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Washington Real Estate Investment Trust Reports Operating Results (10-Q)

November 04, 2010 | About:
10qk

10qk

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Washington Real Estate Investment Trust (WRE) filed Quarterly Report for the period ended 2010-09-30.

Washington Real Estate Investment Trust has a market cap of $1.99 billion; its shares were traded at around $32.16 with and P/S ratio of 6.5. The dividend yield of Washington Real Estate Investment Trust stocks is 5.4%. Washington Real Estate Investment Trust had an annual average earning growth of 3.4% over the past 10 years. GuruFocus rated Washington Real Estate Investment Trust the business predictability rank of 4.5-star.WRE is in the portfolios of Tom Gayner of Markel Gayner Asset Management Corp, Columbia Wanger of Columbia Wanger Asset Management.

Highlight of Business Operations:

The increase in FFO reflects the increase in NOI as well as a $1.1 million decrease in interest expense. Net income decreased by $2.9 million due to a $5.1 million gain on sale of real estate during the 2009 Quarter. The lower interest expense results from the paydowns of a $50.0 million mortgage note and a portion of our 3.875% convertible notes during 2009 and 2010 using the proceeds from equity issuances and property sales, as well as prepaying the $100.0 million term loan using lower interest borrowings on our lines of credit.

On September 30, 2010, we issued $250.0 million of 4.95% unsecured notes due October 1, 2020. The notes bear an effective interest rate of 5.053%. Our net proceeds were $245.8 million. Subsequent to the end of the 2010 Quarter, we completed a tender offer for our 5.95% senior notes due in 2011 that resulted in the repurchase of $56.1 million of those notes. We also completed a tender offer for our 3.875% convertible notes puttable at par in 2011 that resulted in the repurchase of $122.8 million of those notes.

Minimum Base Rent: Minimum base rent increased by $1.9 million in the 2010 Quarter as compared to the 2009 Quarter due primarily to the acquisition of Quantico Corporate Center ($2.1 million), partially offset by a $0.2 million decrease in minimum base rent from core properties. The $0.2 million decrease at core properties was due to lower occupancy ($2.0 million), partially offset by higher rental rates ($1.8 million).

Minimum base rent increased by $2.1 million in the 2010 Period as compared to the 2009 Period due primarily to acquisitions and the lease-up of our development properties ($3.9 million), partially offset by a $1.7 million decrease in minimum base rent from core properties. The $1.7 million decrease at core properties was due to lower occupancy ($4.7 million) and higher rent abatements ($0.3 million), partially offset by higher rental rates ($3.6 million).

Recoveries from tenants decreased by $2.2 million in the 2010 Period as compared to the 2009 Period due to lower real estate tax reimbursements ($1.8 million) caused by lower property assessments across the portfolio and lower utility reimbursements ($0.7 million). These were offset by higher reimbursements from non-core properties ($0.3 million). A driver of our lower utility reimbursements was lower overall occupancy in our portfolio.

Provisions for doubtful accounts decreased by $0.3 million in the 2010 Period as compared to the 2009 Period due to lower provisions in the industrial segment ($0.5 million). This was partially offset by higher provisions in the retail ($0.1 million) and medical office ($0.1 million) segments.

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