Duke Realty Corporation (NYSE: DRE), the largest domestic-only
logistics REIT, today reported results for the third quarter of
2020. Jim Connor, Chairman and Chief
Executive Officer, said, “We delivered excellent operating results
for the third quarter of 2020, putting ourselves on pace to finish
the year at levels exceeding our initial, pre-pandemic, 2020
financial performance expectations. Leases executed during the
quarter totaled 7.3 million square feet and drove the highest total
and in-service portfolio occupancy levels since early 2017. Second
generation leases executed during the quarter resulted in rental
rate growth of 32.1 percent on a net effective basis and 17.2
percent on a cash basis. Growth in same property net operating
income was very strong at 5.0 percent and 5.5 percent for the three
and nine months ended September 30, 2020, respectively, compared to
the corresponding periods in 2019.
“Monthly rent collections are strong and the
pace of such collections has improved each month from the start of
the pandemic. Thus far, we’ve collected more than 99 percent of
deferred rents that have come due under revised billing terms, with
some tenants even repaying their deferrals in advance to avoid
interest charges. Cash bad debt expense for the quarter was
essentially zero. “As a result of our strong
operating performance, we are pleased to increase our quarterly
dividend from $0.235 per share to $0.255 per share. This 8.5
percent increase to our quarterly dividend is based on our
expectation of continued cash flow growth allowing us to maintain
more-than-adequate cash flow coverage to continue to grow our
business.”
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 $0.19 per diluted
share for the third quarter of 2020, compared to $0.62 per diluted
share for the third quarter of 2019. Net income per diluted share
for the third quarter of 2020 was lower than the third quarter of
2019 due to significant gains on building sales recognized in the
third quarter of 2019.
- FFO, as defined by NAREIT, was
$0.39 per diluted share for the third quarter of 2020, compared to
$0.37 per diluted share for the third quarter of 2019. FFO per
diluted share, as defined by NAREIT, increased from the third
quarter of 2019 due to rent growth on new and renewal leases,
higher in-service occupancy and leasing of new developments.
- Core FFO was $0.40 per diluted
share for the third quarter of 2020, compared to $0.37 per diluted
share for the third quarter of 2019. Core FFO per diluted share for
the third quarter of 2020 increased for the same reasons as the
increase to FFO per diluted share, as defined by NAREIT.
- Key indicators
of the company’s operating performance were as follows:– The
company’s stabilized in-service portfolio was 97.5 percent leased
at September 30, 2020, compared to 97.3 percent leased at June 30,
2020 and 97.9 percent leased at September 30, 2019.– The company’s
total in-service portfolio was 97.1 percent leased at September 30,
2020 compared to 96.7 percent leased at June 30, 2020 and 96.2
percent leased at September 30, 2019.– The company’s total
portfolio, including properties under development, was 95.6 percent
leased at September 30, 2020 compared to 95.3 percent leased at
June 30, 2020 and 93.9 percent leased at September 30, 2019.–
Tenant retention was 45.7 percent for the three months ended
September 30, 2020 and 67.2 percent after considering immediate
backfills.– Same-property net operating income growth was 5.0
percent and 5.5 percent, respectively, for the three and nine month
periods ended September 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 7.3
million square feet for the quarter.– Overall cash and annualized
net effective rent growth on new and renewal leases was 17.2
percent and 32.1 percent, respectively, for the quarter.– The
company collected or has executed deferral agreements for 99.9
percent of third quarter rents and 99.8 percent of October rents.
Further detail on collections and deferral agreements appears 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:–
Issued 995,000 common shares, generating $39 million of net
proceeds, under the company’s ATM program at an average price of
$39.14 per share.– Completed one property disposition totaling $18
million.– Completed the acquisition of five properties totaling
$112 million.– Started four new development projects with expected
costs of $261 million that were 28 percent pre-leased.
Real Estate Investment Activity
Mr. Connor further stated, “We finished the
quarter with a 7.0 million square foot development pipeline
totaling $897 million in expected costs. During the third quarter
we fully leased a 1.1 million square foot property in Southern
California that was started on a speculative basis in the fourth
quarter of 2019 and is not scheduled to be delivered until the
second quarter of 2021. Due to our ability to consistently lease up
our speculative space we began two new speculative development
projects during the quarter, one in Southern California and one in
Seattle, totaling 1.4 million square feet. Even with this level of
speculative project starts, we still finished the quarter with our
development pipeline being 63 percent pre-leased overall. Our
non-coastal development pipeline is 100 percent leased with
expected costs totaling $173 million and our development pipeline
in high barrier coastal markets is 46 percent leased with expected
costs totaling $724 million. As rental rates continue to rise in
the coastal markets we have targeted for growth, we believe there
is potential to achieve yields higher than our initial underwriting
for the speculative portion of our development pipeline.
