FFO of $0.47 per Share
Consolidated Operating Occupancy of 95.1
Percent
Same-Store NOI Growth of 13.3 Percent on a
Cash Basis and 9.3 Percent on a GAAP Basis
Rent Growth of 14.1 Percent on a GAAP Basis
and 1.0 Percent on a Cash Basis
Leased 2.9 Million Square Feet of
Development Bringing Pipeline to 59.5 Percent Leased
DCT Industrial Trust® (NYSE: DCT), a leading industrial real
estate company, today announced financial results for the quarter
ending June 30, 2015.
“DCT had a strong second quarter. Our development program
continues to create substantial value and perform ahead of plan.
Since March 31, we leased 2.9 million square feet in our
development pipeline bringing it to 59.5 percent leased. We
commenced construction on 2.4 million square feet and purchased
147.5 acres for the development of 2.1 million square feet,” said
Phil Hawkins, Chief Executive Officer for DCT Industrial. “Our
operating portfolio also continues to perform extremely well with
strong growth in rents and same-store NOI.”
Funds from operations, as adjusted, attributable to common
stockholders and unitholders (“FFO”) for Q2 2015 totaled $44.2
million, or $0.47 per diluted share, compared with $41.6 million,
or $0.48 per diluted share, for Q2 2014, a decrease of 2.1 percent
per diluted share. These results exclude $0.2 million and $0.6
million of acquisition costs for the quarters ending June 30, 2015
and 2014, respectively. FFO includes a one-time, $3.4 million
charge (including associated costs) due to the previously reported
fraud. This charge reduced FFO by $0.04 per diluted share for the
quarter.
Net income attributable to common stockholders for Q2 2015 was
$18.3 million, or $0.20 per diluted share, compared to $6.8
million, or $0.08 per diluted share, reported for Q2 2014.
Property Results and Leasing
Activity
As of June 30, 2015, DCT Industrial owned 398 consolidated
operating properties, totaling 61.1 million square feet, with
occupancy of 95.1 percent, a decrease of 20 basis points over Q1
2015 and an increase of 220 basis points over Q2 2014. On a
same-portfolio basis, consolidated operating occupancy would have
been 95.2 percent; however, the impact of acquisitions,
dispositions and placing developments into operations during the
quarter brought occupancy down 10 basis points. Approximately 1.4
million square feet, or 2.2 percent of DCT Industrial’s total
consolidated portfolio was leased but not occupied at June 30,
2015.
In Q2 2015, the Company signed leases totaling 4.8 million
square feet with rental rates increasing 14.1 percent on a GAAP
basis and 1.0 percent on a cash basis, compared to the
corresponding expiring leases. Over the previous four quarters,
rental rates on signed leases increased 12.6 percent on a GAAP
basis and 4.0 percent on a cash basis. The Company’s tenant
retention rate was 65.5 percent in Q2 2015.
Net operating income (“NOI”) was $66.2 million in Q2 2015,
compared with $60.2 million in Q2 2014. In Q2 2015, same-store NOI,
excluding revenue from lease terminations, increased 13.3 percent
on a cash basis and 9.3 percent on a GAAP basis, when compared with
Q2 2014. Same-store occupancy averaged 95.2 percent in Q2 2015, an
increase of 230 basis points over Q2 2014. Same-store occupancy as
of June 30, 2015 was 94.9 percent.
Investment Activity
Acquisitions
Since March 31, 2015, DCT Industrial acquired three buildings
for $18.6 million. Totaling 327,000 square feet, these buildings
were 69.4 percent occupied at the time of closing. The Company
expects a year-one weighted-average cash yield of 2.8 percent and
anticipates a weighted-average stabilized cash yield of 6.6 percent
on the acquired assets.
The table below summarizes acquisitions since March 31,
2015:
Market Submarket Square Feet
Occupancyat Closing
Closed
AnticipatedYield1
Atlanta, GA I-75/Northwest
77,000 100.0 % 2 May-15
7.1 % Houston, TX Port 200,000 50.0 % 3 May-15 6.6 %
Phoenix, AZ Tempe Southwest
50,000 100.0 % June-15
5.8 % Total/Weighted Average 327,000 69.4 %
6.6 %
1 Anticipated yield represents year-one cash yield for
stabilized acquisitions and projected stabilized cash yield for
value-add acquisitions.2 Acquired with known year-one move-out of
the full-building tenant.3 Since acquisition the vacancy has been
fully leased and the tenant is expected to take occupancy in Q3
2015.
