x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
MARYLAND | 53-0261100 | |
(State of incorporation) | (IRS Employer Identification Number) |
Title of Each Class | Name of exchange on which registered | |
Shares of Beneficial Interest | New York Stock Exchange |
Large accelerated filer | x | Accelerated filer | o |
Non-accelerated filer | o | Smaller reporting company | o |
Emerging growth company | o |
Page | ||
Item 1. | ||
Consolidated Statement of Equity | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
March 31, 2017 | December 31, 2016 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Land | $ | 573,315 | $ | 573,315 | |||
Income producing property | 2,123,807 | 2,112,088 | |||||
2,697,122 | 2,685,403 | ||||||
Accumulated depreciation and amortization | (680,231 | ) | (657,425 | ) | |||
Net income producing property | 2,016,891 | 2,027,978 | |||||
Properties under development or held for future development | 42,914 | 40,232 | |||||
Total real estate held for investment, net | 2,059,805 | 2,068,210 | |||||
Cash and cash equivalents | 15,214 | 11,305 | |||||
Restricted cash | 1,430 | 6,317 | |||||
Rents and other receivables, net of allowance for doubtful accounts of $2,430 and $2,377, respectively | 69,038 | 64,319 | |||||
Prepaid expenses and other assets | 108,622 | 103,468 | |||||
Total assets | $ | 2,254,109 | $ | 2,253,619 | |||
Liabilities | |||||||
Notes payable, net | $ | 893,424 | $ | 843,084 | |||
Mortgage notes payable, net | 97,814 | 148,540 | |||||
Lines of credit | 123,000 | 120,000 | |||||
Accounts payable and other liabilities | 50,684 | 46,967 | |||||
Dividend payable | — | 22,414 | |||||
Advance rents | 11,948 | 11,750 | |||||
Tenant security deposits | 9,002 | 8,802 | |||||
Total liabilities | 1,185,872 | 1,201,557 | |||||
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; 75,702 and 74,606 shares issued and outstanding, respectively | 757 | 746 | |||||
Additional paid in capital | 1,400,093 | 1,368,636 | |||||
Distributions in excess of net income | (342,020 | ) | (326,047 | ) | |||
Accumulated other comprehensive income | 8,346 | 7,611 | |||||
Total shareholders’ equity | 1,067,176 | 1,050,946 | |||||
Noncontrolling interests in subsidiaries | 1,061 | 1,116 | |||||
Total equity | 1,068,237 | 1,052,062 | |||||
Total liabilities and equity | $ | 2,254,109 | $ | 2,253,619 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Revenue | |||||||
Real estate rental revenue | $ | 77,501 | $ | 77,137 | |||
Expenses | |||||||
Real estate expenses | 27,863 | 28,734 | |||||
Depreciation and amortization | 26,069 | 26,038 | |||||
Acquisition costs | — | 154 | |||||
General and administrative | 5,626 | 5,511 | |||||
59,558 | 60,437 | ||||||
Real estate operating income | 17,943 | 16,700 | |||||
Other (expense) income | |||||||
Interest expense | (11,405 | ) | (14,360 | ) | |||
Other income | 77 | 39 | |||||
(11,328 | ) | (14,321 | ) | ||||
Net income | 6,615 | 2,379 | |||||
Less: Net loss attributable to noncontrolling interests in subsidiaries | 19 | 5 | |||||
Net income attributable to the controlling interests | $ | 6,634 | $ | 2,384 | |||
Basic net income attributable to the controlling interests per common share | $ | 0.09 | $ | 0.03 | |||
Diluted net income attributable to the controlling interests per common share | $ | 0.09 | $ | 0.03 | |||
Weighted average shares outstanding – basic | 74,854 | 68,301 | |||||
Weighted average shares outstanding – diluted | 74,966 | 68,488 | |||||
Dividends declared per share | $ | 0.30 | $ | 0.30 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Net income | $ | 6,615 | $ | 2,379 | |||
Other comprehensive income (loss): | |||||||
Unrealized gain (loss) on interest rate hedges | 735 | (3,675 | ) | ||||
Comprehensive income (loss) | 7,350 | (1,296 | ) | ||||
Less: Comprehensive loss attributable to noncontrolling interests | 19 | 5 | |||||
Comprehensive income (loss) attributable to the controlling interests | $ | 7,369 | $ | (1,291 | ) |
Shares Issued and Out-standing | Shares of Beneficial Interest at Par Value | Additional Paid in Capital | Distributions in Excess of Net Income | Accumulated Other Comprehensive Income | Total Shareholders’ Equity | Noncontrolling Interests in Subsidiaries | Total Equity | |||||||||||||||||||||||
Balance, December 31, 2016 | 74,606 | $ | 746 | $ | 1,368,636 | $ | (326,047 | ) | $ | 7,611 | $ | 1,050,946 | $ | 1,116 | $ | 1,052,062 | ||||||||||||||
Net income attributable to the controlling interests | — | — | — | 6,634 | — | 6,634 | — | 6,634 | ||||||||||||||||||||||
Net loss attributable to the noncontrolling interests | — | — | — | — | — | — | (19 | ) | (19 | ) | ||||||||||||||||||||
Unrealized gain on interest rate hedge | — | — | — | — | 735 | 735 | — | 735 | ||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | (36 | ) | (36 | ) | ||||||||||||||||||||
Dividends | — | — | — | (22,607 | ) | — | (22,607 | ) | — | (22,607 | ) | |||||||||||||||||||
Equity offerings, net of issuance costs | 972 | 10 | 29,949 | — | — | 29,959 | — | 29,959 | ||||||||||||||||||||||
Shares issued under dividend reinvestment program | 35 | — | 1,114 | — | — | 1,114 | — | 1,114 | ||||||||||||||||||||||
Share grants, net of share grant amortization, forfeitures and tax withholdings | 89 | 1 | 394 | — | — | 395 | — | 395 | ||||||||||||||||||||||
Balance, March 31, 2017 | 75,702 | $ | 757 | $ | 1,400,093 | $ | (342,020 | ) | $ | 8,346 | $ | 1,067,176 | $ | 1,061 | $ | 1,068,237 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 6,615 | $ | 2,379 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 26,069 | 26,038 | |||||
Provision for losses on accounts receivable | 183 | 441 | |||||
Share-based compensation expense | 1,147 | 1,546 | |||||
Amortization of debt premiums, discounts and related financing costs | 477 | 837 | |||||
Changes in operating other assets | (6,922 | ) | (906 | ) | |||
Changes in operating other liabilities | 3,469 | 1,916 | |||||
Net cash provided by operating activities | 31,038 | 32,251 | |||||
Cash flows from investing activities | |||||||
Capital improvements to real estate | (11,436 | ) | (4,716 | ) | |||
Development in progress | (2,517 | ) | (1,119 | ) | |||
Real estate deposits, net | (5,000 | ) | (12,500 | ) | |||
Cash released from replacement reserve escrows, net | 4,548 | 2,309 | |||||
Non-real estate capital improvements | (575 | ) | (13 | ) | |||
Net cash used in investing activities | (14,980 | ) | (16,039 | ) | |||
Cash flows from financing activities | |||||||
Line of credit borrowings, net | 3,000 | 110,000 | |||||
Dividends paid | (45,021 | ) | (41,137 | ) | |||
Principal payments – mortgage notes payable | (50,346 | ) | (84,219 | ) | |||
Proceeds from term loan | 50,000 | — | |||||
Payment of financing costs | (234 | ) | (236 | ) | |||
Distributions to noncontrolling interests | (36 | ) | (91 | ) | |||
Proceeds from dividend reinvestment program | 1,114 | — | |||||
Net proceeds from equity offering | 29,959 | — | |||||
Payment of tax withholdings for restricted share awards | (585 | ) | (779 | ) | |||
Net cash used in financing activities | (12,149 | ) | (16,462 | ) | |||
Net increase (decrease) in cash and cash equivalents | 3,909 | (250 | ) | ||||
Cash and cash equivalents at beginning of period | 11,305 | 23,825 | |||||
Cash and cash equivalents at end of period | $ | 15,214 | $ | 23,575 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest, net of amounts capitalized | $ | 5,916 | $ | 8,639 | |||
Change in accrued capital improvements and development costs | 438 | 4,214 |
March 31, 2017 | December 31, 2016 | ||||||
Land | $ | 12,851 | $ | 12,851 | |||
Income producing property | 37,954 | 37,949 | |||||
Accumulated depreciation and amortization | (5,127 | ) | (4,571 | ) | |||
Other assets | 622 | 456 | |||||
$ | 46,300 | $ | 46,685 |
March 31, 2017 | December 31, 2016 | ||||||
Mortgage notes payable (1) | $ | 31,798 | $ | 31,869 | |||
Accounts payable and other liabilities | 326 | 186 | |||||
Tenant security deposits | 98 | 99 | |||||
$ | 32,222 | $ | 32,154 |
Disposition Date | Property Name | Segment | Rentable Square Feet | Contract Sales Price (in thousands) | Gain on Sale (in thousands) | |||||||||
May 26, 2016 | Dulles Station II (1) | Office | N/A | $ | 12,100 | $ | 527 | |||||||
June 27, 2016 | Maryland Office Portfolio Transaction I (2) | Office | 692,000 | 111,500 | 23,585 | |||||||||
September 22, 2016 | Maryland Office Portfolio Transaction II (3) | Office | 491,000 | 128,500 | 77,592 | |||||||||
Total 2016 | 1,183,000 | $ | 252,100 | $ | 101,704 |
(1) | Land held for future development and an interest in a parking garage. |
(2) | Maryland Office Portfolio Transaction I consists of 6110 Executive Boulevard, 600 Jefferson Plaza, Wayne Plaza and West Gude Drive. |
(3) | Maryland Office Portfolio Transaction II consists of 51 Monroe Street and One Central Plaza. |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Real estate rental revenue | $ | — | $ | 8,430 | |||
Net income | — | 2,726 |
Committed capacity | $ | 600,000 | |
Borrowings outstanding | (123,000 | ) | |
Unused and available | $ | 477,000 |
Revolving Credit Facility | |||
Balance at December 31, 2016 | $ | 120,000 | |
Borrowings | 90,000 | ||
Repayments | (87,000 | ) | |
Balance at March 31, 2017 | $ | 123,000 |
Fair Value | ||||||||||||
Asset Derivatives | ||||||||||||
Derivative Instrument | Aggregate Notional Amount | Effective Date | Maturity Date | March 31, 2017 | December 31, 2016 | |||||||
Interest rate swaps | $ | 150,000 | October 15, 2015 | March 15, 2021 | $ | 980 | $ | 417 | ||||
Interest rate swaps | 150,000 | March 31, 2017 | July 21, 2023 | 7,366 | 7,194 | |||||||
$ | 300,000 | $ | 8,346 | $ | 7,611 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Unrealized gain (loss) on interest rate hedges | $ | 735 | $ | (3,675 | ) |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||
SERP | $ | 1,526 | $ | — | $ | 1,526 | $ | — | $ | 1,407 | $ | — | $ | 1,407 | $ | — | |||||||||||||||
Interest rate swaps | $ | 8,346 | $ | — | $ | 8,346 | $ | — | $ | 7,611 | $ | — | $ | 7,611 | $ | — |
March 31, 2017 | December 31, 2016 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Cash and cash equivalents | $ | 15,214 | $ | 15,214 | $ | 11,305 | $ | 11,305 | |||||||
Restricted cash | 1,430 | 1,430 | 6,317 | 6,317 | |||||||||||
2445 M Street note receivable | 2,166 | 2,216 | 2,089 | 2,173 | |||||||||||
Mortgage notes payable, net | 97,814 | 100,702 | 148,540 | 149,997 | |||||||||||
Lines of credit | 123,000 | 123,000 | 120,000 | 120,000 | |||||||||||
Notes payable, net | 893,424 | 925,613 | 843,084 | 873,516 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Numerator: | |||||||
Net income | $ | 6,615 | $ | 2,379 | |||
Net loss attributable to noncontrolling interests in subsidiaries | 19 | 5 | |||||
Allocation of earnings to unvested restricted share awards | (78 | ) | (90 | ) | |||
Adjusted net income attributable to the controlling interests | $ | 6,556 | $ | 2,294 | |||
Denominator: | |||||||
Weighted average shares outstanding – basic | 74,854 | 68,301 | |||||
Effect of dilutive securities: | |||||||
Employee restricted share awards | 112 | 187 | |||||
Weighted average shares outstanding – diluted | 74,966 | 68,488 | |||||
Basic net income attributable to the controlling interests per common share | $ | 0.09 | $ | 0.03 | |||
Diluted net income attributable to the controlling interests per common share | $ | 0.09 | $ | 0.03 |
Three Months Ended March 31, 2017 | |||||||||||||||||||
Office | Retail | Multifamily | Corporate and Other | Consolidated | |||||||||||||||
Real estate rental revenue | $ | 38,027 | $ | 15,705 | $ | 23,769 | $ | — | $ | 77,501 | |||||||||
Real estate expenses | 14,414 | 3,863 | 9,586 | — | 27,863 | ||||||||||||||
Net operating income | $ | 23,613 | $ | 11,842 | $ | 14,183 | $ | — | $ | 49,638 | |||||||||
