Acquisition / Disposition

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________ FORM 8-K   ___________________________________________________ CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): July 23, 2019 WASHINGTON REAL ESTATE INVESTMENT TRUST (Exact name of registrant as specified in its charter) Maryland 001-06622 53-0261100 (State of incorporation) (Commission File Number) (IRS Employer Identification Number) 1775 EYE STREET, NW , SUITE 1000 WASHINGTON , DC 20006 (Address of principal executive office) (Zip code) Registrant’s telephone number, including area code: ( 202 )  774-3200 ___________________________________________________ Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ☐   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Shares of Beneficial Interest WRE NYSE Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter). Emerging growth company  ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐   EXPLANATORY NOTE Washington Real Estate Investment Trust (“WashREIT”) previously reported the acquisition of seven multifamily portfolio apartments, collectively referred to as the Assembly Portfolio, which was completed in two tranches. The five Virginia assets in the Assembly Portfolio were acquired by WashREIT on April 30, 2019, and the two Maryland assets in the Assembly Portfolio were acquired by WashREIT on June 27, 2019. These acquisitions were reported on Current Reports on Form 8-K on May 1, 2019 and June 27, 2019, respectively, which Reports were amended on July 11, 2019 to provide the required financial information related to such acquisitions. The adjustments presented in the pro forma financial information therein giving effect to the acquisition of the Assembly Portfolio are repeated in the pro forma financial information included in this Report, in addition to presenting adjustments giving effect to the disposition of the Shopping Center Portfolio, described below and reported herein under Item 2.01 and Item 9.01. Item 2.01 Completion of Acquisition or Disposition of Assets. On June 26, 2019 , WashREIT reported in a Current Report on Form 8-K that it had entered into a purchase and sale agreement with Global Retail Investors, LLC, a Delaware limited liability company (the “Buyer”), to sell a portfolio of five retail assets (the “Shopping Center Portfolio”) for a contract sale price of $485.25 million . On July 23, 2019 , WashREIT closed on the transaction. The five retail assets in the Shopping Center Portfolio are as follows: 1. Bradlee Shopping Center - 3600 King Street, Alexandria, Virginia 22302 2. Shoppes at Foxchase - 4500-4600 Duke Street, Alexandria, Virginia 22304 3. Gateway Overlook - Little Patuxent Pkwy/Rte 175 & Waterloo Rd/Rte 108, Columbia, Maryland 21075 4. Olney Village Shopping Center - 18100 - 18330 Village Center Drive, Olney, Maryland 20832 5. Wheaton Park Shopping Center - Georgia Avenue and Shorefield Road, Wheaton, Maryland 20902 The foregoing description of the purchase and sale agreement does not purport to be complete and is qualified in its entirety by reference to the purchase and sale agreement, a copy of which is filed as an Exhibit to this Current Report on Form 8-K. ITEM 9.01. Financial Statements and Exhibits. (b) Pro Forma Financial Information. The following pro forma financial statements reflecting the Shopping Center Portfolio disposition described above (as defined in Regulation S-X) are filed herein: 1. WashREIT Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2019. 2. WashREIT Unaudited Pro Forma Condensed Consolidated Statements of Income (Loss) for the quarter ended March 31, 2019 and the years ended December 31, 2018, 2017 and 2016. (d) Exhibits The following exhibits are furnished with this report on Form 8-K: Exhibit No. Description     10.1 Purchase and Sale Agreement, dated as of June 26, 2019 between WashREIT and Global Retail Investors, LLC. 101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File Because its XBRL tags are embedded within the Inline XBRL document. 101.SCH Taxonomy Extension Schema Document 101.CAL Taxonomy Extension Calculation Linkbase Document 101.DEF Taxonomy Extension Definition Linkbase Document 101.LAB Taxonomy Extension Label Linkbase Document 101.PRE Taxonomy Extension Presentation Linkbase Document SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.       