FFO, as adjusted, of $0.11 per Share in Q4
and $0.45 per Share in 2013; Increased 7.1 Percent
Year-over-Year
Consolidated Operating Occupancy Increased
to 93.3 Percent in Q4; Up 50 Basis Points over Q3 and 100 Basis
Points Year-over-Year
2013 Same-Store NOI Growth of 4.9 Percent on
a Cash Basis and 1.9 Percent on a GAAP Basis
Rent Growth was 15.5 Percent on a GAAP Basis
and 5.1 Percent on a Cash Basis in Q4
Since September 30, 2013, Acquired 2.7
Million Square Feet for $153.4 Million; Sold 3.4 Million Square
Feet for $162.2 Million
2013 Acquisitions Totaled 7.1 Million Square
Feet for $359.5 Million; Dispositions Totaled 6.8 Million Square
Feet for $265.8 Million
DCT Industrial Trust Inc.® (NYSE: DCT), a leading
industrial real estate company, today announced financial results
for the three months and year ending December 31, 2013.
“DCT had an excellent fourth quarter – a strong finish to a very
successful and productive year. We made progress on all operating
fronts, exceeded our capital deployment goals and improved the
quality and focus of our portfolio,” said Phil Hawkins, Chief
Executive Officer of DCT Industrial. “We also made tremendous
progress to further strengthen our balance sheet, as we obtained
investment grade bond ratings and successfully completed our debut
bond offering in October.”
Funds from operations, as adjusted, attributable to common
stockholders and unitholders (“FFO”) for Q4 2013 totaled $38.0
million, or $0.11 per diluted share, compared with $33.0 million,
or $0.11 per diluted share, for Q4 2012. These results exclude $2.0
million and $1.0 million of acquisition costs for the quarters
ending December 31, 2013 and 2012, respectively.
For the year ending December 31, 2013, FFO totaled $144.2
million, or $0.45 per diluted share, compared with $118.1 million,
or $0.42 per diluted share, for the year ending December 31, 2012,
representing an increase of 7.1 percent. These results exclude $3.6
million and $2.0 million of acquisition costs for the years ending
December 31, 2013 and 2012, respectively.
Net income attributable to common stockholders for Q4 2013 was
$13.9 million, or $0.04 per diluted share, compared with a net loss
attributable to common stockholders of $0.8 million, or $0.00 per
diluted share, reported for Q4 2012. Net income attributable to
common stockholders for the year ending December 31, 2013 was $15.9
million, or $0.05 per diluted share, compared with a net loss of
$15.1 million, or $0.06 per diluted share, for the year ending
December 31, 2012.
Property Results and Leasing
Activity
As of December 31, 2013, DCT Industrial owned 396 consolidated
operating properties, totaling 62.1 million square feet, with
occupancy of 93.3 percent, an increase of 50 basis points over Q3
2013 and 100 basis points over Q4 2012. On a same-portfolio basis,
consolidated operating occupancy would have been 93.8 percent;
however, the impact of acquisitions and dispositions during the
quarter brought occupancy down 50 basis points. In addition,
approximately 977,000 square feet, or 1.5 percent of DCT
Industrial’s total consolidated portfolio, was leased but not yet
occupied at December 31, 2013.
In Q4 2013, the Company signed leases totaling 3.6 million
square feet with rental rates increasing 15.5 percent on a GAAP
basis and 5.1 percent on a cash basis, compared to the
corresponding expiring leases. For the full-year 2013, rental rates
on signed leases increased 6.6 percent on a GAAP basis and
decreased 1.6 percent on a cash basis. The Company’s tenant
retention rate was 83.4 percent in Q4 2013 and 72.0 percent for the
year ending December 31, 2013.
Net operating income (“NOI”) was $55.7 million in Q4 2013,
compared with $46.5 million in Q4 2012. For the year ending
December 31, 2013, NOI was $206.2 million, compared with $170.4
million for the year ending December 31, 2012.
In Q4 2013, same-store NOI, excluding revenue from lease
terminations, increased 1.6 percent on a cash basis and decreased
0.9 percent on a GAAP basis, when compared to Q4 2012. Same-store
occupancy averaged 91.9 percent in Q4 2013, an increase of 10 basis
points over Q4 2012. For the year ending December 31, 2013,
same-store NOI, excluding revenue from lease terminations,
increased 4.9 percent on a cash basis and 1.9 percent on a GAAP
basis, when compared to the year ending December 31, 2012.
