Washington Real Estate Investment Trust (“WashREIT” or the
“Company”) (NYSE: WRE), a leading owner and operator of multifamily
and commercial properties in the Washington, DC area, reported
financial and operating results today for the quarter and year
ended December 31, 2020:
Full-Year 2020 Financial and Operational
Results(1)
- Net loss was
$15.7 million, or $0.20 per diluted share, including net losses on
the sale of real estate of $15.0 million
- NAREIT FFO was
$119.4 million, or $1.44 per diluted share
- Core FFO was
$1.45 per diluted share
- Net Operating
Income (NOI)(2) was $181.2 million
- Same-store(3)
NOI declined 5.4% and cash NOI declined 4.9% compared to 2019
primarily due to lower rental income and higher credit losses
related to COVID-19
- Same-store
Office NOI decreased by 7.1% and cash NOI decreased by 6.4% for the
year
- Same-store
Multifamily NOI decreased by 0.9% and cash NOI decreased by 1.0%
for the year
- Same-store Other
NOI decreased by $2.1 million and cash NOI decreased by $1.8
million for the year
Fourth Quarter 2020 Financial and
Operational Results
- Net loss was
$11.0 million, or $0.13 per diluted share, including net losses on
the sale of real estate of $7.5 million
- NAREIT FFO was
$26.7 million, or $0.32 per diluted share
- Core FFO was
$0.33 per diluted share
- Net Operating
Income (NOI)(2) was $42.5 million
- Cash collections
improved from the third quarter of 2020
- Same-store NOI
and cash NOI declined 11.3% compared to the fourth quarter of 2019
due primarily to lower rental income and higher credit losses on
certain tenants impacted by COVID-19
- Multifamily lease
rates(4) declined 3.6% and 5.7%, respectively, on a gross blended
and effective blended basis during the fourth quarter
Current Operational
Highlights
- Cash collections
remain strong and stable on a month-to-month basis, in line with Q4
levels
- Urban
multifamily net application volume increased 30% year-over-year and
total net application volume increased 14% year-over-year in
January
- Multifamily new
and blended lease rates improved sequentially in January on an
effective basis. New and renewal lease executions with commencement
dates in February and March indicate continued improvement in
effective lease rate growth.
- Trove reached
breakeven in December and, as such, incremental leasing is expected
to be profitable. Net applications continue to increase and the
number of leases signed per month remains above the regional
average.
- Multifamily
occupancy, excluding Trove, increased 20 basis points in January
and appears to be on a positive trend heading into the spring
leasing season
- The Company is
focusing on growing multifamily occupancy to begin reducing
concessions and increasing rents; currently, multifamily occupancy,
excluding the Company's two rent-controlled properties, is over
95%
- Commercial
tenant decision making appears to be accelerating and active
long-term renewal discussions with significant tenants are
progressing well, which will be further discussed on the Company's
earnings call
- Signed
approximately 60,000 square feet of retail lease renewals in
January with a weighted average term of over 6 years, representing
10% of retail rental income
- Signed or
progressed to advanced-stage renewal negotiations with
approximately 7% of commercial revenue in January
- Remaining 2021
commercial lease expirations represented approximately 3% of total
revenue for the year
2020 Transaction Activity
- Prepaid at par
$250 million 4.95% Senior Notes on April 2, 2020 that were
scheduled to mature in October 2020
- Entered into a
one-year $150 million unsecured term loan with extension rights in
May 2020, which was repaid in full on November 30, 2020
- Closed and
funded a $350 million 10-year 3.44% Green Bond on December 17,
2020, the proceeds of which were and will be used to finance or
refinance recently completed and future green building and energy
efficiency, sustainable water and wastewater management and
renewable energy projects
- Prepaid a total
of $300 million of term loans as a result of extending the debt
maturity ladder with the Green Bond, and the balance, net of
expenses, was used to pay down the Company's line of credit
- Completed the
sale of three office assets: John Marshall II on April 21, 2020,
Monument II on December 2, 2020, and 1227 25th Street on December
17, 2020, for combined proceeds of approximately $163.5
million
Liquidity Position
- Available
liquidity of approximately $670 million as of December 31, 2020
consisting of the remaining capacity under the Company's $700
million revolving credit facility and cash on hand
- The Company has
no secured debt and no debt scheduled to mature until the fourth
quarter of 2022
Fourth Quarter Cash
Collections
Multifamily
- Collected 99% of
cash rent and 99% of contractual rent due during the fourth
quarter
- Net deferred
rent(6) associated with multifamily residents was $15 thousand as
of January 31, 2021
Commercial
- Collected 99% of
cash rent and 99% of contractual rent due from office tenants
during the fourth quarter
- Net deferred
rent associated with office tenants was $1.0 million as of January
31, 2021
- Collected 94% of
cash rent and 97% of contractual rent due from retail tenants
during the fourth quarter
- Net deferred
rent associated with retail tenants was $1.0 million as of January
31, 2021
"We successfully navigated through a challenging
and unexpected year, and we expect to enter the recovery phase of
this pandemic with a stronger balance sheet, a reaffirmed strategic
direction, and a portfolio that is on the path to growth once
demand returns," said Paul T. McDermott, President and CEO. "We
have no exposure to co-working operators or tenants, and no
single-tenant risk. Additionally, we have manageable near-term
commercial lease expirations and our multifamily fundamentals
continue to hold up well. As we continue to manage through
uncertain, but improving, market conditions, we remain committed to
maintaining our financial strength and positioning our portfolio
for long-term growth."
