Net Earnings of $0.45 per Diluted Share in
Q2;Raised and Narrowed 2017 Net Earnings Guidance to between
$0.84 and $0.90 Per Diluted Share
FFO, as adjusted, of $0.60 per Diluted Share
in Q2;Raised and Narrowed 2017 FFO Guidance, as adjusted, to
between $2.39 and $2.45 Per Diluted Shared
Consolidated Operating Occupancy of 97.5
Percent
Rent Growth of 40.2 Percent on a
Straight-Line Basis and 17.8 Percent on a Cash Basis
Quarterly Same-Store Portfolio NOI Growth of
12.4 Percent on a Cash Basis and 4.2 Percent on a Straight-Line
Basis for Q2
Annual Same-Store Portfolio NOI Growth of
9.3 Percent on a Cash Basis and 3.9 Percent on a Straight-Line
Basis for Q2; Year-To-Date Growth of 10.0 Percent on a Cash
Basis and 4.8 Percent on a Straight-Line Basis
Executed 720,000 Square Feet of Development
Leases Bringing the Development Pipeline to 41.9 Percent
Leased
DCT Industrial Trust® (NYSE: DCT), a leading real estate
company, today announced financial results for the quarter ending
June 30, 2017.
“We are pleased to report another strong quarter, reflecting the
quality of DCT's portfolio and favorable market fundamentals,” said
Phil Hawkins, President and CEO of DCT Industrial. “The performance
of both our operating and development properties again
exceeded expectations, and across our markets, rents continue
to increase fueled by healthy tenant demand, historically-low
vacancy rates and disciplined levels of new supply.”
Net income attributable to common stockholders (“Net Earnings”)
for Q2 2017 was $41.6 million, or $0.45 per diluted share, compared
to $21.4 million, or $0.24 per diluted share, reported for Q2 2016,
an 87.5 percent increase per diluted share.
Funds from operations (“FFO”), as adjusted, attributable to
common stockholders and unitholders for Q2 2017 totaled $58.0
million, or $0.60 per diluted share, compared with $51.1 million,
or $0.54 per diluted share for Q2 2016, an 11.1 percent increase
per diluted share. These results exclude an impairment loss on land
of $0.9 million for the quarter ending June 30, 2017 and $0.1
million of acquisition costs and a non-cash charge of $0.4 million
related to hedge ineffectiveness for the quarter ending June 30,
2016.
Property Results and Leasing
Activity
As of June 30, 2017, DCT Industrial owned 397 consolidated
operating properties, totaling 63.8 million square feet, with
occupancy of 97.5 percent, the same as Q1 2017 and an increase of
130 basis points over Q2 2016. On a same-portfolio basis, occupancy
decreased by 10 basis points and the impact of dispositions and
placing acquisitions and redevelopments into operations increased
occupancy by 10 basis points. Approximately 732,000 square feet, or
1.1 percent of DCT Industrial’s total consolidated portfolio was
leased but not occupied as of June 30, 2017, which does not take
into consideration 660,000 square feet of leased space in
developments under construction or in pre-development.
In Q2 2017, the Company signed leases totaling 3.6 million
square feet with rental rates increasing 40.2 percent on a
straight-line basis and 17.8 percent on a cash basis, compared to
the corresponding expiring leases. Over the previous four quarters,
rental rates on signed leases increased 26.5 percent on a
straight-line basis and 11.2 percent on a cash basis. The Company’s
tenant retention rate was 71.3 percent in Q2 2017.
Net operating income (“NOI”) was $79.5 million in Q2 2017,
compared with $71.6 million in Q2 2016. NOI was $158.7 million for
the first six months of 2017, compared with $140.9 million for the
first six months of 2016.
Q2 2017 NOI from the Quarterly Same-Store Portfolio increased
12.4 percent on a cash basis and 4.2 percent on a straight-line
basis, when compared to Q2 2016. NOI from the Annual Same-Store
Portfolio for Q2 2017 increased 9.3 percent on a cash basis and 3.9
percent on a straight-line basis when compared to Q2 2016.
Additionally, NOI from the Annual Same-Store Portfolio for the
first six months of 2017 increased 10.0 percent on a cash basis and
4.8 percent on a straight-line basis when compared to the first six
months 2016. All same-store NOI amounts exclude revenue from lease
terminations. For definitions of Quarterly Same-Store Portfolio and
Annual Same-Store Portfolio, see page 25 in DCT Industrial’s Second
Quarter 2017 Supplemental Reporting Package.
