What changed in this filing

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Item 1. Financial Statements

2021-04-29 compared with 2020-10-30 · 106 added, 371 removed, 277 unchanged (63% of the section changed)

1 unchanged sentence

The information furnished in the accompanying unaudited Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Equity and Consolidated Statements of Cash Flows reflects all adjustments, consisting of normal recurring items, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods.

The accompanying financial statements and notes thereto should be read in conjunction with the financial statements and notes for the three years ended December 31, 2019 included in Washington Real Estate Investment Trust’s 2019 Annual Report on Form 10-K, as amended by Amendment No.

1 to the Annual Report on Form 10-K, filed on March 6, 2020.

The accompanying financial statements and notes thereto should be read in conjunction with the financial statements and notes for the three years ended December 31, 2020 included in Washington Real Estate Investment Trust’s 2020 Annual Report on Form 10-K filed on February 16, 2021.

WASHINGTON REAL ESTATE INVESTMENT TRUST AND SUBSIDIARIES

1 unchanged sentence

(IN THOUSANDS, EXCEPT PER SHARE DATA )

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Land $ 551,578 $ 551,578

5 unchanged sentences

Total real estate held for investment, net 2,249,831 2,272,218

Investment in real estate held for sale, net — 57,028

Cash and cash equivalents 3,017 7,700

2 unchanged sentences

Prepaid expenses and other assets 67,216 71,040

Other assets related to properties held for sale — 6,336

Total assets $ 2,380,036 $ 2,409,818

Notes payable, net $ 945,634 $ 945,370

Mortgage notes payable, net — 47,074

Line of credit 33,000 42,000

3 unchanged sentences

Tenant security deposits 10,095 9,990

Other liabilities related to properties held for sale — 718

Total liabilities 1,081,134 1,088,709

5 unchanged sentences

Shares of beneficial interest, $ 0.01 par value;

100,000 shares authorized;

82,351 and 82,099 shares issued and outstanding, as of September 30, 2020 and December 31, 2019, respectively

150,000 and 100,000 shares authorized;

84,564 and 84,409 shares issued and outstanding, as of March 31, 2021 and December 31, 2020, respectively

Additional paid in capital 1,651,680 1,649,366

Distributions in excess of net income ( 325,469 ) ( 298,860 )

Accumulated other comprehensive (loss) income ( 32,759 ) 1,823

Accumulated other comprehensive loss ( 28,473 ) ( 30,563 )

Total shareholders’ equity 1,298,584 1,320,787

6 unchanged sentences

(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Real estate rental revenue $ 69,633 $ 76,792

2 unchanged sentences

General and administrative expenses 5,604 6,337

Real estate impairment — — — 8,374

61,941 64,696

Loss on sale of real estate — — ( 7,539 ) ( 1,046 )

Real estate operating income 7,692 12,096

2 unchanged sentences

Gain on extinguishment of debt — 468

Other income 1,284 —

( 8,839 ) ( 10,377 )

Loss from continuing operations ( 956 ) ( 8,432 ) ( 4,643 ) ( 25,066 )

Discontinued operations:

Income from operations of properties sold or held for sale — 2,942 — 16,158

Gain on sale of real estate — 339,024 — 339,024

Loss on extinguishment of debt — ( 764 ) — ( 764 )

Income from discontinued operations — 341,202 — 354,418

Net (loss) income $ ( 1,147 ) $ 1,719

Net income attributable to noncontrolling interests in subsidiaries — — — —

Net (loss) income attributable to the controlling interests $ ( 956 ) $ 332,770 $ ( 4,643 ) $ 329,352

Basic net (loss) income attributable to the controlling interests per share:

Continuing operations $ ( 0.01 ) $ ( 0.10 ) $ ( 0.06 ) $ ( 0.31 )

Discontinued operations — 4.24 — 4.41

Net (loss) income attributable to the controlling interests per share (1)

Basic net (loss) income per common share:

$ ( 0.02 ) $ 0.02

Diluted net (loss) income attributable to the controlling interests per share:

Continuing operations $ ( 0.01 ) $ ( 0.10 ) $ ( 0.06 ) $ ( 0.31 )

Discontinued operations — 4.24 — 4.41

Net (loss) income attributable to the controlling interests per share (1)

Diluted net (loss) income per common share:

$ ( 0.02 ) $ 0.02

1 unchanged sentence

Weighted average shares outstanding – diluted 84,413 82,287

Dividends declared per share $ 0.30 $ 0.30 $ 0.90 $ 0.90

______________________________

(1) Earnings per share may not sum due to rounding

See accompanying notes to the consolidated financial statements.

2 unchanged sentences

(IN THOUSANDS)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Net (loss) income $ ( 1,147 ) $ 1,719

1 unchanged sentence

Unrealized gain (loss) on interest rate hedges 1,580 ( 34,567 )

Reclassification of unrealized loss on interest rate derivatives to earnings 510 —

Comprehensive income (loss) $ 943 $ ( 32,848 )

Comprehensive income attributable to noncontrolling interests — — — —

Comprehensive income (loss) attributable to the controlling interests $ 818 $ 330,383 $ ( 39,225 ) $ 315,854

See accompanying notes to the consolidated financial statements.

3 unchanged sentences

Shares Issued and Out-standing Shares of Beneficial Interest at Par Value Additional Paid in Capital Distributions in Excess of

Net Income Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity Noncontrolling Interests in Subsidiaries Total Equity

Net Income Accumulated Other Comprehensive Loss Total Shareholders’ Equity Noncontrolling Interests in Subsidiaries Total Equity

Balance, December 31, 2020 84,409 $ 844 $ 1,649,366 $ ( 298,860 ) $ ( 30,563 ) $ 1,320,787 $ 322 $ 1,321,109

Net loss attributable to the controlling interests — — — ( 4,643 ) — ( 4,643 ) — ( 4,643 )

Unrealized loss on interest rate hedges — — — — ( 34,582 ) ( 34,582 ) — ( 34,582 )

Net loss — — — ( 1,147 ) — ( 1,147 ) — ( 1,147 )

Unrealized gain on interest rate hedges — — — — 1,580 1,580 — 1,580

Amortization of swap settlements — — — — 510 510 — 510

Distributions to noncontrolling interests — — — — — — ( 4 ) ( 4 )

Dividends — — — ( 74,387 ) — ( 74,387 ) — ( 74,387 )

Dividends ($ 0.30 per common share)

— — — ( 25,462 ) — ( 25,462 ) — ( 25,462 )

Equity issuances, net of issuance costs 24 — 467 — — 467 — 467

1 unchanged sentence

Share grants, net of forfeitures and tax withholdings 108 2 1,327 — — 1,329 — 1,329

Balance, September 30, 2020 82,351 $ 824 $ 1,601,160 $ ( 262,435 ) $ ( 32,759 ) $ 1,306,790 $ 325 $ 1,307,115

Balance, March 31, 2021 84,564 $ 846 $ 1,651,680 $ ( 325,469 ) $ ( 28,473 ) $ 1,298,584 $ 318 $ 1,298,902

