Attached files
| file | filename |
|---|---|
| 8-K - 8-K - WASHINGTON REAL ESTATE INVESTMENT TRUST | q320158-kxearningsrelease.htm |
| EX-99.1 - EXHIBIT 99.1 - WASHINGTON REAL ESTATE INVESTMENT TRUST | q32015earningsrelease.htm |
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Washington Real Estate Investment Trust | ||||||
Third Quarter 2015 | ||||||
 | ||||||
Supplemental Operating and Financial Data | ||||||
Contact: | 1775 Eye Street, NW | |||||
Tejal R. Engman | Suite 1000 | |||||
Director of Investor Relations | Washington, DC 20006 | |||||
E-mail: tengman@washreit.com | (202) 774-3200 | |||||
(301) 984-9610 fax | ||||||
Company Background and Highlights |
Third Quarter 2015 |
Washington Real Estate Investment Trust ("Washington REIT") is a self-administered equity real estate investment trust investing in income-producing properties in the greater Washington, DC region. Washington REIT has a diversified portfolio with investments in office, retail, and multifamily properties and land for development.
Third Quarter 2015 Highlights
• | Generated Core Funds from Operations (FFO) of $0.45 per fully diluted share for the third quarter, a $0.03 increase over second quarter of 2015 and a $0.02 increase over third quarter of 2014 |
• | Maintained same-store portfolio occupancy of 92.4%, while increasing overall portfolio occupancy by 70 basis points over second quarter 2015 to 90.7% |
• | Executed new and renewal commercial leases totaling 412,000 square feet, the Company's strongest quarterly leasing performance this year, with new leases delivering an average rental rate increase of 28.5% over in-place rents |
• | Acquired The Wellington, a 711-unit apartment community with the opportunity to renovate approximately 680 units and on-site density to develop approximately 360 additional units, for $167.0 million |
• | Subsequent to quarter end, sold Munson Hill Towers, a 279 unit Class B apartment building located in Falls Church,VA, for $57.1 million |
• | Tightened the 2015 Core FFO guidance range to $1.68 to $1.70 from $1.68 to $1.72 per fully diluted share, lowering the mid-point by one cent per share to $1.69 |
Washington REIT signed commercial leases totaling 412,000 square feet, including 167,000 square feet of new leases and 245,000 square feet of renewal leases. New leases had an average rental rate increase of 28.5% over expiring lease rates and a weighted average lease term of 8.3 years. Commercial tenant improvement costs were $59.68 per square foot and leasing commissions and incentives were $37.05 per square foot for new leases. Renewal leases had an average rental rate decrease of 7.0% from expiring lease rates and a weighted average lease term of 3.1 years. Commercial tenant improvement costs were $2.52 per square foot and leasing commissions and incentives were $3.53 per square foot for renewal leases.
On September 9, 2015, Washington REIT sold its interest in a parcel of land (1225 First Street) in Alexandria, Virginia, for $14.5 million.
On October 21, 2015, Washington REIT sold Munson Hill Towers, a 258,000 square foot Class B high-rise of 279 units located in Falls Church, Virginia, for $57.1 million, or approximately $204,480 per unit. The sale is structured as part of a reverse-1031 exchange in connection with the acquisition of The Wellington, which the Company acquired in the third quarter of 2015.
On September 15, 2015, Washington REIT entered into a five and a half year $150 million unsecured term loan maturing on March 15, 2021 by exercising a portion of the accordion feature under its existing unsecured credit facility. The term loan proceeds were used to repay amounts outstanding on the credit facility. Washington REIT entered into an interest rate swap to swap from a LIBOR plus 110 basis points floating interest rate to a 2.72% all-in fixed interest rate commencing October 15, 2015. The term loan fits well on Washington REIT's debt maturity ladder and provides the Company with greater flexibility to accelerate legacy asset sales.
As of September 30, 2015, Washington REIT owned a diversified portfolio of 56 properties, totaling approximately 7 million square feet of commercial space and 3,537 multifamily units, and land held for development. These 56 properties consist of 25 office properties, 17 retail centers and 14 multifamily properties. Washington REIT shares are publicly traded on the New York Stock Exchange (NYSE:WRE)
Company Background and Highlights |
Third Quarter 2015 |
Net Operating Income Contribution by Sector - Third Quarter 2015
Certain statements in our earnings release and on our conference call are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements in this earnings release preceded by, followed by or that include the words “believe,” “expect,” “intend,” “anticipate,” “potential,” “project,” “will” and other similar expressions. 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, the potential for federal government budget reductions, changes in general and local economic and real estate market conditions, the timing and pricing of lease transactions, the availability and cost of capital, fluctuations in interest rates, tenants' financial conditions, levels of competition, the effect of government regulation, the impact of newly adopted accounting principles, and other risks and uncertainties detailed from time to time in our filings with the SEC, including our 2014 Form 10-K and subsequent Quarterly Reports on Form 10-Q. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
Supplemental Financial and Operating Data Table of Contents | ||
September 30, 2015 | ||
Schedule | Page | |
Key Financial Data | ||
Capital Analysis | ||
Portfolio Analysis | ||
Growth and Strategy | ||
Tenant Analysis | ||
Appendix | ||
Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) | |
Three Months Ended | |||||||||||||||||||
OPERATING RESULTS | 9/30/2015 | 6/30/2015 | 3/31/2015 | 12/31/2014 | 9/30/2014 | ||||||||||||||
Real estate rental revenue | $ | 78,243 | $ | 74,226 | $ | 74,856 | $ | 74,359 | $ | 73,413 | |||||||||
Real estate expenses | (28,109 | ) | (27,229 | ) | (29,208 | ) | (25,911 | ) | (25,914 | ) | |||||||||
50,134 | 46,997 | 45,648 | 48,448 | 47,499 | |||||||||||||||
Real estate depreciation and amortization | (29,349 | ) | (25,503 | ) | (25,275 | ) | (24,503 | ) | (24,354 | ) | |||||||||
Income from real estate | 20,785 | 21,494 | 20,373 | 23,945 | 23,145 | ||||||||||||||
Interest expense | (14,486 | ) | (14,700 | ) | (15,348 | ) | (15,183 | ) | (15,087 | ) | |||||||||
Other income | 163 | 192 | 192 | 191 | 192 | ||||||||||||||
Acquisition costs | (929 | ) | (992 | ) | (16 | ) | (663 | ) | (69 | ) | |||||||||
Real estate impairment | — | (5,909 | ) | — | — | — | |||||||||||||
Gain on sale of real estate | — | 1,454 | 30,277 | — | — | ||||||||||||||
Loss on extinguishment of debt | — | (119 | ) | — | — | — | |||||||||||||
General and administrative | (4,953 | ) | (4,306 | ) | (6,080 | ) | (5,981 | ) | (4,523 | ) | |||||||||
Income (loss) from continuing operations | 580 | (2,886 | ) | 29,398 | 2,309 | 3,658 | |||||||||||||
Discontinued operations: | |||||||||||||||||||
Loss on sale of real estate | — | — | — | — | — | ||||||||||||||
Loss from discontinued operations | — | — | — | — | — | ||||||||||||||
Net income (loss) | 580 | (2,886 | ) | 29,398 | 2,309 | 3,658 | |||||||||||||
Less: Net loss from noncontrolling interests | 67 | 340 | 108 | 21 | 10 | ||||||||||||||
Net income (loss) attributable to the controlling interests | $ | 647 | $ | (2,546 | ) | $ | 29,506 | $ | 2,330 | $ | 3,668 | ||||||||
Per Share Data: | |||||||||||||||||||
Net income (loss) | $ | 0.01 | $ | (0.04 | ) | $ | 0.43 | $ | 0.03 | $ | 0.05 | ||||||||
Fully diluted weighted average shares outstanding | 68,305 | 68,176 | 68,191 | 67,065 | 66,790 | ||||||||||||||
Percentage of Revenues: | |||||||||||||||||||
