Net Earnings of $0.28 per Diluted Share in
Q3; Raised and Narrowed 2017 Net Earnings Guidance to between $1.01
and $1.03 Per Diluted Share
FFO, as adjusted, of $0.61 per Diluted Share
in Q3; Raised and Narrowed 2017 FFO Guidance, as adjusted, to
between $2.44 and $2.46 Per Diluted Share
Increased the Quarterly Dividend to $0.36, a
16.1 Percent Increase
Consolidated Operating Occupancy Increased
to 98.0 Percent
Rent Growth of 24.1 Percent on a
Straight-Line Basis and 9.9 Percent on a Cash Basis
Quarterly Same-Store Portfolio NOI Growth of
10.9 Percent on a Cash Basis and 3.5 Percent on a Straight-Line
Basis
Annual Same-Store Portfolio NOI Growth of
7.2 Percent on a Cash Basis and 3.1 Percent on a Straight-Line
Basis for Q3; Year-To-Date Growth of 8.9 Percent on a Cash Basis
and 4.2 Percent on a Straight-Line Basis
Executed 943,000 Square Feet of Development
and Redevelopment Leases since June 30, 2017; Including 696,000
Square Feet Signed Since Q2 Earnings Release
DCT Industrial Trust® (NYSE: DCT), a leading real estate
company, today announced financial results for the quarter ending
September 30, 2017.
“We delivered another strong quarter of growth in both our
financial and operating results,” said Phil Hawkins, President and
CEO of DCT Industrial. “Market fundamentals, driven by high
occupancy and upward pressure on rents, have never been better. Our
development program also continues to outperform as we leased
943,000 square feet of space since June 30th and acquired several
highly-desirable infill land sites for future development.
Reflecting the strong growth in our earnings, we are pleased to
announce a 16.1 percent increase in our quarterly dividend.”
Net income attributable to common stockholders (“Net Earnings”)
for Q3 2017 was $25.8 million, or $0.28 per diluted share compared
with $15.6 million, or $0.17 per diluted share reported for Q3
2016, a 64.7 percent increase per diluted share.
Funds from operations (“FFO”), as adjusted, attributable to
common stockholders and unitholders for Q3 2017 totaled $59.2
million, or $0.61 per diluted share, compared with $57.1 million,
or $0.60 per diluted share for Q3 2016, a 1.7 percent increase per
diluted share. These results exclude $0.5 million of acquisition
costs and a $1.0 million decrease in interest expense related to
hedge ineffectiveness for the quarter ending September 30,
2016.
Property Results and Leasing
Activity
As of September 30, 2017, DCT Industrial owned 400 consolidated
operating properties, totaling 64.1 million square feet, with
occupancy of 98.0 percent, an increase of 50 basis points over Q2
2017 and 180 basis points over Q3 2016. On a same-portfolio basis,
the impact of acquisitions, dispositions and placing developments
and redevelopments into operations increased occupancy by 30 basis
points. Approximately 758,000 square feet, or 1.1 percent, of DCT
Industrial’s total consolidated portfolio was leased but not
occupied as of September 30, 2017, which does not take into
consideration 764,000 square feet of leased space in development
under construction or in pre-development.
In Q3 2017, the Company signed leases totaling 3.4 million
square feet with rental rates increasing 24.1 percent on a
straight-line basis and 9.9 percent on a cash basis, compared to
the corresponding expiring leases. Over the previous four quarters,
rental rates on signed leases increased 29.5 percent on a
straight-line basis and 12.7 percent on a cash basis. The Company’s
tenant retention rate was 82.0 percent in Q3 2017.
Net operating income (“NOI”) was $79.7 million in Q3 2017,
compared with $76.1 million in Q3 2016. NOI was $238.3 million for
the first nine months of 2017, compared with $216.9 million for the
first nine months of 2016.
Comparing Q3 2017 to Q3 2016, NOI from the Quarterly Same-Store
Portfolio increased 10.9 percent on a cash basis and 3.5 percent on
a straight-line basis, and NOI from the Annual Same-Store Portfolio
increased 7.2 percent on a cash basis and 3.1 percent on a
straight-line basis. Additionally, NOI from the Annual Same-Store
Portfolio for the first nine months of 2017 increased 8.9 percent
on a cash basis and 4.2 percent on a straight-line basis when
compared to the first nine months of 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 Third Quarter 2017 Supplemental
Reporting Package.
