Washington Real Estate Investment Trust Announces Fourth Quarter and Year-End Operating Results for 2010

ROCKVILLE, Md.--(BUSINESS WIRE)-- Washington Real Estate Investment Trust ("WRIT" or the "Company") (NYSE: WRE), a leading owner and operator of diversified properties in the Washington, DC region, reported financial and operating results today for the quarter and year ending December 31, 2010:

    --  Core Funds from Operations(1)per diluted share, defined as Funds from
        Operations(1) ("FFO") excluding acquisition expense, gains or losses on
        extinguishment of debt and impairment, was $1.96 for the year and $0.48
        for the quarter ended December 31, 2010, respectively, as compared to
        $2.06 and $0.52 for the prior year period. FFO for the year ending
        December 31, 2010 was $111.6 million, or $1.79 per diluted share,
        compared to $121.8 million, or $2.14 per diluted share, in 2009. FFO for
        the quarter ended December 31, 2010 was $21.1 million, or $0.33 per
        diluted share, compared to $29.7 million, or $0.50 per diluted share, in
        the same period one year ago.
    --  Net income attributable to the controlling interests for the year ending
        December 31, 2010 was $37.4 million, or $0.60 per diluted share,
        compared to $40.7 million, or $0.71 per diluted share, in 2009. Included
        in 2010 net income per share is a $0.15 loss on extinguishment of debt.
        Included in 2009 net income per share is a $0.09 gain related to the
        extinguishment of debt.
    --  Net income attributable to the controlling interests for the quarter
        ended December 31, 2010 was $10.6 million, or $0.16 per diluted share,
        compared to $7.3 million, or $0.12 per diluted share, in the same period
        one year ago. Included in fourth quarter 2010 net income per share is a
        $0.14 loss on extinguishment of debt. Included in fourth quarter 2009
        net income per share is a $0.03 loss on extinguishment of debt.

"During 2010 we continued to execute on our strategy of repositioning our holdings toward properties inside the Beltway, near major transportation nodes and in areas with strong employment drivers and superior growth demographics. Our portfolio repositioning has been, and will continue to be, funded with proceeds from the disposition of properties that no longer meet our investment criteria, equity, and debt or cash on hand. We have a strong interest in refining our diversified property holdings to focus on high quality office, medical office, retail and multifamily. We are also exploring the sale of industrial and flex properties to facilitate this long term strategy," said George "Skip" McKenzie, President and Chief Executive Officer of WRIT.

Acquisitions and Dispositions

In the fourth quarter, the Company sold an office building and three industrial properties that no longer fit into the Company's long term growth plan. The Ridges, a 104,000 square foot office building in Gaithersburg, Maryland was sold for $27.5 million. The sale generated a net book gain of $4.4 million and produced an unleveraged internal rate of return of 11% over the four year holding period. In a separate transaction, WRIT completed the sale of three industrial properties, Ammendale I and II and Amvax, totaling 305,000 square feet in Beltsville, Maryland for $23.0 million and a net book gain of $9.2 million. The unleveraged internal rate of return was 15%.

In tandem with its strategy to dispose of lower growth assets, WRIT continued its focused acquisitions on superior-located, newer assets. During the fourth quarter, WRIT acquired Gateway Overlook, a 223,000 square foot Class A shopping center in Columbia, Maryland for $88.35 million. The property was completed in 2007 and is located immediately off of I-95 at the intersection of Little Patuxent Parkway/Route 175 and Waterloo Road/Route 108 in Howard County. It is 90% leased to 21 tenants, including national retailers Trader Joe's, Best Buy and Office Depot, as well as Wachovia Bank and Capital One Bank. The shopping center is shadow anchored by a Lowe's and a Costco, neither of which are included in the transaction. WRIT funded the acquisition using available cash and its line of credit. The expected first year unleveraged yield is 6.9% on a cash basis.

Subsequent to quarter end, WRIT furthered its stated plan by acquiring a Washington, DC office property. WRIT acquired 1140 Connecticut Avenue, NW, a twelve story, 184,135 square foot office building with a three level parking garage in Washington, DC, for $80.25 million. The property is 99% leased to 25 office tenants and four retail tenants and is located near the intersection of Connecticut Avenue and M Street in the heart of Washington's "Golden Triangle" Central Business District. WRIT funded this acquisition using available cash and its line of credit. The projected first year unleveraged yield is 6.0% on a cash basis.

