DENVER, Aug. 4 CO-DCT-Industrial
DENVER, Aug. 4 /PRNewswire-FirstCall/ -- DCT Industrial Trust Inc.
(NYSE: DCT), a leading industrial real estate investment trust, today
announced financial results for the quarter and six months ended June 30,
2008.
Funds from operations (FFO) attributable to common stockholders totaled
$32.3 million for the second quarter of 2008 and $62.6 million for the six
months ended June 30, 2008. FFO was $0.16 per diluted share for the second
quarter of 2008 and $0.30 per diluted share for the six months ended June 30,
2008, compared to $0.19 per diluted share and $0.36 per diluted share reported
for the same periods in 2007.
Net income attributable to common stockholders for the second quarter of
2008 was $15.5 million, or $0.09 per diluted share, compared to $7.8 million,
or $0.05 per diluted share, reported for the second quarter of 2007. Net
income for the six months ended June 30, 2008 was $15.9 million, or $0.09 per
diluted share, compared to net income of $23.2 million, or $0.14 per diluted
share, for the six months ended June 30, 2007.
Second quarter 2008 net income includes $16.7 million of gains and a $1.2
million impairment charge related to the contribution or sale of real estate.
While second quarter FFO did not include any real estate gains, it was reduced
by the impairment charge. Second quarter 2007 net income included $9.1
million of gains on the contribution or sale of real estate, of which $9.0
million was included in FFO.
"While our leasing activity and rental rate growth remain steady and
in-line with expectations, our caution for the remainder of 2008 has
increased," said Phil Hawkins, Chief Executive Officer of DCT Industrial
Trust. "We've taken additional steps to further strengthen our balance sheet
this year, including extending the maturity on $175 million of an unsecured
note by five years and closing a $300 million senior unsecured term loan, both
with very favorable terms, and disposing of $89 million of low-growth,
non-strategic assets. We remain confident that our financial flexibility will
benefit us through this softer economic environment, and we will continue to
focus on executing our business plan to build long-term value."
Operating Portfolio
As of June 30, 2008, the Company owned 378 consolidated operating
properties, or 53.0 million square feet, compared to 363 consolidated
operating properties, or 52.5 million square feet, as of June 30, 2007. Net
operating income was $46.5 million in the second quarter of 2008, compared to
$45.7 million reported for the second quarter of 2007. DCT's consolidated
operating portfolio occupancy declined to 91.8% as of June 30, 2008, compared
to 92.8% as of June 30, 2007, primarily due to the bankruptcy of Wickes
Furniture. Including an additional 13.0 million square feet of operating
properties held in joint ventures, occupancy as of June 30, 2008 was 93.3%,
compared to 93.6% a year ago.
Same store net operating income increased 1.3% on a cash basis and 0.3% on
a GAAP basis in the second quarter of 2008, when compared to the same period
last year. Occupancy of same store properties was 92.3% as of June 30, 2008,
compared to 93.1% as of June 30, 2007.
Leasing activity increased with 2.5 million square feet of leases signed
during the second quarter, up from 1.9 million square feet of leases signed in
the first quarter of 2008. Tenant retention was 74.4% for the second quarter
of 2008 and 73.3% year to date. Realized rent growth on signed leases for
which there was a prior tenant averaged 12.7% on a GAAP basis and 5.4% on a
cash basis in the second quarter of 2008.
Bad debt expense totaled $0.2 million in the second quarter of 2008,
compared to $0.6 million last quarter and $0.6 million in the second quarter
of 2007.
Disposition and Development Activity
Consistent with its 2008 business plan, DCT Industrial Trust did not
acquire any buildings and disposed of four assets totaling 1.2 million square
feet for a combined sales price of approximately $71.1 million during the
second quarter of 2008. Following the end of the second quarter, DCT disposed
of four industrial buildings totaling 199,000 square feet for a combined sales
price of approximately $11.8 million, bringing year to date sales to more than
$89 million.
As of June 30, 2008, DCT Industrial Trust had 8.9 million square feet
under development.