Same-store occupancy averaged 91.5 percent for the full-year 2013,
an increase of 100 basis points over the full-year 2012.
Investment Activity
Acquisitions
Since September 30, 2013, DCT Industrial acquired 17 buildings
for $153.4 million. These acquisitions total 2.7 million square
feet and were 83.6 percent occupied at the time of closing. The
Company expects a year-one weighted-average cash yield of 5.9
percent and a weighted-average projected stabilized cash yield of
7.3 percent on these assets.
The table below summarizes acquisitions since September 30,
2013:
Market Submarket Square Feet
Occupancy Closed Anticipated
Yield* Atlanta, GA Northwest 405,000
100.0% Oct-13 7.2%
Chicago, IL (6 buildings) Elgin 1,060,000 59.1% Oct-13 7.5%
Southern California Inland Empire West 153,000 100.0% Oct-13 5.2%
Miami, FL North Central Dade 211,000 100.0% Oct-13 7.0% Chicago, IL
O’Hare 110,000 100.0% Oct-13 11.0% Southern California Mid-Counties
84,000 100.0% Nov-13 9.4% Houston, TX North 88,000 100.0% Dec-13
6.8% Dallas, TX Great Southwest 100,000 100.0% Dec-13 7.4% New
Jersey Meadowlands 179,000 100.0% Dec-13 6.3% Dallas, TX Northwest
93,000 84.0% Dec-13 7.3% Chicago, IL O’Hare 174,000 100.0% Jan-14
7.2% Dallas, TX DFW Airport 71,000
100.0% Jan-14 6.7%
Total/Weighted Average 2,728,000 83.6% 7.3%
*Anticipated yield represents year-one cash yield for stabilized
acquisitions and projected stabilized cash yield for value-add
acquisitions.
For the year ending December 31, 2013, the Company acquired 38
buildings, totaling 7.1 million square feet for a total of $359.5
million. As of December 31, 2013, these buildings were 94.5 percent
occupied, up from 83.3 percent at the time of acquisition. The
Company expects a year-one weighted-average cash yield of 5.8
percent and a weighted-average projected stabilized cash yield of
7.1 percent.
Development/Redevelopment
In December 2013, through a 90 percent-owned joint venture, DCT
Industrial invested $3.5 million to acquire 35.6 acres in the
Southeast Broward County submarket of South Florida. The Company
expects to develop Seneca Commerce Center, a three building project
totaling 567,000 square feet. Additionally, in January 2014, DCT
Industrial acquired 6.4 acres in the DFW Airport submarket of
Dallas for the future development of DCT Freeport North, a 95,000
square foot building.
As of December 31, 2013, including recently stabilized
buildings, the Company had 11 projects, totaling 4.3 million square
feet, under active development. These projects have a total
projected investment of $267.3 million and were 47.3 percent
leased.
Development highlights include:
- In December 2013, executed a 267,000
square foot, full-building lease at DCT Airtex Industrial Center
located in the North submarket of Houston.
- In December 2013, commenced
construction on DCT Rialto Distribution Center, a 928,000 square
foot building located in the Inland Empire West submarket of
Southern California.
- In January 2014, completed the
construction and sale of 8th and Vineyard Building A, a 130,000
square foot build-to-suit located in the Inland Empire West
submarket of Southern California, owned in a joint venture.
Dispositions
Since September 30, 2013, the Company completed the disposition
of 33 buildings totaling 3.4 million square feet, which includes
the previously announced sale of all DCT Industrial’s Mexico
assets. These transactions generated total gross proceeds of $162.2
million and have an expected year-one weighted average cash yield
of 7.4 percent.
The table below summarizes the dispositions since September 30,
2013:
Market Submarket Square Feet
Occupancy Closed Dallas, TX (15 buildings)
DFW Airport & Northwest 559,000
72.2% Oct-13 Mexico (15 buildings)
1,653,000 100.0% Oct-13 Northern California Sacramento 396,000
100.0% Nov-13 Cincinnati, OH Northern Kentucky 710,000 100.0%
Dec-13 Southern California Inland Empire West
130,000 N/A Jan-14
Total/Weighted Average 3,448,000 95.3%
For the year ending December 31, 2013, the Company sold 51
buildings, totaling 6.8 million square feet. These transactions
generated total gross proceeds of $265.8 million and have an
expected year-one weighted average cash yield of 7.5 percent.