Depreciation and amortization | (26,069 | ) | |||||||||||||||||
General and administrative | (5,626 | ) | |||||||||||||||||
Interest expense | (11,405 | ) | |||||||||||||||||
Other income | 77 | ||||||||||||||||||
Net income | 6,615 | ||||||||||||||||||
Less: Net loss attributable to noncontrolling interests in subsidiaries | 19 | ||||||||||||||||||
Net income attributable to the controlling interests | $ | 6,634 | |||||||||||||||||
Capital expenditures | $ | 4,955 | $ | 184 | $ | 6,297 | $ | 575 | $ | 12,011 | |||||||||
Total assets | $ | 1,097,256 | $ | 348,221 | $ | 764,732 | $ | 43,900 | $ | 2,254,109 |
Three Months Ended March 31, 2016 | |||||||||||||||||||
Office | Retail | Multifamily | Corporate and Other | Consolidated | |||||||||||||||
Real estate rental revenue | $ | 43,818 | $ | 15,380 | $ | 17,939 | $ | — | $ | 77,137 | |||||||||
Real estate expenses | 17,075 | 4,406 | 7,253 | — | 28,734 | ||||||||||||||
Net operating income | $ | 26,743 | $ | 10,974 | $ | 10,686 | $ | — | $ | 48,403 | |||||||||
Depreciation and amortization | (26,038 | ) | |||||||||||||||||
Acquisition costs | (154 | ) | |||||||||||||||||
General and administrative | (5,511 | ) | |||||||||||||||||
Interest expense | (14,360 | ) | |||||||||||||||||
Other income | 39 | ||||||||||||||||||
Net income | 2,379 | ||||||||||||||||||
Less: Net loss attributable to noncontrolling interests in subsidiaries | 5 | ||||||||||||||||||
Net income attributable to the controlling interests | $ | 2,384 | |||||||||||||||||
Capital expenditures | $ | 2,171 | $ | 543 | $ | 2,002 | $ | 13 | $ | 4,729 | |||||||||
Total assets | $ | 1,254,906 | $ | 351,616 | $ | 524,856 | $ | 53,925 | $ | 2,185,303 |
• | Overview. Discussion of our business outlook, operating results, investment activity, financing activity and capital requirements to provide context for the remainder of MD&A. |
• | Results of Operations. Discussion of our financial results comparing the 2017 Quarter to the 2016 Quarter. |
• | Liquidity and Capital Resources. Discussion of our financial condition and analysis of changes in our capital structure and cash flows. |
• | Funds From Operations. Calculation of NAREIT Funds From Operations (“NAREIT FFO”), a non-GAAP supplemental measure to net income. |
• | Critical Accounting Policies and Estimates. Descriptions of accounting policies that reflect significant judgments and estimates used in the preparation of our consolidated financial statements. |
• | Net operating income (“NOI”), calculated as real estate rental revenue less real estate expenses excluding depreciation and amortization and general and administrative expenses. NOI is a non-GAAP supplemental measure to net income. |
• | NAREIT FFO, calculated as set forth below under the caption “Funds from Operations.” |
• | Occupancy, calculated as occupied square footage as a percentage of total square footage as of the last day of that period. |
• | Leased percentage, calculated as the percentage of available physical net rentable area leased for our office and retail segments and percentage of apartments leased for our multifamily segment. |
• | Rental rates. |
• | Leasing activity, including new leases, renewals and expirations. |
Three Months Ended March 31, | ||||||||||||||
2017 | 2016 | $ Change | % Change | |||||||||||
Net income attributable to the controlling interests | $ | 6,634 | $ | 2,384 | $ | 4,250 | 178.3 | % | ||||||
NOI (1) | $ | 49,638 | $ | 48,403 | $ | 1,235 | 2.6 | % | ||||||
NAREIT FFO (2) | $ | 32,684 | $ | 28,417 | $ | 4,267 | 15.0 | % | ||||||
(1) See page 23 of the MD&A for a reconciliation of NOI to net income. | ||||||||||||||
(2) See page 29 of the MD&A for a reconciliation of NAREIT FFO to net income. |
• | The prepayment at par of the remaining $49.6 million of the mortgage note secured by the Army Navy Building in February 2017. |
• | The draw of the remaining $50.0 million on the seven year, $150 million unsecured term loan agreement maturing on July 21, 2023. We used the borrowing to refinance maturing secured debt. |
• | The issuance of approximately 1.0 million common shares under our ATM program at a weighted average price to the public of $31.31 per share, for net proceeds of approximately $30.0 million. |
Non-Same-Store | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Same-Store | Acquisitions (1) | Development/Redevelopment (2) | Dispositions (3) | All Properties | |||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 2016 | $ Change | % Change | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
Real estate rental revenue | $ | 68,043 | $ | 64,051 | $ | 3,992 | 6.2 | % | $ | 5,513 | $ | — | $ | 3,945 | $ | 4,656 | $ | — | $ | 8,430 | $ | 77,501 | $ | 77,137 | $ | 364 | 0.5 | % | |||||||||||||||||||||||||
Real estate expenses | 23,778 | 23,948 | (170 | ) | (0.7 | )% | 2,442 | — | 1,643 | 1,633 | — | 3,153 | 27,863 | 28,734 | (871 | ) | (3.0 | )% | |||||||||||||||||||||||||||||||||||
NOI | $ | 44,265 | $ | 40,103 | $ | 4,162 | 10.4 | % | $ | 3,071 | $ | — | $ | 2,302 | $ | 3,023 | $ | — | $ | 5,277 | $ | 49,638 | $ | 48,403 | $ | 1,235 | 2.6 | % | |||||||||||||||||||||||||
Reconciliation to net income attributable to the controlling interests: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | (26,069 | ) | (26,038 | ) | (31 | ) | 0.1 | % | |||||||||||||||||||||||||||||||||||||||||||||
Acquisition costs | — | (154 | ) | 154 | (100.0 | )% | |||||||||||||||||||||||||||||||||||||||||||||||
General and administrative expenses | (5,626 | ) | (5,511 | ) | (115 | ) | 2.1 | % | |||||||||||||||||||||||||||||||||||||||||||||
Interest expense | (11,405 | ) | (14,360 | ) | 2,955 | (20.6 | )% | ||||||||||||||||||||||||||||||||||||||||||||||
Other income | 77 | 39 | 38 | 97.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income | 6,615 | 2,379 | 4,236 | 178.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Less: Net loss attributable to noncontrolling interests | 19 | 5 | 14 | 280.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to the controlling interests | $ | 6,634 | $ | 2,384 | $ | 4,250 | 178.3 | % |
(1) | Acquisitions: |
(2) | Development/redevelopment properties: |
(3) | Dispositions (classified as continuing operations): |
Three Months Ended March 31, | ||||||||||||||
2017 | 2016 | $ Change | % Change | |||||||||||
Minimum base rent | $ | 57,060 | $ | 53,552 | $ | 3,508 | 6.6 | % | ||||||
Recoveries from tenants | 7,644 | 7,909 | (265 | ) | (3.4 | )% | ||||||||
Provision for doubtful accounts | (254 | ) | (360 | ) | 106 | (29.4 | )% | |||||||
Lease termination fees | 657 | 131 | 526 | 401.5 | % | |||||||||
Parking and other tenant charges | 2,936 | 2,819 | 117 | 4.2 | % | |||||||||
Total same-store real estate rental revenue | $ | 68,043 | $ | 64,051 | $ | 3,992 | 6.2 | % |
• | Minimum base rent: Increase primarily due to higher occupancy ($3.3 million) and rental rates ($0.6 million), partially offset by higher rent abatements ($0.3 million). |
• | Recoveries from tenants: Decrease primarily due to lower reimbursements for operating expenses ($0.4 million) caused by lower snow removal expenses, partially offset by higher reimbursements for real estate taxes ($0.1 million). |
• | Provision for doubtful accounts: Decrease primarily due to lower provisions in the retail segment ($0.1 million). |
• | Lease termination fees: Increase primarily due to higher fees in the office segment ($0.5 million). |
• | Parking and other tenant charges: Increase primarily due to higher parking income ($0.2 million). |
Three Months Ended March 31, | ||||||||||||||
2017 | 2016 | $ Change | % Change | |||||||||||
Office | $ | 34,082 | $ | 30,732 | $ | 3,350 | 10.9 | % | ||||||
Multifamily | 18,256 | 17,939 | 317 | 1.8 | % | |||||||||
Retail | 15,705 | 15,380 | 325 | 2.1 | % | |||||||||
Total same-store real estate rental revenue | $ | 68,043 | $ | 64,051 | $ | 3,992 | 6.2 | % |
• | Office: Increase primarily due to higher occupancy ($2.9 million) and lease termination fees ($0.5 million). The occupancy increases were primarily at Silverline Center, 1776 G Street and 1775 Eye Street. |
• | Multifamily: Increase primarily due to higher occupancy ($0.2 million) and rental rates ($0.2 million), partially offset by lower antenna rent ($0.1 million). |
• | Retail: Increase primarily due to higher occupancy ($0.3 million). |
March 31, 2017 | March 31, 2016 | Increase (decrease) | ||||||||||||||||||||||||
Segment | Same-Store | Non-Same-Store | Total | Same-Store | Non-Same-Store | Total | Same-Store | Non-Same-Store | Total | |||||||||||||||||
Office | 93.1 | % | 87.7 | % | 92.4 | % | 86.3 | % | 91.5 | % | 87.8 | % | 6.8 | % | (3.8 | )% | 4.6 | % | ||||||||
Multifamily | 94.2 | % | 94.2 | % | 94.2 | % | 94.5 | % | N/A | 94.5 | % | (0.3 | )% | N/A | (0.3 | )% | ||||||||||
Retail | 93.8 | % | N/A | 93.8 | % | 91.2 | % | N/A | 91.2 | % | 2.6 | % | N/A | 2.6 | % | |||||||||||
Total | 93.7 | % | 92.2 | % | 93.5 | % | 90.5 | % | 91.5 | % | 90.6 | % | 3.2 | % | 0.7 | % | 2.9 | % |
• | Office: The increase in same-store ending occupancy was primarily due to higher ending occupancy at Silverline Center, 1776 G Street, 1775 Eye Street and 1600 Wilson Boulevard, partially offset by lower ending occupancy at Monument II. The decrease in non-same-store ending occupancy was primarily due to lower ending occupancy at the Army Navy Building, which is under redevelopment. |
• | Multifamily: The decrease in same-store ending occupancy was primarily due to lower ending occupancy at The Wellington, partially offset by higher ending occupancy at The Ashby. |
• | Retail: The increase in ending occupancy was primarily due to higher ending occupancy at Chevy Chase Metro Center, Montrose Shopping Center and Bradlee Shopping Center, partially offset by lower occupancy at Gateway Overlook. |
Square Feet (in thousands) | Average Rental Rate (per square foot) | % Rental Rate Increase | Leasing Costs (1) (per square foot) | Free Rent (weighted average months) | Retention Rate | ||||||||||||||
Office | 140 | $ | 54.29 | 26.5 | % | $ | 111.89 | 11.4 | 79.2 | % | |||||||||
Retail | 56 | 36.99 | 12.5 | % | 7.34 | 0.4 | 58.6 | % | |||||||||||
Total | 196 | 49.38 | 23.3 | % | 82.21 | 8.9 | 69.9 | % |
Three Months Ended March 31, | ||||||||||||||
2017 | 2016 | $ Change | % Change | |||||||||||
Office | $ | 12,771 | $ | 12,289 | $ | 482 | 3.9 | % | ||||||
Multifamily | 7,144 | 7,253 | (109 | ) | (1.5 | )% | ||||||||
Retail | 3,863 | 4,406 | (543 | ) | (12.3 | )% | ||||||||
Total same-store real estate expenses | $ | 23,778 | $ | 23,948 | $ | (170 | ) | (0.7 | )% |
• | Office: Increase primarily due to higher administrative ($0.2 million), real estate tax ($0.2 million) and bad debt ($0.1 million) expenses. |
• | Multifamily: Decrease primarily due to lower snow removal expenses ($0.1 million). |
• | Retail: Decrease primarily due to lower snow removal ($0.3 million), utilities ($0.1 million) and bad debt ($0.1 million) expenses. |
Three Months Ended March 31, | ||||||||||||||
Debt Type | 2017 | 2016 | $ Change | % Change | ||||||||||
Notes payable | $ | 9,190 | $ | 8,293 | $ | 897 | 10.8 | % | ||||||
Mortgage notes payable | 1,321 | 4,986 | (3,665 | ) | (73.5 | )% | ||||||||
Lines of credit | 1,110 | 1,204 | (94 | ) | (7.8 | )% | ||||||||
Capitalized interest | (216 | ) | (123 | ) | (93 | ) | 75.6 | % | ||||||
Total | $ | 11,405 | $ | 14,360 | $ | (2,955 | ) | (20.6 | )% |
• | Notes payable: Increase primarily due to executing the $150.0 million term loan in 2016, which has a floating interest rate effectively fixed at 2.9% by interest rate swaps. We borrowed $100.0 million on the term loan in the fourth quarter of 2016, and borrowed the remaining $50.0 million during the 2017 Quarter. |
