SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 26, 1999
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WASHINGTON REAL ESTATE INVESTMENT TRUST
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(Exact name of registrant as specified in its charter)
Maryland 1-6622 53-0261100
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(State or other jurisdiction of (Commission File (IRS Employer
incorporation) Number) Identification Number)
6110 Executive Boulevard, Suite 800, Rockville, Maryland 20852
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301) 984-9400
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<PAGE>
ITEM 5 OTHER EVENTS
Attached hereto as Exhibit 99.1 is a copy of certain Supplemental
Disclosures included in the Trust's press release, dated July 26,1999.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit
Number
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99.1 Press Release, July 26,1999, entitled "Supplemental
Disclosures"
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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/ Larry E. Finger
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(Signature)
Larry E. Finger
Senior Vice President
Chief Financial Officer
July 27, 1999
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(Date)
<PAGE>
Exhibit
Number
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99.1 Press Release, July 26,1999, entitled "Supplemental Disclosures"
NEWS RELEASE
[WRIT Washington Real Estate Investment Trust LOGO HERE]
CONTACT: 6110 Executive Boulevard Listed: NYSE
Larry E. Finger Suite 800 Trading Symbol: WRE
Senior V.P. - C.F.O. Rockville, Maryland 20852 Newspaper Quote: WRIT
Direct Dial: (301) 255-0820 Tel 301-984-9400 www.washreit.com
E-Mail: [email protected] Fax 301-984-9610
FOR IMMEDIATE RELEASE July 26, 1999
Page 1 of 6
WASHINGTON REAL ESTATE INVESTMENT TRUST
2nd Quarter 1999 FFO Per Share Up 12%
Washington Real Estate Investment Trust (WRIT) reported today that Funds From
Operations (FFO) per share increased 11.7% to $0.38 in the second quarter of
1999 from $0.34 in the second quarter of 1998. FFO increased 11.5% to
$13,409,000 for the quarter ended June 30, 1999 from $12,030,000 for the quarter
ended June 30, 1998. FFO is the primary performance measure for the REIT
industry.
Edmund B. Cronin, Jr., President and CEO, stated that WRIT's FFO growth is due
to the excellent performance of recent acquisitions, combined with the strong
core portfolio net operating income increase of 8.6%. WRIT's core portfolio
excludes properties not owned for the entirety of both periods being compared.
WRIT is a self-administered, self-managed, equity real estate investment trust
investing in income-producing properties in the greater Washington-Baltimore
region. The Trust owns a diversified portfolio of 55 properties consisting of 12
retail centers, 20 office buildings, 8 apartment properties and 15
industrial/flex properties.
WRIT dividends have increased every year for 28 consecutive years. During these
28 years, WRIT's dividends have been increased 36 times, a record unmatched by
any other publicly traded real estate investment trust. WRIT's shares are
publicly traded on the New York Stock Exchange (symbol: WRE).
CERTAIN STATEMENTS IN THIS PRESS RELEASE ARE "FORWARD-LOOKING STATEMENTS" WITHIN
THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT
MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY. SUCH RISKS, UNCERTAINTIES AND
OTHER FACTORS INCLUDE, BUT ARE NOT LIMITED TO, FLUCTUATIONS IN INTEREST RATES,
AVAILABILITY OF RAW MATERIALS AND LABOR COSTS, LEVELS OF COMPETITION, THE EFFECT
OF GOVERNMENT REGULATION, THE AVAILABILITY OF CAPITAL, WEATHER CONDITIONS AND
CHANGES IN GENERAL ECONOMIC CONDITIONS.
