SEC Filing Summary: Washington Real Estate Investment Trust (WRIT)
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended September 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, multifamily properties, and retail shopping centers. As of the reporting date, 35,733,793 shares of beneficial interest were outstanding.
Key Financial Metrics
| Metric | Three Months Ended Sep 30, 2000 | Nine Months Ended Sep 30, 2000 |
|---|---|---|
| Real Estate Rental Revenue | $34.2 million | $99.5 million |
| Operating Income | $24.6 million | $70.8 million |
| Net Income | $12.8 million | $33.6 million |
| Diluted EPS | $0.36 | $0.94 |
| Dividends Paid | $0.3125 per share | $0.9175 per share |
| Cash Flow from Operations | N/A | $42.0 million |
| Total Debt Outstanding | $336.7 million | $336.7 million |
| Cash and Temporary Investments | $4.3 million | $4.3 million |
Debt Composition: Includes $86.5 million in mortgage notes, $210.0 million in unsecured notes payable, and $40.0 million outstanding on lines of credit (with $35.0 million available).
Material Changes vs. Prior Period
- Revenue Growth: Rental revenue increased 15.8% ($4.7 million) for the quarter and 15.6% ($13.4 million) for the nine-month period compared to 1999. Growth was driven by acquisitions (e.g., Wayne Plaza, Avondale Apartments) and increased rental rates/occupancy in the core portfolio.
- Operating Income: Increased 19.3% for the quarter and 18.1% for the nine-month period. Office buildings and industrial centers saw the strongest growth (17.0% and 26.7% revenue growth, respectively, for the quarter).
- Expenses: Real estate expenses rose 7.7% for the quarter due to new acquisitions and higher core portfolio costs. Interest expense increased to $6.4 million for the quarter (from $5.5 million) due to new mortgage debt and higher rates on lines of credit.
- Asset Sales: Net income included a $2.1 million gain on the sale of real estate for the quarter (vs. $0 in 1999) and a $3.6 million gain for the nine-month period (vs. $7.9 million in 1999). Notable sales included Prince William Plaza and Clairmont Shopping Center.
Outlook, Risks, and Management Commentary
- Capital Resources: Management maintains $75 million in unsecured credit commitments. On November 6, 2000 (subsequent to the period), WRIT sold $55 million of unsecured notes to repay lines of credit.
- Interest Rate Risk: WRIT estimates a 200 basis point increase in interest rates would result in less than a 1.5% reduction in earnings. Only $40 million of total debt is at a floating rate.
- Acquisitions: Subsequent to the quarter, WRIT purchased Courthouse Square for $17 million using a combination of line of credit advances and tax-deferred exchange proceeds.
- Occupancy: Occupancy rates improved across all segments, with office buildings at 96.7%, industrial at 96.3%, and multifamily at 97.7% for the quarter.
- Risks: Primary risks include general economic conditions, capital market conditions, and local real estate performance. No material legal proceedings or defaults were reported.
Investor Verification Checklist
- Verify the impact of the $55 million note issuance in November 2000 on future interest expense and liquidity.
- Confirm the status of tax-deferred exchanges related to the sales of Prince William Plaza and Clairmont Center.
- Monitor occupancy trends in the core portfolio versus acquired properties to ensure sustained revenue growth.
- Review the utilization of the $35 million remaining capacity on lines of credit for future acquisitions.
- Assess the effect of rising interest rates on the $40 million floating-rate debt portion.