Net Earnings of $0.17 per Diluted
Share
FFO, as adjusted, of $0.60 per Share
Consolidated Operating Occupancy Increased
to 96.2 Percent
Same-Store NOI Growth of 9.6 Percent on a
Cash Basis and 8.8 Percent on a Straight-Line Basis
Rent Growth of 16.8 Percent on a
Straight-Line Basis and 5.6 Percent on a Cash Basis
Stabilized 800,000 Square Feet of
Development at an Average Yield of 7.4 Percent; Executed 900,000
Square Feet of Development Leases
Increased Dividend $0.02 to $0.31 per Share,
Up 6.9 Percent
Raised and Narrowed 2016 Net Earnings
Guidance to between $0.87 and $0.91 Per Diluted Share
Raised and Narrowed 2016 FFO Guidance, as
adjusted, to between $2.23 and $2.25 Per Diluted Share
DCT Industrial Trust® (NYSE: DCT), a leading real estate
company, today announced financial results for the quarter ending
September 30, 2016.
“DCT had a great third quarter highlighted by strong occupancy,
rental rate and same-store NOI growth,” said Phil Hawkins,
President and CEO for DCT Industrial. “Leasing in our development
pipeline continues to exceed expectations, reflecting the quality
of our development projects which are located in high-demand
submarkets. We continue to see strong, broad-based customer demand
across all markets and industry verticals including e-commerce,
consumer, auto and housing.”
Net income attributable to common stockholders (“Net Earnings”)
for Q3 2016 was $15.6 million, or $0.17 per diluted share, compared
to $8.5 million, or $0.09 per diluted share, reported for Q3 2015,
an increase of 88.9 percent per diluted share.
Funds from operations (“FFO”), as adjusted, attributable to
common stockholders and unitholders for Q3 2016 totaled $57.1
million, or $0.60 per diluted share, compared with $46.9 million,
or $0.50 per diluted share for Q3 2015, a 20.0 percent increase.
These results exclude $0.5 million of acquisition costs and a $1.0
million decrease in interest expense related to hedge
ineffectiveness for the quarter ending September 30, 2016 and $0.5
million of acquisition costs for the quarter ending September 30,
2015.
Property Results and Leasing
Activity
As of September 30, 2016, DCT Industrial owned 398 consolidated
operating properties, totaling 64.7 million square feet, with
occupancy of 96.2 percent, an increase of 60 basis points from Q2
2016 and an increase of 170 basis points over Q3 2015. On a
same-portfolio basis, the impact of dispositions and placing
developments into operations increased occupancy by 10 basis
points. Approximately 829,000 square feet, or 1.3 percent of DCT
Industrial’s total consolidated portfolio was leased but not
occupied at September 30, 2016, which does not take into
consideration 733,000 square feet of leases in developments under
construction or in pre-development.
In Q3 2016, the Company signed leases totaling 3.9 million
square feet with rental rates increasing 16.8 percent on a
straight-line basis and 5.6 percent on a cash basis, compared to
the corresponding expiring leases. Over the previous four quarters,
rental rates on signed leases increased 20.8 percent on a
straight-line basis and 8.4 percent on a cash basis. The Company’s
tenant retention rate was 92.9 percent in Q3 2016.
Net operating income (“NOI”) was $76.1 million in Q3 2016,
compared with $65.1 million in Q3 2015. In Q3 2016, same-store NOI,
excluding revenue from lease terminations, increased 8.8 percent on
a straight-line basis and 9.6 percent on a cash basis, when
compared to Q3 2015. Same-store occupancy averaged 95.7 percent in
Q3 2016, an increase of 120 basis points from Q3 2015. Same-store
occupancy as of September 30, 2016 was 96.0 percent.
Investment Activity
Acquisitions
From June 30 to November 3, 2016, DCT Industrial acquired six
buildings for $60.8 million. Totaling 749,000 square feet, these
buildings were 83.9 percent occupied at the time of closing. The
Company expects a year-one weighted-average cash yield of 5.4
percent and anticipates a weighted-average stabilized cash yield of
6.1 percent on the acquired assets.
The table below summarizes acquisitions from June 30 to November
3, 2016:
Market Submarket Square Feet
Occupancyat Closing
Closed
AnticipatedYield1
Southern California (2 buildings) Riverside
255,000 100.0% Aug-16
4.3% Cincinnati Northwest 301,000 59.9% Sept-16 7.9% Dallas
Northwest 82,000 100.0% Sept-16 7.0% Northern California 880
Corridor 66,000 100.0% Oct-16 7.5% Chicago I-55
Corridor 45,000 100.0%
Oct-16 6.1% Total/Weighted Average 749,000 83.9% 6.1%
1
Anticipated yield represents year-one cash
yield for stabilized acquisitions and projected stabilized cash
yield for value-add acquisitions.
