-- The company expects that funds from operations ("FFO") per share for
the first quarter of 2009 will be between $0.70 and $0.72 (between $0.49
and $0.51, excluding $33.1 million of gains realized from the repurchase of
the company's unsecured bonds during the quarter). This compares with FFO
per share of $0.57 realized in the first quarter of 2008, as restated for
the effects of a change in accounting for interest expense attributable to
the company's exchangeable unsecured notes maturing in December 2011. The
projected decrease in FFO per share from the first quarter of 2008
(excluding the effects of the $33.1 million of gains realized from the
repurchase of the company's unsecured bonds during the quarter) is the
result of a decrease in gains from sales of built-for-sale properties and
land and lease termination fees.
-- Stabilized, in-service properties (124 million square feet) were 89.7
percent leased at March 31, 2009, as compared with 92.4 percent at December
31, 2008. This decrease is attributable to the addition to the stabilized
portfolio during the first quarter of 2009 of five recently developed
properties aggregating 2.5 million square feet which were 49.2 percent
leased at March 31, 2009, as well as to lease expirations during the first
quarter of 2009. Stabilized occupancy was in line with company
expectations. Total in-service occupancy at March 31, 2009, which includes
unstabilized properties in service for less than one year with less than
90% occupancy, was 87.8 percent, compared with 89.5 percent at December 31,
2008.
-- Tenant retention for the first quarter of 2009 was 68.0 percent, with
growth in net effective rents of 3.8 percent. Tenant retention for the
fourth quarter of 2008, excluding the effects of one early renewal of a
lease of 323,000 square feet of office space to a single tenant, was 66.6
percent, with growth in net effective rents of 5.0 percent.
Financing Update
-- During the first quarter of 2009, the company completed $156 million
of 10-year secured debt financing. The proceeds were primarily used to pay
down the company's unsecured line of credit.
-- The company has executed a term sheet for a $280 million seven-year
secured loan, and is actively discussing additional secured debt financing
with multiple lenders, which the company believes may generate additional
proceeds of approximately $200 million in 2009. As of March 31, 2009, the
company had $5.7 billion of in-service, unencumbered assets in its
portfolio. To the extent that such loans are finalized, they would be
secured by geographically diverse portfolios of suburban office and
industrial assets. The company can provide no assurance that any of these
prospective financing transactions will actually be completed or as to the
terms on which they may be completed.
-- As of March 31, 2009, the company had approximately $625 million
available under its unsecured line-of-credit, which is scheduled to mature
in January 2010. The company, in its sole discretion, may extend this
maturity by one year to January 2011.
Dispositions
-- During the first quarter of 2009, the company completed $62 million of
asset dispositions. In addition, the company has executed agreements
pursuant to which its joint venture with CB Richard Ellis Realty Trust will
acquire three additional properties from the company. Closing is scheduled
to occur in the second quarter, subject to certain conditions, and is
anticipated to provide gross proceeds to the company of $33 million.
-- The company is conducting non-binding negotiations for the sale of
certain other assets from its portfolio for gross proceeds of approximately
$240 million, and is actively marketing additional properties valued at
approximately $80 million. The company can provide no assurance that it
will be successful in completing any of these transactions.
Dividends
The company paid a cash dividend of $0.25 per share on its common stock in
the first quarter of 2009. In order to maintain financial flexibility in
light of the current state of the capital markets, and after taking into
account the dividend payments for the increased number of shares expected
to be outstanding upon completion of the common stock offering announced
today, the company expects to reduce its dividend payments per share for
the balance of 2009. The company's policy is to pay aggregate annual
dividends in 2009 in an amount generally equal to its annual taxable
income.
Assuming the completion of the offering of 64 million shares of common
stock announced today, the company currently expects to pay dividends of
$0.17 per share in each of the second, third and fourth quarters of 2009.
The company currently expects to pay all future 2009 dividend payments in
cash.
While the statements above concerning the remaining distributions for 2009
are the company's current expectation, the actual distributions payable
will be determined by the board of directors based upon circumstances at
the time of authorization, and the actual dividend paid may vary from
currently expected amounts.
