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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Washington REIT | NYSE:WRE | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 17.57 | 0 | 01:00:00 |
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|
MARYLAND
|
|
53-0261100
|
(State of incorporation)
|
|
(IRS Employer Identification Number)
|
Title of Each Class
|
|
Name of exchange on which registered
|
Shares of Beneficial Interest
|
|
New York Stock Exchange
|
Large accelerated filer
|
x
|
Accelerated filer
|
o
|
Non-accelerated filer
|
o
|
Smaller reporting company
|
o
|
|
|
Emerging growth company
|
o
|
|
|
|
Page
|
|
||
|
|
|
Item 1.
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
Item 2.
|
||
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|
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Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
|
||
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(Unaudited)
|
|
|||||
Assets
|
|
|
|
||||
Land
|
$
|
614,659
|
|
|
$
|
588,025
|
|
Income producing property
|
2,239,917
|
|
|
2,113,977
|
|
||
|
2,854,576
|
|
|
2,702,002
|
|
||
Accumulated depreciation and amortization
|
(745,829
|
)
|
|
(683,692
|
)
|
||
Net income producing property
|
2,108,747
|
|
|
2,018,310
|
|
||
Properties under development or held for future development
|
81,765
|
|
|
54,422
|
|
||
Total real estate held for investment, net
|
2,190,512
|
|
|
2,072,732
|
|
||
Investment in real estate held for sale, net
|
—
|
|
|
68,534
|
|
||
Cash and cash equivalents
|
4,810
|
|
|
9,847
|
|
||
Restricted cash
|
1,352
|
|
|
2,776
|
|
||
Rents and other receivables, net of allowance for doubtful accounts of $2,927 and $2,426, respectively
|
74,395
|
|
|
69,766
|
|
||
Prepaid expenses and other assets
|
145,448
|
|
|
125,087
|
|
||
Other assets related to properties held for sale
|
—
|
|
|
10,684
|
|
||
Total assets
|
$
|
2,416,517
|
|
|
$
|
2,359,426
|
|
Liabilities
|
|
|
|
||||
Notes payable, net
|
$
|
995,130
|
|
|
$
|
894,358
|
|
Mortgage notes payable, net
|
60,541
|
|
|
95,141
|
|
||
Line of credit
|
183,000
|
|
|
166,000
|
|
||
Accounts payable and other liabilities
|
63,683
|
|
|
61,565
|
|
||
Dividend payable
|
—
|
|
|
23,581
|
|
||
Advance rents
|
10,597
|
|
|
12,487
|
|
||
Tenant security deposits
|
9,857
|
|
|
9,149
|
|
||
Other liabilities related to properties held for sale
|
—
|
|
|
1,809
|
|
||
Total liabilities
|
1,322,808
|
|
|
1,264,090
|
|
||
Equity
|
|
|
|
||||
Shareholders’ equity
|
|
|
|
||||
Preferred shares; $0.01 par value; 10,000 shares authorized; no shares issued or outstanding
|
—
|
|
|
—
|
|
||
Shares of beneficial interest, $0.01 par value; 100,000 shares authorized; 79,844 and 78,510 shares issued and outstanding, respectively
|
798
|
|
|
785
|
|
||
Additional paid in capital
|
1,526,125
|
|
|
1,483,980
|
|
||
Distributions in excess of net income
|
(450,749
|
)
|
|
(399,213
|
)
|
||
Accumulated other comprehensive income
|
17,181
|
|
|
9,419
|
|
||
Total shareholders’ equity
|
1,093,355
|
|
|
1,094,971
|
|
||
Noncontrolling interests in subsidiaries
|
354
|
|
|
365
|
|
||
Total equity
|
1,093,709
|
|
|
1,095,336
|
|
||
Total liabilities and equity
|
$
|
2,416,517
|
|
|
$
|
2,359,426
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
Real estate rental revenue
|
$
|
82,502
|
|
|
$
|
82,819
|
|
|
$
|
253,989
|
|
|
$
|
243,776
|
|
Expenses
|
|
|
|
|
|
|
|
||||||||
Real estate expenses
|
28,571
|
|
|
29,646
|
|
|
87,975
|
|
|
86,200
|
|
||||
Depreciation and amortization
|
30,272
|
|
|
27,941
|
|
|
90,119
|
|
|
83,271
|
|
||||
General and administrative
|
5,267
|
|
|
5,327
|
|
|
16,737
|
|
|
16,712
|
|
||||
Real estate impairment
|
—
|
|
|
5,000
|
|
|
1,886
|
|
|
5,000
|
|
||||
|
64,110
|
|
|
67,914
|
|
|
196,717
|
|
|
191,183
|
|
||||
Other operating income
|
|
|
|
|
|
|
|
||||||||
Gain on sale of real estate
|
—
|
|
|
—
|
|
|
2,495
|
|
|
—
|
|
||||
Real estate operating income
|
18,392
|
|
|
14,905
|
|
|
59,767
|
|
|
52,593
|
|
||||
Other (expense) income
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(12,499
|
)
|
|
(12,176
|
)
|
|
(38,647
|
)
|
|
(35,634
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
(1,178
|
)
|
|
—
|
|
||||
Other income
|
—
|
|
|
84
|
|
|
—
|
|
|
209
|
|
||||
Income tax benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
107
|
|
||||
|
(12,499
|
)
|
|
(12,092
|
)
|
|
(39,825
|
)
|
|
(35,318
|
)
|
||||
Net income
|
5,893
|
|
|
2,813
|
|
|
19,942
|
|
|
17,275
|
|
||||
Less: Net loss attributable to noncontrolling interests in subsidiaries
|
—
|
|
|
20
|
|
|
—
|
|
|
56
|
|
||||
Net income attributable to the controlling interests
|
$
|
5,893
|
|
|
$
|
2,833
|
|
|
$
|
19,942
|
|
|
$
|
17,331
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net income attributable to the controlling interests per common share
|
$
|
0.07
|
|
|
$
|
0.04
|
|
|
$
|
0.25
|
|
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted net income attributable to the controlling interests per common share
|
$
|
0.07
|
|
|
$
|
0.04
|
|
|
$
|
0.25
|
|
|
$
|
0.22
|
|
Weighted average shares outstanding – basic
|
79,076
|
|
|
77,291
|
|
|
78,695
|
|
|
76,292
|
|
||||
Weighted average shares outstanding – diluted
|
79,238
|
|
|
77,423
|
|
|
78,802
|
|
|
76,415
|
|
||||
Dividends declared per share
|
$
|
0.30
|
|
|
$
|
0.30
|
|
|
$
|
0.90
|
|
|
$
|
0.90
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
5,893
|
|
|
$
|
2,813
|
|
|
$
|
19,942
|
|
|
$
|
17,275
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on interest rate hedges
|
1,474
|
|
|
(9
|
)
|
|
7,762
|
