FFO of $0.53 per Share in Q4 and $2.00 per
Share in 2015; Increased 5.8 Percent Year-over-Year
Consolidated Operating Occupancy of 94.4
Percent in Q4
Same-Store NOI Growth of 7.4 Percent on a
Cash Basis and 3.9 Percent on a GAAP Basis in Q4; 8.6 Percent on a
Cash Basis and 5.9 Percent on a GAAP Basis for the Full
Year
Rent Growth of 28.5 Percent on a GAAP Basis
and 12.3 Percent on a Cash Basis in Q4; 19.5 Percent on a GAAP
Basis and 5.8 Percent on a Cash Basis for the Full Year
In 2015, Executed 7.1 Million Square Feet of
Development Leases and Stabilized 3.0 Million Square Feet of
Development
2016 FFO guidance between $2.07 and $2.17
per diluted share
DCT Industrial Trust® (NYSE: DCT), a leading industrial real
estate company, today announced financial results for the three
months and year ending December 31, 2015.
“2015 was another excellent year for DCT. We had strong
operating results and created substantial value through our
development program, executing 7.1 million square feet of leases at
rents well in excess of our expectations. Tenant demand remains
active and our market teams are focused on leveraging the favorable
market environment to push rents and continue to successfully
execute across our portfolio,” said Phil Hawkins, President and
Chief Executive Officer for DCT Industrial.
Funds from operations, as adjusted, attributable to common
stockholders and unitholders (“FFO”) for Q4 2015 totaled $49.6
million, or $0.53 per diluted share, compared with $42.8 million,
or $0.47 per diluted share, for Q4 2014, an increase of 12.8
percent per diluted share. These results exclude $1.0 million of
acquisition costs for the quarter ending December 31, 2014 and $3.6
million of severance costs for the quarter ending December 31,
2015.
For the year ending December 31, 2015, FFO totaled $186.4
million, or $2.00 per diluted share, compared with $167.0 million,
or $1.89 per diluted share, for the year ending December 31, 2014,
an increase of 5.8 percent per diluted share. These results exclude
$1.9 million and $3.0 million of acquisition costs for the years
ending December 31, 2015 and 2014, respectively; and $3.6 million
of severance costs for the year ending December 31, 2015.
Net income attributable to common stockholders for Q4 2015 was
$38.5 million, or $0.43 per diluted share, compared with net income
of $29.6 million, or $0.34 per diluted share, for Q4 2014. Net
income attributable to common stockholders for the year ending
December 31, 2015, was $94.0 million, or $1.05 per diluted share,
compared with net income of $49.2 million, or $0.58 per diluted
share, for the year ending December 31, 2014.
Property Results and Leasing
Activity
As of December 31, 2015, DCT Industrial owned 394 consolidated
operating properties, totaling 62.2 million square feet, with
occupancy of 94.4 percent, a decrease of 10 basis points from Q3
2015 and a decrease of 100 basis points from Q4 2014. On a same
portfolio basis, the impact of acquisitions, dispositions and
placing developments into operations brought occupancy down 10
basis points. Approximately 0.7 million square feet, or 1.1 percent
of DCT Industrial’s total consolidated portfolio, was leased but
not occupied at December 31, 2015, which does not take into
consideration 3.6 million leased square feet of pre-development and
developments under construction.
In Q4 2015, the Company signed leases totaling 5.8 million
square feet with rental rates increasing 28.5 percent on a GAAP
basis and 12.3 percent on a cash basis, compared with the
corresponding expiring leases. For the full-year, the Company
signed leases totaling 19.4 million square feet with rental rates
increasing 19.5 percent on a GAAP basis and 5.8 percent on a cash
basis. The Company’s tenant retention rate was 78.2 percent in Q4
2015 and 70.5 percent for the year ending December 31, 2015.
Net operating income (“NOI”) was $66.1 million in Q4 2015,
compared with $62.0 million in Q4 2014. For the year ending
December 31, 2015, NOI was $260.9 million compared with $240.5
million for the year ending December 31, 2014.