Fourth Quarter Operating
Results
The Company's overall portfolio NOI from
continuing operations was $42.5 million for the quarter ended
December 31, 2020 compared to $50.1 million in the corresponding
prior year period. The decrease was primarily driven by the impact
of net transaction activity during 2019 and 2020, and lower rental
income and higher credit losses as a result of COVID-19.
Portfolio by Sector:
- Multifamily Same-Store
NOI - Same-store NOI decreased by 7.2% and cash NOI
decreased by 7.3% compared to the corresponding prior year period
driven by lower rental income and higher credit losses related to
COVID-19, and higher real estate taxes as a result of tax refunds
received in Q4 2019. At year end, the total operating portfolio,
excluding Trove, was 94.3% occupied(7) and 95.7%
leased.
- Office Same-Store
NOI - Same-store NOI and cash NOI decreased by 12.7%
compared to the corresponding prior year period, primarily due to
lower lease termination fees, lower parking income and an increase
in credit losses due primarily to the write-off of intangibles
related to two leases impacted by COVID-19. Same-store average
occupancy(8) declined 50 basis points sequentially and 220 basis
points year-over-year due to expected lease expirations. The Office
portfolio was 85.7% occupied and 86.6% leased at year end.
- Other Same-Store
NOI - Same-store NOI and cash NOI decreased by
$0.7 million compared to the corresponding prior year period
driven by credit losses related to COVID-19 primarily due to the
write-off of intangibles related to two leases impacted by
COVID-19. The Other portfolio was 86.5% occupied and 89.0% leased
at year end.
Multifamily Leasing
Activity
- Lease rates declined 3.6% and 5.7%,
respectively, on a gross blended and effective blended basis during
the fourth quarter. Suburban lease rates were flat on a gross
blended basis and declined 1.6% on an effective blended basis,
while urban lease rates declined 5.5% and 7.8% on a gross and
effective blended basis during the fourth quarter.
Commercial Leasing Activity
During the fourth quarter, WashREIT signed
commercial leases totaling 43,000 square feet, including 17,000
square feet of new leases and 26,000 square feet of renewal leases,
as follows (all dollar amounts are on a per square foot basis).
|
Square Feet |
WeightedAverage Term(in
years) |
WeightedAverage FreeRent Period(in
months) |
WeightedAverageRental Rates |
WeightedAverage RentalRate%
Increase |
TenantImprovements |
LeasingCommissions |
New: |
|
|
|
|
|
|
|
Office |
9,000 |
4.5 |
3.5 |
$46.32 |
(5.1)% |
$31.52 |
$11.41 |
Retail |
8,000 |
5.5 |
1.8 |
14.22 |
12.9% |
12.89 |
3.78 |
Total |
17,000 |
4.9 |
3.2 |
31.77 |
(1.9)% |
23.08 |
7.95 |
|
|
|
|
|
|
|
|
Renewal: |
|
|
|
|
|
|
|
Office |
22,000 |
7.8 |
9.0 |
$54.70 |
21.7% |
$27.38 |
$22.41 |
Retail |
4,000 |
3.2 |
2.0 |
41.43 |
3.3% |
— |
2.72 |
Total |
26,000 |
7.2 |
8.2 |
52.89 |
19.5% |
23.64 |
19.72 |
|
|
|
|
|
|
|
|
2021 Outlook
The Company is providing Core FFO guidance for
Q1 2021 along with key Q1 2021 assumptions and metrics relating to
such guidance as described below. While the short-term situation
surrounding COVID-19 and the associated economic impact remain
fluid, the Company remains focused on delivering improved results
over the long term. Therefore, the Company does not expect to
provide guidance by quarter on an ongoing basis. When it is in a
position to do so, the Company expects to provide full year Core
FFO guidance, as well as its full year outlook on key assumptions
and metrics, consistent with its pre-COVID-19 practice.
"While we believe that the most disruptive part
of the pandemic is behind us and the vaccine distribution should
create a positive recovery inflection point during 2021, the timing
of inflection and pace of recovery remains uncertain," said Stephen
E. Riffee, Executive Vice President and CFO. "However, we believe
that we will see rapid improvement once we reach that inflection
point which should carry over into 2022 given that the embedded
growth drivers we had prior to the pandemic are still intact."
"We expect NOI to bottom in the first quarter of
2021 driven primarily by our year-end asset sales," continued Mr.
Riffee. "Following the first quarter, and absent any major setbacks
to the current gradual pace of reopening, we expect sequential NOI
growth throughout the year to be driven by the continued lease-up
of Trove, multifamily NOI growth during the spring and summer
leasing seasons, the phased resumption of multifamily unit
renovations, and commercial lease commencements. Therefore, we
expect our full year results for 2021 to be higher than the first
quarter annualized results."
Core FFO for the quarter ending March 31, 2021 is
expected to range from $0.29 to $0.32 per fully diluted
share(a). The following assumptions are included in the
Core FFO guidance for Q1 2021 set forth above:
|
Q1 2021 |
Same-Store NOI |
|
Multifamily |
$20.25 million - $20.75 million |
Office |
$17.75 million - $18.5 million |
Other |
~ $3.0 million |
Corporate Expenses |
|
G&A |
$6.0 million - $6.25 million |
Interest Expense |
$10.0 million - $10.25 million |
Development Expenditures |
$5.0 million - $7.5 million |
|
|
Full Year 2021 Outlook
The Company is also providing the following key
assumptions and metrics regarding G&A expense and interest
expense for full year 2021. G&A expense is expected to range
from $22.25 million to $23.25 million and interest expense is
expected to range from $41.5 million to $42.5 million for the
year.
