Record In-Service Occupancy of 97.5 Percent
$242 Million of 96 Percent Leased Fourth Quarter Development Starts
8.9 Million Square Feet of Fourth Quarter Leasing Activity
2017 Guidance Issued
INDIANAPOLIS, IN--(Marketwired - January 25, 2017) - Duke Realty Corporation (
Quarterly Highlights
Jim Connor, President and CEO said, "I'm happy to report that we finished the year at another record-high level of in-service occupancy. Same-property net operating income growth continued at a strong pace, increasing by 4.5 percent for the three months ended December 31, 2016 compared to the same period in 2015, as the result of increased occupancy and continued rental rate growth.
I am also pleased to announce that, when considering the suburban office property dispositions that closed during the fourth quarter of 2016, we have essentially completed our exit from that product type."
Mark Denien, Executive Vice President and Chief Financial Officer, stated, "During the fourth quarter, our credit ratings were raised by both Moody's and Standard & Poor's, to Baa1 and BBB+ respectively, which represented the culmination of our long-term strategy to de-leverage our balance sheet. The increase to our credit ratings will reduce borrowing costs and help position us to continue to fund future growth."
Financial Performance
Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Net income per common share, diluted | $ | 0.13 | $ | 0.07 | $ | 0.88 | $ | 1.77 | ||||||||||
Adjustments: | ||||||||||||||||||
Depreciation and amortization | 0.22 | 0.22 | 0.89 | 0.91 | ||||||||||||||
Gains on depreciable property sales | (0.07 | ) | (0.09 | ) | (0.45 | ) | (1.85 | ) | ||||||||||
Share of reconciling items from joint ventures | 0.01 | 0.01 | (0.11 | ) | 0.04 | |||||||||||||
FFO per share - diluted, as defined by NAREIT | $ | 0.29 | $ | 0.21 | $ | 1.21 | $ | 0.86 | ||||||||||
Adjustments: | ||||||||||||||||||
Gains on land sales | (0.02 | ) | (0.03 | ) | (0.04 | ) | (0.10 | ) | ||||||||||
Loss on debt extinguishment | 0.07 | 0.01 | 0.10 | 0.24 | ||||||||||||||
Land impairment charges | 0.01 | 0.10 | 0.04 | 0.12 | ||||||||||||||
Share of joint venture merchant building sale | (0.02 | ) | — | (0.02 | ) | — | ||||||||||||
Overhead restructuring charges | — | — | — | 0.02 | ||||||||||||||
Promote income | — | — | (0.07 | ) | — | |||||||||||||
Acquisition-related activity | (0.02 | ) | — | (0.02 | ) | 0.02 | ||||||||||||
Core FFO per share – diluted | $ | 0.31 | $ | 0.29 | $ | 1.20 | $ | 1.17 | ||||||||||
Real Estate Investment Activity
Development
Mr. Connor further stated, "We started $697 million of developments for the year and, for the fourth quarter, we started $242 million of developments, which were 96 percent pre-leased in total. We finished the year with a development pipeline totaling 9.4 million square feet with total expected project costs of $734 million, that was 69 percent pre-leased in total."
The fourth quarter included the following development activity:
Wholly Owned Properties
Joint Venture Properties
Acquisitions
The company acquired 14 properties in Washington DC from an unconsolidated joint venture during the fourth quarter under the terms of an existing purchase option. The properties, of which eleven were industrial and three were suburban office, totaled 954,000 square feet and were 95 percent leased. One of the acquired properties, a 241,000 square foot suburban office property, was sold immediately upon its acquisition.
The company also acquired a 63 percent leased, 482,000 square foot, industrial property in Columbus from an unconsolidated joint venture during the fourth quarter.
Land Deployment
Deployment of a portion of the company's land bank, either through sales or development, took place as follows during the fourth quarter:
Building Dispositions
Building dispositions for the full year totaled $686 million. Building dispositions totaled $196 million in the fourth quarter and included the following:
Wholly Owned Properties
Joint Venture Properties
Distributions Declared
The company's board of directors declared a quarterly cash distribution on its common stock of $0.19 per share, or $0.76 per share on an annualized basis. The fourth quarter dividend will be payable on February 28, 2017 to shareholders of record on February 16, 2017.
2017 Earnings Guidance
A reconciliation of the company's per share guidance for diluted net income per common share to FFO, as defined by NAREIT and to Core FFO is included in the financial tables to this release. The company issued guidance for net income of $0.38 to $0.59 per diluted share. The company issued guidance for FFO, as defined by NAREIT, of $1.18 to $1.30 per diluted share.