Shares Issued and Out-standing Shares of Beneficial Interest at Par Value Additional Paid in Capital Distributions in Excess of

1 unchanged sentence

Balance, December 31, 2019 82,099 $ 821 $ 1,592,487 $ ( 183,405 ) $ 1,823 $ 1,411,726 $ 336 $ 1,412,062

Cumulative effect of change in accounting principle — — — ( 906 ) — ( 906 ) — ( 906 )

Net income attributable to the controlling interests — — — 329,352 — 329,352 — 329,352

Net income — — — 1,719 — 1,719 — 1,719

Unrealized loss on interest rate hedges — — — — ( 34,567 ) ( 34,567 ) — ( 34,567 )

Distributions to noncontrolling interests — — — — — — ( 3 ) ( 3 )

Dividends — — — ( 72,339 ) — ( 72,339 ) — ( 72,339 )

Equity issuances, net of issuance costs 145 2 3,679 — — 3,681 — 3,681

Shares issued under Dividend Reinvestment Program 128 1 3,429 — — 3,430 — 3,430

Share grants, net of forfeitures and tax withholdings 109 1 6,052 — — 6,053 — 6,053

Balance, September 30, 2019 80,292 $ 803 $ 1,539,734 $ ( 212,978 ) $ ( 3,659 ) $ 1,323,900 $ 343 $ 1,324,243

See accompanying notes to the consolidated financial statements.

WASHINGTON REAL ESTATE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(IN THOUSANDS)

Shares Issued and Out-standing Shares of Beneficial Interest at Par Value Additional Paid in Capital Distributions in Excess of

Net Income Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity Noncontrolling Interests in Subsidiaries Total Equity

Balance, June 30, 2020 82,327 $ 823 $ 1,598,620 $ ( 236,673 ) $ ( 34,533 ) $ 1,328,237 $ 329 $ 1,328,566

Net loss attributable to the controlling interests — — — ( 956 ) — ( 956 ) — ( 956 )

Unrealized gain on interest rate hedges — — — — 1,774 1,774 — 1,774

Distributions to noncontrolling interests — — — — — — ( 4 ) ( 4 )

Dividends — — — ( 24,806 ) — ( 24,806 ) — ( 24,806 )

Equity offerings, net of issuance costs — — — — — — — —

Shares issued under Dividend Reinvestment Program 23 1 515 — — 516 — 516

Share grants, net of forfeitures and tax withholdings 1 — 2,025 — — 2,025 — 2,025

Balance, September 30, 2020 82,351 $ 824 $ 1,601,160 $ ( 262,435 ) $ ( 32,759 ) $ 1,306,790 $ 325 $ 1,307,115

Shares Issued and Out-standing Shares of Beneficial Interest at Par Value Additional Paid in Capital Distributions in Excess of

Net Income Accumulated Other Comprehensive Loss Total Shareholders’ Equity Noncontrolling Interests in Subsidiaries Total Equity

Balance, June 30, 2019 80,082 $ 801 $ 1,532,497 $ ( 521,661 ) $ ( 1,272 ) $ 1,010,365 $ 343 $ 1,010,708

Net income attributable to the controlling interests — — — 332,770 — 332,770 — 332,770

Unrealized loss on interest rate hedges — — — — ( 2,387 ) ( 2,387 ) — ( 2,387 )

Dividends — — — ( 24,087 ) — ( 24,087 ) — ( 24,087 )

Dividends ($ 0.30 per common share)

— — — ( 24,820 ) — ( 24,820 ) — ( 24,820 )

Equity issuances, net of issuance costs 46 1 1,241 — — 1,242 — 1,242

1 unchanged sentence

Share grants, net of forfeitures and tax withholdings 135 1 1,593 — — 1,594 — 1,594

Balance, September 30, 2019 80,292 $ 803 $ 1,539,734 $ ( 212,978 ) $ ( 3,659 ) $ 1,323,900 $ 343 $ 1,324,243

Balance, March 31, 2020 82,315 $ 823 $ 1,596,242 $ ( 206,506 ) $ ( 32,744 ) $ 1,357,815 $ 333 $ 1,358,148

See accompanying notes to the consolidated financial statements.

2 unchanged sentences

(IN THOUSANDS)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities

2 unchanged sentences

Depreciation and amortization 29,643 29,720

Credit losses (gains) on lease related receivables 3,271 ( 45 )

Real estate impairment — 8,374

Loss (gain) on sale of real estate 7,539 ( 337,978 )

Credit losses on lease related receivables 1,043 923

Share-based compensation expense 1,664 1,778

Amortization of debt premiums, discounts and related financing costs 2,036 2,632

(Gain) loss on extinguishment of debt ( 262 ) 764

Net amortization of debt premiums, discounts and related financing costs 1,112 645

Gain on extinguishment of debt — ( 468 )

Changes in operating other assets ( 1,619 ) 895

2 unchanged sentences

Cash flows from investing activities

Real estate acquisitions, net — ( 528,588 )

Net cash received for sale of real estate 56,353 582,551

Capital improvements to real estate ( 4,032 ) ( 10,846 )

6 unchanged sentences

Principal payments – mortgage notes payable — ( 46,567 )

Repayments of unsecured notes payable ( 250,000 ) ( 450,000 )

Proceeds from term loan 150,000 450,000

Payment of financing costs ( 567 ) ( 1,219 )

Distributions to noncontrolling interests ( 4 ) ( 3 )

6 unchanged sentences

Cash, cash equivalents and restricted cash at end of period $ 3,593 $ 21,235

WASHINGTON REAL ESTATE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

Nine Months Ended September 30,

Supplemental disclosure of cash flow information:

8 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

NATURE OF BUSINESS

4 unchanged sentences

We believe that we qualify as a real estate investment trust (“REIT”) under Sections 856-860 of the Internal Revenue Code of 1986, as amended (the “Code”), and intend to continue to qualify as such.

To maintain our status as a REIT, we are, among other things, required to distribute 90% of our REIT taxable income (which is, generally, our ordinary taxable income, with certain modifications), excluding any net capital gains and any deductions for dividends paid to our shareholders on an annual basis.

To maintain our status as a REIT, we are, among other things, required to distribute 90% of our REIT taxable income (determined before the deduction for dividends paid and excluding net capital gains to our shareholders) on an annual basis.

When selling a property, we generally have the option of (a) reinvesting the sales proceeds of property sold in a way that allows us to defer recognition of some or all taxable gain realized on the sale, (b) distributing gains to the shareholders with no tax to us or (c) treating net long-term capital gains as having been distributed to our shareholders, paying the tax on the gain deemed distributed and allocating the tax paid as a credit to our shareholders.

Generally, and subject to our ongoing qualification as a REIT, no provisions for income taxes are necessary except for taxes on undistributed taxable income and taxes on the income generated by our taxable REIT subsidiaries (“TRSs”).

Our TRSs are subject to corporate federal and state income tax on their taxable income at regular statutory rates, or as calculated under the alternative minimum tax, as appropriate.

As of both September 30, 2020 and December 31, 2019, our TRSs had a deferred tax asset of $ 1.4 million that was fully reserved.

