and finance experience in the Washington-Baltimore metropolitan
market. From 1977 to 1993, he served as Chairman and Chief Executive Officer of
Smithy Braedon, a full service commercial real estate firm providing leasing,
sales, asset management, finance, consulting, investment advisory and
development services. From 1993 until joining WRIT in June 1994, Mr. Cronin was
Chief Executive Officer of H.G. Smithy Company, a real estate management and
investment advisory service company whose debt and equity assets under
management total approximately $1.5 billion.
Ms. Mary Beth Avedesian joined the Trust as Vice President -- Investments
in March 1995. Ms. Avedesian was an Assistant Vice President for Towle Financial
Services from 1993 to 1995, where she was responsible for acquisition due
diligence and asset management. From 1991 to 1993, Ms. Avedesian was a Marketing
Manager for AMRESCO, a subsidiary of NationsBank formed to dispose of bank-owned
property; and from 1987 to 1991 Ms. Avedesian was a Financial Analyst and
Development Coordinator with Himmel and Company on the $350 million Reston Town
Center.
Mr. Benjamin H. Dorsey, a co-founder of the Trust, has held the position of
Secretary and General Counsel since 1960.
Mr. Larry E. Finger, an attorney and CPA, joined the Trust as Vice
President and Chief Financial Officer in December 1993 and was promoted to
Senior Vice President and Chief Financial Officer in June 1995. Mr. Finger
previously served as Chief Operating Officer of Savage/Fogarty Companies, Inc.,
a real estate
19
<PAGE> 20
investment, management and development company based in Alexandria, Virginia.
Mr. Finger was employed by Savage/Fogarty for 13 years, from 1978 to 1991
serving four years in the accounting division, ultimately as Vice
President -- Finance, seven years as Senior Vice President and General Counsel
then Executive Vice President and General Counsel, and finally two years as
Chief Operating Officer. During 1992 and until he joined the Trust, Mr. Finger
created and operated a multi-restaurant delivery business in Richmond, Virginia.
Ms. Laura M. Franklin, a CPA, joined the Trust as Assistant Vice
President -- Finance in August 1993 and was promoted to Vice President and Chief
Accounting Officer in June 1995. From 1985 to 1993, Ms. Franklin was an
associate with Reznick, Fedder and Silverman, P.C., a regional public accounting
firm known nationally to the real estate industry. While at Reznick, Ms.
Franklin provided audit and tax services to clients.
Ms. Sandra T. Hunt has held the position of Vice President -- Leasing since
1984.
Mr. Kenneth C. Reed, Vice President -- Property Management, is President of
CSN Management, Inc., which manages the Trust's properties. Mr. Reed has been
with CSN Management since 1983 and has held the position of President since
1991.
Mr. Thomas L. Regnell joined the Trust as Vice President -- Acquisitions in
January 1995. Mr. Regnell previously served as an Investment Officer with
Federal Realty Investment Trust in Bethesda, Maryland. Mr. Regnell was employed
by Federal Realty from 1992 to 1995, and was responsible for Federal Realty's
real estate acquisitions in the Midwest and Southeast United States. Prior to
joining Federal Realty, Mr. Regnell was a Vice President with Spaulding & Slye
Company, a real estate development, brokerage and management company in
Bethesda, Maryland.
SHARES
The Trust is authorized to issue an unlimited number of Shares. The Shares
do not have preference, conversion, exchange, preemptive, cumulative voting or
redemption rights. Holders of Shares are entitled to one vote per Share, to
participate pro rata in distributions as may be declared by the Trustees and,
upon liquidation of the Trust, to receive their pro rata share of the assets
after payment of liabilities and expenses of the Trust. All of the Trust's
outstanding Shares are, and the Shares offered hereby will be, when issued
against full payment of the agreed purchase price, validly issued, fully paid
and, subject to the matters set forth below, non-assessable.
The Shares are not redeemable at the option of the Trust except (i) to the
extent that would be necessary to maintain the Trust's "real estate investment
trust" tax status under the Internal Revenue Code of 1986, as amended (the
"Code"), or (ii) where necessary to prevent any person or entity from owning
more than 10% of the Shares. The Trust's Declaration of Trust provides that any
merger, consolidation or liquidation of the Trust, or any sale of all or
substantially all of its assets, must be approved by a majority of the Trustees,
and that if any such transaction is with, into or to a Related Shareholder (a
person or entity beneficially owning, directly or indirectly, 5% or more of the
outstanding Shares), the transaction must be approved by a majority of the
Trustees not appointed or nominated by or acting on behalf of the Related
Shareholder or an affiliate or associate of the Related Shareholder. The
Declaration of Trust also establishes the number of Trustees at not less than
three nor more than seven and divides the Trustees into three classes to be
elected on a staggered basis. The provisions referred to in this paragraph may
be amended only by the affirmative vote of the holders of 70% or more of the
outstanding Shares. The Declaration of Trust may otherwise be amended by a vote
of the holders of a majority of the outstanding Shares. Shareholders may remove
any Trustee by the affirmative vote of the holders of two-thirds of the
outstanding Shares at a meeting called for such purpose.