Real estate expenses | 35.9 | % | 36.7 | % | 39.0 | % | 34.8 | % | 35.3 | % | |||||||||
General and administrative | 6.3 | % | 5.8 | % | 8.1 | % | 8.0 | % | 6.2 | % | |||||||||
Ratios: | |||||||||||||||||||
Adjusted EBITDA / Interest expense | 3.2 | x | 3.0 | x | 2.7 | x | 3.0 | x | 2.9 | x | |||||||||
Income from continuing operations/Total real estate revenue | 0.7 | % | (3.9 | )% | 39.3 | % | 3.1 | % | 5.0 | % | |||||||||
Net income /Total real estate revenue | 0.8 | % | (3.4 | )% | 39.4 | % | 3.1 | % | 5.0 | % | |||||||||
4
Consolidated Balance Sheets (In thousands) (Unaudited) | |
9/30/2015 | 6/30/2015 | 3/31/2015 | 12/31/2014 | 9/30/2014 | |||||||||||||||
Assets | |||||||||||||||||||
Land | $ | 572,880 | $ | 542,654 | $ | 543,247 | $ | 543,546 | $ | 519,859 | |||||||||
Income producing property | 2,074,425 | 1,966,612 | 1,932,908 | 1,927,407 | 1,867,752 | ||||||||||||||
2,647,305 | 2,509,266 | 2,476,155 | 2,470,953 | 2,387,611 | |||||||||||||||
Accumulated depreciation and amortization | (677,480 | ) | (670,103 | ) | (649,279 | ) | (640,434 | ) | (620,279 | ) | |||||||||
Net income producing property | 1,969,825 | 1,839,163 | 1,826,876 | 1,830,519 | 1,767,332 | ||||||||||||||
Development in progress, including land held for development | 35,256 | 35,314 | 65,656 | 76,235 | 99,500 | ||||||||||||||
Total real estate held for investment, net | 2,005,081 | 1,874,477 | 1,892,532 | 1,906,754 | 1,866,832 | ||||||||||||||
Investment in real estate held for sale, net | 5,010 | — | — | — | — | ||||||||||||||
Cash and cash equivalents | 21,012 | 22,778 | 40,025 | 15,827 | 8,571 | ||||||||||||||
Restricted cash | 12,544 | 13,705 | 13,095 | 10,299 | 9,496 | ||||||||||||||
Rents and other receivables, net of allowance for doubtful accounts | 62,306 | 61,577 | 60,215 | 59,745 | 58,135 | ||||||||||||||
Prepaid expenses and other assets | 122,629 | 117,657 | 117,367 | 121,082 | 116,345 | ||||||||||||||
Other assets related to properties sold or held for sale | 278 | — | — | — | — | ||||||||||||||
Total assets | $ | 2,228,860 | $ | 2,090,194 | $ | 2,123,234 | $ | 2,113,707 | $ | 2,059,379 | |||||||||
Liabilities | |||||||||||||||||||
Notes payable | $ | 747,540 | $ | 597,442 | $ | 747,335 | $ | 747,208 | $ | 747,082 | |||||||||
Mortgage notes payable | 419,293 | 419,755 | 419,250 | 418,525 | 413,330 | ||||||||||||||
Lines of credit | 195,000 | 185,000 | 30,000 | 50,000 | 5,000 | ||||||||||||||
Accounts payable and other liabilities | 54,131 | 50,281 | 65,447 | 54,318 | 64,153 | ||||||||||||||
Advance rents | 10,766 | 13,733 | 14,471 | 12,528 | 12,211 | ||||||||||||||
Tenant security deposits | 9,225 | 9,053 | 8,892 | 8,899 | 8,625 | ||||||||||||||
Liabilities related to properties sold or held for sale | 329 | — | — | — | — | ||||||||||||||
Total liabilities | 1,436,284 | 1,275,264 | 1,285,395 | 1,291,478 | 1,250,401 | ||||||||||||||
Equity | |||||||||||||||||||
Preferred shares; $0.01 par value; 10,000 shares authorized | — | — | — | — | — | ||||||||||||||
Shares of beneficial interest, $0.01 par value; 100,000 shares authorized | 682 | 682 | 681 | 678 | 667 | ||||||||||||||
Additional paid-in capital | 1,192,202 | 1,191,594 | 1,191,123 | 1,184,395 | 1,153,344 | ||||||||||||||
Distributions in excess of net income | (399,421 | ) | (379,577 | ) | (356,531 | ) | (365,518 | ) | (347,724 | ) | |||||||||
Accumulated other comprehensive income (loss) | (2,288 | ) | — | — | — | — | |||||||||||||
Total shareholders' equity | 791,175 | 812,699 | 835,273 | 819,555 | 806,287 | ||||||||||||||
Noncontrolling interests in subsidiaries | 1,401 | 2,231 | 2,566 | 2,674 | 2,691 | ||||||||||||||
Total equity | 792,576 | 814,930 | 837,839 | 822,229 | 808,978 | ||||||||||||||
Total liabilities and equity | $ | 2,228,860 | $ | 2,090,194 | $ | 2,123,234 | $ | 2,113,707 | $ | 2,059,379 | |||||||||
Total Debt / Total Market Capitalization | 0.44 | :1 | 0.40 | :1 | 0.39 | :1 | 0.39 | :1 | 0.41 | :1 | |||||||||
5
Funds from Operations (In thousands, except per share data) (Unaudited) | |
Three Months Ended | |||||||||||||||||||
9/30/2015 | 6/30/2015 | 3/31/2015 | 12/31/2014 | 9/30/2014 | |||||||||||||||
Funds from operations(1) | |||||||||||||||||||
Net (loss) income | $ | 580 | $ | (2,886 | ) | $ | 29,398 | $ | 2,309 | $ | 3,658 | ||||||||
Real estate depreciation and amortization | 29,349 | 25,503 | 25,275 | 24,503 | 24,354 | ||||||||||||||
Gain on sale of depreciable real estate | — | — | (30,277 | ) | — | — | |||||||||||||
NAREIT funds from operations (FFO) | 29,929 | 22,617 | 24,396 | 26,812 | 28,012 | ||||||||||||||
Loss on extinguishment of debt | — | 119 | — | — | — | ||||||||||||||
Real estate impairment | — | 5,909 | — | — | — | ||||||||||||||
Loss (gain) on sale of real estate | 50 | (1,454 | ) | — | — | — | |||||||||||||
Severance expense | — | — | 1,001 | 582 | 394 | ||||||||||||||
Relocation expense | — | 26 | 64 | 764 | — | ||||||||||||||
Acquisition and structuring expenses | 1,034 | 1,264 | 234 | 663 | 69 | ||||||||||||||
Core FFO (1) | $ | 31,013 | $ | 28,481 | $ | 25,695 | $ | 28,821 | $ | 28,475 | |||||||||
Allocation to participating securities(2) | (47 | ) | (80 | ) | (108 | ) | (53 | ) | (44 | ) | |||||||||
NAREIT FFO per share - basic | $ | 0.44 | $ | 0.33 | $ | 0.36 | $ | 0.40 | $ | 0.42 | |||||||||
NAREIT FFO per share - fully diluted | $ | 0.44 | $ | 0.33 | $ | 0.36 | $ | 0.40 | $ | 0.42 | |||||||||
Core FFO per share - fully diluted | $ | 0.45 | $ | 0.42 | $ | 0.38 | $ | 0.43 | $ | 0.43 | |||||||||
Common dividend per share | $ | 0.30 | $ | 0.30 | $ | 0.30 | $ | 0.30 | $ | 0.30 | |||||||||
Average shares - basic | 68,186 | 68,176 | 68,141 | 67,002 | 66,738 | ||||||||||||||
Average shares - fully diluted (for FFO and FAD) | 68,305 | 68,375 | 68,191 | 67,065 | 66,790 | ||||||||||||||
(1) See "Supplemental Definitions" on page 27 of this supplemental for the definitions of FFO and Core FFO. | |||||||||||||||||||
(2) Adjustment to the numerators for FFO and Core FFO per share calculations when applying the two-class method for calculating EPS. | |||||||||||||||||||
6
Funds Available for Distribution (In thousands, except per share data) (Unaudited) | |
Three Months Ended | |||||||||||||||||||
9/30/2015 | 6/30/2015 | 3/31/2015 | 12/31/2014 | 9/30/2014 | |||||||||||||||
Funds available for distribution(1) | |||||||||||||||||||
NAREIT FFO | $ | 29,929 | $ | 22,617 | $ | 24,396 | $ | 26,812 | $ | 28,012 | |||||||||
Non-cash loss on extinguishment of debt | — | 119 | — | — | — | ||||||||||||||
Tenant improvements and incentives | (5,231 | ) | (3,417 | ) | (3,730 | ) | (7,103 | ) | (7,649 | ) | |||||||||
Leasing commissions | (1,714 | ) | (1,149 | ) | (1,606 | ) | (7,800 | ) | (1,323 | ) | |||||||||
Recurring capital improvements | (1,326 | ) | (737 | ) | (689 | ) | (1,811 | ) | (1,720 | ) | |||||||||
Straight-line rent, net | (680 | ) | (538 | ) | 407 | (1,087 | ) | (658 | ) | ||||||||||
Non-cash fair value interest expense | 38 | 36 | 35 | 33 | 32 | ||||||||||||||
Non-real estate depreciation and amortization | 938 | 1,123 | 938 | 1,578 | 994 | ||||||||||||||
Amortization of lease intangibles, net | 913 | 970 | 768 | 729 | 704 | ||||||||||||||
Amortization and expensing of restricted share and unit compensation | 863 | 1,195 | 1,826 | 1,134 | 1,307 | ||||||||||||||
Funds available for distribution (FAD) | 23,730 | 20,219 | 22,345 | 12,485 | 19,699 | ||||||||||||||
Gain on sale of real estate | 50 | (1,454 | ) | — | — | — | |||||||||||||
Non-share-based severance expense | — | — | 196 | 546 | 313 | ||||||||||||||
Relocation expense | — | 26 | 81 | 85 | — | ||||||||||||||
Acquisition and structuring expenses | 1,034 | 1,264 | 234 | 663 | 69 | ||||||||||||||
Real estate impairment | — | 5,909 | — | — | — | ||||||||||||||
Core FAD (1) | $ | 24,814 | $ | 25,964 | $ | 22,856 | $ | 13,779 | $ | 20,081 | |||||||||
Allocation to participating securities(2) | (47 | ) | (80 | ) | (108 | ) | (53 | ) | (44 | ) | |||||||||