In January 2014, two of DCT Industrial’s unconsolidated joint
ventures sold all of their properties. The 12 properties, located
in Atlanta, Central Pennsylvania, Cincinnati, Columbus, Dallas,
Indianapolis and Minneapolis, totaled 3.4 million square feet, and
generated net proceeds of approximately $6.6 million1 to DCT
Industrial with an expected year-one weighted cash yield of 6.8
percent.
1 Based on DCT Industrial’s average 7.2 percent ownership.
Capital Markets
Since September 30, 2013, DCT Industrial raised $39.5 million in
net proceeds from the sale of common stock through its “at the
market” equity offering. The Company issued approximately 5.4
million shares at an average price of $7.37 per share. The proceeds
were used for acquisitions, development activities and for general
corporate purposes. As previously announced, in October 2013, in
its debut bond offering, DCT Industrial issued $275 million
(aggregate principal amount) of 10-year senior unsecured notes at
99.038 percent of face value for net proceeds of approximately
$269.6 million after expenses. The notes have a fixed interest rate
of 4.5 percent. The Company used the net proceeds to repay its
$175.0 million senior unsecured term loan, its $50.0 million senior
unsecured debt, as well as other debt maturities and for general
corporate purposes. DCT Industrial maintains a Baa2 rating from
Moody’s Investors Service and a BBB- from Standard & Poor’s
Rating Services.
Dividend
DCT Industrial’s Board of Directors has declared a $0.07 per
share quarterly cash dividend, payable on April 16, 2014 to
stockholders of record as of April 4, 2014.
Guidance
The Company’s guidance for 2014 FFO is between $0.45 to $0.48
per diluted share. Additionally, net income attributable to common
stockholders is expected to be between $0.06 and $0.09 per diluted
share.
DCT Industrial’s guidance for 2014 includes the following
assumptions:
- Average occupancy for the consolidated
operating portfolio will range between 93.5 percent and 94.5
percent
- Same-store net operating income will
increase between 3.25 percent and 4.75 percent on a GAAP basis and
between 3.00 percent and 4.50 percent on a cash basis
- Development starts of between $100
million and $200 million
- $100 million to $200 million of
stabilized and value-add acquisitions
The Company’s FFO guidance excludes acquisition costs.
Conference Call
Information
DCT Industrial will host a conference call to discuss Q4 2013
results on Friday, February 7, 2014 at 11:00 a.m. Eastern Time.
Stockholders and interested parties may listen to a live broadcast
of the conference call by dialing (888) 317-6016 or (412) 317-6016.
A telephone replay will be available through Friday, February 21,
2014 and can be accessed by dialing (877) 344-7529 or (412)
317-0088 and entering the passcode 10038361. A live webcast of the
conference call will be available in the Investors section of the
DCT Industrial website at www.dctindustrial.com. A webcast replay
will also be available shortly following the call until February 7,
2015.
Supplemental information is available in the Investors section
of the Company’s website at www.dctindustrial.com or by e-mail
request at investorrelations@dctindustrial.com. Interested parties
may also obtain supplemental information from the SEC’s website at
www.sec.gov
About DCT Industrial Trust
Inc.®
DCT Industrial Trust Inc. is a leading industrial real estate
company specializing in the acquisition, development, leasing and
management of bulk distribution and light industrial properties in
high-volume distribution markets in the U.S. As of December 31,
2013, the Company owned interests in approximately 75.5 million
square feet of properties leased to approximately 900 customers,
including 12.3 million square feet operated on behalf of four
institutional capital management partners. Additional information
is available at www.dctindustrial.com.
Click here to subscribe to Mobile Alerts for DCT Industrial.