Quarterly Same-Store Portfolio occupancy averaged 97.1 percent
in Q2 2017, an increase of 10 basis points from Q2 2016. Quarterly
Same-Store Portfolio occupancy as of June 30, 2017, was 97.3
percent.
Investment Activity
Acquisitions
Since DCT Industrial’s Q1 2017 Earnings Release, the Company
acquired one building totaling 73,000 square feet in the 880
Industrial Corridor submarket of Northern California for $11.1
million. The building is 100 percent occupied and the Company
expects a year-one cash yield of 5.1 percent, which excludes six
months of free rent.
Development
Since the Company’s Q1 2017 Earnings Release, DCT Industrial
stabilized 370,000 square feet of development and executed 720,000
square feet of development leases bringing the development pipeline
to 41.9 percent leased. The Company also purchased 87.4 acres to
develop 1.1 million square feet. Additionally, the Company
commenced construction on 684,000 square feet with a projected
investment of $56.8 million.
Highlights since DCT Industrial’s Q1 2017 Earnings Release:
In Q2 2017:
- Executed a 133,000 square foot lease
for DCT White River Corporate Center North bringing the 251,000
square foot development, in the South Kent Valley submarket of
Seattle, to 100 percent leased.
- Executed a 113,000 square foot lease
for DCT Miller Road bringing the 270,000 square foot development,
in the Northeast submarket of Dallas, to 41.9 percent pre-leased.
Construction is scheduled to be complete in Q3 2017.
- Executed a 31,000 square foot lease for
DCT Airport Distribution Center Building D, bringing the 95,000
square foot development, in the Southeast submarket of Orlando, to
33.0 percent leased.
- Executed a 196,000 square foot lease
for Building 18, a 370,000 square foot building in DCT Industrial’s
SCLA unconsolidated joint venture in Victorville, CA. The building
was completed and stabilized in Q2 2017.
- Commenced construction on DCT Rail
Center 225 Building B, a 222,000 square foot build-to-suit in the
Port submarket of Houston. Construction is scheduled to be complete
in Q1 2018.
- Commenced construction on DCT Terrapin
Commerce Center I, a 126,000 square foot building in the B/W
Corridor submarket of Baltimore/Washington D.C. Construction is
scheduled to be complete in Q1 2018.
- Acquired 25.1 acres in the Lehigh
Valley submarket of Pennsylvania to develop DCT Rockline Commerce
Center, a two-building, 336,000 square foot development.
Construction commenced in July and is scheduled to be complete in
Q1 2018.
- Acquired 34.8 acres in the Port
submarket of Houston to develop DCT PetroPort Industrial Park, a
253,000 square foot, two-building project.
- Acquired 12.9 acres in the DFW
submarket of Dallas to develop DCT Freeport West, Buildings II and
III. The landsite is adjacent to the recently stabilized DCT
Freeport West Building I and will add 194,000 square feet to the
project.
Since June 30:
- Executed a 227,000 square foot lease
for DCT North Satellite Distribution Center bringing the 549,000
square foot development, in the I-85 Northeast submarket of
Atlanta, to 83.0 percent leased.
- Executed a 20,000 square foot lease for
DCT Commerce Center Building C, bringing the 136,000 square foot
development, in the Airport West submarket of Miami, to 100 percent
leased.
- Acquired 14.6 acres in the
North Kent Valley submarket of Seattle to develop DCT Hudson
Distribution Center, a 288,000 square foot building.
Dispositions
Since DCT Industrial’s Q1 2017 Earnings Release, the Company
sold seven buildings totaling 1.3 million square feet. These
transactions generated total gross proceeds of $61.9 million
including DCT Industrial’s proportionate share of gross proceeds
for properties sold by an unconsolidated joint venture and have an
expected year-one weighted-average cash yield of 6.4 percent.
The table below summarizes dispositions since the Company's Q1
2017 Earnings Release:
Market Submarket Square Feet
Occupancy Closed Louisville, KY (3 buildings)1
Jefferson Riverport 609,000
100.0% June-17 Cincinnati, OH I-71 66,000
88.6% June-17 Phoenix, AZ (2 buildings) Southwest 558,000 100.0%
June-17 Northern California Tri-Valley
96,000 100.0% July-17 Total/Weighted
Average 1,329,000 99.4%
1 Unconsolidated properties in which DCT Industrial owned a 10
percent interest.
Capital Markets
DCT Industrial raised $49.3 million in net proceeds from the
sale of common stock through its “at the market” equity offering.
The Company issued approximately 957,000 shares at a
weighted-average price of $52.20 per share. The proceeds were used
to fund development and redevelopment and general corporate
activities.
