George F. McKenzie - President and Chief Executive Officer William T.

Camp - EVP and Chief Financial Officer Kelly Shiflett - Director of Finance

Brendan Maiorana - Wells Fargo

Thank you and Good morning everyone. After the market closed yesterday, we issued our earnings press release.

If there is anyone on the call who would like a copy of our release, please contact me at 301-984-9400 or you may access the document from our website at www.writ.com. Our conference call today will contain financial measures such as core FFO and NOI that are non-GAAP measures as defined in Reg G.

Please refer to the definition found in our most recent financial supplements. The per share information being discussed on today’s call is reported on a fully diluted share basis.

Please bear in mind that certain statements during this call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially.

We provide a detailed discussion of these risks from time to time in our filings with the SEC. Please refer to pages 8 to 15 of our Form 10-K for a complete risk factor disclosure.

Participating in today’s call with me will be, Skip McKenzie, President and Chief Executive Officer; Bill Camp, Executive Vice President and Chief Financial Officer; and Laura Franklin, Executive Vice President and Chief Accounting and Administrative Officer. Now, I would like to turn the call over to Skip.

Thanks, Kelly, and thank you everyone for joining us on our call today. For the third quarter in a row, we are seeing increased overall leasing volume in our commercial buildings with continuing strong GAAP rental rate increases.

The improvement in leasing is being driven by the activity in our office and retail divisions. The increase in activity is beginning to translate into occupancy gains as our overall occupancy increased 50 basis points in the quarter.

We currently have a backlog of 130,000 square feet of leases for tenants that we have executed but tenants that have not moved in. Despite the continued challenging office market environment in the DC area that we had discussed last quarter, we were able to sign over 250,000 square feet of new and renewal leases in the office division at rental rates 9.7% higher on new leases and 7% higher on renewal releases.

This quarter we saw office occupancy increase 90 basis points due to this activity. Our retail portfolio is performing very well.

We increased sequential occupancy by 120 basis points and had excellent rental rate increases on both renewals and new leases. Most noteworthy was the execution of a new lease for our supermarket space at the Bradlee Shopping Center which resulted in an extraordinary rental rate increase thus skewing our statistics significantly upwards.

The new grocer takes possession in the third quarter of this year to commence construction on this space. Our multifamily portfolio is performing well.

We continue to achieve rental rate increases including 4% year-over-year, although we saw a typical seasonal dip in our overall occupancy, down 30 basis points in the quarter to 93.8%. I would expect the occupancy in this sector to continue in the 93% to 95% range this year.

I know some market participants are concerned about the potential for oversupply in this sector but we have not felt this effect at this time. Much of the new supply will not begin to hit the market until 2014 and that remains concentrated in certain submarkets.

We believe the impact on WRIT will be muted as our portfolio generally does not compete with new product as it leases $0.50 to $1 per square foot less in monthly rents. We continue to strengthen our management team.

Earlier this month, we hired Ed Murn as Managing Director Head of our Residential Division. Ed brings years of operational, acquisition and development experience from the Tower Companies and Kettler and Archstone-Smith.

We are excited to have Ed on board and look forward to his leadership of our Residential Division. The rounds out the changes to our property divisions we began last fall.

You may recall that we moved Tom Regnell, our Senior Acquisitions Officer, into the role of managing our office operations including acquisitions and dispositions. As we announced on our last call, the hired Paul Weinschenk from The Peterson Companies to our Retail Division.

These changes enhance our senior leadership team and give us added depth to each of our business lines. We look forward to all of you meeting the team the next time you come to town.

On the transactions front, we sold The Atrium Building, an 80,000 square foot suburban office building in Rockville, Maryland for $15.75 million, achieving a net booking of $3.2 million and an unleveraged IRR of 11% over the 10 year holding period. As a result, our Maryland office NOI as a percent of our total is down to approximately 9%.

On the acquisition side, while deals in the marketplace that have closed this year have been few and far between, we are seeing more offerings coming down the pike and we have been actively working on several larger potential assets. And the potential sale of our Medical Office Division is moving along with preliminary offers being submitted as we speak.

In the next week or two, we will be evaluating these proposals and deciding how best to proceed to the next round of bidding. Now, I'll turn the call over to Bill Camp who will discuss first quarter performance and portfolio details.

Thanks Skip. Good morning everyone.

Recall in the last two conference calls, I discussed how our quarterly core FFO will likely range between $0.44 and $0.47 per share for the next few quarters until we become more active with acquisitions and dispositions or until market conditions materially change. This quarter core FFO was $0.44, which was below last quarter due to two primary reasons.

There was a $0.02 differential due to higher operating expenses in the quarter, largely due to the positive impact of expense recoveries in the fourth quarter and lower annual incentive compensation in 2012. Also in the first quarter, we experienced typical seasonal effects on operations, a one-time adjustment in residential, and a return to normal incentive compensation estimates.

In the end, this quarter matched our budget expectations and we are reiterating our full year core FFO guidance of $1.82 to $1.90. Our core FAD result of $0.37 per share remains generally consistent with the levels we have seen over the last six quarters.

Recall six quarters ago, the federal government debt was downgraded and the world's focus turned to government debt reduction and fiscal austerity. This timeframe aligns with the period of significant degradation of the local office markets and a downturn in the local economy.

Despite the volatility in our core FFO numbers, our diversified portfolio continues to deliver very steady FAD results during this challenging time. In the quarter, same-store NOI declined 1.5% on a GAAP basis compared to first quarter 2012.

This was driven by the medical office NOI declining 8%, primarily due to the move out of Children's Hospital last year. We do not believe that this is indicative of a trend in the medical office as we have high level of interest in the children's space and other vacant spaces in the portfolio.

Office and residential NOI declined 1.2% and 1.5% respectively while retail NOI increased 2.7%. As I mentioned, there was a one-time expense adjustment in residential.

Without this adjustment, residential same-store NOI would have been positive 0.9%. Overall portfolio physical occupancy improved 50 basis points over the prior quarter to 88.6%.

This increase is consistent with our expectations as we continue to see lease signing activity improve over the last few quarters. Occupancy improved in the office and retail divisions and declined in the medical office and multifamily divisions.

Rental rates continue to improve on a GAAP basis with overall GAAP rental rate increasing 22% for new commercial leases and 6.7% for renewal leases. Retail division drove these increases with new retail leases increasing 86.3%, because as Skip mentioned, a new grocery anchor was signed during the quarter at a substantial increase over expiring rent.

As reflected in FAD, tenant improvements, leasing commissions, and incentives remained elevated at $6.6 million. This level is consistent with the trailing five quarter average.

As leasing activity picks up for vacant space, we expect these numbers to increase. The tenant improvement, leasing commission and incentive costs for new leases signed range between $55 and $70 per foot over the past five quarters.

This compares to a range of $7 and $19 per square foot for renewal leases over that same period. We are tracking the square footage of new leases and expansion leases signed during the quarter and comparing those to square footage of tenants moving out during the quarter.

The move out immediately impact occupancy numbers while it may take several quarters before a new lease positively impacts the portfolio occupancy. In aggregate, over the last five quarters, leasing of vacant space has modestly outpaced the vacated space.

The majority of the positive leasing momentum occurred in the last two quarters. As Skip mentioned earlier, the backlog of tenants that have signed leases but have not moved into our buildings is growing over the past two quarters.

This is the leading indicator for improved occupancy over time as we go through the construction and move-in period for the new tenants. Lastly, on the capital side, WRIT repaid $30 million 5.855% mortgage in January, and repaid a $60 million 5.125% unsecured notes in March using the line of credit, cash and proceeds from the sale of The Atrium Building.

Total debt decreased by $20 million as compared to levels at the end of the year. With that, I'm going to turn the call back over to Skip.

Thanks Bill. Our strategy of repositioning our portfolio and deliver (indiscernible) in and around urban areas or in urban areas with strong demographics continues to strengthen our Company.

As we move forward exploring the sale of our MOB division, we currently anticipate a successful deployment of the sale proceeds into assets that better fit this long-term strategy. We expect to shift towards much higher-quality cash flows and better located, higher-quality assets that require less capital going forward, thus improving our cash flows over time.

Now, we'll open up the call for your questions.

Skip, I just kind of want to get your perspective on new investment opportunities and sort of how the process is likely to go forward. You've got the MOB portfolio that's out there and it sounds like you're saying that you're seeing more opportunities that are likely to come up over the next several quarters.

Before there's resolution on the MOB portfolio, are you likely to wait until you get a little bit more finality on what may transpire with the MOB before you'd actually go under contract on asset or are you continuing to kind of go down dual tracks regardless of sort of what happens with the process on the MOB portfolio?

Good question, because the answer is yes and yes. We're staying very active in the market whether we do the MOB portfolio or not.

So we have some irons in the fire with some assets that we would acquire, whether the portfolio sale goes forward or not. And we also have an interest in some acquisitions, primarily some larger ones, that would probably not happen unless we went forward with the MOB portfolio.

So, we've got – I would say we have irons in both of those fires so to speak, if that answers your question.

So if we look at the let's say outside of the larger deals, that would be more dependent on the MOB.

Yes.

Is that – office assets obviously tend to be expensive given their size, is this to suggest that there are more of the retail and multifamily side?

Yes, we have offers out on all the above.

Okay. And those deals could close I guess before (indiscernible).

(indiscernible) Just to maybe even give you a little more color, I mean we have offers out on everything from properties that are in sort of the low double-digit millions to properties that are three digit millions and they would fit into the categories that I mentioned.

Sure, okay. And then in terms of the occupancy, it looks like there was a nice sort of sequential move in terms of physical occupancy quarter to quarter, the economic occupancy went down a little bit between Q4 and Q1.

So, is that a mix issue on sort of high rent base versus low rent base, is it a timing issue, what's causing the differential between the economic and the physical?

It's more of a timing issue, Brendan. Yes, in mid quarter last quarter, we had the GSA move out of Braddock as we expected that when we bought that building, I don't know even how long ago that was.

So that was kind of a mid quarter, so you get a full quarter effect of that from an economic basis. And then there was a couple of other move-outs that happened kind of during the quarter last quarter that you get the full quarter effect.

And then move-ins kind of tended to happen towards the end of the quarter, so you got no revenue from it in most of the quarter until, and then they get the fiscal occupancy numbers at the last day of the quarter.

Okay, yes, so it was more that this quarter that economic occupancy was sort of reflecting more of the reality versus in Q4, it was sort of altered from the timing stuff.

Right.

Okay, yes, that makes sense. And then just on the office side, it looks like the term was a little bit low on renewals, I think it was under three years.

Is there something with a large deal that was maybe a short-term renewal or something like that?

Yes, Sunrise. The Sunrise lease was a relatively short-term renewal because we work with them through a major renovation that we are going to be doing for that property.

Okay, so they're out at the end of the renewal term then?

No, I wouldn't say that.

Okay. When is their term through now?

You can look in the logs of tenant, but I think they're – it was 15 months

I think it was (indiscernible) a full year extension.

So, can I just understand the processes there? So, they signed a one-year extension, you guys are going to do a lot of work for the bidding.

What was the discussion point between them thinking about a longer-term versus this one year deal?

Of course the big thing with them is that they were acquired in the middle of a lot of this process by HR and I think there's a lot of internal work going on their side as to what's going to happen to that division, I'm speaking a little bit [out of school] (ph) because I don't know all the mechanics that's happening behind the scenes with Sunrise, but I think there's a lot of uncertainty on their side and we're doing a lot of things in the building. So, we both agreed to do a one year extension just to see how each of our conditions worked at the end of that year.

So, they need to do a little due diligence on their side and we have a little work to do. So that's why I wouldn't say they are leaving, it's just that they have a lot going on, on the corporate level.

Okay, great, thanks for the color.

Hey guys, (indiscernible) here. I guess on the acquisitions front, did you guys look at the DC property that Liberty recently acquired in 2100 M?

Yes, we did, and I think it's a good property and we weren't just a successful bid on it.

Okay, you think pricing ultimately was a bit rich on it or…?

I thought it was a market level pricing. I mean just – keep in mind we have a lot paid on that street there, so we were probably less aggressive than we needed to be.

We own 2000 M Street, we have 1229 19th Street, we have 2445 M Street, 2440 M Street, we have a lot over there, so we probably didn't reach as far as many others would have. But right in that little corner, we probably own about six properties.

So, I would just say we weren't probably as aggressive as we needed to be because we felt we have a lot of concentration there.

Okay, that's fair. Separately, can you talk a little bit about – and I guess compare and contrast how investment decisions are made with the appointment of the division heads for each sector versus previously?

Sure. So in the prior organization, Tom Regnell, who was the Head of our Acquisitions Group, I mean he sourced or he oversaw the sourcing in all property divisions.

And under the new organization, each of the respective heads, Ed Murn is leading the charge on residential, Paul Weinschenk is leading the charge in retail, and Tom will be focusing still on acquisitions but just in the Office Division.

This gives us more horsepower in each of the divisions.

Okay, thanks. I guess last question, so I don’t know you guys may have touched on it a little bit, but leasing costs seem to tick down this quarter and I just want to get your sense, is this sort of just a one quarter data point or are you guys seeing signs that concessions are declining a bit?

I would definitely on a subjective level without giving you numbers, concessions aren't declining, it's only on kind of market basis, that's for sure. I mean it's still a relatively challenging market out there.

Now those who look into the numbers will say, (indiscernible) by the Sunrise not getting any…

Our new leases, they basically were flatter or maybe even elevated a couple of bucks on new leases with [TIs] (ph) being $45 on new stuff. I think it was skewed by the office side, Sunrise.

But they didn't take anything out, that was added on their deal.

Okay, thanks.

I just had one follow-up. So on the West End, I know you guys have a lot of products there, Skip you just mentioned, you got some availability there, I think Pillsbury is moving out of 2300 M.

Yes, in April.

Yes, does that make it challenging, is that competitive space to the product that you've got there, does it make it challenging to get leases on the West End?

I don't think so. I mean firstly that's not going to happen for a while, and they're going to be looking – Pillsbury basically leases a whole building.

I mean they're going to be looking at one giant tenant. Most of our buildings, with the exception of 2445 M Street which has a large tenant but they're under lease through 2019, most of our tenants down there are relatively smaller tenants.

So I don't foresee that being an issue. But like I said they're going to be going for a giant tenant.

I'd also mention that in the West End, the vacancy is extremely low, the vacancy in the West End is I believe, I don't have the specifics in front of me, I think it's the lowest vacancy rate in the city, somewhere around 5% or 6%, and as you know, that building is still early in its construction process but Pillsbury isn't going to be moving for a year anyway.

Brendan, we really don't have like one major vacancy over there in that floor that we had vacant in the building that we acquired at 1227 25th Street.

And we have good activity on there.

We've got a pretty good activity on that space.

Is the encumbrance on that space gone now?

Yes, finally.

Okay. And then just, if I could maybe get your thought process on some of the products that's likely to come out to market, like if you guys – how do you sort of think about building like 555 12th?

That's going to be obviously a big for the redevelopment, lease-out potential, is that something that's of interest to you or do you think it's a little bit more of a stabilized, maybe inside the beltway but outside the district near Metro kind of investment?

Yes, we've got a lot of work to do but I think we are interested in that building. Obviously we haven't even started on that yet but we will definitely be looking at it, it's a great building, great location, certainly it's a value add play.

I'm not sure exactly how that's going to be priced but it will be very interesting to see how that's priced, but at the right price, we would be interested in that building.

Okay, and then just lastly to Skip, I heard your comments about the multifamily, the new development not impacting sort of your portfolio but…

I wouldn't say not impacted, a muted impact.

Muted impact, excuse me, but the decision to delay development on one of your two projects, so is that sort of because that's competitive with the newbuild product versus your portfolio which is less competitive with newbuild?

That's part of – yes, I mean that's in the submarket where there's basically three buildings being built right on top of each other too and we want to get a little space in that one particular submarket. But you're right, I mean it's this new product competing with a lot of 36,000 or 35,000 units over the next three years.

So, that was part of that decision.

Okay, great, thanks.

Okay, thank you everyone. Have a great weekend.

Talk to you in the next quarter.