FAD per share - basic | $ | 0.35 | $ | 0.30 | $ | 0.33 | $ | 0.19 | $ | 0.29 | |||||||||
FAD per share - fully diluted | $ | 0.35 | $ | 0.29 | $ | 0.33 | $ | 0.19 | $ | 0.29 | |||||||||
Core FAD per share - fully diluted | $ | 0.36 | $ | 0.38 | $ | 0.33 | $ | 0.20 | $ | 0.30 | |||||||||
Common dividend per share | $ | 0.30 | $ | 0.30 | $ | 0.30 | $ | 0.30 | $ | 0.30 | |||||||||
Average shares - basic | 68,186 | 68,176 | 68,141 | 67,002 | 66,738 | ||||||||||||||
Average shares - fully diluted (for FFO and FAD) | 68,305 | 68,375 | 68,191 | 67,065 | 66,790 | ||||||||||||||
(1) See "Supplemental Definitions" on page 30 of this supplemental for the definitions of FAD and Core FAD. (2) Adjustment to the numerators for FAD and Core FAD per share calculations when applying the two-class method for calculating EPS. | |||||||||||||||||||
7
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) (In thousands) (Unaudited) | |
Three Months Ended | |||||||||||||||||||
9/30/2015 | 6/30/2015 | 3/31/2015 | 12/31/2014 | 9/30/2014 | |||||||||||||||
Adjusted EBITDA (1) | |||||||||||||||||||
Net income (loss) | $ | 580 | $ | (2,886 | ) | $ | 29,398 | $ | 2,309 | $ | 3,658 | ||||||||
Add: | |||||||||||||||||||
Interest expense, including discontinued operations | 14,486 | 14,700 | 15,348 | 15,183 | 15,087 | ||||||||||||||
Real estate depreciation and amortization, including discontinued operations | 29,349 | 25,503 | 25,275 | 24,503 | 24,354 | ||||||||||||||
Income tax expense | 41 | 28 | — | — | 46 | ||||||||||||||
Real estate impairment | — | 5,909 | — | — | — | ||||||||||||||
Non-real estate depreciation | 168 | 178 | 103 | 793 | 113 | ||||||||||||||
Severance expense | — | — | 1,001 | 582 | 394 | ||||||||||||||
Relocation expense | — | 26 | 64 | 764 | — | ||||||||||||||
Acquisition and structuring expenses | 1,034 | 1,264 | 234 | 663 | 69 | ||||||||||||||
Less: | |||||||||||||||||||
Net loss (gain) on sale of real estate | 50 | (1,454 | ) | (30,277 | ) | — | — | ||||||||||||
Loss on extinguishment of debt | — | 119 | — | — | — | ||||||||||||||
Adjusted EBITDA | $ | 45,708 | $ | 43,387 | $ | 41,146 | $ | 44,797 | $ | 43,721 | |||||||||
(1) Adjusted EBITDA is earnings before interest expense, taxes, depreciation, amortization, gain on sale of real estate, real estate impairment, gain/loss on extinguishment of debt, severance expense, relocation expense, acquisition and structuring expenses, gain from non-disposal activities and allocations to noncontrolling interests. We consider Adjusted EBITDA to be an appropriate supplemental performance measure because it permits investors to view income from operations without the effect of depreciation, and the cost of debt or non-operating gains and losses. Adjusted EBITDA is a non-GAAP measure. | |||||||||||||||||||
8
Long Term Debt Analysis ($'s in thousands) | |
9/30/2015 | 6/30/2015 | 3/31/2015 | 12/31/2014 | 9/30/2014 | |||||||||||||||
Balances Outstanding | |||||||||||||||||||
Secured | |||||||||||||||||||
Conventional fixed rate | $ | 419,293 | $ | 419,755 | $ | 419,250 | $ | 418,525 | $ | 413,330 | |||||||||
Unsecured | |||||||||||||||||||
Fixed rate bonds | 597,540 | 597,442 | 747,335 | 747,208 | 747,082 | ||||||||||||||
Term loans | 150,000 | — | — | — | — | ||||||||||||||
Credit facility | 195,000 | 185,000 | 30,000 | 50,000 | 5,000 | ||||||||||||||
Unsecured total | 942,540 | 782,442 | 777,335 | 797,208 | 752,082 | ||||||||||||||
Total | $ | 1,361,833 | $ | 1,202,197 | $ | 1,196,585 | $ | 1,215,733 | $ | 1,165,412 | |||||||||
Average Interest Rates | |||||||||||||||||||
Secured | |||||||||||||||||||
Conventional fixed rate | 5.2 | % | 5.2 | % | 5.2 | % | 5.2 | % | 5.3 | % | |||||||||
Unsecured | |||||||||||||||||||
Fixed rate bonds | 4.7 | % | 4.7 | % | 4.9 | % | 4.9 | % | 4.9 | % | |||||||||
Term loans (1) | 2.7 | % | — | % | — | % | — | % | — | % | |||||||||
Credit facility | 1.2 | % | 1.2 | % | 1.4 | % | 1.4 | % | 1.4 | % | |||||||||
Unsecured total | 3.7 | % | 3.9 | % | 4.7 | % | 4.7 | % | 4.8 | % | |||||||||
Average | 4.2 | % | 4.4 | % | 4.9 | % | 4.9 | % | 5.0 | % | |||||||||
(1) Washington REIT entered into an interest rate swap to swap from a LIBOR plus 110 basis points floating interest rate to a 2.72% all-in fixed interest rate commencing October 15, 2015.
Note: The current balances outstanding of the secured and unsecured fixed rate bonds and notes are shown net of discounts/premiums of $4.1 million and $2.5 million, respectively.
9
Long Term Debt Maturities (in thousands, except average interest rates) | |
Future Maturities of Debt | |||||||||||||||||
Year | Secured Debt | Unsecured Debt | Credit Facilities | Total Debt | Avg Interest Rate | ||||||||||||
2015 | $ | — | $ | — | $ | — | $ | — | |||||||||
2016 | 163,472 | — | — | 163,472 | 5.1% | ||||||||||||
2017 | 150,903 | — | — | 150,903 | 5.9% | ||||||||||||
2018 | — | — | — | — | |||||||||||||
2019 | 31,280 | — | 195,000 | 226,280 | 1.9% | ||||||||||||
2020 | — | 250,000 | — | 250,000 | 5.1% | ||||||||||||
2021 | — | 150,000 | — | 150,000 | (1) | 2.7% | |||||||||||
2022 | 44,517 | 300,000 | — | 344,517 | 4.0% | ||||||||||||
2023 | — | — | — | — | |||||||||||||
2024 | — | — | — | — | |||||||||||||
2025 | — | — | — | — | |||||||||||||
Thereafter | — | 50,000 | — | 50,000 | 7.4% | ||||||||||||
Scheduled principal payments | $ | 390,172 | $ | 750,000 | $ | 195,000 | $ | 1,335,172 | 4.2% | ||||||||
Scheduled amortization payments | 24,986 | — | — | 24,986 | 4.7% | ||||||||||||
Net discounts/premiums | 4,135 | (2,460 | ) | — | 1,675 | ||||||||||||
Total maturities | $ | 419,293 | $ | 747,540 | $ | 195,000 | $ | 1,361,833 | 4.2% | ||||||||
Weighted average maturity =4.8 years
(1) Washington REIT entered into an interest rate swap to swap from a LIBOR plus 110 basis points floating interest rate to a 2.72% all-in fixed interest rate commencing October 15, 2015.
10
Debt Covenant Compliance | |
Unsecured Notes Payable | Unsecured Line of Credit ($600.0 million) | ||||||||
Quarter Ended September 30, 2015 | Covenant | Quarter Ended September 30, 2015 | Covenant | ||||||
% of Total Indebtedness to Total Assets(1) | 48.9 | % | ≤ 65.0% | N/A | N/A | ||||
Ratio of Income Available for Debt Service to Annual Debt Service | 3.1 | ≥ 1.5 | N/A | N/A | |||||
% of Secured Indebtedness to Total Assets(1) | 14.9 | % | ≤ 40.0% | N/A | N/A | ||||
Ratio of Total Unencumbered Assets(2) to Total Unsecured Indebtedness | 2.3 | ≥ 1.5 | N/A | N/A | |||||
% of Net Consolidated Total Indebtedness to Consolidated Total Asset Value(3) | N/A | N/A | 43.4 | % | ≤ 60.0% | ||||
Ratio of Consolidated Adjusted EBITDA(4) to Consolidated Fixed Charges(5) | N/A | N/A | 3.03 | ≥ 1.50 | |||||
% of Consolidated Secured Indebtedness to Consolidated Total Asset Value(3) | N/A | N/A | 13.4 | % | ≤ 40.0% | ||||
% of Consolidated Unsecured Indebtedness to Unencumbered Pool Value(6) | N/A | N/A | 36.4 | % | ≤ 60.0% | ||||
Ratio of Unencumbered Adjusted Net Operating Income to Consolidated Unsecured Interest Expense | N/A | N/A | 4.16 | ≥ 1.75 | |||||
(1) Total Assets is calculated by applying a capitalization rate of 7.50% to the EBITDA(4) from the last four consecutive quarters, excluding EBITDA from acquired, disposed, and non-stabilized development properties. | |||||||||
(2) Total Unencumbered Assets is calculated by applying a capitalization rate of 7.50% to the EBITDA(4) from unencumbered properties from the last four consecutive quarters, excluding EBITDA from acquired, disposed, and non-stabilized development properties. | |||||||||
(3) Consolidated Total Asset Value is the sum of unrestricted cash plus the quotient of applying a capitalization rate to the annualized NOI from the most recently ended quarter for each asset class, excluding NOI from disposed properties, acquisitions during the past 6 quarters, development, major redevelopment and low occupancy properties. To this amount, we add the purchase price of acquisitions during the past 6 quarters plus values for development, major redevelopment and low occupancy properties. | |||||||||
