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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) MAY 17, 1996
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WASHINGTON REAL ESTATE INVESTMENT TRUST
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Maryland 1-6622 53-0261100
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(State or other jurisdiction of (Commission File (IRS Employer
incorporation) Number) Identification Number)
</TABLE>
<TABLE>
<S> <C>
10400 Connecticut Avenue, Kensington, Maryland 20895
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(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (301) 929-5900
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This form 8-K/A (Amendment No. 1) amends the current report on
Form 8-K filed by Washington Real Estate Investment Trust
("WRIT") on May 31, 1996.
Item 7. of the report is amended as follows:
FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The acquisition on May 17, 1996 of Maryland Trade
Center I and II ("MTC I & II") when aggregated with a
previously reported acquisition completed on March
13, 1996, constitutes the acquisition of a
"significant amount of assets" as defined in
Regulation S-X. The following financial statements
for a substantial majority of the assets acquired
are filed as an exhibit hereto:
1. Maryland Trade Center I & II - Audited
Historical Summary of Gross Income and Direct
Operating Expenses for the year ended
December 31, 1995.
In acquiring MTC I & II, WRIT evaluated among other
things, sources of revenue (including but not limited
to, competition in the rental market, comparative
rents and occupancy rates) and expenses (including but
not limited to, utility rates, ad valorem tax rates,
maintenance expenses and anticipated capital
expenditures). WRIT, after reasonable inquiry, is not
aware of any material factors relating to MTC I & II
that would cause the reported information not to be
necessarily indicative of future operating results.
(b) Pro Forma Financial Information -
The following pro forma financial statements for a
substantial majority of the assets acquired are
filed an exhibit hereto:
1. WRIT Unaudited Pro Forma Condensed Balance
Sheet as of December 31, 1995 and the
Statement of Operations for the year ended
December 31,1995.
(c) Exhibits
23. Consent of Auditors'
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this amendment 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 &
Chief Accounting Officer
July 25, 1996
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(Date)
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MARYLAND TRADE CENTER
I AND II
December 31, 1995
<PAGE> 5
MARYLAND TRADE CENTER I AND II
CONTENTS
Page
----
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 3-4
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[STOY-MALONE LOGO] Stoy, Malone & Company, P.C.
Certified Public Accounts
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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 Maryland Trade Center I and II ("Historical Summary") for
the year ended December 31, 1995. This Historical Summary is the responsibility
of the Buildings' 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
Buildings' 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 Maryland Trade Center I and II for the year ended December 31,
1995, in conformity with generally accepted accounting principles.
STOY, MALONE & COMPANY, P.C.
Bethesda, Maryland
June 18, 1996
1
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MARYLAND TRADE CENTER I AND II
HISTORICAL SUMMARY OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
Year Ended December 31, 1995
<TABLE>
<CAPTION>
Maryland Maryland
Trade Trade
Center I Center II Totals
---------- ---------- ----------
<S> <C> <C> <C>
Gross income:
Base rent $3,483,691 $2,560,544 $6,044,235
Real estate tax recoveries 33,355 778 34,133
Other 585 500 1,085
---------- ---------- ----------
Total gross income $3,517,631 $2,561,822 $6,079,453
---------- ---------- ----------
Direct operating expenses:
Cleaning $ 170,835 $ 157,773 $ 328,608
Grounds maintenance 16,037 16,274 32,311
Insurance 8,895 8,252 17,147
Real estate taxes 300,111 248,528 548,639
Repairs and maintenance 246,722 131,723 378,445
Security 32,047 31,696 63,743
Utilities 435,728 358,587 794,315
Other 225 225 450
---------- ---------- ----------
Total direct operating expenses $1,210,600 $ 953,058 $2,163,658
---------- ---------- ----------
</TABLE>
The Notes to Historical Summary of Gross Income and Direct Operating Expenses
are an integral part of this summary.
2
<PAGE> 8
MARYLAND TRADE CENTER I AND II
NOTES TO HISTORICAL SUMMARY OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
NOTE 1 - NATURE OF BUSINESS:
Maryland Trade Center I and II ("MTC I and II") are two office buildings
located in Greenbelt, Maryland. MTC I and II contain approximately 191,000 and
159,000 rentable square feet, respectively.
The operations of MTC I and II consist of leasing commercial office space to
various tenants. Real estate taxes billed to the tenants are recognized in the
period the expenses are incurred. Certain leases provide for adjustments to
rent based on increases in the consumer price index (CPI). Rent based on
increases in the CPI totaled $222,170 for MTC I and is reflected in base rent
in the Historical Summary. There was no significant rent based on increases in
the CPI for MTC II.
All leases are classified as operating leases and expire at various dates prior
to 2003. The following is a schedule by years of future minimum rents
receivable on noncancelable operating leases.
<TABLE>
<CAPTION>
Maryland Maryland
Trade Trade
Center I Center II Totals
---------- ---------- ----------
<S> <C> <C> <C>
1996 $3,109,428 $2,648,200 $ 5,757,628
1997 2,420,083 2,437,537 4,857,620
1998 1,676,123 2,063,635 3,739,758
1999 519,651 768,736 1,288,387
2000 241,644 350,764 592,408
Thereafter 95,045 335,171 430,216
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$8,061,974 $8,604,043 $16,666,017
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</TABLE>
During the year ended December 31, 1995, one tenant accounted for approximately
19% of the base rents recognized for MTC I and three tenants in the aggregate
accounted for approximately 27% for the base rents recognized for MTC II in the
Historical Summary.
