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, 2004, for Washington Real Estate Investment Trust (WRIT), a Maryland REIT. The company owns and operates a diversified portfolio of 67 income-producing properties in the Washington-Baltimore region, including office buildings, retail centers, multifamily buildings, and industrial/flex properties. As of June 30, 2004, the portfolio totaled 9.8 million net rentable square feet.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2004 | Six Months Ended June 30, 2004 |
|---|---|---|
| Total Revenue | $44.9 million | $89.4 million |
| Net Income | $11.1 million | $22.4 million |
| Net Income Per Share (Diluted) | $0.26 | $0.54 |
| Funds From Operations (FFO) | $21.2 million | $42.4 million |
| Net Operating Income (NOI) | $31.4 million | $62.3 million |
| Cash from Operating Activities | N/A | $46.1 million |
| Total Debt | $529.5 million (Mortgages: $141.3M; Notes: $375.0M; Line of Credit: $13.3M) | |
| Cash and Equivalents | $8.3 million | |
| Available Liquidity | $61.7 million (increased to $86.7M via new facility in July 2004) |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 13.5% for the quarter and 13.7% year-to-date compared to 2003, driven primarily by acquisitions completed in 2003 and early 2004.
- Net Income: Net income decreased slightly by 1.8% for the quarter ($11.1M vs $11.3M) and 0.5% year-to-date ($22.4M vs $22.5M) due to higher interest and depreciation expenses offsetting revenue gains.
- Occupancy: Overall economic occupancy decreased slightly to 90.3% for the quarter (from 90.5%) but increased to 90.2% year-to-date (from 89.9%). The Office sector saw a decline in core occupancy (86.5%) due to lease expirations, while the Industrial sector improved significantly (92.6%).
- Acquisitions: WRIT acquired one industrial property (8880 Gorman Road) in March 2004 for $11.7 million, adding 140,700 square feet.
- Dividends: Dividends paid per share increased to $0.3925 for the quarter (from $0.3725 in 2003) and $0.7650 year-to-date.
Outlook, Risks, and Management Commentary
- Market Conditions: Management notes improvement in the Northern Virginia office market due to federal spending on Homeland Security, though significant vacancy remains. The Washington DC office market is strong, while suburban Maryland faces slower recovery. Retail remains strong with 97% occupancy.
- Capital Requirements: The company expects significant capital needs in 2004, including approximately $100 million for acquisitions, $20 million for portfolio investments, and $55 million to retire unsecured notes maturing in November 2004.
- Liquidity Update: On July 21, 2004 (subsequent to the reporting period), WRIT closed a new $50 million line of credit, replacing a $25 million facility and increasing total available borrowing capacity to $86.7 million.
- Risks: Key risks include economic health of tenants, regional economic conditions, interest rate fluctuations, and potential uninsured losses from acts of terrorism. The company relies on federal terrorism insurance coverage which expires in November 2005.
- Shareholder Vote: Shareholders did not approve an amendment to authorize the issuance of preferred shares at the May 2004 annual meeting.
Investor Verification Checklist
- Debt Maturity Wall: Verify the refinancing plan for the $55 million in unsecured notes maturing in November 2004.
- Office Sector Vacancy: Monitor the leasing status of the Maryland Trade Center properties, which represent a significant portion of current vacancies.
- Development Pipeline: Track progress on the Rosslyn Towers and Westminster Shopping Center redevelopment projects.
- Dividend Coverage: Confirm that FFO continues to cover the increased dividend rate of $0.3925 per share.
- Interest Rate Exposure: Assess the impact of variable rate lines of credit on future interest expense given the current debt structure.