Duke Realty Reports Second Quarter 2015 Results
Core FFO per Share of $0.28 and Core AFFO per Share of $0.25 $1.4 Billion in Dispositions Over $1 Billion of Debt Repayments $257 Million of Development Starts and Strong Rental Rate Growth
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INDIANAPOLIS, IN -- (Marketwired) -- 07/29/15 -- Duke Realty Corporation (NYSE: DRE), a leading industrial, medical and suburban office property REIT, today reported results for the second quarter of 2015.
Quarterly Highlights
- Core Funds from Operations ("Core FFO") per diluted share was $0.28 for the quarter. Funds from Operations ("FFO") per diluted share as defined by the National Association of Real Estate Investment Trusts ("NAREIT") was $0.06 for the quarter.
- Operating results:
- Occupancy in the total portfolio, including properties under development, of 93.5 percent and in-service portfolio occupancy of 95.8 percent;
- Same-property net operating income growth of 6.2 percent for the quarter ended June 30, 2015 as compared to the quarter ended June 30, 2014 and 6.3 percent for the twelve months ended June 30, 2015 as compared to the twelve months ended June 30, 2014;
- Adjusted Funds from Operations ("AFFO") of $0.25 per diluted share, which results in a dividend payout ratio of 68 percent;
- Total leasing activity of 4.0 million square feet.
- Successful execution of capital transactions during the quarter:
- Completed $1.4 billion of non-strategic building and land dispositions, including the previously announced $1.1 billion suburban office portfolio disposition;
- Repaid $431 million of unsecured notes, with maturity dates ranging from 2017 to 2020 and a weighted average stated rate of 6.8 percent, primarily through a tender offer completed in April 2015;
- Repaid $137 million in secured loans, with maturity dates ranging from 2015 to 2018 and a weighted average stated rate of 5.3 percent;
- Repaid $453 million on the line of credit to finish the quarter with no outstanding borrowings on the line.
Denny Oklak, Chairman and CEO, said, "While we executed major dispositions during the quarter, we also continued strong operational performance within our remaining portfolio, which included strong rent growth driving same property net income growth of 6.3 percent for the twelve months ended June 30, 2015 and in-service occupancy of 95.8 percent at June 30, 2015. Low vacancy rates across our markets, and our high quality industrial assets, are allowing us to continue to push rental rates. Because of this, we are pleased to report a 19 percent rental rate growth on renewals in our industrial portfolio."
Mark Denien, Chief Financial Officer, commented, "Our leverage metrics improved significantly as the result of the debt repayments that took place during the second quarter. We also have nearly $300 million of disposition proceeds, in the form of seller-financing and amounts held in escrow accounts that can be accretively re-deployed to fund our development pipeline without increasing leverage. Overall, we believe the strength of our balance sheet leaves us in an excellent position for future growth."
Financial Performance
- The following table reconciles FFO per share, as defined by NAREIT, to Core FFO per share as measured by the company, for the three months ended June 30, 2015 and 2014:
Three Months Ended
June 30,
2015 2014
----------- -----------
FFO per share, attributable to common shareholders
- diluted, as defined by NAREIT 0.06 0.30
Adjustments:
Gain on land sales (0.05) (0.01)
Loss on debt extinguishment 0.23 --
Impairment charges - non-depreciable properties 0.01 0.01
Overhead restructuring charges 0.02 --
----------- -----------
Core FFO per share, attributable to common
shareholders - diluted 0.28 0.30
- Core FFO was $99 million for the second quarter of 2015, a decrease of $4 million, or $0.02 per share, from the same quarter of 2014. The decrease in Core FFO for the quarter was primarily due to the impact of property dispositions, substantially offset by improved property-level performance and lower interest expense. Core FFO excludes approximately $7 million of overhead restructuring charges, which are mainly comprised of severance charges related to the significant reduction in the size of the company's office portfolio. A reconciliation of net income to FFO as defined by NAREIT, as well as to Core FFO, is included in the financial tables included in this release.
