Washington Real Estate Investment Trust Announces Third Quarter Financial and Operating...

Washington Real Estate Investment Trust Announces Third Quarter Financial and Operating Results

ROCKVILLE, Md.--(Business Wire)--
Washington Real Estate Investment Trust (WRIT) (NYSE: WRE)
reported financial and operating results today for the quarter ended
September 30, 2008:

-- Funds from operations (FFO)(1) for the quarter were $27.4
million, or $0.55 per diluted share. This compares to FFO for
the same period one year ago of $27.7 million, or $0.59 per
diluted share.

-- Net income for the quarter ended September 30, 2008 was $0.12
per diluted share, compared to $0.73 per diluted share in the
same period one year ago. Net income in the third quarter 2007
included a $25.0 million, or $0.53 per diluted share, gain on
disposed assets, related to the sale of Maryland Trade Centers
I & II.

-- Rent increases on commercial lease rollovers in third quarter
2008 were 20.9%. Residential rental rates increased 1.2% over
the same period.

-- In the third quarter, WRIT executed two major leases, totaling
154,000 square feet, with IBM and National Student
Clearinghouse at its previously unleased Dulles Station West
office development.

-- During the third quarter and through October 1, 2008, WRIT has
raised more than $100 million in equity and has fully repaid
borrowings on its lines of credit. WRIT has no near-term
maturities for the remainder of 2008 and its next maturity of
$50 million comes due in the fourth quarter 2009.

Operating Results

Core net revenue growth was 2.0% compared to the same period last
year and core occupancy was 93.8% during the third quarter of 2008.
Core Net Operating Income (NOI)(2) for third quarter decreased 0.2%
compared to the same period last year.

-- Medical office properties' core NOI for the third quarter
increased 2.4%. Core economic occupancy was 96.7% and core net
revenue growth was 3.6% for the sector.

-- Retail properties' core NOI for the third quarter increased
1.4% compared to the same period one year ago. Core net
revenue growth was 2.0% and core economic occupancy was 94.4%
for the sector.

-- Multifamily properties' core NOI for the third quarter
increased 1.2% compared to the same period one year ago. Core
net revenue growth was 1.6% and core economic occupancy was
94.7% for the sector.

-- Office properties' core NOI for the third quarter decreased
0.1% compared to the same period one year ago. Core net
revenue growth was 2.3% and core economic occupancy was 92.5%
for the office sector.

-- Industrial/Flex properties' core NOI for the third quarter
decreased 5.0% compared to the same period one year ago. Core
net revenue growth was 0.1%, but was offset by an increase in
bad debt expense. Core economic occupancy was 92.7% for the
industrial/flex sector.

Leasing Activity

On September 29, 2008, WRIT announced it executed two leases
totaling 154,000 square feet at Dulles Station West, Phase I.
International Business Machines Corp. (NYSE: IBM) will occupy 123,000
square feet and National Student Clearinghouse will occupy 31,000
square feet, resulting in an 86% leased rate. Dulles Station West,
Phase I is a 180,000 square foot, six-story office building
prominently located on the Dulles Toll Road, less than one mile from
Washington Dulles International Airport. Last year, the building
received the Northern Virginia NAIOP's Award of Excellence for Best
Suburban Mid-Rise Office Building.

Excluding the leases above, WRIT signed commercial leases for a
total of 458,000 square feet, with an average rental rate increase of
20.9% and tenant improvement costs of $9.41 per square foot during the
third quarter. Residential rental rates increased 1.2% in the third
quarter compared to the same period one year ago.

-- Rental rates for new and renewed retail leases increased
32.0%, with $7.72 per square foot in tenant improvement costs.

-- Rental rates for new and renewed industrial/flex leases
increased 28.7%, with $1.20 per square foot in tenant
improvement costs.

-- Rental rates for new and renewed office leases increased
16.1%, with $21.72 per square foot in tenant improvement
costs.

-- Rental rates for new and renewed medical office leases
increased 13.2%, with $13.51 per square foot in tenant
improvement costs.

Acquisition and Disposition Activity

-- On September 3, 2008, WRIT acquired The Kenmore, a 374-unit,
269,000 square foot apartment building located in Washington,
DC for $58.3 million. The property was acquired for $155,750
per unit, less than half of estimated replacement cost. WRIT
expects to achieve a first-year, unleveraged yield of 6.2% on
a cash and GAAP basis. The acquisition was funded with
borrowings on WRIT's line of credit and cash from operations.