WASHINGTON REAL ESTATE INVESTMENT TRUST         (Registrant)                                       By: /s/ W. Drew Hammond             (Signature)                           W. Drew Hammond             Vice President, Chief Accounting Officer                   July 26, 2019             (Date)           WASHINGTON REAL ESTATE INVESTMENT TRUST UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AND CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) The unaudited consolidated pro forma financial information should be read in conjunction with WashREIT's Current Reports on Form 8-K filed with the Securities and Exchange Commission on May 1, 2019 and June 27, 2019, reporting the acquisition of the Assembly Portfolio and amended on July 11, 2019; the consolidated financial statements and notes thereto included in WashREIT's Annual Report on Form 10-K for the year ended December 31, 2018 and WashREIT's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019; and the Statements of Revenues and Certain Expenses of the Assembly Portfolio included in the Current Report on Form 8-K/A filed on July 11, 2019, as well as associated unaudited consolidated pro forma financial information giving effect to the acquisition of the Assembly Portfolio, the adjustments from which are repeated herein. In management's opinion, all adjustments necessary to reflect these dispositions, acquisitions and related transactions have been made. The unaudited consolidated pro forma financial information is not necessarily indicative of what WashREIT's actual results of operations would have been had the transactions been consummated on the dates indicated, nor does it purport to represent WashREIT's results of operations or financial position for any future period. The pro forma results of operations for the periods ended December 31, 2018, 2017 and 2016 and March 31, 2019 are not necessarily indicative of the operating results for these periods. The Shopping Center Portfolio, sold on July 23, 2019 for an aggregate contract price of $485.25 million (exclusive of closing costs) consists of five retail assets as follows: 1. Bradlee Shopping Center - 3600 King Street, Alexandria, Virginia 22302 2. Shoppes at Foxchase - 4500-4600 Duke Street, Alexandria, Virginia 22304 3. Gateway Overlook - Little Patuxent Pkwy/Rte 175 & Waterloo Rd/Rte 108, Columbia, Maryland 21075 4. Olney Village Shopping Center - 18100 - 18330 Village Center Drive, Olney, Maryland 20832 5. Wheaton Park Shopping Center - Georgia Avenue and Shorefield Road, Wheaton, Maryland 20902 As of June 30, 2019, we determined that the Shopping Center Portfolio met the criteria for classification as held for sale and presentation as discontinued operations. The Assembly Portfolio, acquired in two tranches on the dates specified below, which contains 2,113 units, consists of seven suburban Class B apartment communities in Northern Virginia and Montgomery County, Maryland. The seven assets in the portfolio are as follows: Virginia Assets ($379.1 million (aggregate contract price, exclusive of closing costs); purchased on April 30, 2019 ) 1. 205 Century Place, Alexandria 2. 13690 Legacy Circle, Herndon 3. 2511 Farmcrest Drive, Herndon 4. 10519 Lariat Lane, Manassas 5. 86 Heritage Way, NE, Leesburg Maryland Assets ($82.1 million (aggregate contract price, exclusive of closing costs); purchased on June 27, 2019 ) 1. 2 Observation Court, Germantown 2. 99 Watkins Mill Road, Gaithersburg On April 30, 2019, WashREIT entered into a six-month, $450.0 million unsecured term loan facility (“2019 Term Loan”), maturing on October 30, 2019 with an option to extend for an additional six-month period. The 2019 Term Loan was used to fund the acquisition of the Assembly Portfolio. On July 25, 2019, $350.0 million of the outstanding balance was repaid using proceeds from the sale of the Shopping Center Portfolio. The pro forma balance sheet as of March 31, 2019 presents consolidated financial information as if the disposition of the Shopping Center Portfolio, the acquisition of the Assembly Portfolio and