2009 Earnings Guidance
The company maintains its full-year 2009 FFO guidance of $1.85 to $2.15 per
share before considering the effects of debt repurchases, future impairment
charges, if any, and the proposed offering of common stock announced today.
The following table reconciles projected net income to projected FFO for
2009:
Reconciliation of Estimated Diluted Net Income Per Common Share to
Projected Diluted Funds From Operations per Common Share (unaudited)
Projected Range
Quarter ended 3/31/09
-------------------------------
Low Mid-Point High
--------- --------- ---------
Estimated net income per diluted share $ 0.13 $ 0.15 $ 0.17
Adjustments:
Projected depreciation and
amortization per diluted share 0.52 0.51 0.50
Projected company share of joint
venture depreciation and amortization
per diluted share 0.07 0.07 0.07
Earnings from depreciable property
sales (wholly owned) per diluted
share (0.03) (0.03) (0.03)
Other/Rounding 0.01 0.01 0.01
--------- --------- ---------
Estimated FFO per diluted share (1) $ 0.70 $ 0.71 $ 0.72
========= ========= =========
(1) Based on 155,757 diluted shares and
includes .21 per share of gain on
repurchases of debt through March 31,
2009.
Projected Range
Full Year 2009
-------------------------------
Low Mid-Point High
--------- --------- ---------
Estimated net income (loss) per diluted
share $ (0.16) $ (0.12) $ (0.08)
Adjustments:
Projected depreciation and
amortization per diluted share 1.96 2.06 2.16
Projected company share of joint
venture depreciation and amortization
per diluted share 0.28 0.29 0.30
Earnings from depreciable property
sales (wholly owned) per diluted
share (1) (0.03) (0.03) (0.03)
Other/Rounding 0.01 0.01 0.01
--------- --------- ---------
Estimated FFO per diluted share (2) $ 2.06 $ 2.21 $ 2.36
========= ========= =========
(1) Assumes no gain or loss from property sales after March 31, 2009.
(2) Based on 155,900 diluted shares and includes .21 per share of gain on
repurchases of debt through March 31, 2009.
FFO, as defined by the Board of Governors of the National Association of
Real Estate Investment Trusts ("NAREIT"), represents GAAP net income
(loss), excluding extraordinary items as defined under GAAP and gains or
losses from sales of previously depreciated real estate assets, plus
certain non-cash items such as real estate depreciation and amortization,
and after similar adjustments for unconsolidated partnerships and joint
ventures.
About Duke Realty Corporation
Duke Realty Corporation specializes in the ownership, management and
development of office, industrial, and healthcare real estate. In terms of
market capitalization, Duke is the largest publicly traded, vertically
integrated office, industrial and healthcare real estate company in the
United States. The company owns, manages, or has under development
approximately 135 million rentable square feet in 20 U.S. cities. 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 is
available at www.dukerealty.com.
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 companies' 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 titled "Supplemental Risk Factors" in
the preliminary prospectus supplement and the accompanying prospectus filed
today in connection with the company's common stock offering and the
section entitled "Risk Factors" contained in the company's Annual Report on
Form 10-K for the year ended December 31, 2008. Copies of each filing may
be obtained from the company or the Securities and Exchange Commission.
The risks included here are not exhaustive and undue reliance should not be
placed on any forward-looking statements, which are based on current
expectations. All written and oral forward-looking statements attributable
to the company, its management, or persons acting on their behalf are
qualified in their entirety by these cautionary statements. Further,
forward-looking statements speak only as of the date they are made, and the
company undertakes no obligation to update or revise forward-looking
statements to reflect changed assumptions, the occurrence of unanticipated
events or changes to future operating results over time unless otherwise
required by law.
Contact Information: Investor Relations Contacts Shona Bedwell 317.808.6169 shona.bedwell@dukerealty.com Randy Henry 317.808.6060 randy.henry@dukerealty.com News Media Contact Joel Reuter 317.808.6137 joel.reuter@dukerealty.com