DCT INDUSTRIAL TRUST INC. AND
SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share
information)
December 31, December 31, 2013
2012 ASSETS
(unaudited)
Land $ 883,804 $ 780,235 Buildings and improvements 2,615,879
2,481,206 Intangible lease assets 82,758 78,467 Construction in
progress 88,610 45,619
Total investment in
properties 3,671,051 3,385,527 Less accumulated depreciation
and amortization (654,097) (605,888)
Net
investment in properties 3,016,954 2,779,639 Investments in and
advances to unconsolidated joint ventures 124,923
130,974
Net investment in real estate 3,141,877 2,910,613
Cash and cash equivalents 32,226 12,696 Restricted cash 12,621
10,076 Deferred loan costs, net 10,251 6,838 Straight-line rent and
other receivables, net of allowance for doubtful accounts of $2,178
and $1,251, respectively 46,247 51,179 Other assets, net 14,545
12,945 Assets held for sale 8,196 52,852
Total
assets $ 3,265,963 $ 3,057,199
LIABILITIES AND
EQUITY Liabilities: Accounts payable and accrued expenses $
63,281 $ 57,501 Distributions payable 23,792 21,129 Tenant prepaids
and security deposits 28,542 24,395 Other liabilities 10,122 7,213
Intangible lease liability, net 20,389 20,148 Line of credit 39,000
110,000 Senior unsecured notes 1,122,407 1,025,000 Mortgage notes
290,960 317,314 Liabilities related to assets held for sale
278 940
Total liabilities 1,598,771
1,583,640 Equity: Preferred stock, $0.01 par value,
50,000,000 shares authorized, none outstanding - - Shares-in-trust,
$0.01 par value, 100,000,000 shares authorized, none outstanding -
-
Common stock, $0.01 par value, 500,000,000
shares authorized 320,265,949and 280,310,488 shares issued and
outstanding as of December 31, 2013 andDecember 31, 2012,
respectively
3,203 2,803 Additional paid-in capital 2,512,024 2,232,682
Distributions in excess of earnings (941,019) (871,655) Accumulated
other comprehensive loss (30,402) (34,766)
Total
stockholders’ equity 1,543,806 1,329,064 Noncontrolling
interests 123,386 144,495
Total equity
1,667,192 1,473,559
Total liabilities and equity $
3,265,963 $ 3,057,199
DCT INDUSTRIAL TRUST INC. AND
SUBSIDIARIES
Consolidated Statements of
Operations
(unaudited, in thousands, except per
share information)
Three Months Ended Year Ended December
31, December 31, 2013 2012 2013
2012 REVENUES: Rental revenues $ 76,475 $ 63,365 $
286,218 $ 236,839 Institutional capital management and other fees
648 916 2,787 4,059
Total
revenues 77,123 64,281 289,005
240,898
OPERATING EXPENSES: Rental expenses 9,904
8,024 35,977 30,298 Real estate taxes 10,830 8,805 44,048 36,092
Real estate related depreciation and amortization 35,368 28,477
130,002 109,993 General and administrative 8,187 6,855 28,010
25,763 Casualty and involuntary conversion gain -
(1,033) (296) (1,174)
Total operating expenses
64,289 51,128 237,741 200,972
Operating income 12,834 13,153 51,264 39,926
OTHER
INCOME AND EXPENSE: Development profit - 307 268 307 Equity in
earnings of unconsolidated joint ventures, net 684 303 2,405 1,087
Interest expense (16,066) (17,504) (63,394) (69,274) Interest and
other income (expense) (37) (142) 274 85 Income tax benefit
(expense) and other taxes 305 (94) (68)
(671)
Loss from continuing operations (2,280) (3,977)
(9,251) (28,540) Discontinued operations: Operating income and
other expenses 1,196 2,313 6,383 9,839 Gain on dispositions of real
estate interests from discontinued operations 16,036
1,035 20,340 1,961 Income from discontinued
operations 17,232 3,348 26,723 11,800
Consolidated net income (loss) of DCT Industrial Trust Inc.