the borrowings and repayments under the 2019 Term Loan had taken place on March 31, 2019. The pro forma condensed consolidated statements of income (loss) for the year ended December 31, 2018 and the quarter ended March 31, 2019 present the pro forma results of operations as if the Shopping Center Portfolio disposition had taken place as of January 1, 2018 and the Assembly Portfolio acquisition had taken place as of January 1, 2018. The pro forma condensed consolidated statements of income (loss) for the years ended December 31, 2017 and 2016 present the pro forma results of operations as if the Shopping Center Portfolio had been classified as discontinued operations as of January 1, 2016. The pro forma adjustments to record interest expense assume the 2019 Term Loan was obtained on January 1, 2018, with $350.0 million of the borrowings repaid on January 1, 2018 using proceeds from the sale of the Shopping Center Portfolio. The remaining $100.0 million balance is assumed to be outstanding for the entire year ended December 31, 2018 and the entire quarter ended March 31, 2019. Explanations or details of the pro forma adjustments are in the notes to the financial statements. WASHINGTON REAL ESTATE INVESTMENT TRUST AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET MARCH 31, 2019 (IN THOUSANDS)   WashREIT   Acquisition of Assembly Portfolio and related financing   Disposition of Shopping Center Portfolio   Repayment of 2019 Term Loan   Pro Forma Assets                   Land $ 612,692   $ 80,102 (1)   $ (55,738 ) (3)   $ —   $ 637,056 Income producing property 2,276,385   367,427 (1)   (139,617 ) (3)   —   2,504,195   2,889,077   447,529   (195,355 )   —   3,141,251 Accumulated depreciation and amortization (781,302 )   —   60,630 (3)   —   (720,672 ) Net income producing property 2,107,775   447,529   (134,725 )   —   2,420,579 Properties under development or held for future development 97,288   —   —   —   97,288 Total real estate held for investment, net 2,205,063   447,529   (134,725 )   —   2,517,867 Cash and cash equivalents 12,025   (9,173 ) (2)   469,298 (4)   (350,000 ) (10)   122,150 Restricted cash 1,368   —   —   —   1,368 Rents and other receivables, net 73,293   —   (6,861 ) (3)   —   66,432 Prepaid expenses and other assets 116,718   13,751 (1)   (6,141 ) (3)   —   123,954       167 (1)   (541 ) (5)         Total assets $ 2,408,467   $ 452,274   $ 321,030   $ (350,000 )   $ 2,831,771 Liabilities                   Notes payable $ 995,750   $ 449,012 (2)   $ —   $ (350,000 ) (10)   1,094,762 Mortgage notes payable 58,805   —   (10,999 ) (6)   —   47,806 Lines of credit 228,000   —   —   —   228,000 Accounts payable and other liabilities 67,279   1,353 (1)   (1,745 ) (3)   —   66,887       708 (1)   2,292 (7)       3,000 Advance rents 10,418   449 (1)   (990 ) (3)   —   9,877 Tenant security deposits 10,019   752 (1)   (562 ) (3)   —   10,209 Total liabilities 1,370,271   452,274   (12,004 )   (350,000 )   1,460,541 Equity                   Shareholders’ equity                 Preferred shares; $0.01 par value; 10,000 shares authorized; no shares issued or outstanding —   —   —   —   — Shares of beneficial interest, $0.01 par value; 100,000 shares authorized; 80,029 shares issued and outstanding 800   —   —   —   800 Additional paid in capital 1,529,916   —   —   —   1,529,916 Distributions in excess of net income (498,537 )   —   333,771 (8)   —   (165,503 )           (737 ) (9)       Accumulated other comprehensive loss 5,670   —   —   —   5,670 Total shareholders’ equity 1,037,849   —   333,034   —   1,370,883 Noncontrolling interests in subsidiaries 347   —   —   —   347 Total equity 1,038,196   —   333,034   —   1,371,230 Total liabilities and shareholders’ equity $ 2,408,467   $ 452,274   $ 321,030   $ (350,000 )   $ 2,831,771 See accompanying notes to the pro forma condensed consolidated financial statements. NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET MARCH 31, 2019 (1)     The total cost of the acquisition of the Assembly Portfolio was as follows (in thousands): Contract purchase price $ 461,170 Credit from seller (2,252 ) Capitalized acquisition costs 2,362 Total $ 461,280 WashREIT accounted for the acquisition