INDIANAPOLIS, IN--(Marketwire - Apr 27, 2011) - Duke Realty Corporation (NYSE: DRE), a leading industrial, medical office and suburban office property REIT, today reported results for the first quarter 2011.
"During the first quarter, we continued to make significant progress on the repositioning of our portfolio as evidenced by property disposition proceeds of over $456 million from the sale of primarily Midwest office assets," said Dennis D. Oklak, chairman and chief executive officer. "These dispositions in combination with our industrial acquisitions over the last few quarters are a major step in achieving our asset strategy. Operationally, our Core FFO of $0.28 cents per share was again solid, our total portfolio occupancy remained steady at 88.9 percent and we completed over 5 million square feet of leases. We continue to execute on all components of our strategic plan, despite a still challenging economy."
Quarterly Highlights
-- Core funds from operations per diluted share ("Core FFO") was $0.28
for the quarter. Funds from Operations per diluted share ("FFO") as
defined by the National Association of Real Estate Investment Trusts
("NAREIT") was $0.27 for the quarter.
-- Executing on asset and capital strategies:
-- Over $456 million of proceeds generated primarily from Midwest
office asset dispositions; including $274 million from the
completion of the previously announced sale of office properties
to the CBRE Realty Trust joint venture;
-- Throughout the first quarter and in April, closed on the remaining
buildings from the previously announced acquisition of primarily
industrial buildings in South Florida;
-- Retired $42.5 million of unsecured bonds in March with available
cash;
-- Balance on unsecured line of credit at zero and cash on hand of
$167.1 million as of March 31, 2011;
-- Strong operating metrics and performance:
-- Overall portfolio occupancy of 88.9 percent;
-- Over 5.3 million square feet of leases completed during the
quarter;
-- Same property net operating income growth was positive 0.9 percent
for the twelve months ended March 31, 2011 as compared to the
period ended March 31, 2010.
Financial Performance
-- Core FFO for the first quarter of both 2011 and 2010 was $0.28 per
share. In June 2010, the company completed a common equity offering in
conjunction with the acquisition of an industrial portfolio from a
joint venture partner. The impact on Core FFO from the additional
shares outstanding in the first quarter of 2011 as a result of this
common equity offering was offset by the additional rental operations
FFO from the acquisition.
A reconciliation of FFO as defined by NAREIT to Core FFO is included in
the financial tables included in this release.
-- Net income per diluted share ("EPS") for first quarter 2011 was $0.19,
as compared to a loss of $0.07 for the same quarter in 2010. The
overall improvement is attributable to increased gains from the sale
of assets, which totaled $79.5 million ($0.31 per share) in the first
quarter 2011 as compared to gains of $11.8 million ($0.05 per share)
in the first quarter of 2010.
Operating Performance Highlights
-- Overall portfolio occupancy, including projects under development, was
88.9 percent as of March 31, 2011, compared to 89.1 percent at year-end
2010. The company anticipated the slight decrease in overall occupancy
because of known lease terminations, which were concentrated in the
bulk distribution portfolio.
-- Occupancy in the bulk distribution portfolio at the end of the first
quarter 2011 was 90.2 percent, down from 90.5 percent at year-end
2010. The portfolio was impacted by known terminations of both
temporary space and longer term leases. However, the company did
execute over 1.2 million of new industrial leases during the quarter
to mitigate the effects of these terminations.
-- Occupancy in the suburban office portfolio remained steady at 85.6
percent.
-- Tenant retention for the first quarter was approximately 70 percent.
-- As anticipated, same-property net operating income for the three months
ended March 31, 2011 was flat over the same period in 2010. For the
twelve months ended March 31, 2011, same property net operating income
increased by 0.9 percent over the same period in 2010.
Real Estate Investment Activity
Dispositions
Proceeds from first quarter 2011 building dispositions totaled $456.4 million and included the following:
-- $274 million from the completion of the previously announced sale of 13
office assets to an existing joint venture. The assets sold in the
first quarter 2011 totaled over 2 million square feet and are 93
percent leased.
