Delivers strong operating performance through peak leasing season
Expects 14% Core FFO Growth in 2023
“Building on the success of our transformation and geographic expansion, we are delivering on our primary objective of profitable growth and are on-track to deliver our strongest Core FFO growth in over 20 years in 2023,” said
WashREIT is providing operating metrics for July and August that reflect strong performance during its peak leasing months. The performance is attributed to healthy demand and pricing power supported by renter income growth, housing shortages, and the rising cost of single-family homeownership in the
Same-store multifamily operating metrics | |||
Effective lease rate growth | |||
New | 12.6% | 13.3% | 11.6% |
Renewal | 11.2% | 9.3% | 9.7% |
Blended | 11.8% | 11.1% | 10.6% |
Average Occupancy | 95.8% | 95.6% | 95.7% |
Retention | 59.4% | 59.9% | 58.9% |
Non-same-store multifamily(a)operating metrics | |||
Effective lease rate growth | |||
New | 15.5% | 15.3% | 15.4% |
Renewal | 19.8% | 19.2% | 19.0% |
Blended | 17.9% | 17.4% | 17.4% |
Average Occupancy | 94.5% | 94.2% | 94.3% |
Retention | 56.6% | 58.7% | 66.7% |
(a) Non-same-store multifamily portfolio includes 2,210 homes, or approximately 25% of WashREIT’s total homes
Guidance Update
Following the Board of Trustee’s recent approval of WashREIT’s 2023 business plan and outlook, the Company is providing preliminary 2023 Core FFO guidance of
“Our geographic expansion strategy is delivering the growth that we anticipated, and we are confident in our ability to continue driving organic growth in 2023 and beyond,” said
Full-Year Outlook on Key Assumptions and Metrics
Core FFO for 2023 is expected to range from
- Same-store multifamily NOI growth is expected to range from 9.0% to 11.0%, which reflects year-over-year growth of 10% at the midpoint further building on the double-digit NOI growth expected in the second half of 2022.
- Non-same-store multifamily NOI is expected to range from
$19.0 million to$20.5 million in 2023 including NOI from the$125 million of Southeast acquisitions we expect to complete over the remainder of this year. This guidance range does not reflect the impact of potential acquisitions beyond our 2022 acquisition guidance. - Other same-store NOI, which consists solely of Watergate 600, is expected to range from
$13.0 million to$13.75 million
Full Year 2023 | |
Core FFO per diluted share | |
Net Operating Income | |
Same-store multifamily NOI growth | 9.0% - 11.0% |
Non-same-store multifamily NOI(a) | |
Non-residential NOI(b) | |
Other same-store NOI(c) | |
Expenses | |
Property management expense | |
G&A, net of core adjustments | |
Interest expense | |
Transformation Costs(d) |
(a) Includes Carlyle of
(b) Includes revenues and expenses from retail operations at multifamily properties
(c) Consists of Watergate 600
(d) Represents the final costs related to the internalization of property-level operations
2023 Guidance Reconciliation Table
A reconciliation of projected net loss per diluted share to projected Core FFO per diluted share for the full year ending
Low | High | |
Net loss per diluted share | ||
Real estate depreciation and amortization | 1.09 | 1.09 |
NAREIT FFO per diluted share | 0.94 | 1.01 |
Core adjustments | 0.02 | 0.03 |
Core FFO per diluted share |
2022 Guidance Reconciliation Table
As noted above, WashREIT is reaffirming its previously issued guidance for 2022, along with the underlying assumptions as reflected in the Company’s
Low | High | |
Net loss per diluted share | ||
Real estate depreciation and amortization | 1.06 | 1.06 |
NAREIT FFO per diluted share | 0.72 | 0.75 |
Core adjustments | 0.14 | 0.15 |
Core FFO per diluted share |
WashREIT's 2022 and 2023 Core FFO guidance and outlook are based on a number of factors, many of which are outside the Company's control and all of which are subject to change. WashREIT may change the guidance provided during the year as actual and anticipated results vary from these assumptions, but WashREIT undertakes no obligation to do so.
About WashREIT
WashREIT owns approximately 8,900 residential apartment homes in the
Contact:
202-774-3253
ahopkins@washreit.com
Forward Looking Statements
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 and involve risks and uncertainties. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of WashREIT to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Additional factors which may cause the actual results, performance, or achievements of WashREIT to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements include, but are not limited to: risks associated with our ability to execute on our strategies, including new strategies with respect to our operations and our portfolio, including the acquisition of apartment homes in the Southeastern markets, on the terms anticipated, or at all, and to realize any anticipated benefits, including the performance of any acquired residential properties at the levels anticipated; whether actual NOI for Trove and our recently acquired properties, as well as from properties we expect to acquire during the remainder of 2022, will be consistent with our expected NOI for such properties; the risks associated with ownership of real estate in general and our real estate assets in particular; the economic health of the areas in which our properties are located, particularly with respect to greater
This Operational Update also includes certain forward-looking non-GAAP information. Due to the high variability and difficulty in making accurate forecasts and projections of some of the information excluded from these estimates, together with some of the excluded information not being ascertainable or accessible, the Company is unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measures without unreasonable efforts.
Non-GAAP Financial Measures
Core Funds From Operations (“Core FFO”) is calculated by adjusting NAREIT FFO for the following items (which we believe are not indicative of the performance of Washington REIT’s operating portfolio and affect the comparative measurement of Washington REIT’s operating performance over time): (1) gains or losses on extinguishment of debt and gains or losses on interest rate derivatives, (2) expenses related to acquisition and structuring activities, (3) executive transition costs, severance expenses and other expenses related to corporate restructuring and executive retirements or resignations, (4) property impairments, casualty gains and losses, and gains or losses on sale not already excluded from NAREIT FFO, as appropriate, (5) relocation expense and (6) transformation costs. 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 Washington REIT’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.
NAREIT Funds From Operations (“FFO”) is defined by 2018
Net Operating Income (“NOI”), defined as real estate rental revenue less direct real estate operating 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 or loss on sale, if any), plus interest expense, depreciation and amortization, lease origination expenses, general and administrative expenses, acquisition costs, real estate impairment, casualty gain and losses and gain or loss on extinguishment of debt. NOI does not include management expenses, which consist of corporate property management costs and property management fees paid to third parties. They are the primary performance measures we use to assess the results of our operations at the property level. We also present NOI on a cash basis ("Cash NOI") which is calculated as NOI less the impact of straight-lining apartment rent concessions. We believe that each of NOI and Cash NOI is a useful performance measure because, when compared across periods, they reflect the impact on operations of trends in occupancy rates, rental rates and operating costs on an unleveraged basis, providing perspective not immediately apparent from net income. NOI and Cash NOI exclude certain components from net income in order to provide results more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. As a result of the foregoing, we provide each NOI and Cash NOI as a supplement to net income, calculated in accordance with GAAP. NOI and Cash NOI do not represent net income or income from continuing operations calculated in accordance with GAAP. As such, neither should be considered an alternative to these measures as an indication of our operating performance.
Other Definitions
Average Occupancy is based on average daily occupied apartment homes as a percentage of total apartment homes.
Retention represents the percentage of multifamily leases renewed that were set to expire in the period presented.
Transformation Costs include costs related to the strategic shift away from the commercial sector to the residential sector, including the allocation of internal costs, consulting, advisory and termination benefits.
Source:
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