“The development projects slated for delivery
over the next six months have expected costs of $344 million and
are 93 percent pre-leased. Once delivered, these projects will be
immediately accretive at their current occupancy level.”
Development
The third quarter included the following
development activity:
- The company
started four wholly owned development projects with expected costs
of $261 million, totaling 2.0 million square feet, which were 28
percent leased in total. These projects included a 1.2 million
square foot speculative project in Southern California, a 415,000
square foot build-to-suit project in Eastern Pennsylvania, a 72
percent leased, 222,000 square foot project in South Florida and a
190,000 square foot speculative project in Seattle.
- Four wholly owned projects totaling
1.5 million square feet were placed in service during the quarter.
These projects were 89 percent leased in total and included a 100
percent leased, 800,000 square foot, project in Southern California
and two 100 percent leased projects in Northern New Jersey,
totaling 518,000 square feet.
Building Acquisitions
Building acquisitions totaled $112 million in the third quarter
and included the following:
- Three 100 percent leased buildings
in the East Bay submarket of Northern California, totaling 428,000
square feet. One of these buildings, totaling 141,000 square feet,
is expected to be redeveloped soon after its existing one-year
lease expires.
- A 100 percent leased, 188,000 square
foot, building in Northern New Jersey.
- A 100 percent leased, 64,000 square
foot, building in Seattle.
Building Dispositions
The company disposed of a 100 percent leased
wholly-owned project in Indianapolis, totaling 280,000 square feet,
for $18 million. Distributions
Declared
The company’s board of directors declared a
quarterly cash distribution on its common stock of $0.255 per
share, or $1.02 per share on an annualized basis. The third quarter
dividend will be payable on November 30, 2020 to shareholders of
record on November 16, 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
$0.66 to $0.88 per diluted share, compared to the previous range of
$0.63 to $0.87 per diluted share. The company issued revised
guidance for FFO, as defined by NAREIT, of $1.38 to $1.44 per
diluted share, compared to the previous range of $1.35 to $1.43 per
diluted share. The Company also issued revised guidance for Core
FFO of $1.50 to $1.54 per diluted share, compared to the previous
range of $1.48 to $1.54 per diluted share.
Commenting on the company’s revised 2020
guidance, Mr. Connor stated, “We continued to post strong operating
results and execute on our leasing and rent collection objectives
at a level above our expectations, as our company and sector
continues to outperform the general economy through this protracted
pandemic.
“This mid-point of the revised guidance for Core
FFO includes an estimate of nearly $6 million in combined cash and
straight line bad debt charges or lost rent from tenant defaults,
which includes actual year-to-date bad debt expense of $5.5
million. This represents a decrease of approximately $3 million
from the $9 million of bad debt expense we estimated when we
updated our guidance in July. The mid-point of our revised guidance
was also positively impacted by improved leasing assumptions
compared to our July 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
4.6 percent and 7.7 percent, compared to the previous range of 3.1
percent to 7.7 percent.
“Our range of guidance for the average
percentage leased of our stabilized in-service portfolio has been
revised to between 97.3 percent and 97.7 percent, compared to the
previous range of 96.5 percent to 97.9 percent. Our range of
guidance for the average percentage leased of our total in-service
portfolio has been revised to between 96.7 percent and 97.1
percent, compared to the previous range of 96.0 percent to 97.4
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 strong rental rate
growth on recently executed leases, resulted in revised guidance
for growth in same-property net operating income to between 4.7
percent and 5.1 percent, compared to the previous range of 3.5
percent to 4.5 percent.
“Our revised guidance for 2020 development
starts is between $650 million and $800 million, compared to the
previous range of between $350 million and $550 million. We have a
strong prospect list of build-to-suit projects, in excess of
pre-COVID levels, and anticipate an increased level of development
starts in the fourth quarter and early 2021, which drove the
revision to our guidance for development starts.”
Other guidance changes are as follows:
- Dispositions of properties in a
range of $250 million to $350 million, compared to the previous
range of between $200 million and $400 million.