- FFO, as defined by NAREIT, was $20 million for the second quarter of 2015, a decrease of $83 million, or $0.24 per share, from the same quarter of 2014. In addition to the factors impacting Core FFO, the decrease in FFO as defined by NAREIT was primarily the result of recognizing $83 million of losses on debt extinguishment during the quarter.
- Net income was $1.30 per diluted share for the second quarter of 2015 compared to $0.38 per diluted share for the same quarter in 2014. The increase in net income per diluted share was primarily due to recognizing gains on the sale of depreciable properties totaling $507 million during the second quarter of 2015.
Portfolio Operating Performance
Strong overall operating performance across all product types:
- In-service occupancy in the bulk distribution portfolio at June 30, 2015 of 96.3 percent compared to 96.8 percent at March 31, 2015. The slight decrease in occupancy during the quarter was primarily due to a large speculative industrial property being placed in service during the quarter.
- In-service occupancy in the medical office portfolio of 94.9 percent at June 30, 2015 compared to 94.2 percent at March 31, 2015.
- In-service occupancy in the suburban office portfolio of 87.2 percent at June 30, 2015 compared to 86.0 percent at March 31, 2015.
- Total occupancy, including properties under development, of 93.5 percent at June 30, 2015 compared to 94.5 percent at March 31, 2015. The decrease in total occupancy was due to starting 3.6 million square feet of development projects during the quarter that were 32 percent pre-leased.
- Tenant retention of 67 percent for the quarter, with overall renewal rental rate growth for the entire portfolio of 14.9 percent.
- Same-property net operating income growth of 6.2 percent for the three months ended June 30, 2015 and 6.3 percent for the twelve months ended June 30, 2015 as compared to the comparable periods ended June 30, 2014.
Real Estate Investment Activity
Development
Jim Connor, Chief Operating Officer, stated, "We continued to increase our investment in high quality industrial and medical office properties, starting 13 projects totaling 3.6 million square feet, with expected costs of $257 million, during the second quarter. With the high market pricing for acquisitions, we have continued to focus on development activities, including selective higher yielding speculative developments in selected markets, and we expect a robust level of development starts for the rest of the year while maintaining an overall highly pre-leased pipeline."
The second quarter included the following development activity:
Wholly-Owned Properties
- During the quarter, the company started $234 million of wholly-owned development projects. These projects consisted of nine industrial projects totaling 2.9 million square feet, which were 26 percent leased in total, and three medical office projects totaling 168,000 square feet which were 77 percent leased in total.
- Wholly-owned development projects under construction at June 30, 2015, excluding the one suburban office project that will be sold at completion as part of the suburban office disposition, consisted of 14 industrial projects totaling 4.8 million square feet, eight medical office projects totaling 415,000 square feet and two suburban office projects totaling 256,000 square feet. These projects were 39 percent pre-leased in the aggregate.
- Four bulk industrial projects, which were 95 percent leased and totaled 1.4 million square feet, were placed in service.
Joint Venture Properties
- During the quarter, a 53 percent pre-leased bulk industrial project, totaling 482,000 square feet was started in Columbus in a 50 percent-owned unconsolidated joint venture.
- One speculative industrial project, which totaled 937,000 square feet, was placed in service during the quarter by a 50 percent-owned joint venture.
- Joint venture development projects under construction at June 30, 2015 consisted of three industrial projects totaling 1.0 million square feet, which were 78 percent pre-leased.
Acquisitions
The company acquired a 100 percent leased 233,000 square-foot modern bulk industrial facility located in the Lehigh Valley region of Pennsylvania for $20 million.
Dispositions
Dispositions totaled $1.4 billion in the quarter and were comprised of the following:
Wholly-Owned Properties
- All of the company's suburban office properties in Raleigh, St. Louis, South Florida and Nashville, sold to a joint venture with affiliates of Starwood Capital Group, Vanderbilt Partners and Trinity Capital Advisors for $1.1 billion. The sale was comprised of 61 buildings totaling 6.7 million square feet, which were 92 percent leased, with one additional building in Raleigh to be sold upon completion;
- A portfolio of 51 light industrial properties, which were 94 percent leased, located primarily in the Midwest, totaling 5.2 million square feet, for $270 million.