|
|
(763
|
)
|
||||
Comprehensive income
|
7,367
|
|
|
2,804
|
|
|
27,704
|
|
|
16,512
|
|
||||
Less: Comprehensive loss attributable to noncontrolling interests
|
—
|
|
|
20
|
|
|
—
|
|
|
56
|
|
||||
Comprehensive income attributable to the controlling interests
|
$
|
7,367
|
|
|
$
|
2,824
|
|
|
$
|
27,704
|
|
|
$
|
16,568
|
|
|
Shares Issued and Out-standing
|
|
Shares of Beneficial Interest at Par Value
|
|
Additional Paid in Capital
|
|
Distributions in Excess of
Net Income
|
|
Accumulated Other Comprehensive Income
|
|
Total Shareholders’ Equity
|
|
Noncontrolling Interests in Subsidiaries
|
|
Total Equity
|
|||||||||||||||
Balance at December 31, 2017
|
78,510
|
|
|
$
|
785
|
|
|
$
|
1,483,980
|
|
|
$
|
(399,213
|
)
|
|
$
|
9,419
|
|
|
$
|
1,094,971
|
|
|
$
|
365
|
|
|
$
|
1,095,336
|
|
Net income attributable to the controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
19,942
|
|
|
—
|
|
|
19,942
|
|
|
—
|
|
|
19,942
|
|
|||||||
Unrealized gain on interest rate hedges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,762
|
|
|
7,762
|
|
|
—
|
|
|
7,762
|
|
|||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
(11
|
)
|
|||||||
Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
(71,478
|
)
|
|
—
|
|
|
(71,478
|
)
|
|
—
|
|
|
(71,478
|
)
|
|||||||
Equity issuances, net of issuance costs
|
1,165
|
|
|
11
|
|
|
35,461
|
|
|
—
|
|
|
—
|
|
|
35,472
|
|
|
—
|
|
|
35,472
|
|
|||||||
Shares issued under dividend reinvestment program
|
74
|
|
|
1
|
|
|
1,810
|
|
|
—
|
|
|
—
|
|
|
1,811
|
|
|
—
|
|
|
1,811
|
|
|||||||
Share grants, net of forfeitures and tax withholdings
|
95
|
|
|
1
|
|
|
4,874
|
|
|
—
|
|
|
—
|
|
|
4,875
|
|
|
—
|
|
|
4,875
|
|
|||||||
Balance at September 30, 2018
|
79,844
|
|
|
$
|
798
|
|
|
$
|
1,526,125
|
|
|
$
|
(450,749
|
)
|
|
$
|
17,181
|
|
|
$
|
1,093,355
|
|
|
$
|
354
|
|
|
$
|
1,093,709
|
|
WASHINGTON REAL ESTATE INVESTMENT TRUST AND SUBSIDIARIES
|
|||||||
|
|
|
|
||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
(IN THOUSANDS)
|
|||||||
(UNAUDITED)
|
|||||||
|
|
|
|
||||
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
19,942
|
|
|
$
|
17,275
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
90,119
|
|
|
83,271
|
|
||
Provision for losses on accounts receivable
|
1,077
|
|
|
768
|
|
||
Real estate impairment
|
1,886
|
|
|
5,000
|
|
||
Gain on sale of real estate
|
(2,495
|
)
|
|
—
|
|
||
Share-based compensation expense
|
5,064
|
|
|
3,561
|
|
||
Deferred tax benefit
|
—
|
|
|
(107
|
)
|
||
Amortization of debt premiums, discounts and related financing costs
|
1,565
|
|
|
1,422
|
|
||
Loss on extinguishment of debt
|
1,178
|
|
|
—
|
|
||
Changes in operating other assets
|
(9,233
|
)
|
|
(21,603
|
)
|
||
Changes in operating other liabilities
|
(8,229
|
)
|
|
4,381
|
|
||
Net cash provided by operating activities
|
100,874
|
|
|
93,968
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Real estate acquisitions, net
|
(106,400
|
)
|
|
(138,371
|
)
|
||
Net cash received for sale of real estate
|
174,297
|
|
|
—
|
|
||
Capital improvements to real estate
|
(33,437
|
)
|
|
(35,186
|
)
|
||
Development in progress
|
(25,036
|
)
|
|
(12,988
|
)
|
||
Real estate deposits, net
|
—
|
|
|
775
|
|
||
Non-real estate capital improvements
|
(626
|
)
|
|
(3,306
|
)
|
||
Net cash provided by (used in) investing activities
|
8,798
|
|
|
(189,076
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Line of credit borrowings, net
|
17,000
|
|
|
69,000
|
|
||
Dividends paid
|
(95,059
|
)
|
|
(91,666
|
)
|
||
Principal payments – mortgage notes payable
|
(169,480
|
)
|
|
(51,815
|
)
|
||
Repayments of unsecured term loan debt
|
(150,000
|
)
|
|
—
|
|
||
Proceeds from term loan
|
250,000
|
|
|
50,000
|
|
||
Payment of financing costs
|
(5,565
|
)
|
|
(234
|
)
|
||
Distributions to noncontrolling interests
|
(11
|
)
|
|
(67
|
)
|
||
Proceeds from dividend reinvestment program
|
1,811
|
|
|
2,482
|
|
||
Net proceeds from equity issuances
|
35,472
|
|
|
113,225
|
|
||
Payment of tax withholdings for restricted share awards
|
(301
|
)
|
|
(671
|
)
|
||
Net cash (used in) provided by financing activities
|
(116,133
|
)
|
|
90,254
|
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(6,461
|
)
|
|
(4,854
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
12,623
|
|
|
17,622
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
6,162
|
|
|
$
|
12,768
|
|
|
|
|
|
WASHINGTON REAL ESTATE INVESTMENT TRUST AND SUBSIDIARIES
|
|||||||
|
|
|
|
||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
(IN THOUSANDS)
|
|||||||
(UNAUDITED)
|
|||||||
|
|
|
|
||||
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest, net of amounts capitalized
|
$
|
32,021
|
|
|
$
|
29,188
|
|
Change in accrued capital improvements and development costs
|
6,352
|
|
|
3,959
|
|
||
Operating partnership units issued with acquisition
|
—
|
|
|
376
|
|
||
|
|
|
|
||||
Reconciliation of cash, cash equivalents and restricted cash:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
4,810
|
|
|
$
|
11,326
|
|
Restricted cash
|
1,352
|
|
|
1,442
|
|
||
Cash, cash equivalents and restricted cash
|
$
|
6,162
|
|
|
$
|
12,768
|
|
Acquisition Date
|
|
Property
|
|
Type
|
|
Net Rentable
Square Feet
|
|
Contract Purchase Price (In thousands)
|
||
January 18, 2018
|
|
Arlington Tower
|
|
Office
|
|
391,000
|
|
$
|
250,000
|
|
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||
Real estate rental revenue
|
$
|
5,947
|
|
|
$
|
16,485
|
|
Net income
|
843
|
|
|
2,457
|
|
Land
|
$
|
63,970
|
|
Building
|
142,900
|
|
|
Tenant origination costs
|
13,625