Dividend
DCT Industrial’s Board of Directors declared a $0.31 per share
quarterly cash dividend payable on October 18, 2017 to stockholders
of record as of October 6, 2017.
Guidance
The Company raised and narrowed 2017 Net Earnings guidance to
between $0.84 and $0.90 per diluted share, up from $0.54 to $0.62.
Net Earnings guidance excludes any gain or loss related to
potential future dispositions.
The Company raised and narrowed 2017 FFO guidance, as adjusted,
to between $2.39 and $2.45 per diluted share, up from $2.36 to
$2.44 per diluted share. The Company’s FFO guidance excludes
impairment loss on land and potential non-cash interest expense
related to hedge ineffectiveness.
For additional details, assumptions and definitions related to
the Company’s 2017 guidance, please refer to page 10 in DCT
Industrial’s Second Quarter 2017 Supplemental Reporting
Package.
Conference Call
Information
DCT Industrial will host a conference call to discuss Q2 results
on Friday, August 4, 2017 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, November 3, 2017
and can be accessed by dialing (877) 344-7529 or (412) 317-0088 and
entering the passcode 10110102. 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 August 4,
2018.
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 additional 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, development, acquisition, leasing and management of
bulk-distribution and light-industrial properties in high-demand
distribution markets in the United States. DCT’s actively-managed
portfolio is strategically located near population centers and
well-positioned to take advantage of market dynamics. As of June
30, 2017, the Company owned interests in approximately 73.3 million
square feet of properties leased to approximately 860 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)
June 30, 2017 December 31, 2016 ASSETS
(unaudited) Land $ 1,098,291 $ 1,075,995 Buildings and improvements
3,206,380 3,202,293 Intangible lease assets 71,970 78,356
Construction in progress 134,819 72,829
Total
investment in properties 4,511,460 4,429,473 Less accumulated
depreciation and amortization (891,553 ) (839,773 )
Net
investment in properties 3,619,907 3,589,700 Investments in and
advances to unconsolidated joint ventures 85,055 95,606
Net investment in real estate 3,704,962 3,685,306
Cash and cash equivalents 17,229 10,286 Restricted cash 38,339
7,346
Straight-line rent and other receivables,
net of allowance for doubtful accounts of $345 and $379,
respectively
78,649 79,889 Other assets, net 21,524 25,315 Assets held for sale
6,246 —
Total assets $ 3,866,949 $
3,808,142
LIABILITIES AND EQUITY Liabilities:
Accounts payable and accrued expenses $ 95,604 $ 93,097
Distributions payable 30,032 29,622 Tenant prepaids and security
deposits 34,745 32,884 Other liabilities 37,426 37,403 Intangible
lease liabilities, net 19,863 21,421 Line of credit 133,000 75,000
Senior unsecured notes 1,328,122 1,351,969 Mortgage notes 163,608
201,959 Liabilities related to assets held for sale 190 —
Total liabilities 1,842,590 1,843,355
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 92,956,342 and 91,516,113 shares
issued and outstanding as of June 30, 2017 and December
31, 2016, respectively
930 915 Additional paid-in capital 2,946,235 2,884,806
Distributions in excess of earnings (1,006,485 ) (1,005,728 )
Accumulated other comprehensive loss (16,291 ) (17,944 )
Total
stockholders’ equity 1,924,389 1,862,049 Noncontrolling
interests 99,970 102,738
Total equity
2,024,359 1,964,787
Total liabilities and
equity $ 3,866,949 $ 3,808,142
DCT INDUSTRIAL TRUST INC. AND
SUBSIDIARIES
Consolidated Statements of
Operations
(unaudited, in thousands, except per
share information)
Three Months Ended June 30, Six Months Ended June
30, 2017 2016 2017
2016 REVENUES: Rental revenues $ 104,217 $
95,597 $ 209,641 $ 189,574 Institutional capital management and
other fees 304 305 776 698
Total
revenues 104,521 95,902 210,417 190,272
OPERATING EXPENSES: Rental expenses 9,226
8,986 18,688 19,035 Real estate taxes 15,529 15,054 32,295 29,655
Real estate related depreciation and amortization 41,447 39,901
83,052 79,971 General and administrative 7,821 7,358 15,013 13,620