In addition, WRIT entered into a contract to purchase 1227 25th Street, NW, an eight story, 130,000 square foot office building with a two level parking garage in Washington, DC, for $47.0 million. The Company anticipates closing on 1227 25th Street by April 6, 2011. The property is 72% leased to the GSA and law firms. It is located near the corner of 25th and M Streets in Washington's West End submarket, immediately adjacent to the Company's 2445 M Street office building. WRIT plans to fund this acquisition using available cash and its line of credit and projects a stabilized yield of 8.7% on a cash basis.

Operating Results

The Company's overall portfolio physical occupancy for the fourth quarter was 88.3%, compared to 89.9% in the same period one year ago and 88.4% in the third quarter of 2010. Overall portfolio Net Operating Income ("NOI")(2) was $51.2 million compared to $50.5 million in the same period one year ago and $50.1 million in the third quarter of 2010.

Same-store(3) portfolio physical occupancy for the fourth quarter was 88.6%, compared to 91.0% in the same period one year ago. Sequentially, same-store physical occupancy decreased 30 basis points (bps) compared to the third quarter of 2010. Same-store portfolio NOI for the fourth quarter decreased 2.7% and rental rate growth was 1.2% compared to the same period one year ago.

    --  Multifamily: 14.8% of Total NOI -Multifamily properties' same-store NOI
        for the fourth quarter increased 9.7% compared to the same period one
        year ago. Rental rate growth was 2.4% while same-store physical
        occupancy for the fourth quarter of 2010 compared to 2009 increased 130
        bps to 95.7%. Sequentially, same-store physical occupancy decreased 80
        bps compared to the third quarter of 2010.
    --  Office: 43.1% of Total NOI -Office properties' same-store NOI for the
        fourth quarter decreased 6.7% compared to the same period one year ago.
        A large contributor to the decline in NOI was a fourth quarter 2009
        true-up adjustment to straight-line rent caused by the execution of a
        large lease. Rental rates decreased 0.5% while same-store physical
        occupancy decreased 280 bps to 88.6%. Sequentially, same-store physical
        occupancy increased by 10 bps compared to the third quarter of 2010.
    --  Medical: 15.3% of Total NOI -Medical office properties' same-store NOI
        for the fourth quarter increased 5.1% compared to the same period one
        year ago. Rental rate growth was 3.4% while same-store physical
        occupancy decreased 40 bps to 93.8%. Sequentially, same-store physical
        occupancy increased 50 bps compared to the third quarter of 2010.
    --  Retail: 15.6% of Total NOI -Retail properties' same-store NOI for the
        fourth quarter decreased 7.3% compared to the same period one year ago.
        A significant portion of the decline is due to a lease termination fee
        received in the fourth quarter of 2009. Rental rate growth was 1.4%
        while same-store physical occupancy decreased 110 bps to 92.5%.
        Sequentially, same-store physical occupancy increased 30 bps compared to
        the third quarter of 2010.
    --  Industrial: 11.2% of Total NOI -Industrial properties' same-store NOI
        for the fourth quarter decreased 5.5% compared to the same period one
        year ago. Rental rate growth was 3.2% while same-store physical
        occupancy decreased 620 bps to 78.6%. Sequentially, same-store physical
        occupancy decreased 110 bps compared to the third quarter of 2010.

Leasing Activity

During the fourth quarter, WRIT signed commercial leases for 382,121 square feet with an average rental rate increase of 11.5% over expiring lease rates, an average lease term of 5.8 years, tenant improvement costs of $7.86 per square foot and leasing costs of $6.01 per square foot.

    --  Rental rates for new and renewed office leases increased 9.3% to $31.39
        per square foot, with $19.63 per square foot in tenant improvement costs
        and $11.79 per square foot in leasing costs.
    --  Rental rates for new and renewed medical office leases increased 5.3% to
        $37.41 per square foot, with $12.18 per square foot in tenant
        improvement costs and $3.04 per square foot in leasing costs.
    --  Rental rates for new and renewed retail leases increased 40.6% to $21.79
        per square foot, with $2.97 per square foot in tenant improvement costs
        and $4.37 per square foot in leasing costs. This increase was driven by
        a new lease with an anchor grocery store tenant at Montgomery Village
        Center.
    --  Rental rates for new and renewed industrial/flex leases decreased 9.4%
        to $9.80 per square foot, with $1.09 per square foot in tenant
        improvement costs and $2.44 per square foot in leasing costs.