|
|
|
Leasing commissions/absorption costs
|
27,465
|
|
|
Lease intangible assets
|
3,142
|
|
|
Lease intangible liabilities
|
(545
|
)
|
|
Total
|
$
|
250,557
|
|
Disposition Date
|
|
Property Name
|
|
Segment
|
|
Rentable Square Feet/ Number of Units
|
|
Contract
Sales Price (in thousands) |
|
Gain on Sale
(in thousands) |
||||
January 19, 2018
|
|
Braddock Metro Center
|
|
Office
|
|
356,000
|
|
$
|
93,000
|
|
|
$
|
—
|
|
June 28, 2018
|
|
2445 M Street
|
|
Office
|
|
292,000
|
|
101,600
|
|
|
2,495
|
|
||
|
|
|
|
Total 2018
|
|
648,000
|
|
$
|
194,600
|
|
|
$
|
2,495
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
October 23, 2017
|
|
Walker House Apartments
|
|
Multifamily
|
|
212
|
|
$
|
32,200
|
|
|
$
|
23,838
|
|
Committed capacity
|
$
|
700,000
|
|
Borrowings outstanding
|
(183,000
|
)
|
|
Unused and available
|
$
|
517,000
|
|
Balance at December 31, 2017
|
$
|
166,000
|
|
Borrowings
|
397,000
|
|
|
Repayments
|
(380,000
|
)
|
|
Balance at September 30, 2018
|
$
|
183,000
|
|
|
|
|
|
Fair Value
|
||||||||
|
|
|
|
Derivative Assets
|
||||||||
Derivative Instrument
|
Aggregate Notional Amount
|
Effective Date
|
Maturity Date
|
September 30, 2018
|
|
December 31, 2017
|
||||||
Interest rate swaps
|
$
|
150,000
|
|
October 15, 2015
|
March 15, 2021
|
$
|
4,392
|
|
|
$
|
1,987
|
|
Interest rate swaps
|
150,000
|
|
March 31, 2017
|
July 21, 2023
|
11,484
|
|
|
7,432
|
|
|||
Interest rate swaps
|
100,000
|
|
June 29, 2018
|
July 21, 2023
|
1,305
|
|
|
—
|
|
|||
|
$
|
400,000
|
|
|
|
$
|
17,181
|
|
|
$
|
9,419
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Unrealized gain (loss) on interest rate hedges
|
$
|
1,474
|
|
|
$
|
(9
|
)
|
|
$
|
7,762
|
|
|
$
|
(763
|
)
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
|
Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
SERP
|
$
|
1,364
|
|
|
$
|
—
|
|
|
$
|
1,364
|
|
|
$
|
—
|
|
|
$
|
1,858
|
|
|
$
|
—
|
|
|
$
|
1,858
|
|
|
$
|
—
|
|
Interest rate swaps
|
17,181
|
|
|
—
|
|
|
17,181
|
|
|
—
|
|
|
9,419
|
|
|
—
|
|
|
9,419
|
|
|
—
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Cash and cash equivalents
|
$
|
4,810
|
|
|
$
|
4,810
|
|
|
$
|
9,847
|
|
|
$
|
9,847
|
|
Restricted cash
|
1,352
|
|
|
1,352
|
|
|
2,776
|
|
|
2,776
|
|
||||
Mortgage notes payable, net
|
60,541
|
|
|
60,482
|
|
|
95,141
|
|
|
97,181
|
|
||||
Line of credit
|
183,000
|
|
|
183,000
|
|
|
166,000
|
|
|
166,000
|
|
||||
Notes payable, net
|
995,130
|
|
|
1,014,067
|
|
|
894,358
|
|
|
931,377
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
5,893
|
|
|
$
|
2,813
|
|
|
$
|
19,942
|
|
|
$
|
17,275
|
|
Net loss attributable to noncontrolling interests in subsidiaries
|
—
|
|
|
20
|
|
|
—
|
|
|
56
|
|
||||
Allocation of earnings to unvested restricted share awards
|
(144
|
)
|
|
(107
|
)
|
|
(432
|
)
|
|
(291
|
)
|
||||
Adjusted net income attributable to the controlling interests
|
$
|
5,749
|
|
|
$
|
2,726
|
|
|
$
|
19,510
|
|
|
$
|
17,040
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding – basic
|
79,076
|
|
|
77,291
|
|
|
78,695
|
|
|
76,292
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Operating partnership units
|
12
|
|
|
12
|
|
|
12
|
|
|
8
|
|
||||
Employee restricted share awards
|
150
|
|
|
120
|
|
|
95
|
|
|
115
|
|
||||
Weighted average shares outstanding – diluted
|
79,238
|
|
|
77,423
|
|
|
78,802
|
|
|
76,415
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic net income attributable to the controlling interests per common share
|
$
|
0.07
|
|
|
$
|
0.04
|
|
|
$
|
0.25
|
|
|
$
|
0.22
|
|
Diluted net income attributable to the controlling interests per common share
|
$
|
0.07
|
|
|
$
|
0.04
|
|
|
$
|
0.25
|
|
|
$
|
0.22
|
|
|
Three Months Ended September 30, 2018
|
||||||||||||||||||
|
Office
|
|
Retail
|
|
Multifamily
|
|
Corporate and Other
|
|
Consolidated
|
||||||||||
Real estate rental revenue
|
$
|
42,438
|
|
|
$
|
16,111
|
|
|
$
|
23,953
|
|
|
$
|
—
|
|
|
$
|
82,502
|
|
Real estate expenses
|
15,368
|
|
|
3,906
|
|
|
9,297
|
|
|
—
|
|
|
28,571
|
|
|||||
Net operating income
|
$
|
27,070
|
|
|
$
|
12,205
|
|
|
$
|
14,656
|
|
|
$
|
—
|
|
|
$
|
53,931
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
(30,272
|
)
|
|||||||||
General and administrative
|
|
|
|
|
|
|
|
|
(5,267
|
)
|
|||||||||
Interest expense
|
|
|
|
|
|
|
|
|
(12,499
|
)
|
|||||||||
Net income
|
|
|
|
|
|
|
|
|
5,893
|
|
|||||||||
Less: Net loss attributable to noncontrolling interests in subsidiaries
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||
Net income attributable to the controlling interests
|
|
|
|
|
|
|
|
|
$
|
5,893
|
|
||||||||
Capital expenditures
|
$
|
8,537
|
|
|
$
|
1,098
|
|
|
$
|
5,708
|
|
|
$
|
161
|
|
|
$
|
15,504
|
|
Total assets
|
$
|
1,246,026
|
|
|
$
|
344,358
|
|
|
$
|
785,397
|
|
|
$
|
40,736
|
|
|
$
|
2,416,517
|
|
|
Three Months Ended September 30, 2017
|
||||||||||||||||||
|
Office
|
|
Retail
|
|
Multifamily
|
|
Corporate
and Other
|
|
Consolidated
|
||||||||||
Real estate rental revenue
|
$
|
42,982
|
|
|
$
|
15,604
|
|
|
$
|
24,233
|
|
|
$
|
—
|
|
|
$
|
82,819
|
|
Real estate expenses
|
16,246
|
|
|
3,687
|
|
|
9,713
|
|
|
—
|
|
|
29,646
|
|
|||||
Net operating income
|
$
|
26,736
|
|
|
$
|
11,917
|
|
|
$
|
14,520
|
|
|
$
|
—
|
|
|
$
|
53,173
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
(27,941
|
)
|
|||||||||
General and administrative
|
|
|
|
|
|
|
|
|
(5,327
|
)
|
|||||||||
Interest expense
|
|
|
|
|
|
|
|
|
(12,176
|
)
|
|||||||||
Other income
|
|
|
|
|
|
|
|
|
84
|
|
|||||||||
Real estate impairment
|
|
|
|
|
|
|
|
|
(5,000
|
)
|
|||||||||
Net income
