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) APRIL 25, 2000
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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 Data
included in the Trust's press release, dated April 25, 2000.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit
Number
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99.1 Press Release, April 25, 2000, entitled
"Supplemental Data"
<PAGE>
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
April 25, 2000
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(Date)
<PAGE>
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:
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(Signature)
Larry E. Finger
Senior Vice President
Chief Financial Officer
April 25, 2000
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(Date)
<PAGE>
Exhibit
Number
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99.1 Press Release, April 25, 2000, entitled "Supplemental Data"
EXHIBIT 99.1
NEWS RELEASE
[WRIT GRAPHIC APPEARS HERE]
Washington Real Estate Investment Trust
<TABLE>
<CAPTION>
<S> <C> <C>
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.writ.com
E-Mail: [email protected] Fax 301-984-9610
FOR IMMEDIATE RELEASE APRIL 25, 2000
PAGE 1 OF 6
</TABLE>
WASHINGTON REAL ESTATE INVESTMENT TRUST
1ST QUARTER 2000 FFO PER SHARE UP 17%
Washington Real Estate Investment Trust (WRIT) reported today that Funds From
Operations (FFO) per share increased 16.7% to $0.42 in the first quarter of 2000
from $0.36 in the first quarter of 1999. FFO increased 15.1% to $14,842,000 for
the quarter ended March 31, 2000 from $12,900,000 for the quarter ended March
31, 1999. 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 9.3%." 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 56 properties consisting of 11
retail centers, 21 office buildings, 9 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
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<TABLE>
<CAPTION>
FOR IMMEDIATE RELEASE APRIL 25, 2000
PAGE 2 OF 7
WASHINGTON REAL ESTATE INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
(IN THOUSANDS EXCEPT PER SHARE DATA)
QUARTER ENDED MARCH 31,
OPERATING RESULTS 2000 1999
- ----------------------------------------- ------------------ -------------------
<S> <C> <C>
Real estate rental revenue $31,935 $27,654
Real estate expenses (9,372) (8,423)
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22,563 19,231
Real estate depreciation and amortization (5,430) (4,451)
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INCOME FROM REAL ESTATE $17,133 $14,780
Other income 149 204
Interest expense (6,090) (5,220)
General and administrative (1,780) (1,315)
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INCOME BEFORE GAIN ON SALE OF REAL ESTATE $9,412 $8,449
Gain on sale of real estate 1,498 7,909
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NET INCOME $10,910 $16,358
================== ===================
INCOME BEFORE GAIN ON REAL ESTATE PER SHARE
(BASIC) $0.26 $0.24
================== ===================
INCOME BEFORE GAIN ON REAL ESTATE PER SHARE
(DILUTED)
$0.26 $0.24
================== ===================
NET INCOME PER SHARE (BASIC) $0.31 $0.46
================== ===================
NET INCOME PER SHARE (DILUTED) $0.31 $0.46
================== ===================
Income before gain on sale of real $9,412 $8,449
estate
Real estate depreciation and 5,430 4,451
amortization
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FUNDS FROM OPERATIONS $14,842 $12,900
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FUNDS FROM OPERATIONS PER SHARE (BASIC)
$.042 $0.36
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FUNDS FROM OPERATIONS PER SHARE
(DILUTED) $0.42 $0.36
================== ===================
DIVIDENDS PAID PER SHARE $0.2925 $0.28
================== ===================
Weighted average shares outstanding 35,733,793 35,708,178
Fully diluted weighted average shares 35,763,470 35,726,789
outstanding
AS OF AS OF
BALANCE SHEET DATA MARCH 31, 2000 DECEMBER 31, 1999
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Cash and temporary investments $3,458 $4,716
Real estate assets, at cost (1) 665,286 661,870
Total assets, at cost (1) 694,953 692,054
Lines of credit payable 35,000 33,000
Mortgage notes payable 86,851 87,038
Notes payable 210,000 210,000
Total liabilities 347,990 349,769
Shareholders' equity 257,803 257,189
Shareholders' equity, at cost (1) 345,438 340,763
(1) At cost means adding back accumulated depreciation.
CONTINUED
</TABLE>
<PAGE>
WASHINGTON REAL ESTATE INVESTMENT TRUST
Q1 2000 SUPPLEMENTAL DISCLOSURES
PAGE 3 OF 7
WRIT Continues to Produce Significantly Higher FFO Per Share Growth than
the REIT Industry
As reflected in the following graph WRIT's FFO per share growth, as compared to
the corresponding quarter in the preceding calendar year, continues to
significantly outperform the industry.
[COMPARISON BAR GRAPH APPEARS HERE WITH THE FOLLOWING PLOT POINTS]
<TABLE>
<CAPTION>
Q2 1999 Q3 1999 Q4 1999 Q1 2000 Average
<S> <C> <C> <C> <C> <C>
WRIT* 11.7% 11.8% 13.6% 12.2% 12.3%
REIT Industry ** 8.8% 8.2% 8.1% 8.4%
</TABLE>
*WRIT growth is shown excluding accounting change to straight-line rents in Q4
1999.
