Duke Realty Corporation (NYSE: DRE), the largest domestic-only
logistics REIT, today reported results for the second quarter of
2020.
Jim Connor, Chairman and Chief Executive
Officer, said, “Even with the global pandemic continuing to
negatively impact many sectors of the economy, our modern and
well-located portfolio and high credit quality tenant base have
proven to be extremely resilient and performed better than we had
initially expected last quarter. Operational results for the
second quarter were outstanding and are best highlighted by strong
rent collections and rental rate growth along with a 100 basis
point increase in total portfolio occupancy from the first
quarter.
We had an excellent quarter from a leasing
standpoint, with total leasing volume of 7.6 million square
feet. We executed 1.9 million square feet of renewal leases
and either renewed or immediately re-leased 96 percent of our
second quarter lease expirations. Rental rate growth on
second generation leases signed during the quarter was 26.6 percent
on a net effective basis and 10.7 percent on a cash basis. We
continue to maintain a low risk profile with near term lease
rollover of only 3.0 percent of our total leases expiring for the
remainder of 2020 and only 9.0 percent of our total leases set to
expire in 2021.
Monthly rent collections are strong and the pace
of such collections has improved each month from the start of the
pandemic. As of now, 99.9 percent of second quarter rents,
and 99.9 percent of July rents, have either been collected or have
been deferred pursuant to executed agreements. The terms of
many of the short term deferral agreements that we've executed
required tenants to begin repaying deferred rents in July and we
collected 100 percent of those amounts.
After increasing straight line collectability
reserves in the first quarter for certain segments of our tenant
base that were more adversely affected by the pandemic, virtually
all of our tenants are operating in their spaces and paying their
rent on time. Bad debt expense for the second quarter was
only $435,000 and generally pertained to tenants leasing smaller
spaces."
Mark Denien, Executive Vice President and Chief
Financial Officer, stated, “In late June 2020, we took advantage of
extremely favorable pricing and issued $350 million of 10-year
unsecured notes at a coupon rate of 1.75 percent and an all-in
yield of 1.85 percent. The rate was the lowest ever by a REIT
for a ten-year unsecured note issuance and was among the lowest all
time ten-year rates among all corporate issuers. We used a
portion of the proceeds of these notes to extinguish, through an
any-and-all tender offer, $216 million of our $300 million 3.875
percent unsecured notes, which had a scheduled maturity in October
2022. These transactions reduced our overall average
borrowing rate and near term debt maturities.
When considering our strong balance sheet,
leverage metrics and cash flows from operations, we continue to be
in great shape and confident in our ability to finance operations
through 2020 and beyond. With only $281 million of estimated
remaining costs to complete our development pipeline we are well
positioned for future growth through development and select
acquisitions."
Quarterly Highlights
- A complete reconciliation, in
dollars and per share amounts, of net income to funds from
operations ("FFO"), as defined by NAREIT, as well as to Core FFO,
is included in the financial tables included in this release.
- Net income was $0.11 per diluted
share for the second quarter of 2020, compared to $0.20 per diluted
share for the second quarter of 2019. Net income per diluted
share for the second quarter of 2020 was lower than the second
quarter of 2019 due to a $15 million loss on early extinguishment
related to the tender offer executed during the quarter and no
buildings being sold during the quarter compared to $31 million in
gains on building sales in the second quarter of 2019.
- FFO, as defined by NAREIT, was
$0.33 per diluted share for the second quarter of 2020, compared to
$0.35 per diluted share for the second quarter of 2019. FFO
per diluted share, as defined by NAREIT, decreased from the second
quarter of 2019 due to the above-mentioned loss on debt
extinguishment.
- Core FFO was $0.38 per diluted
share for the second quarter of 2020, compared to $0.36 per diluted
share for the second quarter of 2019. Core FFO for the second
quarter of 2020 increased due to rent growth on new and renewal
leases, higher in-service occupancy and leasing of new
developments.
- Key indicators of the company's
operating performance were as follows: - The company's
stabilized in-service portfolio was 97.3 percent leased at June 30,
2020, compared to 97.2 percent leased at March 31, 2020 and 98.2
percent leased at June 30, 2019. - The company's total
in-service portfolio was 96.7 percent leased at June 30, 2020
compared to 96.5 percent leased at March 31, 2020 and 95.4 percent
leased at June 30, 2019. - The company's total
portfolio, including properties under development, was 95.3 percent
leased at June 30, 2020 compared to 94.3 percent leased at March
31, 2020 and 93.4 percent leased at June 30, 2019. The
significant increase in total portfolio occupancy was due to
leasing speculative space in both our in-service and under
development portfolios. - Tenant retention was 75.1
percent for the three months ended June 30, 2020 and 95.9 percent
after considering immediate backfills. - Same-property
net operating income growth was 5.0 percent and 5.8 percent,
respectively, for the three and six month periods ended June 30,
2020 compared to the same periods in 2019. Same-property net
operating growth was positively impacted by increased occupancy and
rental rate growth as well as the expiration of free rent
periods. - Total leasing activity was 7.6 million
square feet for the quarter, which included 1.4 million square feet
of short term leases. - Overall cash and annualized net
effective rent growth on new and renewal leases was 10.7 percent
and 26.6 percent, respectively, for the quarter. - The
company collected or has executed deferral agreements for 99.9
percent of second quarter rents and 99.9 percent of July
rents. Further detail on collections and deferral agreements
is shown on pages 16 and 17 of the company's supplemental
information located in the Investor Relations section of the
company's website.