Development
Since March 31, 2015, DCT Industrial signed development leases
totaling 2.9 million square feet, which includes 2.5 million square
feet previously announced and an additional 470,000 square feet not
included in the Company’s Development Leasing Update on July 21,
2015. The Company’s development pipeline is currently 59.5 percent
leased.
Development leases not previously announced:
- Full-building, 15-year lease of DCT
Central Avenue, a 172,000 square foot, 235-door truck terminal
build-to-suit on 53.6 acres in the I-55 submarket of Chicago. In Q2
2015, in order to accommodate this transaction, the Company
acquired 8.0 acres in addition to the 45.6 acres acquired at this
location in Q2 2013. The site houses three older buildings which
will be demolished when construction commences in Q1 2016.
- Full building pre-lease for DCT Fife
Distribution Center South, a 240,000 square foot facility in the
Tacoma/Fife submarket of Seattle. Construction is scheduled to
commence in Q3 2015.
- 36,000 square foot lease for DCT Fife
45 North in the Tacoma/Fife submarket of Seattle. The lease brings
the 79,000 square foot building to approximately 45 percent
leased.
- 22,000 square foot lease for DCT Airtex
Industrial Center II in the Northwest submarket of Houston. The
lease brings the 127,000 square foot building to approximately 72
percent leased.
Additional development highlights since March 31, 2015
include:
- Commenced construction on DCT Fairburn,
a 100 percent pre-leased, 1.0 million square foot building in the
I-85/South/Airport submarket of Atlanta. The Company purchased 74.6
acres for development in Q2 2015. Construction is scheduled to be
complete in Q1 2016.
- Purchased 26.3 acres in the Airport
West submarket of Miami to develop DCT Commerce Center Phase II, a
three-building, multi-phased development, which will total
approximately 425,000 square feet. Construction on the first
building of the project, Building C, a 136,000 square foot
facility, is scheduled to commence in Q4 2015.
- Purchased 25.8 acres, in a joint
venture, in the Dulles/Route 28 Corridor submarket of
Baltimore/Washington, D.C. Construction on DCT Downs Park, a
two-building, 300,000 square foot project, is scheduled to commence
in Q3 2015.
- Purchased 12.8 acres in the Southeast
submarket of Orlando. The site will be combined with 8.0 acres
already owned to create Phase III of DCT Airport Distribution
Center North. The project will add three buildings totaling 292,000
square feet to the Company’s existing 301,000 square foot,
three-building industrial park. Construction on Buildings D and E,
totaling 190,000 square feet, is scheduled to commence in Q1
2016.
- In July, commenced construction on DCT
Jurupa Ranch, a 970,000 square foot building located in the Inland
Empire West submarket of Southern California. Construction is
scheduled to be complete in Q2 2016.
- In July, commenced construction on DCT
North Avenue Distribution Center, a 100 percent pre-leased, 350,000
square foot build-to-suit facility for a current customer in the
Northern DuPage submarket of Chicago. Construction is scheduled to
be complete in Q2 2016.
Dispositions
Since March 31, 2015, DCT Industrial sold 10 buildings totaling
1.5 million square feet. These transactions generated total gross
proceeds of $68.4 million and have an expected year-one
weighted-average cash yield of 6.1 percent.
The table below summarizes the dispositions since March 31,
2015:
Market Submarket Square Feet
Occupancy Closed Southern California
Inland Empire West 40,000 N/A1
Apr-15 Southern California Inland Empire West 55,000
N/A1 Apr-15 Southern California Inland Empire West 61,000 N/A1
Apr-15 Atlanta, GA North Central 120,000 87.8 % Apr-15
Atlanta, GA (5 buildings) Fulton County 713,000 79.0 % May-15
Atlanta, GA Henry County 505,000
100.0 % May-15 Total/Weighted Average
1,494,000 87.7 %
1 Build-to-suit for sale.
Dividend
DCT Industrial’s Board of Directors has declared a $0.28 per
share quarterly cash dividend, payable on October 14, 2015 to
stockholders of record as of October 2, 2015.