as an asset acquisition. Accordingly, we capitalized the $2.4 million of costs directly associated with the acquisition. We measured the value of the acquired physical assets (land, building and improvements) and in-place leases (absorption costs) by allocating the total cost of the acquisition on a relative fair value basis. WashREIT has recorded the total cost of the Assembly Portfolio as follows (in thousands): Land $ 80,102 Buildings and improvements 367,427 Absorption costs 13,751 Total $ 461,280 The weighted average remaining life for the absorption costs is seven months. The difference between cash paid ( $458.2 million ) and the total cost ( $461.3 million ) is comprised of the following (in thousands): Credit to seller for prepaid expenses $ (167 ) Credit to WashREIT for assumed liabilities 1,353 Credit to WashREIT for advance rents 449 Credit to WashREIT for security deposits 752 Additional acquisition-related expenses not paid at settlement 708   $ 3,095 (2) On April 30, 2019, WashREIT entered into the 2019 Term Loan. The 2019 Term Loan bears interest, at WashREIT's option, at a rate of either LIBOR plus a margin ranging from 0.75% to 1.65% or a base rate plus a margin ranging 0.0% to 0.65% (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 daily one-month LIBOR rate plus 1.0%. The 2019 Term Loan currently has an interest rate based on the weekly LIBOR rate plus 100 basis points, based on WashREIT’s current unsecured debt rating. As of June 28, 2019, the all-in rate was 3.39%. The pro forma adjustments to record interest expense assume the 2019 Term Loan was obtained on January 1, 2018, with $350.0 million of the borrowings repaid using proceeds from the sale of the Shopping Center Portfolio (see note 10). The remaining $100.0 million balance is assumed to be outstanding for the entire year ended December 31, 2018 and the entire quarter ended March 31, 2019. The impact of a 1/8% increase in the interest rate on our pro forma financial statements would be higher interest expense for the quarter ended March 31, 2019 and year ended December 31, 2018 of approximately $31,000 and $125,000, respectively. The 2019 Term Loan was used to fund the acquisition of the Assembly Portfolio (in thousands): Cash paid at closings and deposits paid $ 458,185 Funding of the Assembly Portfolio acquisition from the 2019 Term Loan, net of loan costs 449,012 Funding of the Assembly Portfolio acquisition from cash $ (9,173 ) (3)     Represents the elimination of assets and liabilities associated with the Shopping Center Portfolio. (4)     Represents the estimated net sales proceeds for the Shopping Center Portfolio.      Cash proceeds received at settlement $ 481,034 Prepayment of mortgage note secured by Olney Village Center (11,736 ) Net cash $ 469,298 (5) Represents incremental costs incurred as of March 31, 2019 in connection with the disposition of the Shopping Center Portfolio. (6)     Represents the prepayment of the mortgage note secured by Olney Village Center. (7)    Represents additional incremental disposition-related expenses not paid at settlement. (8)     Represents the estimated gain on sale of real estate for the Shopping Center Portfolio. (9) Represents the estimated loss on extinguishment of debt for the prepayment of the mortgage note secured by Olney Village Center. (10) Represents the repayment of $350.0 million of the borrowings outstanding on the 2019 Term Loan using sales proceeds from the Shopping Center Portfolio. WASHINGTON REAL ESTATE INVESTMENT TRUST AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS) FOR THE QUARTER ENDED MARCH 31, 2019 (IN THOUSANDS, EXCEPT PER SHARE DATA)   WashREIT   Acquisition of Assembly Portfolio and related financing   Disposition of Shopping Center Portfolio   Pro Forma Revenue               Real estate rental revenue $ 83,174   $ 9,816 (1)   $ (8,333 ) (5)   $ 84,657 Expenses               Real estate expenses 29,210   3,976 (1)   (1,976 ) (5)   31,448       238 (2)         Depreciation and amortization 29,547   3,768 (3)   (1,792 ) (5)   31,523 Real estate impairment 8,374   —   —   8,374 General and administrative 7,429   —   —   7,429 Lease origination expenses 378   —   —   378   74,938   