• | Mortgage notes payable: Decrease primarily due to the repayment of the mortgage notes secured by John Marshall II, 3801 Connecticut Avenue, Bethesda Hill Apartments, Walker House Apartments, 2445 M Street and the Army Navy Building in the 2017 Quarter and in 2016. |
• | Lines of credit: Decrease primarily due to weighted average daily borrowings of $118.6 million during the 2017 Quarter, as compared to $165.7 million during the 2016 Quarter. |
• | Capitalized interest: Increase primarily due to capitalization of interest on spending related to the Trove, the multifamily development adjacent to The Wellington. |
• | Funding dividends and distributions to our shareholders; |
• | $49.6 million to repay our secured note scheduled to mature in 2017; |
• | Approximately $85 - $90 million to invest in our existing portfolio of operating assets, including approximately $35 - $40 million to fund tenant-related capital requirements and leasing commissions; |
• | Approximately $40 - $45 million to invest in our development and redevelopment projects; and |
• | Funding for potential property acquisitions during 2017, offset by proceeds from potential property dispositions. |
March 31, 2017 | December 31, 2016 | ||||||
Mortgage notes payable | $ | 94,139 | $ | 144,485 | |||
Lines of credit | 123,000 | 120,000 | |||||
Notes payable | 900,000 | 850,000 | |||||
1,117,139 | 1,114,485 | ||||||
Premiums and discounts, net | 2,179 | 2,383 | |||||
Debt issuance costs, net | (5,080 | ) | (5,244 | ) | |||
Total | $ | 1,114,238 | $ | 1,111,624 |
Three Months Ended March 31, | Change | |||||||||||||
2017 | 2016 | $ | % | |||||||||||
Common dividends | $ | 45,021 | $ | 41,137 | $ | 3,884 | 9.4 | % | ||||||
Distributions to noncontrolling interests | 36 | 91 | (55 | ) | (60.4 | )% | ||||||||
$ | 45,057 | $ | 41,228 | $ | 3,829 | 9.3 | % |
Three Months Ended March 31, | Change | |||||||||||||
2017 | 2016 | $ | % | |||||||||||
Net cash provided by operating activities | $ | 31,038 | $ | 32,251 | $ | (1,213 | ) | (3.8 | )% | |||||
Net cash used in investing activities | (14,980 | ) | (16,039 | ) | 1,059 | 6.6 | % | |||||||
Net cash used in financing activities | (12,149 | ) | (16,462 | ) | 4,313 | 26.2 | % |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Net income | $ | 6,615 | $ | 2,379 | |||
Adjustments: | |||||||
Depreciation and amortization | 26,069 | 26,038 | |||||
NAREIT FFO | $ | 32,684 | $ | 28,417 |
2017 | 2018 | 2019 | 2020 | 2021 | Thereafter | Total | Fair Value | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
Unsecured fixed rate debt (1) | |||||||||||||||||||||||||||||||
Principal | $ | — | $ | — | $ | — | $ | 250,000 | $ | 150,000 | $ | 500,000 | $ | 900,000 | $ | 925,613 | |||||||||||||||
Interest payments | $ | 32,318 | $ | 36,224 | $ | 36,224 | $ | 36,224 | $ | 20,786 | $ | 42,204 | $ | 203,980 | |||||||||||||||||
Interest rate on debt maturities | — | % | — | % | — | % | 5.1 | % | 2.7 | % | 4.0 | % | 4.1 | % | |||||||||||||||||
Unsecured variable rate debt | |||||||||||||||||||||||||||||||
Principal | $ | — | $ | — | $ | 123,000 | $ | — | $ | — | $ | — | $ | 123,000 | $ | 123,000 | |||||||||||||||
Variable interest rate on debt maturities | — | % | — | % | 2.0 | % | — | % | — | % | — | % | 2.0 | % | |||||||||||||||||
Mortgages | |||||||||||||||||||||||||||||||
Principal amortization (2) (30 year schedule) | $ | 2,225 | $ | 3,135 | $ | 33,909 | $ | 2,659 | $ | 2,829 | $ | 49,382 | $ | 94,139 | $ | 100,702 | |||||||||||||||
Interest payments | $ | 3,943 | $ | 5,089 | $ | 3,627 | $ | 3,046 | $ | 2,876 | $ | 727 | $ | 19,308 | |||||||||||||||||
Weighted average interest rate on principal amortization | 4.9 | % | 4.9 | % | 5.3 | % | 4.7 | % | 4.7 | % | 3.9 | % | 4.5 | % |
Notional Amount | Floating Index Rate | Fair Value as of: | ||||||||||||||||
Fixed Rate | Effective Date | Expiration Date | March 31, 2017 | December 31, 2016 | ||||||||||||||
$ | 75,000 | 1.6190% | One-Month LIBOR | 10/15/2015 | 3/15/2021 | $ | 506 | $ | 224 | |||||||||
75,000 | 1.6260% | One-Month LIBOR | 10/15/2015 | 3/15/2021 | 474 | 193 | ||||||||||||
100,000 | 1.2050% | One-Month LIBOR | 3/31/2017 | 7/21/2023 | 4,894 | 4,775 | ||||||||||||
50,000 | 1.2075% | One-Month LIBOR | 3/31/2017 | 7/21/2023 | 2,472 | 2,419 | ||||||||||||
$ | 300,000 | $ | 8,346 | $ | 7,611 |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased | |||
January 1 - January 31, 2017 | 96 | $ | 31.89 | N/A | N/A | ||
February 1 - February 28, 2017 | 16,426 | 32.36 | N/A | N/A | |||
March 1 - March 31, 2017 | — | — | N/A | N/A | |||
Total | 16,522 | 32.36 | N/A | N/A |
Incorporated by Reference | |||||||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed Herewith | |||||
3.1 | Amended and Restated Bylaws of Washington Real Estate Investment Trust, as adopted on February 8, 2017 | 8-K | 001-06622 | 3.1 | 2/14/2017 | ||||||
12 | Computation of Ratios | X | |||||||||
31.1 | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended (“the Exchange Act”) | X | |||||||||
31.2 | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act | X | |||||||||
31.3 | Certification of the Chief Accounting Officer pursuant to Rule 13a-14(a) of the Exchange Act | X | |||||||||
32 | Certification of the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | |||||||||
101 | The following materials from our Quarterly Report on Form 10–Q for the quarter ended March 31, 2017 formatted in eXtensible Business Reporting Language (“XBRL”): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statement of Equity, (v) the Consolidated Statements of Cash Flows, and (vi) notes to these consolidated financial statements | X |
WASHINGTON REAL ESTATE INVESTMENT TRUST | ||
/s/ Paul T. McDermott | ||
Paul T. McDermott | ||
President and Chief Executive Officer | ||
/s/ Stephen E. Riffee | ||
Stephen E. Riffee | ||
Executive Vice President and Chief Financial Officer (Principal Financial Officer) | ||
/s/ W. Drew Hammond | ||
W. Drew Hammond | ||
Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer) |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Net income | $ | 6,615 | $ | 2,379 | |||
Additions: | |||||||
Fixed charges | |||||||
Interest expense | 11,405 | 14,360 | |||||
Capitalized interest | 216 | 123 | |||||
11,621 | 14,483 | ||||||
Deductions: | |||||||
Capitalized interest | (216 | ) | (123 | ) | |||
Net loss attributable to noncontrolling interests | 19 | 5 | |||||
Adjusted earnings | 18,039 | 16,744 | |||||
Fixed charges (from above) | $ | 11,621 | $ | 14,483 | |||
Ratio of earnings to fixed charges | 1.55 | 1.16 |
1. | I have reviewed this quarterly report on Form 10-Q of Washington Real Estate Investment Trust; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
DATE: | April 28, 2017 | /s/ Paul T. McDermott | |
Paul T. McDermott | |||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Washington Real Estate Investment Trust; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
DATE: | April 28, 2017 | /s/ Stephen E. Riffee | |
Stephen E. Riffee | |||
Chief Financial Officer | |||
(Principal Financial Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Washington Real Estate Investment Trust; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
DATE: | April 28, 2017 | /s/ W. Drew Hammond | |
W. Drew Hammond | |||
Vice President | |||
Chief Accounting Officer | |||
(Principal Accounting Officer) |
(a) | the Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13 (a) or 15(d) of the Securities Exchange Act of 1934; and |
(b) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Washington REIT. |
DATE: | April 28, 2017 | /s/ Paul T. McDermott | |
Paul T. McDermott | |||
Chief Executive Officer | |||
DATE: | April 28, 2017 | /s/ Stephen E. Riffee | |
Stephen E. Riffee | |||
Chief Financial Officer | |||
(Principal Financial Officer) | |||
DATE: | April 28, 2017 | /s/ W. Drew Hammond | |
W. Drew Hammond | |||
Chief Accounting Officer | |||
(Principal Accounting Officer) |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Apr. 26, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | WASHINGTON REAL ESTATE INVESTMENT TRUST | |
Entity Central Index Key | 0000104894 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 76,804,409 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Rents and other receivables, allowance for doubtful accounts | $ 2,430 | $ 2,377 |
Preferred Stock, Par or Stated Value Per Share (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued (in shares) | 0 | 0 |
Preferred Stock, Shares Outstanding (in shares) | 0 | 0 |
Shares of beneficial interest, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Shares of beneficial interest, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Shares of beneficial interest, shares issued (in shares) | 75,702,000 | 74,606,000 |
Shares of beneficial interest, shares outstanding (in shares) | 75,702,000 | 74,606,000 |
Condensed Consolidated Statements of Comprehensive Income Statement - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 6,615 | $ 2,379 |
Unrealized gain (loss) on interest rate hedges | 735 | (3,675) |
Comprehensive income (loss) | 7,350 | (1,296) |
Less: Comprehensive loss attributable to noncontrolling interests | 19 | 5 |
Comprehensive income (loss) attributable to the controlling interests | $ 7,369 | $ (1,291) |
Nature of Business |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | NATURE OF BUSINESS Washington Real Estate Investment Trust (“Washington REIT”), a Maryland real estate investment trust, is a self-administered equity real estate investment trust, successor to a trust organized in 1960. Our business consists of the ownership and operation of income-producing real estate properties in the greater Washington metro region. We own a diversified portfolio of office buildings, multifamily buildings and retail centers. Federal Income Taxes We believe that we qualify as a Real Estate Investment Trust (“REIT”) under Sections 856-860 of the Internal Revenue Code and intend to continue to qualify as such. To maintain our status as a REIT, we are, among other things, required to distribute 90% of our REIT taxable income (which is, generally, our ordinary taxable income, with certain modifications), excluding any net capital gains and any deductions for dividends paid to our shareholders on an annual basis. When selling a property, we generally have the option of (a) reinvesting the sales proceeds of property sold, in a way that allows us to defer recognition of some or all taxable gain realized on the sale, (b) distributing gains to the shareholders with no tax to us or (c) treating net long-term capital gains as having been distributed to our shareholders, paying the tax on the gain deemed distributed and allocating the tax paid as a credit to our shareholders. Generally, and subject to our ongoing qualification as a REIT, no provisions for income taxes are necessary except for taxes on undistributed taxable income and taxes on the income generated by our taxable REIT subsidiaries (“TRSs”). Our TRSs are subject to corporate federal and state income tax on their taxable income at regular statutory rates, or as calculated under the alternative minimum tax, as appropriate. As of March 31, 2017 and December 31, 2016, our TRSs had deferred tax assets of $0.5 million, net of valuation allowances of $2.9 million. As of both March 31, 2017 and December 31, 2016, our TRSs had net deferred tax liabilities of $0.4 million. These deferred tax liabilities are primarily related to temporary differences in the timing of the recognition of revenue, amortization and depreciation. |