As of both September 30, 2020 and December 31, 2019, we had deferred state and local tax liabilities of $ 0.6 million.

These deferred tax liabilities are recorded in Accounts payable and other liabilities on our consolidated balance sheets and are primarily related to temporary differences in the timing of the recognition of revenue, depreciation and amortization.

Our TRSs are subject to corporate federal and state income tax on their taxable income at regular statutory rates.

As of both March 31, 2021 and December 31, 2020, our TRSs had a deferred tax asset of $ 1.4 million that was fully reserved.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATIONS

Significant Accounting Policies

We have prepared our consolidated financial statements using the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2019, as amended by Amendment No.

1 to the Annual Report on Form 10-K, filed on March 6, 2020.

Pronouncements Adopted

Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other significant Matters

ASU 2016-13, Measurement of Credit Losses on Financial Instruments .

This standard requires financial assets measured on an amortized cost basis, including trade receivables, to be presented at the net amount expected to be collected.

We adopted the new standard as of January 1, 2020.

The adoption of the new standard did not have a material effect on our consolidated financial statements.

ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software .

This standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance to determine which implementation costs to capitalize as assets.

We adopted the new standard as of January 1, 2020.

The adoption of the new standard did not have a material effect on our consolidated financial statements.

Standard/Description Effective Date and Adoption Considerations Effect on Financial Statements or Other significant Matters

ASU 2020-04, Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

This standard contains optional practical expedients and exceptions for applying Generally Accepted Accounting Principles (“GAAP”) to contracts, hedging relations, and other transactions affected by reference rate reform if certain criteria are met.

We elected certain optional practical expedients as of January 1, 2020.

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

As of January 1, 2020, we have elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Application of these expedients preserves the presentation of derivatives consistent with past presentation.

We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

COVID-19 Lease Modification Accounting Relief

In April 2020, the Financial Accounting Standards Board (“FASB”) staff issued a question-and-answer document (“Q&A”) that addresses their belief that the guidance on lease modifications in GAAP does not contemplate concessions being executed as rapidly as they were executed as a result of the major financial crisis arising from the COVID-19 pandemic.

Under ASC 842, Leases , we evaluate, on a lease by lease basis, if a lease concession is the result of a new arrangement reached with the tenant, which could result in lease modification accounting, or if a lease concession is contemplated in the existing lease agreement, which is precluded from lease modification accounting.

In the Q&A, the staff stated that entities may elect to not evaluate whether a concession provided by a lessor to a lessee in response to the COVID-19 pandemic is a lease modification.

This election must be applied consistently to leases with similar characteristics and circumstances.

The election permits entities, if certain criteria are met, to account for concessions as if they were contemplated in the existing contract (and accounted for as a negative variable rental revenue) or evaluate the lease concessions for lease modification accounting.

We have elected to utilize the relief provided by the FASB staff.

This election did not have a material impact on our consolidated financial statements as of September 30, 2020, and we do not expect material impacts in future periods.

We have prepared our consolidated financial statements using the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2020.

Principles of Consolidation and Basis of Presentation

4 unchanged sentences

In addition, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for the periods presented have been included.

These unaudited financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2019, as amended by Amendment No.

1 to the Annual Report on Form 10-K, filed on March 6, 2020.

Within these notes to the financial statements, we refer to the three months ended September 30, 2020 and September 30, 2019 as the “2020 Quarter” and the “2019 Quarter,” respectively, and the nine months ended September 30, 2020 and September 30, 2019 as the “2020 Period” and the “2019 Period,” respectively.

Discontinued Operations

We classify properties as held for sale when they meet the necessary criteria, which include:

(a) senior management commits to a plan to sell the assets, (b) the assets are available for immediate sale in their present condition subject only to terms that are usual and customary for sales of such assets, (c) an active program to locate a buyer and other actions required to complete the plan to sell the assets have been initiated, (d) the sale of the assets is probable, and transfer of the assets is expected to qualify for recognition as a completed sale, within one year, (e) the assets are being actively marketed for sale at a price that is reasonable in relation to its current fair value and (f) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Depreciation on these properties is discontinued at the time they are classified as held for sale, but operating revenues, operating expenses and interest expense continue to be recognized until the date of sale.

Revenues and expenses of properties that are either sold or classified as held for sale are presented as discontinued operations for all periods presented in the consolidated statements of operations if the dispositions represent a strategic shift that has (or will have) a major effect on our operations and financial results.

Interest on debt that can be identified as specifically attributed to these properties is included in discontinued operations.

If the dispositions do not represent a strategic shift that has (or will have) a major effect on our operations and financial results, then the revenues and expenses of the properties that are classified as sold or held for sale are presented as continuing operations in the consolidated statements of operations for all periods presented.

These unaudited financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2020.

Within these notes to the financial statements, we refer to the three months ended March 31, 2021 and March 31, 2020 as the “2021 Quarter” and the “2020 Quarter,” respectively.

Restricted Cash

Restricted cash includes funds escrowed for tenant security deposits, real estate tax, insurance and mortgage escrows and escrow deposits required by lenders on certain of our properties to be used for future building renovations or tenant improvements.

Restricted cash includes funds held in escrow for tenant security deposits.

Use of Estimates in the Financial Statements

1 unchanged sentence

Actual results could differ from those estimates.

We acquired the following properties during the 2019 Period:

Acquisition Date Property Name Property Type # of Units (unaudited) Contract Purchase Price (in thousands)

April 30, 2019 Assembly Portfolio - Virginia (1)

Multifamily 1,685 $ 379,100

June 27, 2019 Assembly Portfolio - Maryland (2)

Multifamily 428 82,070

July 23, 2019 Cascade at Landmark Multifamily 277 69,750

Total 2019 2,390 $ 530,920

______________________________

(1) Consists of Assembly Alexandria, Assembly Manassas, Assembly Dulles, Assembly Leesburg and Assembly Herndon.

(2) Consists of Assembly Germantown and Assembly Watkins Mill.

The Assembly Portfolio - Virginia and Assembly Portfolio - Maryland properties are collectively the “Assembly Portfolio.”

Development/Redevelopment

We have properties under development/redevelopment and held for current or future development.

As of September 30, 2020, we have invested $ 130.9 million, including the cost of acquired land, in Trove, a 401 -unit multifamily development adjacent to The Wellington.

During the 2020 Period, we substantially completed major construction activities for Trove’s base building and garage and delivered 205 units.

As of September 30, 2020, we have placed into service assets totaling $ 83.6 million.

We have also invested $ 28.2 million, including the cost of acquired land, in a multifamily development adjacent to Riverside Apartments.

In addition, in our multifamily and office segments, we continue to capitalize qualifying costs on several other projects with minor development activity necessary to get each project ready for its intended use.

As of March 31, 2021, we have invested $ 28.9 million, including the cost of acquired land, in a multifamily development adjacent to Riverside Apartments.

In addition, in our multifamily and office segments, we continue to capitalize qualifying costs on several other projects with minor development activity necessary to ready each project for its intended use.

We placed the remainder of the Trove development costs into service during the 2021 Quarter.