|
|
|
|
|
|
|
|
|
2,813
|
|
|||||||||
Less: Net loss attributable to noncontrolling interests in subsidiaries
|
|
|
|
|
|
|
|
|
20
|
|
|||||||||
Net income attributable to the controlling interests
|
|
|
|
|
|
|
|
|
$
|
2,833
|
|
||||||||
Capital expenditures
|
$
|
5,934
|
|
|
$
|
305
|
|
|
$
|
5,024
|
|
|
$
|
1,356
|
|
|
$
|
12,619
|
|
Total assets
|
$
|
1,231,576
|
|
|
$
|
346,374
|
|
|
$
|
769,873
|
|
|
$
|
36,471
|
|
|
$
|
2,384,294
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||
|
Office
|
|
Retail
|
|
Multifamily
|
|
Corporate
and Other |
|
Consolidated
|
||||||||||
Real estate rental revenue
|
$
|
135,258
|
|
|
$
|
47,563
|
|
|
$
|
71,168
|
|
|
$
|
—
|
|
|
$
|
253,989
|
|
Real estate expenses
|
48,031
|
|
|
11,932
|
|
|
28,012
|
|
|
—
|
|
|
87,975
|
|
|||||
Net operating income
|
$
|
87,227
|
|
|
$
|
35,631
|
|
|
$
|
43,156
|
|
|
$
|
—
|
|
|
$
|
166,014
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
(90,119
|
)
|
|||||||||
General and administrative
|
|
|
|
|
|
|
|
|
(16,737
|
)
|
|||||||||
Interest expense
|
|
|
|
|
|
|
|
|
(38,647
|
)
|
|||||||||
Real estate impairment
|
|
|
|
|
|
|
|
|
(1,886
|
)
|
|||||||||
Gain on sale of real estate
|
|
|
|
|
|
|
|
|
2,495
|
|
|||||||||
Loss on extinguishment of debt
|
|
|
|
|
|
|
|
|
(1,178
|
)
|
|||||||||
Net income
|
|
|
|
|
|
|
|
|
19,942
|
|
|||||||||
Less: Net loss attributable to noncontrolling interests in subsidiaries
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||
Net income attributable to the controlling interests
|
|
|
|
|
|
|
|
|
$
|
19,942
|
|
||||||||
Capital expenditures
|
$
|
17,926
|
|
|
$
|
2,443
|
|
|
$
|
13,068
|
|
|
$
|
626
|
|
|
$
|
34,063
|
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||
|
Office
|
|
Retail
|
|
Multifamily
|
|
Corporate
and Other |
|
Consolidated
|
||||||||||
Real estate rental revenue
|
$
|
125,118
|
|
|
46,821
|
|
|
$
|
71,837
|
|
|
$
|
—
|
|
|
$
|
243,776
|
|
|
Real estate expenses
|
46,513
|
|
|
11,147
|
|
|
28,540
|
|
|
—
|
|
|
86,200
|
|
|||||
Net operating income
|
$
|
78,605
|
|
|
$
|
35,674
|
|
|
$
|
43,297
|
|
|
$
|
—
|
|
|
$
|
157,576
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
(83,271
|
)
|
|||||||||
General and administrative
|
|
|
|
|
|
|
|
|
(16,712
|
)
|
|||||||||
Interest expense
|
|
|
|
|
|
|
|
|
(35,634
|
)
|
|||||||||
Other income
|
|
|
|
|
|
|
|
|
209
|
|
|||||||||
Real estate impairment
|
|
|
|
|
|
|
|
|
(5,000
|
)
|
|||||||||
Income tax benefit
|
|
|
|
|
|
|
|
|
107
|
|
|||||||||
Net income
|
|
|
|
|
|
|
|
|
17,275
|
|
|||||||||
Less: Net loss attributable to noncontrolling interests in subsidiaries
|
|
|
|
|
|
|
|
|
56
|
|
|||||||||
Net income attributable to the controlling interests
|
|
|
|
|
|
|
|
|
$
|
17,331
|
|
||||||||
Capital expenditures
|
$
|
16,753
|
|
|
$
|
551
|
|
|
$
|
17,882
|
|
|
$
|
3,306
|
|
|
$
|
38,492
|
|
•
|
Overview.
Discussion of our business outlook, operating results, investment activity, financing activity and capital requirements to provide context for the remainder of MD&A.
|
•
|
Results of Operations.
Discussion of our financial results comparing the
2018
Quarter to the
2017
Quarter and the 2018 Period to the 2017 Period.
|
•
|
Liquidity and Capital Resources.
Discussion of our financial condition and analysis of changes in our capital structure and cash flows.
|
•
|
Funds From Operations
. Calculation of NAREIT Funds From Operations (“NAREIT FFO”), a non-GAAP supplemental measure to net income.
|
•
|
Critical Accounting Policies and Estimates.
Descriptions of accounting policies that reflect significant judgments and estimates used in the preparation of our consolidated financial statements.
|
•
|
Net operating income (“NOI”)
, calculated as set forth below under the caption "Results of Operations - Net Operating Income." NOI is a non-GAAP supplemental measure to net income.
|
•
|
Funds From Operations (“NAREIT FFO”)
, calculated as set forth below under the caption “Funds from Operations.” NAREIT FFO is a non-GAAP supplemental measure to net income.
|
•
|
Ending occupancy
, calculated as occupied square footage as a percentage of total square footage as of the last day of that period.
|
•
|
Leased percentage
, calculated as the percentage of available physical net rentable area leased for our office and retail segments and percentage of apartments leased for our multifamily segment.
|
•
|
Leasing activity
, including new leases, renewals and expirations.
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Net income attributable to the controlling interests
|
$
|
5,893
|
|
|
$
|
2,833
|
|
|
$
|
3,060
|
|
|
108.0
|
%
|
NOI
(1)
|
$
|
53,931
|
|
|
$
|
53,173
|
|
|
$
|
758
|
|
|
1.4
|
%
|
NAREIT FFO
(2)
|
$
|
36,165
|
|
|
$
|
35,754
|
|
|
$
|
411
|
|
|
1.1
|
%
|
|
|
|
|
|
|
|
|
|||||||
(1)
See page
26
of the MD&A for a reconciliation of NOI to net income.
|
||||||||||||||
(2)
See page
36
of the MD&A for a reconciliation of NAREIT FFO to net income.
|
•
|
The disposition of 2445 M Street, a 292,000 square foot office property in Washington, DC, for a contract sales price of
$101.6 million
. We recognized a gain on sale of
$2.5 million
related to the transaction.
|
•
|
The acquisition of Arlington Tower, a
391,000
net rentable square foot office building in Arlington, Virginia, for a contract purchase price of $250.0 million. We incurred
$0.6 million
of acquisition costs related to this transaction.
|
•
|
The disposition of Braddock Metro Center, a 356,000 net rentable square foot office building in Alexandria, Virginia, for a contract sales price of
$93.0 million
.
