Investor Presentation Reit Week 2013

Investor Presentation
REIT Week 2013

Repositioning
for the future.
First Quarter 2012
Forward Looking Statements
Certain statements in this presentation are “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such statements involve known and unknown risks, uncertainties, and other
factors that may cause actual results to differ materially. Such risks,
uncertainties and other factors include, but are not limited to, the potential for
federal government budget reductions, changes in general and local economic
and real estate market conditions, the timing and pricing of lease
transactions, the availability and cost of capital, fluctuations in interest rates,
tenants’ financial conditions, levels of competition, the effect of government
regulation, the impact of newly adopted accounting principles, and other risks
and uncertainties detailed from time to time in our filings with the SEC,
including our 2012 Form 10-K and first quarter 2013 form 10-Q. We assume
no obligation to update or supplement forward-looking statements that
become untrue because of subsequent events.
2 REIT Week 2013 WASHINGTON REAL ESTATE INVESTMENT TRUST

Repositioning
for the future.
First Quarter 2012
Table of Contents
 Company Profile
 2013 Strategic Initiatives
 Investment Highlights
− Property Profile
− First Quarter News
− 2013 Guidance
 Dividend Discussion
 Washington, DC Market
− Excellent Demographics
− Favorable Employment Numbers
− Federal Government Influence
 Strategic Plan
− Portfolio Repositioning
− Asset Recycling
 Portfolio Metrics
− Diversification Strategy
− Top Ten Tenants
 Appendix

First Quarter 2012
Company Profile
 We have 52+ years of experience of owning and operating real estate in the Washington, DC metro
region, delivering stable returns to our investors over a long investment horizon
 We own 69 properties in four sectors in DC, Virginia and Maryland
− Office, multifamily, retail, and medical office
− 11 million square foot portfolio owned and managed
 We believe in a conservative philosophy
− 40% debt to market capitalization as of 3/31/13
− Investment grade debt ratings
• S&P: BBB / Moody’s: Baa2
NOI Contribution by Sector - First Quarter 2013
Medical Office, 14%
17 properties, 1.3 million sq ft
Retail, 21%
Multifamily, 16%
11 properties, 2,540 units
Office, 49%

Repositioning
for the future.
First Quarter 2012
2013 Strategic Initiatives
 Exploring the sale of our 1.3 million square foot Medical Office Division
− Simplify business model to focus on core office, multifamily and retail divisions
− Capture embedded value from building portfolio to encompass 20% of the institutional quality
medical office market in DC over the past 10 years
− Leverage broker relationships and experience from 2011 Industrial Division sale
− Reinvest capital into high quality office, multifamily and retail assets in core submarkets
 Ramping up apartment development
− Broke ground in Q1 on a Class A multifamily development project in desirable Ballston
submarket of Arlington, Virginia
 Continuing to upgrade existing properties to increase tenant retention and attract new
prospects
− Lobby and common area renovations at several office buildings
− Multifamily unit renovations (average return on cost of 12%)

Repositioning
for the future.
First Quarter 2012
Investment Highlights

First Quarter 2012
Investment Highlights
 52 Year History Resulting in Unmatched Expertise and Network
− 52 years of continuous operations in the same markets
− Broad relationship base across all property types
 Strong Washington, DC market
− Consistently one of the top real estate markets in the world year in and year out
− Presence of the Federal Government combined with excellent population demographics
− Active infrastructure improvement: $10 billion spent on highway/airport expansions and
Metro transit
− Attractive business environment: recent corporate relocations of Hilton, Volkswagen,
Northrop Grumman, SAIC, Computer Sciences Corporation, as well as start-ups like Living
Social and Advisory Board
 Property Type Diversification
− Acquisitions in the past two years include 5 office buildings, 2 retail centers and 2 joint
venture apartment developments totaling approximately $520 million
 Active Asset Management Plan
− Improving our portfolio quality by acquiring well located assets in superior locations while
disposing of properties that no longer fit this criteria – we sold $445 million of assets over
the past two years, recognizing over $100 million in gains
− Investing in renovations and improvements to existing assets, leading to significant leasing
progress in improved buildings
 Conservative Capital Structure
− Ensures liquidity to fund upcoming obligations and provides fire power to fuel growth through
acquisitions and development
− $430 million line of credit capacity, no 2013 debt maturities