"While we completed the lease-up of two development projects in Chicago
and Southern California and two projects in Mexico, we have experienced a
slowdown in the leasing of some of our other development assets," said Jim
Cochran, President and Chief Investment Officer of DCT Industrial Trust.
"Given our caution for the rest of the year, we have decided to move the
stabilization dates for several projects from 2008 to 2009."
Financing Activity
During the second quarter, DCT Industrial Trust closed a two-year $300
million senior unsecured term loan that can be extended for one year at the
Company's option. The first $100 million was drawn on June 9, 2008 and used
to repay maturing unsecured notes. The remaining $200 million can be funded
anytime up to December 31, 2008, at DCT's discretion. DCT Industrial Trust
has entered into a swap to fix LIBOR on the initial funding for two years.
The loan currently bears interest at LIBOR plus 150 basis points, based on the
Company's current leverage, bringing the effective rate to 4.73% per annum.
Balance Sheet
DCT Industrial's balance sheet remains strong, with consolidated debt to
book value of total assets (before depreciation and amortization) of 37.1% as
of June 30, 2008, compared to 37.4% as of December 31, 2007. The Company's
fixed charge coverage for the second quarter of 2008 was 3.2 times. Excluding
$1.4 million of income related to forward-starting interest rate swaps, the
fixed charge coverage was 3.0 times.
Dividend
DCT Industrial Trust's Board of Directors has declared a $0.16 per share
quarterly cash dividend, payable on October 17, 2008, to stockholders of
record as of October 6, 2008.
Guidance
DCT Industrial has lowered its 2008 guidance to FFO per diluted share of
$0.60 to $0.66 and net income of $0.09 to $0.15 per diluted share, primarily
due to a decrease in expectations for development gains.
Conference Call Information
DCT Industrial Trust will host a conference call to discuss second quarter
results and its recent business activities on Tuesday, August 5, 2008 at 12:00
PM Eastern. Stockholders and interested parties may listen to a live
broadcast of the conference call by dialing (800) 860-2442 or (412) 858-4600.
A telephone replay will be available for five days following the call by
dialing (877) 344-7529 or (412) 317-0088 and entering the passcode 420896. A
live webcast and replay of the conference call will be available on the
investor relations page of DCT's website at http://www.dctindustrial.com.
Supplemental information will be available in the Investor Relations
section of the Company's website at http://www.dctindustrial.com or by e-mail
request at investorrelations@dctindustrial.com. Interested parties may also
obtain supplemental information from the SEC's website at http://www.sec.gov.
About DCT Industrial Trust
DCT Industrial Trust is a leading industrial real estate company that
owns, operates and develops high-quality bulk distribution and light
industrial properties in high-volume distribution markets in the U.S. and
Mexico. As of June 30, 2008, the Company owned, managed or had under
development 75.7 million square feet of assets leased to approximately 850
customers, including 16.9 million square feet managed on behalf of three
institutional joint venture partners. Additional information is available at
http://www.dctindustrial.com.
DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share and per share information)
June 30, December 31,
2008 2007
(unaudited)
ASSETS
Land $509,319 $519,584
Buildings and improvements2,119,2162,139,961
Intangible lease assets 182,012 188,079
Construction in progress 54,143 35,282
Total Investment in Properties2,864,6902,882,906
Less accumulated depreciation and
amortization (359,512)(310,691)
Net Investment in Properties 2,505,1782,572,215
Investments in and advances to unconsolidated
joint ventures 122,173 102,750
Net Investment in Real Estate 2,627,3512,674,965
Cash and cash equivalents23,697 30,481
Notes receivable 20,467 27,398
Deferred loan costs, net 5,7934,828
Deferred loan costs - financing
obligations, net -1,345
Straight-line rent and other receivables 27,860 26,879
Other assets, net 9,453 13,096
Assets held for sale 8,912-
Total Assets $2,723,533 $2,778,992
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $38,667 $31,267
Distributions payable33,245 32,994
Tenant prepaids and security deposits15,753 13,896
Other liabilities 6,6638,117
Intangible lease liability, net 8,0669,022
Line of credit 103,000 82,000
Senior unsecured notes 425,000 425,000
Mortgage notes 615,526 649,568
Financing obligations - 14,674
Liabilities related to assets held for sale 343-
Total Liabilities 1,246,2631,266,538
Minority interests318,088 349,782
Stockholders' 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, 350,000,000
shares authorized, 172,136,070 and 168,379,863
shares issued and outstanding as of June 30,
2008 and December 31, 2007, respectively 1,7211,684
Additional paid-in capital1,629,2881,593,165
Distributions in excess of earnings(464,864)(426,210)
Accumulated other comprehensive loss (6,963) (5,967)
Total Stockholders' Equity1,159,1821,162,672
Total Liabilities and Stockholders'
Equity $2,723,533 $2,778,992
Book value of total assets before depreciation:
Total Assets $2,723,533 $2,778,992
Add back accumulated depreciation and
amortization 359,512 310,691
Book value of total assets before
depreciation and amortization $3,083,045 $3,089,683
Percentage of debt to total assets 42.0%41.6%
Percentage of debt to book value of total assets
before depreciation and amortization37.1%37.4%
DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited, in thousands, except per share information)
Three Months EndedSix Months Ended
June 30, June 30,
2008 2007 2008 2007
REVENUES:
Rental revenues $62,393 $60,868 $125,897 $123,997
Institutional
capital management
and other fees 614 5721,4741,318
Total Revenues 63,007 61,440 127,371 125,315
OPERATING EXPENSES:
Rental expenses7,3277,243 15,845 14,836
Real estate taxes 8,5517,974 16,935 16,210
Real estate related
depreciation and
amortization 28,893 27,510 57,148 55,404
General and
administrative5,0835,677 10,9659,733
Total Operating
Expenses 49,854 48,404 100,893 96,183
Operating Income 13,153 13,036 26,478 29,132
OTHER INCOME AND EXPENSE:
Equity in income (loss)
of unconsolidated joint
ventures, net 439 (31) 726 43
Interest expense (11,136) (15,020) (25,566) (31,703)
Interest income and
other 5672,1571,0013,139
Income taxes(360)(502)(897)(962)
Income (Loss) Before
Minority Interests 2,663 (360) 1,742 (351)
Minority interests(431) 102 (220) 187
Income (Loss) From
Continuing
Operations 2,232 (258) 1,522 (164)
Income from discontinued
operations 13,296 358 14,0288,870
Income Before Gain
(Loss) On
Dispositions Of
Real Estate
Interests 15,528 100 15,5508,706
Gain (loss) on
dispositions of real
estate interests, net
of minority interest (32) 7,737 330 14,486
NET INCOME $15,496 $7,837 $15,880 $23,192
INCOME PER COMMON
SHARE - BASIC:
Income (Loss) From
Continuing
Operations$0.01 $(0.00) $0.01 $(0.00)
Income from
discontinued
operations 0.08 0.00 0.08 0.05
Gain (loss) on
dispositions of real
estate interests, net
of minority interest (0.00)0.05 0.00 0.09
Net Income $0.09$0.05$0.09$0.14
INCOME PER COMMON
SHARE - DILUTED:
Income (Loss) From
Continuing Operations $0.01 $(0.00) $0.01 $(0.00)
Income from discontinued
operations 0.08 0.00 0.08 0.05
Gain (loss) on
dispositions of real
estate interests, net
of minority interest (0.00)0.05 0.00 0.09
Net Income $0.09$0.05$0.09$0.14
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
Basic171,429 168,355 169,908 168,355
Diluted 207,654 198,703 207,448 197,711
DCT Industrial Trust Inc. and Subsidiaries
Summary Consolidated Statements of Funds From Operations
(in thousands, except per share information)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Net income attributable
to common shares $15,496 $7,837 $15,880 $23,192
Adjustments:
Real estate related
depreciation and
amortization 29,266 28,389 58,409 57,172
Equity in (income) of
unconsolidated joint
ventures, net (439) 31 (726) (43)
Equity in FFO of
unconsolidated
joint ventures1,517 4152,984 811
(Gain) on dispositions
of real estate
interests (16,723) (9,132) (17,530) (26,578)
Gain (loss) on
dispositions of
non-depreciated
real estate (39) 9,014 207 12,725
Minority interest in
the operating
partnership's share
of the above
adjustments (2,367) (4,397) (7,951) (6,602)
Funds from operations
attributable to common
shares - basic 26,711 32,157 51,273 60,677
FFO attributable to
dilutive OP Units 5,6345,774 11,305 10,571
Funds from operations
attributable to common
shares - diluted $32,345 $37,931 $62,578 $71,248
Basic FFO per common
share $0.16$0.19$0.30$0.36
Diluted FFO per common
share $0.16$0.19$0.30$0.36
Weighted average common
shares outstanding:
Basic171,429 168,355 169,908 168,355
Dilutive OP Units 36,225 30,348 37,540 29,356
Diluted 207,654 198,703 207,448 197,711
Guidance:
Full-Year Range for
2008
Guidance: (low) (high)
Earnings per diluted share$0.09 $0.15
Gains on sale of depreciated assets (0.07) (0.07)
Real estate related depreciation and amortization 0.58 0.58
FFO attributable to common shares per diluted share $0.60 $0.66
Guidance excludes future gains or losses from sale of depreciated assets.
