FFO of $0.50 per Share
Same-Store NOI Growth of 8.4 Percent on a
Cash Basis and 5.0 Percent on a GAAP Basis
Rent Growth of 18.8 Percent on a GAAP Basis
and 2.2 Percent on a Cash Basis
Leased 2.2 Million Square Feet of
Development in Q3; Signed an Additional 1.4 Million Square Feet in
October Bringing Pipeline to 80.7 Percent Leased
Commenced Construction on 2.5 Million Square
Feet of Development since June 30
DCT Industrial Trust® (NYSE: DCT), a leading industrial real
estate company, today announced financial results for the quarter
ending September 30, 2015.
“DCT delivered a strong third quarter across all aspects of our
business. Importantly, we are creating value through our
development leasing momentum, which continues to perform ahead of
plan,” said Phil Hawkins, Chief Executive Officer for DCT
Industrial. “Since June 30, we have leased 3.6 million square feet
in our development pipeline bringing it to 80.7 percent leased. We
also commenced construction on 2.5 million square feet, 81.3
percent of which is pre-leased.”
Funds from operations, as adjusted, attributable to common
stockholders and unitholders (“FFO”) for Q3 2015 totaled $46.9
million, or $0.50 per diluted share, compared with $43.7 million,
or $0.49 per diluted share, for Q3 2014, an increase of 2.0 percent
per diluted share. These results exclude $0.5 million and $0.7
million of acquisition costs for the quarters ending September 30,
2015 and 2014, respectively.
FFO for the nine months ending September 30, 2015 totaled $136.8
million, or $1.47 per diluted share, compared with $124.2 million
or $1.42 per diluted share, for the same period in 2014, an
increase of 3.5 percent per diluted share. These results exclude
$1.9 million and $2.1 million of acquisition costs for the nine
months ending September 30, 2015 and 2014, respectively.
Net income attributable to common stockholders for Q3 2015 was
$8.5 million, or $0.09 per diluted share, compared with net income
of $12.4 million, or $0.15 per diluted share, for Q3 2014. Net
income attributable to common stockholders for the nine months
ending September 30, 2015 was $55.5 million, or $0.62 per diluted
share, compared with net income of $19.5 million, or $0.23 per
diluted share, for the nine months ending September 30, 2014.
Property Results and Leasing
Activity
As of September 30, 2015, DCT Industrial owned 405 consolidated
operating properties, totaling 62.0 million square feet, with
occupancy of 94.5 percent, a decrease of 60 basis points over Q2
2015 and an increase of 100 basis points over Q3 2014. On a same
portfolio basis, the impact of acquisitions and placing
developments into operations brought occupancy down 10 basis
points. Approximately 2.4 million square feet, or 3.6 percent of
DCT Industrial’s total consolidated portfolio, was leased but not
occupied at September 30, 2015.
In Q3 2015, the Company signed leases totaling 5.1 million
square feet with rental rates increasing 18.8 percent on a GAAP
basis and 2.2 percent on a cash basis, compared with the
corresponding expiring leases. Over the previous four quarters,
rental rates on signed leases increased 13.9 percent on a GAAP
basis and 3.2 percent on a cash basis. The Company’s tenant
retention rate was 70.0 percent in Q3 2015.
Net operating income (“NOI”) was $65.1 million in Q3 2015,
compared with $61.3 million in Q3 2014. In Q3 2015, same-store NOI,
excluding revenue from lease terminations, increased 8.4 percent on
a cash basis and 5.0 percent on a GAAP basis, when compared with Q3
2014. Same-store occupancy averaged 94.8 percent in Q3 2015, an
increase of 110 basis points over Q3 2014. Same-store occupancy as
of September 30, 2015 was 95.0 percent.
Investment Activity
Acquisitions
Since June 30, 2015, DCT Industrial acquired two buildings for
$7.9 million. Totaling 109,000 square feet, these buildings were
100 percent occupied at the time of closing. The Company expects a
year-one weighted-average cash yield of 5.9 percent on the acquired
assets.