Quarterly Same-Store Portfolio occupancy averaged 97.9 percent
in Q3 2017, an increase of 50 basis points from Q3 2016. Quarterly
Same-Store Portfolio occupancy as of September 30, 2017 was 98.3
percent.
Investment Activity
Acquisitions
Since DCT Industrial’s Q2 2017 Earnings Release, the Company
acquired two buildings for $65.4 million. These acquisitions,
totaling 421,000 square feet, include a 121,000 square foot
building for redevelopment. The acquisitions were 71.2 percent
occupied at the time of closing. The Company expects a year-one
weighted-average cash yield of 3.3 percent and anticipates a
weighted-average stabilized cash yield of 4.5 percent on the
acquired assets.
The table below summarizes acquisitions since the Company's Q2
2017 Earnings Release:
Market Submarket Square Feet
Occupancyat Closing
Closed
AnticipatedYield1
Southern California North Orange County
300,000 100.0% Aug-17
4.1% Orlando, FL
Southeast
121,000 0.0% Aug-17
6.5% Total/Weighted Average 421,000 71.2% 4.5%
1 Anticipated yield represents year-one cash yield for
stabilized acquisitions and projected stabilized cash yield for
value-add acquisitions.
Development and Redevelopment
Since the Company’s Q2 2017 Earnings Release, DCT Industrial
executed 696,000 square feet of development and redevelopment
leases bringing the development pipeline to 37.1 percent leased.
The Company also commenced construction on 2.0 million square feet
with a projected investment of $185.3 million and purchased 79.9
acres for the future development of 1.0 million square feet.
Highlights since DCT Industrial’s Q2 2017 Earnings Release:
In Q3 2017:
- Executed a 166,000 square foot lease
for DCT Waters Ridge, bringing the 347,000 square foot development
in the Northwest submarket of Dallas to 100 percent leased.
- Executed a full-building pre-lease for
DCT PetroPort Industrial Park Building II, a 163,000 square foot
building in the Port submarket of Houston. The Company commenced
construction on both DCT PetroPort Industrial Park Buildings I and
II, a 252,000 square foot project. Shell construction is scheduled
to be complete in Q2 2018.
- Executed a full-building lease for
10810 Painter Avenue, a 111,000 square foot building in the
Mid-Counties submarket of Southern California. The building was
completed and stabilized in Q3 2017.
- Executed a 54,000 square foot lease for
the expansion of 2560 White Oak, a 163,000 square foot building in
the I-88 Corridor submarket of Chicago. Construction on the
expansion is scheduled to commence in Q4 2017.
- Commenced construction on Blair
Logistics Center Building A, a 543,000 square foot building in the
Fife/Tacoma submarket of Seattle. Shell construction is scheduled
to be complete in Q3 2018.
- Commenced construction on DCT Terrapin
Commerce Center Building II, a 94,000 square foot building in the
B/W Corridor submarket of Baltimore/Washington D.C. Shell
construction is scheduled to be complete in Q2 2018.
- Commenced construction on DCT Williams
Corporate Center, a 75,000 square foot building in the East Bay
submarket of Northern California. Shell construction is scheduled
to be complete in Q1 2018.
- Acquired 33.7 acres in the Central
submarket of New Jersey and commenced construction on a 440,000
square foot building, DCT Midline Commerce Center. Shell
construction is scheduled to be complete in Q2 2018.
- Acquired 36.6 acres in the Sumner
submarket of Seattle to develop DCT 167 Landing, a 365,000 square
foot, two-building project.
- Acquired a 121,000 square foot building
for redevelopment in the Southeast submarket of Orlando. The
Company commenced construction on the project to expand the parking
and truck court areas and add dock positions. Construction is
scheduled to be complete in Q1 2018.
Since September 30:
- Executed a full-building lease for 2201
Arthur Avenue, a 101,000 square foot redevelopment in the O’Hare
submarket of Chicago.
- Executed an 84,000 square foot lease
for DCT Miller Road, bringing the 270,000 square foot development
in the Northwest submarket of Dallas to 73.1 percent
pre-leased.