14,952 (629) 17,472 (16,740) Net (income) loss attributable to
noncontrolling interests (1,013) (216) (1,602)
1,654
Net income (loss) attributable to common
stockholders 13,939 (845) 15,870
(15,086) Distributed and undistributed earnings allocated to
participating securities (167) (122) (692)
(524)
Adjusted net income (loss) attributable to common
stockholders $ 13,772 $ (967) $ 15,178 $ (15,610)
EARNINGS PER COMMON SHARE – BASIC AND DILUTED Loss from
continuing operations $ (0.01) $ (0.01) $ (0.03) $ (0.10) Income
from discontinued operations 0.05 0.01 0.08
0.04 Net income (loss) attributable to common stockholders $
0.04 $ 0.00 $ 0.05 $ (0.06)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING: Basic and Diluted 317,856
271,066 298,769 254,831
Reconciliation of Net Income (Loss)
Attributable to Common Stockholders to Funds from
Operations
(unaudited, in thousands, except per
share and unit data)
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
Reconciliation of net income (loss) attributable to common
stockholders to FFO:
2013 2012
2013 2012 Net income (loss)
attributable to common stockholders $ 13,939 $ (845 ) $ 15,870 $
(15,086 ) Adjustments: Real estate related depreciation and
amortization
35,527 32,011 137,120 126,687 Equity in earnings of unconsolidated
joint ventures, net (684 ) (303 ) (2,405 ) (1,087 ) Equity in FFO
of unconsolidated joint ventures 2,622 2,429 10,152 10,312
Impairment losses on depreciable real estate - - 13,279 11,422 Gain
on dispositions of real estate interests (16,036 ) (1,035 ) (33,650
) (13,383 ) Gain on dispositions of non-depreciable
real estate
- - 31 - Noncontrolling interest in the above
adjustments
(1,145 ) (2,601 ) (8,211 ) (12,522 ) FFO attributable to
unitholders 1,835 2,365 8,437
9,743 FFO attributable to common stockholders
and unitholders(1) 36,058 32,021
140,623 116,086 Adjustments:
Acquisition costs 1,930 989
3,578 1,975 FFO, as adjusted, attributable to
common stockholders and unitholders – basic and diluted $ 37,988
$ 33,010 $ 144,201 $ 118,061 FFO
per common share and unit — basic and diluted $ 0.11 $ 0.11
$ 0.44 $ 0.41 FFO, as adjusted, per
common share and unit — basic and diluted $ 0.11 $ 0.11
$ 0.45 $ 0.42 FFO weighted average
common shares and units outstanding: Common shares for earnings per
share - basic 317,856 271,066 298,769 254,831 Participating
securities 2,513 1,995 2,462 1,896 Units 17,742
21,437 19,079 23,358 FFO
weighted average common shares, participating securities and units
outstanding
– basic
338,111 294,498 320,310 280,085 Dilutive common stock equivalents
1,008 662 893 623
FFO weighted average common shares, participating securities
and units outstanding
– diluted
339,119 295,160 321,203
280,708
(1) Funds from Operations, FFO, as defined by the National
Association of Real Estate Investment Trusts (NAREIT).
Guidance
The Company is providing the following guidance:
Range for the Full-Year 2014 Guidance: Low
High Earnings per common share - diluted $
0.06 $ 0.09 Real estate related depreciation and
amortization(1) 0.39 0.39 FFO, as
adjusted, per common share and unit-diluted(2) $ 0.45
$ 0.48 (1) Includes pro rata share of real estate
depreciation and amortization from unconsolidated joint ventures.
(2) The Company’s FFO guidance excludes acquisition costs.
The following table shows the
calculation of our Fixed Charge Coverage for the three and twelve
months ended
December 31, 2013 and 2012 (in
thousands):
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2013 2012 2013
2012 Net income (loss) attributable to common
stockholders(1) $ 13,939 $ (845) $ 15,870 $ (15,086) Interest
expense 16,066 17,504 63,394 69,403
Proportionate share of interest expense
fromunconsolidated joint ventures
400 734 1,657 3,100 Real estate related depreciation and
amortization 35,527 32,011 137,120 126,687
Proportionate share of real estate related
depreciationand amortization from unconsolidated joint ventures
1,484 1,689 5,924 7,462 Income tax (benefit) expense and other
taxes (333) 95 57 716 Stock-based compensation 1,459 1,235 5,107
4,313 Noncontrolling interests 1,013 216 1,602 (1,654) Non-FFO
gains on dispositions of real estate interests (16,036) (1,035)
(33,619) (13,383) Impairment losses - - 13,279
11,422 Adjusted EBITDA $ 53,519 $ 51,604 $ 210,391 $ 192,980
CALCULATION OF FIXED CHARGES Interest expense $ 16,066 $
17,504 $ 63,394 $ 69,403 Capitalized interest 2,241 1,684 8,298
4,267 Amortization of loan costs and debt
premium/discount
(403) (284) (558) (1,093) Other noncash interest expense (1,000)
(1,008) (3,999) (2,034)
Proportionate share of interest expense
fromunconsolidated joint ventures
400 734 1,657 3,100 Total fixed charges
$ 17,304 $ 18,630 $ 68,792 $ 73,643 Fixed charge coverage
3.1 2.8 3.1 2.6
(1) Includes amounts related to discontinued operations, when
applicable.