Joint Venture Properties
- A portfolio of seven industrial properties in Dallas, totaling 763,000 square feet, from a 50 percent-owned unconsolidated joint venture;
- A 305,000 square foot bulk industrial property in Columbus from a 50 percent-owned unconsolidated joint venture.
Undeveloped Land
- Non-strategic land across several markets, totaling 94 acres, with a sales price of $36 million and a net book gain on sale of $17 million.
Distributions Declared
Our board of directors declared a quarterly cash distribution on the common stock of $0.17 per share, or $0.68 per share on an annualized basis. The second quarter distribution will be payable August 31, 2015 to shareholders of record on August 14, 2015.
2015 Guidance
The following assumptions within the detailed guidance, which is available through the Investor Relations-Financials section of the company's website, were revised:
- The estimate for development starts was increased from a range of $400 million to $500 million to a range of $550 million to $700 million;
- The estimate for building disposition proceeds was increased from a range of $1.5 billion to $1.8 billion to a range of $1.8 billion to $2.0 billion;
- The estimate for land disposition proceeds was increased from a range of $50 million to $80 million to a range of $80 million to $120 million;
- The estimate for same property NOI growth was increased from a range of 3.0 percent to 5.0 percent to a range of 4.0 percent to 5.5 percent.
FFO and AFFO Reporting Definitions
FFO: FFO is computed in accordance with standards established by NAREIT. NAREIT defines FFO as net income (loss) excluding gains (losses) on sales of depreciable property, impairment charges related to depreciable real estate assets, 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 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 the company's 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 materially distort the comparative measurement of company performance over time. The adjustments include gains on sale of undeveloped land, impairment charges not related to depreciable real estate assets, tax expenses or benefit related to (i) changes in deferred tax asset valuation allowances, (ii) changes in tax exposure accruals that were established as the result of the adoption of new accounting principles, or (iii) taxable income (loss) related to other items excluded from FFO or Core FFO (collectively referred to as "other income tax items"), gains (losses) on debt transactions, adjustments on the repurchase or redemption of preferred stock, gains (losses) on and related costs of acquisitions, and charges related to major overhead restructuring activities, including severance. Although the company's 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.
AFFO: AFFO is defined by the company as 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 and 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 income growth as a supplemental measure to evaluate property-level performance, and jointly-controlled properties are included at our ownership percentage.
A description of the properties that are excluded from the company's same-property measure is included on page 20 of our June 30, 2015 supplemental information.