- Capital transactions
included: - Issuance of $350 million of unsecured notes
bearing interest at an effective rate of 1.85 percent and maturing
in July 2030; - Extinguished $216 million of unsecured
notes that bore interest at a 3.93 percent effective rate and were
scheduled to mature in October 2022 through an any and all tender
offer; - Issuance of 2 million shares, generating $71
million of net proceeds, under the company's ATM program at an
average price of $36.35 per share.
Real Estate Investment Activity
Mr. Connor further stated, “We finished the
quarter with a 6.7 million square foot development pipeline
totaling $846 million in expected costs, which was 65 percent
leased. Projects scheduled to be completed in the second half
of 2020 are nearly 96 percent leased and will drive immediate
earnings growth when placed in service. Beyond these 2020
deliveries, we have four speculative development projects scheduled
to be completed in 2021, which are all located in coastal tier one
markets where demand is strong.
As we communicated last quarter, we did not
start any new developments during the quarter, maintaining our
temporary halt on speculative developments. However, we are
working with a strong list of prospective tenants and expect
further build-to-suit developments to be started in the second half
of the year. Also, to the extent economic conditions justify,
we could potentially resume modest speculative development activity
later in the year in a few markets."
Development
Eight new consolidated projects, and one
expansion to an existing project, totaling 3.2 million square feet
were placed in service during the quarter. These projects
were 82 percent leased in total and included a 100 percent leased,
one million square foot project in Southern California, a 100
percent leased, 616,000 square foot build-to-suit project in
Eastern Pennsylvania and a 100 percent leased, 499,000 square foot
project in Atlanta.
Distributions Declared
The company's board of directors declared a
quarterly cash distribution on its common stock of $0.235 per
share, or $0.94 per share on an annualized basis. The second
quarter dividend will be payable on August 31, 2020 to shareholders
of record on August 14, 2020.
2020 Earnings Guidance
A reconciliation of the company's guidance for
diluted net income per common share to FFO, as defined by NAREIT,
and to Core FFO is included in the financial tables to this
release. The company issued revised guidance for net income of
$0.63 to $0.87 per diluted share, compared to the previous range of
$0.54 to $0.83 per diluted share. The company issued revised
guidance for FFO, as defined by NAREIT, of $1.35 to $1.43 per
diluted share, compared to the previous range of $1.32 to $1.44 per
diluted share. The Company also issued revised guidance for
Core FFO of $1.48 to $1.54 per diluted share, compared to the
previous range of $1.41 to $1.51 per diluted share.
Commenting on the company's revised 2020
guidance, Mr. Connor stated, "Although economic conditions continue
to be unpredictable as the result of the pandemic and the pace of
the recovery is uneven across different sectors of the economy, our
operational performance, especially our very strong rent
collections to date, has resulted in a more optimistic outlook for
2020 earnings than when we last updated our guidance in April.
This mid-point of the revised guidance for Core
FFO includes an estimate of nearly $9 million, or $0.02 per diluted
share, in bad debt charges or lost rent from tenant defaults, which
includes actual year-to-date bad debt expense of $5.9
million. This represents a decrease of approximately $8
million from the over $16 million, or $0.04 per diluted share, of
bad debt expense we estimated when we updated our guidance in
April. The mid-point of our revised guidance also includes an
increase of $0.01 per diluted share from improved leasing
assumptions compared to our April guidance.
Driven largely by the same factors as Core FFO,
the guidance for the growth in adjusted funds from operations
("AFFO"), on a share adjusted basis, has been revised to between
3.1 percent and 7.7 percent, compared to the previous range of 0.0
percent to 6.2 percent.
Our range of guidance for the average percentage
leased of our stabilized in-service portfolio has been revised to
between 96.5 percent and 97.9 percent, compared to the previous
range of 95.0 percent to 97.0 percent. Our range of guidance
for the average percentage leased of our total in-service portfolio
has been revised to between 96 percent and 97.4 percent, compared
to the previous range of 94.4 percent to 96.4 percent. The
increased guidance is the result of better tenant demand and the
expectation of fewer tenant defaults compared to our previous
guidance.
These factors, along with an expectation for
healthy rental rate growth on leases executed in the second half of
the year, resulted in revised guidance for growth in same-property
net operating income to between 3.5 percent and 4.5 percent,
compared to the previous range of 1.75 percent to 3.25
percent.