**REIT Industry data for Q2 1999 - Q4 1999 is actual FFO per share growth per
DLJ Equity REIT Research. Q1 2000 Industry data is not yet available.
CORE PORTFOLIO OPERATING INCOME (NOI) GROWTH, RENTAL RATE GROWTH, NET REVENUE
GROWTH AND OPERATING EXPENSE
INCREASE BY SECTOR - Q1 2000 VS. Q1 1999
<TABLE>
<CAPTION>
RENTAL RATE NET REVENUE OPERATING
SECTOR NOI GROWTH* GROWTH* GROWTH* EXP. INCR(DECR)
------ ----------- ------- ------- ---------------
<S> <C> <C> <C> <C>
Apartments 13.7% 4.7% 8.3% -3.2%
Office Buildings 11.3% 6.3% 10.2% 1.6%
Retail Centers 1.9% 4.8% 1.6% 0.8%
Industrial/Flex Centers 6.1% 2.4% 5.6% 2.6%
------ ------ ------ ------
OVERALL CORE PORTFOLIO 9.3% 5.2% 7.8% 0.4%
</TABLE>
*Growth is shown excluding effect of accounting change to straight-line rents in
Q4 1999.
CONTINUED
<PAGE>
WASHINGTON REAL ESTATE INVESTMENT TRUST
Q1 2000 SUPPLEMENTAL DISCLOSURES
PAGE 4 OF 7
CORE PORTFOLIO & OVERALL OCCUPANCY LEVELS BY SECTOR
<TABLE>
<CAPTION>
CORE PORTFOLIO ALL PROPERTIES
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1ST QTR 1ST QTR 1ST QTR 1ST QTR
SECTOR 2000 1999 2000 1999
- ------ ---- ---- ---- ----
<S> <C> <C> <C> <C>
Apartments 97.7% 95.4% 97.1% 95.4%
Office Buildings 97.3% 98.3% 97.2% 98.4%
Retail Centers 94.7% 94.0% 94.6% 94.2%
Industrial/Flex Centers 94.8% 93.1% 95.4% 93.6%
----- ----- ----- -----
OVERALL PORTFOLIO 96.7% 96.4% 96.6% 96.5%
</TABLE>
WRIT Continues to Produce Significantly Higher Core Portfolio Growth than the
REIT Industry.
As reflected in the following graph WRIT's core portfolio NOI growth, as
compared to the corresponding quarter in the preceding calendar year, continues
to significantly outperform the industry.
[COMPARISON BAR GRAPH APPEARS HERE WITH THE FOLLOWING PLOT POINTS]
<TABLE>
<CAPTION>
Q2 1999 Q3 1999 Q4 1999 Q1 2000 Average
<S> <C> <C> <C> <C> <C>
WRIT* 8.6% 6.8% 7.4% 9.3% 8.0%
REIT Industry ** 5.3% 5.4% 5.6% 5.4%
</TABLE>
*WRIT growth is shown excluding accounting change to straight-line rents in Q4
1999.
**REIT Industry Same Store NOI growth data is per Salomon Smith Barney Equity
REIT Research. Q1 2000 Industry data is not yet available.
CAPITAL IMPROVEMENTS SUMMARY
During Q1 2000, WRIT invested $4.1 million in real estate capital improvements.
A breakdown of these improvements is as follows (in 000's):
Accretive Capital Improvements
Acquisition Related $ 216
Expansions & Major Renovations 1,065
Tenant Improvements 1,466
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Total Accretive Capital Improvements 2,747
Recurring Capital Improvements 1,403
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Total Capital Improvements $4,150
<PAGE>
CONTINUED
WASHINGTON REAL ESTATE INVESTMENT TRUST
Q1 2000 SUPPLEMENTAL DISCLOSURES
PAGE 5 OF 7
Q1 2000 COMMERCIAL LEASING ACTIVITY
In Q1 2000, WRIT executed leases for 427,000 square feet of commercial space at
a weighted average increase of 9.2% over the prior rent in place on a cash,
i.e., non-straight lined basis. Details by sector are as follows:
<TABLE>
<CAPTION>
SQUARE PREVIOUS NEW
SECTOR FEET FACE RENT FACE RENT $ INCREASE % INCREASE
- ------ --------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Office 148,198 $20.75 $ 24.16 $ 3.41 16.4%
Retail 24,903 14.58 16.92 2.34 16.1%
Industrial/Flex* 253,849* 6.31* 5.92* (.39)* (6.2%)*
-------- ------- ------- ------ -------
OVERALL* 426,950* $11.81* $12.89* $ 1.09* 9.2%*
AVG TERM AVERAGE AVERAGE
SECTOR (YEARS) SQUARE FOOTAGE TENANT IMP./SF
- ------ ------- ------------- --------------
Office 2.9 2,850 $3.64
Retail 4.9 2,075 1.87
Industrial/Flex* 5.0* 11,539* 3.49*
-------- --------- -------
OVERALL 4.3* 4,965* $3.45*
</TABLE>
*In Q1 2000, WRIT signed a 68,750 square foot, 5 year lease extension at the
Pepsi Bottling Facility. This lease, due to a variety of factors unique to this
lease, was substantially above the market rent at its expiration. This renewal
represented 27% of the Industrial/Flex square footage leased during the quarter
and 16% of the Overall square footage leased during the quarter. It therefore
had a disproportionate effect on the quarter's lease transaction averages. For
ease of comparability, the following table provides the Q1 data, excluding this
Pepsi renewal.