This Outlook does not incorporate any
acquisitions or dispositions during the year. This Outlook is based
on a number of factors, many of which are outside the Company's
control and all of which are subject to change. WashREIT may change
the guidance provided during the year as actual and anticipated
results vary from these assumptions, but WashREIT undertakes no
obligation to do so.
Q1 2021 Guidance Reconciliation
Table
A reconciliation of projected net loss per
diluted share to projected Core FFO per diluted share for the
quarter ending March 31, 2021 is as follows:
|
|
Low |
|
|
|
High |
|
Net loss per diluted share(a) |
$ |
(0.06 |
) |
|
$ |
(0.03 |
) |
Real estate depreciation and amortization |
0.35 |
|
|
0.35 |
|
NAREIT FFO per diluted share |
0.29 |
|
|
0.32 |
|
Core adjustments |
— |
|
|
— |
|
Core FFO per diluted share |
$ |
0.29 |
|
|
$ |
0.32 |
|
(a) Excludes gains or losses on sale of real
estate
Dividends
On January 6, 2021 WashREIT paid a quarterly
dividend of $0.30 per share.
WashREIT announced today that its Board of
Trustees has declared a quarterly dividend of $0.30 per share to be
paid on April 5, 2021 to shareholders of record on March 22,
2021.
Conference Call Information
The Conference Call for Full Year and Fourth
Quarter 2020 Earnings is scheduled for Friday, February 12,
2021 at 11:00 A.M. Eastern Time. Conference Call access information
is as follows:
USA Toll Free Number: |
1-877-407-9205 |
International Toll
Number: |
1-201-689-8054 |
The instant replay of the Conference Call will
be available until February 26, 2021 at 11:00 P.M. Eastern Time.
Instant replay access information is as follows:
USA Toll Free Number: |
1-877-481-4010 |
International Toll
Number: |
1-919-882-2331 |
Conference ID: |
38951 |
The live on-demand webcast of the Conference
Call will be available on the Investor section of WashREIT's
website at www.washreit.com. Online playback of the webcast will be
available following the Conference Call.
About WashREIT
WashREIT owns and operates uniquely positioned
real estate assets in the Washington Metro area. Backed by decades
of experience, expertise and ambition, we create value by
transforming insights into strategy and strategy into action. As of
February 11, 2021, the Company's portfolio of 43 properties
includes approximately 3.4 million square feet of commercial space
and 7,059 multifamily apartment units. These 43 properties consist
of 22 multifamily properties,13 office properties, and 8 retail
centers. Our shares trade on the NYSE. With a track record of
driving returns and delivering satisfaction, we are a trusted
authority in one of the nation's most competitive real estate
markets.
Note: WashREIT's press releases and supplemental
financial information are available on the Company website at
www.washreit.com or by contacting Investor Relations at (202)
774-3200.
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 relate to expectations, beliefs,
projections, future plans and strategies, anticipated events or
trends and similar expressions concerning matters that are not
historical facts. In some cases, you can identify forward looking
statements by the use of forward-looking terminology such as “may,”
“will,” “should,” “expects,” “intends,” “plans,” “anticipates,”
“believes,” “estimates,” “predicts,” or “potential” or the negative
of these words and phrases or similar words or phrases which are
predictions of or indicate future events or trends and which do not
relate solely to historical matters. Such statements involve known
and unknown risks, uncertainties, and other factors which may cause
the actual results, performance, or achievements of WashREIT to be
materially different from future results, performance or
achievements expressed or implied by such forward-looking
statements. Currently, one of the most significant factors is the
adverse effect of the COVID-19 virus and ensuing economic turmoil
on the financial condition, results of operations, cash flows and
performance of WashREIT, particularly the impact of our ability to
collect rent on schedule or at all, our ability to lease or release
our commercial spaces, and increased credit losses, on the
performance of our tenants generally, and on the global economy and
financial markets. The extent to which COVID-19 impacts WashREIT
and its tenants will depend on future developments, which are
highly uncertain and cannot be predicted with confidence, including
the scope, severity and duration of the pandemic, the actions taken
to contain the pandemic or mitigate its impact, and the direct and
indirect economic effects of the pandemic and containment measures,
the speed of the vaccine rollout, effectiveness and willingness of
people to take COVID-19 vaccines, and the duration of associated
immunity and their efficacy against emerging variants of COVID-19,
among others. Moreover, investors are cautioned to interpret many
of the risks identified in the risk factors discussed in our Annual
Report on Form 10-K for the year ended December 31, 2019, as
amended by Amendment No. 1 to the Annual Report on Form 10-K, filed
on March 6, 2020, and our Quarterly Report on Form 10-Q, as being
heightened as a result of the ongoing and numerous adverse impacts
of COVID-19. Additional factors which may cause the actual results,
performance, or achievements of WashREIT to be materially different
from future results, performance or achievements expressed or
implied by such forward-looking statements include, but are not
limited to the risks associated with the ownership of real estate
in general and our real estate assets in particular; the economic
health of the greater Washington metro region; our ability to
finalize negotiations and enter into new or renewed leases with our
tenants; the risk of failure to enter into/and or complete
acquisitions and dispositions at all, within the price ranges
anticipated and on the terms and timing anticipated; changes in the
composition of our portfolio; fluctuations in interest rates;
reductions in or actual or threatened changes to the timing of
federal government spending; the risks related to use of
third-party providers; shifts away from brick and mortar stores to
e-commerce; the availability and terms of financing and capital and
the general volatility of securities markets; compliance with
applicable laws, including those concerning the environment and
access by persons with disabilities; the adequacy of our insurance
coverage; terrorist attacks or actions and/or cyber-attacks;
weather conditions, natural disasters and pandemics; failure to
qualify and maintain our qualification as a REIT and the risks of
changes in laws affecting REITs; and other risks and uncertainties
detailed from time to time in our filings with the SEC, including
our 2019 Form 10-K, as amended by Amendment No. 1 to the Annual
Report on Form 10-K, filed on March 6, 2020, and subsequent
Quarterly Reports on Form 10-Q. While forward-looking statements
reflect our good faith beliefs, they are not guarantees of future
performance. We undertake no obligation to update our
forward-looking statements or risk factors to reflect new
information, future events, or otherwise.
