DCT Industrial Trust Inc.® (NYSE: DCT), a leading
industrial real estate company, today announced financial results
for the quarter ending March 31, 2012.
“2012 is off to a great start. I am very pleased with our
operating and financial results as well as our capital deployment
efforts,” said Phil Hawkins, President and Chief Executive Officer
of DCT Industrial. “Overall leasing activity is positive and
industrial leasing fundamentals continue to improve. We also have
an active pipeline of capital deployment opportunities under
consideration, the majority of which are located in coastal
markets.”
Funds from Operations (“FFO”), as adjusted, attributable to
common stockholders and unitholders for the first quarter of 2012
totaled $29.0 million, or $0.11 per diluted share, compared with
$23.4 million, or $0.09 per diluted share, for the first quarter of
2011. These results exclude $0.2 million of acquisition costs for
the quarter ending March 31, 2012 and $0.4 million of acquisition
costs for the quarter ending March 31, 2011.
Net loss attributable to common stockholders for the first
quarter of 2012 was $6.0 million, or $0.03 per diluted share,
compared with a net loss of $8.5 million, or $0.04 per diluted
share, reported for the first quarter of 2011.
Property Results and Leasing
Activity
The Company signed leases totaling 3.3 million square feet in
the first quarter of 2012, a 13 percent increase over the first
quarter of 2011. Rental rates on signed leases increased 3.1
percent on a GAAP basis and decreased 3.7 percent on a cash basis
compared to prior leases. Over the previous four quarters, rental
rates on signed leases increased 2.0 percent on a GAAP basis and
decreased 5.7 percent on a cash basis. The Company’s tenant
retention rate was 70.9 percent in the first quarter of 2012.
As of March 31, 2012, DCT Industrial owned 408 consolidated
properties, totaling 58.2 million square feet with occupancy of
90.1 percent, compared to 90.5 percent as of December 31, 2011. In
addition, 0.7 million square feet, or 1.3 percent of DCT
Industrial’s total consolidated portfolio, was leased but not
occupied.
Net operating income (“NOI”) was $47.8 million in the first
quarter of 2012, compared with $42.3 million reported for the first
quarter of 2011. First quarter of 2012 same-store NOI, excluding
revenue from lease terminations, increased 9.0 percent on a cash
basis and increased 3.8 percent on a GAAP basis, when compared to
the same period last year. Occupancy of same-store properties
averaged 90.8 percent in the first quarter of 2012, an increase of
200 basis-points compared with an average of 88.8 percent in the
first quarter of 2011. Occupancy of same-store properties ended at
90.8 percent as of March 31, 2012.
Investment Activity
Acquisitions
Through April, DCT Industrial acquired three buildings totaling
$26.4 million located in Atlanta, Chicago and Phoenix.
In January, the Company acquired a 76,000 square foot, Class A
distribution building located in the Southwest submarket of
Phoenix. The building was purchased from the current user who is
expected to vacate in July 2012. DCT Industrial is actively
marketing the building to new users with strong early interest. DCT
Industrial anticipates a stabilized cash yield of 10.1 percent.
In April, DCT Industrial acquired a 157,000 square foot,
bulk-distribution building in the Northmont Business Park of
Atlanta, one of Northeast Atlanta’s premier master planned
industrial parks. Built in 2001, this Class A facility is currently
100 percent occupied by a single tenant. With this acquisition, DCT
now owns 8 buildings totaling 917,000 square feet within Northmont
Business Park. The Company anticipates a year-one cash yield of 6.5
percent on the building.
Finally, also in April, the Company acquired a 304,000 square
foot distribution building in the Central DuPage submarket of
Chicago. This Class A, rear-loaded facility was built in 2000 and
is 100 percent leased and 50.2 percent occupied. The Company
anticipates a stabilized cash yield of 7.0 percent on the
building.
The table below represents a summary of the acquisitions closed
since January 1, 2012:
Market
Submarket
Square Feet
Occupancy
Closed
Phoenix, AZ(1)
Southwest 76,000 100.0 % Jan-12
Atlanta, GA Northeast I-85 157,000 100.0 % Apr-12 Chicago, IL
Central DuPage 304,000 50.2 % Apr-12
Total / Weighted Average
537,000 71.8 %
(1) Tenant expected to vacate the building in July 2012.