The following table is a reconciliation
of our reported income (loss) from continuing operations to our
netoperating income for the three and twelve months ended
December 31, 2013 and 2012 (in thousands):
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
Reconciliation of loss from continuing operations to NOI:
2013 2012 2013 2012 Loss from
continuing operations $ (2,280 ) $ (3,977 ) $ (9,251 ) $ (28,540 )
Income tax expense (benefit) and other taxes (305 ) 94 68 671
Interest and other (income) expense 37 142 (274 ) (85 ) Interest
expense 16,066 17,504 63,394 69,274 Equity in earnings of
unconsolidated joint ventures, net (684 ) (303 ) (2,405 ) (1,087 )
General and administrative 8,187 6,855 28,010 25,763 Real estate
related depreciation and amortization 35,368 28,477 130,002 109,993
Development profit - (307 ) (268 ) (307 ) Casualty and involuntary
conversion gain - (1,033 ) (296 ) (1,174 ) Institutional capital
management and other fees (648 ) (916 ) (2,787
) (4,059 ) Total GAAP net operating income 55,741 46,536
206,193 170,449 Less net operating income – out-of-period
straight-line rent adjustment - (207 ) - - Less net operating
income - non-same store properties (11,071 ) (1,332 )
(37,936 ) (5,921 ) Same store GAAP net operating
income 44,670 44,997 168,257 164,528 Less revenue from lease
terminations (229 ) (154 ) (1,057 )
(491 )
Same store GAAP net operating
income,excluding revenue from lease terminations
44,441 44,843 167,200 164,037 Less straight-line rents, net of
related bad debt expense (377 ) (1,529 ) (799 ) (5,752 ) Less
amortization of above/(below) market rents, net (351 )
(307 ) (1,125 ) (688 )
Same store cash net operating income,
excludingrevenue from lease terminations
$ 43,713 $ 43,007 $ 165,276 $ 157,597
Financial Measures
Net operating income (“NOI”) is defined as rental revenues,
including expense reimbursements, less rental expenses and real
estate taxes, which excludes institutional capital management fees,
depreciation, amortization, casualty gains, impairment, general and
administrative expenses, equity in (earnings) loss of
unconsolidated joint ventures, interest expense, interest and other
income and income tax expense and other taxes. We consider NOI to
be an appropriate supplemental performance measure because it
reflects the operating performance of our properties and excludes
certain items that are not considered to be controllable in
connection with the management of the property such as
depreciation, amortization, impairment, general and administrative
expenses, interest income and interest expense. Additionally, lease
termination revenue is excluded as it is not considered to be
indicative of recurring operating income. However those measures
should not be viewed as alternative measures of our financial
performance since they exclude expenses which could materially
impact our results of operations. Further, our NOI may not be
comparable to that of other real estate companies, as they may use
different methodologies for calculating NOI, same store NOI
(excluding revenue from lease terminations), and cash basis same
store NOI (excluding revenue from lease terminations). Therefore,
we believe net income (loss) attributable to common stockholders,
as defined by GAAP, to be the most appropriate measure to evaluate
our overall financial performance.
DCT Industrial believes that net income (loss) attributable to
common stockholders, as defined by GAAP, is the most appropriate
earnings measure. However, DCT Industrial considers Funds from
Operations (“FFO”), as defined by the National Association of Real
Estate Investment Trusts (“NAREIT”), to be a useful supplemental,
non-GAAP measure of DCT Industrial’s operating performance. NAREIT
developed FFO as a relative measure of performance of an equity
REIT in order to recognize that the value of income-producing real
estate historically has not depreciated on the basis determined
under GAAP. FFO is generally defined as net income attributable to
common stockholders, calculated in accordance with GAAP, plus real
estate-related depreciation and amortization, less gains from
dispositions of operating real estate held for investment purposes,
plus impairment losses on depreciable real estate and impairments
of in substance real estate investments in investees that are
driven by measurable decreases in the fair value of the depreciable
real estate held by the unconsolidated joint ventures and
adjustments to derive DCT Industrial’s pro rata share of FFO of
unconsolidated joint ventures. We exclude gains and losses on
business combinations and include the gains or losses from
dispositions of properties which were acquired or developed with
the intention to sell or contribute to an investment fund in our
definition of FFO. Although the NAREIT definition of FFO predates
the guidance for accounting for gains and losses on business
combinations, we believe that excluding such gains and losses is
consistent with the key objective of FFO as a performance measure.