The table below summarizes acquisitions since June 30, 2015:
Market Submarket Square Feet
Occupancy at Closing Closed
Anticipated Yield1 Seattle, WA Algona 50,000
100.0 % Aug-15 5.2 % Dallas, TX Northwest
59,000 100.0 %
Aug-15 7.3 % Total/Weighted Average
109,000 100.0 % 5.9 %
1 Anticipated yield represents year-one cash yield.
Development
As previously announced, DCT Industrial signed development
leases totaling 2.2 million square feet in Q3 2015. In October
2015, the Company signed an additional 1.4 million square feet,
bringing the development pipeline to 80.7 percent leased.
Development leases executed since DCT Industrial’s October 5,
2015 press release:
- Full-building pre-lease for DCT Jurupa
Ranch, a 970,000 square foot building located in the Inland Empire
West submarket of Southern California. Construction commenced in Q3
2015 and is scheduled to be complete in Q2 2016.
- Full-building pre-lease for DCT O’Hare
Logistics Center, a 113,000 square foot building located in the
O’Hare submarket of Chicago.
- 312,000 square foot lease for DCT
Rialto Logistics Center located in the Inland Empire West submarket
of Southern California. The lease brings the 928,000 square foot
building to 100 percent leased.
- 60,000 square foot pre-lease for DCT
Freeport West. The Company purchased 7.1 acres in Q3 2015 for the
development of a 108,000 square foot building in the DFW Airport
submarket of Dallas. Construction commenced in Q3 2015 and is
scheduled to be complete in Q2 2016.
Additional development highlights include:
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 Q3 2016.
- DCT Waters Ridge, a 346,000 square foot
building located in the Northwest submarket of Dallas. Construction
is scheduled to be complete in Q2 2016.
- DCT Downs Park, a 100 percent
pre-leased, two building, 299,000 square foot development located
in the Dulles/Route 28 Corridor submarket of Baltimore/Washington,
D.C. Construction is scheduled to be complete in Q1 2016.
- DCT Fife Distribution Center South, a
100 percent pre-leased, 240,000 square foot building located in the
Tacoma/Fife submarket of Seattle. Construction is scheduled to be
complete in Q1 2016.
- DCT Fife Distribution Center North, a
56 percent pre-leased, 152,000 square foot building located in the
Tacoma/Fife submarket of Seattle. Construction is scheduled to be
complete in Q1 2016.
Acquired:
- The remaining 25 percent interest of a
47.0 acre joint venture land parcel in the I-85/North submarket of
Atlanta for the development of DCT North Satellite Distribution
Center, a 606,000 square foot building.
- 10.0 acres in the City South submarket
of Chicago for the development of DCT Stockyards Industrial Center,
a 152,000 square foot building. Construction is scheduled to
commence in Q4 2015.
Dispositions
Since June 30, 2015, DCT Industrial sold two buildings totaling
590,000 square feet. These transactions generated total gross
proceeds of $15.1 million1 and have an expected year-one
weighted-average cash yield of 6.2 percent.
The table below summarizes dispositions since June 30, 2015:
Market
Submarket Square Feet
Occupancy Closed Nashville, TN Wilson
County/I-40 East
557,000
2
100.0 % Aug-15 Atlanta, GA Stone Mountain
33,000 100.0 % Oct-15
Total/Weighted Average 590,000 100.0 %
1 Includes DCT Industrial’s proportionate share of gross
proceeds for property sold by an unconsolidated joint venture.2
Unconsolidated property.
Capital Markets
In October 2015, DCT Industrial agreed to terms and received
commitments for a $200 million, seven-year senior unsecured term
loan with a syndicate of banks. The LIBOR based facility is
expected to be swapped to fixed for the entire term with an
expected all-in interest rate of between 3.35 percent and 3.50
percent. The facility is expected to close in November 2015. The
proceeds will be used to pay down our revolving line of credit,
retire maturing mortgage debt and for general corporate
purposes.
In October 2015, Standard & Poor’s Ratings Services revised
its outlook on DCT Industrial to positive from stable and affirmed
its BBB- corporate and issue-level ratings.
Guidance
The Company raised and narrowed 2015 FFO guidance, as adjusted,
to $1.94 to $1.98 per diluted share, up from $1.90 to $1.98 per
diluted share. Additionally, net income attributable to common
stockholders is expected to be between $0.67 and $0.72 per diluted
share, up from $0.61 and $0.69 per diluted share.