The Declaration of Trust provides that no shareholder shall be personally
liable in connection with the Trust's property or the affairs of the Trust. The
Declaration of Trust further provides that the Trust shall indemnify and hold
harmless shareholders against all claims and liabilities and related reasonable
expenses to which they become subject by reason of their being or having been
shareholders. In addition, the Trust as a matter of practice inserts a clause in
its business, management and other contracts which provides that shareholders
shall not be personally liable thereunder. Benjamin H. Dorsey, Esquire, General
Counsel for the
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<PAGE> 21
Trust, is of the opinion that under the laws of the District of Columbia and
most other jurisdictions, no personal liability will attach to the Trust's
shareholders for contract claims under any contract containing such a clause
where adequate notice is given. However, in respect to tort claims and contract
claims where shareholder liability is not so negated, claims for taxes and
certain statutory liabilities, the shareholders may, in some jurisdictions, be
personally liable to the extent that such claims are not satisfied by the Trust.
The Trust carries public liability insurance which the Trustees consider
adequate. Thus, any risk of personal liability to shareholders is limited to
situations in which the Trust's assets, plus its insurance coverage, would be
insufficient to satisfy the claims against the Trust and its shareholders or the
Trust's assets were insufficient to satisfy such claims and the Trust's
insurance did not cover them.
Outstanding Shares are listed on the American Stock Exchange and
application has been made to list the additional Shares that are being offered
hereby by the Trust. American Stock Transfer & Trust Company, New York, New York
is the transfer agent for the Trust's Shares.
TAXATION
The Trust has elected to be taxed as a real estate investment trust under
the Code. Real estate investment trusts which meet certain qualifications are
relieved of federal income taxes on ordinary income and capital gains
distributed to shareholders. In the opinion of Arent Fox Kintner Plotkin & Kahn,
legal counsel for WRIT, the Trust has qualified as a real estate investment
trust for the years 1978-1994 and its present and contemplated method of
operation will put it in a position to continue to so qualify. David M. Osnos, a
Trustee, is a partner of such firm.
21
<PAGE> 22
UNDERWRITING
Subject to the terms and conditions set forth in a Purchase Agreement (the
"Purchase Agreement"), the Trust has agreed to sell to each of the Underwriters
named below, and each of the Underwriters, for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Alex. Brown & Sons Incorporated, A.G. Edwards &
Sons, Inc. and Legg Mason Wood Walker, Incorporated are acting as
representatives (the "Representatives"), has severally agreed to purchase from
the Trust, the number of Shares set forth below opposite their respective names.
The Underwriters are committed to purchase all of such Shares if any are
purchased. Under certain circumstances, the commitments of non-defaulting
Underwriters may be increased as set forth in the Purchase Agreement.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................ 517,500
Alex. Brown & Sons Incorporated.......................................... 517,500
A.G. Edwards & Sons, Inc................................................. 517,500
Legg Mason Wood Walker, Incorporated..................................... 517,500
Dean Witter Reynolds Inc. ............................................... 100,000
Donaldson, Lufkin & Jenrette Securities Corporation...................... 100,000
PaineWebber Incorporated................................................. 100,000
Prudential Securities Incorporated....................................... 100,000
Smith Barney Inc. ....................................................... 100,000
Ferris, Baker Watts, Incorporated........................................ 100,000
Folger Nolan Fleming Douglas Incorporated................................ 100,000
Johnston, Lemon & Co. Incorporated....................................... 100,000
Wheat, First Securities, Inc. ........................................... 100,000
Gruntal & Co., Incorporated.............................................. 50,000
Interstate/Johnson Lane Corporation...................................... 50,000
Janney Montgomery Scott Inc. ............................................ 50,000
Edward D. Jones & Co. ................................................... 50,000
Kemper Securities, Inc. ................................................. 50,000
Raymond James & Associates, Inc. ........................................ 50,000
Tucker Anthony Incorporated.............................................. 50,000
Anderson & Strudwick, Incorporated....................................... 30,000
Branch, Cabell and Company............................................... 30,000
Craigie Incorporated..................................................... 30,000
Davenport & Co. of Virginia, Inc. ....................................... 30,000
Lara, Millard & Associates, LTD.......................................... 30,000
Scott & Stringfellow, Inc. .............................................. 30,000
---------
Total....................................................... 3,500,000
========
</TABLE>
The Representatives have advised the Trust that the Underwriters propose
initially to offer the Shares to the public at the public offering price set
forth on the cover of this Prospectus, and to certain dealers at such price less
a concession not in excess of $.45 per Share. The Underwriters may allow, and
such dealers may reallow, a discount not in excess of $.10 per Share on sales to
certain other dealers. After the initial public offering, the public offering
price, concession and discount may be changed.