- Acquisitions of properties ranging between $225 million and
$325 million, compared to the previous range of between $50 million
and $250 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 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
PerformanceThe 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 September 30, 2020 supplemental
information.
About Duke Realty Corporation
Duke Realty Corporation owns and operates
approximately 159 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.
Third Quarter Earnings Call and
Supplemental Information
Duke Realty Corporation is hosting a conference
call tomorrow, October 29, 2020, at 3:00 p.m. ET to discuss its
third 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:Gene Miller317.808.6195
|
Duke Realty Corporation and Subsidiaries |
Consolidated Statement of Operations |
(Unaudited and in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
Revenues: |
|
|
|
|
|
|
|
Rental and related revenue |
|
$ |
235,391 |
|
$ |
215,374 |
|
|
$ |
680,520 |
|
$ |
638,446 |
|
|
General contractor and service fee revenue |
|
|
26,637 |
|
|
25,955 |
|
|
|
46,388 |
|
|
104,838 |
|
|
|
|
|
262,028 |
|
|
241,329 |
|
|
|
726,908 |
|
|
743,284 |
|
Expenses: |
|
|
|
|
|
|
|
Rental expenses |
|
|
20,231 |
|
|
19,158 |
|
|
|
56,631 |
|
|
57,423 |
|
|
Real estate taxes |
|
|
37,027 |
|
|
31,739 |
|
|
|
110,517 |
|
|
96,556 |
|
|
General contractor and other services expenses |
|
|
24,604 |
|
|
23,640 |
|
|
|
41,578 |
|
|
99,415 |
|
|
Depreciation and amortization |
|
|
88,596 |
|
|
83,924 |
|
|
|
260,659 |
|
|
242,920 |
|
|
|
|
|
170,458 |
|
|
158,461 |
|
|
|
469,385 |
|
|
496,314 |
|
Other operating activities: |
|
|
|
|
|
|
|
Equity in earnings of unconsolidated joint ventures |
|
|
4,023 |
|
|
3,736 |
|
|
|
8,958 |
|
|
12,594 |
|
|
Gain on sale of properties |
|
|
10,968 |
|
|
173,646 |
|
|
|
19,905 |
|
|
204,075 |
|
|
Gain on land sales |
|
|
2,346 |
|
|
3,869 |
|
|
|
8,551 |
|
|
6,569 |
|
|
Other operating expenses |
|
|
(1,772 |
) |
|
(874 |
) |
|
|
(4,430 |
) |
|
(4,515 |
) |
|
Impairment charges |
|
|
- |
|
|
- |
|
|
|
(5,626 |
) |
|
- |
|
|
Non-incremental costs related to successful leases |
|
|
(4,058 |
) |
|
(1,123 |
) |
|
|
(10,617 |
) |
|
(6,726 |
) |
|
General and administrative expenses |
|
|
(11,439 |
) |
|
(13,720 |
) |
|
|
(46,808 |
) |
|
(49,123 |
) |
|
|
|
|
68 |
|
|
165,534 |
|
|
|
(30,067 |
) |
|
162,874 |
|
|
|
|
|
|
|
|
|
|
Operating income |
|
91,638 |
|
|
248,402 |
|
|
|
227,456 |
|
|
409,844 |
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
Interest and other income, net |
|
|
32 |
|
|
2,085 |
|
|
|
1,643 |
|
|
7,377 |
|
|
Interest expense |
|
|
(23,059 |
) |
|
(22,604 |
) |
|
|
(69,394 |
) |
|
(68,246 |
) |
|
Loss on debt extinguishment |
|
|
(120 |
) |
|
- |
|
|
|
(32,898 |
) |
|
(13 |
) |
|
Gain on involuntary conversion |
|
|
3,029 |
|
|
- |
|
|
|
4,312 |
|
|
2,259 |
|
Income from continuing operations, before income taxes |
|
|
71,520 |
|
|
227,883 |
|
|
|
131,119 |
|
|
351,221 |
|
|
Income tax benefit (expense) |
|
|
956 |
|
|
536 |
|
|
|
1,166 |
|
|
(6,465 |
) |
|
Income from continuing operations |
|
72,476 |
|
|
228,419 |
|
|
|