Summary of Significant Accounting Policies and Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies and Basis of Presentation | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATIONS Significant Accounting Policies We have prepared our consolidated financial statements using the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2016. New Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805) - Clarifying the Definition of a Business, which adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the new guidance, a set of transferred assets and activities is not a business when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets. If a set of transferred assets and activities does not meet this threshold, then an entity must evaluate whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The new standard is effective for public entities for fiscal years beginning after December 15, 2017 and for interim periods therein. Early adoption of the standard is allowed for transactions that have not been reported in financial statements issued prior to the new standard’s issuance date, and we adopted the standard as of October 1, 2016. Accordingly, the new standard has been applied to the acquisition of Watergate 600, a 309,000 square foot office building in Washington, DC executed on April 4, 2017 (see note 13). Prior to the new guidance, this acquisition would have been accounted for as a business combination, but is accounted for as an asset acquisition under the new guidance. Acquisition costs are capitalized in asset acquisitions but expensed in business combinations. Identifiable assets, liabilities assumed and any noncontrolling interests are recognized and measured as of the acquisition date at fair value in a business combination, but are measured by allocating the cost of the acquisition on a relative fair value basis in an asset acquisition. As of March 31, 2017, we had capitalized $0.6 million of costs related to the acquisition of Watergate 600. In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash, which requires that restricted cash and cash equivalents be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the consolidated statements of cash flows. The new standard is effective for public entities for fiscal years beginning after December 15, 2017 and for interim periods therein, with early adoption permitted. We are currently evaluating the impact the new standard may have on Washington REIT’s consolidated financial statements. In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, which provides specific guidance on how cash receipts and payments should be presented and classified in the statement of cash flows for eight specific issues. The new standard is effective for public entities for fiscal years beginning after December 15, 2017 and for interim periods therein, with early adoption permitted. We are currently evaluating the impact the new standard may have on Washington REIT’s consolidated financial statements. In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments, which requires financial assets measured at an amortized cost basis, including trade receivables, to be presented at the net amount expected to be collected. The new standard is effective for public entities for fiscal years beginning after December 15, 2019 and for interim periods therein with adoption one year earlier permitted. We are currently evaluating the impact the new standard may have on Washington REIT’s consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which amends existing accounting standards for lease accounting, including by requiring lessees to recognize most leases on the balance sheet and making certain changes to lessor accounting. The new standard is effective for public entities for fiscal years beginning after December 15, 2018 and for interim periods therein with early adoption permitted. Upon adoption, for leases in which we are the lessor, the lease contract will be separated into lease and non-lease components in accordance with the provisions outlined within ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). The lease component of the contract will be recognized on a straight-line basis in accordance with ASU 2016-02, while the non-lease component will be recognized under the provisions of ASU 2014-09. For lease contracts with a duration of more than one year in which we are the lessee, the present value of future lease payments will be recognized on our balance sheet as a right-of-use asset and a corresponding lease liability. Also, only direct leasing costs may be capitalized under the new standard, while current accounting standards allow for the capitalization of indirect leasing costs. We are currently evaluating the impact ASU 2016-02 may have on Washington REIT’s consolidated financial statements. In June 2014, the FASB issued ASU 2014-09, which creates a single source of revenue guidance. The new standard provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goods or services to their customers (unless the contracts are in the scope of other U.S. generally accepted accounting principles (“GAAP”) requirements, such as the leasing literature). The guidance also provides a model for the measurement and recognition of gains and losses on the sale of certain nonfinancial assets, such as property and equipment, including real estate. The new standard is effective for public entities for fiscal years beginning after December 15, 2017 and for interim periods therein. Early adoption is permitted for public entities beginning after December 15, 2016. We intend to adopt the new standard using the modified retrospective method. Upon adoption of ASU 2016-02, the majority of our revenue will be subject to the allocation provisions outlined within the revenue standard. We are currently evaluating the specific implementation requirements for allocating the consideration within our contracts in accordance with ASU 2014-09. We do not expect the new standard to have a material impact on the measurement and recognition of gains and losses on the sale of properties. Principles of Consolidation and Basis of Presentation The accompanying unaudited consolidated financial statements include the consolidated accounts of Washington REIT, our majority-owned subsidiaries and entities in which Washington REIT has a controlling interest, including where Washington REIT has been determined to be a primary beneficiary of a variable interest entity (“VIE”). See note 3 for additional information on the property for which there is a noncontrolling interest. All intercompany balances and transactions have been eliminated in consolidation. We have prepared the accompanying unaudited financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information presented not misleading. In addition, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for the periods presented have been included. These unaudited financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2016. Within these notes to the financial statements, we refer to the three months ended March 31, 2017 and March 31, 2016 as the “2017 Quarter” and the “2016 Quarter,” respectively. Use of Estimates in the Financial Statements The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Real Estate |
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Real Estate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate | REAL ESTATE Development/Redevelopment We have properties under development/redevelopment and held for current or future development as of March 31, 2017. In the office segment, we have a redevelopment project at the Army Navy Building, an office property in Washington, DC, to upgrade its common areas and add significant amenities in order to make the property more competitive within its sub-market. As of March 31, 2017, we had invested $3.4 million in the redevelopment and have placed $1.0 million of the project into service. We expect to place the remainder of the project into service during the second quarter of 2017. In the multifamily segment, we have the Trove, a multifamily development adjacent to The Wellington, and own land held for future multifamily development adjacent to Riverside Apartments. As of March 31, 2017, we had invested $20.7 million and $17.1 million, including the costs of acquired land, in the Trove and the development adjacent to Riverside Apartments, respectively. In the retail segment, we currently have a redevelopment project to add rentable space at Spring Valley Village. As of March 31, 2017, we had invested $1.1 million in the redevelopment. Variable Interest Entity In June 2011, we executed a joint venture operating agreement with a real estate development company to develop The Maxwell, a mid-rise multifamily property at 650 North Glebe Road in Arlington, Virginia. Major construction activities at The Maxwell ended during December 2014, and the building became available for occupancy during the first quarter of 2015. Washington REIT is the 90% owner of the joint venture. The real estate development company owns 10% of the joint venture and was responsible for the development and construction of the property. We have determined that The Maxwell joint venture is a VIE primarily based on the fact that the equity investment at risk is not sufficient to permit the entity to finance its activities without additional financial support. We also determined that Washington REIT was the primary beneficiary of the VIE due to the fact that Washington REIT was determined to have a controlling financial interest in the entity. In January 2016, Washington REIT exercised its right to purchase at par The Maxwell’s construction loan from the original third-party lender. Upon the purchase, the construction loan became an intercompany loan payable from the consolidated VIE to Washington REIT that is eliminated in consolidation. As of March 31, 2017 and December 31, 2016, The Maxwell’s assets were as follows (in thousands):
As of March 31, 2017 and December 31, 2016, The Maxwell’s liabilities were as follows (in thousands):
(1) The mortgage notes payable balances as of March 31, 2017 and December 31, 2016 are eliminated in consolidation due to the purchase of the loan by Washington REIT in January 2016. Properties Sold and Held for Sale We intend to hold our properties for investment with a view to long-term appreciation, to engage in the business of acquiring, developing and owning our properties, and to make occasional sales of the properties that no longer meet our long-term strategy or return objectives and where market conditions for sale are favorable. The proceeds from the sales may be reinvested into other properties, used to fund development operations or to support other corporate needs, or distributed to our shareholders. Depreciation on these properties is discontinued when classified as held for sale, but operating revenues, other operating expenses and interest continue to be recognized until the date of sale. We did not sell or classify as held for sale any properties during the 2017 Quarter. We sold the following properties in 2016:
While the sale of the Maryland Office Portfolio, in the aggregate, constituted an individually significant disposition, the Maryland Office Portfolio does not qualify for presentation and disclosure as a discontinued operation as it does not represent a strategic shift in our operations. Real estate rental revenue and net income for the Maryland Office Portfolio for the three months ended March 31, 2017 and 2016 are as follows:
We do not have significant continuing involvement in the operations of the disposed properties. |
Mortgage Notes Payable |
3 Months Ended |
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Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Mortgage Note Payable | MORTGAGE NOTES PAYABLE In February 2017, we prepaid without penalty the remaining $49.6 million of the mortgage note secured by the Army Navy Building. |
Unsecured Lines of Credit Payable |
