DCT Industrial Trust Inc.® Reports First Quarter 2013 Results

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DCT Industrial Trust Inc.®Reports First Quarter 2013 Results

Same-Store NOI Growth of 8.0 Percent on a Cash Basis and 5.3 Percent on a GAAP Basis in Q1; Average Same-Store Occupancy Increased 210 Basis Points Year-over-Year to 92.1 Percent

Consolidated Operating Occupancy Increased 40 Basis Points to 92.7 Percent in Q1


Rental Rates Increased 6.0 Percent on a GAAP Basis in Q1

Under Agreement to Acquire 7 Buildings, Totaling 1.9 Million Square Feet from a JV Partner

Pre-leased 610,000 Square Foot Slover Logistics Center II

FFO of $0.11 per Share in Q1

Company Raises FFO Guidance

DENVER--(BUSINESS WIRE)-- DCT Industrial Trust Inc.® (NYS: DCT) , a leading industrial real estate company, today announced financial results for the quarter ending March 31, 2013.

"2013 is off to a great start, building on the positive momentum created in 2012. We are making excellent progress across all elements of our business plan - leasing, acquisitions, development, asset sales and balance sheet management," said Phil Hawkins, Chief Executive Officer of DCT Industrial. "Rents continue to improve and leasing activity remains steady across our markets. Additionally, our teams continue to execute with respect to external growth - our acquisitions and developments are creating significant value and further improving the quality and cash-flow growth potential of our portfolio."

Funds from Operations, as adjusted, attributable to common stockholders and unitholders ("FFO") for Q1 2013 totaled $33.3 million, or $0.11 per diluted share, compared with $29.0 million, or $0.11 per diluted share, for Q1 2012. These results exclude $0.4 million and $0.2 million of acquisition costs for the quarters ending March 31, 2013 and 2012, respectively.

Net income attributable to common stockholders for Q1 2013 was $1.3 million, or $0.00 per diluted share, compared with a net loss attributable to common stockholders of $6.0 million, or $0.03 per diluted share, reported for Q1 2012.

Property Results and Leasing Activity

As of March 31, 2013, DCT Industrial owned 406 consolidated operating properties, totaling 59.2 million square feet, with occupancy of 92.7 percent up from 92.3 percent as of December 31, 2012 and up 260 basis points from March 31, 2012. Including development and redevelopment, total consolidated occupancy was 91.3 percent as of March 31, 2013, compared to 90.4 percent as of December 31, 2012 and 90.1 percent as of March 31, 2012. In addition, 0.2 million square feet, or 0.4 percent of DCT Industrial's total consolidated portfolio, was leased but not yet occupied.

Net operating income ("NOI") was $52.5 million in Q1 2013, compared with $44.2 million in Q1 2012. In Q1 2013, same-store NOI, excluding revenue from lease terminations, increased 8.0 percent on a cash basis and 5.3 percent on a GAAP basis, when compared to the same period of 2012. Same-store occupancy averaged 92.1 percent in Q1 2013, an increase of 210 basis points over Q1 2012. Same-store occupancy, as of March 31, 2013, was 92.3 percent.

In Q1 2013, the Company signed leases totaling 1.4 million square feet. Rental rates on signed leases increased 6.0 percent on a GAAP basis and decreased 1.9 percent on a cash basis compared to the corresponding expiring leases. Over the previous four quarters, rental rates on signed leases increased 5.2 percent on a GAAP basis and decreased 2.5 percent on a cash basis. The Company's tenant retention rate was 46.0 percent in Q1 2013.

Investment Activity

Joint Venture Acquisition

The Company has entered into a binding agreement to purchase its joint venture partner's 96.4 percent interest in seven buildings owned by TRT-DCT Industrial JV I Fund, for an incremental investment of $85.9 million. The acquisition is expected to close mid-May.

The buildings total 1.9 million square feet and are currently 71.2 percent occupied. The portfolio has an expected year-one weighted-average cash yield of 6.0 percent and a weighted-average projected stabilized cash yield of 7.4 percent.

Market Submarket Square Feet Occupancy
Atlanta, GA Airport 125,000 100.0%
PennsylvaniaLehigh Valley503,0000.0%
PennsylvaniaHarrisburg104,00061.5%
Charlotte, NCSouthwest472,000100.0%
Chicago, ILI-55 Corridor189,000100.0%
PennsylvaniaNewark129,00093.8%
Northern California Sacramento 396,000 100.0%
Total/Weighted Average1,918,00071.2%
 

Since entering into the purchase and sale agreement, DCT has negotiated a lease for all of the 503,000 square foot building in Lehigh Valley, with occupancy expected in July. This lease will bring the portfolio's occupancy to 97.5 percent.