This Earnings Release also includes certain
forward-looking non-GAAP information. Due to the high variability
and difficulty in making accurate forecasts and projections of some
of the information excluded from these estimates, together with
some of the excluded information not being ascertainable or
accessible, the Company is unable to quantify certain amounts that
would be required to be included in the most directly comparable
GAAP financial measures without unreasonable efforts
(1) NAREIT Funds From Operations (“FFO”) is
defined by the National Association of Real Estate Investment
Trusts, Inc. (“NAREIT”) in its NAREIT FFO White Paper - 2018
Restatement as net income (computed in accordance with GAAP)
excluding gains (or losses) associated with sales of properties,
impairments of depreciable real estate, and 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.
Our NAREIT FFO may not be comparable to FFO reported by other
REITs. These other REITs may not define the term in accordance with
the current NAREIT definition or may interpret the current NAREIT
definition differently. NAREIT FFO is a non-GAAP measure.
Core Funds From Operations (“Core FFO”) is
calculated by adjusting FFO for the following items (which we
believe are not indicative of the performance of WashREIT's
operating portfolio and affect the comparative measurement of
WashREIT'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, severance
expenses and other expenses related to corporate restructuring and
related to executive retirements or resignations, (4) property
impairments, casualty gains, and gains or losses on sale not
already excluded from 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
WashREIT's ability to incur and service debt and to distribute
dividends to its shareholders. Core FFO is a non-GAAP and
non-standardized measure and may be calculated differently by other
REITs.
(2) Net Operating Income (“NOI”), defined as
real estate rental revenue less real estate expenses, is a non-GAAP
measure. NOI is calculated as net income, less non-real estate
revenue and the results of discontinued operations (including the
gain or loss on sale, if any), plus interest expense, depreciation
and amortization, lease origination expenses, general and
administrative expenses, 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 straight-lining
of rent and amortization of market intangibles. We believe that NOI
and cash NOI are useful performance measures because, when compared
across periods, they reflect the impact on operations of trends in
occupancy rates, rental rates and operating costs on an unleveraged
basis, providing perspective not immediately apparent from net
income. NOI and cash NOI exclude certain components from net income
in order to provide results more closely related to a property’s
results of operations. For example, interest expense is not
necessarily linked to the operating performance of a real estate
asset. In addition, depreciation and amortization, because of
historical cost accounting and useful life estimates, may distort
operating performance at the property level. As a result of the
foregoing, we provide each of NOI and cash NOI as a supplement to
net income, calculated in accordance with GAAP. Neither represents
net income or income from continuing operations, in either case
calculated in accordance with GAAP. As such, NOI and cash NOI
should not be considered alternatives to these measures as an
indication of our operating performance.
(3) For purposes of evaluating comparative
operating performance, we categorize our properties as
“same-store”, “non-same-store” or discontinued operations.
Same-store properties include properties that were owned for the
entirety of the year being compared, and exclude properties under
redevelopment or development and properties acquired, sold or
classified as held for sale during the year being compared. We
define development properties as those for which we have planned or
ongoing major construction activities on existing or acquired land
pursuant to an authorized development plan. We consider a
property's development activities to be complete when the property
is ready for its intended use. The property is categorized as
same-store when it has been ready for its intended use for the
entirety of the year being compared. We define redevelopment
properties as those for which have planned or ongoing significant
development and construction activities on existing or acquired
buildings pursuant to an authorized plan, which has an impact on
current operating results, occupancy and the ability to lease space
with the intended result of a higher economic return on the
property. We categorize a redevelopment property as same-store when
redevelopment activities have been complete for the majority of
each year being compared.
(4) Lease rate growth is defined as the average
percentage change in gross (excluding the impact of concessions)
and effective rent (net of concessions) for a new or renewed lease
compared to the prior lease based on the move-in date. The blended
rate represents the weighted average of new and renewal lease rate
growth achieved.
(5) Consists of retail centers not classified as
discontinued operations: Takoma Park, Westminster, Concord Centre,
Chevy Chase Metro Plaza, 800 S. Washington Street, Randolph
Shopping Center, Montrose Shopping Center and Spring Valley
Village. Pursuant to our Strategic Capital Allocation Plan, and
following completion of the above described dispositions of our
retail assets, we no longer report “Retail” as a separate operating
segment.
(6) Represents total outstanding deferred rent
net of the amount that has been repaid as of January 31, 2021
(7) Ending Occupancy is calculated as occupied
square footage or multifamily units as a percentage of total square
footage or total multifamily units, respectively, as of the last
day of that period. Ending occupancy excludes the addition of the
total rentable units at Trove, which began to lease up in the first
quarter of 2020.
(8) Average Occupancy is based on monthly
occupied net rentable square footage or monthly occupied
multifamily units as a percentage of total net rentable square
footage or total multifamily units, respectively.