Guidance
The Company narrowed and lowered 2015 FFO guidance, as adjusted,
to $1.90 to $1.98 per diluted share, down from $1.90 to $2.00 per
diluted share. Additionally, net income attributable to common
stockholders is expected to be between $0.61 and $0.69 per diluted
share.
DCT Industrial’s guidance for 2015 includes the following
assumptions:
- A one-time $3.4 million charge
(including associated costs) related to the previously reported
fraud and the anticipated receipt of approximately $1.0 million in
insurance proceeds
- Same-store net operating income will
increase between 6.25 percent and 7.75 percent on a cash basis and
between 4.50 percent and 6.00 percent on a GAAP basis
- Average consolidated operating
occupancy between 94.5 percent and 95.5 percent
- Development starts of between $250
million and $350 million
- Acquisitions of between $125 million
and $175 million including stabilized and value-add
- Dispositions of non-strategic assets of
between $250 million and $350 million
The Company’s FFO guidance excludes acquisition costs.
Conference Call
Information
DCT Industrial will host a conference call to discuss Q2 results
on Friday, July 31, 2015 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 Monday, August 31, 2015
and can be accessed by dialing (877) 344-7529 or (412) 317-0088 and
entering the passcode 10068227. 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 July 31,
2016.
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 June 30, 2015,
the Company owned interests in approximately 72.6 million square
feet of properties leased to approximately 900 customers. DCT
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)
June 30, 2015 December 31, 2014 ASSETS
(unaudited) Land $ 1,006,608 $ 950,963 Buildings and improvements
2,879,538 2,787,959 Intangible lease assets 89,330 86,515
Construction in progress 85,795 134,938
Total
investment in properties 4,061,271 3,960,375 Less accumulated
depreciation and amortization (724,788 ) (703,840 )
Net investment in properties 3,336,483 3,256,535 Investments
in and advances to unconsolidated joint ventures 92,715
94,728
Net investment in real estate 3,429,198
3,351,263 Cash and cash equivalents 22,914 19,631 Restricted cash
5,424 3,779 Deferred loan costs, net 9,646 8,026 Straight-line rent
and other receivables, net of allowance for doubtful accounts of
$665 and $956, respectively 54,752 54,183 Other assets, net
11,127 14,652
Total assets $ 3,533,061 $ 3,451,534
LIABILITIES AND EQUITY Liabilities: Accounts payable
and accrued expenses $ 67,544 $ 83,543 Distributions payable 26,038
25,973 Tenant prepaids and security deposits 30,584 30,539 Other
liabilities 17,401 14,078 Intangible lease liabilities, net 22,792
22,940 Line of credit 149,000 37,000 Senior unsecured notes
1,082,732 1,122,621 Mortgage notes 266,831 249,424
Total liabilities 1,662,922 1,586,118
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 88,203,274 and 88,012,696 shares issued
andoutstanding as of June 30, 2015 and December 31, 2014,
respectively
882 880 Additional paid-in capital 2,765,228 2,762,431
Distributions in excess of earnings (988,679 ) (986,289 )
Accumulated other comprehensive loss (25,428 )
(27,190 )
Total stockholders’ equity 1,752,003 1,749,832
Noncontrolling interests 118,136 115,584
Total
equity 1,870,139 1,865,416
Total liabilities
and equity $ 3,533,061 $ 3,451,534
DCT INDUSTRIAL TRUST INC. AND
SUBSIDIARIESConsolidated Statements of
Operations(unaudited, in thousands, except per share
information)
Three Months Ended June 30, Six Months Ended June
30, 2015 2014 2015
2014 REVENUES: Rental revenues $ 88,115 $ 83,302 $
176,177 $ 165,921 Institutional capital management and other fees
423 308 801 1,072
Total revenues
88,538 83,610 176,978 166,993
OPERATING EXPENSES: Rental expenses 8,408 9,433 18,556
21,835 Real estate taxes 13,521 13,711 28,026 26,908 Real estate
related depreciation and amortization 38,449 37,270 77,445 73,703
General and administrative 9,856 7,498 17,192 14,332 Impairment