3
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MARYLAND TRADE CENTER I AND II
NOTES TO HISTORICAL SUMMARY OF GROSS INCOME AND
DIRECT OPERATING EXPENSES (Cont'd.)
NOTE 2 - BASIS OF PRESENTATION:
Washington Real Estate Investment Trust purchased MTC I and II on May 17, 1996.
The 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
MTC I and II, exclusive of the following expenses which may not be comparable
to the proposed future operations:
(a) Interest expense on existing mortgages and borrowings
(b) Depreciation of property and equipment
(c) Management and leasing fees
(d) Provisions for income taxes
4
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WASHINGTON REAL ESTATE INVESTMENT TRUST
PRO FORMA CONDENSED BALANCE SHEET AND STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
The pro forma Balance Sheet at December 31, 1995 presents
combined financial information as if the acquisition of MTC I & II had taken
place on December 31, 1995. The pro forma Statement of Operations for the year
ended December 31, 1995 presents combined financial information as if the
acquisition of MTC I & II had taken place as of January 1, 1995. WRIT purchased
Maryland Trade Center I & II on May 17, 1996.
The pro forma statement of operations shows earnings in the
amount of $1,237,961 after giving effect to certain pro forma adjustments
required to reflect the operating results as if both properties had been
acquired by WRIT at the beginning of 1995.
<TABLE>
<CAPTION>
PRO FORMA BALANCE SHEET
DECEMBER 31, 1995
PRO
FORMA PRO
REGISTRANT ADJ'S FORMA
---------- --------- ------------
<S> <C> <C> <C>
Assets
Real estate at cost $272,597,214 (1) 28,415,633 301,012,847
Accumulated depreciation (41,021,586) - (41,021,586)
------------ ------------ -------------
231,575,628 28,415,633 259,991,261
Mortgage note receivable 800,000 - 800,000
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Total Investment in Real Estate 232,375,628 28,415,633 260,791,261
Cash and temporary investments, receivables,
prepaid expenses and other assets 9,407,879 (1) (140,541) 9,267,338
------------ ------------ -------------
$241,783,507 $28,275,092 $270,058,599
============ ============ =============
Liabilities
Mortgage note payable $7,706,346 - $7,706,346
Line of credit payable 28,000,000 (1) 28,000,000 56,000,000
Accounts payable and other liabilities 4,514,758 - 4,514,758
Tenant security deposits 1,827,725 (1) 275,092 2,102,817
------------ ------------ -------------
42,048,829 28,275,092 70,323,921
Shareholders' Equity
Shares of beneficial interest, unlimited
authorization, without par value 184,416,013 - 184,416,013
Undistributed gains on real estate
dispositions 15,318,665 - 15,318,665
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199,734,678 - 199,734,678
------------ ------------ -------------
$241,783,507 $28,275,092 $270,058,599
============ ============ =============
</TABLE>
(1) Adjustment to reflect purchase cost of $28,415,633 funded with $415,633
of temporary investment proceeds and $28,000,000 of short term debt.
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WASHINGTON REAL ESTATE INVESTMENT TRUST
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRO
FORMA PRO
REGISTRANT MTC I MTC II ADJ'S FORMA
------------- ------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Real estate revenue $52,597,497 $3,517,631 $2,561,822 - 58,676,950
Real estate expenses (16,600,615) (1,210,600) (953,058)(1) (238,327) (19,002,600)
----------- ---------- ---------- ------------ -----------
35,996,882 2,307,031 1,608,764 (238,327) 39,674,350
Depreciation (5,083,742) - - (2) (742,007) (5,825,749)
----------- ---------- ---------- ------------ -----------
Income from real estate 30,913,140 2,307,031 1,608,764 (980,334) 33,848,601
Other income (expense)
Investment income 715,189 - - - 715,189
Interest expense (2,169,801) - - (3) (1,697,500) (3,867,301)
General and administrative (3,355,199) - - - (3,355,199)
----------- ---------- ---------- ------------ -----------
Net income $26,103,329 $2,307,031 $1,608,764 ($2,677,834) $27,341,290
=========== ========== ========== ============ ===========
Net income per share $0.88 $0.92
Weighted average number
of shares 29,786,933 29,786,933
</TABLE>
(1) Property management fees based on rate schedule paid by Registrant and
property administrative expenses.
(2) Depreciation over 30 years, based upon the portion of the puchase price
allocated to building and improvements.
(3) Interest expense of $1,697,500 based on Registrant's borrowing rate of
6.0625% on $28,000,000 borrowed for the acquisition of MTC I & II.
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EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement No.
333-5777 on Form S-3 and the related Prospectus, of our report dated June 18,
1996, relating to the audited historical summary of gross income and direct
operating expenses of Maryland Trade Center I and II, for the year ended
December 31, 1995, which report is included in the Trust's Current Report on
Form 8-K/A, Amendment No. 1, dated on July 25, 1996.
STOY, MALONE & COMPANY, P.C.
Bethesda, Maryland
July 25, 1996