Casualty (gain) loss — 162 (270 ) 162
Total
operating expenses 74,023 71,461 148,778
142,443
Operating income 30,498 24,441 61,639 47,829
OTHER INCOME (EXPENSE): Equity in earnings of
unconsolidated joint ventures, net 2,737 935 4,253 1,819 Gain on
dispositions of real estate interests 28,076 12,955 28,102 43,052
Interest expense (16,805 ) (15,635 ) (33,560 ) (32,057 ) Interest
and other income (expense) (7 ) 48 (12 ) 563 Impairment loss on
land (938 ) — (938 ) — Income tax expense and other taxes (69 )
(172 ) (203 ) (288 )
Consolidated net income of DCT Industrial
Trust Inc. 43,492 22,572 59,281 60,918 Net income attributable
to noncontrolling interests (1,858 ) (1,154 ) (2,688 ) (3,109 )
Net income attributable to common stockholders 41,634
21,418 56,593 57,809
Distributed and undistributed earnings
allocated to participating securities
(162 ) (106 ) (323 ) (334 )
Adjusted net income attributable to
common stockholders $ 41,472 $ 21,312 $ 56,270
$ 57,475
NET EARNINGS PER COMMON SHARE:
Basic $ 0.45 $ 0.24 $ 0.61 $ 0.65
Diluted $ 0.45 $ 0.24 $ 0.61 $ 0.64
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic
92,307 89,748 92,030 89,066 Diluted 92,429 90,184
92,156 89,490 Distributions declared per
common share $ 0.31 $ 0.29 $ 0.62 $ 0.58
Reconciliation of Net Income
Attributable to Common Stockholders to Funds from
Operations
(unaudited, in thousands, except per
share and unit data)
For the Three Months EndedJune
30,
For the Six Months EndedJune
30,
2017 2016 2017
2016 Reconciliation of net income attributable to
common stockholders to FFO: Net income attributable to common
stockholders $ 41,634 $ 21,418 $ 56,593 $ 57,809 Adjustments: Real
estate related depreciation and amortization 41,447 39,901 83,052
79,971 Equity in earnings of unconsolidated joint ventures, net
(2,737 ) (935 ) (4,253 ) (1,819 ) Equity in FFO of unconsolidated
joint ventures(1) 3,394 2,451 6,632 4,818 Gain on dispositions of
real estate interests (28,076 ) (12,955 ) (28,102 ) (43,052 )
Noncontrolling interest in the above adjustments (664 ) (1,411 )
(2,499 ) (2,097 ) FFO attributable to unitholders 2,095
2,182 4,349 4,443 FFO attributable to common
stockholders and unitholders – basic and diluted(2) 57,093
50,651 115,772 100,073 Adjustments: Impairment
loss on land 938 — 938 — Acquisition costs — 72 13 92 Hedge
ineffectiveness (non-cash) (24 ) 357 6 1,420
FFO, as adjusted, attributable to common
stockholders and unitholders – basic
and diluted
$ 58,007 $ 51,080 $ 116,729 $ 101,585
FFO per common share and unit – basic $ 0.59 $ 0.54
$ 1.20 $ 1.07 FFO per common share and unit –
diluted $ 0.59 $ 0.53 $ 1.20 $ 1.06
FFO, as adjusted, per common share and unit – basic $ 0.60
$ 0.54 $ 1.21 $ 1.08 FFO, as adjusted,
per common share and unit – diluted $ 0.60 $ 0.54 $
1.21 $ 1.08 FFO weighted average common shares
and units outstanding: Common shares for net earnings per share
92,307 89,748 92,030 89,066 Participating securities 520 592 494
550 Units 3,520 4,039 3,592 4,138
FFO weighted average common shares,
participating securities and units outstanding – basic
96,347 94,379 96,116 93,754 Dilutive common stock equivalents 122
436 126 424
FFO weighted average common shares,
participating securities and units outstanding – diluted
96,469 94,815 96,242 94,178 (1)
Equity in FFO of unconsolidated joint ventures is determined as our
share of FFO from each unconsolidated joint venture. See DCT
Industrial's second quarter 2017 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 2017 Low
High Guidance: Net earnings per common share –
diluted $ 0.84 $ 0.90 Adjustments: Gain on dispositions of real
estate interests (0.29 ) (0.29 ) Real estate related depreciation
and amortization(1) 1.81 1.81 Hedge ineffectiveness (non-cash) and
impairment loss on land 0.01 0.01
Noncontrolling interests in
adjustments
0.02 0.02 FFO, as adjusted, per common share and unit
– diluted(2) $ 2.39 $ 2.45 (1) Includes our
proportionate share of real estate depreciation and amortization
from unconsolidated joint ventures. (2)
The Company’s FFO guidance excludes
impairment loss on land and potential non-cash interest expense
related to hedge ineffectiveness.