(9) Funds Available for Distribution (“FAD”) is
a non-GAAP measure. It is calculated by subtracting from 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 performance 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.
|
|
|
Ending Occupancy (i)
Levels by Same-Store Properties
(ii) and All Properties |
|
|
|
Ending Occupancy |
|
Same-Store Properties |
|
All Properties |
|
4th QTR |
|
4th QTR |
|
4th QTR |
|
4th QTR |
Segment |
2020 |
|
2019 |
|
2020 |
|
2019 |
Multifamily (iv) |
93.7 |
% |
|
95.0 |
% |
|
94.3 |
% |
|
94.9 |
% |
Office |
85.7 |
% |
|
88.4 |
% |
|
85.7 |
% |
|
89.6 |
% |
Other (iii) |
86.5 |
% |
|
90.9 |
% |
|
86.5 |
% |
|
90.9 |
% |
|
|
|
|
|
|
|
|
Overall Portfolio (iv) |
90.1 |
% |
|
92.0 |
% |
|
91.4 |
% |
|
92.8 |
% |
(i) Ending occupancy is calculated as occupied
square footage or multifamily units as a percentage of total square
footage or total multifamily units, respectively, as of the last
day of that period. The occupied square footage for office and
other properties includes short-term lease agreements.
(ii) Same-store properties include properties
that were owned for the entirety of the years being compared, and
exclude properties under redevelopment or development and
properties acquired, sold or classified as held for sale during the
years being compared. We define development properties as those for
which we have planned or are ongoing major construction activities
on existing or acquired land pursuant to an authorized development
plan. We consider a property's development activities to be
complete when the property is ready for its intended use. The
property is categorized as same-store when it has been ready for
its intended use for the entirety of the years being compared. We
define redevelopment properties as those for which we have planned
or are ongoing significant development and construction activities
on existing or acquired buildings pursuant to an authorized plan,
which has an impact on current operating results, occupancy and the
ability to lease space with the intended result of a higher
economic return on the property. We categorize a redevelopment
property as same-store when redevelopment activities have been
complete for the majority of each year being compared. For Q4 2020
and Q4 2019, same-store properties exclude:
Acquisitions:
Multifamily -
Assembly Alexandria, Assembly Manassas, Assembly Dulles, Assembly
Leesburg, Assembly Herndon, Assembly Germantown, Assembly Watkins
Mill and Cascade at Landmark
Development:
Multifamily -
Trove
Sold properties:
Office - Quantico
Corporate Center, 1776 G Street, John Marshall II, Monument II, and
1227 25th Street NW
Discontinued Operations:
Retail - Wheaton
Park, Bradlee Shopping Center, Shoppes at Foxchase, Gateway
Overlook, Olney Village Center, Frederick County Square, Centre at
Hagerstown and Frederick Crossing
(iii) Same-Store Other consists of retail
properties not classified as discontinued operations: Takoma Park,
Westminster, Concord Centre, Chevy Chase Metro Plaza, 800 S.
Washington Street, Randolph Shopping Center, Montrose Shopping
Center and Spring Valley Village.
(iv) Ending occupancy excludes the addition of
the total rentable units at Trove, which began to lease-up in the
first quarter of 2020. Including Trove, multifamily ending
occupancy was 90.9% and overall portfolio ending occupancy was
89.7% as of December 31, 2020.
|
WASHINGTON REAL ESTATE INVESTMENT TRUST AND
SUBSIDIARIES |
FINANCIAL HIGHLIGHTS |
(In thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months EndedDecember 31, |
|
Twelve Months EndedDecember 31, |
OPERATING RESULTS |
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenue |
|
|
|
|
|
|
|
Real estate rental revenue |
$ |
71,229 |
|
|
|
$ |
80,667 |
|
|
|
$ |
294,118 |
|
|
|
$ |
309,180 |
|
|
Expenses |
|
|
|
|
|
|
|
Real estate expenses |
28,713 |
|
|
|
30,611 |
|
|
|
112,909 |
|
|
|
115,580 |
|
|
Depreciation and amortization |
30,241 |
|
|
|
38,812 |
|
|
|
120,030 |
|
|
|
136,253 |
|
|
Real estate impairment |
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,374 |
|
|
General and administrative expenses |
5,988 |
|
|
|
6,265 |
|
|
|
23,951 |
|
|
|
26,068 |
|
|
|
64,942 |
|
|
|
75,688 |
|
|
|
256,890 |
|
|
|
286,275 |
|
|
Other operating income |
|
|
|
|
|
|
|
(Loss) gain on sale of real estate |
(7,470 |
) |
|
|
61,007 |
|
|