Development and Redevelopment
Since June 30, 2016, DCT Industrial stabilized 800,000 square
feet of development at an anticipated weighted-average yield of 7.4
percent and a projected investment of $48.3 million. Additionally,
the Company executed 900,000 square feet of development leases,
bringing the pipeline to 40.3 percent leased. The Company also
purchased 24.5 acres to develop 300,000 square feet.
Highlights since DCT Industrial’s Q2 2016 Earnings release:
- Executed a 227,000 square foot
pre-lease for DCT North Satellite Distribution Center bringing the
549,000 square foot development, located in the I-85/Northwest
submarket of Atlanta, to 41.3 percent leased. Construction is
scheduled to be complete in Q1 2017.
- Executed a 181,000 square foot
pre-lease for DCT Waters Ridge bringing the 347,000 square foot
development, located in the Northwest submarket of Dallas, to 52.3
percent leased. Construction is scheduled to be complete in Q4
2016.
- Executed a 156,000 square foot
pre-lease for SCLA Building 18, a 370,000 square foot building
located in Victorville, CA, which is owned by an unconsolidated
joint venture.1 The building is 42.0 percent leased with
construction scheduled to commence in Q4 2016.
- Executed a 67,000 square foot lease for
DCT Fife Distribution Center North bringing the 152,000 square foot
development, located in the Fife/Tacoma submarket of Seattle, to
100.0 percent leased.
- Executed two leases totaling 98,000
square feet for DCT Northwest Crossroads Logistics Centre II
bringing the 320,000 square foot building, located in the Northwest
submarket of Houston, to 100.0 percent leased.
- Executed a 36,000 square foot lease for
DCT Freeport West bringing the 108,000 square foot development,
located in the DFW Airport submarket of Dallas, to 100.0 percent
leased. Construction was completed in Q3 2016.
- Commenced redevelopment of 10810
Painter Avenue, a 115,000 square foot building located in the
Mid-Counties submarket of Los Angeles. Construction is scheduled to
be complete in Q2 2017.
- Acquired 14.6 acres in the Northeast
submarket of Denver to develop DCT Summit Distribution Center, a
168,000 square foot distribution building.
1
DCT Industrial does not control this
unconsolidated joint venture.
Dispositions
Since June 30, 2016, a joint venture, in which DCT Industrial
owned a 10.0 percent interest, sold a 126,000 square foot building,
located in the Jefferson Riverport submarket of Louisville. This
transaction generated gross proceeds to DCT Industrial of $0.5
million with an expected year-one weighted-average cash yield of
3.4 percent
Capital Markets
DCT Industrial raised $33.5 million in net proceeds from the
sale of common stock through its “at the market” equity offering.
The Company issued approximately 700,000 shares at a
weighted-average price of $49.12 per share. The proceeds were used
to fund development and general corporate activities.
Dividend
DCT Industrial’s Board of Directors declared a $0.31 per share
quarterly cash dividend, an increase of 6.9 percent, payable on
January 5, 2017 to stockholders of record as of December 23,
2016.
Guidance
The Company raised and narrowed 2016 Net Earnings guidance to
between $0.87 and $0.91 per diluted share, up from $0.84 to $0.90.
Net Earnings guidance excludes any gain or loss related to
potential future dispositions.
The Company raised and narrowed 2016 FFO guidance, as adjusted,
to between $2.23 and $2.25 per diluted share, up from $2.16 to
$2.22 per diluted share. The Company’s FFO guidance excludes actual
and any potential future acquisition costs and non-cash interest
expense impact of hedge ineffectiveness.
For additional details, assumptions and definitions related to
the Company’s 2016 guidance, please refer to page 8 in DCT
Industrial’s third quarter 2016 supplemental reporting package.
Conference Call
Information
DCT Industrial will host a conference call to discuss Q3 results
on Friday, November 4, 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, February 3,
2017 and can be accessed by dialing (877) 344-7529 or (412)
317-0088 and entering the passcode 10094066. 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 November 4,
2017.