- Commenced construction on DCT Hudson
Distribution Center, a 288,000 square foot building in the North
Kent Valley submarket of Seattle. Shell construction is scheduled
to be complete in Q3 2018.
- Commenced construction on DCT Freeport
West Buildings II and III, totaling 194,000 square feet in the DFW
submarket of Dallas. Shell construction is scheduled to be complete
in Q3 2018.
- Acquired 9.6 acres in the North Kent
Valley submarket of Seattle to develop DCT Monster Road
Distribution Center, a 161,000 square foot building.
Dispositions
Since DCT Industrial’s Q2 2017 Earnings Release, the Company
sold two buildings totaling 314,000 square feet and the Company has
now exited the Louisville market. These transactions generated
total gross proceeds of $16.8 million and have an expected year-one
weighted-average cash yield of 6.9 percent.
The table below summarizes dispositions since the Company's Q2
2017 Earnings Release:
Market Submarket Square Feet
Occupancy Closed Louisville, KY
Jefferson Riverport 300,000 100.0 %
Aug-17 Northern California Concord
14,000 100.0 % Oct-17
Total/Weighted Average 314,000 100.0 %
Dividend
DCT Industrial’s Board of Directors declared a $0.36 per share
quarterly cash dividend, an increase of 16.1 percent, payable on
January 4, 2018 to stockholders of record as of December 22,
2017.
Guidance
The Company raised and narrowed 2017 Net Earnings guidance to
between $1.01 and $1.03 per diluted share, up from $0.84 to $0.90.
Net Earnings guidance excludes any gain or loss related to
potential future dispositions.
The Company raised and narrowed 2017 FFO guidance, as adjusted,
to between $2.44 and $2.46 per diluted share, up from $2.39 to
$2.45 per diluted share. The Company’s FFO guidance excludes an
impairment loss on land.
For additional details, assumptions and definitions related to
the Company’s 2017 guidance, please refer to page 10 in DCT
Industrial’s Third Quarter 2017 Supplemental Reporting Package.
Conference Call
Information
DCT Industrial will host a conference call to discuss Q3 results
on Friday, November 3, 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, February 2,
2018 and can be accessed by dialing (877) 344-7529 or (412)
317-0088 and entering the passcode 10112835. A live webcast of the
conference call will be available in the Investors section of the
DCT Industrial website at www.dctindustrial.com. A webcast replay
will also be available shortly following the call until November 3,
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
September 30, 2017, the Company owned interests in approximately
73.7 million square feet of properties leased to approximately 870
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 (unaudited,
in thousands, except share information)
September 30,2017
December 31,2016
ASSETS
Land $ 1,146,298 $ 1,075,995 Buildings and improvements 3,260,147
3,202,293 Intangible lease assets 70,497 78,356 Construction in
progress 167,034 72,829
Total investment in
properties 4,643,976 4,429,473 Less accumulated depreciation
and amortization (918,142 ) (839,773 )
Net investment in
properties 3,725,834 3,589,700 Investments in and advances to
unconsolidated joint ventures 72,223 95,606
Net
investment in real estate 3,798,057 3,685,306 Cash and cash
equivalents 13,446 10,286 Restricted cash 32,269 7,346
Straight-line rent and other receivables,
net of allowance for doubtful accounts of $809 and $379,
respectively
79,484 79,889 Other assets, net 27,226 25,315 Assets held for sale
1,521 —
Total assets $ 3,952,003 $
3,808,142
LIABILITIES AND EQUITY Liabilities:
Accounts payable and accrued expenses $ 113,697 $ 93,097
Distributions payable 29,995 29,622 Tenant prepaids and security
deposits 34,481 32,884 Other liabilities 36,980 37,403 Intangible
lease liabilities, net 19,287 21,421 Line of credit 206,000 75,000
Senior unsecured notes 1,328,435 1,351,969 Mortgage notes 161,882
201,959 Liabilities related to assets held for sale 18 —
Total liabilities 1,930,775 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 93,018,193 and 91,516,113 shares
issued and outstanding as of September 30, 2017 and
December 31, 2016, respectively
930 915 Additional paid-in capital 2,946,446 2,884,806
Distributions in excess of earnings (1,009,962 ) (1,006,125 )
Accumulated other comprehensive loss (14,985 ) (17,530 )
Total
stockholders’ equity 1,922,429 1,862,066 Noncontrolling
interests 98,799 102,721
Total equity
2,021,228 1,964,787
Total liabilities and
equity $ 3,952,003 $ 3,808,142