|
(15,009 |
) |
|
|
59,961 |
|
|
Real estate operating income |
(1,183 |
) |
|
|
65,986 |
|
|
|
22,219 |
|
|
|
82,866 |
|
|
Other income (expense) |
|
|
|
|
|
|
|
Interest expense |
(8,998 |
) |
|
|
(11,788 |
) |
|
|
(37,305 |
) |
|
|
(53,734 |
) |
|
Loss on interest rate derivatives |
(560 |
) |
|
|
— |
|
|
|
(560 |
) |
|
|
— |
|
|
Loss on extinguishment of debt |
(296 |
) |
|
|
— |
|
|
|
(34 |
) |
|
|
— |
|
|
|
(9,854 |
) |
|
|
(11,788 |
) |
|
|
(37,899 |
) |
|
|
(53,734 |
) |
|
(Loss) income from continuing operations |
(11,037 |
) |
|
|
54,198 |
|
|
|
(15,680 |
) |
|
|
29,132 |
|
|
Discontinued operations: |
|
|
|
|
|
|
|
Income from operations of properties sold or held for sale |
— |
|
|
|
— |
|
|
|
— |
|
|
|
16,158 |
|
|
Gain on sale of real estate |
— |
|
|
|
— |
|
|
|
— |
|
|
|
339,024 |
|
|
Loss on extinguishment of debt |
— |
|
|
|
— |
|
|
|
— |
|
|
|
(764 |
) |
|
Income from discontinued operations |
— |
|
|
|
— |
|
|
|
— |
|
|
|
354,418 |
|
|
Net (loss) income |
$ |
(11,037 |
) |
|
|
$ |
54,198 |
|
|
|
$ |
(15,680 |
) |
|
|
$ |
383,550 |
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations |
$ |
(11,037 |
) |
|
|
$ |
54,198 |
|
|
|
$ |
(15,680 |
) |
|
|
$ |
29,132 |
|
|
Depreciation and amortization |
30,241 |
|
|
|
38,812 |
|
|
|
120,030 |
|
|
|
136,253 |
|
|
Real estate impairment |
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,374 |
|
|
Loss (gain) on sale of depreciable real estate |
7,470 |
|
|
|
(61,007 |
) |
|
|
15,009 |
|
|
|
(59,961 |
) |
|
Funds from continuing operations |
$ |
26,674 |
|
|
|
$ |
32,003 |
|
|
|
$ |
119,359 |
|
|
|
$ |
113,798 |
|
|
Income from discontinued operations |
— |
|
|
|
— |
|
|
|
— |
|
|
|
354,418 |
|
|
Discontinued operations real estate depreciation and
amortization |
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,926 |
|
|
Gain on sale of real estate |
— |
|
|
|
— |
|
|
|
— |
|
|
|
(339,024 |
) |
|
Funds from discontinued operations |
— |
|
|
|
— |
|
|
|
— |
|
|
|
20,320 |
|
|
NAREIT funds from operations (1) |
$ |
26,674 |
|
|
|
$ |
32,003 |
|
|
|
$ |
119,359 |
|
|
|
$ |
134,118 |
|
|
|
|
|
|
|
|
|
|
Non-cash loss (gain) on extinguishment of debt |
$ |
296 |
|
|
|
$ |
— |
|
|
|
$ |
(881 |
) |
|
|
$ |
(244 |
) |
|
Tenant improvements and incentives |
(6,250 |
) |
|
|
(6,857 |
) |
|
|
(13,212 |
) |
|
|
(15,898 |
) |
|
External and internal leasing commissions capitalized |
(1,445 |
) |
|
|
(2,700 |
) |
|
|
(3,852 |
) |
|
|
(6,371 |
) |
|
Recurring capital improvements |
(2,164 |
) |
|
|
(4,345 |
) |
|
|
(5,044 |
) |
|
|
(6,746 |
) |
|
Straight-line rents, net |
82 |
|
|
|
(763 |
) |
|
|
(1,758 |
) |
|
|
(3,266 |
) |
|
Non-cash fair value interest expense |
— |
|
|
|
(178 |
) |
|
|
(59 |
) |
|
|
(778 |
) |
|
Non-real estate depreciation & amortization of debt costs |
987 |
|
|
|
1,030 |
|
|
|
3,795 |
|
|
|
5,005 |
|
|
Amortization of lease intangibles, net |
477 |
|
|
|
504 |
|
|
|
1,942 |
|
|
|
2,183 |
|
|
Amortization and expensing of restricted share and unit
compensation |
1,972 |
|
|
|
1,479 |
|
|
|
7,873 |
|
|
|
7,743 |
|
|
Funds available for distribution (9) |
$ |
20,629 |
|
|
|
$ |
20,173 |
|
|
|
$ |
108,163 |
|
|
|
$ |
115,746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedDecember 31, |
|
Twelve Months EndedDecember 31, |
Per share data: |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
(Loss) income from continuing operations |
(Basic) |
$ |
(0.13 |
) |
|
|
$ |
0.66 |
|
|
$ |
(0.20 |
) |
|
|
$ |
0.36 |
|
|
(Diluted) |
$ |
(0.13 |
) |
|
|
$ |
0.66 |
|
|
$ |
(0.20 |
) |
|
|
$ |
0.36 |
|
Net (loss) income |
(Basic) |
$ |
(0.13 |
) |
|
|
$ |
0.66 |
|
|
$ |
(0.20 |
) |
|
|
$ |
4.75 |
|
|
(Diluted) |
$ |
(0.13 |
) |
|
|
$ |
0.66 |
|
|
$ |
(0.20 |
) |
|
|
$ |
4.75 |
|
NAREIT FFO |
(Basic) |
$ |
0.32 |
|
|
|
$ |
0.39 |
|
|
$ |
1.44 |
|
|
|
$ |
1.67 |
|
|
(Diluted) |
$ |
0.32 |
|
|
|
$ |
0.39 |
|
|
$ |
1.44 |
|
|
|
$ |
1.66 |
|
|
|
|
|
|
|
|
|
|
Dividends paid |
|
$ |
0.30 |
|
|
|
$ |
0.30 |
|
|
$ |
1.20 |
|
|
|
$ |
1.20 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic |
|
82,962 |
|
|
|
81,220 |
|
|
82,348 |
|
|
|
80,257 |
|
Weighted average shares outstanding - diluted |
|
82,962 |
|
|
|
81,313 |
|
|
82,348 |
|
|
|
80,335 |
|
Weighted average shares outstanding - diluted (for NAREIT FFO) |
83,093 |
|
|
|
81,313 |
|
|
82,516 |
|
|
|