Supplemental information is available in the Investors section
of the Company’s website at www.dctindustrial.com or by e-mail
request to 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 real estate company specializing in
the ownership, acquisition, development, leasing and management of
bulk-distribution and light-industrial properties in high-demand
distribution markets in the U.S. DCT’s actively-managed portfolio
is strategically located near population centers and
well-positioned to take advantage of market dynamics. As of
September 30, 2016, the Company owned interests in approximately
73.5 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
SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share
information)
September 30, 2016 December 31, 2015
ASSETS (unaudited) Land $ 1,026,776 $ 1,009,905 Buildings
and improvements 3,099,166 2,886,859 Intangible lease assets 79,771
84,420 Construction in progress 114,332 159,397
Total investment in properties 4,320,045 4,140,581 Less
accumulated depreciation and amortization (809,408 ) (742,980 )
Net investment in properties 3,510,637 3,397,601 Investments
in and advances to unconsolidated joint ventures 93,854
82,635
Net investment in real estate 3,604,491
3,480,236 Cash and cash equivalents 7,073 18,412 Restricted cash
2,417 31,187
Straight-line rent and other receivables,
net of allowance for doubtful accounts of $594 and $335,
respectively
76,803 60,357 Other assets, net 23,244 15,964 Assets held for sale
10,138 26,199
Total assets $ 3,724,166
$ 3,632,355
LIABILITIES AND EQUITY
Liabilities: Accounts payable and accrued expenses $ 106,039 $
108,788 Distributions payable 27,575 26,938 Tenant prepaids and
security deposits 31,772 29,663 Other liabilities 40,177 18,398
Intangible lease liabilities, net 21,126 22,070 Line of credit —
70,000 Senior unsecured notes 1,351,537 1,276,097 Mortgage notes
204,102 210,375 Liabilities related to assets held for sale 365
869
Total liabilities 1,782,693
1,763,198 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 90,882,190 and 88,313,891 shares
issued and outstanding as of September 30, 2016 and
December 31, 2015, respectively
909 883 Additional paid-in capital 2,861,623 2,766,193
Distributions in excess of earnings (997,015 ) (992,010 )
Accumulated other comprehensive loss (27,756 ) (23,082 )
Total
stockholders’ equity 1,837,761 1,751,984 Noncontrolling
interests 103,712 117,173
Total equity
1,941,473 1,869,157
Total liabilities and
equity $ 3,724,166 $ 3,632,355
DCT INDUSTRIAL TRUST INC. AND
SUBSIDIARIES
Consolidated Statements of
Operations
(unaudited, in thousands, except per
share information)
Three Months Ended September 30, Nine Months Ended
September 30, 2016 2015 2016
2015 REVENUES: Rental revenues $ 99,933
$ 88,092 $ 289,507 $ 264,269 Institutional capital management and
other fees 341 333 1,039 1,134
Total
revenues 100,274 88,425 290,546 265,403
OPERATING EXPENSES: Rental expenses 8,795
8,900 27,830 27,456 Real estate taxes 15,074 14,056 44,729 42,082
Real estate related depreciation and amortization 40,273 39,431
120,244 116,876 General and administrative 7,370 7,720 20,990
24,912 Impairment losses — 371 — 371 Casualty gain (2,440 ) —
(2,278 ) —
Total operating expenses 69,072
70,478 211,515 211,697
Operating
income 31,202 17,947 79,031 53,706
OTHER INCOME
(EXPENSE): Development profit, net of taxes — — — 2,627
Equity in earnings of unconsolidated
joint ventures, net
1,164 4,493 2,983 6,336 Gain on dispositions of real estate
interests — — 43,052 41,086 Interest expense (15,773 ) (13,078 )
(47,830 ) (40,591 ) Interest and other income (expense) 18 (42 )
581 (71 ) Income tax expense and other taxes (222 ) (241 ) (510 )
(712 )
Consolidated net
income of DCT Industrial Trust Inc.