7,982   (3,768 )   79,152 Real estate operating income 8,236   1,834   (4,565 )   5,505 Other income (expense)               Interest expense (12,641 )   (846 ) (4)   145 (6)   (13,342 )   (12,641 )   (846 )   145   (13,342 ) Loss from continuing operations (4,405 )   988   (4,420 )   (7,837 ) Less: Income from continuing operations attributable to noncontrolling interests —   —   —   — Loss from continuing operations attributable to the controlling interests $ (4,405 )   $ 988   $ (4,420 )   $ (7,837 ) Loss from continuing operations attributable to the controlling interests per share:               Basic $ (0.06 )           $ (0.10 ) Diluted $ (0.06 )           $ (0.10 ) Weighted average shares outstanding - basic 79,881           79,881 Weighted average shares outstanding - diluted 79,881           79,881 See accompanying notes to the pro forma condensed consolidated financial statements. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS) FOR THE QUARTER ENDED MARCH 31, 2019 (1) Represents real estate rental revenue and operating expenses of the Assembly Portfolio for the quarter ended March 31, 2019. (2) Represents property management costs incurred by the Assembly Portfolio. (3) Represents depreciation over 30 years, based on the relative fair value of building and improvements, plus amortization of absorption costs over the remaining life of the acquired leases. (4) Represents interest expense related to the 2019 Term Loan. The adjustment to record interest expense assumes that the 2019 Term Loan was obtained on January 1, 2018, with $350.0 million of the borrowings repaid using proceeds from the sale of the Shopping Center Portfolio. The remaining $100.0 million balance is assumed to be outstanding for the entire year ended December 31, 2018 and the entire quarter ended March 31, 2019. The interest rate assumed for purposes of preparing this pro forma financial information is 3.27%, based on the 30 day LIBOR rate as of July 24, 2019 plus 100 basis points . (5) Represents the elimination of income and expenses associated with the Shopping Center Portfolio. (6) Represents the elimination of the interest expense associated with the mortgage note secured by Olney Village Center due to the prepayment of the mortgage note. WASHINGTON REAL ESTATE INVESTMENT TRUST AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS) FOR THE YEAR ENDED DECEMBER 31, 2018 (IN THOUSANDS, EXCEPT PER SHARE DATA)   WashREIT   Acquisition of Assembly Portfolio and related financing   Disposition of Shopping Center Portfolio   Pro Forma Revenue               Real estate rental revenue $ 336,890   $ 38,465 (1)   $ (32,282 ) (5)   $ 343,073 Expenses               Real estate expenses 116,230   16,102 (1)   (6,863 ) (5)   126,402       933 (2)         Depreciation and amortization 121,228   28,823 (3)   (6,606 ) (5)   143,445 Real estate impairment 1,886   —   —   1,886 General and administrative 22,089   —   —   22,089   261,433   45,858   (13,469 )   293,822 Other operating income               Gain on sale of real estate 2,495   —   —   2,495 Real estate operating income 77,952   (7,393 )   (18,813 )   51,746 Other income (expense)               Interest expense (51,144 )   (3,385 ) (4)   643 (6)   (53,886 ) Loss on extinguishment of debt (1,178 )   —   —   (1,178 )   (52,322 )   (3,385 )   643   (55,064 ) Income (loss) from continuing operations 25,630   (10,778 )   (18,170 )   (3,318 ) Less: Income from continuing operations attributable to noncontrolling interests —   —   —   — Income (loss) from continuing operations attributable to the controlling interests $ 25,630   $ (10,778 )   $ (18,170 )   $ (3,318 ) Income (loss) from continuing operations attributable to the controlling interests per share:               Basic $ 0.32           $ (0.05 ) Diluted $ 0.32           $ (0.05 ) Weighted average shares outstanding - basic 78,960           78,960 Weighted average shares outstanding - diluted 79,042           78,960 See accompanying notes to the pro forma condensed consolidated financial statements. WASHINGTON REAL ESTATE INVESTMENT TRUST AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS) FOR THE YEAR ENDED DECEMBER 31, 2017 (IN THOUSANDS, EXCEPT PER SHARE