CONTINUED
<PAGE>
FOR IMMEDIATE RELEASE July 26, 1999
Page 2 of 6
WASHINGTON REAL ESTATE INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
(in thousands except per share data)
<TABLE>
<CAPTION>
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
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OPERATING RESULTS 1999 1998 1999 1998
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<S><C>
Real estate rental revenue $28,864 $25,413 $56,518 $49,914
Real estate expenses (8,595) (7,812) (17,100) (14,942)
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20,269 17,601 39,418 34,972
Real estate depreciation and
amortization (4,644) (3,743) (9,095) (7,383)
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INCOME FROM REAL ESTATE $15,625 $13,858 $30,323 $27,589
Other income 232 316 437 547
Interest expense (5,386) (4,237) (10,607) (8,015)
General and administrative (1,706) (1,650) (2,939) (3,178)
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INCOME BEFORE GAIN ON SALE OF
REAL ESTATE $8,765 $8,287 $17,214 $16,943
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Gain on sale of real estate - 64 7,909 5,926
NET INCOME $8,765 $8,351 $25,123 $22,869
========= ============= ============= =============
INCOME BEFORE GAIN ON REAL ESTATE
PER SHARE $0.25 $0.23 $0.48 $0.47
========= ============= ============= =============
NET INCOME PER SHARE $0.25 $0.23 $0.70 $0.64
========= ============= ============= =============
Income before gain on sale of
real estate $8,765 $8,287 $17,214 $16,943
Real estate depreciation and
amortization 4,644 3,743 9,095 7,383
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FUNDS FROM OPERATIONS $13,409 $12,030 $26,309 $24,326
========= ============= ============= =============
FUNDS FROM OPERATIONS PER
SHARE $0.38 $0.34 $0.74 $0.68
========= ============= ============= =============
DIVIDENDS PAID PER SHARE $0.2925 $0.28 $0.5725 $0.55
========= ============= ============= =============
Weighted average shares
outstanding 35,709,789 35,685,138 35,708,988 35,684,566
</TABLE>
AS OF AS OF
JUNE 30, DECEMBER 31,
BALANCE SHEET DATA 1999 1998
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Cash and temporary
investments $5,320 $4,595
Real estate assets, at cost (1) 631,985 598,874
Total assets, at cost (1) 659,336 627,008
Lines of credit payable 66,000 44,000
Mortgage note payable 28,642 28,912
Notes payable 210,000 210,000
Total liabilities 325,581 303,447
Shareholders' equity 258,685 253,733
Shareholders' equity, at cost (1) $332,210 $322,034
(1) At cost means adding back accumulated depreciation.
CONTINUED
<PAGE>
Washington Real Estate Investment Trust
Q2 1999 Supplemental Disclosures
Page 3 of 6
CORE PORTFOLIO OPERATING INCOME (NOI) GROWTH, RENTAL RATE GROWTH, NET REVENUE
GROWTH AND OPERATING EXPENSE INCREASE BY SECTOR - Q2 1999 VS. Q2 1998
NOI RENTAL RATE NET REVENUE OPERATING
SECTOR GROWTH GROWTH GROWTH EXP. INCREASE
------ ------ ----------- ----------- -------------
Apartments 4.1% 3.5% 3.8% 3.2%
Office Buildings 11.1% 5.0% 7.3% -0.2%
Retail Centers 10.1% 2.3% 8.9% 9.0%
Industrial/Flex
Centers 4.3% 6.6% 4.2% 3.6%
---- ---- ---- ----
OVERALL CORE PORTFOLIO 8.6% 4.4% 6.4% 2.1%
CORE PORTFOLIO & OVERALL OCCUPANCY LEVELS BY SECTOR
CORE PORTFOLIO ALL PROPERTIES
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2ND QTR 2ND QTR 2ND QTR 2ND QTR
SECTOR 1999 1998 1999 1998
- ------ ---- ---- ---- ----
Apartments 95.9% 94.9% 95.9% 94.9%
Office Buildings 98.3% 96.2% 98.2% 96.1%
Retail Centers 97.5% 94.5% 95.5% 93.7%
Industrial/Flex Centers 97.9% 95.7% 94.5% 93.7%
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OVERALL PORTFOLIO 97.6% 95.6% 96.8% 95.2%
CAPITAL IMPROVEMENTS SUMMARY
During Q2 1999, WRIT invested $3.2 million in real estate capital improvements.
A breakdown of these improvements is as follows (in 000's):
Accretive Capital Improvements
Acquisition Related $ 943
Expansions & Major Renovations 1,206
Tenant Improvements 346
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Total Accretive Capital Improvements 2,495
Recurring Capital Improvements 670
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Total Capital Improvements $3,165
CONTINUED
<PAGE>
Washington Real Estate Investment Trust
Q2 1999 Supplemental Disclosures
Page 4 of 6
Q2 1999 COMMERCIAL LEASING ACTIVITY
In Q2 1999, WRIT executed leases for 348,000 square feet of commercial space at
a weighted average initial face rate of $14.57 psf. This represents an increase
of 16.2% ($2.03 psf) over the prior rent in place on a cash, i.e., non-straight
line basis. Details by sector are as follows:
PREVIOUS NEW
SECTOR SQUARE FEET FACE RENT FACE RENT $ INCREASE % INCREASE
- ------ ----------- --------- --------- ---------- ----------
Office 150,828 $19.27 $ 22.92 $ 3.65 18.9%
Retail 64,237 10.41 11.62 1.21 11.6%
Industrial/Flex 133,371 5.94 6.54 .60 10.0%
------- ---- ---- --- -----
OVERALL 348,436 $12.54 $14.57 $ 2.03 16.2%
AVG TERM AVERAGE AVERAGE
SECTOR (YEARS) SQUARE FEET TENANT IMP.