Commenting on the company's 2017 outlook, Mr. Connor stated, "We are introducing 2017 guidance for Core FFO of $1.21 to $1.27 per diluted share. Included in that guidance, is the continued reduction in income from service operations from 2016, as we continue to focus our efforts on wholly owned development and rental operations rather than third-party service fees. This has a short term dilutive effect on earnings but will create long term shareholder value through future NOI growth from the increased focus on development. Our 2017 Core FFO guidance would equate to over a five percent increase from 2016, after normalizing this negative impact from service operations. While still strong, our guidance for 2017 same property NOI growth is down a bit from 2016 due to our limited upside for occupancy growth, but we still believe total NOI growth will be strong in 2017 as new development projects are placed in service.
Our guidance for growth in Adjusted Funds from Operations ("AFFO"), on a share adjusted basis, ranges from 1.9 percent to 7.5 percent. The midpoint of our guidance for growth in AFFO, even after considering the impact from our service operations, equates to a consistent growth rate to what we recorded for 2016. Our development prospects for 2017 are very strong, but down a little bit from 2016 due to our large pipeline of fourth quarter development starts heading into 2017."
Key ranges for the assumptions underlying this updated guidance are as follows:
More specific assumptions and components of our 2017 guidance will be available by 6:00 p.m. Eastern Time today through the Investor Relations section of the company's website.
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; 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 generally accepted accounting principles ("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 benefits 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, gains (losses) on and related costs of acquisitions, gains on sale of merchant buildings, promote income and severance charges related to major overhead restructuring activities. 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 a supplemental performance measure 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 operating income growth as a supplemental measure to evaluate property-level performance, and jointly-controlled properties are included at the company's ownership percentage.
A reconciliation of net income from continuing operations to same property net operating income is included in the financial tables to this release. A description of the properties that are excluded from the company's same-property net operating income measure is included on page 20 of its December 31, 2016 supplemental information.
About Duke Realty Corporation
Duke Realty Corporation owns and operates approximately 139 million rentable square feet of industrial, medical office and other non core assets in 21 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.
Fourth Quarter Earnings Call and Supplemental Information
Duke Realty Corporation is hosting a conference call tomorrow, January 26, 2017, at 3:00 p.m. ET to discuss its fourth 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) – (xv). 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, 2015. 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 Statement of Operations | ||||||||||||||||||
(Unaudited and in thousands, except per share amounts) | ||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||
December 31, | December 31, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Revenues: | ||||||||||||||||||
Rental and related revenue | $ | 204,263 | $ | 198,516 | $ | 813,434 | $ | 816,065 | ||||||||||
General contractor and service fee revenue | 20,264 | 23,047 | 88,810 | 133,367 | ||||||||||||||
224,527 | 221,563 | 902,244 | 949,432 | |||||||||||||||
Expenses: | ||||||||||||||||||
Rental expenses | 26,318 | 29,311 | 107,410 | 125,666 | ||||||||||||||