In Q4 2015, same-store NOI, excluding revenue from lease
terminations, increased 7.4 percent on a cash basis and 3.9 percent
on a GAAP basis, when compared with Q4 2014. Same-store occupancy
averaged 94.7 percent in Q4 2015, a decrease of 20 basis points
from Q4 2014. For the year ending December 31, 2015, same-store
NOI, excluding revenue from lease terminations, increased 8.6
percent on a cash basis and 5.9 percent on a GAAP basis, when
compared with the year ending December 31, 2014. Same-store
occupancy averaged 94.6 percent for the full-year 2015, an increase
of 100 basis points over the full-year 2014.
Investment Activity
Acquisitions
Since September 30, 2015, DCT Industrial acquired three
buildings for $28.2 million. Totaling 278,000 square feet, these
buildings were 43.5 percent occupied at the time of closing. The
Company expects a year-one weighted-average cash yield of 2.9
percent and anticipates a weighted-average stabilized cash yield of
6.1 percent on the acquired assets.
The table below summarizes acquisitions since September 30,
2015:
Market
Submarket
SquareFeet
Occupancyat Closing
Closed
AnticipatedYield1
Miami, FL Southeast Broward County 54,000 2 0.0 % 3 Nov-15
5.9 % Houston, TX North 121,000 100.0 % Nov-15 6.6 %
Seattle, WA Fife 103,000
0.0 % Dec-15 5.6 %
Total/Weighted Average 278,000 43.5 % 6.1 %
1Anticipated yield represents year-one cash yield for stabilized
acquisitions and projected stabilized cash yield for value-add
acquisitions.2 Purchased through a 90 percent-owned joint venture.3
Executed a 24,000 square foot lease bringing the building to 45.0
percent leased as of December 31, 2015.
For the year ending December 31, 2015, the Company acquired 17
buildings, totaling 2.4 million square feet for $153.1 million. The
Company expects a year-one weighted-average cash yield of 3.6
percent and a weighted-average projected stabilized cash yield of
6.3 percent.
Development
In Q4 2015, DCT Industrial signed development leases totaling
2.4 million square feet1, bringing the development pipeline to 82.5
percent leased. For the year ending December 31, 2015, the Company
executed development leases totaling 7.1 million square feet1 and
stabilized 3.0 million square feet of development.
Development highlights since September 30, 2015 include:
- Executed a 211,000 square foot
pre-lease on Building 13B, a 445,000 square foot distribution
building located in DCT Industrial’s SCLA unconsolidated joint
venture project in Victorville, California. Construction commenced
in January 2016 and is scheduled for completion in Q3 2016.
- Commenced construction on DCT
Stockyards Industrial Center, a 167,000 square foot building
located in the City South submarket of Chicago. Construction is
scheduled to be complete in Q4 2016.
- Commenced construction on DCT Central
Avenue, a 235-door truck terminal build-to-suit in the I-55
submarket of Chicago. Construction is scheduled to be complete in
Q1 2017.
- Acquired 39.6 acres in the City of
Tracy, in the San Joaquin County submarket of Northern California,
for the development of DCT Arbor Avenue. Construction is scheduled
to commence on the 796,000 square foot distribution center in Q2
2016.
Dispositions
Since September 30, 2015, DCT Industrial sold 21 buildings
totaling 2.4 million square feet. These transactions generated
total gross proceeds of $162.6 million and have an expected
year-one weighted-average cash yield of 5.9 percent.
The table below summarizes dispositions since September 30,
2015:
Market Submarket Square Feet
Occupancy Closed Atlanta, GA Stone Mountain
33,000 100.0 % Oct-15 Atlanta, GA North Central 93,000 0.0 % Dec-15
Houston, TX (8 buildings) Northwest 229,000 100.0 % Dec-15
Indianapolis, IN Park 100 380,000 100.0 % Dec-15 Indianapolis, IN
Plainfield 252,000 100.0 % Dec-15 Louisville, KY Bullitt County
303,000 100.0 % Dec-15 New Jersey (3 buildings) Morris County/I-80
242,000 80.2 % Dec-15 Pennsylvania Cumberland 104,000 100.0 %
Dec-15 Houston, TX (3 buildings) Northwest 273,000 94.0 % Jan-16
Louisville, KY Jefferson Riverport
506,000 100.0 % Jan-16
Total/Weighted Average 2,415,000 93.5 %
For the year ending December 31, 2015, the Company sold 34
buildings, totaling 6.0 million square feet. These transactions
generated total gross proceeds of $274.5 million2 and have an
expected year-one weighted-average cash yield of 6.5 percent.
