DCT Industrial Trust Inc.® Reports Fourth Quarter and 2012 Full-Year Results
DCT Industrial Trust Inc.®Reports Fourth Quarter and 2012 Full-Year Results
Same-Store NOI Growth of 8.6 Percent on a Cash Basis and 4.9 Percent on a GAAP Basis in Q4; Average Same-Store Occupancy Increased 170 Basis Points Year-over-Year to 91.7 Percent
Consolidated Operating Occupancy Increased 50 Basis Points to 92.3 Percent in Q4
Rental Rates Increased 15.3 Percent on a GAAP Basis and 3.4 Percent on a Cash Basis in Q4
Acquired 21 Buildings for $241.7 Million and Sold Seven Buildings for $111.1 Million in Q4
Funds from Operations of $0.11 per Share in Q4 and $0.42 per Share in 2012; an Increase of 5.0 Percent Year-over-Year
"2012 was an excellent year across all fronts. We surpassed our operating, capital deployment and capital recycling goals and we continue to build a successful development program," said Phil Hawkins, Chief Executive Officer of DCT Industrial. "For the year, we acquired 32 buildings for $338.4 million and grew our assets under active development to $128.2 million. In addition we purchased eight land sites which will support development of 4.5 million square feet. Since December 31, 2011, we sold 40 buildings, totaling 6.2 million square feet, further enhancing the cash flow growth of our portfolio."
Funds from Operations, as adjusted, attributable to common stockholders and unitholders ("FFO") for the fourth quarter of 2012 totaled $33.0 million, or $0.11 per diluted share, compared with $30.0 million, or $0.11 per diluted share, for the fourth quarter of 2011. These results exclude $1.0 million and $0.5 million of acquisition costs for the quarters ending December 31, 2012 and 2011, respectively.
For the year ending December 31, 2012, FFO totaled $118.1 million, or $0.42 per diluted share, compared with $106.7 million, or $0.40 per diluted share, for the year ending December 31, 2011. These results exclude $2.0 million and $1.9 million of acquisition costs for the year ending December 31, 2012 and 2011, respectively.
Net loss attributable to common stockholders for the fourth quarter of 2012 was $0.8 million, or $0.00 per diluted share, compared with a net loss attributable to common stockholders of $0.2 million, or $0.00 per diluted share, reported for the fourth quarter of 2011. Net loss attributable to common stockholders for the year ending December 31, 2012 was $15.1 million, or $0.06 per diluted share, compared with a net loss of $25.3 million, or $0.11 per diluted share, for the year ending December 31, 2011.
Property Results and Leasing Activity
As of December 31, 2012, DCT Industrial owned 402 consolidated operating properties, totaling 60.1 million square feet, with occupancy of 92.3 percent up from 91.8 percent as of September 30, 2012 and up 170 basis points from December 31, 2011. Including development and redevelopment, total consolidated occupancy was 90.4 percent as of December 31, 2012, compared to 91.0 percent as of September 30, 2012 and 90.5 percent as of December 31, 2011. In addition, 0.7 million square feet, or 1.1 percent of DCT Industrial's total consolidated portfolio, was leased but not yet occupied.
Net operating income ("NOI") was $50.5 million in the fourth quarter of 2012, compared with $44.3 million in the fourth quarter of 2011. In the fourth quarter of 2012, same-store NOI, excluding revenue from lease terminations, increased 8.6 percent on a cash basis and 4.9 percent on a GAAP basis, when compared to the same period of 2011. Same-store occupancy averaged 91.7 percent in the fourth quarter of 2012, an increase of 170 basis points over the fourth quarter of 2011. Same-store occupancy, as of December 31, 2012, was 92.1 percent.
In the fourth quarter of 2012, the Company signed leases totaling 3.3 million square feet. For the year ending December 31, 2012, DCT Industrial signed leases totaling 15.5 million square feet compared with 14.9 million square feet for the year ending December 31, 2011. In the fourth quarter of 2012, rental rates on signed leases increased 15.3 percent on a GAAP basis and 3.4 percent on a cash basis compared to the corresponding expiring leases. For the full year 2012, rental rates on signed leases increased 4.6 percent on a GAAP basis and decreased 2.8 percent on a cash basis. The Company's tenant retention rate was 75.7 percent in the fourth quarter of 2012 and 73.4 percent for the year ending December 31, 2012.
Joint Venture Acquisition
The Company successfully purchased its joint venture partner's 80 percent interest in DCT Fund I, for an incremental investment of $78.2 million. The six buildings in the portfolio are located in Atlanta, Central Pennsylvania, Chicago, Dallas, Memphis and New Jersey and total 2.6 million square feet. Subsequently, DCT Industrial sold the buildings in Atlanta and Memphis to a third party in January. The portfolio, after the sale of the Atlanta and Memphis assets, has a year-one weighted-average cash yield of 6.5 percent and a weighted-average projected stabilized cash yield of 7.2 percent.
|Atlanta, GA*||Henry County||578,000||76.2%|
|Central Pennsylvania||Lehigh Valley||100,000||100.0%|
|Chicago, IL||Southwest Suburbs||303,000||100.0%|
*Asset sold to third party in January 2013
In addition to the joint venture portfolio, DCT Industrial acquired 15 buildings at a total cost of $163.5 million in the fourth quarter. The buildings, located in Chicago, Houston, Northern California, Seattle and Southern California, total 1.8 million square feet. The Company expects a year-one weighted-average cash yield of 6.3 percent and a weighted-average projected stabilized cash yield of 6.6 percent on these assets.