Capital Structure & Maturities

WRIT has no near-term maturities for the remainder of 2008. In
2009, WRIT's only debt maturity is a $50 million residential property
mortgage, due October 2009. As of October 23, 2008, WRIT had repaid
all outstanding balances on its lines of credit, providing a potential
borrowing capacity totaling $337 million.

-- On August 28, 2008, WRIT entered into a Sales Agency Financing
Agreement with BNY Mellon Capital Markets, LLC. Under the
agreement, WRIT may offer and sell up to $150 million of
common shares for a period of no more than 36 months. As of
September 30, 2008, WRIT had issued an aggregate of 1,141,410
shares at a weighted average share price of $36.15 for $41.2
million in gross proceeds pursuant to this arrangement.

-- On September 30, 2008, WRIT paid a quarterly dividend of
$0.4325 per share for its 187th consecutive quarterly dividend
at equal or increasing rates.

-- As of September 30, 2008, WRIT had a total capitalization of
$3.2 billion.

-- Subsequent to the quarter-end on October 1, 2008, WRIT closed
a $60.4 million equity offering of 1.725 million common shares
at a price of $35.00 per share. WRIT used the net proceeds
from the offering to repay borrowings under its lines of
credit and for general corporate purposes.

Earnings Guidance

Guidance for 2008 FFO per diluted share is lowered from a range of
$2.11 to $2.21 to a range of $2.07 to $2.12. The decrease is primarily
due to dilution associated with additional equity offerings and delay
in the timing of planned acquisitions.

Other News and Events

On October 14, 2008, WRIT announced the appointment of William
"Bill" T. Camp as Executive Vice President and Chief Financial Officer
- Elect effective November 12, 2008. Mr. Camp will succeed Sara L.
Grootwassink as EVP/CFO as she plans to resign due to a personal
relocation to the West Coast. He brings 16 years of finance and
capital markets experience to WRIT, serving most recently as Vice
President, Assistant Director of Equities at Wachovia Securities, LLC.

Conference Call Information

The Conference Call for 3rd Quarter Earnings is scheduled for
Friday, October 24, 2008 at 11:00 A.M. Eastern Daylight Time.
Conference Call access information is as follows:

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USA Toll Free Number: 1-877-407-9205
International Toll Number: 1-201-689-8054
Leader: Sara Grootwassink

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The instant replay of the Conference Call will be available until
November 7, 2008 at 11:59 P.M. Eastern Standard Time. Instant replay
access information is as follows:

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USA Toll Free Number: 1-877-660-6853
International Toll Number: 1-201-612-7415
Account: 286
Conference ID: 295251

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The live on-demand webcast of the Conference Call will also be
available on WRIT's website at www.writ.com. On-line playback of the
webcast will be available at http://www.writ.com for two weeks
following the Conference Call.

About WRIT

WRIT is a self-administered, self-managed, equity real estate
investment trust investing in income-producing properties in the
greater Washington metro region. WRIT's dividends have increased every
year for 38 consecutive years. WRIT owns a diversified portfolio of 92
properties consisting of 27 office properties, 22 industrial/flex
properties, 17 medical office properties, 14 retail centers, 12
multifamily properties and land for development. WRIT shares are
publicly traded on the New York Stock Exchange (NYSE:WRE).

Note: WRIT's press releases and supplemental financial information
are available on the company website at www.writ.com or by contacting
Investor Relations at (301) 984-9400.

Certain statements in this press release and the supplemental
disclosures attached hereto 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, fluctuations in interest rates, availability of raw materials and
labor costs, levels of competition, the effect of government
regulation, the availability and cost of capital, weather conditions,
the timing and pricing of lease transactions and changes in general
and local economic and real estate market conditions, and other risks
and uncertainties detailed from time to time in our filings with the
SEC, including our 2007 Form 10-K. We assume no obligation to update
or supplement forward-looking statements that become untrue because of
subsequent events.

(1) 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.
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. FFO is a non-GAAP measure. A reconciliation of FFO to net
income is provided on page 6.