|
•
|
The execution of an amended, extended and expanded $700 million unsecured revolving credit facility (the “Revolving Credit Facility”) and refinancing of an existing $150.0 million seven-year unsecured term loan with a $250.0 million five-year unsecured term loan. We recognized a $1.2 million non-cash loss on extinguishment of debt related to the write-off of unamortized loan origination costs.
|
•
|
The execution of
eight
separate equity distribution agreements on May 4, 2018 relating to the issuance of up to
$250.0 million
of our common shares from time to time. Issuances of our common shares are made at market prices prevailing at the time of issuance. The equity distribution agreements executed on May 4, 2018 replaced our previous equity distribution agreements, dated June 23, 2015. During the 2018 Quarter, we issued approximately
1.2 million
common shares under our at-the-market program at an average price of
$31.18
per share, raising approximately
$35.5 million
in net proceeds.
|
|
|
|
|
|
|
|
|
|
Non-Same-Store
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
|
Same-Store
|
|
|
|
|
|
Acquisitions
(1)
|
|
Development/
Re-development
(2)
|
|
Held for Sale or Sold
(3)
|
|
All Properties
|
|
|
||||||||||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
$
Change
|
|
%
Change
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
$
Change |
|
%
Change |
||||||||||||||||||||||||||
Real estate rental revenue
|
$
|
71,716
|
|
|
$
|
69,664
|
|
|
$
|
2,052
|
|
|
2.9
|
%
|
|
$
|
10,786
|
|
|
$
|
4,831
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,324
|
|
|
$
|
82,502
|
|
|
$
|
82,819
|
|
|
$
|
(317
|
)
|
|
(0.4
|
)%
|
Real estate expenses
|
25,496
|
|
|
24,979
|
|
|
517
|
|
|
2.1
|
%
|
|
3,139
|
|
|
1,560
|
|
|
(64
|
)
|
|
—
|
|
|
—
|
|
|
3,107
|
|
|
28,571
|
|
|
29,646
|
|
|
(1,075
|
)
|
|
(3.6
|
)%
|
||||||||||||
NOI
|
$
|
46,220
|
|
|
$
|
44,685
|
|
|
$
|
1,535
|
|
|
3.4
|
%
|
|
$
|
7,647
|
|
|
$
|
3,271
|
|
|
$
|
64
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,217
|
|
|
$
|
53,931
|
|
|
$
|
53,173
|
|
|
$
|
758
|
|
|
1.4
|
%
|
Reconciliation to net income attributable to the controlling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(30,272
|
)
|
|
(27,941
|
)
|
|
(2,331
|
)
|
|
8.3
|
%
|
|||||||||||||||||||||||||||
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,267
|
)
|
|
(5,327
|
)
|
|
60
|
|
|
(1.1
|
)%
|
|||||||||||||||||||||||||||
Real estate impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(5,000
|
)
|
|
5,000
|
|
|
(100.0
|
)%
|
|||||||||||||||||||||||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,499
|
)
|
|
(12,176
|
)
|
|
(323
|
)
|
|
2.7
|
%
|
|||||||||||||||||||||||||||
Other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
84
|
|
|
(84
|
)
|
|
(100.0
|
)%
|
|||||||||||||||||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,893
|
|
|
2,813
|
|
|
3,080
|
|
|
109.5
|
%
|
|||||||||||||||||||||||||||
Less: Net loss attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
20
|
|
|
(20
|
)
|
|
(100.0
|
)%
|
|||||||||||||||||||||||||||||
Net income attributable to the controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,893
|
|
|
$
|
2,833
|
|
|
$
|
3,060
|
|
|
108.0
|
%
|
(1)
|
Acquisitions:
|
(2)
|
Development/redevelopment:
|
(3)
|
Sold:
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Minimum base rent
|
$
|
61,745
|
|
|
$
|
60,275
|
|
|
$
|
1,470
|
|
|
2.4
|
%
|
Recoveries from tenants
|
7,043
|
|
|
6,442
|
|
|
601
|
|
|
9.3
|
%
|
|||
Provisions for doubtful accounts
|
(428
|
)
|
|
(292
|
)
|
|
(136
|
)
|
|
46.6
|
%
|
|||
Lease termination fees
|
369
|
|
|
471
|
|
|
(102
|
)
|
|
(21.7
|
)%
|
|||
Parking and other tenant charges
|
2,987
|
|
|
2,768
|
|
|
219
|
|
|
7.9
|
%
|
|||
Total same-store real estate rental revenue
|
$
|
71,716
|
|
|
$
|
69,664
|
|
|
$
|
2,052
|
|
|
2.9
|
%
|
•
|
Minimum base rent
:
Increase
primarily due to higher rental income ($1.4 million) due to new leases at Army Navy Building, 1901 Pennsylvania Avenue, Monument II and Silverline Center and higher rental rates in multifamily segment, partially offset by lease expirations at Quantico Corporate Center.
|
•
|
Recoveries from tenants
:
Increase
primarily due to higher reimbursements for operating expenses ($0.3 million) and real estate taxes ($0.2 million).
|
•
|
Provisions for doubtful accounts
: Increase primarily due to higher provisions in the office segment ($0.2 million), partially offset by lower provisions in the retail segment ($0.1 million).
|
•
|
Lease termination fees
:
Decrease
primarily due to lower fees in the retail segment ($0.2 million), partially offset by higher fees in the office segment ($0.1 million).
|
•
|
Parking and other tenant charges
:
Increase
primarily due to higher tenant charges ($0.2 million).
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Office
|
$
|
31,652
|
|
|
$
|
30,672
|
|
|
$
|
980
|
|
|
3.2
|
%
|
Multifamily
|
23,953
|
|
|
23,388
|
|
|
565
|
|
|
2.4
|
%
|
|||
Retail
|
16,111
|
|
|
15,604
|
|
|
507
|
|
|
3.2
|
%
|
|||
Total same-store real estate rental revenue
|
$
|
71,716
|
|
|
$
|
69,664
|
|
|
$
|
2,052
|
|
|
2.9
|
%
|
•
|
Office
:
Increase
primarily due to higher rental income ($0.7 million), higher reimbursements for operating expenses ($0.2 million), higher lease termination fees ($0.1 million) and higher tenant charges ($0.1 million), partially offset by higher provisions for doubtful accounts ($0.2 million). The higher rental income is primarily due to new leases at Army Navy Building, 1901 Pennsylvania Avenue, Monument II and Silverline Center.
|
•
|
Multifamily
:
Increase
primarily due to higher rental rates ($0.5 million).
|
•
|
Retail
:
Increase
primarily due to higher reimbursements for operating expenses ($0.4 million), higher rental income ($0.2 million) and lower provisions for doubtful accounts ($0.1 million), partially offset by lower termination fees ($0.2 million).