Properties Sold and Held for Sale

1 unchanged sentence

The proceeds from the sales may be reinvested into other properties, used to fund development operations or to support other corporate needs or distributed to our shareholders.

We sold our interests in the following properties during 2020 and 2019:

We did not sell or classify any properties as held for sale during the 2021 Quarter.

We sold our interests in the following properties during 2020:

Disposition Date Property Name Property Type Rentable Square Feet Contract Sales Price

2 unchanged sentences

April 21, 2020 John Marshall II Office 223,000 $ 57,000 $ ( 6,855 )

Total 2020 223,000 $ 57,000 $ ( 6,855 )

June 26, 2019 Quantico Corporate Center (1)

Office 272,000 $ 33,000 $ ( 1,046 )

July 23, 2019 Shopping Center Portfolio (2)

Retail 800,000 485,250 333,023

August 21, 2019 Frederick Crossing and Frederick County Square Retail 520,000 57,500 9,507

August 27, 2019 Centre at Hagerstown Retail 330,000 23,500 ( 3,506 )

December 19, 2019 1776 G Street Office 262,000 129,500 61,007

December 2, 2020 Monument II Office 207,000 53,000 ( 8,595 )

December 17, 2020 1227 25th Street NW Office 135,000 53,500 1,125

Total 2020 565,000 $ 163,500 $ ( 14,325 )

______________________________

(1) Consists of 925 and 1000 Corporate Drive.

(2) Consists of five retail properties:

Gateway Overlook, Wheaton Park, Olney Village Center, Bradlee Shopping Center and Shoppes of Foxchase.

During the second quarter of 2019, we sold Quantico Corporate Center, an office property in Stafford, Virginia, consisting of two office buildings totaling 272,000 square feet, for a contract sale price of $ 33.0 million, recognizing a loss on sale of real estate of $ 1.0 million.

Prior to the sale, due to the negotiations to sell the property, we evaluated Quantico Corporate Center for impairment and recognized an $ 8.4 million impairment charge during the first quarter of 2019 in order to reduce the carrying value of the property to its estimated fair value.

In June 2019, we entered into two separate purchase and sale agreements with two separate buyers to sell the Shopping Center Portfolio (Gateway Overlook, Wheaton Park, Olney Village Center, Bradlee Shopping Center and Shoppes of Foxchase) and the Power Center Portfolio (Frederick Crossing, Frederick County Square and Centre at Hagerstown).

As of June 30, 2019, the properties in the Retail Portfolio (as defined below) met the criteria for classification as held for sale.

We closed on the Shopping Center Portfolio sale transaction on July 23, 2019, recognizing a gain on sale of real estate of $ 333.0 million.

Prior to closing on the disposition of the Shopping Center Portfolio, we prepaid the mortgage note secured by Olney Village Center, incurring a loss on extinguishment of debt of approximately $ 0.8 million, which we recognized in the third quarter of 2019.

In the third quarter of 2019, the purchase and sale agreement to sell the Power Center Portfolio was amended to include only Frederick Crossing and Frederick County Square.

We closed on the sale of these assets on August 21, 2019, recognizing a gain on sale of real estate of $ 9.5 million.

Following the amendment to the purchase and sale agreement to sell the Power Center Portfolio, we marketed Centre at Hagerstown for sale and identified a separate buyer.

We closed on the sale of this asset on August 27, 2019, recognizing a loss on sale of real estate of $ 3.5 million.

References to the “Retail Portfolio” include the Shopping Center Portfolio, Frederick Crossing, Frederick County Square and Centre at Hagerstown.

The disposition of the Retail Portfolio represented a strategic shift that had a major effect on our financial results and we accordingly reported the Retail Portfolio as discontinued operations.

The Retail Portfolio represented a majority of our retail assets by net operating income and following its sale, we determined that our retail line of business was no longer a reportable segment.

In October 2019, we renewed and extended our lease with the World Bank at 1776 G Street NW, an office property in Washington, DC, through December 31, 2025.

In December 2019, we sold the property to the World Bank for a contract sale price of $ 129.5 million, recognizing a gain on sale of real estate of $ 61.0 million.

In December 2019, we executed a purchase and sale agreement to sell John Marshall II for a contract sale price of $ 63.4 million.

Upon execution of the purchase and sale agreement, the property met the criteria for classification as held for sale.

In April 2020, we executed an amendment to the purchase and sale agreement which decreased the contract sale price to $ 57.0 million and closed on the sale on April 21, 2020, recognizing a loss on sale of real estate of $ 6.9 million.

As of September 30, 2020, we assessed certain properties for impairment and did not recognize any impairment charges during the 2020 Quarter.

We applied reasonable estimates and judgments in evaluating each of the properties as of September 30, 2020.

We have fully transferred control of the assets associated with these disposed properties and do not have continuing involvement in their operations.

As of March 31, 2021, we assessed certain properties for impairment and did not recognize any impairment charges during the 2021 Quarter.

We applied reasonable estimates and judgments in evaluating each of the properties as of March 31, 2021.

Should external or internal circumstances change requiring the need to shorten holding periods or adjust future estimated cash flows from our properties, we could be required to record impairment charges in the future.

Discontinued Operations

The results of the Retail Portfolio are classified as discontinued operations and are summarized as follows (amounts in thousands, except for share data):

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019

Real estate rental revenue $ 4,126 $ 28,200

Real estate expenses ( 1,095 ) ( 6,803 )

Depreciation and amortization ( 59 ) ( 4,926 )

Interest expense ( 30 ) ( 313 )

Loss on extinguishment of debt ( 764 ) ( 764 )

Gain on sale of real estate 339,024 339,024

Income from discontinued operations $ 341,202 $ 354,418

Basic net income per share $ 4.24 $ 4.41

Diluted net income per share $ 4.24 $ 4.41

Capital expenditures $ — $ 809

LEASE ACCOUNTING

Leasing as a Lessor

Future Minimum Rental Income

As of September 30, 2020, non-cancelable commercial operating leases provide for future minimum rental income from continuing operations as follows (in thousands).

Apartment leases are not included as the terms are generally for one year or less.

2020 $ 34,386

Thereafter 327,560

Leasing as a Lessee

2000 M Street, an office property in Washington, DC, is subject to an operating ground lease with a remaining term of 51 years.

Rental payments under this lease are subject to percentage rent variable payments, which are not included as part of our measurement of straight-line rental expense.

We recognized straight-line rental expense of $ 0.1 million during each of the 2020 Quarter and 2019 Quarter and $ 0.2 million for each of the 2020 Period and 2019 Period, respectively.

We recognized variable rental payments of $ 0.2 million during each of the 2020 Quarter and 2019 Quarter and $ 0.7 million during each of the 2020 Period and 2019 Period, respectively.

We recognized a right of use asset (included in Income producing property) and lease liability (included in Accounts payable and other liabilities) of $ 4.2 million.

We used a discount rate of approximately 5.9 %, which was derived from our assessment of

securitized rates for similar assets and credit quality.