We will continue to focus on build-to-suit
development opportunities and we have a good build-to-suit prospect
list for the remainder of 2020. If justified by economic
conditions, we may also resume speculative development in certain
markets in the second half of the year. Our revised guidance
for 2020 development starts is between $350 million and $550
million, compared to the previous range of between $275 million and
$425 million."
Other guidance changes are as follows:
- Dispositions of properties in a range of $200 million to $400
million, compared to the previous range of between $125 million and
$250 million.
- Acquisitions of properties ranging between $50 million and $250
million, compared to the previous range of up to $100 million.
More specific assumptions and components of the
company's 2020 guidance will be available by 6:00 p.m. Eastern Time
today through the Investor Relations section of the company's
website. A number of factors could limit our ability to
deliver results in line with our assumptions, such as the impact of
COVID-19 on the economy, the supply and demand of industrial real
estate, the ability of our tenants to continue paying rent, our
ability to continue our development activity, the availability and
terms of financing to us or potential buyers of our real estate,
and the timing and yield for dispositions and acquisitions.
There can be no assurance that the company can achieve such
results. Except as required, the company undertakes no duty
to update forward-looking statements.
FFO and AFFO Reporting
Definitions
FFO: FFO is a non-GAAP
performance measure computed in accordance with standards
established by the National Association of Real Estate Investment
Trusts (“NAREIT”). It is calculated as net income attributable to
common shareholders computed in accordance with generally accepted
accounting principles (“GAAP"), excluding depreciation and
amortization related to real estate, gains and losses on sales of
real estate assets (including real estate assets incidental to our
business) and related taxes, gains and losses from change in
control, impairment charges related to real estate assets
(including real estate assets incidental to our business) and
similar adjustments for unconsolidated joint ventures and partially
owned consolidated entities. We believe FFO to be most
directly comparable to net income attributable to common
shareholders as defined by GAAP. FFO does not represent a
measure of liquidity, nor is it indicative of funds available for
our cash needs, including our ability to make cash distributions to
shareholders.
Core FFO: Core FFO is computed
as FFO adjusted for certain items that are generally non-cash in
nature and that can create significant earnings volatility and do
not directly relate to our core business operations. The
adjustments include gains or losses on debt transactions, gains or
losses from involuntary conversion from weather events or natural
disasters, promote income, severance and other charges related to
major overhead restructuring activities and the expense impact of
costs attributable to successful leasing activities. Although
our calculation of Core FFO differs from NAREIT’s definition of FFO
and may not be comparable to that of other REITs and real estate
companies, we believe it provides a meaningful supplemental measure
of our operating performance.
AFFO: AFFO is defined by the
company as the Core FFO (as defined above), less recurring building
improvements and total second generation capital expenditures (the
leasing of vacant space that had previously been under lease by the
company is referred to as second generation lease activity) related
to leases commencing during the reporting period, and adjusted for
certain non-cash items including straight line rental income and
expense, non-cash components of interest expense including interest
rate hedge amortization, stock compensation expense and after
similar adjustments for unconsolidated partnerships and joint
ventures.
Same-Property Performance
The company includes same-property net operating
income growth as a property-level supplemental measure of
performance. The company utilizes same-property net operating
income growth as a supplemental measure to evaluate property-level
performance, and jointly-controlled properties are included at the
company's ownership percentage.
A reconciliation of income from continuing
operations before income taxes to same-property net operating
income is included in the financial tables to this release. A
description of the properties that are excluded from the company’s
same-property net operating income measure is included on page 18
of its June 30, 2020 supplemental information.
About Duke Realty
Corporation
Duke Realty Corporation owns and operates
approximately 156 million rentable square feet of industrial assets
in 20 major logistics markets. Duke Realty Corporation is publicly
traded on the NYSE under the symbol DRE and is a member of the
S&P 500 Index. More information about Duke Realty Corporation
is available at www.dukerealty.com.
Second Quarter Earnings Call and Supplemental
Information
Duke Realty Corporation is hosting a conference
call tomorrow, July 30, 2020, at 3:00 p.m. ET to discuss its second
quarter operating results. All investors and other interested
parties are invited to listen to the call. Access is available
through the Investor Relations section of the company's
website.
A copy of the company's supplemental information
will be available by 6:00 p.m. ET today through the Investor
Relations section of the company's website.
Cautionary Notice Regarding Forward-Looking
Statements
This news release may contain forward-looking
statements within the meaning of the federal securities laws.
All statements, other than statements of historical facts,
including, among others, statements regarding the company’s future
financial position or results, future dividends, and future
performance, are forward-looking statements. Those statements
include statements regarding the intent, belief, or current
expectations of the company, members of its management team, as
well as the assumptions on which such statements are based, and
generally are identified by the use of words such as "may," "will,"
"seeks," "anticipates," "believes," "estimates," "expects,"
"plans," "intends," "should," or similar expressions although not
all forward looking statements may contain such words.