Dispositions
Year-to-date, the Company has completed three dispositions in
Atlanta and Charlotte, totaling 184,000 square feet with combined
proceeds of $8.4 million and with a projected year-one weighted
average cash yield of 2.4 percent. The Charlotte disposition
completes DCT Industrial’s exit from that market.
The table below represents a summary of the dispositions closed
since January 1, 2012:
Market
Submarket
Square Feet
Occupancy
Closed
Atlanta, GA Northeast I-85 85,000 85.5%
Jan-12 Atlanta, GA Northeast I-85 19,000 100.0% Feb-12 Charlotte,
NC Southwest 80,000 0.0% May-12
Total / Weighted Average
184,000 49.7%
Development
As previously announced, DCT Industrial acquired a 32.6 acre
land parcel within the I-55 South industrial submarket of Chicago
in Boldt Park. The Company plans to start construction in May on
DCT 55, a 604,000 square foot, cross-dock facility. The building
will incorporate DCT Industrial’s sustainable design initiative and
DCT Industrial will seek LEED certification on the building.
“The I-55 submarket is one of the most desirable distribution
areas in Chicago, with favorable supply dynamics for buildings of
this size,” said Neil Doyle, the Company’s Managing Director,
Central Region. “We are confident that DCT 55 will be well-received
in the market given strong user activity and the building’s
state-of-the-art design.”
In March, DCT Industrial commenced construction on Building A at
DCT Commerce Center at Pan American West Industrial Park, the first
of a two-building development project in the Airport West submarket
of Miami. The 167,000 square foot, class-A, rear-load distribution
building is being built on one of the last remaining parcels of
developable land in what is considered the top sub-market in Miami.
Construction is expected to be completed in the third quarter of
2012.
In April, the Company announced the signing of a long-term lease
for all of Phase 2 at its Dulles Summit development project in the
Dulles Corridor submarket of Washington, D.C. The 179,000 square
foot lease is with a subsidiary of a Fortune 500 company. The
Company commenced development of Phase 2, a two building, 179,000
square foot project, in late 2011. The first building will be
finished in the first quarter of 2013 and the second building will
be complete in the third quarter of 2013.
Dividend
DCT Industrial’s Board of Directors has declared a $0.07 per
share quarterly cash dividend, payable on July 18, 2012 to
stockholders of record as of July 6, 2012.
Guidance
The Company increased and narrowed 2012 FFO guidance, as
adjusted, to $0.38 to $0.42 per diluted share, up from $0.36 to
$0.41. Additionally, net loss attributable to common stockholders
and unitholders is expected to be between $(0.12) and $(0.08) per
diluted share.
The Company’s guidance excludes real estate gains and losses and
acquisition costs.
Conference Call
Information
DCT Industrial will host a conference call to discuss first
quarter 2012 on Thursday, May 3, 2012 at 11:00 a.m. Eastern Time.
Stockholders and interested parties may listen to a live broadcast
of the conference call by dialing (877) 317-6789 or (412) 317-6789.
A telephone replay will be available until 9 a.m. Eastern Time,
Thursday, May 17, 2012 and can be accessed by dialing (877)
344-7529 or (412) 317-0088 and entering the passcode 10012767. 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 May 3, 2013.
Supplemental information is available in the Investors section
of the Company’s website at www.dctindustrial.com or by e-mail
request at investorrelations@dctindustrial.com. Interested parties
may also obtain supplemental information from the SEC’s website at
www.sec.gov.
About DCT Industrial Trust
Inc.®
DCT Industrial Trust Inc. is a leading industrial real estate
company specializing in the acquisition, development, leasing and
management of bulk distribution and light industrial properties in
high-volume distribution markets in the U.S. and Mexico. As of
March 31, 2012, the Company owned interests in approximately 75.4
million square feet of properties leased to approximately 900
customers, including 17.2 million square feet operated on behalf of
five institutional capital management partners. Additional
information is available at www.dctindustrial.com.