132,285 |
|
|
344,756 |
|
|
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
Gain on sale of properties |
|
|
40 |
|
|
112 |
|
|
|
111 |
|
|
366 |
|
|
Income from discontinued operations |
|
40 |
|
|
112 |
|
|
|
111 |
|
|
366 |
|
|
|
|
|
|
|
|
|
Net income |
|
|
72,516 |
|
|
228,531 |
|
|
|
132,396 |
|
|
345,122 |
|
Net income attributable to noncontrolling interests |
|
|
(693 |
) |
|
(1,965 |
) |
|
|
(1,297 |
) |
|
(2,952 |
) |
|
Net income attributable to common shareholders |
$ |
71,823 |
|
$ |
226,566 |
|
|
$ |
131,099 |
|
$ |
342,170 |
|
|
|
|
|
|
|
|
|
Basic net income per common share: |
|
|
|
|
|
|
|
Continuing operations attributable to common shareholders |
|
$ |
0.19 |
|
$ |
0.62 |
|
|
$ |
0.35 |
|
$ |
0.95 |
|
Diluted net income per common share: |
|
|
|
|
|
|
|
Continuing operations attributable to common shareholders |
|
$ |
0.19 |
|
$ |
0.62 |
|
|
$ |
0.35 |
|
$ |
0.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Duke Realty Corporation and Subsidiaries |
|
Consolidated Balance Sheets |
|
(Unaudited and in thousands) |
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
|
2020 |
|
|
|
2019 |
|
|
Assets |
|
|
|
|
Real estate investments: |
|
|
|
|
|
Real estate assets |
|
$ |
8,569,340 |
|
|
$ |
7,993,377 |
|
|
Construction in progress |
|
|
604,819 |
|
|
|
550,926 |
|
|
Investments in and advances to unconsolidated joint ventures |
|
|
132,127 |
|
|
|
133,074 |
|
|
Undeveloped land |
|
|
267,254 |
|
|
|
254,537 |
|
|
|
|
|
9,573,540 |
|
|
|
8,931,914 |
|
|
Accumulated depreciation |
|
|
(1,637,190 |
) |
|
|
(1,480,461 |
) |
|
|
|
|
|
|
|
Net real estate investments |
|
7,936,350 |
|
|
|
7,451,453 |
|
|
|
|
|
|
|
Real estate investments and other assets held-for-sale |
|
|
- |
|
|
|
18,463 |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
6,748 |
|
|
|
110,891 |
|
Accounts receivable |
|
|
15,072 |
|
|
|
20,349 |
|
Straight-line rent receivable |
|
|
145,130 |
|
|
|
129,344 |
|
Receivables on construction contracts, including retentions |
|
|
44,824 |
|
|
|
25,607 |
|
Deferred leasing and other costs, net |
|
|
325,846 |
|
|
|
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 |
|
|
269,055 |
|
|
|
232,338 |
|
|
|
|
|
|
|
|
|
|
$ |
8,743,025 |
|
|
$ |
8,420,562 |
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
Indebtedness: |
|
|
|
|
|
Secured debt, net of deferred financing costs |
|
$ |
74,339 |
|
|
$ |
34,023 |
|
|
Unsecured debt, net of deferred financing costs |
|
|
3,025,089 |
|
|
|
2,880,742 |
|
|
Unsecured line of credit |
|
|
47,000 |
|
|
|
- |
|
|
|
|
|
3,146,428 |
|
|
|
2,914,765 |
|
Liabilities related to real estate investments held-for-sale |
|
|
|
|
|
|
- |
|
|
|
887 |
|
|
|
|
|
|
|
Construction payables and amounts due subcontractors, including
retentions |
|
|
83,047 |
|
|
|
68,840 |
|
Accrued real estate taxes |
|
|
101,846 |
|
|
|
69,042 |
|
Accrued interest |
|
|
26,499 |
|
|
|
14,181 |
|
Other liabilities |
|
|
249,266 |
|
|
|
223,680 |
|
Tenant security deposits and prepaid rents |
|
|
47,292 |
|
|
|
48,907 |
|
|
Total liabilities |
|
3,654,378 |
|
|
|
3,340,302 |
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
Common shares |
|
|
3,715 |
|
|