<TABLE>
<CAPTION>
SQUARE PREVIOUS NEW
SECTOR FEET FACE RENT FACE RENT $ INCREASE % INCREASE
- ------ --------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Office 148,198 $20.75 $ 24.16 $ 3.41 16.4%
Retail 24,903 14.58 16.92 2.34 16.1%
Industrial/Flex 185,099 5.21 6.45 1.24 23.7%
------- ---- ---- ---- -----
OVERALL 358,200 $12.29 $14.50 $ 2.21 18.0%
AVG TERM AVERAGE AVERAGE
SECTOR (YEARS) SQUARE FOOTAGE TENANT IMP./SF
- ------ ------- ------------- --------------
Office 2.9 2,850 $3.64
Retail 4.9 2,075 1.87
Industrial/Flex 5.0 8,814 4.25
----- ------- ------
OVERALL 4.3 4,214 $3.83
</TABLE>
<PAGE>
CONTINUED
WASHINGTON REAL ESTATE INVESTMENT TRUST
Q1 2000 SUPPLEMENTAL DISCLOSURES
PAGE 6 OF 7
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 83% 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.
As of December 31, 1999, i.e., in the 19 months since acquisition, WRIT has
executed leases for 525,000 square feet at a weighted average $5.31 NNN psf.
This average rent is 25% above the average rent in the park at acquisition.
NVIP was 92% leased as of March 31,2000.
Q1 2000 ACQUISITIONS
833 SOUTH WASHINGTON STREET, a mixed-use retail/office building and an adjoining
parking lot in Alexandria, Virginia was acquired for $1.35 Million, cash on
February 16, 2000. WRIT now owns 100% of the frontage of the 800 Block of South
Washington Street and the adjoining off-street parking.
The 6,026 square foot building and .24 acres of land are strategically located
in historic Old Town Alexandria, Virginia. The building is currently unoccupied,
but WRIT is completing negotiations with a national retailer to occupy the
entire building. WRIT's existing properties on South Washington Street are 100%
leased to 15 tenants including Williams-Sonoma, Laura Ashley, Storehouse
Furniture and Next Day Blinds. WRIT's holdings on South Washington Street now
total 42,326 square feet of retail space, 5,600 square feet of office space and
2,800 square feet of warehouse space. Over 100,000 people live within the
three-mile radius surrounding the property with an average household income of
over $86,000.
The acquisition includes the adjoining parking lot at 828 South Columbus Street
which contains off-street parking for approximately 21 cars (3.48 spaces/1,000
square feet). With off-street parking being very scarce in Old Town Alexandria,
this parking lot is a very significant amenity to the property's tenants and
their customers. It also increases the overall parking at WRIT's South
Washington Street properties to 78 spaces (1.5 spaces/1,000 square feet)
WRIT plans on investing approximately $75,000 in immediate capital improvements
to ready the building for occupancy. Major categories of improvements include
exterior repairs and painting, HVAC replacement and parking lot repairs.
Q1 2000 DISPOSITIONS
Prince William Plaza Shopping Center in Woodbridge, Virginia was sold for $2.8
million, resulting in a gain of approximately $1.5 million on March 1,2000. The
purchaser was a local investor.
CONTINUED
<PAGE>
WASHINGTON REAL ESTATE INVESTMENT TRUST
Q1 2000 SUPPLEMENTAL DISCLOSURES
PAGE 7OF 7
Built in 1967, the property contains approximately 54,600 square feet of retail
space and had been in the WRIT portfolio since 1968. This is WRIT's eigth
property sale under its strategic plan to dispose of properties which do not fit
our long term objectives. This program, which commenced in 1998, has resulted in
a total of $36.2 million in property sales and total gains of $16.2 million.
WRIT anticipates that this sale will be the first step of a tax-deferred
exchange whereby WRIT reinvests the sales proceeds on a tax-free basis in
another real estate property.
MARCH 31, 2000 DEBT SUMMARY
At March 31, 2000, WRIT's debt was as follows (in $millions):
<TABLE>
<CAPTION>
Wtd Avg Wtd Avg
Amount Maturity (Yrs) Interest Rate
------ -------------- -------------
<S> <C> <C> <C>
Secured $ 86.9 7.6 7.5%
Senior Notes & MTNs $ 210.0 11.2 7.2%
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Subtotal $ 296.7 10.2 7.3%
Lines of Credit $ 35.0 2.1 7.1%
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Total Debt $ 331.9 9.3 7.2%
</TABLE>
*WRIT's Lines of Credit total $75 million of capacity at LIBOR+ 70bp.
No more than $60 million of debt matures in any one year and less than $1
million matures in each year until 2003.
END