DCT INDUSTRIAL TRUST INC. AND
SUBSIDIARIESConsolidated Balance Sheets(in thousands,
except share information)
March 31,
2012
December 31,
2011
ASSETS: (unaudited) Land $ 654,573 $ 647,552 Building and
improvements 2,392,386 2,393,346 Intangible lease assets 83,633
84,779 Construction in progress 34,855 35,386
Total investment in properties 3,165,447
3,161,063
Less accumulated depreciation and
amortization
(610,403 ) (589,314 )
Net investment in
properties 2,555,044 2,571,749
Investments in and advances to
unconsolidated joint ventures
139,417 139,278
Net investment in
real estate 2,694,461 2,711,027 Cash and cash
equivalents 10,980 12,834 Notes receivable 1,010 1,053 Deferred
loan costs, net 8,038 8,567
Straight-line rent and other receivables,
net of allowance for doubtful accounts of $1,418 and $1,256,
respectively
44,549 42,349 Other assets, net 20,103 17,468
Total assets $ 2,779,141
$ 2,793,298 LIABILITIES AND
EQUITY: Liabilities: Accounts payable and accrued expenses $
34,695 $ 45,785 Distributions payable 19,140 19,057 Tenant prepaids
and security deposits 22,772 22,864 Other liabilities 29,066 29,797
Intangible lease liability, net 18,340 18,897 Line of credit 25,000
— Senior unsecured notes 935,000 935,000 Mortgage notes
315,230 317,783
Total
liabilities 1,399,243
1,389,183 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, 350,000,000
shares authorized247,104,435 and 245,943,100 shares issued and
outstanding as ofMarch 31, 2012 and December 31, 2011,
respectively
2,471 2,459 Additional paid-in capital 2,026,288 2,018,075
Distributions in excess of earnings (806,580 ) (783,229 )
Accumulated other comprehensive loss (27,812 )
(29,336 )
Total stockholders’ equity 1,194,367
1,207,969 Noncontrolling interests 185,531
196,146
Total equity 1,379,898
1,404,115 Total liabilities and
equity $ 2,779,141 $
2,793,298
DCT INDUSTRIAL TRUST INC. AND
SUBSIDIARIESConsolidated Statements of
Operations(unaudited, in thousands, except per share
information)
Three Months Ended
March 31,
2012 2011 REVENUES: Rental revenues $
66,099 $ 59,879 Institutional capital management and other
fees 1,055 1,019
Total revenues
67,154 60,898
OPERATING
EXPENSES: Rental expenses 8,121 8,422 Real estate taxes 10,227
9,139 Real estate related depreciation and amortization 32,139
29,846 General and administrative 5,785 7,056 Casualty gains
(155 ) —
Total operating expenses
56,117 54,463
Operating income 11,037
6,435
OTHER INCOME AND EXPENSE: Equity in loss of
unconsolidated joint ventures, net (854 ) (1,357 ) Interest expense
(17,028 ) (15,511 ) Interest and other income 197 85 Income tax
expense and other taxes (268 ) (40 )
Loss from continuing operations
(6,916
) (10,388
) Income from discontinued
operations 86 543
Consolidated net
loss of DCT Industrial Trust Inc. (6,830
) (9,845
) Net loss attributable to noncontrolling interests
826 1,309
Net loss attributable to common
stockholders (6,004
) (8,536
)
Distributed and undistributed earnings allocated to participating
securities (128 ) (118 )
Adjusted net loss
attributable to common stockholders $ (6,132
) $
(8,654 )
EARNINGS PER COMMON SHARE – BASIC AND
DILUTED: Loss from continuing operations $ (0.03 ) $ (0.04 )
Income from discontinued operations
0.00
0.00
Net loss attributable to common stockholders $ (0.03 ) $
(0.04 )
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic and diluted 246,367 233,288
Reconciliation of Net Loss Attributable
to Common Stockholders to Funds from
Operations(1)(unaudited, in thousands, except per share and
unit data)
Three Months Ended March 31, 2012
2011 Net loss attributable to common
stockholders $ (6,004 ) $ (8,536 ) Adjustments: Real estate related
depreciation and amortization 32,166 31,143 Equity in loss of
unconsolidated joint ventures, net 854 1,357 Equity in FFO of
unconsolidated joint ventures 2,834 316
Impairment losses on depreciable real
estate
— 42 Gain on dispositions of real estate interests (88 ) —
Noncontrolling interest in the operating partnership's share of the
above adjustments (3,744 ) (3,623 ) FFO attributable to unitholders
2,709 2,261
FFO attributable to common stockholders
and unitholders, basic and diluted(1)
28,727 22,960 Adjustments: Acquisition
costs(2) 237 400 FFO, as adjusted,
attributable to common stockholders and unitholders, basic and
diluted $
28,964
$ 23,360 FFO per common share and unit, basic
and diluted $ 0.11 $ 0.09 FFO, as adjusted,
per common share and unit, basic and diluted $ 0.11 $ 0.09
FFO weighted average common shares and units
outstanding: Common shares for earnings per share – basic
246,367
233,288 Participating securities 1,580 1,627 Units 25,731
25,513 FFO weighted average common shares,
participating securities and units outstanding - basic
273,678
260,428 Dilutive common stock equivalents 584
539 FFO weighted average common shares, participating
securities and units outstanding - diluted
274,262
260,967
(1)
Funds from Operations, FFO, as defined by
the National Association of Real Estate Investment Trusts
(NAREIT).