|
3,680 |
|
|
Additional paid-in capital |
|
|
5,653,143 |
|
|
|
5,525,463 |
|
|
Accumulated other comprehensive loss |
|
|
(32,457 |
) |
|
|
(35,036 |
) |
|
Distributions in excess of net income |
|
|
(606,182 |
) |
|
|
(475,992 |
) |
|
Total shareholders’ equity |
|
5,018,219 |
|
|
|
5,018,115 |
|
|
|
|
|
|
|
Noncontrolling interests |
|
|
70,428 |
|
|
|
62,145 |
|
|
Total equity |
|
|
5,088,647 |
|
|
|
5,080,260 |
|
|
|
|
|
|
|
|
|
|
$ |
8,743,025 |
|
|
$ |
8,420,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Duke Realty Corporation and Subsidiaries |
Summary of EPS, FFO and AFFO |
Three Months Ended September 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 |
$ |
71,823 |
|
|
|
|
$ |
226,566 |
|
|
|
|
Less dividends on participating securities |
|
(352 |
) |
|
|
|
|
(350 |
) |
|
|
|
Net income per common share-basic |
|
71,471 |
|
371,082 |
|
$ |
0.19 |
|
|
226,216 |
|
362,416 |
|
$ |
0.62 |
|
Add back: |
|
|
|
|
|
|
|
|
Noncontrolling interest in earnings of unitholders |
|
638 |
|
3,330 |
|
|
|
1,968 |
|
3,142 |
|
|
Other potentially dilutive securities |
|
- |
|
422 |
|
|
|
350 |
|
1,713 |
|
|
Net income attributable to common
shareholders-diluted |
$ |
72,109 |
|
374,834 |
|
$ |
0.19 |
|
|
228,534 |
|
367,271 |
|
$ |
0.62 |
|
Reconciliation to FFO |
|
|
|
|
|
|
|
|
Net income attributable to common
shareholders |
$ |
71,823 |
|
371,082 |
|
|
$ |
226,566 |
|
362,416 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
88,596 |
|
|
|
|
|
83,924 |
|
|
|
|
Depreciation, amortization and other - unconsolidated joint
ventures |
|
2,259 |
|
|
|
|
|
2,858 |
|
|
|
|
Gains on sales of properties |
|
(11,008 |
) |
|
|
|
|
(173,758 |
) |
|
|
|
Gains on land sales |
|
(2,346 |
) |
|
|
|
|
(3,869 |
) |
|
|
|
Income tax benefit triggered by sales of real estate assets |
|
(956 |
) |
|
|
|
|
(536 |
) |
|
|
|
Gains on sales of real estate assets - unconsolidated joint
ventures |
|
(1,095 |
) |
|
|
|
|
(332 |
) |
|
|
|
Noncontrolling interest share of adjustments |
|
(671 |
) |
|
|
|
|
788 |
|
|
|
|
NAREIT FFO attributable to common shareholders -
basic |
|
146,602 |
|
371,082 |
|
$ |
0.40 |
|
|
135,641 |
|
362,416 |
|
$ |
0.37 |
|
Noncontrolling interest in income of unitholders |
|
638 |
|
3,330 |
|
|
|
1,968 |
|
3,142 |
|
|
Noncontrolling interest share of adjustments |
|
671 |
|
|
|
|
|
(788 |
) |
|
|
|
Other potentially dilutive securities |
|
1,833 |
|
|
|
1,713 |
|
|
NAREIT FFO attributable to common shareholders -
diluted |
$ |
147,911 |
|
376,245 |
|
$ |
0.39 |
|
$ |
136,821 |
|
367,271 |
|
$ |
0.37 |
|
Gain on involuntary conversion - including share of unconsolidated
joint venture |
|
(3,029 |
) |
|
|
|
|
(1,300 |
) |
|
|
|
Loss on debt extinguishment |
|
120 |
|
|
|
|
|
- |
|
|
|
|
Non-incremental costs related to successful leases |
|
4,058 |
|
|
|
|
|
1,123 |
|
|
|
|
Core FFO attributable to common shareholders -
diluted |
$ |
149,060 |
|
376,245 |
|
$ |
0.40 |
|
$ |
136,644 |
|
367,271 |
|
$ |
0.37 |
|
AFFO |
|
|
|
|
|
|
|
|
Core FFO - diluted |
$ |
149,060 |
|
376,245 |
|
$ |
0.40 |
|
$ |
136,644 |
|
367,271 |
|
$ |
0.37 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Straight-line rental income and expense |