16,389 9,079 77,307 62,381
Net income attributable to
noncontrolling interests
(829 ) (622 ) (3,938 ) (6,882 )
Net income attributable to
common stockholders
15,560 8,457 73,369 55,499
Distributed and undistributed earnings
allocated to participating securities
(163 ) (166 ) (497 ) (510 )
Adjusted net income
attributable to common stockholders
$ 15,397 $ 8,291 $ 72,872 $ 54,989
NET EARNINGS PER COMMON SHARE: Basic $ 0.17 $
0.09 $ 0.81 $ 0.62 Diluted $ 0.17 $
0.09 $ 0.81 $ 0.62
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING: Basic 90,250 88,207 89,464 88,162
Diluted 90,723 88,526 89,906 88,472
Distributions declared per common share $ 0.29 $ 0.28 $ 0.87
$ 0.84
Reconciliation of Net Income
Attributable to Common Stockholders to Funds from
Operations
(unaudited, in thousands, except per
share and unit data)
For the Three MonthsEnded
September 30,
For the Nine MonthsEnded
September 30,
2016 2015 2016
2015 Reconciliation of net income attributable to
common stockholders to FFO: Net income attributable to common
stockholders $ 15,560 $ 8,457 $ 73,369 $ 55,499 Adjustments: Real
estate related depreciation and amortization 40,273 39,431 120,244
116,876 Equity in earnings of unconsolidated joint ventures, net
(1,164 ) (4,493 ) (2,983 ) (6,336 ) Equity in FFO of unconsolidated
joint ventures(1) 2,503 2,441 7,321 7,424 Impairment losses on
depreciable real estate — 371 — 371 Gain on dispositions of real
estate interests — — (43,052 ) (41,086 ) Gain on dispositions of
non-depreciable real estate — — — 18 Noncontrolling interest in the
above adjustments (1,908 ) (1,897 ) (4,005 ) (4,086 ) FFO
attributable to unitholders 2,343 2,119 6,786
6,214 FFO attributable to common stockholders and
unitholders – basic and diluted(2) 57,607 46,429
157,680 134,894 Adjustments: Acquisition costs 468
455 560 1,939 Hedge ineffectiveness (non-cash) (967 ) — 453
—
FFO, as adjusted, attributable to common
stockholders and unitholders – basic and diluted
$ 57,108 $ 46,884 $ 158,693 $ 136,833
FFO per common share and unit – basic $ 0.61 $ 0.50
$ 1.68 $ 1.45 FFO per common share and unit –
diluted $ 0.61 $ 0.50 $ 1.67 $ 1.45
FFO, as adjusted, per common share and unit – basic $ 0.60
$ 0.50 $ 1.69 $ 1.47 FFO, as adjusted,
per common share and unit – diluted $ 0.60 $ 0.50 $
1.68 $ 1.47 FFO weighted average common shares
and units outstanding: Common shares for net earnings per share
90,250 88,207 89,464 88,162 Participating securities 582 614 561
604 Units 3,797 4,217 4,023 4,257 FFO
weighted average common shares, participating securities and units
outstanding – basic 94,629 93,038 94,048 93,023 Dilutive common
stock equivalents 473 319 442 310
FFO weighted average common shares,
participating securities and units outstanding – diluted
95,102 93,357 94,490 93,333 (1)
Equity in FFO of unconsolidated joint ventures is determined as our
share of FFO from each unconsolidated joint venture. See DCT
Industrial's third quarter 2016 supplemental reporting package for
additional information. (2) 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: Net earnings per common share -
diluted $ 0.87 $ 0.91 Adjustments: Gains on disposition of real
estate interest (0.46 ) (0.46 ) Real estate related depreciation
and amortization(1) 1.77 1.75 Hedge ineffectiveness (non-cash) and
acquisition costs 0.02 0.02 Noncontrolling interest in adjustments
0.03 0.03 FFO, as adjusted, per common share and unit
- diluted(2) $ 2.23 $ 2.25 (1) Includes
proportionate share of real estate depreciation and amortization
from unconsolidated joint ventures. (2)
The Company’s FFO guidance excludes actual
and any potential future acquisition costs and non-cash interest
expense impact of hedge ineffectiveness.
The following table shows the
calculation of our Fixed Charge Coverage Ratio for the three and
nine months endedSeptember 30, 2016 and 2015 (unaudited, in
thousands):
For the Three Months
EndedSeptember 30,
For the Nine Months
EndedSeptember 30,
2016 2015 2016
2015 Net income attributable to common stockholders $ 15,560
$ 8,457 $ 73,369 $ 55,499 Interest expense 15,773 13,078 47,830
40,591
Proportionate share of interest expense
from unconsolidated joint ventures(1)
276 317 827 970 Real estate related depreciation and amortization
40,273 39,431 120,244 116,876
Proportionate share of real estate related
depreciation and amortization from unconsolidated joint
ventures(1)
1,097 1,203 3,295 3,637 Income tax expense and other taxes 222 241
510 712 Stock-based compensation 1,413 1,342 4,153 3,882
Noncontrolling interests 829 622 3,938 6,882 Non-FFO gain on
dispositions of real estate interests — — (43,052 ) (41,068 )
Impairment losses — 371 —
371 Adjusted EBITDA $ 75,443 $ 65,062 $
211,114 $ 188,352 CALCULATION OF FIXED
CHARGES: Interest expense $ 15,773 $ 13,078 $ 47,830 $ 40,591
Capitalized interest 2,040 4,219 7,648 12,053 Amortization of loan
costs and debt premium/discount (237 ) 184 (687 ) 276 Other
non-cash interest expense(2) (56 ) (1,024 ) (3,524 ) (3,072 )
Proportionate share of interest expense
from unconsolidated joint ventures(1)
276 317 827 970
Total fixed charges $ 17,796 $ 16,774 $ 52,094
$ 50,818 Fixed charge coverage ratio
4.2x 3.9x 4.1x 3.7x (1) Amounts
are determined based on our ownership share of such amounts from
the unconsolidated joint ventures. See DCT Industrial's third
quarter 2016 supplemental reporting package for additional
information. (2) Includes $(1.0) million and $0.5 million of hedge
ineffectiveness for the three and nine months ended September 30,
2016, respectively.