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Unsecured Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Unsecured Lines of Credit Payable | UNSECURED LINES OF CREDIT PAYABLE We have a $600.0 million unsecured revolving credit agreement (“Revolving Credit Facility”) that matures in June 2019, unless extended pursuant to one or both of the two six months extension options. The Revolving Credit Facility has an accordion feature, which we utilized a portion of in September 2015, as described below, that allows us to increase the facility to $1.0 billion, subject to the extent the lenders agree to provide additional revolving loan commitments or term loans. In September 2015, we entered into a $150.0 million unsecured term loan (“2015 Term Loan”) by executing a portion of the accordion feature under the Revolving Credit Facility. The 2015 Term Loan has a 5.5 year term and currently has an interest rate of one month LIBOR plus 110 basis points, based on Washington REIT’s current unsecured debt ratings. We entered into two interest rate swaps to effectively fix the interest rate at 2.7% (see note 7). The Revolving Credit Facility bears interest at a rate of either one month LIBOR plus a margin ranging from 0.875% to 1.55% or the base rate plus a margin ranging from 0.0% to 0.55% (in each case depending upon Washington REIT’s credit rating). The base rate is the highest of the administrative agent’s prime rate, the federal funds rate plus 0.50% and the LIBOR market index rate plus 1.0%. In addition, the Revolving Credit Facility requires the payment of a facility fee ranging from 0.125% to 0.30% (depending on Washington REIT’s credit rating) on the $600.0 million committed capacity, without regard to usage. As of March 31, 2017, the interest rate on the facility is one month LIBOR plus 1.00% and the facility fee is 0.20%. The amount of the Revolving Credit Facility’s unsecured line of credit unused and available at March 31, 2017 is as follows (in thousands):
We executed borrowings and repayments on the Revolving Credit Facility during the 2017 Quarter as follows (in thousands):
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Note Payable (Notes) |
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Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTES PAYABLE During 2016, we entered into a seven year, $150.0 million unsecured term loan (“2016 Term Loan”) maturing on July 21, 2023 with a deferred draw period of up to six months commencing on July 22, 2016. The 2016 Term Loan bears interest at a rate of either LIBOR plus a margin ranging from 1.50% to 2.45% or the base rate plus a margin ranging from 0.5% to 1.45% (in each case depending upon Washington REIT’s credit rating). The base rate is the highest of the administrative agent’s prime rate, the federal funds rate plus 0.50% and one-month LIBOR plus 1.0%. The 2016 Term Loan currently has an interest rate of one month LIBOR plus 165 basis points, based on Washington REIT’s current unsecured debt ratings. We borrowed $100.0 million on the term loan in the fourth quarter of 2016, and borrowed the remaining $50.0 million during the 2017 Quarter. We have also previously entered into forward interest rate swaps commencing on March 31, 2017 to effectively fix the interest rate on the 2016 Term Loan at 2.9% (see note 7). |
Derivatives Instruments |
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Derivative Instruments | DERIVATIVE INSTRUMENTS On September 15, 2015, we entered into two interest rate swap arrangements with a total notional amount of $150.0 million to swap the floating interest rate under the 2015 Term Loan (see note 5) to an all-in fixed interest rate of 2.7% starting on October 15, 2015 and extending until the maturity of the 2015 Term Loan on March 15, 2021. On July 22, 2016, we entered into two forward interest rate swap arrangements with a total notional amount of $150.0 million to swap the floating interest rate under the 2016 Term Loan (see note 6) to an all-in fixed interest rate of 2.9% starting on March 31, 2017 and extending until the maturity of the 2016 Term Loan on July 21, 2023. The interest rate swaps qualify as cash flow hedges and are recorded at fair value in accordance with GAAP, based on discounted cash flow methodologies and observable inputs. We record the effective portion of changes in fair value of the cash flow hedges in other comprehensive income (loss). The resulting unrealized gain (loss) on the effective portions of the cash flow hedges was the only activity in other comprehensive income (loss) during the periods presented in our consolidated financial statements. We assess the effectiveness of our cash flow hedges both at inception and on an ongoing basis. The cash flow hedges were effective for the 2017 Quarter and 2016 Quarter, and therefore hedge ineffectiveness did not impact earnings during the 2017 Quarter and 2016 Quarter. The fair values of the interest rate swaps as of March 31, 2017 and December 31, 2016, are as follows (in thousands):
We record interest rate swaps on our consolidated balance sheets with prepaid expenses and other assets when in a net asset position and with accounts payable and other liabilities when in a net liability position. The interest rate swaps have been effective since inception. The net gains or losses on the effective swaps are recognized in other comprehensive income (loss), as follows (in thousands):
Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next twelve months, we estimate that an additional $0.5 million will be reclassified as an increase to interest expense. We have agreements with each of our derivative counterparties that contain a provision whereby we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness. As of March 31, 2017, the fair value of derivatives is in a net asset position of $8.3 million, which includes accrued interest but excludes any adjustment for nonperformance risk. As of March 31, 2017, we have not posted any collateral related to these agreements. Derivative instruments expose us to credit risk in the event of non-performance by the counterparty under the terms of the interest rate hedge agreement. We believe that we minimize our credit risk on these transactions by dealing with major, creditworthy financial institutions. We monitor the credit ratings of counterparties and our exposure to any single entity, thus minimizing our credit risk concentration. |
Fair Value Disclosures |
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Fair Value Disclosures | FAIR VALUE DISCLOSURES Assets and Liabilities Measured at Fair Value For assets and liabilities measured at fair value on a recurring basis, quantitative disclosures about the fair value measurements are required to be disclosed separately for each major category of assets and liabilities, as follows: Level 1: Quoted prices in active markets for identical assets Level 2: Significant other observable inputs Level 3: Significant unobservable inputs The only assets or liabilities we had at March 31, 2017 and December 31, 2016 that are recorded at fair value on a recurring basis are the assets held in the Supplemental Executive Retirement Plan (“SERP”), which primarily consist of investments in mutual funds, and the interest rate swaps (see note 7). We base the valuations related to the SERP on assumptions derived from significant other observable inputs and accordingly these valuations fall into Level 2 in the fair value hierarchy. The valuation of the interest rate swaps is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each interest rate swap. This analysis reflects the contractual terms of the interest rate swaps, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. To comply with the provisions of ASC 820, we incorporate credit valuation adjustments in the fair value measurements to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk. These credit valuation adjustments were concluded to not be significant inputs for the fair value calculations for the periods presented. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as the posting of collateral, thresholds, mutual puts and guarantees. The valuation of interest rate swaps fall into Level 2 in the fair value hierarchy. The fair values of these assets and liabilities at March 31, 2017 and December 31, 2016 were as follows (in thousands):
Financial Assets and Liabilities Not Measured at Fair Value The following disclosures of estimated fair value were determined by management using available market information and established valuation methodologies, including discounted cash flow. Many of these estimates involve significant judgment. The estimated fair value disclosed may not necessarily be indicative of the amounts we could realize on disposition of the financial instruments. The use of different market assumptions or estimation methodologies could have an effect on the estimated fair value amounts. In addition, fair value estimates are made at a point in time and thus, estimates of fair value subsequent to March 31, 2017 may differ significantly from the amounts presented. Following is a summary of significant methodologies used in estimating fair values and a schedule of fair values at March 31, 2017 and December 31, 2016. Cash and Cash Equivalents and Restricted Cash Cash and cash equivalents and restricted cash include cash and commercial paper with original maturities of less than 90 days, which are valued at the carrying value, which approximates fair value due to the short maturity of these instruments (Level 1 inputs). Notes Receivable We acquired a note receivable (“2445 M Street note”) in 2008 with the purchase of 2445 M Street. We estimate the fair value of the 2445 M Street note based on a discounted cash flow methodology using market discount rates (Level 3 inputs). Debt Mortgage notes payable consist of instruments in which certain of our real estate assets are used for collateral. We estimate the fair value of the mortgage notes payable by discounting the contractual cash flows at a rate equal to the relevant treasury rates (with respect to the timing of each cash flow) plus credit spreads estimated through independent comparisons to real estate assets or loans with similar characteristics. Lines of credit payable consist of our bank facility which we use for various purposes including working capital, acquisition funding and capital improvements. The lines of credit advances and term loans with floating interest rates are priced at a specified rate plus a spread. We estimate the market value based on a comparison of the spreads of the advances to market given the adjustable base rate. We estimate the fair value of the notes payable by discounting the contractual cash flows at a rate equal to the relevant treasury rates (with respect to the timing of each cash flow) plus credit spreads derived using the relevant securities’ market prices. We classify these fair value measurements as Level 3 as we use significant unobservable inputs and management judgment due to the absence of quoted market prices. As of March 31, 2017 and December 31, 2016, the carrying values and estimated fair values of our financial instruments were as follows (in thousands):
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Stock Based Compensation |
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Mar. 31, 2017 | |
Share-based Compensation [Abstract] | |