Capital Markets Update

In the fourth quarter, WRIT issued 1,679,508 shares at a weighted average price of $30.68 per share through its Sales Agency Financing Agreement with BNY Capital Markets, generating approximately $51.5 million in proceeds. These proceeds were used for general corporate purposes, including partially funding the acquisition of Gateway Overlook Shopping Center. In 2010 WRIT issued 5,644,777 shares for total proceeds of approximately $171.1 million.

As previously announced, in the fourth quarter, WRIT completed tender offers for its 5.95% senior notes due June 15, 2011 and its 3 7/8% convertible senior notes due September 15, 2026. Of the $150 million 5.95% senior notes, $56.1 million were tendered. With respect to the $125.5 million of 3 7/8% convertible senior notes outstanding, $122.8 million were tendered. The repurchases were funded with a portion of the proceeds from its previously announced $250 million 4.95% senior unsecured notes offering completed in September 2010. As of December 31, 2010, WRIT had a total market capitalization of $3.3 billion.(4)

Dividends

On December 31, 2010, WRIT paid a quarterly dividend of $0.43375 per share for its 196th consecutive quarterly dividend at equal or increasing rates.

Earnings Guidance

For 2011, WRIT projects Core FFO per fully diluted share to be $1.96 - $2.08. The following assumptions are incorporated into this guidance:

    --  Same-store occupancy, which ended 2010 at 88.6%, is projected to improve
        150 to 200 basis points throughout 2011.
    --  Same-store NOI is expected to improve by a range of $0.06 - $0.08 per
        fully diluted share.
    --  Dilution from the full year impact of issuing additional equity in 2010
        is expected to lower FFO per fully diluted share by an additional $0.10
        in 2011.
    --  Interest expense for 2011 is estimated to range between $0.03 - $0.05
        per fully diluted share lower than reported 2010 results due to the
        reduction in overall debt.
    --  General and administrative expense is estimated to range between $0.02 -
        $0.03 per fully diluted share higher than 2010 results due to higher
        overhead costs related to the execution of our strategic plan.
    --  Net acquisition/disposition volume of $0 - $50 million.
    --  Full year impact of 2010 net acquisition/disposition volume and
        previously announced 2011 acquisitions is expected to range from $0.10 -
        $0.12 per fully diluted share.

Conference Call Information

The Conference Call for 4th Quarter Earnings is scheduled for Friday, February 18, 2011 at 11:00 A.M. Eastern time. Conference Call access information is as follows:


USA Toll Free Number:        1-877-407-9205

International Toll Number:   1-201-689-8054



The instant replay of the Conference Call will be available until March 4, 2011 at 11:59 P.M. Eastern time. Instant replay access information is as follows:


USA Toll Free Number:        1-877-660-6853

International Toll Number:   1-201-612-7415

Account:                     286

Conference ID:               364034



The live on-demand webcast of the Conference Call will be available on the Investor section of WRIT's website at www.writ.com. On-line playback of the webcast will be available 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 owns a diversified portfolio of 86 properties totaling approximately 11 million square feet of commercial space and 2,540 residential units, and land held for development. These 86 properties consist of 26 office properties, 16 industrial/flex properties, 18 medical office properties, 15 retail centers and 11 multi-family properties. 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 our earnings release and on our conference call 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 effect of the current credit and financial market conditions, the availability and cost of capital, fluctuations in interest rates, tenants' financial conditions, the timing and pricing of lease transactions, levels of competition, the effect of government regulation, the impact of newly adopted accounting principles, 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 2009 Form 10-K and our third quarter 2010 10-Q. 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. 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) costs related to the acquisition of properties and (3) property impairments, 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 distribute dividends to its shareholders. Core FFO is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs.

(2) Net Operating income ("NOI"), defined as real estate rental revenue less real estate expenses, is a non-GAAP measure. 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. 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.

(3) For purposes of evaluating comparative operating performance, we categorize our properties as "same-store" or "non-same-store". A same-store property is one that was owned for the entirety of the periods being evaluated. A non-same-store property is one that was acquired or placed into service during either of the periods being evaluated.

(4) Total market capitalization is calculated by multiplying the total outstanding common shares at period end by the closing share price on the last trading day of the period, and then adding the book value of the total outstanding debt at period end.

(5) 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.