Real estate taxes | 27,693 | 26,650 | 118,654 | 112,879 | ||||||||||||||
General contractor and other services expenses | 20,137 | 20,715 | 80,467 | 119,170 | ||||||||||||||
Depreciation and amortization | 79,171 | 77,194 | 317,818 | 317,329 | ||||||||||||||
153,319 | 153,870 | 624,349 | 675,044 | |||||||||||||||
Other operating activities: | ||||||||||||||||||
Equity in earnings (loss) of unconsolidated companies | 9,999 | (19,585 | ) | 47,403 | (3,304 | ) | ||||||||||||
Gain on dissolution of unconsolidated company | - | - | 30,697 | - | ||||||||||||||
Promote income | - | - | 26,299 | - | ||||||||||||||
Gain on sale of properties | 24,504 | 27,549 | 162,093 | 229,702 | ||||||||||||||
Gain on land sales | 7,427 | 10,958 | 9,865 | 35,054 | ||||||||||||||
Other operating expenses | (441 | ) | (1,368 | ) | (3,864 | ) | (5,947 | ) | ||||||||||
Impairment charges | (2,920 | ) | (15,036 | ) | (18,018 | ) | (22,932 | ) | ||||||||||
General and administrative expenses | (13,173 | ) | (10,983 | ) | (55,389 | ) | (58,565 | ) | ||||||||||
25,396 | (8,465 | ) | 199,086 | 174,008 | ||||||||||||||
Operating income | 96,604 | 59,228 | 476,981 | 448,396 | ||||||||||||||
Other income (expenses): | ||||||||||||||||||
Interest and other income, net | 438 | 1,611 | 4,035 | 4,667 | ||||||||||||||
Interest expense | (32,056 | ) | (38,934 | ) | (141,576 | ) | (173,574 | ) | ||||||||||
Loss on debt extinguishment | (25,261 | ) | (3,124 | ) | (33,934 | ) | (85,713 | ) | ||||||||||
Acquisition-related activity | 7,258 | (1,506 | ) | 7,176 | (8,499 | ) | ||||||||||||
Income from continuing operations, before income taxes | 46,983 | 17,275 | 312,682 | 185,277 | ||||||||||||||
Income tax benefit (expense) | 416 | (181 | ) | 589 | 3,928 | |||||||||||||
Income from continuing operations | 47,399 | 17,094 | 313,271 | 189,205 | ||||||||||||||
Discontinued operations: | ||||||||||||||||||
Income before gain on sales | 250 | 328 | 991 | 10,939 | ||||||||||||||
Gain on sale of depreciable properties, net of tax | 531 | 7,097 | 1,016 | 421,717 | ||||||||||||||
Income from discontinued operations | 781 | 7,425 | 2,007 | 432,656 | ||||||||||||||
Net income | 48,180 | 24,519 | 315,278 | 621,861 | ||||||||||||||
Net income attributable to noncontrolling interests | (425 | ) | (267 | ) | (3,135 | ) | (6,551 | ) | ||||||||||
Net income attributable to common shareholders | $ | 47,755 | $ | 24,252 | $ | 312,143 | $ | 615,310 | ||||||||||
Basic net income per common share: | ||||||||||||||||||
Continuing operations attributable to common shareholders | $ | 0.13 | $ | 0.05 | $ | 0.88 | $ | 0.53 | ||||||||||
Discontinued operations attributable to common shareholders | 0.00 | 0.02 | 0.01 | 1.24 | ||||||||||||||
Total | $ | 0.13 | $ | 0.07 | $ | 0.89 | $ | 1.77 | ||||||||||
Diluted net income per common share: | ||||||||||||||||||
Continuing operations attributable to common shareholders | $ | 0.13 | $ | 0.05 | $ | 0.88 | $ | 0.53 | ||||||||||
Discontinued operations attributable to common shareholders | 0.00 | 0.02 | 0.00 | 1.24 | ||||||||||||||
Total | $ | 0.13 | $ | 0.07 | $ | 0.88 | $ | 1.77 |
Duke Realty Corporation and Subsidiaries | ||||||||||
Consolidated Balance Sheets | ||||||||||
(Unaudited and in thousands) | ||||||||||
December 31, | December 31, | |||||||||
2016 | 2015 | |||||||||
Assets | ||||||||||
Real estate investments: | ||||||||||
Land and improvements | $ | 1,511,264 | $ | 1,391,763 | ||||||
Buildings and tenant improvements | 4,970,891 | 4,740,837 | ||||||||
Construction in progress | 347,193 | 321,062 | ||||||||
Investments in and advances to unconsolidated companies | 197,807 | 268,390 | ||||||||
Undeveloped land | 237,436 | 383,045 | ||||||||
7,264,591 | 7,105,097 | |||||||||
Accumulated depreciation | (1,283,629 | ) | (1,192,425 | ) | ||||||
Net real estate investments | 5,980,962 | 5,912,672 | ||||||||
Real estate investments and other assets held-for-sale | 51,627 | 45,801 | ||||||||
Cash and cash equivalents | 12,639 | 22,533 | ||||||||