Forward-looking statements are not guarantees of future performance
and involve risks and uncertainties that actual results may differ
materially from those contemplated by such forward-looking
statements. Many of these factors are beyond the company’s
abilities to control or predict. Such factors include, but are not
limited to, (i) general adverse economic and local real estate
conditions; (ii) the inability of major tenants to continue paying
their rent obligations due to bankruptcy, insolvency or a general
downturn in their business; (iii) financing risks, such as the
inability to obtain equity, debt or other sources of financing or
refinancing on favorable terms, if at all; (iv) the company’s
ability to raise capital by selling its assets; (v) changes in
governmental laws and regulations; (vi) the level and volatility of
interest rates and foreign currency exchange rates; (vii) valuation
of joint venture investments; (viii) valuation of marketable
securities and other investments; (ix) valuation of real estate;
(x) increases in operating costs; (xi) changes in the dividend
policy for the company’s common stock; (xii) the reduction in the
company’s income in the event of multiple lease terminations by
tenants; (xiii) impairment charges, (xiv) the effects of
geopolitical instability and risks such as terrorist attacks and
trade wars; (xv) the effects of natural disasters, including the
current pandemic caused by the COVID-19 outbreak, as well as
floods, droughts, wind, tornadoes and hurricanes; and (xvi) the
effect of any damage to our reputation resulting from developments
relating to any of items (i) – (xv). The company refers you to the
section entitled “Risk Factors” contained in the company's Annual
Report on Form 10-K for the year ended December 31, 2019.
Additional information concerning factors that could cause actual
results to differ materially from those forward-looking statements
is contained from time to time in the company's filings with the
Securities and Exchange Commission. Copies of each filing may be
obtained from the company or the Securities and Exchange
Commission.
The risks included here are not exhaustive and
undue reliance should not be placed on any forward-looking
statements, which are based on current expectations. All written
and oral forward-looking statements attributable to the company,
its management, or persons acting on their behalf are qualified in
their entirety by these cautionary statements. Further,
forward-looking statements speak only as of the date they are made,
and the company undertakes no obligation to update or revise
forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating
results over time unless otherwise required by law.
Contact Information:
Investors:Ron Hubbard317.808.6060
Media:Helen McCarthy317.708.8010
|
Duke Realty
Corporation and Subsidiaries |
Consolidated
Statement of Operations |
(Unaudited and in
thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
Revenues: |
|
|
|
|
|
|
|
Rental and related revenue |
|
$ |
226,374 |
|
$ |
213,107 |
|
|
$ |
445,129 |
|
$ |
423,072 |
|
|
General contractor and service fee revenue |
|
|
12,137 |
|
|
23,919 |
|
|
|
19,751 |
|
|
78,883 |
|
|
|
|
|
238,511 |
|
|
237,026 |
|
|
|
464,880 |
|
|
501,955 |
|
Expenses: |
|
|
|
|
|
|
|
Rental expenses |
|
|
17,557 |
|
|
17,597 |
|
|
|
36,400 |
|
|
38,265 |
|
|
Real estate taxes |
|
|
36,763 |
|
|
32,375 |
|
|
|
73,490 |
|
|
64,817 |
|
|
General contractor and other services expenses |
|
|
10,406 |
|
|
23,189 |
|
|
|
16,974 |
|
|
75,775 |
|
|
Depreciation and amortization |
|
|
86,704 |
|
|
83,004 |
|
|
|
172,063 |
|
|
158,996 |
|
|
|
|
|
151,430 |