1 Includes a 211,000 square foot pre-lease for DCT Industrial’s
SCLA unconsolidated joint venture.2 Includes DCT Industrial’s
proportionate share of gross proceeds for property sold by an
unconsolidated joint venture.
Capital Markets
In November 2015, DCT Industrial closed on the previously
announced $200 million, seven-year senior unsecured term loan. The
LIBOR based facility was swapped to a fixed rate for the entire
term with an all-in interest rate of 3.31 percent. The proceeds
were used to pay down the Company’s revolving line of credit and
for general corporate purposes.
Dividend
DCT Industrial’s Board of Directors declared a $0.29 per share
quarterly cash dividend, payable on April 13, 2016 to stockholders
of record as of April 1, 2016.
Guidance
The Company’s guidance for 2016 FFO is between $2.07 and $2.17
per diluted share. Additionally, net income attributable to common
stockholders is expected to be between $0.45 and $0.55 per diluted
share.
For additional details, assumptions and definitions related to
the Company’s 2016 guidance please refer to page 18 in DCT
Industrial’s Q4 2015 supplemental.
The Company’s FFO guidance excludes acquisition costs.
Conference Call
Information
DCT Industrial will host a conference call to discuss Q4 and
full-year 2015 results on Friday, February 5, 2016 at 11:00 a.m.
Eastern Time. Stockholders and interested parties may listen to a
live broadcast of the conference call by dialing (877) 506-6112 or
(412) 902-6686. A telephone replay will be available through
Friday, March 4, 2016 and can be accessed by dialing (877) 344-7529
or (412) 317-0088 and entering the passcode 10078258. 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 5, 2017.
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®
DCT Industrial 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,
2015, the Company owned interests in approximately 71.1 million
square feet of properties leased to approximately 900 customers.
DCT Industrial maintains a Baa2 rating from Moody’s Investors
Service and a BBB- from Standard & Poor’s Rating Services.
Additional information is available at www.dctindustrial.com.
Click here to subscribe to Mobile Alerts for DCT
Industrial.
###
DCT INDUSTRIAL TRUST INC. AND
SUBSIDIARIESConsolidated Balance Sheets(in thousands,
except share information)
December 31,2015
December 31,2014
ASSETS (unaudited) (unaudited) Land $ 1,009,905 $ 950,963
Buildings and improvements 2,886,859 2,787,959 Intangible lease
assets 84,420 86,515 Construction in progress 159,397
134,938
Total investment in properties 4,140,581 3,960,375
Less accumulated depreciation and amortization (742,980 )
(703,840 )
Net investment in properties 3,397,601
3,256,535 Investments in and advances to unconsolidated joint
ventures 82,635 94,728
Net investment in real
estate 3,480,236 3,351,263 Cash and cash equivalents 18,412
19,631 Restricted cash 31,187 3,779
Straight-line rent and other receivables,
net of allowance for doubtful accounts of $335 and $956,
respectively
60,357 54,183 Other assets, net 15,964 16,865 Assets held for sale
26,199 -
Total assets $ 3,632,355 $ 3,445,721
LIABILITIES AND EQUITY Liabilities: Accounts payable
and accrued expenses $ 108,788 $ 83,543 Distributions payable
26,938 25,973 Tenant prepaids and security deposits 29,663 30,539
Other liabilities 18,398 14,078 Intangible lease liabilities, net
22,070 22,940 Line of credit 70,000 37,000 Senior unsecured notes
1,276,097 1,117,253 Mortgage notes 210,375 248,979 Liabilities
related to assets held for sale 869 -
Total