The following table shows the calculation of our Fixed Charge Coverage for
the three and six months ended June 30, 2008 and 2007 (in thousands).
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Net income$15,496 $7,837 $15,880$23,192
Interest expense (1) 11,245 15,204 25,81932,084
Pro rata share of interest
expense from unconsolidated JVs1,510 957 2,841 1,783
Real estate related
depreciation and amortization (1) 29,266 28,389 58,40957,172
Pro rata share of real estate
related depreciation and
amortization from
unconsolidated JVs 1,163 446 2,378 771
Income taxes 365 533914 1,004
Stock-based compensation
amortization expense 852 598 1,595 1,092
Minority interests (1) 3,2271,371 3,269 3,857
Non-FFO (gains) losses on
dispositions of real estate
interests, net (16,762)(118) (17,323) (13,853)
Adjusted EBITDA $46,362 $55,217$93,782 $107,102
Calculation of Fixed Charges:
Interest expense excluding
financing obligations (1) $11,245 $13,868$25,767 $28,881
Interest expense related to
financing obligations-1,336 52 3,203
Capitalized interest 1,8651,669 3,919 3,222
Amortization of loan costs
and debt premium/discount 98 1421871
Amortization of financing
obligations - (161)(4) (356)
Pro rata share of interest
expense from
unconsolidated JVs 1,510 957 2,841 1,783
Total Fixed Charges $14,718 $17,683$32,793 $36,804
Fixed Charge Coverage 3.2 3.12.9 2.9
Fixed Charge Coverage,
Excluding Financing
Obligations 3.2 3.32.9 3.2
Fixed Charge Coverage,
Excluding Hedge Settlement
Income (2) 3.0- - -
(1) Includes amounts related to discontinued operations.
(2) Excludes $1.4 million income related to settlement of
forward-starting interest rate swaps.