Acquisitions

Since January 1, 2013, DCT Industrial acquired six buildings at a total cost of $44.4 million. The buildings total 771,000 square feet and were 96.3 percent occupied at the time of acquisition. The Company expects a year-one weighted-average cash yield of 5.7 percent and a weighted-average projected stabilized cash yield of 6.3 percent on these assets.

The table below represents a summary of the acquisitions that have closed since January 1, 2013:

Market Submarket Square Feet Occupancy Closed Anticipated Yield*
Southern California Inland Empire West 125,000 100.0% Mar-13 5.9%
Southern California (2 buildings)Mid-Counties221,000100.0%Mar-135.5%
Atlanta, GA (2 buildings)Airport154,00081.3%Mar-137.2%
Dallas, TX Turnpike 271,000 100.0% Apr-13 7.7%
Total/Weighted Average771,00096.3%6.3%
 

*Anticipated yield represents year-one cash yield for stabilized acquisitions and projected stabilized cash yield for value-add acquisitions

Development

Two development projects, Northwest 8 Distribution Center in Houston and Dulles Summit Distribution Building E were stabilized during the first quarter. These projects total 343,000 square feet with expected development costs of $20.4 million and an anticipated yield of 9.4 percent on a GAAP basis. Since July 2012, DCT Industrial has stabilized four development projects totaling 549,000 square feet with development costs of $39.4 million and an anticipated yield of 9.0 percent on a GAAP basis.

Other development activities since January 1, 2013:

  • Announced the pre-lease of all of Slover Logistics Center II, a 610,000 square foot building located in the Inland Empire West submarket of Southern California. Building construction expected to start in Q3 2013 and complete in Q1 2014.
  • Completed construction of DCT Commerce Center at Pan American West Building A, a 168,000 square foot building in the Airport West submarket of Miami. The building is currently 89 percent occupied.
  • Commenced construction of DCT Airtex Industrial Center, a 267,000 square foot building in North Houston, located along Interstate 45. The building is slated for completion in Q3 2013.
  • Commenced construction of DCT Beltway Tanner Business Park, a 136,000 square foot building in the Northwest submarket of Houston. The building is slated for completion in Q3 2013.
  • Commenced construction on the 225,000 square foot expansion of Rockdale Distribution Center in the Wilson County submarket of Nashville. The pre-leased project is slated for completion in Q3 2013.

Dispositions

As previously announced, in Q1 2013, the Company completed three dispositions in Atlanta, Louisville and Memphis. The dispositions generated gross proceeds of $50.5 million and have a year-one weighted-average cash yield of 7.2 percent.

Market Submarket Square Feet Occupancy Closed
Atlanta, GA Henry County 578,000 76.2% Jan-13
Memphis, TNSoutheast/Shelby1,039,00074.1%Jan-13
Louisville, KY Riverport 221,000 100.0% Mar-13
Total/Weighted Average

1,838,000

77.9%

 

Capital Markets Activity

Since January 1, 2013, DCT Industrial raised $75.2 million in net proceeds from the sale of common stock through its "at the market" equity offering. The Company issued approximately 10.4 million shares at an average price of $7.33 per share. The proceeds were, or will be, used to fund acquisitions and development costs.

In February 2013, DCT Industrial entered into an amendment with its syndicated bank group in which the Company increased its existing $175.0 million senior unsecured term loan to $225.0 million and extended it for a period of five years, extended its existing $300.0 million senior unsecured line of credit for a period of four years and received a commitment for an additional $175.0 million of senior unsecured debt. DCT closed on the additional $175.0 million in March 2013, which was used to refinance a scheduled June 2013 maturity of $175.0 million of other senior unsecured debt.

Dividend

DCT Industrial's Board of Directors has declared a $0.07 per share quarterly cash dividend, payable on July 17, 2013 to stockholders of record as of July 5, 2013.

Guidance

The Company has increased 2013 FFO guidance, as adjusted, to $0.41 to $0.46 per diluted share, up from $0.40 to $0.45. Additionally, net loss attributable to common stockholders and unitholders is expected to be between $(0.07) and $(0.02) per diluted share.

The Company's FFO guidance excludes acquisition costs.

