SEC Filing Summary: Washington Real Estate Investment Trust (WRIT)
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 2000, for Washington Real Estate Investment Trust (WRIT), a self-administered REIT focused on income-producing real estate in the Washington-Baltimore region. The portfolio includes office buildings, industrial distribution centers, apartment buildings, and shopping centers. As of the reporting date, there were 35,733,793 shares of beneficial interest outstanding.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2000 |
Six Months Ended June 30, 2000 |
|---|---|---|
| Real Estate Rental Revenue | $33.35 million | $65.29 million |
| Operating Income | $23.72 million | $46.28 million |
| Net Income | $9.96 million | $20.87 million |
| Diluted EPS | $0.28 | $0.58 |
| Dividends Paid (per share) | $0.3125 | $0.6050 |
| Cash Flow from Operations | N/A | $33.72 million |
| Total Debt Outstanding | $336.66 million (Mortgage: $86.66M; Lines of Credit: $40.0M; Notes: $210.0M) | |
| Cash and Temporary Investments | $8.98 million |
Material Changes vs. Prior Period
- Revenue Growth: Rental revenue increased 15.5% year-over-year for both the quarter and the six-month period, driven by acquisitions (e.g., Wayne Plaza, Avondale Apartments) and increased rental rates in the core portfolio.
- Operating Income: Increased 17.0% for the quarter and 17.4% for the six-month period compared to 1999.
- Net Income Decline (6 Months): Despite higher operating income, Net Income for the six months ended June 30, 2000, was $20.87 million, down from $25.12 million in 1999. This decrease is primarily due to a significantly lower Gain on Sale of Real Estate ($1.5 million in 2000 vs. $7.9 million in 1999).
- Expense Increases: Real estate expenses rose 12.1% (quarter) and 10.9% (six months) due to new acquisitions and higher utility/maintenance costs. Interest expense increased due to new mortgage obligations and higher rates on lines of credit.
- Occupancy: Improved across most segments, with Industrial centers rising to 96.3% and Apartments to 97.6%, while Office occupancy dipped slightly to 97.1%.
Outlook, Risks, and Management Commentary
- Liquidity: WRIT maintains $35 million in available capacity under $75 million in unsecured credit lines. Management believes current resources are sufficient for obligations and future acquisitions.
- Interest Rate Risk: The majority of debt is fixed-rate. Only $40 million is floating-rate. Management estimates a 200 basis point rate increase would reduce earnings by less than 1.5%.
- Capital Allocation: The company continues to acquire properties and fund capital improvements, financed through operating cash flow, property sales, and credit lines.
- Shareholder Action: Shareholders approved an amendment to the Stock Option plan but rejected a proposal regarding executive compensation.
- Year 2000 Compliance: No material failures or interruptions occurred; costs were not material to financial position.
Investor Verification Checklist
- Gain on Sale Volatility: Verify the sustainability of earnings given the sharp decline in one-time gains from property sales compared to the prior year.
- Debt Maturities: Review the schedule of debt maturities, noting the $50 million mortgage due in 2009 and the $210 million in unsecured notes due between 2003 and 2028.
- Occupancy Trends: Monitor the slight decline in office occupancy (98.2% to 97.1%) to ensure it does not accelerate.
- Dividend Coverage: Confirm that operating cash flow continues to support the dividend payout rate of $0.6050 per share for the six-month period.
- Acquisition Integration: Assess the performance of recent acquisitions (Wayne Plaza, 833 South Washington Street) in subsequent quarters.