Stock Based Compensation | STOCK BASED COMPENSATION Washington REIT maintains short-term (“STIP”) and long-term (“LTIP”) incentive plans that allow for stock-based awards to officers and non-officer employees. Stock based awards are provided to officers and non-officer employees, as well as trustees, under the Washington Real Estate Investment Trust 2016 Omnibus Incentive Plan which allows for awards in the form of restricted shares, restricted share units, options and other awards up to an aggregate of 2,400,000 shares over the ten-year period in which the plan will be in effect. Restricted share units are converted into shares of our stock upon full vesting through the issuance of new shares. Total Compensation Expense Total compensation expense recognized in the consolidated financial statements for all outstanding share based awards was $1.1 million and $1.5 million for the 2017 Quarter and 2016 Quarter, respectively. Restricted Share Awards The total fair values of restricted share awards vested was $1.6 million and $2.0 million for the 2017 Quarter and 2016 Quarter, respectively. The total unvested restricted share awards at March 31, 2017 was 258,759 shares, which had a weighted average grant date fair value of $30.13 per share. As of March 31, 2017, the total compensation cost related to unvested restricted share awards was $5.8 million, which we expect to recognize over a weighted average period of 28 months. |
Earnings per Common Share |
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Earnings per Common Share | EARNINGS PER COMMON SHARE We determine “Basic earnings per share” using the two-class method as our unvested restricted share awards and units have non-forfeitable rights to dividends, and are therefore considered participating securities. We compute basic earnings per share by dividing net income attributable to the controlling interest less the allocation of undistributed earnings to unvested restricted share awards and units by the weighted-average number of common shares outstanding for the period. We also determine “Diluted earnings per share” as the more dilutive of the two-class method or the treasury stock method with respect to the unvested restricted share awards. We further evaluate any other potentially dilutive securities at the end of the period and adjust the basic earnings per share calculation for the impact of those securities that are dilutive. Our diluted earnings per share calculation includes the dilutive impact of our share based awards with performance conditions prior to the grant date and awards with market conditions under the contingently issuable method. The computations of basic and diluted earnings per share for the three months ended March 31, 2017 and 2016 were as follows (in thousands, except per share data):
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Segment Information |
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Segment Reporting Information, Revenue for Reportable Segment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | SEGMENT INFORMATION We have three reportable segments: office, multifamily and retail. Office properties provide office space for various types of businesses and professions. Multifamily properties provide rental housing for individuals and families throughout the greater Washington metro region. Retail properties are typically grocery store-anchored neighborhood centers that include other small shop tenants or regional power centers with several junior box tenants. We evaluate performance based upon net operating income from the combined properties in each segment. Our reportable operating segments are consolidations of similar properties. GAAP requires that segment disclosures present the measure(s) used by the chief operating decision maker for purposes of assessing segments’ performance. Net operating income is a key measurement of our segment profit and loss. Net operating income is defined as segment real estate rental revenue less segment real estate expenses. The following tables present revenues, net operating income, capital expenditures and total assets for the three months ended March 31, 2017 and 2016 from these segments, and reconcile net operating income of reportable segments to net income attributable to the controlling interests as reported (in thousands):
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Shareholders' Equity (Notes) |
3 Months Ended |
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Mar. 31, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | SHAREHOLDERS' EQUITY On June 23, 2015, we entered into four separate equity distribution agreements (collectively, the “Equity Distribution Agreements”) with each of Wells Fargo Securities, LLC, BNY Mellon Capital Markets, LLC, Citigroup Global Markets Inc. and RBC Capital Markets, LLC relating to the issuance of up to $200.0 million of our common shares from time to time. Issuances of our common shares are made at market prices prevailing at the time of issuance. We may use net proceeds from the issuance of common shares under this program for general corporate purposes, including, without limitation, working capital, the acquisition, renovation, expansion, improvement, development or redevelopment of income producing properties or the repayment of debt. During the 2017 Quarter, we issued 1.0 million common shares under the Equity Distribution Agreements at a weighted average price of $31.31 per share, raising $30.0 million in net proceeds. Subsequent to the 2017 Quarter, we issued an additional 1.1 million common shares under the Equity Distribution Agreements at a weighted average price of $31.49 per share, raising $34.1 million in net proceeds. We have a dividend reinvestment program, whereby shareholders may use their dividends and optional cash payments to purchase common shares. The common shares sold under this program may either be common shares issued by us or common shares purchased in the open market. During the 2017 Quarter, we issued 34,770 common shares under this program at a weighted average price of $32.07 per share, raising $1.1 million in net proceeds. |
Subsequent Events Subsequent Events (Notes) |
3 Months Ended |
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Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS On April 4, 2017, we closed the purchase of Watergate 600, a 309,000 square foot office building in Washington, DC, for approximately $135.0 million in a transaction that was structured to include the issuance of operating units for $0.4 million of the purchase price. We primarily funded the purchase with borrowings on our Revolving Credit Facility |
Summary of Significant Accounting Policies and Basis of Presentation (Policy) |
3 Months Ended |
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Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Fiscal Period | Significant Accounting Policies We have prepared our consolidated financial statements using the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2016 |
New Accounting Pronouncements | New Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805) - Clarifying the Definition of a Business, which adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the new guidance, a set of transferred assets and activities is not a business when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets. If a set of transferred assets and activities does not meet this threshold, then an entity must evaluate whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The new standard is effective for public entities for fiscal years beginning after December 15, 2017 and for interim periods therein. Early adoption of the standard is allowed for transactions that have not been reported in financial statements issued prior to the new standard’s issuance date, and we adopted the standard as of October 1, 2016. Accordingly, the new standard has been applied to the acquisition of Watergate 600, a 309,000 square foot office building in Washington, DC executed on April 4, 2017 (see note 13). Prior to the new guidance, this acquisition would have been accounted for as a business combination, but is accounted for as an asset acquisition under the new guidance. Acquisition costs are capitalized in asset acquisitions but expensed in business combinations. Identifiable assets, liabilities assumed and any noncontrolling interests are recognized and measured as of the acquisition date at fair value in a business combination, but are measured by allocating the cost of the acquisition on a relative fair value basis in an asset acquisition. As of March 31, 2017, we had capitalized $0.6 million of costs related to the acquisition of Watergate 600. In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash, which requires that restricted cash and cash equivalents be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the consolidated statements of cash flows. The new standard is effective for public entities for fiscal years beginning after December 15, 2017 and for interim periods therein, with early adoption permitted. We are currently evaluating the impact the new standard may have on Washington REIT’s consolidated financial statements. In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, which provides specific guidance on how cash receipts and payments should be presented and classified in the statement of cash flows for eight specific issues. The new standard is effective for public entities for fiscal years beginning after December 15, 2017 and for interim periods therein, with early adoption permitted. We are currently evaluating the impact the new standard may have on Washington REIT’s consolidated financial statements. In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments, which requires financial assets measured at an amortized cost basis, including trade receivables, to be presented at the net amount expected to be collected. The new standard is effective for public entities for fiscal years beginning after December 15, 2019 and for interim periods therein with adoption one year earlier permitted. We are currently evaluating the impact the new standard may have on Washington REIT’s consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which amends existing accounting standards for lease accounting, including by requiring lessees to recognize most leases on the balance sheet and making certain changes to lessor accounting. The new standard is effective for public entities for fiscal years beginning after December 15, 2018 and for interim periods therein with early adoption permitted. Upon adoption, for leases in which we are the lessor, the lease contract will be separated into lease and non-lease components in accordance with the provisions outlined within ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). The lease component of the contract will be recognized on a straight-line basis in accordance with ASU 2016-02, while the non-lease component will be recognized under the provisions of ASU 2014-09. For lease contracts with a duration of more than one year in which we are the lessee, the present value of future lease payments will be recognized on our balance sheet as a right-of-use asset and a corresponding lease liability. Also, only direct leasing costs may be capitalized under the new standard, while current accounting standards allow for the capitalization of indirect leasing costs. We are currently evaluating the impact ASU 2016-02 may have on Washington REIT’s consolidated financial statements. In June 2014, the FASB issued ASU 2014-09, which creates a single source of revenue guidance. The new standard provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goods or services to their customers (unless the contracts are in the scope of other U.S. generally accepted accounting principles (“GAAP”) requirements, such as the leasing literature). The guidance also provides a model for the measurement and recognition of gains and losses on the sale of certain nonfinancial assets, such as property and equipment, including real estate. The new standard is effective for public entities for fiscal years beginning after December 15, 2017 and for interim periods therein. Early adoption is permitted for public entities beginning after December 15, 2016. We intend to adopt the new standard using the modified retrospective method. Upon adoption of ASU 2016-02, the majority of our revenue will be subject to the allocation provisions outlined within the revenue standard. We are currently evaluating the specific implementation requirements for allocating the consideration within our contracts in accordance with ASU 2014-09. We do not expect the new standard to have a material impact on the measurement and recognition of gains and losses on the sale of properties. |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The accompanying unaudited consolidated financial statements include the consolidated accounts of Washington REIT, our majority-owned subsidiaries and entities in which Washington REIT has a controlling interest, including where Washington REIT has been determined to be a primary beneficiary of a variable interest entity (“VIE”). See note 3 for additional information on the property for which there is a noncontrolling interest. All intercompany balances and transactions have been eliminated in consolidation. |