Conference Call Information

DCT Industrial will host a conference call to discuss Q1 2013 results on Friday, May 3, 2013 at 11:00 a.m. Eastern Time. Stockholders and interested parties may listen to a live broadcast of the conference call by dialing (888) 317-6016 or (412) 317-6016. A telephone replay will be available through Thursday, May 16, 2013 and can be accessed by dialing (877) 344-7529 or (412) 317-0088 and entering the passcode 10027047. A live webcast of the conference call will be available in the Investors section of the DCT Industrial website at www.dctindustrial.com. A webcast replay will also be available shortly following the call until May 3, 2014.

Supplemental information is available in the Investors section of the Company's website at 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 www.sec.gov.

About DCT Industrial Trust Inc.®

DCT Industrial Trust Inc. is a leading industrial real estate company specializing in the acquisition, development, leasing and management of bulk distribution and light industrial properties in high-volume distribution markets in the U.S. and Mexico. As of March 31, 2013, the Company owned interests in approximately 74.5 million square feet of properties leased to approximately 880 customers, including 14.2 million square feet operated on behalf of four institutional capital management partners. Additional information is available at www.dctindustrial.com.

 
DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share information)
 
 March 31, December 31,
20132012
ASSETS(unaudited)
Land$795,083$780,235
Buildings and improvements2,519,9142,481,206
Intangible lease assets79,53978,467
Construction in progress 42,716  45,619 
Total investment in properties3,437,2523,385,527
Less accumulated depreciation and amortization (631,986) (605,888)
Net investment in properties2,805,2662,779,639
Investments in and advances to unconsolidated joint ventures 129,415  130,974 
Net investment in real estate2,934,6812,910,613
Cash and cash equivalents19,49812,696
Restricted cash5,08510,076
Deferred loan costs, net9,3136,838
Straight-line rent and other receivables, net of allowance for doubtful accounts of $1,395 and $1,251, respectively51,49351,179
Other assets, net12,67212,945
Assets held for sale 11,350  52,852 
Total assets$3,044,092 $3,057,199 
 
LIABILITIES AND EQUITY
Liabilities:
Accounts payable and accrued expenses$49,571$57,501
Distributions payable21,63721,129
Tenant prepaids and security deposits22,28824,395
Other liabilities5,3227,213
Intangible lease liability, net19,79520,148
Line of credit50,000110,000
Senior unsecured notes1,075,0001,025,000
Mortgage notes317,704317,314
Liabilities related to assets held for sale 400  940 
Total liabilities 1,561,717  1,583,640 
 
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, 500,000,000 shares authorized 284,695,132 and 280,310,488 shares issued and outstanding as of March 31, 2013 and December 31, 2012, respectively2,8472,803
Additional paid-in capital2,262,6312,232,682
Distributions in excess of earnings(890,503)(871,655)
Accumulated other comprehensive loss (33,766) (34,766)
Total stockholders' equity1,341,2091,329,064
Noncontrolling interests 141,166  144,495 
Total equity 1,482,375  1,473,559 
Total liabilities and equity$3,044,092 $3,057,199 
 
 
DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited, in thousands, except per share information)
 
 

Three Months Ended

March 31,
2013 2012
REVENUES:
Rental revenues$72,396$61,416
Institutional capital management and other fees 812  1,055 
Total revenues 73,208  62,471 
 
OPERATING EXPENSES:
Rental expenses8,8647,578
Real estate taxes11,0799,625
Real estate related depreciation and amortization32,61529,602
General and administrative6,4205,784
Casualty gains (59) (83)
Total operating expenses 58,919  52,506 
Operating income14,2899,965
 
OTHER INCOME AND EXPENSE:
Development profits268-
Equity in earnings (loss) of unconsolidated joint ventures, net391(854)
Interest expense(16,860)(16,930)
Interest and other income (expense)162197
Income tax benefit (expense) and other taxes (109) (268)
Loss from continuing operations(1,859)(7,890)
Income from discontinued operations 3,495  1,060 
Consolidated net income (loss) of DCT Industrial Trust Inc.1,636(6,830)
Net (income) loss attributable to noncontrolling interests (357) 826 
Net income (loss) attributable to common stockholders 1,279  (6,004)
Distributed and undistributed earnings allocated to participating securities (173) (128)
Adjusted net income (loss) attributable to common stockholders$1,106 $(6,132)
 
EARNINGS PER COMMON SHARE - BASIC AND DILUTED:
Loss from continuing operations$(0.01)$(0.03)
Income from discontinued operations 0.01  0.00 
Net income (loss) attributable to common stockholders$0.00 $(0.03)
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted 281,063  246,367 
 
Distributions declared per common share$0.07$0.07
 
 

Reconciliation of Net Income (Loss) Attributable to Common Stockholders to Funds from Operations(1)

(unaudited, in thousands, except per share and unit data)
 
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