(4) Consolidated Adjusted EBITDA is defined as earnings before noncontrolling interests, depreciation, amortization, interest expense, income tax expense, acquisition costs, extraordinary, unusual or nonrecurring transactions including sale of assets, impairment, gains and losses on extinguishment of debt and other non-cash charges. | |||||||||
(5) Consolidated Fixed Charges consist of interest expense excluding capitalized interest and amortization of deferred financing costs, principal payments and preferred dividends, if any. | |||||||||
(6) Unencumbered Pool Value is the sum of unrestricted cash plus the quotient of applying a capitalization rate to the annualized NOI from unencumbered properties from the most recently ended quarter for each asset class excluding NOI from disposed properties, acquisitions during the past 6 quarters, development, major redevelopment and low occupancy properties. To this we add the purchase price of unencumbered acquisitions during the past 6 quarters and values for unencumbered development, major redevelopment and low occupancy properties. | |||||||||
11
Capital Analysis (In thousands, except per share amounts) | |
9/30/2015 | 6/30/2015 | 3/31/2015 | 12/31/2014 | 9/30/2014 | |||||||||||||||
Market Data | |||||||||||||||||||
Shares Outstanding | $ | 68,180 | $ | 68,162 | $ | 68,126 | $ | 67,819 | $ | 66,663 | |||||||||
Market Price per Share | 24.93 | 25.95 | 27.63 | 27.66 | 25.38 | ||||||||||||||
Equity Market Capitalization | $ | 1,699,727 | $ | 1,768,804 | $ | 1,882,321 | $ | 1,875,874 | $ | 1,691,907 | |||||||||
Total Debt | $ | 1,361,833 | $ | 1,202,197 | $ | 1,196,585 | $ | 1,215,733 | $ | 1,165,412 | |||||||||
Total Market Capitalization | $ | 3,061,560 | $ | 2,971,001 | $ | 3,078,906 | $ | 3,091,607 | $ | 2,857,319 | |||||||||
Total Debt to Market Capitalization | 0.44 | :1 | 0.40 | :1 | 0.39 | :1 | 0.39 | :1 | 0.41 | :1 | |||||||||
Earnings to Fixed Charges(1) | 1.0x | 0.8x | 2.9x | 1.1x | 1.2x | ||||||||||||||
Debt Service Coverage Ratio(2) | 2.9x | 2.7x | 2.5x | 2.8x | 2.7x | ||||||||||||||
Dividend Data | |||||||||||||||||||
Total Dividends Paid | $ | 20,491 | $ | 20,500 | $ | 20,519 | $ | 20,124 | $ | 20,019 | |||||||||
Common Dividend per Share | $ | 0.30 | $ | 0.30 | $ | 0.30 | $ | 0.30 | $ | 0.30 | |||||||||
Payout Ratio (Core FFO per share basis) | 66.7 | % | 71.4 | % | 78.9 | % | 69.8 | % | 69.8 | % | |||||||||
Payout Ratio (Core FAD per share basis) | 83.3 | % | 78.9 | % | 90.9 | % | 150.0 | % | 100.0 | % | |||||||||
(1) The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, earnings consist of income from continuing operations attributable to the controlling interests plus fixed charges, less capitalized interest. Fixed charges consist of interest expense, including amortized costs of debt issuance, plus interest costs capitalized. | |||||||||||||||||||
(2) Debt service coverage ratio is computed by dividing Adjusted EBITDA (see page 8) by interest expense and principal amortization. | |||||||||||||||||||
12
Same-Store Portfolio Net Operating Income (NOI) Growth & Rental Growth 2015 vs. 2014 | |
Three Months Ended September 30, | Rental Rate | ||||||||||||
2015 | 2014 | % Change | Growth | ||||||||||
Cash NOI: | |||||||||||||
Multifamily | $ | 8,775 | $ | 8,878 | (1.2 | )% | (2.0 | )% | |||||
Office | 26,275 | 25,702 | 2.2 | % | 1.9 | % | |||||||
Retail | 11,164 | 11,558 | (3.4 | )% | 2.5 | % | |||||||
Overall Same-Store Portfolio (1) | $ | 46,214 | $ | 46,138 | 0.2 | % | 1.1 | % | |||||
NOI: | |||||||||||||
Multifamily | $ | 8,770 | $ | 8,886 | (1.3 | )% | (2.1 | )% | |||||
Office | 25,688 | 25,731 | (0.2 | )% | 0.9 | % | |||||||
Retail | 11,336 | 11,621 | (2.5 | )% | 3.2 | % | |||||||
Overall Same-Store Portfolio (1) | $ | 45,794 | $ | 46,238 | (1.0 | )% | 0.6 | % | |||||
(1) Non same-store properties were: |
Acquisitions: |
Multifamily - The Wellington |
Retail - Spring Valley Retail Center |
Development/Redevelopment: |
Multifamily - The Maxwell |
Office - Silverline Center |
Sold properties classified as continuing operations: |
Multifamily - Country Club Towers |
13
Same-Store Portfolio Net Operating Income (NOI) Detail (In thousands) | |
Three Months Ended September 30, 2015 | |||||||||||||||||||
Multifamily | Office | Retail | Corporate and Other | Total | |||||||||||||||
Real estate rental revenue | |||||||||||||||||||
Same-store portfolio | $ | 14,897 | $ | 41,221 | $ | 14,783 | $ | — | $ | 70,901 | |||||||||
Non same-store - acquired and in development (1) | 4,046 | 2,395 | 901 | — | 7,342 | ||||||||||||||
Total | 18,943 | 43,616 | 15,684 | — | 78,243 | ||||||||||||||
Real estate expenses | |||||||||||||||||||
Same-store portfolio | 6,127 | 15,533 | 3,447 | — | 25,107 | ||||||||||||||
Non same-store - acquired and in development (1) | 1,721 | 1,079 | 202 | — | 3,002 | ||||||||||||||
Total | 7,848 | 16,612 | 3,649 | — | 28,109 | ||||||||||||||
Net Operating Income (NOI) | |||||||||||||||||||
Same-store portfolio | 8,770 | 25,688 | 11,336 | — | 45,794 | ||||||||||||||
Non same-store - acquired and in development (1) | 2,325 | 1,316 | 699 | — | 4,340 | ||||||||||||||
Total | $ | 11,095 | $ | 27,004 | $ | 12,035 | $ | — | $ | 50,134 | |||||||||
Same-store portfolio NOI (from above) | $ | 8,770 | $ | 25,688 | $ | 11,336 | $ | — | $ | 45,794 | |||||||||
Straight-line revenue, net for same-store properties | 4 | (329 | ) | (182 | ) | — | (507 | ) | |||||||||||
FAS 141 Min Rent | 1 | 402 | (47 | ) | — | 356 | |||||||||||||
Amortization of lease intangibles for same-store properties | — | 514 | 57 | — | 571 | ||||||||||||||
Same-store portfolio cash NOI | $ | 8,775 | $ | 26,275 | $ | 11,164 | $ | — | $ | 46,214 | |||||||||
Reconciliation of NOI to net income | |||||||||||||||||||
Total NOI | $ | 11,095 | $ | 27,004 | $ | 12,035 | $ | — | $ | 50,134 | |||||||||
Depreciation and amortization | (7,905 | ) | (17,487 | ) | (3,708 | ) | (249 | ) | (29,349 | ) | |||||||||
General and administrative | — | — | — | (4,953 | ) | (4,953 | ) | ||||||||||||
Interest expense | (2,464 | ) | (3,003 | ) | (227 | ) | (8,792 | ) | (14,486 | ) | |||||||||
Other income | — | — | — | 163 | 163 | ||||||||||||||
Acquisition costs | — | — | — | (929 | ) | (929 | ) | ||||||||||||
Net income | 726 | 6,514 | 8,100 | (14,760 | ) | 580 | |||||||||||||
Net loss attributable to noncontrolling interests | — | — | — | 67 | 67 | ||||||||||||||
Net income attributable to the controlling interests | $ | 726 | $ | 6,514 | $ | 8,100 | $ | (14,693 | ) | $ | 647 | ||||||||
(1) For a list of non-same-store properties and held for sale and sold properties, see page 13 of this Supplemental. | |||||||||||||||||||
14
Same-Store Net Operating Income (NOI) Detail (In thousands) | |
Three Months Ended September 30, 2014 | |||||||||||||||||||
Multifamily | Office | Retail | Corporate and Other | Total | |||||||||||||||
Real estate rental revenue | |||||||||||||||||||
Same-store portfolio | $ | 14,953 | $ | 40,566 | $ | 14,825 | $ | — | $ | 70,344 | |||||||||
Non same-store - acquired and in development (1) | 1,007 | 2,062 | — | — | 3,069 | ||||||||||||||
Total | 15,960 | 42,628 | 14,825 | — | 73,413 | ||||||||||||||
Real estate expenses | |||||||||||||||||||
Same-store portfolio | 6,067 | 14,835 | 3,204 | — | 24,106 | ||||||||||||||
Non same-store - acquired and in development (1) | 577 | 1,231 | — | — | 1,808 | ||||||||||||||
Total | 6,644 | 16,066 | 3,204 | — | 25,914 | ||||||||||||||
Net Operating Income (NOI) | |||||||||||||||||||
Same-store portfolio | 8,886 | 25,731 | 11,621 | — | 46,238 | ||||||||||||||
Non same-store - acquired and in development (1) | 430 | 831 | — | — | 1,261 | ||||||||||||||
Total | $ | 9,316 | $ | 26,562 | $ | 11,621 | $ | — | $ | 47,499 | |||||||||