First Quarter 2012
Property Portfolio
Q1 2013
Net Operating Income
Contribution by Region
26%
46%
31% Washington, DC
Virginia
Maryland
53%
47%
Inside Beltway
Outside Beltway
 As we reduce our exposure to suburban office buildings, we are focusing our strategy more on urban
core markets in the DC region
 Most remaining “outside the Beltway” NOI comes from retail and medical office properties; only 20% of
our NOI comes from office buildings located outside the Beltway

Repositioning
for the future.
First Quarter 2012
First Quarter News
 Sold the Atrium Building, an 80,000 square foot suburban office building in Rockville,
Maryland
− $15.75 million, net book gain of $3.2 million and unleveraged IRR of 11%
− Sold to a user
− Built in 1980 and acquired in 2002
 Repaid $60 million 5.125% bonds using line of credit
 Prepaid an additional $30 million mortgage at 5.855% (West Gude Office Park)
 Announced hiring of two Division Heads in Retail and Multifamily Divisions
 Commenced marketing of Medical Office Division

Repositioning
for the future.
First Quarter 2012
2013 Core FFO Guidance
 Range of $1.82 - $1.90 includes the following assumptions:
− Same-store multifamily NOI growth is projected to range from 3% to 5%, with flat same-store
occupancy
− Same-store retail NOI growth is projected to range from 1% to 3%, with same-store occupancy
improving incrementally
− Same-store office NOI is projected to decrease by 1% to 2%, with same-store occupancy
improving incrementally
− General and administrative expense is projected to be approximately $16.5 million, an increase
over the third quarter 2012 run rate, due to the projected three-year long-term incentive
compensation plan payout in the fourth quarter of 2013
− Interest expense is projected to be approximately $66 million, an increase over the third quarter
2012 run rate, due to the full year impact of the third quarter 2012 $300 million unsecured debt
issuance, offset in part by recent mortgage prepayments totaling approximately $88.5 million,
and capitalized interest on development
− Acquisition and disposition activities, including the effects of the proposed Medical Office Division
sale and any potential reinvestment, are not included in guidance

Repositioning
for the future.
First Quarter 2012
Dividend Discussion

Dividend Discussion
Source: SNL Financial data
Annual FAD Payout Ratio Estimates
 In Q3 2012, we right sized our dividend to an annual rate of $1.20
− Estimated positive cash flow impact of $35 million per year to be used for property
acquisitions, development projects, improvements to existing assets or debt reduction
− New rate is more aligned with taxable income
 By decreasing our dividend payment, our future estimated FAD payout ratio (as calculated by SNL) is
more in line with our peer group
 This level of dividend payout more closely approximates taxable income, a comfortable level that
should allow us more upside to grow future dividends
 Current yield is still approximately 50 basis points higher than the equity REIT average%
0
20
40
60
80
100
120
140
2007 2008 2009 2010 2011 2012 2013
WRE Peer Group Average

Repositioning
for the future.
First Quarter 2012
Washington, DC Market

Repositioning
for the future.
Washington Metro Demographics
Aligning our portfolio with strong metro area demographics...
 Four of the top five wealthiest counties in the U.S. are located here, and the top five most educated
counties in the U.S. are all located here, contributing a total of 45% of our NOI
 This is in addition to the 25% NOI contribution from our properties in the urban core of Washington,
DC
Source: Main Street, Greater Washington Initiative, WRIT research
Top 5 Wealthiest Counties in the U.S.
1. Loudoun County, Virginia
2. Fairfax County, Virginia
3. Howard County, Maryland
4. Hunterdon County, New Jersey
5. Arlington County, Virginia
Top 5 Most Educated Counties in the U.S.
1. Arlington County, Virginia
2. Howard County, Maryland
3. Fairfax County, Virginia
4. Loudoun County, Virginia
5. Alexandria City, Virginia