|
(7,796 |
) |
|
|
|
|
(5,282 |
) |
|
|
|
Amortization of above/below market rents and concessions |
|
(1,836 |
) |
|
|
|
|
(1,742 |
) |
|
|
|
Stock based compensation expense |
|
2,736 |
|
|
|
|
|
2,045 |
|
|
|
|
Noncash interest expense |
|
2,463 |
|
|
|
|
|
1,513 |
|
|
|
|
Second generation concessions |
|
(58 |
) |
|
|
|
|
(300 |
) |
|
|
|
Second generation tenant improvements |
|
(3,685 |
) |
|
|
|
|
(3,227 |
) |
|
|
|
Second generation leasing costs |
|
(5,623 |
) |
|
|
|
|
(5,253 |
) |
|
|
|
Building improvements |
|
(413 |
) |
|
|
|
|
(4,203 |
) |
|
|
|
AFFO - diluted |
$ |
134,848 |
|
376,245 |
|
|
$ |
120,195 |
|
367,271 |
|
|
|
|
|
|
|
|
|
|
|
|
Duke Realty Corporation and Subsidiaries |
Summary of EPS, FFO and AFFO |
Nine Months Ended September 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 |
$ |
131,099 |
|
|
|
|
$ |
342,170 |
|
|
|
|
Less dividends on participating securities |
|
(1,064 |
) |
|
|
|
|
(1,125 |
) |
|
|
|
Net income per common share-basic |
|
130,035 |
|
369,375 |
|
$ |
0.35 |
|
|
341,045 |
|
360,424 |
|
$ |
0.95 |
|
Add back: |
|
|
|
|
|
|
|
|
Noncontrolling interest in earnings of unitholders |
|
1,164 |
|
3,296 |
|
|
|
2,971 |
|
3,118 |
|
|
Other potentially dilutive securities |
|
- |
|
420 |
|
|
|
1,125 |
|
1,801 |
|
|
Net income attributable to common
shareholders-diluted |
$ |
131,199 |
|
373,091 |
|
$ |
0.35 |
|
$ |
345,141 |
|
365,343 |
|
$ |
0.94 |
|
Reconciliation to FFO |
|
|
|
|
|
|
|
|
Net income attributable to common
shareholders |
$ |
131,099 |
|
369,375 |
|
|
$ |
342,170 |
|
360,424 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
260,659 |
|
|
|
|
|
242,920 |
|
|
|
|
Depreciation, amortization and other - unconsolidated joint
ventures |
|
6,759 |
|
|
|
|
|
7,628 |
|
|
|
|
Gains on sales of properties |
|
(20,016 |
) |
|
|
|
|
(204,441 |
) |
|
|
|
Gains on land sales |
|
(8,551 |
) |
|
|
|
|
(6,569 |
) |
|
|
|
Income tax (benefit) expense triggered by depreciable property
sales |
|
(1,166 |
) |
|
|
|
|
6,465 |
|
|
|
|
Impairment charges |
|
5,626 |
|
|
|
|
|
- |
|
|
|
|
Gains on sales of real estate assets - unconsolidated joint
ventures |
|
(787 |
) |
|
|
|
|
(4,859 |
) |
|
|
|
Noncontrolling interest share of adjustments |
|
(2,144 |
) |
|
|
|
|
(353 |
) |
|
|
|
NAREIT FFO attributable to common shareholders -
basic |
|
371,479 |
|
369,375 |
|
$ |
1.01 |
|
|
382,961 |
|
360,424 |
|
$ |
1.06 |
|
Noncontrolling interest in income of unitholders |
|
1,164 |
|
3,296 |
|
|
|
2,971 |
|
3,118 |
|
|
Noncontrolling interest share of adjustments |
|
2,144 |
|
|
|
|
|
353 |
|
|
|
|
Other potentially dilutive securities |
|
1,821 |
|
|
|
1,801 |
|
|
NAREIT FFO attributable to common shareholders -
diluted |
$ |
374,787 |
|
374,492 |
|
$ |
1.00 |
|
$ |
386,285 |
|
365,343 |
|
$ |
1.06 |
|
Gain on involuntary conversion - including share of unconsolidated
joint venture |
|
(4,312 |
) |
|
|
|
|
(3,559 |
) |
|
|
|
Loss on debt extinguishment |
|
32,898 |
|
|
|
|
|
13 |
|
|
|
|
Non-incremental costs related to successful leases |
|
10,617 |
|
|
|
|
|
6,726 |
|
|
|
|
Overhead restructuring charges |
|
2,063 |
|
|
|
|
|
- |
|
|
|
|