DCT INDUSTRIAL TRUST INC. AND
SUBSIDIARIES
Consolidated Statements of
Operations
(unaudited, in thousands, except per
share information)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2017 2016 2017
2016 REVENUES: Rental revenues $ 104,873 $ 99,933 $
314,514 $ 289,507 Institutional capital management and other fees
307 341 1,083 1,039
Total revenues
105,180 100,274 315,597 290,546
OPERATING EXPENSES: Rental expenses 9,183 8,795 27,871
27,830 Real estate taxes 16,023 15,074 48,318 44,729 Real estate
related depreciation and amortization 42,427 40,273 125,479 120,244
General and administrative 7,138 7,370 22,151 20,990 Casualty gain
— (2,440 ) (270 ) (2,278 )
Total operating expenses
74,771 69,072 223,549 211,515
Operating income 30,409 31,202 92,048 79,031
OTHER
INCOME (EXPENSE): Equity in earnings of unconsolidated joint
ventures, net 982 1,164 5,235 2,983 Gain on dispositions of real
estate interests 11,556 — 39,658 43,052 Interest expense (16,022 )
(15,773 ) (49,582 ) (47,830 ) Interest and other income (expense)
(1 ) 18 (13 ) 581 Impairment loss on land — — (938 ) — Income tax
benefit (expense) and other taxes 56 (222 ) (147 ) (510 )
Consolidated net income of DCT Industrial Trust Inc. 26,980
16,389 86,261 77,307 Net income attributable to noncontrolling
interests (1,199 ) (829 ) (3,887 ) (3,938 )
Net income
attributable to common stockholders 25,781 15,560
82,374 73,369
Distributed and undistributed earnings
allocated to participating securities
(159 ) (163 ) (482 ) (497 )
Adjusted net income attributable to
common stockholders $ 25,622 $ 15,397 $ 81,892
$ 72,872
NET EARNINGS PER COMMON SHARE:
Basic $ 0.28 $ 0.17 $ 0.89 $ 0.81
Diluted $ 0.28 $ 0.17 $ 0.89 $ 0.81
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic
92,981 90,250 92,351 89,464 Diluted 93,078 90,723
92,467 89,906 Distributions declared per
common share $ 0.31 $ 0.29 $ 0.93 $ 0.87
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
EndedSeptember 30,
For the Nine Months
EndedSeptember 30,
2017 2016 2017
2016 Reconciliation of net income attributable to
common stockholders to FFO: Net income attributable to common
stockholders $ 25,781 $ 15,560 $ 82,374 $ 73,369 Adjustments: Real
estate related depreciation and amortization 42,427 40,273 125,479
120,244 Equity in earnings of unconsolidated joint ventures, net
(982 ) (1,164 ) (5,235 ) (2,983 ) Equity in FFO of unconsolidated
joint ventures(1) 2,767 2,503 9,399 7,321 Gain on dispositions of
real estate interests (11,556 ) — (39,658 ) (43,052 )
Noncontrolling interest in the above adjustments (1,335 ) (1,908 )
(3,834 ) (4,005 ) FFO attributable to unitholders 2,086
2,343 6,435 6,786 FFO attributable to common
stockholders and unitholders – basic and diluted(2) 59,188
57,607 174,960 157,680 Adjustments: Impairment
loss on land — — 938 — Acquisition costs — 468 13 560 Hedge
ineffectiveness (non-cash) — (967 ) — 453
FFO, as adjusted, attributable to common
stockholders and unitholders – basic
and diluted
$ 59,188 $ 57,108 $ 175,911 $ 158,693
FFO per common share and unit – basic $ 0.61 $ 0.61
$ 1.82 $ 1.68 FFO per common share and unit –
diluted $ 0.61 $ 0.61 $ 1.81 $ 1.67
FFO, as adjusted, per common share and unit – basic $ 0.61
$ 0.60 $ 1.83 $ 1.69 FFO, as adjusted,
per common share and unit – diluted $ 0.61 $ 0.60 $
1.82 $ 1.68 FFO weighted average common shares
and units outstanding: Common shares for net earnings per share
92,981 90,250 92,351 89,464 Participating securities 517 582 501
561 Units 3,396 3,797 3,526 4,023 FFO
weighted average common shares, participating securities and units
outstanding – basic 96,894 94,629 96,378 94,048 Dilutive common
stock equivalents 97 473 116 442 FFO
weighted average common shares, participating securities and units
outstanding – diluted 96,991 95,102 96,494
94,490 (1) Equity in FFO of unconsolidated joint
ventures is determined as our share of FFO from each unconsolidated
joint venture. See DCT Industrial's third quarter 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 $ 1.01 $ 1.03 Adjustments: Gain on dispositions of real
estate interests (0.41 ) (0.41 ) Real estate related depreciation
and amortization(1) 1.80 1.80 Impairment loss on land 0.01 0.01
Noncontrolling interests in adjustments 0.03 0.03
FFO, as adjusted, per common share and unit – diluted(2) $ 2.44
$ 2.46 (1) Includes our proportionate share of
real estate depreciation and amortization from unconsolidated joint
ventures. (2)
The Company’s FFO guidance excludes an
impairment loss on land.