|
|
September 30, 2018
|
|
September 30, 2017
|
|
Increase (decrease)
|
|||||||||||||||||||||
Segment
|
Same-Store
|
|
Non-Same-Store
|
|
Total
|
|
Same-Store
|
|
Non-Same-Store
|
|
Total
|
|
Same-Store
|
|
Non-Same-Store
|
|
Total
|
|||||||||
Office
|
92.1
|
%
|
|
95.4
|
%
|
|
92.7
|
%
|
|
91.7
|
%
|
|
98.3
|
%
|
|
93.2
|
%
|
|
0.4
|
%
|
|
(2.9
|
)%
|
|
(0.5
|
)%
|
Multifamily
|
95.4
|
%
|
|
N/A
|
|
|
95.4
|
%
|
|
94.5
|
%
|
|
93.2
|
%
|
|
94.5
|
%
|
|
0.9
|
%
|
|
N/A
|
|
|
0.9
|
%
|
Retail
|
94.3
|
%
|
|
N/A
|
|
|
94.3
|
%
|
|
93.5
|
%
|
|
N/A
|
|
|
93.5
|
%
|
|
0.8
|
%
|
|
N/A
|
|
|
0.8
|
%
|
Total
|
94.0
|
%
|
|
95.4
|
%
|
|
94.1
|
%
|
|
93.3
|
%
|
|
97.6
|
%
|
|
93.8
|
%
|
|
0.7
|
%
|
|
(2.2
|
)%
|
|
0.3
|
%
|
•
|
Office
: The increase in same-store ending occupancy was primarily due to higher ending occupancy at Army Navy Building and 1901 Pennsylvania Avenue, partially offset by lower ending occupancy at Fairgate at Ballston.
|
•
|
Multifamily
: The increase in same-store ending occupancy was primarily due to higher ending occupancy at The Ashby at McLean, Bennett Park, Roosevelt Towers and 3801 Connecticut Avenue, partially offset by lower ending occupancy at Clayborne Apartments.
|
•
|
Retail
: The increase in same-store ending occupancy was primarily due to higher ending occupancy at Concord Centre and Frederick Crossing, partially offset by lower ending occupancy at Randolph Shopping Center, Gateway Overlook and Westminster Shopping Center.
|
|
Square Feet
(in thousands)
|
|
Average Rental Rate
(per square foot)
|
|
% Rental Rate Increase (Decrease)
|
|
Leasing Costs
(1)
(per square foot)
|
|
Free Rent (weighted average months)
|
|
Retention Rate
|
||||||||
Office
|
73
|
|
|
$
|
48.94
|
|
|
13.5
|
%
|
|
$
|
61.80
|
|
|
5.0
|
|
|
47.1
|
%
|
Retail
|
29
|
|
|
36.64
|
|
|
8.4
|
%
|
|
19.97
|
|
|
0.6
|
|
|
54.3
|
%
|
||
Total
|
102
|
|
|
45.43
|
|
|
12.3
|
%
|
|
49.89
|
|
|
4.0
|
|
|
49.3
|
%
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Office
|
$
|
12,229
|
|
|
$
|
12,010
|
|
|
$
|
219
|
|
|
1.8
|
%
|
Multifamily
|
9,361
|
|
|
9,282
|
|
|
79
|
|
|
0.9
|
%
|
|||
Retail
|
3,906
|
|
|
3,687
|
|
|
219
|
|
|
5.9
|
%
|
|||
Total same-store real estate expenses
|
$
|
25,496
|
|
|
$
|
24,979
|
|
|
$
|
517
|
|
|
2.1
|
%
|
•
|
Office
:
Increase
primarily due to higher utilities ($0.1 million) and administrative ($0.1 million) expenses.
|
•
|
Multifamily
:
Increase
primarily due to higher administrative ($0.2 million) and contract maintenance ($0.1 million) expenses, partially offset by lower real estate tax ($0.2 million) expenses.
|
•
|
Retail
:
Increase
primarily due to higher repairs and maintenance ($0.1 million) and real estate tax ($0.1 million) expenses.
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||
Debt Type
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Notes payable
|
$
|
10,207
|
|
|
$
|
9,446
|
|
|
$
|
761
|
|
|
8.1
|
%
|
Mortgage notes payable
|
992
|
|
|
1,163
|
|
|
(171
|
)
|
|
(14.7
|
)%
|
|||
Line of credit
|
1,983
|
|
|
1,798
|
|
|
185
|
|
|
10.3
|
%
|
|||
Capitalized interest
|
(683
|
)
|
|
(231
|
)
|
|
(452
|
)
|
|
195.7
|
%
|
|||
Total
|
$
|
12,499
|
|
|
$
|
12,176
|
|
|
$
|
323
|
|
|
2.7
|
%
|
•
|
Notes payable
:
Increase
primarily due to executing the $250.0 million term loan in March 2018, which increased and replaced a $150 million term loan.
|
•
|
Mortgage notes payable:
Decrease
primarily due to repayment of the mortgage note secured by Kenmore Apartments in the 2018 Quarter.
|
•
|
Line of credit
:
Increase
primarily due to a higher weighted average interest rate of 3.1% during the
2018
Quarter, as compared to 2.3% during the
2017
Quarter. The impact of the higher weighted average interest rate was partially offset by lower weighted average borrowings of $165.7 million during the
2018
Quarter, as compared to $206.2 million during the
2017
Quarter.
|
•
|
Capitalized interest
:
Increase
primarily due to higher spending related to the Trove, the multifamily development adjacent to The Wellington, and the commencement in 2018 of interest capitalization on spending related to the multifamily development adjacent to Riverside Apartments.
|
|
|
|
|
|
|
|
|
|
Non-Same-Store
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
|
Same-Store
|
|
|
|
|
|
Acquisitions
(1)
|
|
Development/Redevelopment
(2)
|
|
Held for Sale or Sold
(3)
|
|
All Properties
|
|
|
||||||||||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
$
Change
|
|
%
Change
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
$
Change |
|
%
Change |
||||||||||||||||||||||||||
Real estate rental revenue
|
$
|
214,434
|
|
|
$
|
208,736
|
|
|
$
|
5,698
|
|
|
2.7
|
%
|
|
$
|
30,516
|
|
|
$
|
9,733
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,039
|
|
|
$
|
25,307
|
|
|
$
|
253,989
|
|
|
$
|
243,776
|
|
|
$
|
10,213
|
|
|
4.2
|
%
|
Real estate expenses
|
75,940
|
|
|
73,828
|
|
|
2,112
|
|
|
2.9
|
%
|
|
8,458
|
|
|
3,060
|
|
|
21
|
|
|
—
|
|
|
3,556
|
|
|
9,312
|
|
|
87,975
|
|
|
86,200
|
|
|
1,775
|
|
|
2.1
|
%
|
||||||||||||
NOI
|
$
|
138,494
|
|
|
$
|
134,908
|
|
|
$
|
3,586
|
|
|
2.7
|
%
|
|
$
|
22,058
|
|
|
$
|
6,673
|
|
|
$
|
(21
|
)
|
|
$
|
—
|
|
|
$
|
5,483
|
|
|
$
|
15,995
|
|
|
$
|
166,014
|
|
|
$
|
157,576
|
|
|
$
|
8,438
|
|
|
5.4
|
%
|
Reconciliation to net income attributable to the controlling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(90,119
|
)
|
|
(83,271
|
)
|
|
(6,848
|
)
|
|
8.2
|
%
|
|||||||||||||||||||||||||||
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,737
|
)
|
|
(16,712
|
)
|
|
(25
|
)
|
|
0.1
|
%
|
|||||||||||||||||||||||||||
Real estate impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,886
|
)
|
|
(5,000
|
)
|
|
3,114
|
|
|
(62.3
|
)%
|
|||||||||||||||||||||||||||
Gain on sale of real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,495
|
|
|
—
|
|
|
2,495
|
|
|
—
|
|
|||||||||||||||||||||||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(38,647
|
)
|
|
(35,634
|
)
|
|
(3,013
|
)
|
|
8.5
|
%
|
|||||||||||||||||||||||||||
Other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
209
|
|
|
(209
|
)
|
|
(100.0
|
)%
|
|||||||||||||||||||||||||||
Loss on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,178
|
)
|
|
—
|
|
|
(1,178
|
)
|
|
—
|
|
|||||||||||||||||||||||||||
Income tax benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