80,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WASHINGTON REAL ESTATE INVESTMENT TRUST AND
SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(In thousands, except per share data) |
|
|
|
|
|
December 31, 2020 |
|
|
|
(unaudited) |
|
December 31, 2019 |
Assets |
|
|
|
Land |
$ |
551,578 |
|
|
|
$ |
566,807 |
|
|
Income producing property |
2,432,039 |
|
|
|
2,392,415 |
|
|
|
2,983,617 |
|
|
|
2,959,222 |
|
|
Accumulated depreciation and amortization |
(749,014 |
) |
|
|
(693,610 |
) |
|
Net income producing property |
2,234,603 |
|
|
|
2,265,612 |
|
|
Properties under development or held for future development |
37,615 |
|
|
|
124,193 |
|
|
Total real estate held for investment, net |
2,272,218 |
|
|
|
2,389,805 |
|
|
Investment in real estate held for sale, net |
— |
|
|
|
57,028 |
|
|
Cash and cash equivalents |
7,700 |
|
|
|
12,939 |
|
|
Restricted cash |
603 |
|
|
|
1,812 |
|
|
Rents and other receivables |
58,257 |
|
|
|
65,259 |
|
|
Prepaid expenses and other assets |
71,040 |
|
|
|
95,149 |
|
|
Other assets related to properties sold or held for sale |
— |
|
|
|
6,336 |
|
|
Total assets |
$ |
2,409,818 |
|
|
|
$ |
2,628,328 |
|
|
|
|
|
|
Liabilities |
|
|
|
Notes payable, net |
$ |
945,370 |
|
|
|
$ |
996,722 |
|
|
Mortgage notes payable, net |
— |
|
|
|
47,074 |
|
|
Line of credit |
42,000 |
|
|
|
56,000 |
|
|
Accounts payable and other liabilities |
58,773 |
|
|
|
71,136 |
|
|
Dividend payable |
25,361 |
|
|
|
24,668 |
|
|
Advance rents |
7,215 |
|
|
|
9,353 |
|
|
Tenant security deposits |
9,990 |
|
|
|
10,595 |
|
|
Other liabilities related to properties sold or held for sale |
— |
|
|
|
718 |
|
|
Total liabilities |
1,088,709 |
|
|
|
1,216,266 |
|
|
|
|
|
|
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; 84,409 and 82,099 shares issued and
outstanding, as of December 31, 2020 and December 31, 2019,
respectively |
844 |
|
|
|
821 |
|
|
Additional paid in capital |
1,649,366 |
|
|
|
1,592,487 |
|
|
Distributions in excess of net income |
(298,860 |
) |
|
|
(183,405 |
) |
|
Accumulated other comprehensive (loss) income |
(30,563 |
) |
|
|
1,823 |
|
|
Total shareholders' equity |
1,320,787 |
|
|
|
1,411,726 |
|
|
|
|
|
|
Noncontrolling interests in subsidiaries |
322 |
|
|
|
336 |
|
|
Total equity |
1,321,109 |
|
|
|
1,412,062 |
|
|
|
|
|
|
Total liabilities and equity |
$ |
2,409,818 |
|
|
|
$ |
2,628,328 |
|
|
|
|
|
|
|
|
|
|
|
|
The following tables contain reconciliations of net income to
same-store net operating income for the periods presented (in
thousands): |
|
|
|
|
|
|
|
|
Three months ended December 31, 2020 |
Multifamily |
|
Office |
|
Corporateand other |
|
Total |
Same-store net operating income (3) |
$ |
14,373 |
|
|
$ |
17,680 |
|
|
$ |
2,497 |
|
|
$ |
34,550 |
|
|
Add: Net operating income from non-same-store properties (3) |
6,758 |
|
|
1,208 |
|
|
— |
|
|
7,966 |
|
|
Total net operating income (2) |
$ |
21,131 |
|
|
$ |
18,888 |
|
|
$ |
2,497 |
|
|
$ |
42,516 |
|
|
Deduct: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
(30,241 |
) |
|
General and administrative expenses |
|
|
|
|
|
|
(5,988 |
) |
|
Interest expense |
|
|
|
|
|
|
(8,998 |
) |
|
Loss on interest rate derivatives |
|
|
|
|
|
|
(560 |
) |
|
Loss on extinguishment of debt |
|
|
|
|
|
|
(296 |
) |
|
Loss on sale of real estate |
|
|
|
|
|
|
(7,470 |
) |
|
Net loss |
|
|
|
|
|
|
$ |
(11,037 |
) |
|
|
|
|
|
|
|
|
|
Three months ended December 31, 2019 |
Multifamily |
|
Office |
|
Corporate and other |
|
Total |
Same-store net operating income (3) |
$ |
15,485 |
|
|
$ |
20,244 |
|
|
$ |
3,235 |
|
|
$ |
38,964 |
|
|
Add: Net operating income from non-same-store properties (3) |
6,427 |
|
|
4,665 |
|
|
— |
|
|
11,092 |
|
|
Total net operating income (2) |
$ |
21,912 |
|
|
$ |
24,909 |
|
|
$ |
3,235 |
|
|
$ |
50,056 |
|
|
Add/(deduct): |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
(38,812 |
) |
|
General and administrative expenses |
|
|
|
|
|
|
(6,265 |
) |
|
Interest expense |
|
|
|
|
|
|
(11,788 |
) |
|
Gain on sale of real estate |
|
|
|
|
|
|
61,007 |
|
|
Net income |
|
|
|
|
|
|
$ |
54,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables contain reconciliations of net income to
same-store net operating income for the periods presented (in
thousands): |
|
|
|
|
|
|
|
|
Twelve months ended December 31, 2020 |
Multifamily |
|
Office |
|
Corporateand Other |
|
Total |
Same-store net operating income(3) |