Basis of Accounting | We have prepared the accompanying unaudited financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information presented not misleading. In addition, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for the periods presented have been included. These unaudited financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2016. Within these notes to the financial statements, we refer to the three months ended March 31, 2017 and March 31, 2016 as the “2017 Quarter” and the “2016 Quarter,” respectively. |
Use of Estimates in the Financial Statements | Use of Estimates in the Financial Statements The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Real Estate (Tables) |
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Schedule of assets in joint venture | As of March 31, 2017 and December 31, 2016, The Maxwell’s assets were as follows (in thousands):
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Schedule of Accounts Payable and Accrued Liabilities of Joint Ventures | As of March 31, 2017 and December 31, 2016, The Maxwell’s liabilities were as follows (in thousands):
(1) The mortgage notes payable balances as of March 31, 2017 and December 31, 2016 are eliminated in consolidation due to the purchase of the loan by Washington REIT in January 2016. |
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Schedule of Dispositions | We did not sell or classify as held for sale any properties during the 2017 Quarter. We sold the following properties in 2016:
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Disposal Groups, Including Discontinued Operations | Real estate rental revenue and net income for the Maryland Office Portfolio for the three months ended March 31, 2017 and 2016 are as follows:
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Unsecured Lines of Credit Payable (Tables) |
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Unsecured Debt [Abstract] | |||||||||||||||||||||||||||||
Unsecured Lines Of Credit Unused And Available [Table Text Block] | The amount of the Revolving Credit Facility’s unsecured line of credit unused and available at March 31, 2017 is as follows (in thousands):
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Lines Of Credit Repayments And Borrowings [Table Text Block] | We executed borrowings and repayments on the Revolving Credit Facility during the 2017 Quarter as follows (in thousands):
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Derivatives Instruments (Tables) |
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Schedule of Derivative Assets at Fair Value | The fair values of the interest rate swaps as of March 31, 2017 and December 31, 2016, are as follows (in thousands):
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Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | The interest rate swaps have been effective since inception. The net gains or losses on the effective swaps are recognized in other comprehensive income (loss), as follows (in thousands):
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Fair Value Disclosures (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value | The fair values of these assets and liabilities at March 31, 2017 and December 31, 2016 were as follows (in thousands):
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Financial Assets and Liabilities Not Measured at Fair Value | As of March 31, 2017 and December 31, 2016, the carrying values and estimated fair values of our financial instruments were as follows (in thousands):
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Earnings per Common Share (Tables) |
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Computation of Basic and Diluted Earnings per Share | The computations of basic and diluted earnings per share for the three months ended March 31, 2017 and 2016 were as follows (in thousands, except per share data):
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Segment Information (Tables) |
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Segment Reporting Information, Revenue for Reportable Segment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Net Operating Income of Reportable Segments | The following tables present revenues, net operating income, capital expenditures and total assets for the three months ended March 31, 2017 and 2016 from these segments, and reconcile net operating income of reportable segments to net income attributable to the controlling interests as reported (in thousands):
|
Nature of Business - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Percentage of distribution of ordinary taxable income | 90.00% | |
Taxable Reit Subsidiary [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Deferred Tax Assets, Net | $ 0.5 | $ 0.5 |
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | 2.9 | 2.9 |
Deferred Tax Liabilities, Net | $ 0.4 | $ 0.4 |
Summary of Significant Accounting Policies and Basis of Presentation Accounting Policies (Details) $ in Millions |
Mar. 31, 2017
USD ($)
|
---|---|
Business Combination, Description [Abstract] | |
Business acquisition, transaction costs | $ 0.6 |
Real Estate - Development/Redevelopment (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Real Estate Properties [Line Items] | ||
Properties under development or held for future development | $ 42,914 | $ 40,232 |
Real Estate Investment Property, at Cost | 2,697,122 | $ 2,685,403 |
Army Navy Building [Domain] | ||
Real Estate Properties [Line Items] | ||
Properties under development or held for future development | 3,400 | |
Real Estate Investment Property, at Cost | 1,000 | |
The Wellington land parcel [Member] | ||
Real Estate Properties [Line Items] | ||
Properties under development or held for future development | 20,700 | |
Riverside Developments [Member] | ||
Real Estate Properties [Line Items] | ||
Properties under development or held for future development | 17,100 | |
Spring Vally Retail Center [Member] | ||
Real Estate Properties [Line Items] | ||
Properties under development or held for future development | $ 1,100 |
Real Estate - Held for Sale and Sold Properties (Details) $ in Thousands |
12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Dec. 31, 2016
USD ($)
ft²
| ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Rentable Square Feet | ft² | 1,183,000 | |||||||
Disposal Group, Including Discontinued Operation, Consideration | $ 252,100 | |||||||
Gain on sale of real estate | 101,704 | |||||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | Dulles Station II [Member] | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Disposal Group, Including Discontinued Operation, Consideration | 12,100 | [1] | ||||||
Gain on sale of real estate | 527 | [1] | ||||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | Maryland Office Portfolio Transaction I [Member] | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Disposal Group, Including Discontinued Operation, Consideration | 111,500 | [2] | ||||||
Gain on sale of real estate | 23,585 | [2] | ||||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | Maryland Office Portfolio Transaction II [Member] | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Disposal Group, Including Discontinued Operation, Consideration | 128,500 | [3] | ||||||
Gain on sale of real estate | $ 77,592 | [3] | ||||||
Office [Member] | Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | Maryland Office Portfolio Transaction I [Member] | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Rentable Square Feet | ft² | 692,000 | [2] | ||||||
Office [Member] | Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | Maryland Office Portfolio Transaction II [Member] | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Rentable Square Feet | ft² | 491,000 | [3] | ||||||
|
Real Estate - Disposal Group revenue and net income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Discontinued Operations and Disposal Groups [Abstract] | ||
Real estate rental revenue | $ 0 | $ 8,430 |
Net income | $ 0 | $ 2,726 |
Mortgage Notes Payable (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
Feb. 28, 2017 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Debt Instrument [Line Items] | |||
Repayments of Notes Payable | $ 50,346 | $ 84,219 | |
The Army Navy Club Building Member | |||
Debt Instrument [Line Items] | |||
Repayments of Notes Payable | $ 49,600 |
Unsecured Lines of Credit Payable - Narrative (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017
USD ($)
|
Sep. 30, 2015
USD ($)
|
|
Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Commitment Fee Percentage | 0.20% | |
Line of Credit Facility, Interest Rate During Period | 1.00% | |
Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Committed capacity | $ 1,000,000,000.0 | |
Revolving Credit Facility | 2015 Term Loan [Member] | ||
Line of Credit Facility [Line Items] | ||
Long-term Line of Credit, Noncurrent | $ 150,000,000 | |
Debt Instrument, Term | 5 years 6 months | |
Revolving Credit Facility | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Committed capacity | $ 600,000,000 | |
Debt Instrument, Maturity Date | Jun. 22, 2019 | |
line of credit facility, number of extensions allowed | 2 | |
Line of Credit Facility, extension period | 6 months | |
Minimum [Member] | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Commitment Fee Percentage | 0.125% | |
Maximum [Member] | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Commitment Fee Percentage | 0.30% | |
London Interbank Offered Rate (LIBOR) [Member] | 2015 Term Loan [Member] | ||
Line of Credit Facility [Line Items] | ||
Debt Instrument, Description of Variable Rate Basis | P1M | |
London Interbank Offered Rate (LIBOR) [Member] | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 1.00% | |
London Interbank Offered Rate (LIBOR) [Member] | Revolving Credit Facility | 2015 Term Loan [Member] | ||
Line of Credit Facility [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 1.10% | |
London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 0.875% | |
London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 1.55% | |
Base Rate [Member] | Minimum [Member] | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 0.00% | |
Base Rate [Member] | Maximum [Member] | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 0.55% | |
Federal Funds Effective Swap Rate [Member] | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | |
Interest Rate Swap [Member] | 2015 Term Loan [Member] | ||
Line of Credit Facility [Line Items] | ||
Derivative, Number of Instruments Held | 2 |
Unsecured Lines of Credit Payable - Schedule of Credit Unused and Available (Details) - USD ($) |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Line of Credit Facility [Line Items] | ||