|
|
156,165 |
|
|
|
298,927 |
|
|
337,853 |
|
Other operating activities: |
|
|
|
|
|
|
|
Equity in
earnings of unconsolidated joint ventures |
|
|
2,396 |
|
|
4,143 |
|
|
|
4,935 |
|
|
8,858 |
|
|
Gain on sale
of properties |
|
|
- |
|
|
30,592 |
|
|
|
8,937 |
|
|
30,429 |
|
|
Gain on land
sales |
|
|
6,070 |
|
|
1,950 |
|
|
|
6,205 |
|
|
2,700 |
|
|
Other
operating expenses |
|
|
(1,546 |
) |
|
(1,518 |
) |
|
|
(2,658 |
) |
|
(3,641 |
) |
|
Impairment
charges |
|
|
- |
|
|
- |
|
|
|
(5,626 |
) |
|
- |
|
|
Non-incremental costs related to successful leases |
|
|
(4,034 |
) |
|
(3,447 |
) |
|
|
(6,559 |
) |
|
(5,603 |
) |
|
General and
administrative expenses |
|
|
(13,606 |
) |
|
(13,420 |
) |
|
|
(35,369 |
) |
|
(35,403 |
) |
|
|
|
|
(10,720 |
) |
|
18,300 |
|
|
|
(30,135 |
) |
|
(2,660 |
) |
|
|
|
|
|
|
|
|
|
Operating income |
|
76,361 |
|
|
99,161 |
|
|
|
135,818 |
|
|
161,442 |
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
Interest and
other income, net |
|
|
216 |
|
|
2,534 |
|
|
|
1,611 |
|
|
5,292 |
|
|
Interest
expense |
|
|
(22,841 |
) |
|
(23,510 |
) |
|
|
(46,335 |
) |
|
(45,642 |
) |
|
Loss on debt
extinguishment |
|
|
(14,972 |
) |
|
- |
|
|
|
(32,778 |
) |
|
(13 |
) |
|
Gain on
involuntary conversion |
|
|
1,283 |
|
|
- |
|
|
|
1,283 |
|
|
2,259 |
|
Income from continuing operations, before income taxes |
|
|
40,047 |
|
|
78,185 |
|
|
|
59,599 |
|
|
123,338 |
|
|
Income tax
benefit (expense) |
|
|
150 |
|
|
(6,616 |
) |
|
|
210 |
|
|
(7,001 |
) |
|
Income from continuing operations |
|
40,197 |
|
|
71,569 |
|
|
|
59,809 |
|
|
116,337 |
|
|
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
Gain on sale
of properties |
|
|
23 |
|
|
99 |
|
|
|
71 |
|
|
254 |
|
|
Income from discontinued operations |
|
23 |
|
|
99 |
|
|
|
71 |
|
|
254 |
|
|
|
|
|
|
|
|
|
Net income |
|
|
40,220 |
|
|
71,668 |
|
|
|
59,880 |
|
|
116,591 |
|
Net income attributable to noncontrolling interests |
|
|
(400 |
) |
|
(615 |
) |
|
|
(604 |
) |
|
(987 |
) |
|
Net income attributable to common shareholders |
$ |
39,820 |
|
$ |
71,053 |
|
|
$ |
59,276 |
|
$ |
115,604 |
|
|
|
|
|
|
|
|
|
Basic net income per common share: |
|
|
|
|
|
|
|
Continuing operations attributable to common shareholders |
|
$ |
0.11 |
|
$ |
0.20 |
|
|
$ |
0.16 |
|
$ |
0.32 |
|
Diluted net income per common share: |
|
|
|
|
|
|
|
Continuing operations attributable to common shareholders |
|
$ |
0.11 |
|
$ |
0.20 |
|
|
$ |
0.16 |
|
$ |
0.32 |
|
|
|
|
|
|
|
|
|
|
Duke Realty
Corporation and Subsidiaries |
|
Consolidated
Balance Sheets |
|
(Unaudited and in
thousands) |
|
|
|
|
|
|
|
|
|
|
June
30, |
|
December
31, |
|
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
Assets |
|
|
|
|
|
Real estate investments: |
|
|
|
|
|
|
Real estate
assets |
|
$ |
8,293,907 |
|
|
$ |
7,993,377 |
|
|
|
Construction
in progress |
|
|
584,138 |
|
|
|
550,926 |
|
|
|
Investments
in and advances to unconsolidated joint ventures |
|
|
133,795 |
|
|
|
133,074 |
|
|
|
Undeveloped
land |
|
|
350,226 |
|
|
|
254,537 |
|
|
|
|
|
|
9,362,066 |
|
|
|
8,931,914 |
|
|
|
Accumulated
depreciation |
|
|
(1,590,546 |
) |
|
|
(1,480,461 |
) |
|
|
|
|
|
|
|
|
|
Net real estate investments |
|
7,771,520 |
|
|
|
7,451,453 |
|
|
|
|
|
|
|
|
|
Real estate investments and other assets held-for-sale |
|
|
- |
|
|
|
18,463 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
29,870 |
|
|
|
110,891 |
|
|
Accounts receivable |
|
|
16,869 |
|
|
|
20,349 |
|
|
Straight-line rents receivable |
|
|
138,251 |
|
|
|
129,344 |
|
|
Receivables on construction contracts, including retentions |
|
|
53,769 |
|
|
|
25,607 |
|
|
Deferred leasing and other costs, net |
|
|