Accounts receivable, net | 20,373 | 18,846 | ||||||||
Straight-line rents receivable, net | 115,922 | 116,781 | ||||||||
Receivables on construction contracts, including retentions | 10,441 | 16,459 | ||||||||
Deferred leasing and other costs, net | 342,263 | 346,374 | ||||||||
Escrow deposits and other assets | 237,775 | 416,049 | ||||||||
$ | 6,772,002 | $ | 6,895,515 | |||||||
Liabilities and Equity | ||||||||||
Indebtedness: | ||||||||||
Secured debt, net of deferred financing costs | $ | 383,725 | $ | 738,444 | ||||||
Unsecured debt, net of deferred financing costs | 2,476,752 | 2,510,697 | ||||||||
Unsecured line of credit | 48,000 | 71,000 | ||||||||
2,908,477 | 3,320,141 | |||||||||
Liabilities related to real estate investments held-for-sale | 1,661 | 972 | ||||||||
Construction payables and amounts due subcontractors, including retentions | 53,742 | 54,921 | ||||||||
Accrued real estate taxes | 73,190 | 71,617 | ||||||||
Accrued interest | 23,633 | 34,447 | ||||||||
Other accrued expenses | 63,617 | 61,827 | ||||||||
Other liabilities | 114,569 | 106,283 | ||||||||
Tenant security deposits and prepaid rents | 39,820 | 40,506 | ||||||||
Total liabilities | 3,278,709 | 3,690,714 | ||||||||
Shareholders' equity: | ||||||||||
Common shares | 3,548 | 3,453 | ||||||||
Additional paid-in-capital | 5,192,011 | 4,961,923 | ||||||||
Accumulated other comprehensive income | 682 | 1,806 | ||||||||
Distributions in excess of net income | (1,730,423 | ) | (1,785,250 | ) | ||||||
Total shareholders' equity | 3,465,818 | 3,181,932 | ||||||||
Noncontrolling interests | 27,475 | 22,869 | ||||||||
Total equity | 3,493,293 | 3,204,801 | ||||||||
$ | 6,772,002 | $ | 6,895,515 |
Duke Realty Corporation and Subsidiaries | |||||||||||||||||||
Summary of EPS, FFO and AFFO | |||||||||||||||||||
Three Months Ended December 31 | |||||||||||||||||||
(Unaudited and in thousands, except per share amounts) | |||||||||||||||||||
2016 | 2015 | ||||||||||||||||||
Wtd. | Wtd. | ||||||||||||||||||
Avg. | Per | Avg. | Per | ||||||||||||||||
Amount | Shares | Share | Amount | Shares | Share | ||||||||||||||
Net income attributable to common shareholders | $ | 47,755 | $ | 24,252 | |||||||||||||||
Less: dividends on participating securities | (608 | ) | (1,312 | ) | |||||||||||||||
Net income per common share- basic | 47,147 | 354,711 | $ | 0.13 | 22,940 | 345,267 | $ | 0.07 | |||||||||||
Add back: | |||||||||||||||||||
Noncontrolling interest in earnings of unitholders | 419 | 3,424 | 192 | 3,502 | |||||||||||||||
Other potentially dilutive securities | - | 889 | - | 763 | |||||||||||||||
Net income attributable to common shareholders- diluted | $ | 47,566 | 359,024 | $ | 0.13 | $ | 23,132 | 349,532 | $ | 0.07 | |||||||||
Reconciliation to funds from operations ("FFO") | |||||||||||||||||||
Net income attributable to common shareholders | $ | 47,755 | 354,711 | $ | 24,252 | 345,267 | |||||||||||||
Adjustments: | |||||||||||||||||||
Depreciation and amortization | 79,171 | 77,194 | |||||||||||||||||
Company share of joint venture depreciation, amortization and other | 2,523 | 5,001 | |||||||||||||||||
Impairment charges - depreciable property | 677 | 2,542 | |||||||||||||||||
Gains on depreciable property sales - wholly owned, discontinued operations | (531 | ) | (7,097 | ) | |||||||||||||||
Gains on depreciable property sales - wholly owned, continuing operations | (24,504 | ) | (27,549 | ) | |||||||||||||||
Income tax expense (benefit) triggered by depreciable property sales | (416 | ) | 181 | ||||||||||||||||
Gains on depreciable property sales - joint ventures | (196 | ) | (189 | ) | |||||||||||||||
Noncontrolling interest share of adjustments | (542 | ) | (503 | ) | |||||||||||||||
NAREIT FFO attributable to common shareholders - basic | 103,937 | 354,711 | $ | 0.29 | 73,832 | 345,267 | $ | 0.21 | |||||||||||
Noncontrolling interest in income of unitholders | 419 | 3,424 | 192 | 3,502 | |||||||||||||||