Borrowings outstanding | $ (123,000,000) | $ (120,000,000) |
Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Committed capacity | 1,000,000,000.0 | |
Line of Credit | Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Committed capacity | 600,000,000 | |
Borrowings outstanding | (123,000,000) | $ (120,000,000) |
Unused and available | $ 477,000,000 |
Unsecured Lines of Credit Payable - Line of Credit Facility, Increase (decrease), net (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Line of Credit Facility, Increase (Decrease) During the Period [Roll Forward] | |
Balance at December 31, 2016 | $ 120,000 |
Balance at March 31, 2017 | 123,000 |
Revolving Credit Facility | Line of Credit | |
Line of Credit Facility, Increase (Decrease) During the Period [Roll Forward] | |
Balance at December 31, 2016 | 120,000 |
Borrowings | 90,000 |
Repayments | (87,000) |
Balance at March 31, 2017 | $ 123,000 |
Note Payable (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Jul. 22, 2016 |
Mar. 31, 2017 |
Dec. 31, 2016 |
|
2016 Term Loan [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 1.00% | ||
2016 Term Loan [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 1.50% | ||
2016 Term Loan [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 2.45% | ||
2016 Term Loan [Member] | Base Rate [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | ||
2016 Term Loan [Member] | Base Rate [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 1.45% | ||
2016 Term Loan [Member] | Federal Funds Effective Swap Rate [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | ||
Unsecured Debt [Member] | 2016 Term Loan [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Term | 7 years | ||
Debt Instrument, Face Amount | $ 150,000,000 | ||
Debt Instrument, Maturity Date | Jul. 21, 2023 | ||
Debt Instrument, Deferred Draw Period | 6 months | ||
Unsecured Long-term Debt, Noncurrent | $ 100,000,000 | ||
Proceeds from Issuance of Unsecured Debt | $ 50,000,000.0 | ||
Derivative, Fixed Interest Rate | 2.90% | ||
Unsecured Debt [Member] | 2016 Term Loan [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 1.65% | ||
2015 Term Loan [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Description of Variable Rate Basis | P1M |
Derivatives Instruments - Narrative (Details) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017
USD ($)
|
Jul. 22, 2016
USD ($)
|
Sep. 15, 2015
USD ($)
|
|
Derivative Instruments, Gain (Loss) [Line Items] | |||
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months | $ 500,000 | ||
Interest Rate Swap [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative, Notional Amount | 300,000,000 | ||
Swap [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Interest rate swaps | $ 8,300,000 | ||
2015 Term Loan [Member] | Interest Rate Swap [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative, Number of Instruments Held | 2 | ||
Derivative, Notional Amount | $ 150,000,000 | ||
Derivative, Fixed Interest Rate | 2.70% | ||
2016 Term Loan [Member] | Interest Rate Swap [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative, Number of Instruments Held | 2 | ||
Derivative, Notional Amount | $ 150,000,000 | ||
Derivative, Fixed Interest Rate | 2.90% |
Derivatives Instruments - Schedule of Derivative Liability at Fair Value (Details) - Interest Rate Swap [Member] - USD ($) |
Mar. 31, 2017 |
Dec. 31, 2016 |
Jul. 22, 2016 |
Sep. 15, 2015 |
---|---|---|---|---|
Derivatives, Fair Value [Line Items] | ||||
Derivative, Notional Amount | $ 300,000,000 | |||
Interest rate swaps | 8,346,000 | $ 7,611,000 | ||
Prepaid expenses and other assets [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
Interest rate swaps | 8,346,000 | 7,611,000 | ||
2015 Term Loan [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative, Notional Amount | $ 150,000,000 | |||
2015 Term Loan [Member] | Prepaid expenses and other assets [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
Interest rate swaps | 980,000 | 417,000 | ||
2016 Term Loan [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative, Notional Amount | $ 150,000,000 | |||
2016 Term Loan [Member] | Prepaid expenses and other assets [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
Interest rate swaps | $ 7,366,000 | $ 7,194,000 |
Derivatives Instruments - Schedule of Gains (Losses) on Derivatives (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Interest Rate Swap [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Unrealized gain (loss) on interest rate hedges | $ 735 | $ (3,675) |
Fair Value Disclosures - Financial Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Supplemental Employee Retirement Plan [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
SERP | $ 1,526 | $ 1,407 |
Supplemental Employee Retirement Plan [Member] | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
SERP | 0 | 0 |
Supplemental Employee Retirement Plan [Member] | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
SERP | 1,526 | 1,407 |
Supplemental Employee Retirement Plan [Member] | Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
SERP | 0 | 0 |
Interest Rate Swap [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate swaps | 8,346 | 7,611 |
Interest Rate Swap [Member] | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate swaps | 0 | 0 |
Interest Rate Swap [Member] | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate swaps | 8,346 | 7,611 |
Interest Rate Swap [Member] | Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate swaps | $ 0 | $ 0 |
Fair Value Disclosures - Financial Assets and Liabilities Not Measured at Fair Value (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Commercial Paper, Maturity | 90 | |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | $ 15,214 | $ 11,305 |
Restricted cash | 1,430 | 6,317 |
Mortgage notes payable, net | 97,814 | 148,540 |
Lines of credit | 123,000 | 120,000 |
Notes payable, net | 893,424 | 843,084 |
Carrying Value | 2445 M Street note receivable | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
2445 M Street note receivable | 2,166 | 2,089 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 15,214 | 11,305 |
Restricted cash | 1,430 | 6,317 |
Mortgage notes payable, net | 100,702 | 149,997 |
Lines of credit | 123,000 | 120,000 |
Notes payable, net | 925,613 | 873,516 |
Fair Value | 2445 M Street note receivable | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
2445 M Street note receivable | $ 2,216 | $ 2,173 |
Stock Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 1.1 | $ 1.5 |
Restricted Share Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Fair value of share grants vested | $ 1.6 | $ 2.0 |
Total unvested restricted share awards (in shares) | 258,759 | |
Weighted average grant date fair value (in dollars per share) | $ 30.13 | |
Total compensation costs, non-vested restricted share awards | $ 5.8 | |
Total compensation cost not yet recognized, period for recognition (in months) | 28 months | |
Washington Real Estate Investment Trust 2016 Omnibus Long Term Incentive Plan [Domain] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock based plan, aggregate number of shares authorized (in shares) | 2,400,000.0 | |
Stock based plan, period in effect (in years) | 10 years |
Earnings per Common Share - EPS Schedule (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Earnings Per Share [Abstract] | ||
Net income | $ 6,615 | $ 2,379 |
Less: Net loss attributable to noncontrolling interests in subsidiaries | 19 | 5 |
Allocation of earnings to unvested restricted share awards | (78) | (90) |
Adjusted net income attributable to the controlling interests | $ 6,556 | $ 2,294 |
Weighted average shares outstanding - basic (in shares) | 74,854 | 68,301 |
Employee restricted share awards | 112 | 187 |
Weighted average shares outstanding - diluted (in shares) | 74,966 | 68,488 |
Basic net income attributable to the controlling interests per common share( in dollars per share) | $ 0.09 | $ 0.03 |
Diluted net income attributable to the controlling interests per common share (in dollars per share) | $ 0.09 | $ 0.03 |
Segment Information - Segment Schedules (Details) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017
USD ($)
segment
|
Mar. 31, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Segment Reporting Information [Line Items] | |||
Number of reportable segments | segment | 3 | ||
Real estate rental revenue | $ 77,501 | $ 77,137 | |
Real estate expenses | 27,863 | 28,734 | |
Gross Profit | 49,638 | 48,403 | |
Depreciation and amortization | (26,069) | (26,038) | |
Acquisition costs | 0 | (154) | |
General and administrative | (5,626) | (5,511) | |
Interest expense | (11,405) | (14,360) | |
Other income | 77 | 39 | |
Net income | 6,615 | 2,379 | |
Less: Net loss attributable to noncontrolling interests in subsidiaries | 19 | 5 | |
Net income attributable to the controlling interests | 6,634 | 2,384 | |
Capital expenditures | 12,011 | 4,729 | |
Total assets | 2,254,109 | 2,185,303 | $ 2,253,619 |
Office | |||
Segment Reporting Information [Line Items] | |||
Real estate rental revenue | 38,027 | 43,818 | |
Real estate expenses | 14,414 | 17,075 | |
Gross Profit | 23,613 | 26,743 | |
Capital expenditures | 4,955 | 2,171 | |
Total assets | 1,097,256 | 1,254,906 | |
Retail | |||
Segment Reporting Information [Line Items] | |||
Real estate rental revenue | 15,705 | 15,380 | |
Real estate expenses | 3,863 | 4,406 | |
Gross Profit | 11,842 | 10,974 | |
Capital expenditures | 184 | 543 | |
Total assets | 348,221 | 351,616 | |
Multifamily | |||
Segment Reporting Information [Line Items] | |||
Real estate rental revenue | 23,769 | 17,939 | |
Real estate expenses | 9,586 | 7,253 | |
Gross Profit | 14,183 | 10,686 | |
Capital expenditures | 6,297 | 2,002 | |
Total assets | 764,732 | 524,856 | |
Corporate and Other | |||
Segment Reporting Information [Line Items] | |||
Real estate rental revenue | 0 | 0 | |
Real estate expenses | 0 | 0 | |
Gross Profit | 0 | 0 | |
Capital expenditures | 575 | 13 | |
Total assets | $ 43,900 | $ 53,925 |
Shareholders' Equity - USD ($) |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
Apr. 28, 2017 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Class of Stock [Line Items] | |||
Net proceeds from equity offering | $ 29,959,000 | $ 0 | |
Shares issued under dividend reinvestment program | 1,114,000 | ||
Common Stock [Member] | |||
Class of Stock [Line Items] | |||
Capital shares reserved for future issuances | $ 200,000,000.0 | ||
Stock Issued During Period, Shares, New Issues | 972,000 | ||
Stock Issued During Period, Weighted Average Price | $ 31.31 | ||
Net proceeds from equity offering | $ 30,000,000 | ||
Shares issued under dividend reinvestment program (in shares) | 34,770 | ||
Stock issued during period, weighted share price, Dividend Reinstated Plan | $ 32.07 | ||
Shares issued under dividend reinvestment program | $ 1,100,000 | ||
Subsequent Event [Member] | Common Stock [Member] | |||
Class of Stock [Line Items] | |||
Stock Issued During Period, Shares, New Issues | 1,100,000 | ||
Stock Issued During Period, Weighted Average Price | $ 31.49 | ||
Net proceeds from equity offering | $ 34,100,000 |
Subsequent Events Subsequent Events (Details) $ in Thousands |
Apr. 04, 2017
USD ($)
ft²
|
Mar. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
ft²
|
---|---|---|---|
Subsequent Event [Line Items] | |||
Rentable Square Feet | ft² | 1,183,000 | ||
Real Estate Investment Property, at Cost | $ 2,697,122 | $ 2,685,403 | |
Watergate 600 [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Rentable Square Feet | ft² | 309,000 | ||
Real Estate Investment Property, at Cost | $ 135,000 | ||
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned | $ 400 |
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