DCT Industrial’s guidance for 2015 includes the following
assumptions:
- Same-store net operating income will
increase between 7.50 percent and 8.50 percent on a cash basis
compared with 6.25 percent and 7.75 percent in Q2, and between 5.25
percent and 6.25 percent on a GAAP basis compared with 4.50 percent
and 6.00 percent in Q2.
- Average consolidated operating
occupancy narrowed to between 94.75 percent and 95.25 percent
compared with 94.50 percent to 95.50 percent in Q2.
- Development starts raised and narrowed
to between $275 million and $335 million compared with $250 million
and $350 million in Q2.
- Acquisitions lowered and narrowed to
between $125 million and $150 million including stabilized and
value-add, compared with $125 million to $175 million in Q2.
- Dispositions of non-strategic assets
raised and narrowed to between $275 million and $350 million,
compared with $250 million and $350 million in Q2.
The Company’s FFO guidance excludes acquisition costs.
Conference Call
Information
DCT Industrial will host a conference call to discuss Q3 2015
results on Friday, October 30, 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, November 30,
2015 and can be accessed by dialing (877) 344-7529 or (412)
317-0088 and entering the passcode 10073481. 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 October 30,
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 September 30,
2015, the Company owned interests in approximately 73.3 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)
September 30, 2015 December 31, 2014
ASSETS (unaudited) Land $ 1,017,656 $ 950,963 Buildings and
improvements 2,944,900 2,787,959 Intangible lease assets 88,118
86,515 Construction in progress 93,811 134,938
Total investment in properties 4,144,485 3,960,375 Less
accumulated depreciation and amortization (754,862 )
(703,840 )
Net investment in properties 3,389,623 3,256,535
Investments in and advances to unconsolidated joint ventures
82,683 94,728
Net investment in real estate 3,472,306
3,351,263 Cash and cash equivalents 11,783 19,631 Restricted cash
3,005 3,779 Deferred loan costs, net 9,101 8,026 Straight-line rent
and other receivables, net of allowance for doubtful
accounts of $433 and $956,
respectively
57,347 54,183 Other assets, net 17,623 14,652 Assets held for sale
1,046 -
Total assets $ 3,572,211 $ 3,451,534
LIABILITIES AND EQUITY Liabilities: Accounts payable
and accrued expenses $ 91,511 $ 83,543 Distributions payable 26,029
25,973 Tenant prepaids and security deposits 31,311 30,539 Other
liabilities 17,867 14,078 Intangible lease liabilities, net 21,859
22,940 Line of credit 186,000 37,000 Senior unsecured notes
1,082,788 1,122,621 Mortgage notes 264,157 249,424 Liabilities
related to assets held for sale 18 -
Total
liabilities 1,721,540 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
88,209,975 and 88,012,696 shares issued
and outstanding as of
September 30, 2015 and December 31, 2014,
respectively
882 880 Additional paid-in capital 2,765,231 2,762,431
Distributions in excess of earnings (1,004,937 ) (986,289 )
Accumulated other comprehensive loss (24,745 )
(27,190 )
Total stockholders’ equity 1,736,431 1,749,832
Noncontrolling interests 114,240 115,584
Total
equity 1,850,671 1,865,416
Total liabilities
and equity $ 3,572,211 $ 3,451,534
DCT INDUSTRIAL TRUST INC. AND
SUBSIDIARIESConsolidated Statements of
Operations(unaudited, in thousands, except per share
information)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2015 2014 2015 2014
REVENUES: Rental revenues $ 88,092 $ 84,285 $ 264,269 $
250,206 Institutional capital management and other fees 333
322 1,134 1,394
Total revenues
88,425 84,607 265,403 251,600
OPERATING EXPENSES: Rental expenses 8,900 9,672 27,456
31,507 Real estate taxes 14,056 13,288 42,082 40,196 Real estate
related depreciation and amortization 39,431 37,842 116,876 111,545
General and administrative 7,720 6,727 24,912 21,059 Impairment
losses 371 900 371 5,635 Casualty and involuntary conversion (gain)
loss - 14 - (326 )
Total operating
expenses 70,478 68,443 211,697
209,616
Operating income 17,947 16,164 53,706 41,984
OTHER INCOME (EXPENSE): Development profit, net of taxes - -
2,627 2,016 Equity in earnings of unconsolidated joint ventures,
net 4,493 892 6,336 5,202 Gain on business combination - - - 1,000
Gain on dispositions of real estate interests - 10,230 41,086
11,647 Interest expense (13,078 ) (16,078 ) (40,591 ) (48,316 )
Interest and other income (expense) (42 ) 1,577 (71 ) 1,582 Income
tax benefit (expense) and other taxes (241 ) 73
(712 ) 257
Income from continuing operations
9,079 12,858 62,381 15,372 Income from discontinued operations
- 352 - 5,576
Consolidated net
income of DCT Industrial
Trust Inc.
