Welcome to the Washington Real Estate Investment Trust Fourth Quarter 2007 Earnings Conference Call. As a reminder, today’s call is being recorded. Before turning over the call to the Company’s President and Chief Executive Officer Skip McKenzie, Kelly Shiplet, Senior Manager of Finance, will provide some introductory information. Ms. Shiplet, please go ahead.

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, please contact me at 301-984-9400; or you may access the document from our website at www.writ.com. Our fourth quarter supplemental financial information is also available on the website. Please bear in mind that certain statements during this call are forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995. Other such statements and projections are based upon what we believe to be reasonable assumptions, actual results may differ from those projected. Key factors that could cause actual results to differ materially include changes in the economy, the successful and timely completion of acquisitions, changes of interest rates, leasing activities and other risks associated with the commercial real estate business and as detailed in our filings from time-to-time with the Securities and Exchange Commission. Participating in today’s call with me will be Skip McKenzie, President and CEO; Sara Grootwassink, Executive Vice President and Chief Financial Officer; Laura Franklin, Executive Vice President and Chief Accounting Officer; and Mike Paukstitus, Senior Vice President. Now I’d like to turn the call over to Skip.

Thanks Kelly. Good morning, everyone, and thank you for joining us today. We’d like to take a few minutes to review our fourth quarter results and provide some insight into 2008, then we’ll open up the call for your questions. We ended the year with an excellent year with solid fourth quarter results. We’re pleased to report FFO for the fourth quarter of $0.59 per share, up 5% over the prior year. FFO per year was $2.31 per share, an increase of 9% over last year. Core net operating income for the fourth quarter increased 7.1% on a cash basis compared to the same period a year ago. Rental rate growth was 3.2%, and economic occupancy increased 100 basis points over last year reaching 95%. For the year, core net operating income increased 4.5% on a cash basis and rental rates increased 3.4%. Strong performance in each of the core components of our business contributed to this year’s operating results. In 2007, we signed over 300 commercial leases for a total of 1.8 million square feet, an average term of five years. On average, rental rates on these leases increased 6.4% on a cash basis. We continue to improve our portfolio quality through the acquisition of $319 million of assets, including two-DC properties and the sale of Maryland Trade Centers I & II office building in Prince George’s County. This $58 million sale resulted in a $25 million gain on sale and is 16.9% unlevered internal rate of return over the 11-year holding period. We completed construction on two of our three development projects. Dulles Station West, our office development in Herndon, Virginia, was named the Best Suburban Mid-rise Office Building by the NAIOP Awards of Excellence; and Bennett Park, our apartment development, has been well received by the market.…

Thanks, Skip, and good morning to everyone. On a portfolio level, we’ve seen an increase in market rents that have maintained very low vacancy. In the fourth quarter, core NOI in our Retail portfolio increased 13.8% on a cash basis driven by rental rate growth of 3.2% and 120 basis point increase in economic occupancy. Our Retail centers were 97.6% leased as of year-end, which is on par with the region’s overall vacancy rate of 2.3%. We continue to see excellent rental rate growth in this sector. This quarter we signed new and renewed leases at rental rates 24.3% higher than the expiring rates. In the Industrial sector, core NOI for the quarter increased 6.8% on a cash basis. Rental rate growth of 3.6% and 150 basis point increase in economic occupancy. As of the year-end, the portfolio was 95.1% leased. By submarket, our Industrial portfolio was 97.2% leased along the I-395 corridor, 95.8% leased in Maryland and 91.5% leased in Chantilly, Virginia. This quarter we signed 320,000 square feet of new and renewed lease at cash rental rates 7.4% higher than rates on expiring leases. The Medical Office sector increased revenue 6.3% and increased rental rates 3%, leading to a 6.7% increase in cash over NOI in the fourth quarter. We signed an additional 42,000 square feet, making the portfolio 97.5% leased at year-end. Forecasted demand for Medical Office space remains high, especially with the aging baby boomer population. This coupled with the limited supply of high quality assets near hospitals allows us to continue to push rents at our properties in the upcoming year. The Office sector’s core NOI increased 5.5% on a cash basis in fourth quarter, with rental rate growth of 2.4% and a 320 basis point increase in economic occupancy. This quarter we closed on…

Thanks, Mike. Mike and Skip have covered our 2007 results in detail so that I could take the opportunity to discuss our strong capital position in 2008 earnings guidance. As Skip mentioned, in January, we exercised a portion of the accordion feature on our syndicated credit facility. We increased capacity an additional $62 million to give us $337 million in capacity overall. With no increase in spread, we continue to borrow at the very attractive rate of 42.5 basis points over LIBOR. Yesterday we closed on $100 million term facility with a fixed rate of 4.45% for two years. In 2007, we completed several transactions that further strengthen our balance sheet. Early in the year, we completed a $150 million convertible bond issue with a three (inaudible) coupon and a $49 conversion price. In May, we issued $59 million of equity at $37 per share. During the summer, we completed a bond consent to modify our bond covenants providing much more flexibility in our balance sheet. In the fall, we entered into a new four-year revolving credit facility with pricing again at 42.5 basis points over LIBOR. On Monday, we will complete an extinguishment of debt on the $60 million of 10-year Mandatory Par Put Remarketed Securities that come due for remarketing. This extinguishment will result in a net $8.4 million charge. Those offers were issued in 1998 with an option to the underwriters to remarket the bonds in 2008 with a 10-year Treasury rate of 5.6% plus the current market spread. The net loss is calculated as the net present value of the difference between their fixed 10-year Treasury rate and the current 10-year Treasury rate. Due to the volatility in the credit markets, we decided to redeem the balance rather than allowing the remarketing. We believe that both…

Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. (Operator Instructions) Our first question is coming from Matthew Konrad. Please state your question, sir. .

Hi. Good morning. Thanks a lot for taking my call. Just maybe if you could touch on what you’re hearing from your tenants. I would expect that if I had to kind of have a spectrum of where the most risk is, I would think that it would be in some of the ma and pa places in the Retail Centers and in some of the Industrial and where they’re situated with consumer or with housing. I just wanted to see what you’re hearing from them, if there was anyone that you’re adding to your watch list.

I think you’re hitting upon a good point. I mean certainly as the economy gets a little bit rougher around the edges, those are exactly the sectors where you will see some weakness. We have the ability to push rent particularly in the retail properties with respect to those smaller tenants is getting more difficult, especially in some of the core properties we have like particularly our Bradlee Shopping Center, our Foxchase Shopping Center. Those shopping centers where we really push rents in that $50, $40, $50, $60 triple net range, it is getting tougher; I have to admit, and we’ve sort of dialed back our expectations in that area. I would say, however, that we really haven’t seen increased delinquencies at this point. In fact, our delinquencies for the year were quite low, if you looked at our earnings. So we’re remaining cautiously optimistic, but we are watching the particular tenant types that you had highlighted.

Great. Then trying to keep a gauge on what’s going on with Dulles Metro, even kind of being in the mix is tough. I guess the only property that that really affects for you is Dulles Station; that would be eight years out anyway. Can you try to handicap what’s going to happen there and how that affects the region and your properties?

You’re talking about the…

Dulles Rail Extension.

The extension of Metro.

Yes sir.

I mean we believe that metro will occur. I mean it’s hard for us to handicap it specifically Virginia particularly seems committed to moving this initiative forward, the state, and I think most of the people who are closest on this believe that the state’s going to come through if the federal government doesn’t ultimately provide the funding. So we remain reasonably optimistic. Now the second part of your question - How does that impact us specifically - I mean I would say that it is does impact all of the buildings in the Tysons’ area. Our 79 West Park property, which is our largest office building, it’s over 500,000-squre feet, that property is very close to what would be one of the Tysons’ Metro stops; and if in fact this does occur, that property actually has long-term significant development or redevelopment potential. So we remain optimistic that it’s going to occur and we feel that there are some very positive influences it’ll have on our properties when it does ultimately occur.

Great. Then just my final question just has to do with TIs and leasing commissions and the trends there on a weakening economy if they, what your expectations are, especially for office and tenant improvements.

In general, we’ve seen TIs going up and particular with regards to concessions and some of the deals we’ve looked at particularly out in the Dulles Toll Road, TI improvements have increased without a doubt; and we really haven’t seen an influence from free rent. But I would say that there have been increases in tenant improvement allowance, particularly for new properties. Downtown office buildings, tenant improvement packages can be huge. Although, as I mentioned in my comments, that we were very fortunate to do a very big renewal with the World Bank actually in the first quarter, in 2008 with the World Bank as is. But those type of deals in the District of Columbia can very easily be 30 to 40 to on a ten-year basis even $50 in TIs.

Great. Thanks again for taking my questions.

Our next question is coming from Michael Knott. Please state your question.

Hey, Skip and Sara, can you just comment on your thought process behind forecasting some acquisitions as opposed to maybe considering buying back your stock given that you can buy it at big discount to NAV?

We were very conservative. As I mentioned, we’ve completely dialed back the acquisition activity. I mean I guess our thoughts with… Well first of all, as it relates to buying back stock, the short answer is we don’t have approval from the Board to do so. But from a strategic perspective, we’ve made the decision we’re not going to lever up our balance sheet to buyback stock. Now that’s not to say if we were to sell a property at the appropriate time if we didn’t view acquisition activity it isn’t in the realm of possibility. But to be honest with you, we still see tremendous ability to grow and find assets out there that we think are good investments for the property and grow the portfolio. A good example of that is, and Mike referenced and I referenced, the 2000 M Street acquisition. That property has tremendous upside from a number of areas as well as it has long-term redevelopment potential. At the time, I guess you could make the argument we could’ve bought back stock. But our focus is on growing the business and not getting smaller.

Can you talk more about that acquisition; what types of unlevered return expectations do you have over maybe a five- or seven-year time period?

Yeah, that property has significantly below market rents in there. The average rents in place in that building are in the 30s, so we’ve gone in actually at a relatively low yield in the low 6s. But as Mike had mentioned and I had mentioned, it had a very large garage in that facility that we’re able to renegotiate the lease. That’s going to have a significant impact getting us over the 7% range early, as well as a number of leases that are coming up, we have three-quarters of a floor who’s expiring this year which have rents that are probably $10 below market. In addition to that, one of the things we like about this asset, long-term it has potential to grow, to redevelop over time. So it’s a type of asset that not only has near-term positive accretive effect on our revenues, but it also has the ability to make a significant impact long-term from a redevelopment perspective.

Any thoughts on what type of IRR that translates into, 6.2, do you get to an 8 or 9?

Actually we don’t run IRRs on our properties. We look at the annual returns over the first 5- and 10-year basis, so I don’t have a specific answer for you. But I would expect that it would be significant given the redevelopment potential long-term from it.

Then I have two other quick questions. One, can you talk about the Bennett Park mid-rise? It looked like it only increased 2% incrementally from fourth quarter, I’m sorry, from third quarter to fourth quarter. Then my other question is your outlook for the Industrial portfolio occupancy given the, that looks like where you have the most rollover in 2008 and 2009.

Yeah, the mid-rise… Let me go, your first part of your question, the mid-rise of Bennett Park: The mid-rise specifically, if you bifurcate the property into the mid-rise and the high-rise, that had phenomenal leasing progress early and that project has some very unique two-story units in it that we’ve been holding off to achieve the highest possible rents, and that’s why you’ve seen a little bit of a tailing off on that property. It’s really been offset by the, positively by the leasing progress that’s picked up in the mid-rise. But if you looked… Or high-rise, excuse me. But if you looked at it and bifurcated it on a property basis, it may look like it’s tailed up. It’s only because we’ve held off leasing these two-story units really trying to achieve the highest rents in the marketplace. In addition to that, we’re looking at some corporate rentals on those units as well. What was the question about Industrial?

It looked like out of all your commercial property types, that’s the sector where you have the most rollover in ’08 and ’09. I’m just curious on your outlook for maintaining your occupancy there given that rollover.

Yeah, I think the market’s still very strong on the Industrial sector. I have no particular knowledge one way or the other, but I’m very positive about it.

Thanks.

(Operator Instructions) Our next question is coming from John Guinee. Please state your question.

Hi. How are you? Nice job. Question: On 2000 M Street, can you talk through the ground lease and how that all, what the terms and conditions are on the ground lease?

Sure. The ground lease is for 64 years, I believe, in round numbers, and it’s a fixed rate ground lease. I believe it’s $250,000 a year and has a participating element to it.

So that’s really what kept the price per pound so low and the cap rate relatively high?

That’s exactly right.

Yes, because you can’t get 6.2/6.7 yields in the CBD.

No, but also I would point out that property was not marketed to the market. We had sort of an inside connection with the owner and we were able to buy that property off market. That was not exposed to the marketplace.

Right, but you’re a smart guy and you know that there are no dumb fellers in the Washington CBD.

I’ll take that as a statement and I won’t comment on it.

You’re a smart guy, Skip, come on. Question on guidance, it’s basically $0.58 or $0.59 run rate, which it was last year excluding the one quarter where Ed retired and what you’ve got is you’ve got $0.03 in G&A savings; you’ve got positive spread investing on a couple hundred million dollars worth of investments; you’ve got core NOI growth of 1% to 2%. All this translates to much higher than essentially a 1% or 2% year-over-year FFO growth and a $0.58 to $0.59 quarter. What are we missing on the downside, Sara?

Well, I don’t know exactly what you’re missing. We could talk about it, but we wanted…

One of the things we’re applying against is the interest.

Well, right. If you factor in the higher interest expense from the standpoint that when 2007 we had $6.2 million of capitalized interest related to our development projects and the vast majority of that is hitting our interest expense this year.

Also with Dulles Station as well.

Right.

We start expensing interest on Dulles Station, I believe, in July.

We’re looking at about $0.15 to $0.16.

Right.

Laura just mentioned, I don’t know if you heard that, John, that we’re looking at $0.15 to $0.16 in interest expense as it relates to the development property with development projects with probably average occupancy, if you looked at it on a year basis, less than 50%. Certainly when you throw Dulles Station in there it would be less than 50%.

So Laura, you’re saying, when you going to start expensing versus capitalizing the interest?

Some of that has already begun because we placed and serviced Bennett Park and Clayborne as well as, as you know, we have we have an above ground garage at Dulles Station. That’s already placed in service and so the balance of Dulles Station would be placed in service in July of ’08.

So is the garage just sitting there vacant? Is there any use for the garage?

It would have use if there was a tenant there.

So there’s no other apartment use or anything like that?

Not right now.

Not at Dulles Station.

You’re basically eating the cost of all three phases of the garage plus the vacant building?

That’s true. Again, the building’s starting in July, I believe, is the date when the interest expense is expensed on the garage or on the building.

Gotcha. When’s the last time you raised your dividend and what was that?

John, we raised it in the second quarter of ’07, and we raised it $0.04 on an annual basis.

Is that a good run rate?

I think it’s a fairly good run rate, but that decision’s made by the Board.

All right, great. Thanks a lot.

There are no further questions at this time. I’d like to turn the floor back over to management for any closing comments.

Well thank you for listening today. Thank you for your interest in the Company, and we look forward to talking to you again in the end of the first quarter.

Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.