107
|
|
|
(107
|
)
|
|
(100.0
|
)%
|
|||||||||||||||||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,942
|
|
|
17,275
|
|
|
2,667
|
|
|
15.4
|
%
|
|||||||||||||||||||||||||||
Less: Net loss attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
56
|
|
|
(56
|
)
|
|
(100.0
|
)%
|
|||||||||||||||||||||||||||||
Net income attributable to the controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
19,942
|
|
|
$
|
17,331
|
|
|
$
|
2,611
|
|
|
15.1
|
%
|
(1)
|
Acquisitions:
|
(2)
|
Development/redevelopment:
|
(3)
|
Sold:
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Minimum base rent
|
$
|
184,567
|
|
|
$
|
179,706
|
|
|
$
|
4,861
|
|
|
2.7
|
%
|
Recoveries from tenants
|
21,244
|
|
|
20,464
|
|
|
780
|
|
|
3.8
|
%
|
|||
Provisions for doubtful accounts
|
(1,117
|
)
|
|
(1,014
|
)
|
|
(103
|
)
|
|
(10.2
|
)%
|
|||
Lease termination fees
|
994
|
|
|
1,726
|
|
|
(732
|
)
|
|
(42.4
|
)%
|
|||
Parking and other tenant charges
|
8,746
|
|
|
7,854
|
|
|
892
|
|
|
11.4
|
%
|
|||
Total same-store real estate rental revenue
|
$
|
214,434
|
|
|
$
|
208,736
|
|
|
$
|
5,698
|
|
|
2.7
|
%
|
•
|
Minimum base rent
:
Increase
primarily due to higher rental income ($4.7 million) from new leases at Army Navy Building, Silverline Center, 1776 G Street, 1901 Pennsylvania Avenue and Gateway Overlook, partially offset by lease expirations at Quantico Corporate Center.
|
•
|
Recoveries from tenants:
Increase
primarily due to higher reimbursements for operating expenses ($0.5 million) and real estate taxes ($0.2 million).
|
•
|
Provisions for doubtful accounts:
Increase
primarily due to higher provisions in the office segment ($0.3 million), partially offset by lower provisions in the retail segment ($0.2 million).
|
•
|
Lease termination fees
:
Decrease
primarily due to lower fees in the office ($0.6 million) and retail ($0.1 million) segments.
|
•
|
Parking and other tenant charges
:
Increase
primarily due to higher parking ($0.1 million) and tenant fee ($0.1 million) income. Remainder of variance is comprised of various immaterial items.
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Office
|
$
|
95,703
|
|
|
$
|
92,630
|
|
|
$
|
3,073
|
|
|
3.3
|
%
|
Multifamily
|
71,168
|
|
|
69,285
|
|
|
1,883
|
|
|
2.7
|
%
|
|||
Retail
|
47,563
|
|
|
46,821
|
|
|
742
|
|
|
1.6
|
%
|
|||
Total same-store real estate rental revenue
|
$
|
214,434
|
|
|
$
|
208,736
|
|
|
$
|
5,698
|
|
|
2.7
|
%
|
•
|
Office
:
Increase
primarily due to higher rental income ($3.1 million) due to new leases at Army Navy Building, Silverline Center, 1776 G Street, 1901 Pennsylvania Avenue and 1140 Connecticut Avenue, partially offset by lease expirations at Quantico Corporate Center.
|
•
|
Multifamily
:
Increase
primarily due to higher rental income ($1.6 million) due to rental rates increase and higher reimbursements ($0.2 million).
|
•
|
Retail
:
Increase
primarily due to higher reimbursements ($0.4 million) and lower provisions for bad debt ($0.3 million).
|
|
Square Feet
(in thousands)
|
|
Average Rental Rate
(per square foot)
|
|
% Rental Rate Increase
|
|
Leasing Costs
(1)
(per square foot) |
|
Free Rent (weighted average months)
|
|
Retention Rate
|
||||||||
Office
|
200
|
|
|
$
|
45.85
|
|
|
8.8
|
%
|
|
$
|
49.08
|
|
|
4.7
|
|
|
57.5
|
%
|
Retail
|
278
|
|
|
16.28
|
|
|
5.8
|
%
|
|
6.16
|
|
|
0.4
|
|
|
95.3
|
%
|
||
Total
|
478
|
|
|
28.66
|
|
|
7.8
|
%
|
|
24.12
|
|
|
3.3
|
|
|
80.7
|
%
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Office
|
$
|
36,017
|
|
|
$
|
35,321
|
|
|
$
|
696
|
|
|
2.0
|
%
|
Multifamily
|
27,991
|
|
|
27,360
|
|
|
631
|
|
|
2.3
|
%
|
|||
Retail
|
11,932
|
|
|
11,147
|
|
|
785
|
|
|
7.0
|
%
|
|||
Total same-store real estate expenses
|
$
|
75,940
|
|
|
$
|
73,828
|
|
|
$
|
2,112
|
|
|
2.9
|
%
|
•
|
Office
:
Increase
primarily due to higher utilities ($0.3 million), custodial ($0.2 million) and bad debt ($0.1 million) expenses.
|
•
|
Multifamily
:
Increase
primarily due to higher administrative ($0.4 million) and utilities ($0.2 million) expenses.
|
•
|
Retail
:
Increase
primarily due to higher real estate tax ($0.2 million), repairs and maintenance ($0.2 million), bad debt ($0.1 million) and snow removal ($0.1 million) expenses.
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||
Debt Type
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Notes payable
|
$
|
29,623
|
|
|
$
|
28,042
|
|
|
$
|
1,581
|
|
|
5.6
|
%
|
Mortgage notes payable
|
3,253
|
|
|
3,651
|
|
|
(398
|
)
|
|
(10.9
|
)%
|
|||
Line of credit
|
7,216
|
|
|
4,617
|
|
|
2,599
|
|
|
56.3
|
%
|
|||
Capitalized interest
|
(1,445
|
)
|
|
(676
|
)
|
|
(769
|
)
|
|
113.8
|
%
|
|||
Total
|
$
|
38,647
|
|
|
$
|
35,634
|
|
|
$
|
3,013
|
|
|
8.5
|
%
|
•
|
Notes payable
:
Increase
primarily due to executing the $250.0 million term loan in March 2018, which increased and replaced the $150 million term loan.
|
•
|
Mortgage notes payable
:
Decrease
primarily due to the repayment of the mortgage notes secured by the Kenmore Apartments in 2018 Period and Army Navy Building in 2017 Period.
|
•
|
Line of credit
:
Increase
primarily due to weighted average borrowings of $245.2 million and a weighted average interest rate of 2.8% during the 2018 Period, as compared to $182.2 million and 2.1%, respectively, during the 2017 Period. The higher weighted average borrowings are primarily due to using borrowings on the line of credit to partially fund the acquisition of Arlington Tower.
|
•
|
Capitalized interest
:
Increase
primarily due to higher spending related to the Trove, the multifamily development adjacent to The Wellington, and the commencement of the capitalization of interest on spending related to the multifamily development adjacent to Riverside Apartments.
|
•
|
Funding dividends and distributions to our shareholders;
|
•
|
$31.7 million to repay or refinance a mortgage note that was prepaid without penalty in 2018;
|
•
|
Approximately $80 - $85 million to invest in our existing portfolio of operating assets, including approximately $30 - $35 million to fund tenant-related capital requirements and leasing commissions;
|
•
|
Approximately $40 - $45 million to invest in our development and redevelopment projects; and
|
•
|
Funding for potential property acquisitions throughout 2018, offset by proceeds from potential property dispositions.
