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WRIT grows despite slump


Any conversation about successful real estate investing, especially during tough times, has to include mention of the Washington Real Estate Investment Trust of Bethesda, which has the top record in the industry for growth of share price and dividends -- up about 33 times in the past 15 years. WRIT has boosted its earnings 26 years in a row at a compound growth rate of 15 percent a year.

This week, the trust reported record results for 1991: earnings up 14 percent and cash flow ahead 13 percent. The dividend was raised for the 21st consecutive year.

With WRIT's revenues, earnings, cash flow and dividends all hitting peaks, attention has to turn to the man with perhaps the most appropriate name in the industry -- Benjamin Franklin Kahn. His philosophy parallels that of the original Franklin. Unlike some competitors whose earnings have been suffering, the conservative trust has no such worries.

As an equity trust, WRIT generally pays cash for its properties, and that cash has been cheap to accumulate. The trust has piled up an investing fund of more than $40 million, primarily from the sale of new shares. The cash costs the dividend rate, currently 6 percent based on the sale price of $20.75 per new share and the $1.24-a-share dividend. Selectivity is paramount -- WRIT receives hundreds of property offers annually and in 1991 bought none of them.

Basically, Mr. Kahn runs the trust in this way: He buys value properties, improves them and leases space at higher prices. WRIT has been able to maintain its occupancy rate near 95 percent, and it would be even higher were it not for exceptionally low occupancy when two major office buildings were acquired in recent years. Those occupancy levels have been improved greatly but still lag behind the average.

WRIT has diversified well among apartment and office buildings, and shopping and business centers. With its properties mostly around the Washington area, supervision is easier, Mr. Kahn says. WRIT was also able last year to renegotiate many service contracts, chopping expenses to 30 percent from 32 percent.

Last year, as the real estate industry suffered more than usual, WRIT's share price climbed 10 points, to 26 1/2 . Its trading volume has gained substantially in recent months, a sign of more interest in this most successful of all real estate trusts.

From trusts to trucks

Last year was a poor one for the Preston Corp., with headquarters in Preston on the Eastern Shore. The company lost less than in 1990, but that year's loss was substantially because of the closing of divisions. The sluggish economy was the reason for last year's loss of $3.4 million, or nearly 60 cents a share.

However, William Potter, chairman and president, sees a light down the tunnel. He expects the nation's economy to improve in the next few months and his company to do better -- to operate profitably -- along with it. Preston Trucking and other companies under the Preston Corp. banner, operating in many areas of the country, make up one of the 10 leading trucking businesses in the nation.

"Comparing us to a company such as the Chrysler Corp. is a good analogy," Mr. Potter said. "There is a lot of leverage" that can result in heavy losses during slow times but strong earnings when the economy improves.

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