About Duke Realty Corporation
Duke Realty Corporation owns and operates 142 million rentable square feet of industrial and office assets, including medical office, in 22 major U.S. metropolitan areas. Duke Realty Corporation 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 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, 2015, at 3:00 p.m. ET 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 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. 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; (xv) the effects of weather and natural disasters such 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) - (ix). 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, 2014. 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 and Subsidiaries
Consolidated Balance Sheets
(Unaudited and in thousands)
June 30, December 31,
2015 2014
------------- -------------
Assets
Real estate investments:
Land and improvements $ 1,395,664 $ 1,412,867
Buildings and tenant improvements 4,805,915 4,986,390
Construction in progress 216,352 246,062
Investments in and advances to
unconsolidated companies 284,739 293,650
Undeveloped land 474,997 499,960
------------- -------------
7,177,667 7,438,929
Accumulated depreciation (1,178,976) (1,235,337)
------------- -------------
Net real estate investments 5,998,691 6,203,592
Real estate investments and other assets held-
for-sale 72,384 725,051
Cash and cash equivalents 20,254 17,922
Accounts receivable, net 22,649 26,168
Straight-line rents receivable, net 111,255 109,657
Receivables on construction contracts,
including retentions 14,529 36,224
Deferred financing costs, net 32,410 38,734
Deferred leasing and other costs, net 370,172 387,635
Escrow deposits and other assets 472,177 209,856
------------- -------------
$ 7,114,521 $ 7,754,839
============= =============
Liabilities and Equity
Indebtedness:
Secured debt $ 778,869 $ 942,478
Unsecured debt 2,681,874 3,364,161
Unsecured line of credit - 106,000
------------- -------------
3,460,743 4,412,639
Liabilities related to real estate investments
held-for-sale 3,742 59,092
Construction payables and amounts due
subcontractors, including retentions 63,396 69,470
Accrued real estate taxes 73,556 76,308
Accrued interest 37,289 55,110
Other accrued expenses 41,939 62,632
Other liabilities 105,533 95,566
Tenant security deposits and prepaid rents 36,480 44,142
------------- -------------
Total liabilities 3,822,678 4,874,959
------------- -------------
Shareholders' equity:
Common stock 3,451 3,441
Additional paid-in-capital 4,953,224 4,944,800
Accumulated other comprehensive income 2,340 3,026
Distributions in excess of net income (1,694,574) (2,090,942)
------------- -------------
Total shareholders' equity 3,264,441 2,860,325
Noncontrolling interest 27,402 19,555
------------- -------------
Total equity 3,291,843 2,879,880
------------- -------------
$ 7,114,521 $ 7,754,839
============= =============
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,
-------------------- --------------------
2015 2014 2015 2014
--------- --------- --------- ---------
Revenues:
Rental and related revenue $ 201,996 $ 204,780 $ 416,611 $ 413,426
General contractor and service
fee revenue 23,901 69,512 76,722 125,332
--------- --------- --------- ---------
225,897 274,292 493,333 538,758
--------- --------- --------- ---------
Expenses:
Rental expenses 30,094 32,221 66,218 74,262
Real estate taxes 27,747 28,652 58,526 57,855
General contractor and other
services expenses 21,738 63,857 68,762 111,128
Depreciation and amortization 78,334 88,500 160,237 176,798
--------- --------- --------- ---------
157,913 213,230 353,743 420,043
--------- --------- --------- ---------
Other operating activities:
Equity in earnings of
unconsolidated companies 15,123 60,826 21,369 63,147
Gain on sale of properties 107,410 70,318 130,894 86,171
Gain on land sales 17,012 3,889 22,437 4,041
Other operating expenses (1,555) (1,987) (3,112) (4,203)
Impairment charges (5,470) (2,523) (5,470) (2,523)
General and administrative
expenses (19,238) (10,365) (36,242) (25,059)
--------- --------- --------- ---------
113,282 120,158 129,876 121,574
--------- --------- --------- ---------
Operating income 181,266 181,220 269,466 240,289
Other income (expenses):
Interest and other income, net 1,375 229 1,713 580
Interest expense (42,976) (51,448) (92,567) (103,306)
Loss on debt extinguishment (82,653) (139) (82,653) (139)
Acquisition-related activity (1,305) (747) (1,333) (761)
--------- --------- --------- ---------
Income from continuing
operations, before income taxes 55,707 129,115 94,626 136,663
Income tax benefit (expense) 2,288 (364) 804 (3,038)
--------- --------- --------- ---------
Income from continuing
operations 57,995 128,751 95,430 133,625
Discontinued operations:
Income before gain on sales 36 5,471 10,195 9,393
Gain on sale of depreciable
properties, net of tax 396,134 2,305 414,509 19,080
--------- --------- --------- ---------
Income from discontinued
operations 396,170 7,776 424,704 28,473
Net income 454,165 136,527 520,134 162,098
Dividends on preferred shares - (7,046) - (14,083)
Adjustments for
redemption/repurchase of
preferred shares - - - 483
Net income attributable to
noncontrolling interests (4,785) (1,793) (5,510) (2,127)
--------- --------- --------- ---------
Net income attributable to
common shareholders $ 449,380 $ 127,688 $ 514,624 $ 146,371
========= ========= ========= =========
Basic net income per common
share:
Continuing operations
attributable to common
shareholders $ 0.16 $ 0.36 $ 0.27 $ 0.35
Discontinued operations
attributable to common
shareholders 1.14 0.02 1.22 0.09
--------- --------- --------- ---------
Total $ 1.30 $ 0.38 $ 1.49 $ 0.44
========= ========= ========= =========
Diluted net income per common
share:
Continuing operations
attributable to common
shareholders $ 0.16 $ 0.36 $ 0.27 $ 0.35
Discontinued operations
attributable to common
shareholders 1.14 0.02 1.22 0.09
--------- --------- --------- ---------
Total $ 1.30 $ 0.38 $ 1.49 $ 0.44
========= ========= ========= =========
Duke Realty Corporation and Subsidiaries
Summary of EPS, FFO and AFFO
Three Months Ended June 30
(Unaudited and in thousands, except per share amounts)
---------------------------------------------------
2015 2014
-------------------------- ------------------------
Wtd. Wtd.