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Mortgage notes payable
|
$
|
57,971
|
|
|
$
|
91,914
|
|
Line of credit
|
183,000
|
|
|
166,000
|
|
||
Notes payable
|
1,000,000
|
|
|
900,000
|
|
||
|
1,240,971
|
|
|
1,157,914
|
|
||
Premiums and discounts, net
|
1,447
|
|
|
1,805
|
|
||
Debt issuance costs, net
|
(3,747
|
)
|
|
(4,220
|
)
|
||
Total
|
$
|
1,238,671
|
|
|
$
|
1,155,499
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
Common dividends
|
$
|
24,057
|
|
|
$
|
23,493
|
|
|
$
|
564
|
|
|
2.4
|
%
|
|
$
|
95,059
|
|
|
$
|
91,666
|
|
|
$
|
3,393
|
|
|
3.7
|
%
|
Distributions to noncontrolling interests
|
4
|
|
|
8
|
|
|
(4
|
)
|
|
(50.0
|
)%
|
|
11
|
|
|
67
|
|
|
(56
|
)
|
|
(83.6
|
)%
|
||||||
|
$
|
24,061
|
|
|
$
|
23,501
|
|
|
$
|
560
|
|
|
2.4
|
%
|
|
$
|
95,070
|
|
|
$
|
91,733
|
|
|
$
|
3,337
|
|
|
3.6
|
%
|
|
Nine Months Ended September 30,
|
|
Change
|
|||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
Net cash provided by operating activities
|
$
|
100,874
|
|
|
$
|
93,968
|
|
|
$
|
6,906
|
|
|
7.3
|
%
|
Net cash provided by (used in) investing activities
|
8,798
|
|
|
(189,076
|
)
|
|
197,874
|
|
|
104.7
|
%
|
|||
Net cash (used in) provided by financing activities
|
(116,133
|
)
|
|
90,254
|
|
|
(206,387
|
)
|
|
228.7
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
5,893
|
|
|
$
|
2,813
|
|
|
$
|
19,942
|
|
|
$
|
17,275
|
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
30,272
|
|
|
27,941
|
|
|
90,119
|
|
|
83,271
|
|
||||
Real estate impairment
|
—
|
|
|
5,000
|
|
|
1,886
|
|
|
5,000
|
|
||||
Net gain on sale of depreciable real estate
|
—
|
|
|
—
|
|
|
(2,495
|
)
|
|
—
|
|
||||
NAREIT FFO
|
$
|
36,165
|
|
|
$
|
35,754
|
|
|
$
|
109,452
|
|
|
$
|
105,546
|
|
Notional Amount
|
|
|
|
Floating Index Rate
|
|
|
|
|
|
Fair Value as of:
|
||||||||
|
Fixed Rate
|
|
|
Effective Date
|
|
Expiration Date
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||
$
|
75,000
|
|
|
1.619%
|
|
One-Month LIBOR
|
|
10/15/2015
|
|
3/15/2021
|
|
$
|
2,206
|
|
|
$
|
1,006
|
|
75,000
|
|
|
1.626%
|
|
One-Month LIBOR
|
|
10/15/2015
|
|
3/15/2021
|
|
2,186
|
|
|
981
|
|
|||
100,000
|
|
|
1.205%
|
|
One-Month LIBOR
|
|
3/31/2017
|
|
7/21/2023
|
|
7,650
|
|
|
4,943
|
|
|||
50,000
|
|
|
1.208%
|
|
One-Month LIBOR
|
|
3/31/2017
|
|
7/21/2023
|
|
3,834
|
|
|
2,489
|
|
|||
25,000
|
|
|
2.610%
|
|
One-Month LIBOR
|
|
6/29/2018
|
|
7/21/2023
|
|
324
|
|
|
—
|
|
|||
25,000
|
|
|
2.610%
|
|
One-Month LIBOR
|
|
6/29/2018
|
|
7/21/2023
|
|
326
|
|
|
—
|
|
|||
25,000
|
|
|
2.610%
|
|
One-Month LIBOR
|
|
6/29/2018
|
|
7/21/2023
|
|
327
|
|
|
—
|
|
|||
25,000
|
|
|
2.610%
|
|
One-Month LIBOR
|
|
6/29/2018
|
|
7/21/2023
|
|
328
|
|
|
—
|
|
|||
$
|
400,000
|
|
|
|
|
|
|
|
|
|
|
$
|
17,181
|
|
|
$
|
9,419
|
|
Period
|
Total Number of Shares Purchased
(1)
|
Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased
|
|||
July 1 - July 31, 2018
|
—
|
|
$
|
—
|
|
N/A
|
N/A
|
August 1 - August 31, 2018
|
—
|
|
—
|
|
N/A
|
N/A
|
|
September 1 - September 30, 2018
|
34
|
|
31.56
|
|
N/A
|
N/A
|
|
Total
|
34
|
|
31.56
|
|
N/A
|
N/A
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Exhibit
Number
|
Exhibit Description
|
|
Form
|
|
File
Number
|
|
Exhibit
|
|
Filing Date
|
|
Filed
Herewith
|
12
|
|
|
|
|
|
|
|
|
|
X
|
|
31.1
|
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
|
X
|
|
31.3
|
|
|
|
|
|
|
|
|
|
X
|
|
32
|
|
|
|
|
|
|
|
|
|
X
|
|
101
|
The following materials from our Quarterly Report on Form 10–Q for the quarter ended September 30, 2018 formatted in eXtensible Business Reporting Language (“XBRL”): (i) the Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statement of Equity, (v) the Consolidated Statements of Cash Flows, and (vi) notes to these consolidated financial statements
|
|
|
|
|
|
|
|
|
|
X
|
WASHINGTON REAL ESTATE INVESTMENT TRUST
|
||
|
|
|
|
|
/s/ Paul T. McDermott
|
|
|
Paul T. McDermott
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
/s/ Stephen E. Riffee
|
|
|
Stephen E. Riffee
|
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer) |
|
|
|
|
|
/s/ W. Drew Hammond
|
|
|
W. Drew Hammond
|
|
|
Vice President, Chief Accounting Officer and Treasurer
(Principal Accounting Officer)
|
1 Year Washington REIT Chart |
1 Month Washington REIT Chart |
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