liabilities 1,763,198 1,580,305 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 88,313,891 and 88,012,696 shares
issued and outstanding as of December 31, 2015
and December 31, 2014, respectively
883 880 Additional paid-in capital 2,766,193 2,762,431
Distributions in excess of earnings (992,010 ) (986,289 )
Accumulated other comprehensive loss (23,082 )
(27,190 )
Total stockholders’ equity 1,751,984 1,749,832
Noncontrolling interests 117,173 115,584
Total
equity 1,869,157 1,865,416
Total liabilities
and equity $ 3,632,355 $ 3,445,721
DCT INDUSTRIAL TRUST INC. AND
SUBSIDIARIESConsolidated Statements of Operations(in
thousands, except per share information)
Three Months Ended December 31, Year Ended
December 31, 2015 2014 2015
2014 REVENUES: (unaudited) (unaudited) (unaudited)
(audited) Rental revenues $ 88,822 $ 84,581 $
353,091 $ 334,787 Institutional capital management and other
fees 472 345 1,606
1,739
Total revenues 89,294
84,926 354,697 336,526
OPERATING EXPENSES: Rental expenses 8,539 9,013 35,995
40,520 Real estate taxes 14,137 13,594 56,219 53,790 Real estate
related depreciation and amortization 39,134 37,447 156,010 148,992
General and administrative 9,665 8,020 34,577 29,079 Impairment
losses 1,914 - 2,285 5,635 Casualty and involuntary conversion gain
(414 ) (2 ) (414 )
(328 )
Total operating expenses 72,975
68,072 284,672 277,688
Operating income 16,319 16,854 70,025 58,838
OTHER
INCOME (EXPENSE): Development profit, net of taxes - - 2,627
2,016 Equity in earnings of unconsolidated joint ventures, net 937
1,260 7,273 6,462 Gain on business combination - - - 1,000 Gain on
dispositions of real estate interests 36,785 28,024 77,871 39,671
Interest expense (13,464 ) (14,920 ) (54,055 ) (63,236 ) Interest
and other income (expense) 31 (19 ) (40 ) 1,563 Income tax benefit
(expense) and other taxes (24 ) (40 )
(736 ) 217
Income from continuing
operations 40,584 31,159 102,965 46,531 Discontinued
operations: Operating income and other expenses - - - 321
Gain on dispositions of real estate
interests from discontinued operations
- 141 -
5,396 Income from discontinued operations -
141 - 5,717
Consolidated net
income of DCT Industrial Trust Inc. 40,584 31,300 102,965
52,248 Net income attributable to noncontrolling interests
(2,035 ) (1,663 ) (8,917 )
(3,084 )
Net income attributable to common
stockholders 38,549 29,637
94,048 49,164
Distributed and undistributed earnings
allocated to participating securities
(168 ) (170 ) (678 )
(677 )
Adjusted net income attributable to
common stockholders
$ 38,381 $ 29,467 $ 93,370 $ 48,487
EARNINGS PER COMMON SHARE - BASIC: Income from
continuing operations $ 0.44 $ 0.34 $ 1.06 $ 0.52 Income from
discontinued operations 0.00 0.00
0.00 0.06 Net income attributable to
common stockholders $ 0.44 $ 0.34 $ 1.06 $
0.58
EARNINGS PER COMMON SHARE - DILUTED:
Income from continuing operations $ 0.43 $ 0.34 $ 1.05 $ 0.52
Income from discontinued operations 0.00
0.00 0.00 0.06 Net income
attributable to common stockholders $ 0.43 $ 0.34 $
1.05 $ 0.58
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING: Basic 88,241 86,406 88,182 83,280 Diluted 88,614
86,728 88,514 83,572
Reconciliation of Net Income
Attributable to Common Stockholders to Funds from
Operations(unaudited, in thousands, except per share and
unit data)
Three Months EndedDecember
31,
Year Ended December 31, 2015 2014
2015 2014 Reconciliation of net income
attributable to common
stockholders to FFO:
Net income attributable to common stockholders $ 38,549 $ 29,637 $
94,048 $ 49,164 Adjustments: Real estate related depreciation and