Noncontrolling interest share of adjustments | 542 | 503 | |||||||||||||||||
Other potentially dilutive securities | 3,919 | 3,816 | |||||||||||||||||
NAREIT FFO attributable to common shareholders - diluted | $ | 104,898 | 362,054 | $ | 0.29 | $ | 74,527 | 352,585 | $ | 0.21 | |||||||||
Gain on land sales, including share of joint ventures | (7,529 | ) | (10,958 | ) | |||||||||||||||
Loss on debt extinguishment | 25,261 | 3,124 | |||||||||||||||||
Land impairment charges, including joint ventures | 2,243 | 34,605 | |||||||||||||||||
Gain on non-depreciable property sale - joint venture | (6,156 | ) | - | ||||||||||||||||
Acquisition-related activity | (7,258 | ) | $ | 1,506 | |||||||||||||||
Core FFO attributable to common shareholders - diluted | $ | 111,459 | 362,054 | $ | 0.31 | $ | 102,804 | 352,585 | $ | 0.29 | |||||||||
Adjusted FFO | |||||||||||||||||||
Core FFO - diluted | $ | 111,459 | 362,054 | $ | 0.31 | $ | 102,804 | 352,585 | $ | 0.29 | |||||||||
Adjustments: | |||||||||||||||||||
Straight-line rental income and expense | (3,860 | ) | (4,147 | ) | |||||||||||||||
Amortization of above/below market rents and concessions | 165 | 698 | |||||||||||||||||
Stock based compensation expense | 1,845 | 1,503 | |||||||||||||||||
Noncash interest expense | 1,562 | 1,614 | |||||||||||||||||
Second generation concessions | (30 | ) | (17 | ) | |||||||||||||||
Second generation tenant improvements | (4,714 | ) | (7,062 | ) | |||||||||||||||
Second generation leasing commissions | (10,058 | ) | (6,117 | ) | |||||||||||||||
Building improvements | (6,391 | ) | (5,232 | ) | |||||||||||||||
Adjusted FFO - diluted | $ | 89,978 | 362,054 | $ | 84,044 | 352,585 |
Duke Realty Corporation and Subsidiaries | |||||||||||||||||||
Summary of EPS, FFO and AFFO | |||||||||||||||||||
Twelve Months Ended December 31 | |||||||||||||||||||
(Unaudited and in thousands, except per share amounts) | |||||||||||||||||||
2016 | 2015 | ||||||||||||||||||
Wtd. | Wtd. | ||||||||||||||||||
Avg. | Per | Avg. | Per | ||||||||||||||||
Amount | Shares | Share | Amount | Shares | Share | ||||||||||||||
Net income attributable to common shareholders | $ | 312,143 | $ | 615,310 | |||||||||||||||
Less: dividends on participating securities | (2,356 | ) | (3,081 | ) | |||||||||||||||
Net income per common share- basic | 309,787 | 349,942 | $ | 0.89 | 612,229 | 345,057 | $ | 1.77 | |||||||||||
Add back: | |||||||||||||||||||
Noncontrolling interest in earnings of unitholders | 3,089 | 3,481 | 6,404 | 3,582 | |||||||||||||||
Other potentially dilutive securities | 2,356 | 3,653 | 3,081 | 3,558 | |||||||||||||||
Net income attributable to common shareholders- diluted | $ | 315,232 | 357,076 | $ | 0.88 | $ | 621,714 | 352,197 | $ | 1.77 | |||||||||
Reconciliation to funds from operations ("FFO") | |||||||||||||||||||
Net income attributable to common shareholders | $ | 312,143 | 349,942 | $ | 615,310 | 345,057 | |||||||||||||
Adjustments: | |||||||||||||||||||
Depreciation and amortization | 317,818 | 320,846 | |||||||||||||||||
Company share of joint venture depreciation, amortization and other | 14,188 | 27,247 | |||||||||||||||||
Impairment charges - depreciable property | 3,719 | 3,406 | |||||||||||||||||
Gains on depreciable property sales - wholly owned, discontinued operations | (1,016 | ) | (424,892 | ) | |||||||||||||||
Gains on depreciable property sales - wholly owned, continuing operations | (162,093 | ) | (229,702 | ) | |||||||||||||||
Income tax benefit triggered by depreciable property sales | (589 | ) | (753 | ) | |||||||||||||||
Gains on depreciable property sales - joint ventures | (23,896 | ) | (13,911 | ) | |||||||||||||||
Gain on dissolution of unconsolidated company | (30,697 | ) | - | ||||||||||||||||
Noncontrolling interest share of adjustments | (1,157 | ) | 3,265 | ||||||||||||||||
NAREIT FFO attributable to common shareholders - basic | 428,420 | 349,942 | $ | 1.22 | 300,816 | 345,057 | $ | 0.87 | |||||||||||