(2) For purposes of evaluating comparative operating performance,
we categorize our properties as "core" or "non-core". Core NOI is
calculated as real estate rental revenue less real estate expenses for
those properties owned for the entirety of the periods being
evaluated. Core NOI is a non-GAAP measure. A reconciliation of Core
NOI to net income is provided on pages 14 and 15 of the Supplemental
Operating and Financial Data for the quarter ended September 30, 2008.

(3) Funds Available for Distribution ("FAD") is calculated by
subtracting from FFO (1) recurring capital 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, and (4) amortization of restricted share and unit
compensation, and adding or subtracting (5) amortization of lease
intangibles, as appropriate. FAD is included herein because we
consider it 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-GAAP and non-standardized measure, and may be calculated
differently by other REITs. A reconciliation of FAD to net income is
provided on page 6.

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Economic Occupancy Levels by Core Properties (i) and All Properties
----------------------------------------------------------------------
Core Properties All Properties
Sector 3rd QTR 3rd QTR 3rd QTR 3rd QTR
2008 2007 2008 2007
Residential 94.7% 93.4% 85.6%(ii) 91.5%
Office 92.5% 94.9% 90.2% 94.2%
Medical Office 96.7% 99.6% 95.8% 99.7%
Retail 94.4% 95.0% 94.4% 95.0%
Industrial 92.7% 95.4% 92.9% 94.8%

Overall Portfolio 93.8% 95.5% 91.1% 94.8%

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(i) Core properties include all properties that were owned for the
entirety of the current and prior year reporting periods. For Q3 2008
and Q3 2007, core properties exclude:

Residential Acquisition: The Kenmore

Office Acquisition: 2000 M Street

Medical Office Acquisitions: CentreMed I & II, and Sterling
Medical Office Building

Retail Acquisitions: none

Industrial Acquisition: 6100 Columbia Pike Road

Also excluded from Core Properties in Q3 2008 and Q3 2007 are Sold
Properties: Maryland Trade Centers I & II, Sullyfield Center and The
Earhart Building; and Held for Sale Properties: Avondale; and In
Development Properties: Bennett Park, Clayborne Apartments, Dulles
Station, and 4661 Kenmore Ave.

(ii) Residential occupancy for all properties decreased from 91.5%
to 85.6%, primarily due to the completion of Bennett Park and
Clayborne Apartments. At 9/30/08, 159 of 224 units were leased at
Bennett Park and 41 of 74 units were leased at Clayborne Apartments.

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WASHINGTON REAL ESTATE INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
OPERATING RESULTS 2008 2007 2008 2007
------------------------------ --------- --------- --------- ---------
Revenue
Real estate rental revenue $ 70,639 $ 64,286 $209,227 $185,931

Expenses
Real estate expenses 24,031 20,021 69,101 57,526
Depreciation and
amortization 21,422 17,852 62,799 50,310
General and administrative 2,780 3,174 8,971 11,424
--------- --------- --------- ---------
48,233 41,047 140,871 119,260
--------- --------- --------- ---------
Real Estate Operating Income 22,406 23,239 68,356 66,671
Other income/(expense):
Interest expense (17,148) (15,824) (52,395) (45,498)
Loss on extinguishment of
debt - - (8,449) -
Other income 338 357 796 1,395
Gain from non-disposal
activities 17 - 17 1,303
--------- --------- --------- ---------
(16,793) (15,467) (60,031) (42,800)
--------- --------- --------- ---------

Income from continuing
operations 5,613 7,772 8,325 23,871

Discontinued operations:
Income from operations of
properties held for sale 266 1,596 1,999 4,546
Gain on sale of real estate - 25,022 15,275 25,022
--------- --------- --------- ---------

Net Income $ 5,879 $ 34,390 $ 25,599 $ 53,439
========= ========= ========= =========

Income from continuing
operations $ 5,613 $ 7,772 $ 8,325 $ 23,871
Gain from non-disposal
activities (17) - (17) (1,303)
Continuing operations real
estate depreciation and
amortization 21,422 17,852 62,799 50,310
--------- --------- --------- ---------
Funds from continuing
operations $ 27,018 $ 25,624 $ 71,107 $ 72,878
--------- --------- --------- ---------

Income from discontinued
operations before gain on
sale 266 1,596 1,999 4,546
Discontinued operations real
estate depreciation and
amortization 123 433 469 1,630
--------- --------- --------- ---------
Funds from discontinued
operations 389 2,029 2,468 6,176
--------- --------- --------- ---------