We also present FFO excluding severance, acquisition costs, debt
modification costs and impairment losses on properties which are
not depreciable. We believe that FFO excluding severance,
acquisition costs, debt modification costs and impairment losses on
non-depreciable real estate is useful supplemental information
regarding our operating performance as it provides a more
meaningful and consistent comparison of our operating performance
and allows investors to more easily compare our operating results.
Readers should note that FFO captures neither the changes in the
value of DCT Industrial’s properties that result from use or market
conditions, nor the level of capital expenditures and leasing
commissions necessary to maintain the operating performance of DCT
Industrial’s properties, all of which have real economic effect and
could materially impact DCT Industrial’s results from operations.
NAREIT’s definition of FFO is subject to interpretation, and
modifications to the NAREIT definition of FFO are common.
Accordingly, DCT Industrial’s FFO may not be comparable to other
REITs’ FFO and FFO should be considered only as a supplement to net
income (loss) as a measure of DCT Industrial’s performance.
DCT Industrial calculates our fixed charge coverage calculation
based on adjusted EBITDA, which represents net loss attributable to
DCT common stockholders before interest, taxes, depreciation,
amortization, stock-based compensation expense, noncontrolling
interest, impairment losses and excludes non-FFO gains and losses
on disposed assets and business combinations. We use adjusted
EBITDA to measure our operating performance and to provide
investors relevant and useful information because it allows fixed
income investors to view income from our operations on an
unleveraged basis before the effects of non-cash items, such as
depreciation and amortization and stock-based compensation expense,
and irregular items, such as non-FFO gains or losses from the
dispositions of real estate, impairment losses and gains and losses
on business combinations.
Forward-Looking Statements
We make statements in this report that are considered
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, or the Securities Act, and
Section 21E of the Securities Exchange Act of 1934, as amended, or
the Exchange Act, which are usually identified by the use of words
such as “anticipates,” “believes,” “estimates,” “expects,”
“intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,”
and variations of such words or similar expressions and includes
statements regarding our anticipated yields. We intend these
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 and are including this
statement for purposes of complying with those safe harbor
provisions. These forward-looking statements reflect our current
views about our plans, intentions, expectations, strategies and
prospects, which are based on the information currently available
to us and on assumptions we have made. Although we believe that our
plans, intentions, expectations, strategies and prospects as
reflected in or suggested by those forward-looking statements are
reasonable, we can give no assurance that the plans, intentions,
expectations or strategies will be attained or achieved.
Furthermore, actual results may differ materially from those
described in the forward-looking statements and will be affected by
a variety of risks and factors that are beyond our control
including, without limitation: national, international, regional
and local economic conditions, including, in particular, the
strength of the United States economic recovery and global economic
recovery; the general level of interest rates and the availability
of capital; the competitive environment in which we operate; real
estate risks, including fluctuations in real estate values and the
general economic climate in local markets and competition for
tenants in such markets; decreased rental rates or increasing
vacancy rates; defaults on or non-renewal of leases by tenants;
acquisition and development risks, including failure of such
acquisitions and development projects to perform in accordance with
projections; the timing of acquisitions, dispositions and
development; natural disasters such as fires, floods, tornadoes,
hurricanes and earthquakes; energy costs; the terms of governmental
regulations that affect us and interpretations of those
regulations, including the cost of compliance with those
regulations, changes in real estate and zoning laws and increases
in real property tax rates; financing risks, including the risk
that our cash flows from operations may be insufficient to meet
required payments of principal, interest and other commitments lack
of or insufficient amounts of insurance; litigation, including
costs associated with prosecuting or defending claims and any
adverse outcomes; the consequences of future terrorist attacks or
civil unrest; environmental liabilities, including costs, fines or
penalties that may be incurred due to necessary remediation of
contamination of properties presently owned or previously owned by
us; and other risks and uncertainties detailed in the section of
our Form 10-K filed with the SEC and updated on Form 10-Q entitled
“Risk Factors.” In addition, our current and continuing
qualification as a real estate investment trust, or REIT, involves
the application of highly technical and complex provisions of the
Internal Revenue Code of 1986, or the Code, and depends on our
ability to meet the various requirements imposed by the Code
through actual operating results, distribution levels and diversity
of stock ownership. We assume no obligation to update publicly any
forward looking statements, whether as a result of new information,
future events or otherwise.
DCT Industrial Trust Inc.Melissa Sachs,
303-597-2400investorrelations@dctindustrial.com
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