amortization 39,134 37,447 156,010 148,992 Equity in earnings of
unconsolidated joint ventures, net (937 ) (1,260 ) (7,273 ) (6,462
) Equity in FFO of unconsolidated joint ventures 2,478 2,814 9,902
10,804 Impairment losses on depreciable real estate 1,914 - 2,285
5,767 Gain on business combination - - - (1,000 ) Gain on
dispositions of real estate interests (36,785 ) (28,165 ) (77,871 )
(45,199 ) Gain (loss) on dispositions of non-depreciable real
estate (18 ) - - 98 Noncontrolling interest in the above
adjustments (401 ) (620 ) (4,487 ) (6,300 ) FFO attributable to
unitholders 2,060 1,953 8,274 8,106
FFO attributable to common stockholders
and unitholders — basic and diluted(1)
45,994 41,806 180,888 163,970
Adjustments: Acquisition costs 4 961 1,943 3,011 Severance costs
3,558 - 3,558 -
FFO, as adjusted, attributable to common
stockholders and unitholders — basic and diluted
$ 49,556 $ 42,767 $ 186,389 $ 166,981 FFO per common share
and unit — basic $ 0.49 $ 0.46 $ 1.95 $ 1.86 FFO per common share
and unit — diluted $ 0.49 $ 0.46 $ 1.94 $ 1.85 FFO, as
adjusted, per common share and unit — basic $ 0.53 $ 0.47 $ 2.00 $
1.89 FFO, as adjusted, per common share and unit — diluted $ 0.53 $
0.47 $ 2.00 $ 1.89 FFO weighted average common shares and
units outstanding: Common shares for earnings per share 88,241
86,406 88,182 83,280 Participating securities 555 621 560 605 Units
4,136 4,242 4,227 4,331
FFO weighted average common shares,
participating securities and units outstanding —
basic
92,932 91,269 92,969 88,216 Dilutive common stock equivalents
373 322 332 292
FFO weighted average common shares,
participating securities and units outstanding —
diluted
93,305 91,591 93,301 88,508
(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 2016 Low
High Guidance: Earnings per common share and unit -
diluted $ 0.45 $ 0.55 Real estate related depreciation and
amortization(1) 1.62 1.62 FFO per common share and
unit-diluted $ 2.07 $ 2.17 Adjustments: Acquisition costs
0.00 0.00 FFO, as adjusted, per common share and
unit-diluted(2) $ 2.07 $ 2.17 (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 endedDecember 31, 2015 and 2014 (in
thousands):
Three Months EndedDecember
31,
Year Ended December 31, 2015 2014
2015 2014 Net income attributable to common
stockholders(1) $ 38,549 $ 29,637 $ 94,048 $
49,164 Interest expense 13,464 14,920 54,055 63,236
Proportionate share of interest expense
from unconsolidated joint ventures
274 354 1,244 1,401 Real estate related depreciation and
amortization 39,134 37,447 156,010 148,992
Proportionate share of real estate related
depreciation and amortization from unconsolidated joint
ventures
1,102 1,378 4,739 5,533 Income tax (benefit) expense and other
taxes 24 40 736 (185 ) Stock-based compensation 5,063 1,367 8,945
4,777 Noncontrolling interests 2,035 1,663 8,917 3,084 Non-FFO gain
on acquisitions and dispositions of real estate interests (36,803 )
(28,165 ) (77,871 ) (46,101 ) Impairment losses 1,914
- 2,285 5,767 Adjusted
EBITDA $ 64,756 $ 58,641 $ 253,108 $
235,668 CALCULATION OF FIXED CHARGES: Interest expense $
13,464 $ 14,920 $ 54,055 $ 63,236 Capitalized interest 3,796 2,979
15,849 9,098 Amortization of loan costs and debt premium/discount
232 (94 ) 508 (477 ) Other noncash interest expense (1,025 ) (1,027
) (4,097 ) (4,105 )
Proportionate share of interest expense
from unconsolidated joint ventures
274 354 1,244
1,401 Total fixed charges $ 16,741 $ 17,132 $
67,559 $ 69,153 Fixed charge coverage
3.9 3.4 3.7 3.4
(1) Includes amounts related to
discontinued operations, when applicable.