The following table is a reconciliation of our property NOI to our
reported "Income (Loss) From Continuing Operations" for the three and six
months ended June 30, 2008 and 2007 (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Same Store property
NOI $42,575 $42,462 $83,716 $84,114
Non-same store NOI and
revenues related to
early lease
terminations and
buyout, net 3,9403,1899,4018,837
Total NOI 46,515 45,651 93,117 92,951
Institutional capital
management and
other fees614 5721,4741,318
Real estate related
depreciation and
amortization (28,893) (27,510) (57,148) (55,404)
General and
administrative
expenses (5,083) (5,677) (10,965) (9,733)
Equity in income
(losses) of
unconsolidated
joint ventures, net 439 (31) 726 43
Interest expense (11,136) (15,020) (25,566) (31,703)
Interest income and
other 5672,1571,0013,139
Income taxes (360)(502)(897)(962)
Minority interests(431) 102 (220) 187
Income (Loss) from
Continuing
Operations $2,232$(258) $1,522$(164)
The following table is a reconciliation of our same store NOI to our cash
basis same store NOI for the three and six months ended June 30, 2008 and 2007
(in thousands):
Three Months EndedSix Months Ended
June 30, June 30,
2008 2007 2008 2007
Same Store property NOI $42,575 $42,462 $83,716 $84,114
Less straight-line rents (640)(910) (1,344) (2,091)
Less amortization of
above/below market rents 338 192 446 833
Cash basis same store
NOI$42,273 $41,744 $82,818 $82,856
Financial Measures
Net operating income ("NOI") is defined as rental revenue, including
reimbursements, less rental expenses and real estate taxes, and excludes
depreciation, amortization, general and administrative expenses and interest
expense. DCT Industrial considers NOI, same store NOI and cash basis same
store NOI to be appropriate supplemental performance measures because they
reflect the operating performance of DCT Industrial's properties and exclude
certain items that are not considered to be controllable in connection with
the management of the property such as depreciation, interest expense,
interest income and general and administrative expenses. However, these
measures should not be viewed as alternative measures of DCT Industrial's
financial performance since they exclude expenses which could materially
impact our results of operations. Further, DCT Industrial's NOI, same store
NOI and cash basis same store NOI may not be comparable to that of other real
estate companies, as they may use different methodologies for calculating
these measures. Therefore, DCT Industrial believes net income, as defined by
GAAP, to be the most appropriate measure to evaluate DCT Industrial's overall
financial performance.
DCT Industrial believes that net income, 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, calculated in
accordance with GAAP, plus real estate-related depreciation and amortization,
less gains (or losses) from dispositions of operating real estate held for
investment purposes and adjustments to derive DCT Industrial's pro rata share
of FFO of consolidated and unconsolidated joint ventures. We include the
gains or losses from dispositions of properties which were acquired or
developed with the intention to sell or contribute to an investment fund in
our definition of FFO. Readers should note that FFO 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 is common. Accordingly, DCT Industrial's FFO may not be
comparable to such other REITs' FFO and FFO should be considered only as a
supplement to net income as a measure of DCT Industrial's performance.
DCT Industrial calculates our fixed charge coverage calculation based on
adjusted EBITDA, which is defined as earnings from operations before interest,
taxes, depreciation, amortization, stock-based compensation expense and
minority interest, and excludes non-FFO gains on disposed assets. We use
adjusted EBITDA to measure our operating performance and to provide investors
relevant and useful information because it allows fixed income investors to
view income from our operations on an unleveraged basis before the effects of
non-cash items, such as depreciation and amortization. We also present our
fixed charge coverage for the three months ended June 30, 2008 excluding the
settlement income related to forward-starting interest rate swaps because it
allows fixed income investors to view income from our operations on an
unleveraged basis before the effects of this item.
Forward-Looking Information
The Company makes statements in this document 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. The
Company intends 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 the Company's current views about its plans, intentions,
expectations, strategies and prospects, which are based on the information
currently available to the Company and on assumptions it has made. Although
the Company believes that its plans, intentions, expectations, strategies and
prospects as reflected in or suggested by those forward-looking statements are
reasonable, the Company 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 its control including, without limitation: the competitive environment
in which the Company operates; 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
and dispositions; natural disasters such as hurricanes, fires and earthquakes;
national, international, regional and local economic conditions, including, in
particular the recent softening of the U.S. economy; the general level of
interest rates and the availability of debt financing, particularly in light
of the recent disruption in the credit markets; energy costs; the terms of
governmental regulations that affect the Company and interpretations of those
regulations, including changes in real estate and zoning laws and increases in
real property tax rates; financing risks, including the risk that the
Company's cash flows from operations may be insufficient to meet required
payments of principal and interest; 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; possible 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 the
Company; and other risks and uncertainties detailed from time to time in DCT
Industrial Trust's filings with the Securities Exchange Commission. In
addition, the Company's current and continuing qualification as a REIT
involves the application of highly technical and complex provisions of the
Internal Revenue Code of 1986, or the Code, and depends on its ability to meet
the various requirements imposed by the Code through actual operating results,
distribution levels and diversity of stock ownership. The Company assumes no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.
SOURCE DCT Industrial Trust Inc.