losses - 376 - 4,735 Casualty and involuntary conversion gain
- (340 ) - (340 )
Total operating
expenses 70,234 67,948 141,219
141,173
Operating income 18,304 15,662 35,759 25,820
OTHER INCOME (EXPENSE): Development profit, net of taxes
2,627 1,288 2,627 2,016 Equity in earnings of unconsolidated joint
ventures, net 1,036 697 1,843 4,310 Gain on business combination -
- - 1,000 Gain on dispositions of real estate interests 14,932 372
41,086 1,417 Interest expense (13,609 ) (16,182 ) (27,513 ) (32,238
) Interest and other income (expense) (11 ) (23 ) (29 ) 5 Income
tax benefit (expense) and other taxes (278 ) 241
(471 ) 184
Income from continuing operations
23,001 2,055 53,302 2,514 Income from discontinued operations
- 5,215 - 5,224
Consolidated net
income of DCT Industrial Trust Inc. 23,001 7,270 53,302 7,738
Net income attributable to noncontrolling interests (4,704 )
(469 ) (6,260 ) (620 )
Net income
attributable to common stockholders 18,297 6,801
47,042 7,118 Distributed and undistributed earnings
allocated to
participating securities
(201 ) (170 ) (344 ) (336 )
Adjusted
net income attributable to common
stockholders
$ 18,096 $ 6,631 $ 46,698 $ 6,782
EARNINGS PER COMMON
SHARE - BASIC Income from continuing operations $ 0.21 $ 0.02 $
0.53 $ 0.02 Income from discontinued operations 0.00
0.06 0.00 0.06 Net income attributable to common
stockholders $ 0.21 $ 0.08 $ 0.53 $ 0.08
EARNINGS PER
COMMON SHARE - DILUTED Income from continuing operations $ 0.20
$ 0.02 $ 0.53 $ 0.02 Income from discontinued operations
0.00 0.06 0.00 0.06 Net income attributable to
common stockholders $ 0.20 $ 0.08 $ 0.53 $ 0.08
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING: Basic 88,187 82,280 88,139
81,636 Diluted 88,486 82,563 88,453
81,909 Distributions declared per common share $ 0.28 $ 0.28
$ 0.56 $ 0.56
Reconciliation of Net Income
Attributable to Common Stockholders to Funds from
Operations(unaudited, in thousands, except per share and
unit data)
Three Months Ended June 30, Six Months Ended June
30, 2015 2014 2015
2014 Reconciliation of net income attributable to
common
stockholders to FFO:
Net income attributable to common stockholders $ 18,297 $ 6,801 $
47,042 $ 7,118 Adjustments: Real estate related depreciation and
amortization 38,449 37,270 77,445 73,703 Equity in earnings of
unconsolidated joint ventures, net (1,036 ) (697 ) (1,843 ) (4,310
) Equity in FFO of unconsolidated joint ventures 2,575 2,546 4,983
5,262 Impairment losses on depreciable real estate - 376 - 4,867
Gain on business combination - - - (1,000 ) Gain on dispositions of
real estate interests (14,932 ) (5,489 ) (41,086 ) (6,534 ) Gain on
dispositions of non-depreciable real estate - - 18 98
Noncontrolling interest in the above adjustments (1,336 ) (1,876 )
(2,189 ) (4,040 ) FFO attributable to unitholders 2,028
2,056 4,095 4,050 FFO attributable to common
stockholders and unitholders (1) 44,045 40,987
88,465 79,214 Adjustments: Acquisition costs 170
609 1,484 1,334
FFO, as adjusted, attributable to common
stock holdersand unitholders — basic and diluted
$ 44,215 $ 41,596 $ 89,949 $ 80,548 FFO per common share and
unit — basic $ 0.47 $ 0.47 $ 0.95 $ 0.91 FFO per common share and
unit — diluted $ 0.47 $ 0.47 $ 0.95 $ 0.91 FFO, as adjusted,
per common share and unit — basic $ 0.48 $ 0.48 $ 0.97 $ 0.93 FFO,
as adjusted, per common share and unit — diluted $ 0.47 $ 0.48 $
0.96 $ 0.93 FFO weighted average common shares and units
outstanding: Common shares for earnings per share — basic 88,187
82,280 88,139 81,636 Participating securities 626 621 599 589 Units
4,256 4,340 4,278 4,397 FFO weighted
average common shares, participating
securities and units outstanding —
basic
93,069 87,241 93,016 86,622 Dilutive common stock equivalents
299 283 314 273 FFO weighted average
common shares, participating
securities and units outstanding —
diluted
93,368 87,524 93,330 86,895
(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 2015 Low
High Guidance: Earnings per common share - diluted $