9,079 13,210 62,381 20,948 Net income attributable to
noncontrolling interests (622 ) (801 ) (6,882
) (1,421 )
Net income attributable to common
stockholders 8,457 12,409 55,499
19,527 Distributed and undistributed earnings allocated to
participating securities
(166 ) (171 ) (510 ) (507 )
Adjusted
net income attributable to common
stockholders
$ 8,291 $ 12,238 $ 54,989 $ 19,020
EARNINGS PER COMMON
SHARE - BASIC Income from continuing operations $ 0.09 $ 0.15 $
0.62 $ 0.17 Income from discontinued operations 0.00
0.00 0.00 0.06 Net income attributable to common
stockholders $ 0.09 $ 0.15 $ 0.62 $ 0.23
EARNINGS PER
COMMON SHARE - DILUTED Income from continuing operations $ 0.09
$ 0.15 $ 0.62 $ 0.17 Income from discontinued operations
0.00 0.00 0.00 0.06 Net income attributable to
common stockholders $ 0.09 $ 0.15 $ 0.62 $ 0.23
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING: Basic 88,207 83,391 88,162
82,227 Diluted 88,526 83,691 88,472
82,509 Distributions declared per common share $ 0.28 $ 0.28
$ 0.84 $ 0.84
Reconciliation of Net Income
Attributable to Common Stockholders to Funds from
Operations(unaudited, in thousands, except per share and
unit data)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2015 2014 2015 2014
Reconciliation of net income attributable to common
stockholders to FFO:
Net income attributable to common stockholders $ 8,457 $ 12,409 $
55,499 $ 19,527 Adjustments: Real estate related depreciation and
amortization 39,431 37,842 116,876 111,545 Equity in earnings of
unconsolidated joint ventures, net (4,493 ) (892 ) (6,336 ) (5,202
) Equity in FFO of unconsolidated joint ventures 2,441 2,728 7,424
7,990 Impairment losses on depreciable real estate 371 900 371
5,767 Gain on business combination - - - (1,000 ) Gain on
dispositions of real estate interests - (10,500 ) (41,086 ) (17,034
) Gain on dispositions of non-depreciable real estate - - 18 98
Noncontrolling interest in the above adjustments (1,897 ) (1,640 )
(4,086 ) (5,680 ) FFO attributable to unitholders 2,119
2,103 6,214 6,153 FFO attributable to common
stockholders and unitholders
- basic and diluted(1)
46,429 42,950 134,894 122,164
Adjustments: Acquisition costs 455 716 1,939
2,050 FFO, as adjusted, attributable to common stockholders
and
unitholders — basic and diluted
$ 46,884 $ 43,666 $ 136,833 $ 124,214 FFO per common share
and unit — basic $ 0.50 $ 0.49 $ 1.45 $ 1.40 FFO per common share
and unit — diluted $ 0.50 $ 0.49 $ 1.45 $ 1.40 FFO, as
adjusted, per common share and unit — basic $ 0.50 $ 0.50 $ 1.47 $
1.43 FFO, as adjusted, per common share and unit — diluted $ 0.50 $
0.49 $ 1.47 $ 1.42 FFO weighted average common shares and
units outstanding: Common shares for earnings per share — basic
88,207 83,391 88,162 82,227 Participating securities 614 621 604
600 Units 4,217 4,288 4,257 4,360 FFO
weighted average common shares, participating
securities and units outstanding —
basic
93,038 88,300 93,023 87,187 Dilutive common stock equivalents
319 300 310 282 FFO weighted average
common shares, participating
securities and units outstanding —
diluted
93,357 88,600 93,333 87,469
(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 $ 0.67 $ 0.72 Gains on disposition of real estate interest
(0.48 ) (0.48 ) Real estate related depreciation and
amortization(1) 1.73 1.72 Acquisition costs 0.02 0.02
FFO, as adjusted, per common share and unit-diluted(2) $ 1.94 $
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 nine months ended