314,715 |
|
|
|
320,444 |
|
|
Restricted cash held in escrow for like-kind exchange |
|
|
- |
|
|
|
1,673 |
|
|
Notes receivable from property sales |
|
|
- |
|
|
|
110,000 |
|
|
Other escrow deposits and other assets |
|
|
242,015 |
|
|
|
232,338 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
8,567,009 |
|
|
$ |
8,420,562 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
Indebtedness: |
|
|
|
|
|
|
Secured
debt, net of deferred financing costs |
|
$ |
50,274 |
|
|
$ |
34,023 |
|
|
|
Unsecured
debt, net of deferred financing costs |
|
|
3,024,912 |
|
|
|
2,880,742 |
|
|
|
|
|
|
3,075,186 |
|
|
|
2,914,765 |
|
|
|
|
|
|
|
|
Liabilities related to real estate investments
held-for-sale |
|
|
- |
|
|
|
887 |
|
|
|
|
|
|
|
|
|
Construction payables and amounts due subcontractors, including
retentions |
|
|
111,844 |
|
|
|
68,840 |
|
|
Accrued real estate taxes |
|
|
79,204 |
|
|
|
69,042 |
|
|
Accrued interest |
|
|
15,450 |
|
|
|
14,181 |
|
|
Other liabilities |
|
|
181,978 |
|
|
|
223,680 |
|
|
Tenant security deposits and prepaid rents |
|
|
45,931 |
|
|
|
48,907 |
|
|
|
Total liabilities |
|
3,509,593 |
|
|
|
3,340,302 |
|
|
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares |
|
|
3,704 |
|
|
|
3,680 |
|
|
|
Additional
paid-in capital |
|
|
5,607,897 |
|
|
|
5,525,463 |
|
|
|
Accumulated
other comprehensive loss |
|
|
(33,346 |
) |
|
|
(35,036 |
) |
|
|
Distributions in excess of net income |
|
|
(590,435 |
) |
|
|
(475,992 |
) |
|
|
Total shareholders' equity |
|
4,987,820 |
|
|
|
5,018,115 |
|
|
|
|
|
|
|
|
|
Noncontrolling interests |
|
|
69,596 |
|
|
|
62,145 |
|
|
|
Total equity |
|
|
5,057,416 |
|
|
|
5,080,260 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
8,567,009 |
|
|
$ |
8,420,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Duke Realty
Corporation and Subsidiaries |
|
Summary of
EPS, FFO and AFFO |
|
Three Months
Ended June 30, |
|
(Unaudited and in
thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
2019 |
|
|
|
Wtd. |
|
|
Wtd. |
|
|
|
|
Avg. |
Per |
|
Avg. |
Per |
|
|
Amount |
Shares |
Share |
Amount |
Shares |
Share |
Net income attributable to common
shareholders |
$ |
39,820 |
|
|
|
$ |
71,053 |
|
|
|
Less dividends on participating securities |
|
(356 |
) |
|
|
|
(388 |
) |
|
|
Net income per common share-basic |
|
39,464 |
|
368,836 |
$ |
0.11 |
|
70,665 |
|
359,681 |
$ |
0.20 |
Add back: |
|
|
|
|
|
|
|
Noncontrolling interest in earnings of unitholders |
|
356 |
|
3,331 |
|
|
621 |
|
3,145 |
|
|
Other
potentially dilutive securities |
|
- |
|
406 |
|
|
- |
|
100 |
|
Net income attributable to common
shareholders-diluted |
$ |
39,820 |
|
372,573 |
$ |
0.11 |
|
71,286 |
|
362,926 |
$ |
0.20 |
Reconciliation to FFO |
|
|
|
|
|
|
Net income attributable to common
shareholders |
$ |
39,820 |
|
368,836 |
|
$ |
71,053 |
|
359,681 |
|
Adjustments: |
|
|
|
|
|
|
|
Depreciation
and amortization |
|
86,704 |
|
|
|
|
83,004 |
|
|
|
|
Depreciation, amortization and other - unconsolidated joint
ventures |
|
2,306 |
|
|
|
|
2,417 |
|
|
|
|
Gains on
sales of properties |
|
(23 |
) |
|
|
|
(30,691 |
) |
|
|
|
Gains on
land sales |
|
(6,070 |
) |
|
|
|
(1,950 |
) |
|
|
|
Income tax
(benefit) expense triggered by depreciable property sales |
|
(150 |
) |
|
|
|
6,616 |
|
|
|
|
Gains on
sales of real estate assets - unconsolidated joint ventures |
|
334 |
|
|
|
|
(2,028 |
) |
|
|
|
Noncontrolling interest share of adjustments |
|
(744 |
) |
|
|
|
(496 |
) |
|
|
NAREIT FFO attributable to common shareholders -
basic |
|
122,177 |
|
368,836 |
$ |
0.33 |
|
127,925 |
|
359,681 |
$ |
0.36 |
|
Noncontrolling interest in income of unitholders |
|
356 |
|
3,331 |
|
|
621 |