Physical Occupancy Levels by Core Properties(i)and All Properties

                    Physical Occupancy

                    Core Properties     All Properties

Segment             4th QTR   4th QTR   4th QTR   4th QTR

                    2010      2009      2010      2009

Residential         95.7%     94.4%     95.7%     94.4%

Office              88.6%     91.4%     89.4%     90.8%

Medical Office      93.8%     94.2%     88.5%     87.9%

Retail              92.5%     93.6%     92.1%     93.6%

Industrial          78.6%     84.8%     78.6%     84.4%

Overall Portfolio   88.6%     91.0%     88.3%     89.9%




(i) Core properties include all properties that were owned for the entirety of
the current and prior year reporting periods. For Q4 2010 and Q4 2009, core
properties exclude:

Residential Acquisitions: none;

Office Acquisition: Quantico Corporate Center;

Medical Office Acquisition: Lansdowne Medical Office Building;

Retail Acquisition: Gateway Overlook Shopping Center;

Industrial Acquisitions: none.

Also excluded from Core Properties in Q4 2010 and Q4 2009 are:

Sold Properties: Crossroads Distribution Center, Charleston Business Center,
Parklawn Plaza, Lexington, Saratoga, The Ridges, Ammendale I & II and Amvax;

Held for Sale Properties: none.




WASHINGTON REAL ESTATE INVESTMENT TRUST

FINANCIAL HIGHLIGHTS

(In thousands, except per share data)

(Unaudited)

                         Three Months Ended December  Twelve Months Ended
                         31,                          December 31,

OPERATING RESULTS        2010         2009            2010         2009

Revenue

Real estate rental       $ 75,143     $ 75,774        $ 297,977    $ 298,161
revenue

Expenses

Real estate expenses       23,957       25,319          98,922       101,304

Depreciation and           23,889       23,358          93,992       91,668
amortization

General and                3,951        3,187           14,406       13,118
administrative

                           51,797       51,864          207,320      206,090

Real estate operating      23,346       23,910          90,657       92,071
income

Other income (expense):

Interest expense           (17,801 )    (17,548 )       (68,389 )    (74,074 )

Gain (loss) on             (8,896  )    (1,595  )       (9,176  )    5,336
extinguishment of debt

Gain from non-disposal     3            11              7            73
activities

Other income (expense)     (391    )    297             32           417

                           (27,085 )    (18,835 )       (77,526 )    (68,248 )

Income from continuing     (3,739  )    5,075           13,131       23,823
operations

Discontinued
operations:

Income from operations
of properties held for     697          701             2,829        3,777
sale

Gain on sale of real       13,657       1,527           21,599       13,348
estate

Net income                 10,615       7,303           37,559       40,948

Less: Net income
attributable to
noncontrolling             (24     )    (49     )       (133    )    (203    )
interests in
subsidiaries

Net income attributable
to the controlling       $ 10,591     $ 7,254         $ 37,426     $ 40,745
interests

Income from continuing
operations attributable    (3,763  )    5,026           12,998       23,620
to the controlling
interests

Gain from non-disposal     (3      )    (11     )       (7      )    (73     )
activities

Continuing operations
real estate                23,889       23,358          93,992       91,668
depreciation and
amortization

Funds from continuing    $ 20,123     $ 28,373        $ 106,983    $ 115,215
operations(1)

Income from
discontinued operations    697          701             2,829        3,777
before gain on sale

Discontinued operations
real estate                302          590             1,754        2,779
depreciation and
amortization

Funds from discontinued    999          1,291           4,583        6,556
operations

Funds from operations    $ 21,122     $ 29,664        $ 111,566    $ 121,771
(1)

Non-cash (gain) loss on    2,922        595             3,202        (6,336  )
extinguishment of debt

Tenant improvements        (6,373  )    (4,425  )       (13,579 )    (12,490 )

External and internal
leasing commissions        (2,089  )    (1,058  )       (9,511  )    (5,845  )
capitalized

Recurring capital          (1,698  )    (1,442  )       (5,938  )    (6,356  )
improvements

Straight-line rents,       (951    )    (1,527  )       (3,470  )    (3,379  )
net

Non-cash fair value        345          773             2,664        3,595
interest expense

Non real estate
depreciation &             889          1,037           3,969        4,555
amortization of debt
costs

Amortization of lease      (437    )    (777    )       (1,817  )    (2,587  )
intangibles, net

Amortization and
expensing of restricted    1,553        820             5,852        3,460
share and unit
compensation

Funds available for      $ 15,283     $ 23,660        $ 92,938     $ 96,388
distribution(5)

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

                         Three Months Ended December  Twelve Months Ended
                         31,                          December 31,

Per share
data
attributable             2010         2009            2010         2009
to the
controlling
interests:

Income from
continuing    (Basic)    $ (0.06   )  $ 0.08          $ 0.21       $ 0.41
operations

              (Diluted)  $ (0.06   )  $ 0.08          $ 0.21       $ 0.41

Net income    (Basic)    $ 0.16       $ 0.12          $ 0.60       $ 0.71

              (Diluted)  $ 0.16       $ 0.12          $ 0.60       $ 0.71

Funds from
continuing    (Basic)    $ 0.31       $ 0.47          $ 1.72       $ 2.02
operations

              (Diluted)  $ 0.31       $ 0.47          $ 1.72       $ 2.02

Funds from    (Basic)    $ 0.33       $ 0.50          $ 1.79       $ 2.14
operations

              (Diluted)  $ 0.33       $ 0.50          $ 1.79       $ 2.14

Dividends                $ 0.4338     $ 0.4325        $ 1.7313     $ 1.7300
paid

Weighted
average                    64,536       59,735          62,140       56,894
shares
outstanding

Fully
diluted
weighted                   64,536       59,833          62,264       56,968
average
shares
outstanding




WASHINGTON REAL ESTATE INVESTMENT TRUST

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

                                                  December 31,    December 31,

                                                  2010            2009

Assets

Land                                              $ 440,509       $ 402,277

Income producing property                           1,976,378       1,848,129

                                                    2,416,887       2,250,406

Accumulated depreciation and amortization           (538,786  )     (457,858  )

Net income producing property                       1,878,101       1,792,548

Development in progress                             26,240          25,031

Total real estate held for investment, net          1,904,341       1,817,579

Investment in real estate sold or held for sale     -               48,636

Cash and cash equivalents                           78,767          11,203

Restricted cash                                     21,552          17,668

Rents and other receivables, net of allowance
for doubtful accounts of $8,394 and $6,412          55,176          49,617
respectively

Prepaid expenses and other assets                   108,045         95,986

Other assets related to property sold or held       -               4,536
for sale

Total assets                                      $ 2,167,881     $ 2,045,225

Liabilities

Notes payable                                     $ 753,587       $ 688,912

Mortgage notes payable                              380,171         383,563

Lines of credit                                     100,000         128,000

Accounts payable and other liabilities              51,130          52,324

Advance rents                                       12,597          10,743

Tenant security deposits                            9,538           9,512

Other liabilities related to property sold or       -               23,108
held for sale

Total liabilities                                 $ 1,307,023     $ 1,296,162

Shareholders' equity

Shares of beneficial interest, $0.01 par value;
100,000

Shares authorized; 65,870 and 59,811 shares         659             599
issued and outstanding, respectively

Additional paid-in capital                          1,127,825       944,825

Distributions in excess of net income               (269,935  )     (198,412  )

Accumulated other comprehensive income              (1,469    )     (1,757    )

Total shareholders' equity                          857,080         745,255

Noncontrolling interests in subsidiaries            3,778           3,808

Total equity                                        860,858         749,063

Total liabilities and equity                      $ 2,167,881     $ 2,045,225

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





The following tables contain reconciliations of net income to same-store net
operating income for the periods presented:

Three months                           Medical
ended December  Multifamily  Office                Retail    Industrial  Total
31, 2010                               Office

Same-store net
operating       $ 7,588      $ 20,467  $ 7,877     $ 7,507   $ 5,746     $ 49,185
income(3)

Add: Net
operating
income from       -            1,572     (69    )    498       -           2,001
non-same-store
properties(3)

Total net
operating       $ 7,588      $ 22,039  $ 7,808     $ 8,005   $ 5,746     $ 51,186
income(2)

Add/(deduct):

Other income                                                               (391    )
(expense)

Gain from
non-disposal                                                               3
activities

Interest                                                                   (17,801 )
expense

Gain (loss) on
extinguishment                                                             (8,896  )
of debt

Depreciation
and                                                                        (23,889 )
amortization

General and
administrative                                                             (3,951  )
expenses

Income from
operations of                                                              697
properties
held for sale

Gain on sale                                                               13,657
of real estate

Net income                                                                 10,615

Less: Net
income
attributable
to                                                                         (24     )
noncontrolling
interests in
subsidiaries

Net income
attributable
to the                                                                   $ 10,591
controlling
interests

Three months                           Medical
ended December  Multifamily  Office                Retail    Industrial  Total
31, 2009                               Office