Same-store portfolio NOI (from above) | $ | 8,886 | $ | 25,731 | $ | 11,621 | $ | — | $ | 46,238 | |||||||||
Straight-line revenue, net for same-store properties | — | (568 | ) | (71 | ) | — | (639 | ) | |||||||||||
FAS 141 Min Rent | (8 | ) | 268 | (57 | ) | — | 203 | ||||||||||||
Amortization of lease intangibles for same-store properties | — | 271 | 65 | — | 336 | ||||||||||||||
Same-store portfolio cash NOI | $ | 8,878 | $ | 25,702 | $ | 11,558 | $ | — | $ | 46,138 | |||||||||
Reconciliation of NOI to net income | |||||||||||||||||||
Total NOI | $ | 9,316 | $ | 26,562 | $ | 11,621 | $ | — | $ | 47,499 | |||||||||
Depreciation and amortization | (4,252 | ) | (16,655 | ) | (3,200 | ) | (247 | ) | (24,354 | ) | |||||||||
General and administrative | — | — | — | (4,523 | ) | (4,523 | ) | ||||||||||||
Interest expense | (2,492 | ) | (3,024 | ) | (247 | ) | (9,324 | ) | (15,087 | ) | |||||||||
Other income | — | — | — | 192 | 192 | ||||||||||||||
Acquisition costs | — | — | — | (69 | ) | (69 | ) | ||||||||||||
Net income | 2,572 | 6,883 | 8,174 | (13,971 | ) | 3,658 | |||||||||||||
Net income attributable to noncontrolling interests | — | — | — | 10 | 10 | ||||||||||||||
Net income attributable to the controlling interests | $ | 2,572 | $ | 6,883 | $ | 8,174 | $ | (13,961 | ) | $ | 3,668 | ||||||||
(1) For a list of non-same-store properties and held for sale and sold properties, see page 13 of this Supplemental. | |||||||||||||||||||
15
Net Operating Income (NOI) by Region | |
Percentage of NOI | |||||||
Q3 2015 | YTD 2015 | ||||||
DC | |||||||
Multifamily | 5.2 | % | 5.5 | % | |||
Office | 24.3 | % | 25.3 | % | |||
Retail | 1.8 | % | 2.0 | % | |||
31.3 | % | 32.8 | % | ||||
Maryland | |||||||
Multifamily | 2.5 | % | 2.5 | % | |||
Office | 10.4 | % | 10.5 | % | |||
Retail | 15.7 | % | 16.2 | % | |||
28.6 | % | 29.2 | % | ||||
Virginia | |||||||
Multifamily | 14.4 | % | 12.0 | % | |||
Office | 19.1 | % | 19.3 | % | |||
Retail | 6.6 | % | 6.7 | % | |||
40.1 | % | 38.0 | % | ||||
Total Portfolio | 100.0 | % | 100.0 | % | |||
16
Same-Store and Overall Physical Occupancy Levels by Sector | ||||
Physical Occupancy - Same-Store Properties (1) | |||||||||||||||
Sector | 9/30/2015 | 6/30/2015 | 3/31/2015 | 12/31/2014 | 9/30/2014 | ||||||||||
Multifamily | 93.4 | % | 94.5 | % | 94.0 | % | 93.8 | % | 94.2 | % | |||||
Office | 90.8 | % | 91.0 | % | 90.6 | % | 90.9 | % | 90.7 | % | |||||
Retail | 94.3 | % | 92.8 | % | 94.7 | % | 94.5 | % | 94.4 | % | |||||
Overall Portfolio | 92.4 | % | 92.4 | % | 92.6 | % | 92.6 | % | 92.6 | % | |||||
Physical Occupancy - All Properties | |||||||||||||||
Sector | 9/30/2015 | 6/30/2015 | 3/31/2015 | 12/31/2014 | 9/30/2014 | ||||||||||
Multifamily | 92.3 | % | 91.7 | % | 89.5 | % | 93.8 | % | 94.3 | % | |||||
Office | 87.8 | % | 87.6 | % | 86.7 | % | 86.9 | % | 87.1 | % | |||||
Retail | 94.4 | % | 92.9 | % | 94.7 | % | 94.4 | % | 94.4 | % | |||||
Overall Portfolio | 90.7 | % | 90.0 | % | 89.5 | % | 90.5 | % | 90.7 | % | |||||
(1) Non same-store properties were: |
Acquisitions: |
Multifamily - The Wellington |
Retail - Spring Valley Retail Center |
Development/Redevelopment: |
Multifamily - The Maxwell |
Office - Silverline Center |
Sold properties classified as continuing operations: |
Multifamily - Country Club Towers |
17
Same-Store Portfolio and Overall Economic Occupancy Levels by Sector | ||||
Economic Occupancy - Same-Store Properties(1) | |||||||||||||||
Sector | 9/30/2015 | 6/30/2015 | 3/31/2015 | 12/31/2014 | 9/30/2014 | ||||||||||
Multifamily | 95.0 | % | 95.7 | % | 94.9 | % | 94.2 | % | 94.0 | % | |||||
Office | 91.3 | % | 91.3 | % | 90.9 | % | 91.1 | % | 90.9 | % | |||||
Retail | 92.2 | % | 92.8 | % | 93.8 | % | 94.9 | % | 94.9 | % | |||||
Overall Portfolio | 92.3 | % | 92.5 | % | 92.4 | % | 92.5 | % | 92.3 | % | |||||
Economic Occupancy - All Properties | |||||||||||||||
Sector | 9/30/2015 | 6/30/2015 | 3/31/2015 | 12/31/2014 | 9/30/2014 | ||||||||||
Multifamily | 92.7 | % | 90.6 | % | 88.4 | % | 94.2 | % | 94.1 | % | |||||
Office | 87.7 | % | 87.2 | % | 86.5 | % | 86.8 | % | 87.0 | % | |||||
Retail | 92.3 | % | 92.9 | % | 93.5 | % | 94.5 | % | 94.9 | % | |||||
Overall Portfolio | 89.8 | % | 89.0 | % | 88.2 | % | 89.8 | % | 90.0 | % | |||||
(1) Non same-store properties were: |
Acquisitions: |
Multifamily - The Wellington |
Retail - Spring Valley Retail Center |
Development/Redevelopment: |
Multifamily - The Maxwell |
Office - Silverline Center |
Sold properties classified as continuing operations: |
Multifamily - Country Club Towers |
18
Acquisition and Disposition Summary | |
2015 | |
($ in thousands) | |
0,
Acquisition Summary | ||||||||||||||||
Location | Acquisition Date | Property Type | # of units | 9/30/2015 Leased Percentage | Investment | |||||||||||
The Wellington | Arlington, VA | July 1, 2015 | Multifamily | 711 | 95 | % | $ | 167,000 | ||||||||
012
Disposition Summary | |||||||||||||||||
Location | Disposition Date | Property Type | # of units | Contract Sales Price | GAAP Gain | ||||||||||||
Country Club Towers | Arlington, VA | March 20, 2015 | Multifamily | 227 | $ | 37,800 | $ | 30,277 | |||||||||
Land interest at 1225 First Street | Alexandria, VA | September 9, 2015 | Multifamily | N/A | 14,500 | — | |||||||||||
227 | $ | 52,300 | $ | 30,277 | |||||||||||||
19
Development/Re-Development Summary | |
September 30, 2015 | |
($ in thousands) | |
Property and Location | Total Rentable Square Feet or # of Units | Cost to Date | Draws on Construction Loan to Date | Construction Completion Date | Leased % | ||||
Development Summary | |||||||||
The Maxwell, Arlington, VA | 163 units & 2,200 square feet retail | $ | 47,323 | $ | 31,707 | fourth quarter 2014 | 81% | ||
Re-Development Summary | |||||||||
Silverline Center,Tysons, VA | 532,000 square feet | $ | 34,156 | N/A | first quarter 2015 | 64% | |||
20
Commercial Leasing Summary - New Leases | |
3rd Quarter 2015 | 2nd Quarter 2015 | 1st Quarter 2015 | 4th Quarter 2014 | 3rd Quarter 2014 | |||||||||||||||||||||||||||||||||||
Gross Leasing Square Footage | |||||||||||||||||||||||||||||||||||||||
Office Buildings | 93,389 | 57,693 | 61,141 | 92,349 | 37,852 | ||||||||||||||||||||||||||||||||||
Retail Centers | 74,102 | 35,095 | 10,853 | 10,965 | 10,408 | ||||||||||||||||||||||||||||||||||
Total | 167,491 | 92,788 | 71,994 | 103,314 | 48,260 | ||||||||||||||||||||||||||||||||||
Weighted Average Term (yrs) | |||||||||||||||||||||||||||||||||||||||
Office Buildings | 6.8 | 6.8 | 7.5 | 8.5 | 7.4 | ||||||||||||||||||||||||||||||||||
Retail Centers | 10.2 | 9.6 | 11.0 | 9.2 | 9.8 | ||||||||||||||||||||||||||||||||||
Total | 8.3 | 7.8 | 8.0 | 8.6 | 7.9 | ||||||||||||||||||||||||||||||||||
Rental Rate Increases: | GAAP | CASH | GAAP | CASH | GAAP | CASH | GAAP | CASH | GAAP | CASH | |||||||||||||||||||||||||||||
Rate on expiring leases | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 27.72 | $ | 28.67 | $ | 36.35 | $ | 38.06 | $ | 31.43 | $ | 33.14 | $ | 30.37 | $ | 31.66 | $ | 31.50 | $ | 32.62 | |||||||||||||||||||
Retail Centers | 22.32 | 22.77 | 23.77 | 25.30 | 41.57 | 41.85 | 34.95 | 35.52 | 36.96 | 37.29 | |||||||||||||||||||||||||||||
Total | $ | 25.33 | $ | 26.06 | $ | 31.59 | $ | 33.23 | $ | 32.96 | $ | 34.45 | $ | 30.85 | $ | 32.07 | $ | 32.68 | $ | 33.63 | |||||||||||||||||||
Rate on new leases | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 36.46 | $ | 33.53 | $ | 41.61 | $ | 38.11 | $ | 35.39 | $ | 32.49 | $ | 38.39 | $ | 34.43 | $ | 33.77 | $ | 30.68 | |||||||||||||||||||
Retail Centers | 27.61 | 26.14 | 28.17 | 26.42 | 52.79 | 46.99 | 41.82 | 37.65 | 43.69 | 38.76 | |||||||||||||||||||||||||||||
Total | $ | 32.55 | $ | 30.26 | $ | 36.53 | $ | 33.69 | $ | 38.01 | $ | 34.68 | $ | 38.75 | $ | 34.77 | $ | 35.91 | $ | 32.43 | |||||||||||||||||||
Percentage Increase | |||||||||||||||||||||||||||||||||||||||
Office Buildings | 31.6 | % | 17.0 | % | 14.5 | % | 0.2 | % | 12.6 | % | (2.0 | )% | 26.4 | % | 8.8 | % | 7.2 | % | (5.9 | )% | |||||||||||||||||||