-- Sale of a portfolio of two CBD buildings in Cincinnati, OH and three
suburban office assets in Nashville, TN. The total portfolio was
over 988,000 square feet and 86 percent leased.
-- Sale of two suburban office buildings totaling nearly 410,000 square
feet located in Cincinnati, OH. The assets were 100 percent leased to
a single tenant and were originally developed by the company in its
held-for-sale portfolio.
Acquisitions
The company completed the previously announced acquisition of the remaining buildings of a primarily industrial portfolio located in South Florida. The closings on the assets were completed throughout the first quarter and in April. Total acquisitions in the first quarter were $139 million.
Development
Wholly Owned Properties
-- The company's wholly-owned development projects under construction at
March 31, 2011 consisted of six medical office projects totaling
347,000 square feet and two bulk industrial buildings totaling 1.6
million square feet. These projects are 88 percent pre-leased in the
aggregate.
-- During the first quarter 2011, the company started development of a
medical office building totaling 48,000 square feet which is 80
percent pre-leased.
Joint Venture Properties
-- The company had a single joint venture development project under
construction at March 31, 2011. The project is a 406,000 square foot
expansion of an existing industrial building that is 100 percent leased
to a single tenant.
-- During the quarter, the 460,000 square feet Baylor Cancer Center
medical office asset was placed into service. The asset is 93 percent
leased.
2011 Earnings Guidance
The Company reaffirmed Core FFO guidance for 2011 of $1.06 to $1.18.
Dividends Declared
The company's board of directors declared a quarterly cash dividend on the company's common stock of $0.17 per share, or $0.68 per share on an annualized basis. The first quarter dividend will be payable May 31, 2011, to shareholders of record as of May 17, 2011.
The board also declared the following dividends on the company's outstanding preferred stock:
Quarterly
Class NYSE Symbol Amount/Share Record Date Payment Date
------------- ------------- ------------- ------------- -------------
Series J DREPRJ $0.414063 May 17, 2011 May 31, 2011
Series K DREPRK $0.406250 May 17, 2011 May 31, 2011
Series L DREPRL $0.412500 May 17, 2011 May 31, 2011
Series M DREPRM $0.434375 June 16, 2011 June 30, 2011
Series N DREPRN $0.453125 June 16, 2011 June 30, 2011
Series O DREPRO $0.523438 June 16, 2011 June 30, 2011
Information Regarding FFO
The company computes FFO in accordance with standards established by the National Association of Real Estate Investment Trusts ("NAREIT"). NAREIT defines FFO as net income (loss) before non-controlling interest and excluding gains (losses) on sales of depreciable property and extraordinary items (computed in accordance with generally accepted accounting principles ("GAAP")); plus real estate related depreciation and amortization, and after similar adjustments for unconsolidated joint ventures. The company believes FFO to be most directly comparable to net income as defined by GAAP. The company believes that FFO is an operating measure and should be examined in conjunction with net income (as defined by GAAP) as presented in the financial statements accompanying this release. FFO does not represent a measure of liquidity, nor is it indicative of funds available for the company's cash needs, including its ability to make cash distributions to shareholders. A reconciliation of net income and net income per share, as defined by GAAP, to FFO, as defined by NAREIT, is included in the financial tables accompanying this release.
For information purposes, the company also provides FFO adjusted for certain items that are generally non-cash in nature and that materially distort the comparative measurement of company performance over time ("Core FFO"). The adjustments include impairment charges, tax expenses or benefits related to either changes in deferred tax asset valuation allowances or changes in tax exposure accruals that were established as the result of the adoption of new accounting principles, gains (losses) on debt transactions, adjustments related to the repurchase of preferred stock and gains on and related costs of acquisitions. Although the 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, the company believes it provides a meaningful supplemental measure of its operating performance. A reconciliation of FFO as defined by NAREIT to Core FFO is included in the financial tables accompanying this release.