The following table is a reconciliation
of our reported net income attributable to common stockholders to
our netoperating income for the three and nine months ended
September 30, 2016 and 2015 (unaudited, in thousands):
For the Three Months
EndedSeptember 30,
For the Nine Months
EndedSeptember 30,
2016 2015 2016 2015
Reconciliation of net income attributable to common stockholders
to NOI: Net income attributable to common stockholders $ 15,560
$ 8,457 $ 73,369 $ 55,499 Net income attributable to noncontrolling
interests 829 622 3,938 6,882 Income tax expense and other taxes
222 241 510 712 Interest and other (income) expense (18 ) 42 (581 )
71 Interest expense 15,773 13,078 47,830 40,591 Equity in earnings
of unconsolidated joint ventures, net (1,164 ) (4,493 ) (2,983 )
(6,336 ) General and administrative expense 7,370 7,720 20,990
24,912 Real estate related depreciation and amortization 40,273
39,431 120,244 116,876 Impairment losses — 371 — 371 Development
profit, net of taxes — — — (2,627 ) Gain on dispositions of real
estate interests — — (43,052 ) (41,086 ) Casualty gain (2,440 ) —
(2,278 ) — Institutional capital management and other fees
(341 ) (333 ) (1,039 ) (1,134 ) Total NOI
76,064 65,136 216,948 194,731 Less NOI – non-same store properties
(10,996 ) (4,675 ) (38,482 ) (23,519 )
Same store NOI 65,068 60,461 178,466 171,212 Less revenue from
lease terminations (249 ) (1,184 ) (901 ) (1,946 ) Add early
termination straight-line rent adjustment 30
348 162 255 Same store NOI,
excluding revenue from lease terminations 64,849 59,625 177,727
169,521 Less straight-line rents, net of related bad debt expense
(764 ) (954 ) (3,403 ) (2,950 ) Less amortization of above/(below)
market rents (568 ) (702 ) (1,679 )
(1,865 ) Same store Cash NOI, excluding revenue from lease
terminations $ 63,517 $ 57,969 $ 172,645 $
164,706
Financial Measures
NOI is defined as rental revenues, which includes 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 and other income, income tax expense and
other taxes 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.
We calculate Cash NOI as NOI excluding non-cash amounts recorded
for straight-line rents including related bad debt expense and the
amortization of above and below market rents. DCT Industrial
considers Cash NOI to be an appropriate supplemental performance
measure because Cash NOI reflects the operating performance of DCT
Industrial’s properties and excludes certain non-cash items that
are not considered to be controllable in connection with the
management of the property such as accounting adjustments for
straight-line rent and the amortization of above or below market
rent. Additionally, DCT Industrial presents Cash NOI, excluding
revenue from lease terminations, as such revenue is not considered
indicative of recurring operating performance.
Same Store Properties are determined independently for each
period presented, quarter-to-date and year-to-date, by including
all consolidated operating properties that have been owned for the
entire current and prior period presented. We consider NOI and Cash
NOI from Same Store Properties to be a useful measure in evaluating
our financial performance and to improve comparability between
periods by including only properties owned for comparable
periods.
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 proportionate 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, as adjusted, which excludes hedge
ineffectiveness, certain severance costs, acquisition costs, debt
modification costs and impairment losses on properties which are
not depreciable. We believe that FFO excluding hedge
ineffectiveness, certain 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.
We calculate Fixed Charge Coverage Ratio as Adjusted EBITDA
divided by total Fixed Charges. Fixed Charges include interest
expense, interest capitalized, our proportionate share of our
unconsolidated joint venture interest expense and adjustments for
amortization of discounts, premiums, loan costs and other non-cash
interest expense. DCT Industrial considers Fixed Charge Coverage
Ratio to be an appropriate supplemental measure of our ability to
satisfy fixed financing obligations.
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 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/20161103006705/en/
DCT Industrial TrustMelissa Sachs,
303-597-2400investorrelations@dctindustrial.com
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