Retail Centers | 23.7 | % | 14.8 | % | 18.5 | % | 4.4 | % | 27.0 | % | 12.3 | % | 19.7 | % | 6.0 | % | 18.2 | % | 4.0 | % | |||||||||||||||||||
Total | 28.5 | % | 16.1 | % | 15.6 | % | 1.4 | % | 15.3 | % | 0.7 | % | 25.6 | % | 8.4 | % | 9.9 | % | (3.6 | )% | |||||||||||||||||||
Total Dollars | $ per Sq Ft | Total Dollars | $ per Sq Ft | Total Dollars | $ per Sq Ft | Total Dollars | $ per Sq Ft | Total Dollars | $ per Sq Ft | ||||||||||||||||||||||||||||||
Tenant Improvements | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 4,775,584 | $ | 51.14 | $ | 2,209,271 | $ | 38.29 | $ | 3,255,324 | $ | 53.24 | $ | 4,609,137 | $ | 49.91 | $ | 1,499,573 | $ | 39.62 | |||||||||||||||||||
Retail Centers | 5,220,923 | 70.46 | 592,351 | 16.88 | 353,335 | 32.56 | 120,600 | 11.00 | 162,180 | 15.58 | |||||||||||||||||||||||||||||
Subtotal | $ | 9,996,507 | $ | 59.68 | $ | 2,801,622 | $ | 30.19 | $ | 3,608,659 | $ | 50.12 | $ | 4,729,737 | $ | 45.78 | $ | 1,661,753 | $ | 34.43 | |||||||||||||||||||
Leasing Commissions and Incentives | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 4,556,279 | $ | 48.79 | $ | 1,809,746 | $ | 31.37 | $ | 2,092,175 | $ | 34.22 | $ | 3,328,304 | $ | 36.04 | $ | 1,345,301 | $ | 35.54 | |||||||||||||||||||
Retail Centers | 1,649,704 | 22.26 | 592,483 | 16.88 | 754,661 | 69.53 | 275,428 | 25.12 | 291,731 | 28.03 | |||||||||||||||||||||||||||||
Subtotal | $ | 6,205,983 | $ | 37.05 | $ | 2,402,229 | $ | 25.89 | $ | 2,846,836 | $ | 39.54 | $ | 3,603,732 | $ | 34.88 | $ | 1,637,032 | $ | 33.92 | |||||||||||||||||||
Tenant Improvements and Leasing Commissions and Incentives | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 9,331,863 | $ | 99.93 | $ | 4,019,017 | $ | 69.66 | $ | 5,347,499 | $ | 87.46 | $ | 7,937,441 | $ | 85.95 | $ | 2,844,874 | $ | 75.16 | |||||||||||||||||||
Retail Centers | 6,870,627 | 92.72 | 1,184,834 | 33.76 | 1,107,996 | 102.09 | 396,028 | 36.12 | 453,911 | 43.61 | |||||||||||||||||||||||||||||
Total | $ | 16,202,490 | $ | 96.73 | $ | 5,203,851 | $ | 56.08 | $ | 6,455,495 | $ | 89.66 | $ | 8,333,469 | $ | 80.66 | $ | 3,298,785 | $ | 68.35 | |||||||||||||||||||
21
Commercial Leasing Summary - Renewal Leases | |
3rd Quarter 2015 | 2nd Quarter 2015 | 1st Quarter 2015 | 4th Quarter 2014 | 3rd Quarter 2014 | |||||||||||||||||||||||||||||||||||
Gross Leasing Square Footage | |||||||||||||||||||||||||||||||||||||||
Office Buildings | 191,599 | 71,112 | 135,134 | 575,499 | 44,214 | ||||||||||||||||||||||||||||||||||
Retail Centers | 53,415 | 95,048 | 111,342 | 45,084 | 170,568 | ||||||||||||||||||||||||||||||||||
Total | 245,014 | 166,160 | 246,476 | 620,583 | 214,782 | ||||||||||||||||||||||||||||||||||
Weighted Average Term (yrs) | |||||||||||||||||||||||||||||||||||||||
Office Buildings | 2.8 | 3.9 | 4.8 | 6.1 | 7.4 | ||||||||||||||||||||||||||||||||||
Retail Centers | 4.4 | 5.8 | 5.4 | 6.8 | 5.1 | ||||||||||||||||||||||||||||||||||
Total | 3.1 | 4.9 | 5.1 | 6.1 | 5.6 | ||||||||||||||||||||||||||||||||||
Rental Rate Increases: | GAAP | CASH | GAAP | CASH | GAAP | CASH | GAAP | CASH | GAAP | CASH | |||||||||||||||||||||||||||||
Rate on expiring leases | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 35.23 | $ | 37.43 | $ | 30.91 | $ | 33.07 | $ | 35.26 | $ | 36.79 | $ | 35.87 | $ | 37.53 | $ | 32.89 | $ | 35.79 | |||||||||||||||||||
Retail Centers | 23.21 | 23.72 | 17.57 | 18.54 | 16.14 | 16.71 | 33.21 | 35.65 | 13.65 | 13.86 | |||||||||||||||||||||||||||||
Total | $ | 32.61 | $ | 34.44 | $ | 23.28 | $ | 24.76 | $ | 26.63 | $ | 27.72 | $ | 35.67 | $ | 37.39 | $ | 17.61 | $ | 18.37 | |||||||||||||||||||
Rate on new leases | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 31.37 | $ | 30.29 | $ | 32.43 | $ | 31.37 | $ | 37.98 | $ | 35.99 | $ | 37.25 | $ | 35.44 | $ | 44.95 | $ | 41.11 | |||||||||||||||||||
Retail Centers | 26.63 | 26.10 | 22.49 | 21.25 | 17.06 | 16.64 | 40.26 | 37.30 | 14.67 | 14.47 | |||||||||||||||||||||||||||||
Total | $ | 30.34 | $ | 29.38 | $ | 26.75 | $ | 25.58 | $ | 28.53 | $ | 27.25 | $ | 37.46 | $ | 35.57 | $ | 20.90 | $ | 19.95 | |||||||||||||||||||
Percentage Increase | |||||||||||||||||||||||||||||||||||||||
Office Buildings | (11.0 | )% | (1) | (19.1 | )% | (1) | 4.9 | % | (5.1 | )% | 7.7 | % | (2.2 | )% | 3.9 | % | (5.6 | )% | 36.7 | % | 14.9 | % | |||||||||||||||||
Retail Centers | 14.7 | % | 10.0 | % | 28.0 | % | 14.6 | % | 5.7 | % | (0.4 | )% | 21.2 | % | 4.6 | % | 7.4 | % | 4.4 | % | |||||||||||||||||||
Total | (7.0 | )% | (14.7 | )% | 14.9 | % | 3.3 | % | 7.2 | % | (1.7 | )% | 5.0 | % | (4.9 | )% | 18.7 | % | 8.6 | % | |||||||||||||||||||
Total Dollars | $ per Sq Ft | Total Dollars | $ per Sq Ft | Total Dollars | $ per Sq Ft | Total Dollars | $ per Sq Ft | Total Dollars | $ per Sq Ft | ||||||||||||||||||||||||||||||
Tenant Improvements | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 580,967 | $ | 3.03 | $ | 423,589 | $ | 5.96 | $ | 550,948 | $ | 4.08 | $ | 14,952,993 | $ | 25.98 | $ | 595,757 | $ | 13.47 | |||||||||||||||||||
Retail Centers | 36,540 | 0.68 | 39,183 | 0.41 | 152,391 | 1.37 | 33,370 | 0.74 | — | — | |||||||||||||||||||||||||||||
Subtotal | $ | 617,507 | $ | 2.52 | $ | 462,772 | $ | 2.79 | $ | 703,339 | $ | 2.85 | $ | 14,986,363 | $ | 24.15 | $ | 595,757 | $ | 2.77 | |||||||||||||||||||
Leasing Commissions and Incentives | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 744,977 | $ | 3.89 | $ | 368,593 | $ | 5.19 | $ | 929,511 | $ | 6.88 | $ | 9,087,273 | $ | 15.79 | $ | 532,789 | $ | 12.05 | |||||||||||||||||||
Retail Centers | 119,946 | 2.25 | 199,976 | 2.10 | 243,602 | 2.19 | 192,343 | 4.27 | 51,270 | 0.30 | |||||||||||||||||||||||||||||
Subtotal | $ | 864,923 | $ | 3.53 | $ | 568,569 | $ | 3.43 | $ | 1,173,113 | $ | 4.76 | $ | 9,279,616 | $ | 14.96 | $ | 584,059 | $ | 2.72 | |||||||||||||||||||
Tenant Improvements and Leasing Commissions and Incentives | |||||||||||||||||||||||||||||||||||||||
Office Buildings | $ | 1,325,944 | $ | 6.92 | $ | 792,182 | $ | 11.15 | $ | 1,480,459 | $ | 10.96 | $ | 24,040,266 | $ | 41.77 | $ | 1,128,546 | $ | 25.52 | |||||||||||||||||||
Retail Centers | 156,486 | 2.93 | 239,159 | 2.51 | 395,993 | 3.56 | 225,713 | 5.01 | 51,270 | 0.30 | |||||||||||||||||||||||||||||
Total | $ | 1,482,430 | $ | 6.05 | $ | 1,031,341 | $ | 6.22 | $ | 1,876,452 | $ | 7.61 | $ | 24,265,979 | $ | 39.11 | $ | 1,179,816 | $ | 5.49 | |||||||||||||||||||
(1) Office renewal spreads were significantly negatively impacted by one anomalous, short-term lease renewal, excluding which, average rental rates for office lease renewals increased by 1.4%.
22
10 Largest Tenants - Based on Annualized Commercial Income | |
September 30, 2015 | |
Tenant | Number of Buildings | Weighted Average Remaining Lease Term in Months | Percentage of Aggregate Portfolio Annualized Commercial Income | Aggregate Rentable Square Feet | Percentage of Aggregate Occupied Square Feet | ||||||||
World Bank | 1 | 63 | 5.78 | % | 210,354 | 3.27 | % | ||||||
Advisory Board Company | 2 | 44 | 3.72 | % | 199,762 | 3.10 | % | ||||||
Booz Allen Hamilton, Inc. | 1 | 124 | 2.70 | % | 222,989 | 3.46 | % | ||||||
Engility Corporation | 1 | 24 | 2.55 | % | 134,126 | 2.08 | % | ||||||
Squire Patton Boggs (USA) LLP (1) | 1 | 19 | 2.41 | % | 110,566 | 1.72 | % | ||||||
Epstein, Becker & Green, P.C. | 1 | 15 | 1.31 | % | 53,427 | 0.83 | % | ||||||
General Services Administration | 3 | 38 | 1.23 | % | 52,282 | 0.81 | % | ||||||
Alexandria City School Board | 1 | 164 | 1.18 | % | 84,693 | 1.32 | % | ||||||
Hughes Hubbard & Reed LLP | 1 | 29 | 1.15 | % | 53,208 | 0.83 | % | ||||||
Cozen O'Connor | 1 | 7 | 1.14 | % | 36,574 | 0.57 | % | ||||||
Total/Weighted Average | 66 | 23.17 | % | 1,157,981 | 17.99 | % | |||||||
(1) Squire Patton Boggs (USA) LLP's space is currently subleased to Advisory Board Company, who will become the primary lessee on May 1, 2017.
