- The Washington Times - Tuesday, July 24, 2007

Washington Real Estate Investment Trust (WRIT) is claiming a small victory despite deep wounds in the national REIT sector.

The Real Estate Investment Trust segment was discouraging this year, falling 0.5 percent, and many of the nation’s top REITs are feeling the impact of rising interest rates, negative mutual fund flows, low dividend yields and international investment bias.

WRIT is no exception, as shares of the Rockville REIT hit a six-month low yesterday after falling 39 cents to $32.64 on the New York Stock Exchange. But the firm is showing signs of hope.

Washington Real Estate Investment Trust, which has increased its quarterly dividend rate for 37 consecutive years, did not disappoint investors in the second quarter of 2007.

Net income for the second quarter ended June 30 rose nearly 8 percent to $8.3 million (18 cents per diluted share) from $7.7 million (18 cents) the previous year.



Funds from operations, or FFO, a measure of real estate investment trust performance, were $25.2 million (55 cents) compared with $20.7 million (48 cents) a year ago.

With 88 properties in the Washington region, WRIT distinguished itself from the pack by encouraging diversity in its portfolio.

“Many other REITs stick with a particular asset type, but these guys invest in all kinds of property types,” said Charlie Place, an analyst at Ferris, Baker Watts Inc., an investment banking firm in Baltimore.

WRIT’s portfolio consists of 42 office properties, 14 retail centers, 23 industrial properties and nine multifamily properties.

“Since they are not focused solely on one property type, they are constantly in the market,” said Mr. Place. “So I see [WRIT] finding opportunities to add to their portfolio.”

Mr. Place does not own any stock in the Washington Real Estate Investment Trust.

In the company’s earnings call on Friday, George F. McKenzie, the company’s new president and chief executive officer, touted the firm’s purchase of three properties for $72 million.

In the second quarter, WRIT bought the Woodholme Center, a 73,000-square-foot building, and the Woodholme Medical Office Building, a 125,000-square-foot property in Baltimore County, Md.

In addition, WRIT bought the Ashburn Farm Office Park, three medical office buildings totaling 75,000 square feet inLoudoun County, Va.

“We do have things in the pipeline and we are confident that we are going to continue to find, not only acquisitions that are accretive but that ones that we can grow over time,” said Mr. McKenzie.

WRIT is also building three more projects in the Washington region that are slated for completion by the end of the year.

“We are hopeful we’ll find other properties, we have got our irons in the fire but our intention is to buy other assets,” said Mr. McKenzie.

But John Guinee, an analyst from Stifel Nicolaus & Co. Inc., a financial services firm in St. Louis, was less enthused.

“Those guys said they did a whole lot this quarter, and they didn’t do squat,” said Mr. Guinee.

“They bought a few assets, but they didn’t do all that much. [WRIT] should be selling a lot of their old assets and paying a higher dividend.”

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