Washington Metro Employment
 The Washington metro region’s unemployment rate continues to improve and outperform the national rate
 Job growth is still not as robust as it has been historically, but is projected to return to average levels over
the next 5 years

Federal Government Influence
 Despite talk of sequestration and government spending overhauls, the Washington, DC metro area
has consistently been a beneficiary of annually increasing spending regardless of which political party
is in power
 Over the next few years, we expect this trend to continue given increased employment from BRAC
initiatives as well as the implementation of new healthcare and financial reform programs
Source: Cassidy Turley, Center for Regional Analysis (George Mason University), WRIT research.
Federal Spending – Washington, DC Metro Area
Gingrich
attempts to
balance the
budget
Increased
spending post-
9/11 (Homeland
Security, etc)
Increased spending
post-financial meltdown
(Dodd-Frank, etc)
Republican
Controlled House
Democrat
Controlled House
Light Colored Bar =
Opposite Party
President

Repositioning
for the future.
First Quarter 2012
Strategic Plan

First Quarter 2012
Portfolio Repositioning
 Over the past several years, we have actively shifted our investment focus to properties located
inside the Capital Beltway as well as increased our holdings in Virginia and the District of Columbia

Repositioning
for the future.
Asset Recycling
 The chart below illustrates WRIT’s active asset recycling program over the past five years –
acquisitions are shown on the positive axis and dispositions are shown on the negative axis
-$250.0
-$200.0
-$150.0
-$100.0
-$50.0
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
2Q
2008
3Q
2008
4Q
2008
1Q
2009
2Q
2009
3Q
2009
4Q
2009
1Q
2010
2Q
2010
3Q
2010
4Q
2010
1Q
2011
2Q
2011
3Q
2011
4Q
2011
1Q
2012
2Q
2012
3Q
2012
4Q
2012
1Q
2013
Inside the Beltway
Near demand drivers and/or transportation nodes (Metro, hospitals, BRAC, I-95)
Outside the Beltway

Repositioning
for the future.
First Quarter 2012
Portfolio Metrics

Repositioning
for the future.
First Quarter 2012
Diversification Strategy
 Our property sector diversification serves as a balance, with better-performing sectors stabilizing
other sectors experiencing downward trends
 For the first quarter, same-store portfolio physical occupancy was 89.1%, an increase of 40 basis
points over last quarter
80
85
90
95
100
1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013
%
Multifamily Office Medical Office Retail Same-Store Physical Occupancy
Same-Store Physical Occupancy

Repositioning
for the future.
First Quarter 2012
Top Ten Tenants
Top Ten Tenants – Based on Annualized Rent
Tenant
Number
of
Buildings
Weighted
Avg
Remaining
Lease Term
(Mos.)
Percentage
of Aggregate
Portfolio
Annualized
Rent
Aggregate
Rentable Sq
Ft
Percentage
of Aggregate
Occupied Sq
Ft
World Bank 1 27 5.11% 210,354 2.92%
Advisory Board Company 1 74 2.88% 180,925 2.51%
Booz Allen Hamilton, Inc. 1 34 2.35% 222,989 3.10%
Engility Corporation (formerly L-3 Communications) 1 54 2.25% 140,400 1.95%
INOVA Health System 7 36 2.08% 114,917 1.60%
Patton Boggs LLP 1 49 2.05% 110,566 1.54%
Sunrise Assisted Living, Inc. 1 15 1.66% 115,289 1.60%
General Services Administration 4 50 1.33% 66,170 0.92%
General Dynamics 2 15 1.22% 88,359 1.23%
Epstein, Becker & Green, P.C. 1 45 1.14% 53,427 0.74%
Total/Weighted Average 40 22.07% 1,303,396 18.11%