23
Industry Diversification | |
September 30, 2015 | |
Industry Classification (NAICS) | Annualized Base Rental Revenue | Percentage of Aggregate Annualized Rent | Aggregate Rentable Square Feet | Percentage of Aggregate Square Feet | ||||||||
Professional, Scientific, and Technical Services | $ | 76,825,756 | 38.40 | % | 2,227,459 | 34.51 | % | |||||
Credit Intermediation and Related Activities | 18,611,032 | 9.30 | % | 328,570 | 5.09 | % | ||||||
Religious, Grantmaking, Civic, Professional, and Similar Organizations | 11,765,946 | 5.88 | % | 311,578 | 4.83 | % | ||||||
Food Services and Drinking Places | 8,674,135 | 4.34 | % | 270,839 | 4.20 | % | ||||||
Food and Beverage Stores | 6,710,904 | 3.35 | % | 335,018 | 5.19 | % | ||||||
Educational Services | 6,635,524 | 3.32 | % | 225,375 | 3.49 | % | ||||||
Ambulatory Health Care Services | 5,915,019 | 2.96 | % | 182,926 | 2.83 | % | ||||||
Executive, Legislative, and Other General Government Support | 5,533,650 | 2.77 | % | 155,732 | 2.41 | % | ||||||
Furniture and Home Furnishings Stores | 4,575,724 | 2.29 | % | 216,089 | 3.35 | % | ||||||
Health and Personal Care Stores | 4,106,043 | 2.05 | % | 108,985 | 1.69 | % | ||||||
Personal and Laundry Services | 4,005,881 | 2.00 | % | 123,400 | 1.91 | % | ||||||
Securities, Commodity Contracts, and Other Financial Investments and Related Activities | 3,791,200 | 1.90 | % | 105,489 | 1.63 | % | ||||||
Electronics and Appliance Stores | 3,400,239 | 1.70 | % | 176,455 | 2.73 | % | ||||||
Sporting Goods, Hobby, Book, and Music Stores | 3,353,849 | 1.68 | % | 201,827 | 3.13 | % | ||||||
Administrative and Support Services | 2,996,264 | 1.50 | % | 83,909 | 1.30 | % | ||||||
Broadcasting (except Internet) | 2,994,065 | 1.50 | % | 70,672 | 1.10 | % | ||||||
Miscellaneous Store Retailers | 2,895,040 | 1.45 | % | 150,420 | 2.33 | % | ||||||
Publishing Industries (except Internet) | 2,830,837 | 1.41 | % | 79,659 | 1.23 | % | ||||||
General Merchandise Stores | 2,333,709 | 1.17 | % | 265,366 | 4.11 | % | ||||||
Amusement, Gambling, and Recreation Industries | 2,099,502 | 1.05 | % | 115,580 | 1.79 | % | ||||||
Clothing and Clothing Accessories Stores | 1,985,855 | 0.99 | % | 103,610 | 1.61 | % | ||||||
Telecommunications | 1,946,312 | 0.97 | % | 49,933 | 0.77 | % | ||||||
Nursing and Residential Care Facilities | 1,888,051 | 0.94 | % | 66,810 | 1.04 | % | ||||||
Real Estate | 1,643,406 | 0.82 | % | 46,172 | 0.72 | % | ||||||
Social Assistance | 1,257,465 | 0.63 | % | 50,318 | 0.78 | % | ||||||
Building Material and Garden Equipment and Supplies Dealers | 1,173,193 | 0.59 | % | 38,330 | 0.59 | % | ||||||
24
Industry Diversification (continued) | |
September 30, 2015 | |
Industry Classification (NAICS) | Annualized Base Rental Revenue | Percentage of Aggregate Annualized Rent | Aggregate Rentable Square Feet | Percentage of Aggregate Square Feet | |||||||||
Chemical Manufacturing | 936,612 | 0.47 | % | 20,036 | 0.31 | % | |||||||
Insurance Carriers and Related Activities | 846,676 | 0.42 | % | 26,905 | 0.42 | % | |||||||
Merchant Wholesalers, Durable Goods | 845,415 | 0.42 | % | 23,445 | 0.36 | % | |||||||
Motor Vehicle and Parts Dealers | 783,501 | 0.39 | % | 43,672 | 0.68 | % | |||||||
Merchant Wholesalers, Nondurable Goods | 771,297 | 0.39 | % | 48,208 | 0.75 | % | |||||||
Construction of Buildings | 665,461 | 0.33 | % | 21,965 | 0.34 | % | |||||||
Transportation Equipment Manufacturing | 558,973 | 0.28 | % | 20,641 | 0.32 | % | |||||||
Other | 4,705,134 | 2.34 | % | 158,243 | 2.46 | % | |||||||
Total | $ | 200,061,670 | 100.00 | % | $ | 6,453,636 | 100.00 | % | |||||
25
Lease Expirations | |
September 30, 2015 | |
Year | Number of Leases | Rentable Square Feet | Percent of Rentable Square Feet | Annualized Rent * | Average Rental Rate | Percent of Annualized Rent * | ||||||||||||||
Office: | ||||||||||||||||||||
2015 | 18 | 76,423 | 1.75 | % | $ | 2,724,070 | $ | 35.64 | 1.58 | % | ||||||||||
2016 | 109 | 471,774 | 10.79 | % | 18,386,646 | 38.97 | 10.63 | % | ||||||||||||
2017 | 89 | 569,274 | 13.01 | % | 22,013,483 | 38.67 | 12.73 | % | ||||||||||||
2018 | 89 | 450,452 | 10.30 | % | 16,835,841 | 37.38 | 9.73 | % | ||||||||||||
2019 | 83 | 683,874 | 15.63 | % | 24,721,963 | 36.15 | 14.29 | % | ||||||||||||
2020 and thereafter | 260 | 2,122,262 | 48.52 | % | 88,281,609 | 41.60 | 51.04 | % | ||||||||||||
648 | 4,374,059 | 100.00 | % | $ | 172,963,612 | 39.54 | 100.00 | % | ||||||||||||
Retail: | ||||||||||||||||||||
2015 | 9 | 21,181 | 0.92 | % | $ | 638,082 | 30.13 | 1.16 | % | |||||||||||
2016 | 29 | 115,238 | 5.01 | % | 3,351,240 | 29.08 | 6.08 | % | ||||||||||||
2017 | 48 | 261,084 | 11.35 | % | 7,006,419 | 26.84 | 12.70 | % | ||||||||||||
2018 | 44 | 370,592 | 16.11 | % | 5,465,405 | 14.75 | 9.91 | % | ||||||||||||
2019 | 39 | 173,299 | 7.53 | % | 5,134,558 | 29.63 | 9.31 | % | ||||||||||||
2020 and thereafter | 156 | 1,359,548 | 59.08 | % | 33,552,889 | 24.68 | 60.84 | % | ||||||||||||
325 | 2,300,942 | 100.00 | % | $ | 55,148,593 | 23.97 | 100.00 | % | ||||||||||||
Total: | ||||||||||||||||||||
2015 | 27 | 97,604 | 1.46 | % | 3,362,152 | 34.45 | 1.47 | % | ||||||||||||
2016 | 138 | 587,012 | 8.79 | % | 21,737,886 | 37.03 | 9.53 | % | ||||||||||||
2017 | 137 | 830,358 | 12.44 | % | 29,019,902 | 34.95 | 12.72 | % | ||||||||||||
2018 | 133 | 821,044 | 12.30 | % | 22,301,246 | 27.16 | 9.78 | % | ||||||||||||
2019 | 122 | 857,173 | 12.84 | % | 29,856,521 | 34.83 | 13.09 | % | ||||||||||||
2020 and thereafter | 416 | 3,481,810 | 52.17 | % | 121,834,498 | 34.99 | 53.41 | % | ||||||||||||
973 | 6,675,001 | 100.00 | % | $ | 228,112,205 | 34.17 | 100.00 | % | ||||||||||||
* Annualized Rent is equal to the rental rate effective at lease expiration (cash basis) multiplied by 12. | ||||||||||||||||||||
26
Schedule of Properties | |
September 30, 2015 | |
PROPERTIES | LOCATION | YEAR ACQUIRED | YEAR CONSTRUCTED | NET RENTABLE SQUARE FEET | |||||
Office Buildings | |||||||||
1901 Pennsylvania Avenue | Washington, DC | 1977 | 1960 | 101,000 | |||||
51 Monroe Street | Rockville, MD | 1979 | 1975 | 223,000 | |||||
515 King Street | Alexandria, VA | 1992 | 1966 | 75,000 | |||||
6110 Executive Boulevard | Rockville, MD | 1995 | 1971 | 202,000 | |||||
1220 19th Street | Washington, DC | 1995 | 1976 | 104,000 | |||||
1600 Wilson Boulevard | Arlington, VA | 1997 | 1973 | 168,000 | |||||
Silverline Center | Tysons, VA | 1997 | 1972/1986/1999 | 532,000 | |||||
600 Jefferson Plaza | Rockville, MD | 1999 | 1985 | 113,000 | |||||
Wayne Plaza | Silver Spring, MD | 2000 | 1970 | 99,000 | |||||
Courthouse Square | Alexandria, VA | 2000 | 1979 | 115,000 | |||||
One Central Plaza | Rockville, MD | 2001 | 1974 | 267,000 | |||||
1776 G Street | Washington, DC | 2003 | 1979 | 263,000 | |||||
West Gude Drive | Rockville, MD | 2006 | 1984/1986/1988 | 277,000 | |||||
Monument II | Herndon, VA | 2007 | 2000 | 208,000 | |||||
2000 M Street | Washington, DC | 2007 | 1971 | 231,000 | |||||
2445 M Street | Washington, DC | 2008 | 1986 | 290,000 | |||||
925 Corporate Drive | Stafford, VA | 2010 | 2007 | 134,000 | |||||
1000 Corporate Drive | Stafford, VA | 2010 | 2009 | 136,000 | |||||
1140 Connecticut Avenue | Washington, DC | 2011 | 1966 | 183,000 | |||||
1227 25th Street | Washington, DC | 2011 | 1988 | 135,000 | |||||
Braddock Metro Center | Alexandria, VA | 2011 | 1985 | 350,000 | |||||
John Marshall II | Tysons, VA | 2011 | 1996/2010 | 223,000 | |||||
Fairgate at Ballston | Arlington, VA | 2012 | 1988 | 143,000 | |||||
The Army Navy Club Building | Washington, DC | 2014 | 1912/1987 | 108,000 | |||||
1775 Eye Street, NW | Washington, DC | 2014 | 1964 | 186,000 | |||||
Subtotal | 4,866,000 | ||||||||
27
Schedule of Properties (continued) | |
September 30, 2015 | |
PROPERTIES | LOCATION | YEAR ACQUIRED | YEAR CONSTRUCTED | NET RENTABLE SQUARE FEET | |||||
Retail Centers | |||||||||
Takoma Park | Takoma Park, MD | 1963 | 1962 | 51,000 | |||||
Westminster | Westminster, MD | 1972 | 1969 | 150,000 | |||||
Concord Centre | Springfield, VA | 1973 | 1960 | 76,000 | |||||
Wheaton Park | Wheaton, MD | 1977 | 1967 | 74,000 | |||||
Bradlee Shopping Center | Alexandria, VA | 1984 | 1955 | 171,000 | |||||
Chevy Chase Metro Plaza | Washington, DC | 1985 | 1975 | 49,000 | |||||
Montgomery Village Center | Gaithersburg, MD | 1992 | 1969 | 197,000 | |||||
Shoppes of Foxchase | Alexandria, VA | 1994 | 1960/2006 | 134,000 | |||||
Frederick County Square | Frederick, MD | 1995 | 1973 | 227,000 | |||||
800 S. Washington Street | Alexandria, VA | 1998/2003 | 1955/1959 | 46,000 | |||||
Centre at Hagerstown | Hagerstown, MD | 2002 | 2000 | 332,000 | |||||
Frederick Crossing | Frederick, MD | 2005 | 1999/2003 | 295,000 | |||||
Randolph Shopping Center | Rockville, MD | 2006 | 1972 | 82,000 | |||||
Montrose Shopping Center | Rockville, MD | 2006 | 1970 | 145,000 | |||||
Gateway Overlook | Columbia, MD | 2010 | 2007 | 220,000 | |||||
Olney Village Center | Olney, MD | 2011 | 1979/2003 | 199,000 | |||||
Spring Valley Retail Center | Washington, DC | 2014 | 1941/1950 | 75,000 | |||||
Subtotal | 2,523,000 | ||||||||
28
Schedule of Properties (continued) | |
September 30, 2015 | |
PROPERTIES | LOCATION | YEAR ACQUIRED | YEAR CONSTRUCTED | NET RENTABLE SQUARE FEET (1) | |||||
Multifamily Buildings / # units | |||||||||
3801 Connecticut Avenue / 307 | Washington, DC | 1963 | 1951 | 178,000 | |||||
Roosevelt Towers / 191 | Falls Church, VA | 1965 | 1964 | 170,000 | |||||
Park Adams / 200 | Arlington, VA | 1969 | 1959 | 173,000 | |||||
Munson Hill Towers / 279 | Falls Church, VA | 1970 | 1963 | 258,000 | |||||
The Ashby at McLean / 256 | McLean, VA | 1996 | 1982 | 274,000 | |||||