The following table is a reconciliation
of our reported income from continuing operations to our net
operating income forthe three and twelve months ended
December 31, 2015 and 2014 (in thousands):
Three Months Ended December 31, Year Ended
December 31, 2015 2014 2015
2014 Reconciliation of income from continuing operations
to NOI: (amounts in thousands) Income from
continuing operations $ 40,584 $ 31,159 $ 102,965 $ 46,531
Income tax (benefit) expense and other taxes 24 40 736 (217 )
Interest and other (income) expense (31 ) 19 40 (1,563 ) Interest
expense 13,464 14,920 54,055 63,236 Equity in earnings of
unconsolidated joint ventures, net (937 ) (1,260 ) (7,273 ) (6,462
) General and administrative expense 9,665 8,020 34,577 29,079 Real
estate related depreciation and amortization 39,134 37,447 156,010
148,992 Impairment losses 1,914 - 2,285 5,635 Development profit,
net of taxes - - (2,627 ) (2,016 ) Gain on business combination - -
- (1,000 ) Gain on dispositions of real estate interests (36,785 )
(28,024 ) (77,871 ) (39,671 ) Casualty and involuntary conversion
gain (loss) (414 ) (2 ) (414 ) (328 ) Institutional capital
management and other fees (472 ) (345 )
(1,606 ) (1,739 ) Total GAAP net
operating income 66,146 61,974 260,877 240,477 Less net operating
income - non-same store properties (9,345 )
(7,205 ) (52,344 ) (43,928 )
Same store GAAP net operating income 56,801 54,769 208,533 196,549
Less revenue from lease terminations (106 ) (246 ) (2,052 ) (1,785
) Add early termination straight-line rent adjustment
94 112 350 500
Same store GAAP net operating income,
excluding revenue from lease terminations
56,789 54,635 206,831 195,264 Less straight-line rents, net of
related bad debt expense (641 ) (2,087 ) (1,745 ) (5,884 ) Less
amortization of above/(below) market rents (544 )
(789 ) (1,278 ) (1,686 )
Same store cash net operating income,
excluding revenue from lease terminations
$ 55,604 $ 51,759 $ 203,808 $ 187,694
Financial Measures
Net operating income (“NOI”) is defined as rental revenues,
including expense reimbursements, less rental expenses and real
estate taxes, and excludes institutional capital management fees,
depreciation, amortization, casualty and involuntary conversion
gain (loss), 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. DCT Industrial considers NOI to be an appropriate
supplemental performance measure because NOI reflects the operating
performance of DCT Industrial’s properties and excludes certain
items that are not considered to be controllable in connection with
the management of the properties such as amortization,
depreciation, impairment, interest expense, interest income and
general and administrative expenses. We also present NOI excluding
lease termination revenue as it is not considered to be indicative
of recurring operating performance. However, NOI should not be
viewed as an alternative measure of DCT Industrial’s financial
performance since it excludes expenses which could materially
impact our results of operations. Further, DCT Industrial’s NOI may
not be comparable to that of other real estate companies, as they
may use different methodologies for calculating NOI. Therefore, DCT
Industrial believes net income, as defined by GAAP, to be the most
appropriate measure to evaluate DCT Industrial’s 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 costs, acquisition costs,
debt modification costs and impairment losses on properties which
are not depreciable. We believe that FFO excluding severance costs,
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 income (loss)
attributable to DCT common stockholders before interest, taxes,
depreciation, amortization, stock-based compensation expense,
noncontrolling interest, impairment losses, and proportionate share
of interest, depreciation and amortization from unconsolidated
joint ventures, 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; 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 costs 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160204006566/en/
DCT Industrial TrustMelissa Sachs,
303-597-2400investorrelations@dctindustrial.com
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