Noncontrolling interest in income of unitholders | 3,089 | 3,481 | 6,404 | 3,582 | |||||||||||||||
Noncontrolling interest share of adjustments | 1,157 | (3,265 | ) | ||||||||||||||||
Other potentially dilutive securities | 3,653 | 3,558 | |||||||||||||||||
NAREIT FFO attributable to common shareholders - diluted | $ | 432,666 | 357,076 | $ | 1.21 | $ | 303,955 | 352,197 | $ | 0.86 | |||||||||
Gain on land sales, including share of joint ventures | (13,040 | ) | (35,054 | ) | |||||||||||||||
Loss on debt extinguishment, joint ventures | 35,526 | 85,713 | |||||||||||||||||
Gain on non-depreciable property sale - joint venture | (6,156 | ) | - | ||||||||||||||||
Land impairment charges, including joint ventures | 14,299 | 41,637 | |||||||||||||||||
Overhead restructuring charges | - | 7,422 | |||||||||||||||||
Promote income | (26,299 | ) | - | ||||||||||||||||
Acquisition-related activity | (7,176 | ) | 8,499 | ||||||||||||||||
Core FFO attributable to common shareholders - diluted | $ | 429,820 | 357,076 | $ | 1.20 | $ | 412,172 | 352,197 | $ | 1.17 | |||||||||
Adjusted FFO | |||||||||||||||||||
Core FFO - diluted | $ | 429,820 | 357,076 | $ | 1.20 | $ | 412,172 | 352,197 | $ | 1.17 | |||||||||
Adjustments: | |||||||||||||||||||
Straight-line rental income and expense | (17,107 | ) | (23,232 | ) | |||||||||||||||
Amortization of above/below market rents and concessions | 1,526 | 3,659 | |||||||||||||||||
Stock based compensation expense | 18,593 | 16,837 | |||||||||||||||||
Noncash interest expense | 6,156 | 6,967 | |||||||||||||||||
Second generation concessions | (341 | ) | (73 | ) | |||||||||||||||
Second generation tenant improvements | (22,668 | ) | (28,744 | ) | |||||||||||||||
Second generation leasing commissions | (29,555 | ) | (23,105 | ) | |||||||||||||||
Building improvements | (8,330 | ) | (9,771 | ) | |||||||||||||||
Adjusted FFO - diluted | $ | 378,094 | 357,076 | $ | 354,710 | 352,197 |
Duke Realty Corporation and Subsidiaries | ||||||||
Reconciliation of Same Property Net Operating Income Growth | ||||||||
(Unaudited and in thousands) | ||||||||
Three Months Ended | ||||||||
December 31, 2016 | December 31, 2015 | |||||||
Income from continuing operations before income taxes | $ | 46,983 | $ | 17,275 | ||||
Share of same property NOI from unconsolidated joint ventures | 5,132 | 5,301 | ||||||
Income and expense items not allocated to segments | 105,634 | 128,611 | ||||||
Earnings from service operations | (127 | ) | (2,332 | ) | ||||
Properties not included and other adjustments | (29,458 | ) | (26,269 | ) | ||||
Same property NOI | $ | 128,164 | $ | 122,586 | ||||
Percent Change | 4.5 | % | ||||||
Twelve Months Ended | ||||||||
December 31, 2016 | December 31, 2015 | |||||||
Income from continuing operations before income taxes | $ | 312,682 | $ | 185,277 | ||||
Share of same property NOI from unconsolidated joint ventures | 20,964 | 20,694 | ||||||
Income and expense items not allocated to segments | 286,984 | 409,505 | ||||||
Earnings from service operations | (8,343 | ) | (14,197 | ) | ||||
Properties not included and other adjustments | (107,761 | ) | (125,173 | ) | ||||
Same property NOI | $ | 504,526 | $ | 476,106 | ||||
Percent Change | 6.0 | % | ||||||
Duke Realty Corporation and Subsidiaries | ||||||||
Reconciliation of 2016 FFO Guidance | ||||||||
(Unaudited ) | ||||||||
Pessimistic | Optimistic | |||||||
Net income per common share, diluted | $ | 0.38 | $ | 0.59 | ||||
Depreciation and amortization | 0.90 | 0.90 | ||||||
Gains on budgeted depreciable property sales | (0.13 | ) | (0.22 | ) | ||||
Share of joint venture adjustments | 0.03 | 0.03 | ||||||
FFO per share - diluted, as defined by NAREIT | $ | 1.18 | $ | 1.30 | ||||
Gains on land sales, net of impairments | 0.02 | (0.03 | ) | |||||
Other reconciling items | 0.01 | 0.00 | ||||||
Core FFO per share - diluted | $ | 1.21 | $ | 1.27 |
Contact Information:
Contact Information:
Investors:
Ron Hubbard
317.808.6060
Media:
Helen McCarthy
317.708.8010