Avg. Per Avg. Per
Amount Shares Share Amount Shares Share
--------- ------- ------- -------- ------- -------
Net income attributable
to common shareholders $ 449,380 $127,688
Less: dividends on
participating securities (589) (646)
--------- --------
Net income per common
share- basic 448,791 345,098 $ 1.30 127,042 331,753 $ 0.38
Add back:
Noncontrolling interest
in earnings of
unitholders 4,762 3,630 1,693 4,386
Other potentially
dilutive securities 433 275
--------- ------- -------- -------
Net income attributable
to common shareholders-
diluted $ 453,553 349,161 $ 1.30 $128,735 336,414 $ 0.38
========= ======= ======== =======
Reconciliation to funds
from operations ("FFO")
Net income attributable
to common shareholders $ 449,380 345,098 $127,688 331,753
Adjustments:
Depreciation and
amortization 78,334 97,641
Company share of joint
venture depreciation,
amortization and other 4,817 6,781
Impairment charges -
depreciable property 864 -
Gains on depreciable
property sales -
wholly owned,
discontinued
operations (399,354) (2,851)
Gains on depreciable
property sales -
wholly owned,
continuing operations (107,410) (70,318)
Income tax expense
triggered by
depreciable property
sales 932 910
Gains/losses on
depreciable property
sales - JV (11,989) (58,447)
Noncontrolling interest
share of adjustments 4,515 352
--------- ------- -------- -------
NAREIT FFO attributable
to common shareholders -
basic 20,089 345,098 $ 0.06 101,756 331,753 $ 0.31
Noncontrolling interest
in income of
unitholders 4,762 3,630 1,693 4,386
Noncontrolling interest
share of adjustments (4,515) (352)
Other potentially
dilutive securities 3,297 3,183
--------- ------- -------- -------
NAREIT FFO attributable
to common shareholders -
diluted $ 20,336 352,025 $ 0.06 $103,097 339,322 $ 0.30
Gain on land sales (17,012) (3,889)
Loss on debt
extinguishment 82,653 139
Impairment charges -
non-depreciable
properties 4,606 2,523
Severance/Restructuring
Charges 7,207 -
Acquisition-related
activity 1,305 747
--------- ------- -------- -------
Core FFO attributable to
common shareholders -
diluted $ 99,095 352,025 $ 0.28 $102,617 339,322 $ 0.30
========= ======= ======== =======
Adjusted FFO
Core FFO - diluted $ 99,095 352,025 $ 0.28 $102,617 339,322 $ 0.30
Adjustments:
Straight-line rental
income and expense (4,086) (5,372)
Amortization of
above/below market
rents and concessions 568 1,690
Stock based
compensation expense 3,539 3,189
Noncash interest
expense 1,747 1,449
Second generation
concessions (12) -
Second generation
tenant improvements (4,991) (10,423)
Second generation
leasing commissions (4,328) (8,715)
Building improvements (2,097) (1,124)
--------- ------- -------- -------
Adjusted FFO - diluted $ 89,435 352,025 $ 0.25 $ 83,311 339,322 $ 0.25
========= ======= ======== =======
Duke Realty Corporation and Subsidiaries
Summary of EPS, FFO and AFFO
Six Months Ended June 30
(Unaudited and in thousands, except per share amounts)
---------------------------------------------------
2015 2014
-------------------------- ------------------------
Wtd. Wtd.