(2)
Excluding amounts attributable to
noncontrolling interests.
Guidance
The Company is providing the following guidance:
Range for the
Full-Year2012
Guidance: Low High Earnings per common
share - diluted $ (0.12 ) $ (0.08 ) Impairments and
acquisition cost 0.01 0.01 Real estate related depreciation and
amortization net of noncontrolling interests(1) 0.49
0.49 FFO, as adjusted, per common share and
unit-diluted(2) $ 0.38 $ 0.42
(1) Includes pro rata share of real estate
depreciation and amortization from unconsolidated joint
ventures.
(2) The Company’s guidance excludes real
estate gains and losses, impairments and acquisition costs.
The following table shows the
calculation of our Fixed Charge Coverage for the three months
endedMarch 31, 2012 and 2011 (in thousands):
Three Months Ended March 31, CALCULATION OF
ADJUSTED EBITDA
2012 2011 Net loss
attributable to common stockholders $ (6,004 ) $ (8,536 )
Interest expense(1)
17,028 15,511 Proportionate share of interest expense from
unconsolidated joint ventures 737 839 Real estate related
depreciation and amortization(1) 32,166 31,143 Proportionate share
of real estate related depreciation and amortization from
unconsolidated joint ventures 2,321 1,426 Income tax expense and
other taxes(1) 268 40 Stock-based compensation amortization 980
1,381 Noncontrolling interests(1) (826 ) (1,309 ) Non-FFO gains on
dispositions of real estate interests (88 ) — Impairment losses(1)
— 42 Adjusted EBITDA $ 46,582 $
40,537 CALCULATION OF FIXED CHARGES Interest expense
(1) $ 17,028 $ 15,511 Capitalized interest 693 761 Amortization of
loan costs and debt premium/discount (282 ) (213 ) Proportionate
share of interest expense from unconsolidated joint ventures
737 839 Total fixed charges $ 18,176 $
16,898 Fixed charge coverage 2.6
2.4
(1) Includes amounts related to discontinued operations.
The following table is a reconciliation
of our reported “Loss from continuing operations” to our net
operating income for thethree months ended March 31, 2012
and 2011 (in thousands):
Three Months Ended
March 31,
Reconciliation of loss from continuing operations to NOI: 2012
2011 Loss from continuing operations $ (6,916 ) $ (10,388 )
Income tax expense and other taxes 268 40 Interest and other income
(197 ) (85 ) Interest expense 17,028 15,511 Equity in loss of
unconsolidated joint ventures, net 854 1,357 General and
administrative 5,785 7,056 Real estate related depreciation and
amortization 32,139 29,846 Casualty gains (155 ) — Institutional
capital management and other fees (1,055 ) (1,019 )
Total net operating income 47,751 42,318 Less net operating income-
non-same store properties (4,430 ) (579 ) Same store
GAAP net operating income 43,321 41,739 Less revenue from lease
terminations (73 ) (54 ) Same store GAAP net
operating income, excluding revenue from lease terminations 43,248
41,685 Less straight-line rents, net of related bad debt expense
(1,078 ) (3,014 ) Add back amortization of above/(below) market
rents (142 ) (115 ) Same store cash net operating
income, excluding revenue from lease terminations $ 42,028 $
38,556
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 losses of unconsolidated joint
ventures, interest expense, interest and other income and income
tax expense and other taxes. We consider NOI to be an appropriate
supplemental performance measure because it reflects the operating
performance of our properties and excludes certain items that are
not considered to be controllable in connection with the management
of the property such as depreciation, amortization, impairment,
general and administrative expenses, interest income, and interest
expense. Additionally, lease termination revenue is excluded as it
is not considered to be indicative of recurring operating income.