We recognized $ 0.1 million of right-of-use and lease liability amortization during each of the 2020 Quarter and 2019 Quarter and $ 0.2 million for each of the 2020 Period and 2019 Period, respectively.

The following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments on our operating ground lease as of September 30, 2020 and a reconciliation of those cash flows to the operating lease liability as of September 30, 2020 (in thousands):

Thereafter 11,895

Imputed interest ( 9,210 )

Lease liability $ 3,790

MORTGAGE NOTES PAYABLE

In January 2020, we prepaid the $ 45.6 million mortgage note secured by Yale West, which was scheduled to mature in 2052.

As a result of the transaction, we recognized a gain on extinguishment of debt of $ 0.5 million related to the write-off of an unamortized mortgage premium of $ 1.4 million, partially offset by a prepayment penalty of $ 0.9 million.

Following this repayment, we have no outstanding mortgage notes.

UNSECURED LINE OF CREDIT PAYABLE

During the first quarter of 2018, we entered into an amended and restated credit agreement (“Credit Agreement”) which provides for a $ 700.0 million unsecured revolving credit facility (“Revolving Credit Facility”), the continuation of an existing $ 150.0 million unsecured term loan (“2015 Term Loan”) and an additional $ 250.0 million unsecured term loan (“2018 Term Loan”).

In the fourth quarter of 2020, we repaid all $ 150.0 million of borrowings on the 2015 Term Loan.

The Revolving Credit Facility has a four-year term ending in March 2022, with two six-month extension options.

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The Revolving Credit Facility bears interest at a rate of either one month LIBOR plus a margin ranging from 0.775 % to 1.55 % or the base rate plus a margin ranging from 0.0 % to 0.55 % (in each case depending upon WashREIT’s credit rating).

The base rate is the highest of the administrative agent’s prime rate, the federal funds rate plus 0.50 % and the LIBOR market index rate plus 1.0 %.

The base rate is the highest of the administrative agent’s prime rate, the federal funds rate plus 0.50 % and the LIBOR market index rate

In addition, the Revolving Credit Facility requires the payment of a facility fee ranging from 0.10 % to 0.30 % (depending on WashREIT’s credit rating) on the $ 700.0 million committed revolving loan capacity, without regard to usage.

As of September 30, 2020, the interest rate on the Revolving Credit Facility is one month LIBOR plus 1.00 %, the one month LIBOR is 0.15 % and the facility fee is 0.20 %.

As of March 31, 2021, the interest rate on the Revolving Credit Facility is one month LIBOR plus 1.00 %, the one month LIBOR is 0.11 % and the facility fee is 0.20 %.

All outstanding advances for the Revolving Credit Facility are due and payable upon maturity in March 2022, unless extended pursuant to one or both of the two six-month extension options.

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The 2018 Term Loan has an all-in fixed interest rate of 2.87 %.

The amount of the Revolving Credit Facility’s unsecured line of credit unused and available at September 30, 2020 is as follows (in thousands):

The amount of the Revolving Credit Facility’s unsecured line of credit unused and available at March 31, 2021 is as follows (in thousands):

Committed capacity $ 700,000

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Unused and available $ 667,000

We executed borrowings and repayments on the Revolving Credit Facility during the 2020 Period as follows (in thousands):

We executed borrowings and repayments on the Revolving Credit Facility during the 2021 Quarter as follows (in thousands):

Balance at December 31, 2020 $ 42,000

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Repayments ( 36,000 )

Balance at September 30, 2020 $ 186,000

NOTES PAYABLE

On May 5, 2020, we entered into a one-year , $ 150.0 million unsecured term loan facility (“2020 Term Loan”), maturing on May 5, 2021 with a one-year extension option.

The 2020 Term Loan bears interest at LIBOR + 1.50 %, which margin is subject to change based on our credit ratings, with a 0.50 % floor for the LIBOR rate.

We used the proceeds to repay borrowings under our Revolving Credit Facility.

On September 29, 2020, we entered into a note purchase agreement to issue $ 350.0 million aggregate principal amount of 3.44 % senior unsecured 10 -year notes payable (the “Green Bonds”).

The effective interest rate under the Green Bonds, including amortization of the associated interest rate swaps (see note 8), is 4.09 %.

The closing and funding of the Green Bonds is expected to occur no later than December 29, 2020, with the ability for such closing and funding to occur earlier upon our election, in each case, subject to the satisfaction of standard closing conditions.

We incurred $ 2.5 million of debt issuance costs associated with the Green Bonds which are recorded within Prepaid expenses and other assets on our consolidated balance sheets.

Subsequent to the closing and funding of the Green Bonds, the debt issuance costs will be reported on our consolidated balance sheets as an offset to their related debt.

The Green Bonds will be senior unsecured obligations of WashREIT and will rank equal in right to payment with all other senior unsecured indebtedness of WashREIT.

We intend to use the proceeds of the sale of the Green Bonds to finance or refinance recently completed and future green building and energy efficiency, sustainable water and wastewater management and renewable energy projects (“Eligible Green Projects”) and, pending allocation to such Eligible Green Projects, such net proceeds may be used to repay borrowings outstanding on the Revolving Credit Facility or term loans and may be held in Cash and cash equivalents on our consolidated balance sheets.

The note purchase agreement contains customary financial covenants, including a maximum total leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a minimum unencumbered interest coverage ratio, and a maximum unencumbered leverage ratio.

The note purchase agreement also contains restrictive covenants that, among other things, restrict the ability of WashREIT and its subsidiaries to enter into transactions with affiliates, consolidate or merge or transfer or lease all or substantially all of its assets, create liens, make dividends and distributions if an event of default exists, or substantially change the general nature of our business.

Such financial and restrictive covenants are substantially similar to the corresponding covenants contained in our amended and restated credit agreement and 2020 Term Loan.

The note purchase agreement also contains customary events of default, including payment defaults, cross defaults with certain other indebtedness, breaches of certain covenants and bankruptcy events.

In the case of an event of default, we will generally be prohibited from paying any dividends, subject to certain exceptions including payment of dividends necessary to maintain REIT status, and the Purchasers may, among other remedies, accelerate the payment of all obligations.

In the event of a change in control of WashREIT, we must offer to prepay the Green Bonds at par.

Balance at March 31, 2021 $ 33,000

DERIVATIVE INSTRUMENTS

On September 15, 2015, we entered into two forward interest rate swap arrangements with a total notional amount of $ 150.0 million to swap the floating interest rate under the $ 150.0 million 2015 Term Loan to an all-in fixed interest rate of 2.72 % starting on October 15, 2015 and extending until the maturity of the 2015 Term Loan on March 15, 2021.

On July 22, 2016, we entered into two forward interest rate swap arrangements with a total notional amount of $ 150.0 million to swap the floating interest rate under the $ 150.0 million 2016 Term Loan to an all-in fixed interest rate of 2.86 % starting on March 31, 2017 and extending until the maturity of the 2016 Term Loan on July 21, 2023.

On March 29, 2018, we entered into the $ 250.0 million 2018 Term Loan maturing on July 21, 2023, which increased and replaced the 2016 Term Loan.