$ |
60,078 |
|
|
$ |
75,409 |
|
|
$ |
11,404 |
|
|
$ |
146,891 |
|
|
Add: Net operating income from non-same-store properties(3) |
26,852 |
|
|
7,466 |
|
|
— |
|
|
34,318 |
|
|
Total net operating income(2) |
$ |
86,930 |
|
|
$ |
82,875 |
|
|
$ |
11,404 |
|
|
$ |
181,209 |
|
|
Deduct: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
(120,030 |
) |
|
General and administrative expenses |
|
|
|
|
|
|
(23,951 |
) |
|
Interest expense |
|
|
|
|
|
|
(37,305 |
) |
|
Loss on interest rate derivatives |
|
|
|
|
|
|
(560 |
) |
|
Loss on extinguishment of debt |
|
|
|
|
|
|
(34 |
) |
|
Loss on sale of real estate |
|
|
|
|
|
|
(15,009 |
) |
|
Net loss |
|
|
|
|
|
|
$ |
(15,680 |
) |
|
|
|
|
|
|
|
|
|
Twelve months ended December 31, 2019 |
Multifamily |
|
Office |
|
Corporateand Other |
|
Total |
Same-store net operating income(3) |
$ |
60,638 |
|
|
$ |
81,205 |
|
|
$ |
13,468 |
|
|
$ |
155,311 |
|
|
Add: Net operating income from non-same-store properties(3) |
16,358 |
|
|
21,931 |
|
|
— |
|
|
38,289 |
|
|
Total net operating income(2) |
$ |
76,996 |
|
|
$ |
103,136 |
|
|
$ |
13,468 |
|
|
$ |
193,600 |
|
|
Add/(deduct): |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
(136,253 |
) |
|
General and administrative expenses |
|
|
|
|
|
|
(26,068 |
) |
|
Real estate impairment |
|
|
|
|
|
|
(8,374 |
) |
|
Interest expense |
|
|
|
|
|
|
(53,734 |
) |
|
Gain on sale of real estate |
|
|
|
|
|
|
59,961 |
|
|
Income from continuing operations |
|
|
|
|
|
|
29,132 |
|
|
Discontinued operations: |
|
|
|
|
|
|
|
Income from operations of properties sold or held for sale |
|
|
|
|
|
|
16,158 |
|
|
Gain on sale of real estate |
|
|
|
|
|
|
339,024 |
|
|
Loss on extinguishment of debt |
|
|
|
|
|
|
(764 |
) |
|
Net income |
|
|
|
|
|
|
$ |
383,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table contains a reconciliation of net income
attributable to the controlling interests to core funds from
operations for the periods presented (in thousands, except per
share data): |
|
|
|
Three Months EndedDecember 31, |
|
Twelve Months EndedDecember 31, |
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Net (loss) income |
|
$ |
(11,037 |
) |
|
|
$ |
54,198 |
|
|
|
$ |
(15,680 |
) |
|
|
$ |
383,550 |
|
|
|
Add: |
|
|
|
|
|
|
|
|
|
Real estate depreciation and amortization |
|
30,241 |
|
|
|
38,812 |
|
|
|
120,030 |
|
|
|
136,253 |
|
|
|
Loss (gain) on sale of depreciable real estate |
|
7,470 |
|
|
|
(61,007 |
) |
|
|
15,009 |
|
|
|
(59,961 |
) |
|
|
Real estate impairment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,374 |
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
|
|
Gain on sale of real estate |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(339,024 |
) |
|
|
Real estate depreciation and amortization |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,926 |
|
|
|
NAREIT funds from operations (1) |
|
26,674 |
|
|
|
32,003 |
|
|
|
119,359 |
|
|
|
134,118 |
|
|
|
Add: |
|
|
|
|
|
|
|
|
|
Restructuring expenses |
|
— |
|
|
|
270 |
|
|
|
— |
|
|
|
3,019 |
|
|
|
Loss on extinguishment of debt |
|
296 |
|
|
|
— |
|
|
|
34 |
|
|
|
764 |
|
|
|
Loss on interest rate derivatives |
|
560 |
|
|
|
— |
|
|
|
560 |
|
|
|
— |
|
|
|
Core funds from operations (1) |
|
$ |
27,530 |
|
|
|
$ |
32,273 |
|
|
|
$ |
119,953 |
|
|
|
$ |
137,901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedDecember 31, |
|
Twelve Months EndedDecember 31, |
|
Per share data: |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
NAREIT FFO |
(Basic) |
$ |
0.32 |
|
|
|
$ |
0.39 |
|
|
|
$ |
1.44 |
|
|
|
$ |
1.67 |
|
|
|
|
(Diluted) |
$ |
0.32 |
|
|
|
$ |
0.39 |
|
|
|
$ |
1.44 |
|
|
|
$ |
1.66 |
|
|
|
Core FFO |
(Basic) |
$ |
0.33 |
|
|
|
$ |
0.40 |
|
|
|
$ |
1.45 |
|
|
|
$ |
1.71 |
|
|
|
|
(Diluted) |
$ |
0.33 |
|
|
|
$ |
0.40 |
|
|
|
$ |
1.45 |
|
|
|
$ |
1.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic |
|
82,962 |
|
|
|
81,220 |
|
|
|
82,348 |
|
|
|
80,257 |
|
|
|
Weighted average shares outstanding - diluted (for NAREIT and Core
FFO) |
|
83,093 |
|
|
|
81,313 |
|
|
|
82,516 |
|
|
|
80,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTACT:Amy HopkinsVice President, Investor
RelationsE-Mail: ahopkins@washreit.com
Washington REIT (NYSE:WRE)
Historical Stock Chart
From Apr 2024 to May 2024
Washington REIT (NYSE:WRE)
Historical Stock Chart
From May 2023 to May 2024