However those measures should not be viewed as alternative measures
of our financial performance since they exclude expenses which
could materially impact our results of operations. Further, our NOI
may not be comparable to that of other real estate companies, as
they may use different methodologies for calculating NOI, same
store NOI (excluding revenue from lease terminations), and cash
basis same store NOI (excluding revenue from lease terminations).
Therefore, we believe net income (loss) attributable to common
stockholders, as defined by GAAP, to be the most appropriate
measure to evaluate our overall financial performance.
DCT Industrial believes that net income (loss) attributable to
common stockholders, as defined by GAAP, is the most appropriate
earnings measure. However, DCT Industrial considers Funds from
Operations (“FFO”), as defined by the National Association of Real
Estate Investment Trusts (“NAREIT”), to be a useful supplemental,
non-GAAP measure of DCT Industrial’s operating performance. NAREIT
developed FFO as a relative measure of performance of an equity
REIT in order to recognize that the value of income-producing real
estate historically has not depreciated on the basis determined
under GAAP. FFO is generally defined as net income attributable to
common stockholders, calculated in accordance with GAAP, plus real
estate-related depreciation and amortization, less gains from
dispositions of operating real estate held for investment purposes,
plus impairment losses on depreciable real estate and impairments
of in substance real estate investments in investees that are
driven by measurable decreases in the fair value of the depreciable
real estate held by the unconsolidated joint ventures and
adjustments to derive DCT Industrial’s pro rata share of FFO of
unconsolidated joint ventures. We exclude gains and losses on
business combinations and include the gains or losses from
dispositions of properties which were acquired or developed with
the intention to sell or contribute to an investment fund in our
definition of FFO. Although the NAREIT definition of FFO predates
the guidance for accounting for gains and losses on business
combinations, we believe that excluding such gains and losses is
consistent with the key objective of FFO as a performance measure.
We also present FFO excluding severance, acquisition costs, debt
modification costs and impairment losses on properties which are
not depreciable. We believe that FFO excluding severance,
acquisition costs, debt modification costs and impairment losses on
non-depreciable real estate is useful supplemental information
regarding our operating performance as it provides a more
meaningful and consistent comparison of our operating performance
and allows investors to more easily compare our operating results.
Readers should note that FFO captures neither the changes in the
value of DCT Industrial’s properties that result from use or market
conditions, nor the level of capital expenditures and leasing
commissions necessary to maintain the operating performance of DCT
Industrial’s properties, all of which have real economic effect and
could materially impact DCT Industrial’s results from operations.
NAREIT’s definition of FFO is subject to interpretation, and
modifications to the NAREIT definition of FFO are common.
Accordingly, DCT Industrial’s FFO may not be comparable to other
REITs’ FFO and FFO should be considered only as a supplement to net
income (loss) as a measure of DCT Industrial’s performance.
DCT Industrial calculates our fixed charge coverage calculation
based on adjusted EBITDA, which represents net loss attributable to
DCT common stockholders before interest, taxes, depreciation,
amortization, stock-based compensation expense, noncontrolling
interest, impairment losses and excludes non-FFO gains and losses
on disposed assets and business combinations. We use adjusted
EBITDA to measure our operating performance and to provide
investors relevant and useful information because it allows fixed
income investors to view income from our operations on an
unleveraged basis before the effects of non-cash items, such as
depreciation and amortization and stock-based compensation expense,
and irregular items, such as non-FFO gains or losses from the
dispositions of real estate, impairment losses and gains and losses
on business combinations.
Forward-Looking Statements
We make statements in this document 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. 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
continuing impact of the economic downturn and the strength of the
economic recovery and the potential impact of the financial crisis
in Europe; 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 and dispositions; natural
disasters such as fires, 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.
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