The interest rate swap arrangements that had effectively fixed the 2016 Term Loan now effectively fix the interest rate on a $ 150.0 million portion of the 2018 Term Loan at 2.31 %.

The interest rate swap arrangements that had effectively fixed the 2016 Term Loan then effectively fix the interest rate on a $ 150.0 million portion of the 2018 Term Loan at 2.31 %.

On March 29, 2018, we entered into four interest rate swap arrangements with a total notional amount of $ 100.0 million to effectively fix the interest rate on the remaining $ 100.0 million of the 2018 Term Loan at 3.71 %, that commenced on June 29, 2018 and extending until the maturity of the 2018 Term Loan on July 21, 2023.

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In April 2020, we used borrowings from our Revolving Credit Facility to prepay all $ 250.0 million of our 4.95 % 10 -year unsecured notes without penalty.

In September 2020, in conjunction with the entry into the note purchase agreement to issue the Green Bonds (see note 7), we terminated the Forward Swaps.

In September 2020, in conjunction with the entry into the note purchase agreement to issue $ 350.0 million aggregate principal amount of 3.44 % senior unsecured 10 -year notes payable (the “Green Bonds”), we terminated the 2020 Forward Swaps.

At the time of termination, the 2020 Forward Swaps had a liability fair value of $ 20.4 million, which will be amortized as interest expense over the 10 -year term of the Green Bonds.

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The interest rate swaps qualify as cash flow hedges and are recorded at fair value in accordance with GAAP, based on discounted cash flow methodologies and observable inputs.

We record the total change in fair value of the interest rate swap arrangements associated with our cash flow hedges in other comprehensive income (loss).

The resulting unrealized gain or loss on interest rate hedges was the only activity in other comprehensive income (loss) during the periods presented in our consolidated financial statements.

We record the effective portion of changes in fair value of the cash flow hedges in other comprehensive income.

The resulting unrealized loss on the effective portions of the cash flow hedges was the only activity in other comprehensive income (loss) during the periods presented in our consolidated financial statements.

We assess the effectiveness of our cash flow hedges both at inception and on an ongoing basis.

The cash flow hedges were highly effective for all periods presented.

The fair values of the interest rate swaps as of September 30, 2020 and December 31, 2019, are as follows (in thousands):

Derivative Assets (Liabilities)

Derivative Instrument Aggregate Notional Amount Effective Date Maturity Date September 30, 2020 December 31, 2019

Interest rate swaps $ 150,000 October 15, 2015 March 15, 2021 $ ( 1,005 ) $ ( 62 )

The fair values of the interest rate swaps as of March 31, 2021 and December 31, 2020, are as follows (in thousands):

Derivative Liabilities

Derivative Instrument Aggregate Notional Amount Effective Date Maturity Date March 31, 2021 December 31, 2020

Interest rate swaps $ 150,000 March 31, 2017 July 21, 2023 $ ( 3,263 ) $ ( 4,009 )

Interest rate swaps 100,000 June 29, 2018 July 21, 2023 ( 5,411 ) ( 6,246 )

Interest rate swaps 200,000 April 1, 2020 April 1, 2030 — 3,724

$ ( 8,674 ) $ ( 10,255 )

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The net unrealized gains or losses on the effective swaps are recognized in Other comprehensive loss, as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Unrealized gain (loss) on interest rate hedges 1,580 ( 34,567 )

Amounts reported in Accumulated other comprehensive (loss) income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt.

Amounts reported in Accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt.

The gains or losses reclassified from Accumulated other comprehensive loss into interest expense for the three months ended March 31, 2021 and 2020, were as follows (in thousands):

Three Months Ended March 31,

Loss reclassified from Accumulated other comprehensive loss into interest expense $ 510 $ —

During the next twelve months, we estimate that an additional $ 6.1 million will be reclassified as an increase to interest expense.

We have agreements with each of our derivative counterparties that contain a provision whereby we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness.

As of September 30, 2020, we did not have any derivatives in an asset position and the fair value of the derivative liabilities, including accrued interest, was $ 12.4 million.

As of September 30, 2020, we have not posted any collateral related to these agreements.

As of March 31, 2021, we did no t have any derivatives in an asset position and the fair value of the derivative liabilities, including accrued interest, was $ 8.7 million.

As of March 31, 2021, we have not posted any collateral related to these agreements.

Derivative instruments expose us to credit risk in the event of non-performance by the counterparty under the terms of the interest rate hedge agreements.

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Significant unobservable inputs

The only assets or liabilities we had at September 30, 2020 and December 31, 2019 that are recorded at fair value on a recurring basis are the assets held in the Supplemental Executive Retirement Plan (“SERP”), which primarily consist of investments in mutual funds, and the interest rate swaps (see note 8).

The only assets or liabilities we had at March 31, 2021 and December 31, 2020 that are recorded at fair value on a recurring basis are the assets held in the Supplemental Executive Retirement Plan (“SERP”), which primarily consist of investments in mutual funds, and the interest rate swaps (see note 5).

We base the valuations related to the SERP on assumptions derived from significant other observable inputs and accordingly these valuations fall into Level 2 in the fair value hierarchy.

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The valuation of interest rate swaps fall into Level 2 in the fair value hierarchy.

The fair values of these assets and liabilities at September 30, 2020 and December 31, 2019 were as follows (in thousands):

September 30, 2020 December 31, 2019

The fair values of these assets and liabilities at March 31, 2021 and December 31, 2020 were as follows (in thousands):

March 31, 2021 December 31, 2020

Value Level 1 Level 2 Level 3 Fair

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Interest rate swaps $ ( 8,674 ) $ — $ ( 8,674 ) $ — $ ( 10,255 ) $ — $ ( 10,255 ) $ —

Interest rate swaps $ ( 12,372 ) $ — $ ( 12,372 ) $ — $ ( 3,726 ) $ — $ ( 3,726 ) $ —

Financial Assets and Liabilities Not Measured at Fair Value

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The use of different market assumptions or estimation methodologies could have an effect on the estimated fair value amounts.

In addition, fair value estimates are made at a point in time and thus, estimates of fair value subsequent to September 30, 2020 may differ significantly from the amounts presented.

The valuations of cash and cash

equivalents and restricted cash fall into Level 1 in the fair value hierarchy and the valuations of debt instruments fall into Level 3 in the fair value hierarchy.

As of September 30, 2020 and December 31, 2019, the carrying values and estimated fair values of our financial instruments were as follows (in thousands):

September 30, 2020 December 31, 2019

In addition, fair value estimates are made at a point in time and thus, estimates of fair value subsequent to March 31, 2021 may differ significantly from the amounts presented.

The valuations of cash and cash equivalents and restricted cash fall into Level 1 in the fair value hierarchy and the valuations of debt instruments fall into Level 3 in the fair value hierarchy.

As of March 31, 2021 and December 31, 2020, the carrying values and estimated fair values of our financial instruments were as follows (in thousands):

March 31, 2021 December 31, 2020

Carrying Value Fair Value Carrying Value Fair Value

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Restricted cash 576 576 603 603

Mortgage notes payable, net — — 47,074 47,899

Line of credit 33,000 33,000 42,000 42,000

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Restricted share units are converted into shares of our stock upon full vesting through the issuance of new shares.