Avg. Per Avg. Per
Amount Shares Share Amount Shares Share
--------- ------- ------- -------- ------- -------
Net income attributable
to common shareholders $ 514,624 $146,371
Less: dividends on
participating securities (1,209) (1,289)
--------- --------
Net income per common
share- basic 513,415 344,849 $ 1.49 145,082 329,442 $ 0.44
Add back:
Noncontrolling interest
in earnings of
unitholders 5,461 3,662 1,943 4,386
Other potentially
dilutive securities 434 274
--------- ------- -------- -------
Net income attributable
to common shareholders-
diluted $ 518,876 348,945 $ 1.49 $147,025 334,102 $ 0.44
========= ======= ======== =======
Reconciliation to funds
from operations ("FFO")
Net income attributable
to common shareholders $ 514,624 344,849 $146,371 329,442
Adjustments:
Depreciation and
amortization 163,754 195,905
Company share of joint
venture depreciation,
amortization and other 9,745 13,177
Impairment charges -
depreciable property 864 -
Gains on depreciable
property sales -
wholly owned,
discontinued
operations (417,729) (22,603)
Gains on depreciable
property sales -
wholly owned,
continuing operations (130,894) (86,171)
Income tax expense
triggered by
depreciable property
sales 2,416 6,561
Gains on depreciable
property sales-JV (13,533) (58,282)
Noncontrolling interest
share of adjustments 4,050 (639)
--------- ------- -------- -------
NAREIT FFO attributable
to common shareholders -
basic 133,297 344,849 $ 0.39 194,319 329,442 $ 0.59
Noncontrolling interest
in income of
unitholders 5,461 3,662 1,943 4,386
Noncontrolling interest
share of adjustments (4,050) 639
Other potentially
dilutive securities 3,329 3,119
--------- ------- -------- -------
NAREIT FFO attributable
to common shareholders -
diluted $ 134,708 351,840 $ 0.38 $196,901 336,947 $ 0.58
Gain on land sales (22,437) (4,041)
Loss on debt
extinguishment 82,653 139
Adjustments for
redemption/repurchase
of preferred shares - (483)
Impairment charges -
non-depreciable
properties 4,606 2,523
Severance/Restructuring
Charges 7,207 -
Acquisition-related
activity 1,333 761
--------- ------- -------- -------
Core FFO attributable to
common shareholders -
diluted $ 208,070 351,840 $ 0.59 $195,800 336,947 $ 0.58
========= ======= ======== =======
Adjusted FFO
Core FFO - diluted $ 208,070 351,840 $ 0.59 $195,800 336,947 $ 0.58
Adjustments:
Straight-line rental
income and expense (13,265) (12,073)
Amortization of
above/below market
rents and concessions 2,681 4,158
Stock based
compensation expense 13,604 11,466
Noncash interest
expense 3,522 3,051
Second generation
concessions (48) (76)
Second generation
tenant improvements (11,891) (17,884)
Second generation
leasing commissions (11,026) (15,617)
Building improvements (2,387) (1,461)
--------- ------- -------- -------
Adjusted FFO - diluted $ 189,260 351,840 $ 0.54 $167,364 336,947 $ 0.50
========= ======= ======== =======
Contact Information: Investors: Ron Hubbard 317.808.6060 Media: Helen McCarthy 317.708.8010
Source: Duke Realty Corporation
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