Same-store net
operating       $ 6,919      $ 21,948  $ 7,492     $ 8,101   $ 6,082     $ 50,542
income(3)

Add: Net
operating
income from       -            -         (87    )    -         -           (87     )
non-same-store
properties(3)

Total net
operating       $ 6,919      $ 21,948  $ 7,405     $ 8,101   $ 6,082     $ 50,455
income(2)

Add/(deduct):

Other income                                                               297
(expense)

Gain from
non-disposal                                                               11
activities

Interest                                                                   (17,548 )
expense

Gain (loss) on
extinguishment                                                             (1,595  )
of debt

Depreciation
and                                                                        (23,358 )
amortization

General and
administrative                                                             (3,187  )
expenses

Income from
operations of                                                              701
properties
held for sale

Gain on sale                                                               1,527
of real estate

Net income                                                                 7,303

Less: Net
income
attributable
to                                                                         (49     )
noncontrolling
interests in
subsidiaries

Net income
attributable
to the                                                                   $ 7,254
controlling
interests

The following tables contain reconciliations of net income to same-store net
operating income for the periods presented:

Twelve months                          Medical
ended December  Multifamily  Office                Retail    Industrial  Total
31, 2010                               Office

Same-store net
operating       $ 24,699     $ 79,721  $ 30,744    $ 30,196  $ 22,856    $ 188,216
income(3)

Add: Net
operating
income from       4,657        6,116     (431   )    497       -           10,839
non-same-store
properties(3)

Total net
operating       $ 29,356     $ 85,837  $ 30,313    $ 30,693  $ 22,856    $ 199,055
income(2)

Add/(deduct):

Other income                                                               32
(expense)

Gain from
non-disposal                                                               7
activities

Interest                                                                   (68,389 )
expense

Gain (loss) on
extinguishment                                                             (9,176  )
of debt

Depreciation
and                                                                        (93,992 )
amortization

General and
administrative                                                             (14,406 )
expenses

Income from
operations of                                                              2,829
properties
held for sale

Gain on sale                                                               21,599
of real estate

Net income                                                                 37,559

Less: Net
income
attributable
to                                                                         (133    )
noncontrolling
interests in
subsidiaries

Net income
attributable
to the                                                                   $ 37,426
controlling
interests

Twelve months                          Medical
ended December  Multifamily  Office                Retail    Industrial  Total
31, 2009                               Office

Same-store net
operating       $ 23,620     $ 81,728  $ 29,860    $ 31,141  $ 24,904    $ 191,253
income(3)

Add: Net
operating
income from       3,356        2,415     (167   )    -         -           5,604
non-same-store
properties(3)

Total net
operating       $ 26,976     $ 84,143  $ 29,693    $ 31,141  $ 24,904    $ 196,857
income(2)

Add/(deduct):

Other income                                                               417
(expense)

Gain from
non-disposal                                                               73
activities

Interest                                                                   (74,074 )
expense

Gain (loss) on
extinguishment                                                             5,336
of debt

Depreciation
and                                                                        (91,668 )
amortization

General and
administrative                                                             (13,118 )
expenses

Income from
operations of                                                              3,777
properties
held for sale

Gain on sale                                                               13,348
of real estate

Net income                                                                 40,948

Less: Net
income
attributable
to                                                                         (203    )
noncontrolling
interests in
subsidiaries

Net income
attributable
to the                                                                   $ 40,745
controlling
interests



The following table contains a reconciliation of net income attributable to the controlling interests to core funds from operations for the periods presented:


                 Three Months Ended December   Twelve Months Ended December 31,
                 31,

                 2010          2009            2010          2009

Net income
attributable
to the           $ 10,591      $ 7,254         $ 37,426      $ 40,745
controlling
interests

Add/(deduct):

Real estate
depreciation       23,889        23,358          93,992        91,668
and
amortization

Gain from
non-disposal       (3      )     (11    )        (7      )     (73     )
activities

Discontinued
operations:

Gain on sale       (13,657 )     (1,527 )        (21,599 )     (13,348 )
of real estate

Real estate
depreciation       302           590             1,754         2,779
and
amortization

Funds from         21,122        29,664          111,566       121,771
Operations(1)

Add/(deduct):

Loss (gain) on
extinguishment     8,896         1,595           9,176         (5,336  )
of debt

Acquisition        709           (13    )        1,161         788
costs

Core funds
from             $ 30,727      $ 31,246        $ 121,903     $ 117,223
operations(1)




    Source: Washington Real Estate Investment Trust