0.61 $ 0.69 Gains on disposition of real estate interest (0.44 )
(0.44 ) Real estate related depreciation and amortization(1) 1.71
1.71 Acquisition costs 0.02 0.02 FFO, as adjusted,
per common share and unit-diluted(2) $ 1.90 $ 1.98 (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 six
months ended June 30, 2015 and 2014 (in thousands):
Three Months Ended June 30, Six Months Ended June
30, 2015 2014 2015
2014 Net income attributable to common stockholders(1) $
18,297 $ 6,801 $ 47,042 $ 7,118
Interest expense 13,609 16,182 27,513 32,238 Proportionate share of
interest expense from unconsolidated joint ventures 329 361 653 678
Real estate related depreciation and amortization 38,449 37,270
77,445 73,703 Proportionate share of real estate related
depreciation and amortization from unconsolidated joint ventures
1,226 1,345 2,434 2,811 Income tax (benefit) expense and other
taxes 278 (241 ) 471 (152 ) Stock-based compensation 1,477 1,173
2,540 2,211 Noncontrolling interests 4,704 469 6,260 620 Non-FFO
gain on acquisitions and dispositions of real estate interests
(14,932 ) (5,489 ) (41,068 ) (7,436 ) Impairment losses
- 376 - - Adjusted
EBITDA $ 63,437 $ 58,247 $ 123,290 $
111,791 CALCULATION OF FIXED CHARGES Interest expense $
13,609 $ 16,182 $ 27,513 $ 32,238 Capitalized interest 4,125 2,011
7,834 3,959 Amortization of loan costs and debt premium/discount 72
(143 ) 92 (256 ) Other noncash interest expense (1,024 ) (1,027 )
(2,048 ) (2,051 ) Proportionate share of interest expense from
unconsolidated joint ventures 329 361
653 678 Total fixed charges $
17,111 $ 17,384 $ 34,044 $ 34,568 Fixed
charge coverage 3.7 3.4
3.6 3.2
(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 six months ended June 30,
2015 and 2014 (in thousands):
Three Months Ended June 30, Six Months Ended June
30, 2015 2014 2015
2014
Reconciliation of income from
continuing operations to NOI: (amounts in thousands)
Income from continuing operations $
23,001 $ 2,055 $ 53,302 $ 2,514 Income tax (benefit) expense and
other taxes 278 (241 ) 471 (184 ) Interest and other (income)
expense 11 23 29 (5 ) Interest expense 13,609 16,182 27,513 32,238
Equity in earnings of unconsolidated joint ventures, net (1,036 )
(697 ) (1,843 ) (4,310 ) General and administrative expense 9,856
7,498 17,192 14,332 Real estate related depreciation and
amortization 38,449 37,270 77,445 73,703 Impairment losses - 376 -
4,735 Development profit, net of taxes (2,627 ) (1,288 ) (2,627 )
(2,016 ) Gain on business combination - - - (1,000 ) Gain on
dispositions of real estate interests (14,932 ) (372 ) (41,086 )
(1,417 ) Casualty and involuntary conversion gain - (340 ) - (340 )
Institutional capital management and other fees (423
) (308 ) (801 ) (1,072 )
Total GAAP net operating income 66,186 60,158 129,595 117,178 Less
net operating income - non-same store properties
(9,735 ) (8,349 ) (21,317 )
(16,503 ) Same store GAAP net operating income 56,451 51,809
108,278 100,675 Less revenue from lease terminations (527 ) (679 )
(1,038 ) (1,586 ) Add early termination straight-line rent
adjustment 66 84 233
347 Same store GAAP net operating income, excluding
revenue from lease terminations 55,990 51,214 107,473 99,436 Less
straight-line rents, net of related bad debt expense (694 ) (2,296
) (973 ) (4,034 ) Less amortization of above/(below) market rents
(335 ) (420 ) (698 )
(787 ) Same store cash net operating income,
excluding revenue from lease terminations $ 54,961 $
48,498 $ 105,802 $ 94,615
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 properties 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 acquisition costs, debt modification
costs and impairment losses on properties which are not
depreciable. We believe that FFO excluding 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, 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20150730006638/en/
DCT Industrial TrustMelissa Sachs,
303-597-2400investorrelations@dctindustrial.com
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