|
3,145 |
|
|
Noncontrolling interest share of adjustments |
|
744 |
|
|
|
|
496 |
|
|
|
|
Other
potentially dilutive securities |
|
1,761 |
|
|
1,763 |
|
NAREIT FFO attributable to common shareholders -
diluted |
$ |
123,277 |
|
373,928 |
$ |
0.33 |
$ |
129,042 |
|
364,589 |
$ |
0.35 |
|
Gain on
involuntary conversion |
|
(1,283 |
) |
|
|
|
- |
|
|
|
|
Loss on debt
extinguishment |
|
14,972 |
|
|
|
|
- |
|
|
|
|
Non-incremental costs related to successful leases |
|
4,034 |
|
|
|
|
3,447 |
|
|
|
|
Overhead
restructuring charges |
|
2,063 |
|
|
|
|
- |
|
|
|
Core FFO attributable to common shareholders -
diluted |
$ |
143,063 |
|
373,928 |
$ |
0.38 |
$ |
132,489 |
|
364,589 |
$ |
0.36 |
AFFO |
|
|
|
|
|
|
Core FFO - diluted |
$ |
143,063 |
|
373,928 |
$ |
0.38 |
$ |
132,489 |
|
364,589 |
$ |
0.36 |
Adjustments: |
|
|
|
|
|
|
|
Straight-line rental income and expense |
|
(6,314 |
) |
|
|
|
(4,852 |
) |
|
|
|
Amortization
of above/below market rents and concessions |
|
(1,540 |
) |
|
|
|
(1,542 |
) |
|
|
|
Stock based
compensation expense |
|
5,387 |
|
|
|
|
4,242 |
|
|
|
|
Noncash
interest expense |
|
2,237 |
|
|
|
|
1,538 |
|
|
|
|
Second
generation concessions |
|
(86 |
) |
|
|
|
(34 |
) |
|
|
|
Second
generation tenant improvements |
|
(3,039 |
) |
|
|
|
(2,855 |
) |
|
|
|
Second
generation leasing costs |
|
(4,572 |
) |
|
|
|
(5,304 |
) |
|
|
|
Building
improvements |
|
(481 |
) |
|
|
|
(1,508 |
) |
|
|
AFFO - diluted |
$ |
134,655 |
|
373,928 |
|
$ |
122,174 |
|
364,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Duke Realty
Corporation and Subsidiaries |
|
Summary of
EPS, FFO and AFFO |
|
Six Months
Ended June 30, |
|
(Unaudited and in
thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
2019 |
|
|
|
Wtd. |
|
|
Wtd. |
|
|
|
|
Avg. |
Per |
|
Avg. |
Per |
|
|
Amount |
Shares |
Share |
Amount |
Shares |
Share |
Net income attributable to common
shareholders |
$ |
59,276 |
|
|
|
$ |
115,604 |
|
|
|
Less dividends on participating securities |
|
(712 |
) |
|
|
|
(777 |
) |
|
|
Net income per common share-basic |
|
58,564 |
|
368,513 |
$ |
0.16 |
|
114,827 |
|
359,412 |
$ |
0.32 |
Add back: |
|
|
|
|
|
|
|
Noncontrolling interest in earnings of unitholders |
|
526 |
|
3,277 |
|
|
1,003 |
|
3,105 |
|
|
Other
potentially dilutive securities |
|
- |
|
407 |
|
|
- |
|
98 |
|
Net income attributable to common
shareholders-diluted |
$ |
59,090 |
|
372,197 |
$ |
0.16 |
$ |
115,830 |
|
362,615 |
$ |
0.32 |
Reconciliation to FFO |
|
|
|
|
|
|
Net income attributable to common
shareholders |
$ |
59,276 |
|
368,513 |
|
$ |
115,604 |
|
359,412 |
|
Adjustments: |
|
|
|
|
|
|
|
Depreciation
and amortization |
|
172,063 |
|
|
|
|
158,996 |
|
|
|
|
Depreciation, amortization and other - unconsolidated joint
ventures |
|
4,500 |
|
|
|
|
4,770 |
|
|
|
|
Gains on
sales of properties |
|
(9,008 |
) |
|
|
|
(30,683 |
) |
|
|
|
Gains on
land sales |
|
(6,205 |
) |
|
|
|
(2,700 |
) |
|
|
|
Income tax
(benefit) expense triggered by depreciable property sales |
|
(210 |
) |
|
|
|
7,001 |
|
|
|
|
Impairment
Charges |
|
5,626 |
|
|
|
|
- |
|
|
|
|
Gains on
sales of real estate assets - unconsolidated joint ventures |
|
308 |
|
|
|
|
(4,527 |
) |
|
|
|
Noncontrolling interest share of adjustments |
|
(1,474 |
) |
|
|
|
(1,138 |
) |
|
|
NAREIT FFO attributable to common shareholders -
basic |
|
224,876 |
|
368,513 |
$ |
0.61 |
|
247,323 |
|
359,412 |
$ |
0.69 |
|
Noncontrolling interest in income of unitholders |
|
526 |
|
3,277 |
|
|
1,003 |
|
3,105 |
|
|
Noncontrolling interest share of adjustments |
|
1,474 |
|
|
|
|
1,138 |
|
|
|
|
Other
potentially dilutive securities |
|
1,759 |
|
|
1,753 |
|