On February 14, 2020, the board of trustees adopted an Amended and Restated Executive Officer Short-Term Incentive Plan (the “Officer STIP”) and an Amended and Restated Executive Officer Long-Term Incentive Plan (the “Officer LTIP”).

Upon adoption by the board of trustees, both plans became effective for the performance periods beginning January 1, 2020.

Under the Officer LTIP, as revised, all named executive officers will have the opportunity to receive awards based on (i) the achievement of performance measures, which will be established for each performance period, and (ii) continued employment with the Company.

The aggregate weighting for the performance measures and the time-based measures, as determined by the Compensation Committee, will total 100 %.

The performance measures will consist of one or more shareholder return measures and one or more strategic measures.

The awards earned under the Officer LTIP, if any, are payable in our common shares of beneficial interest.

Each participant’s total award under the Officer LTIP with respect to a performance period will be stated as a percentage of the participant’s annual base salary determined as of the beginning of that performance period.

The percentage will depend upon the participant’s position and the degree of achievement of threshold, target, and high performance goals for the performance period which, except as otherwise determined by the Compensation Committee, will be as set forth in the table below:

Threshold Target High

President and Chief Executive Officer 198 % 275 % 440 %

Executive Vice President 143 % 200 % 295 %

Senior Vice President 100 % 143 % 207 %

Any time-based awards under the Officer LTIP will be subject to a three-year vesting schedule, with any award vesting in one-third increments on December 15 of each year of the applicable performance period if the participant remains employed by the Company on each of such dates.

The Officer LTIP provides that following a performance period, 100 % of any performance-based award will vest immediately upon grant.

Each year, the Compensation Committee will establish the threshold, target and high performance goals for each performance measures.

Upon or following completion of a performance period, the degree of achievement of each performance measure will be determined by the Compensation Committee in its discretion.

If a Change in Control (as defined in the Officer LTIP) occurs during a performance period while the participant is employed, the Officer LTIP provides that all time-based awards which are unvested will become vested, and the participant will receive a

pro-rated portion of the shareholder return measure-based awards and the strategic measure-based awards will be calculated at target.

Total Compensation Expense

Total compensation expense recognized in the consolidated financial statements for all outstanding share based awards was $ 2.1 million and $ 1.7 million for the 2020 Quarter and 2019 Quarter, respectively, and $ 5.9 million and $ 6.3 million for the 2020 Period and 2019 Period, respectively.

Total compensation expense recognized in the consolidated financial statements for all outstanding share based awards was $ 1.7 million and $ 1.8 million for the 2021 Quarter and 2020 Quarter, respectively.

Restricted Share Awards

The total fair values of restricted share awards vested was $ 0.8 million and $ 1.7 million for the 2020 Period and 2019 Period, respectively.

The total unvested restricted share awards at September 30, 2020 was 502,300 shares, which had a weighted average grant date fair value of $ 29.99 per share.

As of September 30, 2020, the total compensation cost related to unvested restricted share awards was $ 8.7 million, which we expect to recognize over a weighted average period of 23 months.

The total fair values of restricted share awards vested was $ 1.0 million and $ 0.4 million for the 2021 Quarter and 2020 Quarter, respectively.

The total unvested restricted share awards at March 31, 2021 was 463,100 shares, which had a weighted average grant date fair value of $ 28.36 per share.

As of March 31, 2021, the total compensation cost related to unvested restricted share awards was $ 9.2 million, which we expect to recognize over a weighted average period of 23 months.

EARNINGS PER COMMON SHARE

We determine “Basic earnings per share” using the two-class method as our unvested restricted share awards and units have non-forfeitable rights to dividends, and are therefore considered participating securities.

We compute basic earnings per share by dividing net income attributable to the controlling interest less the allocation of undistributed earnings to unvested restricted share awards and units by the weighted-average number of common shares outstanding for the period.

We compute basic earnings per share by dividing net income less the allocation of undistributed earnings to unvested restricted share awards and units by the weighted-average number of common shares outstanding for the period.

We also determine “Diluted earnings per share” as the more dilutive of the two-class method or the treasury stock method with respect to the unvested restricted share awards.

We further evaluate any other potentially dilutive securities at the end of the period and adjust the basic earnings per share calculation for the impact of those securities.

We further evaluate any other potentially dilutive securities at the end of the period and adjust the basic earnings per share calculation for the impact of those securities that are dilutive.

Our dilutive earnings per share calculation includes the dilutive impact of operating partnership units under the if-converted method and our share based awards with performance conditions prior to the grant date and all market condition awards under the contingently issuable method.

The computations of basic and diluted earnings per share for the three and nine months ended September 30, 2020 and 2019 were as follows (in thousands, except per share data):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Loss from continuing operations $ ( 956 ) $ ( 8,432 ) $ ( 4,643 ) $ ( 25,066 )

Allocation of earnings to unvested restricted share awards to continuing operations ( 151 ) 47 ( 453 ) 118

Adjusted loss from continuing operations attributable to the controlling interests ( 1,107 ) ( 8,385 ) ( 5,096 ) ( 24,948 )

Income from discontinued operations — 341,202 — 354,418

Allocation of earnings to unvested restricted share awards to discontinued operations — ( 1,841 ) — ( 1,870 )

Adjusted income from discontinuing operations — 339,361 — 352,548

Adjusted net (loss) income attributable to the controlling interests $ ( 1,107 ) $ 330,976 $ ( 5,096 ) $ 327,600

The computations of basic and diluted earnings per share for the three months ended March 31, 2021 and 2020 were as follows (in thousands, except per share data):

Three Months Ended March 31,

Net (loss) income $ ( 1,147 ) $ 1,719

Allocation of distributed earnings to unvested restricted share awards ( 139 ) ( 151 )

Adjusted net (loss) income $ ( 1,286 ) $ 1,568

Weighted average shares outstanding – basic 84,413 82,086

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Weighted average shares outstanding – diluted 84,413 82,287

Earnings per common share, basic:

Continuing operations $ ( 0.01 ) $ ( 0.10 ) $ ( 0.06 ) $ ( 0.31 )

Discontinued operations — 4.24 — 4.41

Basic net (loss) income attributable to the controlling interests per common share (1)

$ ( 0.01 ) $ 4.14 $ ( 0.06 ) $ 4.10

Earnings per common share, diluted:

Continuing operations $ ( 0.01 ) $ ( 0.10 ) $ ( 0.06 ) $ ( 0.31 )

Discontinued operations — 4.24 — 4.41

Diluted net (loss) income attributable to the controlling interests per common share (1)

$ ( 0.01 ) $ 4.14 $ ( 0.06 ) $ 4.10

Basic net (loss) income per common share $ ( 0.02 ) $ 0.02

Diluted net (loss) income per common share $ ( 0.02 ) $ 0.02

Dividends declared per common share $ 0.30 $ 0.30

______________________________

(1) Earnings per share may not sum due to rounding.