Funds from operations(1) $ 27,407 $ 27,653 $ 73,575 $ 79,054
========= ========= ========= =========

Tenant improvements (1,452) (4,215) (8,591) (11,561)
External and internal leasing
commissions capitalized (1,851) (1,159) (5,303) (4,392)
Recurring capital improvements (1,936) (2,635) (7,104) (7,997)
Straight-line rents, net (779) (988) (2,235) (3,247)
Non real estate depreciation &
amortization of debt costs 996 987 2,983 2,561
Amortization of lease
intangibles, net (533) (315) (1,576) (1,190)
Amortization and expensing of
restricted share and unit
compensation 706 882 2,121 3,238
Other - 102 - 1,303
--------- --------- --------- ---------
Funds Available for
Distribution (3) $ 22,558 $ 20,312 $ 53,870 $ 57,769
========= ========= ========= =========

Certain prior period amounts have been reclassified to conform to the
current presentation.

Three Months Ended Nine Months Ended
September 30, September 30,
Per Share Data 2008 2007 2008 2007
-------------------- --------- --------- --------- ---------

Income from
continuing
operations (Basic) $ 0.11 $ 0.17 $ 0.17 $ 0.52
(Diluted) $ 0.11 $ 0.17 $ 0.17 $ 0.52
Net income (Basic) $ 0.12 $ 0.74 $ 0.53 $ 1.17
(Diluted) $ 0.12 $ 0.73 $ 0.53 $ 1.16
Funds from
continuing
operations (Basic) $ 0.54 $ 0.55 $ 1.48 $ 1.60
(Diluted) $ 0.54 $ 0.55 $ 1.47 $ 1.59
Funds from
operations (Basic) $ 0.55 $ 0.59 $ 1.53 $ 1.73
(Diluted) $ 0.55 $ 0.59 $ 1.52 $ 1.72

Dividends paid $ 0.4325 $ 0.4225 $ 1.2875 $ 1.2575

Weighted average
shares outstanding 49,599 46,596 48,057 45,678
Fully diluted
weighted average
shares outstanding 49,849 46,802 48,298 45,877

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WASHINGTON REAL ESTATE INVESTMENT TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)

September 30, December 31,
2008 2007
------------- -------------
Assets
Land $ 368,371 $ 325,490
Income producing property 1,751,057 1,621,679
------------- -------------
2,119,428 1,947,169
Accumulated depreciation and
amortization (382,261) (327,759)
------------- -------------
Net income producing property 1,737,167 1,619,410
Development in progress 23,469 98,321
------------- -------------
Total real estate held for
investment, net 1,760,636 1,717,731
Investment in real estate sold or held
for sale 12,546 36,562
Cash and cash equivalents 7,813 21,485
Restricted cash 47,074 6,030
Rents and other receivables, net of
allowance for doubtful accounts of
$5,943 and $4,196 38,121 36,548
Prepaid expenses and other assets 104,291 78,394
Other assets related to property sold
or held for sale 211 1,576
------------- -------------
Total Assets $ 1,970,692 $ 1,898,326
============= =============

Liabilities
Notes payable $ 918,873 $ 879,123
Mortgage notes payable 330,569 252,484
Lines of credit 47,000 192,500
Accounts payable and other liabilities 65,724 63,327
Advance rents 9,291 9,537
Tenant security deposits 10,209 10,419
Other liabilities related to property
sold or held for sale 137 616
------------- -------------
Total Liabilities 1,381,803 1,408,006
------------- -------------

Minority interest 3,790 3,776
------------- -------------

Shareholders' Equity
Shares of beneficial interest, $0.01
par value; 100,000 shares authorized;
50,661 and 46,682 shares issued and
outstanding, respectively 508 468
Additional paid-in capital 696,885 561,492
Distributions in excess of net income (112,570) (75,416)
Accumulated other comprehensive income 276 -
------------- -------------
Total Shareholders' Equity 585,099 486,544
------------- -------------
Total Liabilities and
Shareholders' Equity $ 1,970,692 $ 1,898,326
============= =============

Note: Certain prior year amounts have been reclassified to conform to
the current year presentation.

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Washington Real Estate Investment Trust (WRIT)
Sara Grootwassink
Executive Vice President and
Chief Financial Officer
301-984-9400
Fax: 301-984-9610
E-Mail: sgrootwassink@writ.com
www.writ.com

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