For information related to our Fixed Charge
Coverage Ratio please see our Third Quarter 2017
Supplemental
The following table is a reconciliation of
our reported net income attributable to common stockholders to our
net operating income for the three and nine months ended September
30, 2017 and 2016 (unaudited, in thousands):
For the Three MonthsEnded
September 30,
For the Nine MonthsEnded
September 30,
2017 2016 2017
2016 Reconciliation of net income attributable to common
stockholders to NOI: Net income attributable to
common stockholders $ 25,781 $ 15,560 $ 82,374 $ 73,369 Net income
attributable to noncontrolling interests 1,199 829 3,887 3,938
Income tax (benefit) expense and other taxes (56 ) 222 147 510
Impairment loss on land — — 938 — Interest and other (income)
expense 1 (18 ) 13 (581 ) Interest expense 16,022 15,773 49,582
47,830 Equity in earnings of unconsolidated joint ventures, net
(982 ) (1,164 ) (5,235 ) (2,983 ) General and administrative
expense 7,138 7,370 22,151 20,990 Real estate related depreciation
and amortization 42,427 40,273 125,479 120,244 Gain on dispositions
of real estate interests (11,556 ) — (39,658 ) (43,052 ) Casualty
gain — (2,440 ) (270 ) (2,278 ) Institutional capital management
and other fees (307 ) (341 ) (1,083 ) (1,039 ) Total
NOI $ 79,667 $ 76,064 $ 238,325 $ 216,948
Quarterly
Same-Store Portfolio NOI: Total NOI $ 79,667 $ 76,064 Less NOI
– non-same-store properties (5,465 ) (3,793 ) Less revenue from
lease terminations (225 ) (249 ) Add early termination
straight-line rent adjustment 585 31 NOI, excluding
revenue from lease terminations 74,562 72,053 Less straight-line
rents, net of related bad debt expense 165 (4,509 ) Less
amortization of above/(below) market rents (555 ) (640 ) Cash NOI,
excluding revenue from lease terminations $ 74,172 $ 66,904
Annual Same-Store Portfolio NOI: Total NOI $
79,667 $ 76,064 $ 238,325 $ 216,948 Less NOI – non-same-store
properties (12,327 ) (10,174 ) (36,928 ) (23,944 ) Less revenue
from lease terminations (225 ) (249 ) (1,161 ) (351 ) Add early
termination straight-line rent adjustment 585 31 718
162 NOI, excluding revenue from lease terminations
67,700 65,672 200,954 192,815 Less straight-line rents, net of
related bad debt expense 458 (1,945 ) (451 ) (8,294 ) Less
amortization of above/(below) market rents (509 ) (594 ) (1,641 )
(1,968 ) Cash NOI, excluding revenue from lease terminations $
67,649 $ 63,133 $ 198,862 $ 182,553
Financial Measures
Terms not otherwise defined below are as defined in our Third
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/20171102006710/en/
DCT Industrial TrustMelissa Sachs,
303-597-2400investorrelations@dctindustrial.com
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