Washington Real Estate Investment Trust Announces First Quarter Financial and Operating Results

Business Wire, April 27, 2009

ROCKVILLE, Md. -- Washington Real Estate Investment Trust (WRIT) (NYSE: WRE) reported financial and operating results today for the quarter ending March 31, 2009:

• Net income was $0.20 per diluted share compared to $(0.06) per diluted share in the same period one year ago. Included in the first quarter 2009 and first quarter 2008 net income are respective charges of $0.05 and $0.03 per diluted share from the adoption of an accounting pronouncement impacting the accounting of our 3.875% convertible notes(1). Also included in the first quarter 2009 net income is a gain of $0.11 per diluted share related to the repurchase of convertible debt. Also included in the first quarter 2008 net income is a $0.18 per diluted share non-recurring charge for the extinguishment of $60 million of 10-year Mandatory Par Put Remarketed Securities (“MOPPRS”).
• Funds From Operations (FFO)(3) was $0.65 per diluted share compared to $0.38 per diluted share in the same period one year ago. Included in the first quarter 2009 and first quarter 2008 FFO are respective charges of $0.05 and $0.03 per diluted share from the adoption of an accounting pronouncement impacting the accounting of our 3.875% convertible notes(1). Also included in the first quarter 2009 FFO is a gain of $0.11 per diluted share related to the repurchase of convertible debt. Also included in the first quarter 2008 FFO is a $0.18 per diluted share non-recurring charge for the extinguishment of $60 million of 10-year Mandatory Par Put Remarketed Securities (“MOPPRS”).
• Guidance for 2009 FFO per diluted share remains unchanged.

Capital Structure

Throughout the first quarter, WRIT repurchased a total of $48.6 million of its 3.875% convertible notes. WRIT repurchased the notes at discount prices ranging from 80% to 84% of par for approximately $40 million. In conjunction with these repurchases, WRIT reported a gain of approximately $5.8 million in the first quarter of 2009. In addition, WRIT issued 558,268 shares through its Sales Agency Financing Agreement with BNY Mellon Capital Markets, LLC. The average share price was $26.47 for gross proceeds of $14.8 million. Also this quarter, WRIT entered into a 10-year, $37.5 million mortgage on The Kenmore at a fixed rate of 5.37%.

On March 31, 2009, WRIT paid a quarterly dividend of $0.4325 per share for its 189th consecutive quarterly dividend at equal or increasing rates.

As of March 31, 2009 WRIT had a total capitalization of $2.3 billion.

Operating Results

Overall portfolio economic occupancy for the first quarter was 92.3%, compared to 93.0% in the same period one year ago and 92.6% in the fourth quarter of 2008. Overall portfolio Net Operating Income (NOI) (5) was $50.5 million compared to $46.7 million in the same period one year ago and $47.4 million in the fourth quarter of 2008.

Core (6) portfolio NOI for the first quarter decreased 4.3% and rental rate growth was 2.5% compared to the same period one year ago. Core economic occupancy was 93.1% during the first quarter of 2009, a decrease of 230 basis points (bps) from the same period one year ago and a decrease of 60 bps sequentially from the fourth quarter of 2008.

• Multifamily properties’ core NOI for the first quarter increased 3.1% compared to the same period one year ago. Rental rate growth was 2.2% while core economic occupancy decreased 120 bps to 91.6%. Sequentially, core economic occupancy decreased from 92.8% in the fourth quarter of 2008.
• Medical office properties’ core NOI for the first quarter increased 3.6% compared to the same period one year ago. Rental rate growth was 2.5% while core economic occupancy decreased 80 bps to 97.1%. Sequentially, core economic occupancy increased from 95.2% in the fourth quarter of 2008.
• Office properties’ core NOI for the first quarter decreased 6.1% compared to the same period one year ago, primarily due to increased bad debt expense. Rental rate growth was 2.9% while core economic occupancy decreased 330 bps to 92.2%, primarily due to occupancy reduction at the One Central Plaza office building. Sequentially, core economic occupancy declined from 93.2% in the fourth quarter of 2008.
• Retail properties’ core NOI for the first quarter decreased 8.0% compared to the same period one year ago, primarily due to increased bad debt expense and higher operating expenses throughout the portfolio. Rental rate growth was 3.0% while core economic occupancy decreased 10 bps to 95.2%. Sequentially, core economic occupancy increased from 94.8% in the fourth quarter of 2008.
• Industrial properties’ core NOI for the first quarter decreased 7.8% compared to the same period one year ago, primarily due to lower occupancy at Northern Virginia Industrial Park and higher operating expenses throughout the portfolio. Rental rate growth was 1.0% while core economic occupancy decreased 440 bps to 90.3%. Sequentially, core economic occupancy declined from 92.4% in the fourth quarter of 2008.