The Trust has granted to the Underwriters an option exercisable within 30
days after the date hereof to purchase up to 525,000 additional Shares to cover
over-allotments, if any, at the initial public offering price less the
underwriting discount set forth on the cover page of this Prospectus. If the
Underwriters exercise this option, each of the Underwriters will have a firm
commitment, subject to certain conditions, to purchase approximately the same
percentage thereof that the number of Shares to be purchased by it shown in the
foregoing table is of the 3,500,000 Shares initially offered hereby.
The Trust has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Trust and its officers and Trustees have agreed that for a period of 90
days from the date of this Prospectus they will not, without the prior written
consent of the Representatives, offer, sell, grant any option for the sale of or
otherwise dispose of any Shares, except for grants of options or issuances of
Shares upon exercise of options pursuant to the Trust's Incentive Share Option
Plan and the Trust's Dividend Reinvestment Plan.
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<PAGE> 23
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Trust's Annual Report on Form 10-K for the year ended December 31, 1994 have
been so incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
LEGAL OPINIONS
Arent Fox Kintner Plotkin & Kahn, Washington, D.C., legal counsel to the
Trust, has delivered an opinion to the effect that the Shares offered hereby are
legally issued, fully paid, free of preemptive rights and, subject to the
matters discussed under the caption "Shares," non-assessable, and have passed on
certain tax matters relating to the qualification of the Trust as a real estate
investment trust. Certain legal matters with respect to the Shares offered
hereby will be passed on for the Underwriters by Brown & Wood, New York, New
York.
AVAILABLE INFORMATION
The Trust is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Trust can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's Regional Offices at 7 World Trade Center, New
York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661, and copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Trust's Shares are listed on the American Stock
Exchange, 86 Trinity Place, New York, New York 10005 and reports, proxy
statements and other information filed by the Trust can be inspected at such
Exchange. The Trust has filed a Registration Statement on Form S-3 (together
with all amendments and exhibits thereto, the "Registration Statement") under
the Securities Act of 1933, as amended. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information, reference is made to the Registration Statement.
DOCUMENTS INCORPORATED BY REFERENCE
The Trust hereby incorporates by reference the following documents filed
with the Commission pursuant to the Exchange Act: the Annual Report of the Trust
on Form 10-K for the year ended December 31, 1994 and the Quarterly Report of
the Trust on Form 10-Q for the quarter ended March 31, 1995. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein, or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
All documents filed by the Trust pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of this offering shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of filing such
documents.
Copies of all documents incorporated by reference, other than exhibits to
such documents not specifically incorporated by reference therein, will be
provided without charge to each person who receives a copy of this Prospectus on
the written or oral request of such person directed to Larry E. Finger,
Washington Real Estate Investment Trust, 10400 Connecticut Avenue, Kensington,
Maryland 20895, telephone (301) 929-5900 or (800) 565-9748.
23
<PAGE> 24
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NO DEALER, SALESMAN OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE TRUST OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE SHARES IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF
THE TRUST SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---
<S> <C>
Prospectus Summary.................... 3
The Trust............................. 5
Use of Proceeds....................... 8
Capitalization........................ 8
Dividends............................. 9
Dividend Reinvestment Plan............ 9
Investments of the Trust.............. 11
Description of Real Estate
Investments......................... 12
Selected Financial Data............... 15
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 16
Management............................ 19
Shares................................ 20
Underwriting.......................... 22
Experts............................... 23
Legal Opinions........................ 23
Available Information................. 23
Documents Incorporated by Reference... 23
</TABLE>
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[WRIT LOGO]
WASHINGTON
REAL ESTATE
INVESTMENT TRUST
3,500,000 SHARES OF
BENEFICIAL INTEREST
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH & CO.
ALEX. BROWN & SONS
INCORPORATED
A.G. EDWARDS & SONS, INC.
LEGG MASON WOOD WALKER
INCORPORATED
JULY 18, 1995
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