- ------ -------- ----------- -----------
Office 4.7 3,078 $4.71
Retail 4.9 4,941 .92
Industrial/Flex 2.7 8,891 .23
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OVERALL 4.0 4,525 $2.03
Of particular note was a lease at WRIT's Tycon III office building in Tysons
Corner, Virginia. A major internet company leased 14,140 square feet of below
grade space for $20 per square foot, plus electric, with $3.54 per square foot
in tenant improvements. The lease is for 10 years with 3% annual escalations in
the base rent. This space had most recently been leased at $13.55 per square
foot, but demand for the space was very high due to its close proximity to the
Mae-East Internet peering point.
NORTHERN VIRGINIA INDUSTRIAL PARK UPDATE
On May 22, 1998 WRIT acquired the 790,000 square foot Northern Virginia
Industrial Park (NVIP). At acquisition, the property was 82.8% leased at an
average per square foot rent of $4.25 NNN. Upon acquisition, WRIT reported that
the property had been under-managed and that the market vacancy rate was
approximately 1/2 the project vacancy rate. In addition, WRIT indicated that
market rents for the property, in a well managed condition, would range from
$5.00 to $5.50 NNN, depending on the interior office build-out of the various
spaces.
CONTINUED
<PAGE>
Washington Real Estate Investment Trust
Q2 1999 Supplemental Disclosures
Page 5 of 6
As of June 30, 1999, i.e., in the 13 months since acquisition, WRIT has executed
leases for 225,000 square feet at a weighted average $5.41 NNN psf. This average
rent is 27% above the average rent in the park at acquisition.
Q2 1999 ACQUISITIONS
600 JEFFERSON PLAZA and 1700 RESEARCH BOULEVARD, two Rockville, Maryland office
buildings, were acquired on May 24, 1999, for $27 million cash. The buildings
contain a total of 217,000 rentable square feet plus parking and were 99% leased
at acquisition. At an average purchase price of $124 per square foot, the
buildings were acquired at a substantial discount to replacement cost.
The properties are anticipated to produce a first year cash return on investment
(ROI) of 9.4%. This first year ROI is anticipated to grow by over 5% per year
over the first five years due to the average rents in the property being more
than 19% below current market rents.
SULLY SQUARE, a three building flex/industrial complex in Chantilly, Virginia
was acquired for $7.5 million, cash, on April 16, 1999. Sully Square contains
95,000 rentable square feet and was 100% leased at acquisition. Leases for
approximately 15% of the rentable area in the property will expire in 1999 at
rents which are more than 30% below market. The acquisition is anticipated to
produce a first year cash return on investment of 9.9%.
The property is located in the fully completed Sullyfield Business Park, which
contains approximately 1.6 million square feet in 28 buildings. Dulles South IV,
a 100% leased, 83,000 square foot flex/industrial property acquired by WRIT in
January 1999, is also located in the Park. Sullyfield Business Park is located
1/2 mile from the Route 50 & Route 28 interchange, directly across from Dulles
Business Park, another master-planned business park containing the 92,000-square
foot Earhart Building, a 100% leased flex building acquired by WRIT in December
1996.
WRIT now owns 6 office buildings, containing over 730,000 square feet, in the
Rockville sub-market and 6 flex buildings, containing 270,000 square feet, in
the Chantilly sub-market. These strong market positions will give WRIT
significant synergistic leasing opportunities to accommodate the changing needs
of the more than 200 tenants in these properties.
A portion of the cash required for these purchases was provided by WRIT's Q1
1999 property dispositions, thereby allowing WRIT to defer recognition of the
gain on sale for tax purposes.
KIVEX.COM AND STARPOWER COMMUNICATIONS AGREEMENTS
During Q2 1999, WRIT signed agreements with Kivex.com and Starpower
Communications to offer low cost, high speed internet access, cable TV and local
& long distance telephone service to its tenants.
CONTINUED
<PAGE>
WASHINGTON REAL ESTATE INVESTMENT TRUST
Q2 1999 SUPPLEMENTAL DISCLOSURES
PAGE 6 OF 6
Kivex.com will offer T1 Internet access to WRIT's office building tenants
through their multi-tenant Internet Building(TM) program. This program provides
T1 Internet access, which is up to 100 times faster than dial-up modems and over
12 times faster than ISDN, at lower costs than these much slower alternatives.
Kivex.com is the leading Internet Service Provider (ISP) to multi-tenant
commercial office buildings in the U.S. In addition to high speed Internet
access, Kivex.com services will include POP3 e-mail, corporate website hosting,
firewall protection, LAN/WAN connectivity, 24X7 network monitoring, and a toll
free help support desk.
Starpower will offer WRIT's residential tenants high speed internet access,
cable TV, and local & long distance telephone service at up to 30% savings over
current providers. Starpower LLC is a joint venture between Potomac Electric
Power Company (PEPCO) and RCN Telecom Services.
These agreements will provide WRIT additional sources of revenue from its
existing properties, while giving these properties a competitive advantage in
the market.
END