Walker House Apartments / 212 | Gaithersburg, MD | 1996 | 1971/2003 | 157,000 | |||||
Bethesda Hill Apartments / 195 | Bethesda, MD | 1997 | 1986 | 226,000 | |||||
Bennett Park / 224 | Arlington, VA | 2007 | 2007 | 214,000 | |||||
Clayborne / 74 | Alexandria, VA | 2008 | 2008 | 60,000 | |||||
Kenmore Apartments / 374 | Washington, DC | 2008 | 1948 | 268,000 | |||||
The Paramount / 135 | Arlington, VA | 2013 | 1984 | 141,000 | |||||
Yale West / 216 | Washington, DC | 2014 | 2011 | 173,000 | |||||
The Maxwell / 163 | Arlington, VA | 2014 | 2014 | 139,000 | |||||
The Wellington / 711 | Arlington, VA | 2015 | 1960 | 842,000 | |||||
Subtotal (3,537 units) | 3,273,000 | ||||||||
TOTAL | 10,662,000 | ||||||||
(1) Multifamily buildings are presented in gross square feet. | |||||||||
29
Supplemental Definitions | |
September 30, 2015 | |
Adjusted EBITDA (a non-GAAP measure) is earnings attributable to the controlling interest before interest expense, taxes, depreciation, amortization, real estate impairment, gain on sale of real estate, gain/loss on extinguishment of debt, severance expense, relocation expense, acquisition and structuring expenses and gain/loss from non-disposal activities. |
Annualized base rent ("ABR") is calculated as monthly base rent (cash basis) per the lease, as of the reporting period, multiplied by 12. |
Debt service coverage ratio is computed by dividing earnings attributable to the controlling interest before interest expense, taxes, depreciation, amortization, real estate impairment, gain on sale of real estate, gain/loss on extinguishment of debt, severance expense, relocation expense, acquisition and structuring expenses and gain/loss from non-disposal activities by interest expense (including interest expense from discontinued operations) and principal amortization. |
Debt to total market capitalization is total debt divided by the sum of total debt plus the market value of shares outstanding at the end of the period. |
Earnings to fixed charges ratio is computed by dividing earnings attributable to the controlling interest by fixed charges. For this purpose, earnings consist of income from continuing operations (or net income if there are no discontinued operations) plus fixed charges, less capitalized interest. Fixed charges consist of interest expense (excluding interest expense from discontinued operations), including amortized costs of debt issuance, plus interest costs capitalized. |
Economic occupancy is calculated as actual real estate rental revenue recognized for the period indicated as a percentage of gross potential real estate rental revenue for that period. We determine gross potential real estate rental revenue by valuing occupied units or square footage at contract rates and vacant units or square footage at market rates for comparable properties. We do not consider percentage rents and expense reimbursements in computing economic occupancy percentages. |
NAREIT Funds from operations ("NAREIT FFO") is defined by The National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) in an April, 2002 White Paper as net income (computed in accordance with generally accepted accounting principles (“GAAP”)) excluding gains (or losses) associated with sales of property and impairment of depreciable real estate, plus real estate depreciation and amortization. We consider NAREIT FFO to be a standard supplemental measure for equity real estate investment trusts (“REITs”) because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which historically assumes that the value of real estate assets diminishes predictably over time. Since real estate values have instead historically risen or fallen with market conditions, we believe that NAREIT FFO more accurately provides investors an indication of our ability to incur and service debt, make capital expenditures and fund other needs. NAREIT FFO is a non-GAAP measure. |
Core Funds From Operations ("Core FFO") is calculated by adjusting NAREIT FFO for the following items (which we believe are not indicative of the performance of Washington REIT’s operating portfolio and affect the comparative measurement of Washington REIT’s operating performance over time): (1) gains or losses on extinguishment of debt, (2) expenses related to acquisition and structuring activities, (3) executive transition costs and severance expense related to corporate reorganization and related to executive retirements or resignations, (4) property impairments and gains or losses on sale, not already excluded from NAREIT FFO, as appropriate, and (5) relocation expense. These items can vary greatly from period to period, depending upon the volume of our acquisition activity and debt retirements, among other factors. We believe that by excluding these items, Core FFO serves as a useful, supplementary measure of Washington REIT’s ability to incur and service debt, and distribute dividends to its shareholders. Core FFO is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs. |
Funds Available for Distribution ("FAD") is calculated by subtracting from NAREIT FFO (1) recurring expenditures, tenant improvements and leasing costs, that are capitalized and amortized and are necessary to maintain our properties and revenue stream (excluding items contemplated prior to acquisition or associated with development / redevelopment of a property) and (2) straight line rents, then adding (3) non-real estate depreciation and amortization, (4) non-cash fair value interest expense and (5) amortization of restricted share compensation, then adding or subtracting the (6) amortization of lease intangibles, (7) real estate impairment and (8) non-cash gain/loss on extinguishment of debt, as appropriate. FAD is included herein, because we consider it to be a measure of a REIT’s ability to incur and service debt and to distribute dividends to its shareholders. FAD is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs. |
Core Funds Available for Distribution ("Core FAD") is calculated by adjusting FAD for the following items (which we believe are not indicative of the performance of Washington REIT’s operating portfolio and affect the comparative measurement of Washington REIT’s operating performance over time): (1) gains or losses on extinguishment of debt, (2) costs related to the acquisition of properties, (3) non-share-based severance expense related to corporate reorganization and related to executive retirements or resignations, (4) property impairments and gains or losses on sale, not already excluded from FAD, as appropriate, and (5) relocation expense. These items can vary greatly from period to period, depending upon the volume of our acquisition activity and debt retirements, among other factors. We believe that by excluding these items, Core FAD serves as a useful, supplementary measure of Washington REIT’s ability to incur and service debt, and distribute dividends to its shareholders. Core FAD is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs. |
Net Operating Income (“NOI”) is a non-GAAP measure defined as real estate rental revenue less real estate expenses. NOI is calculated as net income, less non-real estate revenue and the results of discontinued operations (including the gain on sale, if any), plus interest expense, depreciation and amortization, general and administrative expenses, acquisition costs, real estate impairment and gain or loss on extinguishment of debt. We also present NOI on a cash basis ("Cash NOI") which is calculated as NOI less the impact of straightlining of rent and amortization of market intangibles. We provide NOI as a supplement to net income calculated in accordance with GAAP. As such, it should not be considered an alternative to net income as an indication of our operating performance. It is the primary performance measure we use to assess the results of our operations at the property level. |
30
Physical occupancy is calculated as occupied square footage as a percentage of total square footage as of the last day of that period. |
Recurring capital expenditures represent non-accretive building improvements and leasing costs required to maintain current revenues. Recurring capital expenditures do not include acquisition capital that was taken into consideration when underwriting the purchase of a building or which are incurred to bring a building up to "operating standard." |
Rent increases on renewals and rollovers are calculated as the difference, weighted by square feet, of the net ABR due the first month after a term commencement date and the net ABR due the last month prior to the termination date of the former tenant's term. |
Same-store portfolio properties include all stabilized properties that were owned for the entirety of the current and prior reporting periods, and exclude properties under redevelopment or development and properties purchased or sold at any time during the periods being compared. We define redevelopment properties as those for which we expect to spend significant development and construction costs on existing or acquired buildings pursuant to a formal plan which has a current impact on operating results, occupancy and the ability to lease space with the intended result of a higher economic return on the property. Redevelopment and development properties are included in the same-store pool upon completion of the redevelopment or development, and the earlier of achieving 90% occupancy or two years after completion. |
Same-store portfolio net operating income (NOI) growth is the change in the NOI of the same-store portfolio properties from the prior reporting period to the current reporting period. |
31