About Duke Realty
Duke Realty owns and operates approximately 139 million rentable square feet of industrial and office assets, including medical office, in 18 major U.S. cities. Duke Realty is publicly traded on the NYSE under the symbol DRE and is listed on the S&P MidCap 400 Index. More information about Duke Realty is available at www.dukerealty.com.
First Quarter Earnings Call and Supplemental Information
Duke Realty is hosting a conference call tomorrow, April 28, 2011, at 3:00 p.m. EDT to discuss its first 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 Web site.
A copy of the company's supplemental information will be available by 6:00 p.m. EDT today through the Investor Relations section of the company's Web site.
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, projected financing sources, future transactions with joint venture partners, 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. 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, including the current economic recession; (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) increases in operating costs; (x) changes in the dividend policy for the company's common stock; (xi) the reduction in the company's income in the event of multiple lease terminations by tenants; and (xii) impairment charges. 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. 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, 2010. 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.
Duke Realty Corporation
Statement of Operations
March 31, 2011
(In thousands, except per share amounts)
Three Months Ended
------------------------
March 31,
------------------------
2011 2010
----------- -----------
Revenues:
Rental and related revenue $ 240,339 $ 211,918
General contractor and service fee revenue 146,547 113,641
----------- -----------
386,886 325,559
----------- -----------
Expenses:
Rental expenses 56,890 51,336
Real estate taxes 35,003 28,519
General contractor and other services
expenses 135,664 107,162
Depreciation and amortization 94,740 80,577
----------- -----------
322,297 267,594
----------- -----------
Other Operating Activities
Equity in earnings of unconsolidated
companies 1,073 4,929
Gain (loss) on sale of properties 67,856 2,069
Undeveloped land carrying costs (2,309) (2,251)
Other operating expenses (85) (277)
General and administrative expense (11,197) (13,544)
----------- -----------
55,338 (9,074)
----------- -----------
Operating income 119,927 48,891
Other income (expense)
Interest and other income, net 87 151
Interest expense (66,082) (56,167)
Loss on debt transactions - (354)
Acquisition costs (589) -
----------- -----------
Income (loss) from continuing
operations 53,343 (7,479)
Discontinued Operations:
Income (loss) before gain on sales (157) 349
Gain on sale of depreciable properties 11,603 9,778
----------- -----------
Income (loss) from discontinued
operations 11,446 10,127
Net income 64,789 2,648
Dividends on preferred shares (15,974) (18,363)
Adjustments for repurchase of preferred
shares (163) -
Net (income) loss attributable to
noncontrolling interests (1,083) 451
----------- -----------
Net income (loss) attributable to
common shareholders $ 47,569 $ (15,264)
=========== ===========
Basic net income (loss) per common share:
Continuing operations attributable to
common shareholders $ 0.14 $ (0.12)
Discontinued operations attributable to
common shareholders $ 0.05 $ 0.05
----------- -----------
Total $ 0.19 $ (0.07)
=========== ===========
Diluted net income (loss) per common share:
Continuing operations attributable to
common shareholders $ 0.14 $ (0.12)
Discontinued operations attributable to
common shareholders $ 0.05 $ 0.05
----------- -----------
Total $ 0.19 $ (0.07)
=========== ===========
Duke Realty Corporation
Statement of Funds From Operations
March 31, 2011
(In thousands, except per share amounts)
Three Months Ended
March 31,
(Unaudited)
==========================================================
2011 2010
============================ ============================
Wtd. Wtd.