SEGMENT INFORMATION

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Net operating income is a key measurement of our segment profit and loss and is defined as real estate rental revenue less real estate expenses.

The following tables present revenues, net operating income, capital expenditures and total assets for the three and nine months ended September 30, 2020 and 2019 from these segments, and reconcile net operating income of our reportable segments to net (loss) income attributable to the controlling interests as reported (in thousands):

Three Months Ended September 30, 2020

Office Multifamily Corporate and Other Consolidated

The following tables present revenues, net operating income, capital expenditures and total assets for the three months ended March 31, 2021 and 2020 from these segments, and reconcile net operating income of our reportable segments to net (loss) income as reported (in thousands):

Three Months Ended March 31, 2021

Multifamily Office Corporate and Other Consolidated

Real estate rental revenue $ 36,132 $ 28,599 $ 4,902 $ 69,633

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Interest expense ( 10,123 )

Other income 1,284

Net loss $ ( 1,147 )

Net income attributable to noncontrolling interests in subsidiaries —

Net loss attributable to the controlling interests $ ( 956 )

Capital expenditures $ 3,737 $ 172 $ 130 $ 4,039

Total assets $ 1,322,738 $ 927,757 $ 129,541 $ 2,380,036

Three Months Ended September 30, 2019

Office Multifamily Corporate and Other (1)

Three Months Ended March 31, 2020

Multifamily Office Corporate and Other Consolidated

Real estate rental revenue $ 36,578 $ 35,670 $ 4,544 $ 76,792

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Interest expense ( 10,845 )

Discontinued operations:

Income from operations of properties sold or held for sale 2,942

Gain on sale of real estate 339,024

Loss on extinguishment of debt ( 764 )

Net income 332,770

Net income attributable to noncontrolling interests in subsidiaries —

Net income attributable to the controlling interests $ 332,770

Capital expenditures $ 6,039 $ 5,742 $ 369 $ 12,150

Total assets $ 1,191,838 $ 1,333,146 $ 150,092 $ 2,675,076

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(1) Total assets and capital expenditures include all retail properties, including those classified as discontinued operations.

Nine Months Ended September 30, 2020

Office Multifamily Corporate and Other Consolidated

Real estate rental revenue $ 101,163 $ 108,882 $ 12,844 $ 222,889

Real estate expenses 37,176 43,083 3,937 84,196

Net operating income $ 63,987 $ 65,799 $ 8,907 $ 138,693

Depreciation and amortization ( 89,789 )

General and administrative ( 17,963 )

Interest expense ( 28,307 )

Loss on sale of real estate ( 7,539 )

Gain on extinguishment of debt 468

Net loss ( 4,643 )

Net income attributable to noncontrolling interests in subsidiaries —

Net loss attributable to the controlling interests $ ( 4,643 )

Capital expenditures $ 21,120 $ 15,477 $ 2,089 $ 38,686

Nine Months Ended September 30, 2019

Office Multifamily Corporate and Other (1)

Real estate rental revenue $ 124,164 $ 90,012 $ 14,337 $ 228,513

Real estate expenses 45,937 34,928 4,104 84,969

Net operating income $ 78,227 $ 55,084 $ 10,233 $ 143,544

Depreciation and amortization ( 97,441 )

General and administrative ( 19,803 )

Interest expense ( 41,946 )

Loss on sale of real estate ( 1,046 )

Real estate impairment ( 8,374 )

Discontinued operations:

Income from operations of properties sold or held for sale 16,158

Gain on sale of real estate 339,024

Loss on extinguishment of debt ( 764 )

Net income $ 1,719

Net income attributable to noncontrolling interests in subsidiaries —

Net income attributable to the controlling interests $ 329,352

Capital expenditures $ 3,469 $ 7,088 $ 383 $ 10,940

______________________________

(1) Total assets and capital expenditures include all retail properties, including those classified as discontinued operations.

Total assets $ 1,339,925 $ 1,130,013 $ 152,682 $ 2,622,620

SHAREHOLDERS' EQUITY

On May 4, 2018, we entered into eight separate equity distribution agreements (collectively, the “Equity Distribution Agreements”) with Wells Fargo Securities, LLC, BNY Mellon Capital Markets, LLC, Capital One Securities, Inc., Citigroup Global Markets Inc., Goldman Sachs & Co.

On February 17, 2021, we entered into separate amendments to each of our existing equity distribution agreements (“Original Equity Distribution Agreements”) with each of Wells Fargo Securities, LLC, BNY Mellon Capital Markets, LLC, Capital One Securities, Inc., Citigroup Global Markets Inc., Goldman Sachs & Co.

Morgan Securities LLC, KeyBanc Capital Markets Inc.

and SunTrust Robinson Humphrey, Inc.

relating to the issuance of up to $ 250.0 million of our common shares from time to time.

and Truist Securities, Inc.

(f/k/a SunTrust Robinson Humphrey, Inc.), each dated May 4, 2018 (collectively, as amended, the “Amended Equity Distribution Agreements”).

Also on February 17, 2021, we entered into a separate equity distribution agreement with BTIG, LLC on the same terms as the Amended Equity Distribution Agreements (the “BTIG Equity Distribution Agreement,” together with the Amended Equity Distribution Agreements, the “Equity Distribution Agreements”).

Pursuant to the Equity Distribution Agreements, we may sell, from time to time, up to an aggregate price of $ 550.0 million of our common shares of beneficial interest, $ 0.01 par value per share.

Issuances of our common shares are made at market prices prevailing at the time of issuance.

We may use net proceeds from the issuance of common shares under this program for general corporate purposes, including, without limitation, working capital, the acquisition, renovation, expansion, improvement, development or redevelopment of income producing properties or the repayment of debt.

During the first quarter of 2020, we issued 46,500 shares under this program at a weighted average price of $ 31.07 for net proceeds of $ 1.2 million.

We did no t issue common shares under the Equity Distribution Agreements during the 2020 Quarter or during the second quarter of 2020.

During the 2019 Quarter and Period, we issued 0.1 million common shares at a weighted average price of $ 27.52 for net proceeds of $ 3.7 million.

We may use net proceeds from the issuance of common shares under this program for general business purposes, including, without limitation, working capital, the acquisition, renovation, expansion, improvement, development or redevelopment of income producing properties or the repayment of debt.

Our issuances and net proceeds on the Equity Distribution Agreements and the Original Equity Distribution Agreements, respectively, for the three months ended March 31, 2021 and 2020 are as follows:

Three Months Ended March 31,

Issuance of common shares 24 47

Weighted average price per share $ 22.06 $ 31.07

Net proceeds $ 467 $ 1,241

We have a dividend reinvestment program whereby shareholders may use their dividends and optional cash payments to purchase common shares.

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Net proceeds under this program are used for general corporate purposes.

Our issuances and net proceeds on the dividend reinvestment program for the three and nine months ended September 30, 2020 and 2019 are as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Our issuances and net proceeds on the dividend reinvestment program for the three months ended March 31, 2021 and 2020 are as follows:

Three Months Ended March 31,

Issuance of common shares 23 35

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements