Thank you, and good morning, everyone. Before we begin, please note that forward-looking statements may be made during this discussion. Such statements involve known and unknown risks and uncertainties, including those related to the effects of the ongoing COVID-19 pandemic, which may cause actual results to differ materially, and we undertake no duty to update them as actual events unfold. We refer to certain of these risks in our SEC filings.

Thank you, and good morning, everyone, and thanks for joining us today. I hope you and your families are keeping safe and well. Last evening, we released our fourth quarter earnings results, which rounded out a year dedicated to stabilizing our operating fundamentals and maintaining and preserving future growth drivers against the backdrop of one of the most challenging operating environments in recent history. Thanks to the dedication shown by the WashREIT team, the strong credit profile of our portfolio and the resilience of the Washington Metro region, we continue to successfully navigate through the pandemic and expect to enter the vaccine-led recovery phase with a stronger balance sheet, a reaffirmed strategic direction and a portfolio that is positioned for growth as demand returns. With the vaccine rollout that commenced toward the end of last year, we are seeing signs of increased activity across both our multifamily and commercial portfolios. For multifamily, net applications were up 30% year-over-year in January for our urban properties, and year-to-date trends already reflect improvement in occupancy as we head into the spring leasing season. We are focused on growing occupancy to begin reducing concessions and increasing rents. Currently, multifamily occupancy is over 95%, excluding our two rent control properties, where we are not emphasizing occupancy gains as they offer limited rent growth potential in the current environment. Multifamily credit performance continues to remain very strong at both our urban and suburban properties and has consistently outperformed the national average by a wide margin over the past year. While multifamily lease rates declined 3.6% and 5.7% on a gross and effective blended basis during the fourth quarter, we believe that December represented the height of rental rate pressure as lease rate changes improved in January on a month-over-month basis and concessions declined. Furthermore, new and renewal lease executions with commencement dates in February and March indicate continued improvement in effective lease rent growth.

Thank you, Paul, and good morning, everyone. I'll start off today by reviewing the balance sheet before discussing our fourth quarter and full year financial performance and future outlook. In the midst of the uncertainty that dominated the capital markets during 2020, we took steps to strengthen our balance sheet and increase our operational flexibility, which has put us in a stronger position as we head towards the recovery phase of the pandemic. First, we made sure that we had ample liquidity at the onset of the pandemic by entering into a $150 million one-year term loan with extension rights. Second, we closed and funded in December a $350 million ten-year green bond at 3.44%. We used the proceeds to pay off the new $150 million term loan and our other $150 million term loan that was scheduled to expire in March of 2021. These actions address all of our debt maturities through the fourth quarter of 2022 and turned out our maturity ladder. Third, we fully unencumbered the balance sheet, allowing us optimal flexibility as we continue to allocate capital to further multifamily growth. Finally, we increased our balance sheet flexibility heading into 2021, with our strategic office asset sales and issued some equity through the ATM program to be ready to continue our capital allocation when visibility into the recovery is more clear. In that regard, at year-end, we only had $42 million outstanding on our fully available $700 million line of credit, underscoring that we increased our liquidity further during the pandemic. All of our covenant ratios remain strong, and we maintained our Baa2 and BBB flat investment-grade ratings with Moody's and S&P. Now I'll turn to our cash collection performance. Our multifamily collections continue to be excellent, tracking well above national averages. We collected 99% of cash and contractual rents during the fourth quarter, and our rent collections through January are in line with our quarterly trend. We've offered deferred payment programs to residents who've been financially impacted by the pandemic, and only a very small amount, about $15,000, of deferred multifamily rent remains outstanding.

Thank you, Steve. During what was a challenging and unexpected year, we supported and protected our residents and tenants, stabilized our operating fundamentals, strengthened our balance sheet, and preserved long-term growth opportunities. While the timing of when we will reach an inflection remains uncertain, we believe that it will happen at some time in the second half of 2021 and that we are positioned for rapid improvement once we reach that point. Our region has several unique catalysts to accelerate the rebound in demand, including a strong economy and favorable demographics. Historically, we have seen Washington office absorption increase significantly when the White House and both branches of Congress are aligned with one party correlating with increased legislation, lobbying, and law implementation. That is a promising opportunity that we will be monitoring. We also expect the apartment market in the region to receive a relative boost compared to other markets over the six months based on historical patterns following presidential elections, which should coincide with our strongest seasonal leasing months. Long term, our research indicates that we should expect sustained growth in Northern Virginia driven by government contracting, technology sector growth, and investments in higher education. While we certainly have not emerged from the pandemic at this point, we are seeing signs of our multifamily occupancy strengthening, concessions starting to decline, and improvement in effective lease rates, all of which are positive trends heading into our stronger seasonal leasing months. Now we would like to open the call to answer your questions.

Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. Our first question comes from the line of Anthony Paolone with JP Morgan. Please proceed with your question.

Okay, yeah. Thanks and good morning. I guess, first question for Paul, just from a bigger picture point of view. Can you talk about just how you're thinking about capital allocation and the push to multifamily in an environment where it seems like cap rates have compressed, actually gone to like 4% in apartments? And so, how you're thinking about potentially making that trade and if that's still a push that you want to make here?

Sure, Tony. First off, I just want to acknowledge we've been getting some feedback that we've got static on our line, so my apologies for that upfront. In terms of capital allocation, Tony, I mean, we are going to continue to look for multifamily opportunities. I would say that right now when we look at the markets and what we're seeing out there, I do question the sustainability of those cap rates, just anecdotally some color on that. I mean, agency borrowing costs have increased over 50 basis points since last summer. And even the new lending from the life companies and the debt funds, they're pushing back and they're really gravitating towards the kind of trailing ones and trailing threes. I think the folks that we are competing against are probably core-plus and value-add folks, really essentially competing for the same deals, but with different leverage strategies. When I look around, like where would we allocate capital right now, in DC, I mean, with TOPA and the restrictions, I think DC probably had its lowest sales volume. The numbers I'm hearing are around $30 million for 2020, and in basically a multi-billion-dollar region. But I do think, Tony, there are going to be opportunities in terms of looking at potentially some unstabilized deals in decent submarkets. I mean, we always preach research around here, and we follow jobs. And we track the rents and the income demographics. And I do think there are decent submarkets. And I do think that there are - when we're looking at potentially an unstabilized property, those aren't going to have an agency debt on those. And I think there's an opportunity for us to jump in and make a basis bet. But we're definitely committed to continuing our capital allocation to multifamily. We look at what's taking place in the market right now, just in terms of our operating fundamentals. I think that as we look at how we drove occupancy and how other operators are driving occupancy using concessions, it really feels like DC as a region, this region held up pretty good to September. It had kind of a tough fourth quarter. But candidly, we like what we're seeing in January. And we think that the traffic has picked up, and hoping that bodes well for the spring season. And, just some other observations, Tony, in general, because I've been reading the same things other people are about multifamily and how we're going to perform entering into a recovery phase and a reentry phase. We actually, we still feel like the Class B strategy is the appropriate strategy and is really only then amplified in these times. People look at DC and they question the supply is going to deliver over the next couple years. I mean, I'm looking at units that are supposed to deliver in 2023, that I think there are 11,000 units forecasted to deliver in 2023. On our math and the things that we're tracking, only about 3,300 of those units have been capitalized. And those units are delivering at price points, a Class A price point with a rent gap between our average - and this is net effective - our average Class Bs and the net effective Class A, there's still a $650 gap there. We think that a lot of folks right now - I mean, we're through the move-home-to-mom-and-dad phase. We think people are planning on a reentry in 2021, whether it's summer or fall. And that's really driving a lot of the traffic right now. And with the growth that we've seen in rents in the suburbs, we think that some of the urban and DC deals are looking on a relative basis kind of inexpensive. So we think there are going to be opportunities out there. I never would say it's not going to be competitive. They're all competitive, but I think it gets back to knowing what markets you want to be in and what price points you want to be at. And, as you know, we don't really, typically, utilize debt. But we do think they're - while I believe the first quarter will probably be slow, because we had a big fourth quarter in terms of multifamily sales. And while I think the first quarter is going to be slow, we do think we're going to be presented with some multifamily opportunities for the balance of the year.

Got it. I appreciate all that color. Were you all active in some of the bidding contests in the fourth quarter deal flow and did you find yourselves, if so, far behind or it just didn't line up and it wasn't stuff you wanted or how did that work?

I think, again, I hate to keep going back to research. But we know, we think we have a good handle on the markets that Steve basically touched upon this in his remarks. We have an idea of the markets, we think are kind of out in front and are going to recover quicker, and that will probably reactivate our renovation pipeline. But when I see folks, when we're - we have market observations, Tony, we're seeing negative rent trade-outs and I'm seeing folks that are winning these deals, growing rents simultaneously at 1% to 3%. We wish them well. But that's not - we want to be pragmatic about our underwriting. And we looked at deals, certainly in the fourth quarter. We always look at deals. But I think we were very comfortable when we saw some of the price per pound that were being ponied up we were comfortable passing and maintaining discipline and being shot selective.

Got it. Thank you. And then just one other, on the comment about potential 400 basis points of occupancy pickup, just what's behind that? Is there a set of leases that just may or may not go your way? Is there a specific asset that you've got some traction? I'm just curious what's behind the 400.

Well, that is - this is Steve, Tony. That's really looking at all our leasing. And if you think about what we're experiencing, we're having really good traction on renewals. So I think renewals are showing that there is conviction and people are ready to move on that. And that's happening already. So to get our occupancy gains, it's got to be our new leasing. And that's the one that we've been a little bit - we're very confident in terms of the space that we have. It's some of the very best space and assets that we had going into the call. And that's our normal lease up, including just looking at market color and activity. The question is really, for new leasing, will people have the conviction soon enough, that their workforce is ready to return to work and all. We see the conviction happening pretty actively on the renewal front. And so, that's basically reflecting our new leasing assumptions. And for us, it's honestly a when not an if question. And the when is really driven by when schools open, when the vaccine has more widely distributed, when activities return, and really, companies feeling like they got ahead of it. We're seeing it in the apartment side. We're seeing people now starting to move back in. Our applications are up, getting closer to where they want to work. We're seeing it on the renewal side, where companies are saying, okay, we're ready to make our long-term decisions. We just need to see the inflection help with new leasing a little bit. And so, that's the risk for us. It's really a timing risk, in terms of whether that will happen soon enough in 2021, for us to get the benefit, to grow that occupancy. That's the call we were ready to make.

Got it. Great. Thank you for the color.

Thank you.

Our next question comes from the line of Blaine Heck with Wells Fargo. Please proceed with your question.

Great, thanks. Good morning. Paul, you touched a little bit on the 60,000 square feet of retail leasing you signed in January. First, is there any detail you can give on the rent spreads on that leasing? And second, now that you have longer-term renewal signed on that 10% of the retail portfolio? Does that maybe change the pricing profile and make you any more willing to look to sell your remaining retail assets?

Blaine, I don't have the rent spreads right in front of me, but I'm happy to follow up with you after the call. And those were two critical anchors at their respective centers. In terms of changing it, certainly, I think it changes the risk profile. But both of those centers are in that potential redevelopment bucket. As you know, the Giant at Takoma not only is in an opportunity zone, but it's literally right on the Purple Line. So we think that does represent a redevelopment opportunity. I think like most of - going back to Tony's earlier question, and we want to allocate capital, most of it is due the rents that we're seeing right now, justify new development in that respective submarket or don't they. Right now, I don't believe the rents are there for Takoma. And then when I look at, I probably say the same for the Montrose Shopping Center. Right now, I think suburban Maryland still has a couple of bumps, as we're all well aware of. So I do think that there are people that are starting to put the pen to paper right now looking at new return on cost metrics. Looking at for rents, two years from now and obviously looking at their land basis. And I think if somebody like we've always said these were covered land plays. And I think the optionality that Washington REIT has, does it do it itself? Or does it sell the dream? And I think that that's still where we are. And I think, Steve, do you have this went through?

Yeah, I do. Blaine, pretty much flat in terms of initial cash rent, but we've got bumps in it. So the GAAP increases about 15% lease over the lease.

Okay, that's great. And then, Steve, one for you. I know, we've talked about this in the past, but just for an update in light of the recent office sales, just wanted to get a sense of how you guys are thinking about the dividend going forward, your payout ratio was between 90% and 95% this quarter. And you've also talked about recycling more capital out of office and into multifamily, which is likely to be diluted going forward. So, just updated thoughts on the dividend would be helpful.

Yeah, we obviously provide our forecasts and guidance in the board room. We discuss the dividend every quarter, as the board thinks along with this. We're expecting to cover the forecasts to cover the dividend and our forecast for the year. And in the board, it is confident that we should keep paying it. We do believe that once we get to a point of inflection, assuming we're going forward through this pandemic, and coming out the other side, we think our coverage ratio should strengthen. So there's really been no thought or discussion of cutting the dividend, honestly, in our board discussions.

Great. That's helpful. Thanks, guys.

Our next question comes from the line of Dave Rodgers with Robert W. Baird. Please proceed with your question.

Yeah. Good morning, everybody. I wanted to talk about the Class B rent gap. I think it came up maybe a couple of times in the variety of the comments. But can you maybe dive down a little bit deeper, and maybe this is for grant as well, in terms of kind of the Class B rent gap, I think you said it's getting wider. And I would think that given the decline in rents and kind of the pandemic, we would see compression in those numbers. So I wanted to give you the chance to clarify maybe both on the multifamily side, and then within the office component as well.

Do you hear me now?

Yeah. Sorry about that. I'm getting used to hitting the mute buttons here. So I think the comments in the note or our script, that we had some compression market-wide throughout 2020, but that we had - that it actually starting to flatten out in the fourth quarter. So there was no longer compression at the market level. At the submarket level, which we are watching very closely as part of our ongoing analysis of when will be the right time to turn renovations back on. There is quite a bit of variety in terms of the rent gap, so that some submarkets actually are widening, and that gap is growing, because we are getting rent growth and those particularly in some suburban locations. And there is a variety, some of the submarkets that's actually sort of how we chose our submarkets to begin with, and that we chose submarket that had a greater than average rent gap, so even the ones that we've had some compression, and we have 350 basis points greater gap in some of our submarkets, like Columbia Pike, where the Wellington and Trove are located than you would have end-market wide. So we're watching that closely. It's flattening out at the market level and is not compressing further as it had. And in some submarkets, we are actually seeing it go the other way in a positive direction. Hopefully that clears that up.

Yeah. Maybe just a quick follow-up on that before talking office, if we could just suburban versus the urban component of where that compression has been, is there a way to generalize between the two of those without kind of going each submarket by submarket?

I would say if there's a - it's wider I don't have the exact number in front of me. But if the average for the region is around 20%, I would say, it's wider in the submarkets in the suburbs where there has been less decline in Class A than there is Class B. I think over the course of the pandemic, B has outperformed, A by about 230, 240 basis points. So I think that would probably sort of back into the difference there between those rent gap levels.

Okay, that's helpful. And then, last, maybe just on the office component, I don't know if that's for you, Paul. How the rent delta is compressing maybe within and around the district?

Well, Dave, if I'm looking at, and I'd like to look at a kind of pre-pandemic, and what we're currently seeing like if I were to look at large deals in the Class A space, probably pre-pandemic at TI package was probably, let's say, 110 a foot, and today to be anywhere from 130 to 140 free rent, probably, it was right on top of a month per year. And today, it's probably, 1.25, 1.5 months per year term. And then you have your unused TI conversion, which is probably gone from 10% maybe upwards to 20%. We're not really seeing those types of lifts, I think, we see less slippage in the Class B space. And probably, more importantly, just like in the multifamily space, it's about retention. I mean, I look, just reading with JLL, their deck and retention - excuse me, renewals in Northern Virginia were up one-third. And I think they're more economically - can be more economically viable for both the tenant, and certainly for the landlord. And so we're really focused on renewal, you have to remember, I mean, especially in the lease space, and looking at our portfolio. We're playing in that 4,000 to 6,000 square foot range. And so we're not really competing for those hefty TI packages and big free rent packages. I think tenants are very savvy, and they're going to, obviously, try to negotiate the best deal possible. But there's definitely a spread for the big renovated A's and trophies that have to achieve occupancy and what they're willing to do by occupancy in the Class B's. So I still think there's, we have an adequate delta between Class A rents and Class B rents in the region, Dave.

Okay, thanks for that. And then you'd mentioned the two renewals, B. Riley and Sunrise. Can you talk about the tone of those conversations was that just, it sounds like some flexibility was important, and at least one of those deals, but talk about maybe the economics and how those shook out at the end?

Well, we just to be transparent, I mean, Sunrise, we've been talking about pre-pandemic. And we applaud them in terms of their decision makers coming back having a workforce strategy and putting the pen to paper, and it was a competitive bid situation. Flexibility, when we talk about flexibility, we see tenants that are operating in the space that want to, are recognizing that it's kind of a tenants market right now, making workforce strategy decisions. I think, in terms of flexibility, I think tenants, we're seeing more just folks requesting a partial termination option in a future lease. Not that they're going to exercise it, but that they definitely want that after disposal. In case, their model requires some type of shift in operating expenses. When I look at B. Riley, B. Riley is committed to the space but looked at their model, and said, hey, we have an option here to get back a floor and that's what they've done. Fortunately, it was not their bad floors, but there was a - it was a good floor in Arlington Tower. And so, the situation we have with B. Riley is that user will do their sublease through the end of the - to the point of the termination option, which I believe is December of 2022. And then that user will have a primary lease with WashREIT through 2029. Again, a lot of the tenants that we were talking to, Dave, we're not seeing, tenants saying, hey, I want to get back half my space. But what they're looking for is optionality going forward, based on how protracted or not, a recovery can be. And those have been in discussions, we haven't seen huge redesigns we just have not experienced in that, that in our portfolio to date.

Thanks for those details, Paul. Maybe just a final question for me, Steve, you mentioned using the ATM? Can you talk about kind of when and how you're looking at using that going forward in terms of adding capital to the balance sheet?

Yeah, Dave, we've just looked at the opportunity to continue our capital allocation. First of all, we wanted to strengthen the balance sheet. And we also wanted to - you can't find everything at the same time. So we wanted to get the office sales executed that that we felt good and couldn't get executed. We did just a little bit of ATM, I think, somewhere around 2%, it's just a small sliver of capital. But we wanted to go into 2021 with a strong balance sheet as we could until we had more visibility for the inflection that we think, sure, we have spring leasing seasons, but we think the pandemic is going to give us a lift. And we just wanted to be as strong as possible when we finally have that visibility. We're not planning on using it or going to the ATM at this point. We wanted to go into 2021 and decide how much conviction we had on visibility. And, really, we're also monitoring what's happening. And, we like the multifamily business. We commented on the call. I'll just make a comment or two in terms of what we were observing, because we did have some investor meetings on the road at the end of the year too. October, November were really good months for us. Still, I would say the leasing season extended a little bit into the September, October months. For us, it looks like December was the bottom from a multifamily standpoint. And in terms of the winter months, fortunately, we only have about 20% of our portfolio expiring at that time. And we have about two-thirds in the summer. But we saw December was tough. And our focus was on maintaining and then starting to push occupancy. And that's really helped us. We commented on it in our prepared remarks. But we didn't think it made sense to push our two rent controlled assets, but for everything else. Since yearend, we got it up to about 95%. And that is getting to the point where we can start to burn off concession, start improving effective rents. And we saw in the month of January a 300 basis point improvement in effective rents for new leases, which is the right trend. And as we look at our early indicators, renewals and the leases getting signed in early February, it looks like February, March are improving in the right direction too, both from an effective rent standpoint. And, as I've said, we've improved our occupancy. So we feel good about that. When I think about January versus the fourth quarter, if December was our toughest month, and I look at January, it's better than December. And in fact, January is already kind of to the average of the fourth quarter, which had two better months. And if February and March are truly trending as they seem to be trending, then hopefully the first quarter will be better in all-in. When you think about our guidance, we saw the winter coming but we actually outperformed our fourth quarter multifamily guidance from a same-store standpoint or from an NOI standpoint. And hopefully, it will prove to be conservative on the first quarter. But we're just going to have to see. And in terms of the other inflection points, Dave, it's just, as I said earlier, it's when will things happen soon enough and how much will they benefit 2021.

I appreciate all the added color, Steve. Thanks.

Thank you.

Our next question comes from the line of Chris Lucas with Capital One Securities. Please proceed with your question.

So it's now good afternoon, guys. Just a couple of quick follow-ups, on the Sunrise renewal, did you provide the duration of that renewal?

It's seven years, Chris.

Excellent. Okay. And then, the one sort of nearer-term lease that you haven't talked about is that Capital One expiration, which I guess is first quarter of 2022. Any movement or conversation there? And what do you see as sort of things that you need to see in order to get a response out of them?

We are having dialogue and kind of broker-to-broker and head of real estate to WashREIT. The only thing tangible, Chris, that I think has happened in the last 90 to 120 plus days, is just them executing. They're in three buildings, as you know in Tysons outside of their main campus, and them executing a short-term extension at one of the buildings. We are hearing that that same type of activity may be coming our way. But that's obviously one, Chris, we've all got our eye on. But to date, we have not traded paper, since the beginning of the year.

Okay, thank you. That's all I had.

There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.

Thank you. Again, I would like to thank everybody for your time today. And we look forward to seeing many of you at the upcoming conferences over the next several weeks. Thank you, everyone.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.