NAREIT FFO attributable to common shareholders -
diluted |
$ |
226,876 |
|
373,549 |
$ |
0.61 |
$ |
249,464 |
|
364,270 |
$ |
0.68 |
|
Gain on
involuntary conversion |
|
(1,283 |
) |
|
|
|
(2,259 |
) |
|
|
|
Loss on debt
extinguishment |
|
32,778 |
|
|
|
|
13 |
|
|
|
|
Non-incremental costs related to successful leases |
|
6,559 |
|
|
|
|
5,603 |
|
|
|
|
Overhead
restructuring charges |
|
2,063 |
|
|
|
|
- |
|
|
|
Core FFO attributable to common shareholders -
diluted |
$ |
266,993 |
|
373,549 |
$ |
0.71 |
$ |
252,821 |
|
364,270 |
$ |
0.69 |
AFFO |
|
|
|
|
|
|
Core FFO - diluted |
$ |
266,993 |
|
373,549 |
$ |
0.71 |
$ |
252,821 |
|
364,270 |
$ |
0.69 |
Adjustments: |
|
|
|
|
|
|
|
Straight-line rental income and expense |
|
(8,138 |
) |
|
|
|
(10,784 |
) |
|
|
|
Amortization
of above/below market rents and concessions |
|
(4,098 |
) |
|
|
|
(2,804 |
) |
|
|
|
Stock based
compensation expense |
|
17,599 |
|
|
|
|
15,213 |
|
|
|
|
Noncash
interest expense |
|
4,433 |
|
|
|
|
3,064 |
|
|
|
|
Second
generation concessions |
|
(336 |
) |
|
|
|
(34 |
) |
|
|
|
Second
generation tenant improvements |
|
(6,388 |
) |
|
|
|
(5,079 |
) |
|
|
|
Second
generation leasing commissions |
|
(8,503 |
) |
|
|
|
(8,945 |
) |
|
|
|
Building
improvements |
|
(893 |
) |
|
|
|
(2,544 |
) |
|
|
AFFO - diluted |
$ |
260,669 |
|
373,549 |
|
$ |
240,908 |
|
364,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Duke Realty
Corporation and Subsidiaries |
Reconciliation of Same Property Net Operating Income
Growth |
(Unaudited and in
thousands) |
|
|
|
|
|
Three Months
Ended |
|
June 30,
2020 |
June 30,
2019 |
|
|
|
|
|
Income from continuing operations before income taxes |
$ |
40,047 |
|
$ |
78,185 |
|
|
Share of
same property NOI from unconsolidated joint ventures |
|
4,677 |
|
|
4,542 |
|
|
Income and
expense items not allocated to segments |
|
133,344 |
|
|
85,092 |
|
|
Earnings
from service operations |
|
(1,731 |
) |
|
(730 |
) |
|
Properties
not included and other adjustments |
|
(22,558 |
) |
|
(20,621 |
) |
|
Same
property NOI - Cash Basis |
$ |
153,779 |
|
$ |
146,468 |
|
|
|
|
|
|
Percent
Change |
|
5.0% |
|
|
|
|
|
|
|
|
Six Months
Ended |
|
June 30,
2020 |
June 30,
2019 |
|
|
|
|
|
Income from
continuing operations before income taxes |
$ |
59,599 |
|
$ |
123,338 |
|
|
Share of
same property NOI from unconsolidated joint ventures |
|
9,319 |
|
|
8,986 |
|
|
Income and
expense items not allocated to segments |
|
278,090 |
|
|
199,097 |
|
|
Earnings
from service operations |
|
(2,777 |
) |
|
(3,108 |
) |
|
Properties
not included and other adjustments |
|
(38,422 |
) |
|
(39,273 |
) |
|
Same
property NOI - Cash Basis |
$ |
305,809 |
|
$ |
289,040 |
|
|
|
|
|
|
Percent
Change |
|
5.8% |
|
|
|
|
|
|
|
|
|
|
|
Duke Realty
Corporation and Subsidiaries |
Reconciliation of 2020 FFO Per Diluted Share
Guidance |
(Unaudited ) |
|
|
|
|
|
Pessimistic |
Optimistic |
|
Net income
attributable to common shareholders - diluted |
$ |
0.63 |
|
$ |
0.87 |
|
|
Depreciation |
|
0.96 |
|
|
0.92 |
|
|
Gains on
land and property sales, net of impairment charges |
|
(0.26 |
) |
|
(0.38 |
) |
|
Share of
joint venture adjustments |
|
0.02 |
|
|
0.02 |
|
|
NAREIT FFO
attributable to common shareholders - diluted |
$ |
1.35 |
|
$ |
1.43 |
|
|
Loss on debt
extinguishment |
|
0.09 |
|
|
0.09 |
|
|
Non-incremental costs related to successful leases |
|
0.04 |
|
|
0.02 |
|
|
Other
reconciling items |
|
- |
|
|
- |
|
|
Core FFO
attributable to common shareholders - diluted |
$ |
1.48 |
|
$ |
1.54 |
|
|
|
|
|
|
Duke Realty (NYSE:DRE)
Historical Stock Chart
From Aug 2024 to Sep 2024
Duke Realty (NYSE:DRE)
Historical Stock Chart
From Sep 2023 to Sep 2024