Avg. Per Avg. Per
Amount Shares Share Amount Shares Share
-------- --------- --------- -------- --------- --------
Net Income
(Loss)
Attributable
to Common
Shareholders $ 47,569 $(15,264)
Less: Dividends
on share based
awards
expected to
vest (799) (502)
-------- --------
Net Income
(Loss) Per
Common Share-
Basic 46,770 252,406 $ 0.19 (15,766) 224,153 $ (0.07)
Add back:
Noncontrolling
interest in
earnings of
unitholders 1,205 6,384 - -
Other
potentially
dilutive
securities 47 -
-------- --------- -------- ---------
Net income
(Loss) Per
Common Share-
Diluted $ 47,975 258,837 $ 0.19 $(15,766) 224,153 $ (0.07)
======== ========= ======== =========
Reconciliation
to Funds From
Operations
("FFO")
Net Income
(Loss)
Attributable
to Common
Shareholders $ 47,569 252,406 $(15,264) 224,153
Adjustments:
Depreciation
and
amortization 94,981 84,168
Company share
of joint
venture
depreciation
and
amortization 7,628 9,563
Earnings from
depreciable
property
sales-wholly
owned,
discontinued
operations (11,603) (9,778)
Earnings from
depreciable
property
sales-wholly
owned,
continuing
operations (67,856) (2,069)
Earnings from
depreciable
property
sales-joint
venture
share (91) (2,304)
Noncontrolling
interest
share of
adjustments (569) (2,278)
-------- --------- -------- ---------
Funds From
Operations-
Basic 70,059 252,406 $ 0.28 62,038 224,153 $ 0.28
Noncontrolling
interest in
income (loss)
of unitholders 1,205 6,384 (449) 6,607
Noncontrolling
interest
share of
adjustments 569 2,278
Other
potentially
dilutive
securities 3,086 1,435
-------- --------- -------- ---------
Funds From
Operations-
Diluted $ 71,833 261,876 $ 0.27 $ 63,867 232,195 $ 0.28
Loss on debt
transactions - 354
Adjustments
for
repurchases
of preferred
shares 163 -
Acquisition
costs 589 -
-------- --------- -------- ---------
Core Funds
From
Operations-
Diluted $ 72,585 261,876 $ 0.28 $ 64,221 232,195 $ 0.28
======== ========= ======== =========
Duke Realty Corporation
Balance Sheet
March 31, 2011
(In thousands, except per share amounts)
March December
31, 2011 31, 2010
=========== ===========
ASSETS:
Rental Property $ 6,681,647 $ 7,032,889
Less: Accumulated Depreciation (1,334,574) (1,406,437)
Construction in Progress 93,433 61,776
Land Held for Development 627,965 625,353
----------- -----------
Net Real Estate Investments 6,068,471 6,313,581
----------- -----------
Cash 167,115 18,384
Accounts Receivable 27,166 23,478
Straight-line Rents Receivable 132,106 135,294
Receivables on Construction Contracts 37,570 7,564
Investments in and Advances to Unconsolidated
Companies 360,355 367,445
Deferred Financing Costs, Net 44,400 46,320
Deferred Leasing and Other Costs, Net 500,505 545,787
Escrow Deposits and Other Assets 189,803 186,423
----------- -----------
Total Assets $ 7,527,491 $ 7,644,276
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Secured Debt $ 1,147,158 $ 1,065,628
Unsecured Notes 2,906,016 2,948,405
Unsecured Line of Credit 18,329 193,046
Construction Payables and Amounts due
Subcontractors 69,369 44,892
Accrued Real Estate Taxes 88,782 91,502
Accrued Interest 36,211 62,407
Accrued Expenses 34,384 63,175
Other Liabilities 144,795 130,711
Tenant Security Deposits and Prepaid Rents 56,597 54,607
----------- -----------
Total Liabilities 4,501,641 4,654,373
----------- -----------
Preferred Stock 902,540 904,540
Common Stock and Additional Paid-in Capital 3,582,163 3,576,242
Accumulated Other Comprehensive Loss (661) (1,432)
Distributions in Excess of Net Income (1,529,847) (1,533,740)
----------- -----------
Total Shareholders' Equity 2,954,195 2,945,610
----------- -----------
Non-controlling Interest 71,655 44,293
----------- -----------
Total Liabilities and Equity $ 7,527,491 $ 7,644,276
=========== ===========
Contact Information: Contact Information: Media: Jim Bremner 317.808.6920 jim.bremner@dukerealty.com Investors: Randy Henry 317.808.6060 randy.henry@dukerealty.com