Core FFO attributable to common shareholders -
diluted |
$ |
416,053 |
|
374,492 |
|
$ |
1.11 |
|
$ |
389,465 |
|
365,343 |
|
$ |
1.07 |
|
AFFO |
|
|
|
|
|
|
|
|
Core FFO - diluted |
$ |
416,053 |
|
374,492 |
|
$ |
1.11 |
|
$ |
389,465 |
|
365,343 |
|
$ |
1.07 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Straight-line rental income and expense |
|
(15,934 |
) |
|
|
|
|
(16,066 |
) |
|
|
|
Amortization of above/below market rents and concessions |
|
(5,934 |
) |
|
|
|
|
(4,546 |
) |
|
|
|
Stock based compensation expense |
|
20,335 |
|
|
|
|
|
17,258 |
|
|
|
|
Noncash interest expense |
|
6,896 |
|
|
|
|
|
4,577 |
|
|
|
|
Second generation concessions |
|
(394 |
) |
|
|
|
|
(334 |
) |
|
|
|
Second generation tenant improvements |
|
(10,073 |
) |
|
|
|
|
(8,306 |
) |
|
|
|
Second generation leasing costs |
|
(14,126 |
) |
|
|
|
|
(14,198 |
) |
|
|
|
Building improvements |
|
(1,306 |
) |
|
|
|
|
(6,747 |
) |
|
|
|
AFFO - diluted |
$ |
395,517 |
|
374,492 |
|
|
$ |
361,103 |
|
365,343 |
|
|
|
|
|
|
|
|
|
|
|
|
Duke Realty Corporation and Subsidiaries |
Reconciliation of Same Property Net Operating Income
Growth |
(Unaudited and in thousands) |
|
|
|
|
Three Months Ended |
|
September 30, 2020 |
September 30, 2019 |
|
|
|
Income from continuing operations before income taxes |
$ |
71,520 |
|
$ |
227,883 |
|
Share of same property NOI from unconsolidated joint ventures |
|
4,917 |
|
|
4,564 |
|
Income and expense items not allocated to segments |
|
108,318 |
|
|
(61,216 |
) |
Earnings from service operations |
|
(2,033 |
) |
|
(2,315 |
) |
Properties not included and other adjustments |
|
(28,034 |
) |
|
(21,564 |
) |
Same property NOI - Cash Basis |
$ |
154,688 |
|
$ |
147,352 |
|
|
|
|
Percent Change |
|
5.0 |
% |
|
|
|
|
|
Nine Months Ended |
|
September 30, 2020 |
September 30, 2019 |
|
|
|
Income from continuing operations before income taxes |
$ |
131,119 |
|
$ |
351,221 |
|
Share of same property NOI from unconsolidated joint ventures |
|
14,236 |
|
|
13,550 |
|
Income and expense items not allocated to segments |
|
386,408 |
|
|
137,881 |
|
Earnings from service operations |
|
(4,810 |
) |
|
(5,423 |
) |
Properties not included and other adjustments |
|
(66,912 |
) |
|
(61,284 |
) |
Same property NOI - Cash Basis |
$ |
460,041 |
|
$ |
435,945 |
|
|
|
|
Percent Change |
|
5.5 |
% |
|
|
|
|
|
|
|
Duke Realty Corporation and Subsidiaries |
Reconciliation of 2020 FFO Per Diluted Share
Guidance |
(Unaudited ) |
|
|
|
|
Pessimistic |
Optimistic |
Net income attributable to common shareholders - diluted |
$ |
0.66 |
|
$ |
0.88 |
|
Depreciation |
|
0.94 |
|
|
0.92 |
|
Gains on land and property sales, net of impairment charges |
|
(0.24 |
) |
|
(0.38 |
) |
Share of joint venture adjustments |
|
0.02 |
|
|
0.02 |
|
NAREIT FFO attributable to common shareholders - diluted |
$ |
1.38 |
|
$ |
1.44 |
|
Loss on debt extinguishment |
|
0.09 |
|
|
0.09 |
|
Non-incremental costs related to successful leases |
|
0.04 |
|
|
0.03 |
|
Other reconciling items |
|
(0.01 |
) |
|
(0.02 |
) |
Core FFO attributable to common shareholders - diluted |
$ |
1.50 |
|
$ |
1.54 |
|
|
|
|
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