DATA)   WashREIT   Disposition of Shopping Center Portfolio   Pro Forma Revenue           Real estate rental revenue $ 325,078   $ (31,745 ) (5)   $ 293,333 Expenses           Real estate expenses 115,650   (6,673 ) (5)   108,977 Depreciation and amortization 112,056   (7,184 ) (5)   104,872 Real estate impairment 33,152   —   33,152 General and administrative 22,580   —   22,580   283,438   (13,857 )   269,581 Other operating income           Gain on sale of real estate 24,915   —   24,915 Real estate operating income 66,555   (17,888 )   48,667 Other income (expense)           Interest expense (47,534 )   740 (6)   (46,794 ) Other income 507   —   507 Income tax benefit 84   —   84   (46,943 )   740   (46,203 ) Income (loss) from continuing operations 19,612   (17,148 )   2,464 Less: Income from continuing operations attributable to noncontrolling interests 56   —   56 Income (loss) from continuing operations attributable to the controlling interests $ 19,668   $ (17,148 )   $ 2,520 Income from continuing operations attributable to the controlling interests per share:           Basic $ 0.25       $ 0.03 Diluted $ 0.25       $ 0.03 Weighted average shares outstanding - basic 76,820       76,820 Weighted average shares outstanding - diluted 76,935       76,935 See accompanying notes to the pro forma condensed consolidated financial statements. WASHINGTON REAL ESTATE INVESTMENT TRUST AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS) FOR THE YEAR ENDED DECEMBER 31, 2016 (IN THOUSANDS, EXCEPT PER SHARE DATA)   WashREIT   Disposition of Shopping Center Portfolio   Pro Forma Revenue           Real estate rental revenue $ 313,264   $ (30,452 ) (5)   $ 282,812 Expenses           Real estate expenses 115,013   (6,829 ) (5)   108,184 Depreciation and amortization 108,406   (7,042 ) (5)   101,364 Acquisition costs 1,178   —   1,178 Casualty gain, net (676 )   —   (676 ) General and administrative 19,545   —   19,545   243,466   (13,871 )   229,595 Other operating income           Gain on sale of real estate 101,704   —   101,704 Real estate operating income 171,502   (16,581 )   154,921 Other income (expense)           Interest expense (53,126 )   831 (6)   (52,295 ) Other income 297   —   297 Income tax benefit 615   —   615   (52,214 )   831   (51,383 ) Income from continuing operations 119,288   (15,750 )   103,538 Less: Income from continuing operations attributable to noncontrolling interests 51   —   51 Income from continuing operations attributable to the controlling interests $ 119,339   $ (15,750 )   $ 103,589 Income from continuing operations attributable to the controlling interests per share:           Basic $ 1.65       $ 1.43 Diluted $ 1.65       $ 1.43 Weighted average shares outstanding - basic 72,163       72,163 Weighted average shares outstanding - diluted 72,339       72,339 See accompanying notes to the pro forma condensed consolidated financial statements. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 2018, 2017 and 2016 (1) Represents real estate rental revenue and operating expenses of the Assembly Portfolio for the year ended December 31, 2018. (2) Represents property management costs incurred by the Assembly Portfolio. (3) Represents depreciation over 30 years, based on the relative fair value of building and improvements, plus amortization of absorption costs over the remaining life of the acquired leases. (4) Represents interest expense related to the 2019 Term Loan. The adjustment to record interest expense assumes that the 2019 Term Loan was obtained on January 1, 2018, with $350.0 million of the borrowings repaid using proceeds from the sale of the Shopping Center Portfolio. The remaining $100.0 million balance is assumed to be outstanding for the entire year ended December 31, 2018. The interest rate assumed for purposes of preparing this pro forma financial information is 3.39%, based on the weekly LIBOR rate as of June 28, 2019 plus 100 basis points . (5) Represents the elimination of income and expenses associated with the Shopping Center Portfolio. (6) Represents the elimination of the interest expense associated with the mortgage note secured by Olney Village Center due to the elimination of the mortgage note.