Repositioning
for the future.
First Quarter 2012
Appendix/Disclosures

Repositioning
for the future.
First Quarter 2012
Core FFO and Core FAD
Per Share Reconciliation
In thousands, except per share data
Fully Diluted Depreciation and
Weighted Average Adjusted Net Income Other FFO Core FFO FAD Core FAD
Year For All Stock Splits Net Income Per Share Adjustments Core FFO Per Share Adjustments Core FAD Per Share
2012 66,376 $ 23,708 $ 0.35 $ 102,724 $ 126,432 $ 1.90 $ 26,430 $ 100,002 $ 1.50
2011 65,982 104,884 1.58 24,283 129,167 1.95 -22,129 107,038 1.61
2010 62,264 37,426 0.60 84,477 121,903 1.96 -21,830 100,073 1.60
2009 56,968 40,745 0.71 81,026 117,223 2.06 -19,047 98,176 1.72
2008 49,217 27,082 0.55 71,606 104,271 2.12 -29,435 74,836 1.52
2007 46,115 61,881 1.34 69,775 106,581 2.31 -31,109 75,472 1.64

Repositioning
for the future.
First Quarter 2012
Non-GAAP Financial Measures
Funds From Operations (“FFO”) – The National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) defines
FFO (April, 2002 White Paper) as net income (computed in accordance with generally accepted accounting principles
(“GAAP”)) excluding gains (or losses) from sales of property plus real estate depreciation and amortization. FFO is a
non-GAAP measure and does not replace net income as a measure of performance or net cash provided by operating
activities as a measure of liquidity. We consider FFO to be a standard supplemental measure for equity real estate
investment trusts (“REITs”) because it facilitates an understanding of the operating performance of our properties
without giving effect to real estate depreciation and amortization, which historically assumes that the value of real
estate assets diminishes predictably over time. Since real estate values have instead historically risen or fallen with
market conditions, we believe that FFO more accurately provides investors an indication of our ability to incur and
service debt, make capital expenditures and fund other needs.
Core Funds From Operations (“Core FFO”) is calculated by adjusting FFO for the following items (which we believe are
not indicative of the performance of WRIT's operating portfolio and affect the comparative measurement of WRIT's
operating performance over time): (1) gains or losses on extinguishment of debt, (2) real estate impairment not
already excluded from FFO and (3) costs related to the acquisition of properties, as appropriate. These items can vary
greatly from period to period, depending upon the volume of our acquisition activity and debt retirements, among
other factors. We believe that by excluding these items, Core FFO serves as a useful, supplementary measure of
WRIT's ability to incur and service debt and to distribute dividends to its shareholders. Core FFO is a non-GAAP and
non-standardized measure, and may be calculated differently by other REITs.
Net Operating income (“NOI”), defined as real estate rental revenue less real estate expenses, is a non-GAAP
measure. We provide NOI as a supplement to net income calculated in accordance with GAAP. As such, it should not
be considered an alternative to net income as an indication of our operating performance. It is the primary
performance measure we use to assess the results of our operations at the property level. NOI is calculated as net
income, less non-real estate revenue and the results of discontinued operations (including the gain on sale, if any),
plus interest expense, depreciation and amortization and general and administrative expenses.
Funds Available for Distribution (“FAD”) is a non-GAAP measure. It is calculated by subtracting from FFO (1) recurring
expenditures, tenant improvements and leasing costs that are capitalized and amortized and are necessary to maintain
our properties and revenue stream and (2) straight-line rents, then adding (3) non-real estate depreciation and
amortization, (4) amortization of restricted share and unit compensation, and adding or subtracting amortization of
lease intangibles, as appropriate. We consider FAD to be a measure of a REIT’s ability to incur and service debt and to
distribute dividends to its shareholders. FAD is a non-standardized measure and may be calculated differently by
other REITs.

Investor Presentation Reit Week 2013

Recomendados

Recomendados

Más contenido relacionado

La actualidad más candente

La actualidad más candente (20)

Destacado

Destacado (20)

Similar a Investor Presentation Reit Week 2013

Similar a Investor Presentation Reit Week 2013 (20)

Más de Company Spotlight

Más de Company Spotlight (20)

Último

Último (20)

Investor Presentation Reit Week 2013