September 30, 2015 and 2014 (in thousands):
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2015 2014 2015 2014 Net
income attributable to common stockholders(1) $ 8,457 $ 12,409 $
55,499 $ 19,527 Interest expense 13,078 16,078 40,591 48,316
Proportionate share of interest expense from unconsolidated joint
ventures 317 369 970 1,047 Real estate related depreciation and
amortization 39,431 37,842 116,876 111,545 Proportionate share of
real estate related depreciation and amortization
from unconsolidated joint ventures
1,203 1,344 3,637 4,155 Income tax (benefit) expense and other
taxes 241 (73 ) 712 (225 ) Stock-based compensation 1,342 1,199
3,882 3,410 Noncontrolling interests 622 801 6,882 1,421 Non-FFO
gain on acquisitions and dispositions of real estate interests -
(10,500 ) (41,068 ) (17,936 ) Impairment losses 371
900 371 5,767 Adjusted EBITDA $ 65,062 $ 60,369 $
188,352 $ 177,027 CALCULATION OF FIXED CHARGES Interest
expense $ 13,078 $ 16,078 $ 40,591 $ 48,316 Capitalized interest
4,219 2,160 12,053 6,119 Amortization of loan costs and debt
premium/discount 184 (127 ) 276 (383 ) Other noncash interest
expense (1,024 ) (1,027 ) (3,072 ) (3,078 ) Proportionate share of
interest expense from unconsolidated
joint ventures
317 369 970 1,047 Total fixed charges $
16,774 $ 17,453 $ 50,818 $ 52,021 Fixed charge coverage
3.9 3.5 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 for
the three and nine months ended September 30, 2015 and 2014 (in
thousands):
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2015 2014 2015 2014
Reconciliation of income from continuing operations to NOI:
(amounts in thousands)
Income from continuing operations $ 9,079 $ 12,858 $ 62,381 $
15,372 Income tax (benefit) expense and other taxes 241 (73 ) 712
(257 ) Interest and other (income) expense 42 (1,577 ) 71 (1,582 )
Interest expense 13,078 16,078 40,591 48,316 Equity in earnings of
unconsolidated joint ventures, net (4,493 ) (892 ) (6,336 ) (5,202
) General and administrative expense 7,720 6,727 24,912 21,059 Real
estate related depreciation and amortization 39,431 37,842 116,876
111,545 Impairment losses 371 900 371 5,635 Development profit, net
of taxes - - (2,627 ) (2,016 ) Gain on business combination - - -
(1,000 ) Gain on dispositions of real estate interests - (10,230 )
(41,086 ) (11,647 ) Casualty and involuntary conversion (gain) loss
- 14 - (326 ) Institutional capital management and other fees
(333 ) (322 ) (1,134 ) (1,394 ) Total
GAAP net operating income 65,136 61,325 194,731 178,503 Less net
operating income - non-same store properties (7,307 )
(6,864 ) (32,086 ) (26,391 ) Same store GAAP net
operating income 57,829 54,461 162,645 152,112 Less revenue from
lease terminations (922 ) (199 ) (1,960 ) (1,785 ) Add early
termination straight-line rent adjustment 94 40
327 387 Same store GAAP net operating income,
excluding revenue
from lease terminations
57,001 54,302 161,012 150,714 Less straight-line rents, net of
related bad debt expense (525 ) (2,069 ) (1,304 ) (5,151 ) Less
amortization of above/(below) market rents (420 )
(507 ) (997 ) (1,222 ) Same store cash net operating
income, excluding revenue
from lease terminations
$ 56,056 $ 51,726 $ 158,711 $ 144,341
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; 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/20151029006677/en/
DCT Industrial TrustMelissa Sachs,
303-597-2400investorrelations@dctindustrial.com
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