For information related to our Fixed
Charge Coverage Ratio please see our Second Quarter 2017
Supplemental
The following table is a reconciliation
of our reported net income attributable to common stockholders to
our netoperating income for the three and six months ended
June 30, 2017 and 2016 (unaudited, in thousands):
For the Three MonthsEnded June
30,
For the Six MonthsEnded June
30,
2017 2016 2017
2016 Reconciliation of net income attributable to common
stockholders to NOI: Net income attributable to
common stockholders $ 41,634 $ 21,418 $ 56,593 $ 57,809 Net income
attributable to noncontrolling interests 1,858 1,154 2,688 3,109
Income tax expense and other taxes 69 172 203 288 Impairment loss
on land 938 — 938 — Interest and other (income) expense 7 (48 ) 12
(563 ) Interest expense 16,805 15,635 33,560 32,057 Equity in
earnings of unconsolidated joint ventures, net (2,737 ) (935 )
(4,253 ) (1,819 ) General and administrative expense 7,821 7,358
15,013 13,620 Real estate related depreciation and amortization
41,447 39,901 83,052 79,971 Gain on dispositions of real estate
interests (28,076 ) (12,955 ) (28,102 ) (43,052 ) Casualty (gain)
loss — 162 (270 ) 162 Institutional capital management and other
fees (304 ) (305 ) (776 ) (698 ) Total NOI $ 79,462 $
71,557 $ 158,658 $ 140,884
Quarterly Same-Store Portfolio
NOI: Total NOI $ 79,462 $ 71,557 Less NOI – non-same-store
properties (7,915 ) (3,206 ) Less revenue from lease terminations
(435 ) (22 ) Add early termination straight-line rent adjustment
117 22 NOI, excluding revenue from lease terminations
71,229 68,351 Less straight-line rents, net of related bad debt
expense (85 ) (4,803 ) Less amortization of above/(below) market
rents (581 ) (762 ) Cash NOI, excluding revenue from lease
terminations $ 70,563 $ 62,786
Annual
Same-Store Portfolio NOI: Total NOI $ 79,462 $ 71,557 $ 158,658
$ 140,884 Less NOI – non-same-store properties (12,100 ) (7,015 )
(23,573 ) (12,827 ) Less revenue from lease terminations (435 ) (22
) (936 ) (102 ) Add early termination straight-line rent adjustment
117 22 134 132 NOI, excluding revenue
from lease terminations 67,044 64,542 134,283 128,087 Less
straight-line rents, net of related bad debt expense 105 (2,901 )
(949 ) (6,481 ) Less amortization of above/(below) market rents
(535 ) (716 ) (1,131 ) (1,373 ) Cash NOI, excluding revenue from
lease terminations $ 66,614 $ 60,925 $ 132,203
$ 120,233
Financial Measures
Terms not otherwise defined below are as defined in our Second
Quarter 2017 Supplemental Reporting Package.
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 overall 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.
The Quarterly Same-Store Portfolio includes all consolidated
stabilized acquisitions acquired before April 1, 2016 and all
consolidated Value-Add Acquisitions, developments and
Redevelopments stabilized prior to April 1, 2016. Once a property
is included in the Quarterly Portfolio, it remains until it is
subsequently disposed or placed into redevelopment. We consider NOI
and Cash NOI from our Quarterly Same-Store Portfolio to be a useful
measure in evaluating our financial performance and to improve
comparability between periods by including only properties owned
for comparable periods.
The Annual Same-Store Portfolio includes all consolidated
stabilized acquisitions acquired before January 1, 2016 and all
consolidated Value-Add Acquisitions, developments and
Redevelopments stabilized prior to January 1, 2016. Once a property
is included in the Annual Same-Store Portfolio, it remains until it
is subsequently disposed or placed into redevelopment. We consider
NOI from our Annual Same-Store Portfolio to be a useful measure in
evaluating our financial performance and to improve comparability
between periods by including only properties owned for those
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 with the following
adjustments:
- Add real estate-related depreciation
and amortization;
- Subtract gains from dispositions of
real estate held for investment purposes;
- Add 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 for the preceding items to
derive DCT Industrial’s proportionate share of FFO of
unconsolidated joint ventures.
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, as adjusted, 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 or FFO, as adjusted, 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, as
adjusted, may not be comparable to other REITs’ FFO or FFO, as
adjusted, should be considered only as a supplement to net income
(loss) as a measure of DCT Industrial’s performance.
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/20170803006427/en/
DCT Industrial TrustMelissa Sachs,
303-597-2400investorrelations@dctindustrial.com
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