For the full year ending December 31, 2012, including the purchase of the joint venture portfolio, the Company acquired 32 buildings, totaling 6.2 million square feet for a total of $338.4 million. The Company expects a year-one weighted-average cash yield of 6.3 percent and a weighted-average projected stabilized cash yield of 7.1 percent.
The table below represents a summary of the acquisitions in the fourth quarter:
|Seattle, WA||Kent Valley||26,000||0.0%||Oct-12||6.8%|
|Southern California (4 buildings)||San Gabriel Valley||211,000||100.0%||Oct-12||6.2%|
Air Freight Portfolio
|LAX (3 buildings)||471,000||99.6%||Nov-12||6.5%|
|O'Hare (1 building)||92,000||100.0%||Nov-12||6.5%|
|Chicago, IL||I-88/Fox Valley||163,000||100.0%||Dec-12||7.3%|
|Houston, TX (2 buildings)||Port of Houston||313,000||100.0%||Dec-12||7.3%|
Northern DuPage County
*Anticipated yield represents year-one cash yield for stabilized acquisitions and projected stabilized cash yield for value-add acquisitions.
In the fourth quarter, DCT Industrial invested $40.5 million to acquire 5 land parcels for the future development of approximately 3.0 million square feet. The land is located in some of the most highly sought after submarkets of Atlanta, Houston, Seattle and Southern California.
The table below represents a summary of land acquired in the fourth quarter:
|Atlanta, GA||I-20 West||47.2||DCT River West||1||733,000|
|Houston, TX||Northwest||11.0||DCT Beltway Tanner Business Park||1||133,000|
|Seattle, WA||Kent Valley||46.3||DCT White River Corporate Center||2|
|Seattle, WA||Kent Valley||9.3||DCT Sumner South Distribution Center||1|
|Southern California||Inland Empire West||42.2||DCT Rialto Logistics Center||1||928,000|
In addition, DCT Industrial:
- Completed the expansion of Building 3 at SCLA in Southern California, which is fully leased to Newell Rubbermaid.
- Commenced construction on the pre-leased 652,000 square foot Slover Logistics Center I in Southern California. The building is expected to be completed and the lease commenced by Q3 of 2013.
- Committed to start a build-to-suit on Building A at 8th and Vineyard, in Southern California. Construction is expected to commence Q1 of 2013 and the building is under contract to be sold to the user upon completion.
- 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 of 2013.
As of December 31, 2012, the Company had under active development, including recently stabilized buildings, $128.2 million which is 70.0 percent leased.
During the fourth quarter of 2012, the Company committed to sell a portfolio of six assets. Five buildings closed in the fourth quarter, and the sixth building is held for sale and scheduled to close in the first quarter of 2013. Additionally, as mentioned in the Joint Venture Acquisition section, DCT Industrial sold two buildings in Atlanta and Memphis in January.
The seven buildings that closed since September 30, 2012, total 3.7 million square feet and are located in Atlanta, Columbus and Memphis. The dispositions generated gross proceeds of $111.1 million. Including the held-for-sale building scheduled to close in the first quarter of 2013, we expect to generate gross proceeds of $122.4 million with a projected year-one weighted-average cash yield of 7.9 percent. Since December 31, 2011 and once the building held for sale closes, gross proceeds from dispositions will total $211.5 million1 with a projected year-one weighted-average cash yield of 7.1 percent.
The table below represents a summary of the seven assets that closed since September 30, 2012, and the held-for-sale building:
|Atlanta, GA||Henry County||189,000||100.0%||Dec-12|
|Atlanta, GA||Henry County||578,000||76.2%||Jan-13|
* Building held for sale and scheduled to close in Q1 2013
1 Includes DCT Industrial's proportionate share of gross proceeds for properties sold by unconsolidated joint ventures.
Capital Markets Activity
During the fourth quarter DCT Industrial raised $59.2 million in net proceeds from the sale of common stock through its "at the market" continuous equity offering. The Company issued approximately 9.5 million shares at an average price of $6.33 per share. The proceeds were used to fund acquisitions.
DCT Industrial's Board of Directors has declared a $0.07 per share quarterly cash dividend, payable on April 17, 2013, to stockholders of record as of April 5, 2013.
The Company's guidance for 2013 FFO is between $0.40 to $0.45 per diluted share. Additionally, net loss attributable to common stockholders is expected to be between $(0.06) and $(0.01) per diluted share.
DCT Industrial's guidance for 2013 includes the following assumptions:
- Average occupancy for the consolidated operating portfolio will range between 91.0 percent and 94.0 percent
- Same-store net operating income will increase between 1.0 percent and 4.0 percent on a GAAP basis and between 2.0 percent and 5.0 percent on a cash basis
- Development starts of between $125 million and $200 million
- $100 million to $200 million of stabilized and value-add acquisitions
The Company's FFO guidance excludes real estate gains and losses, impairments and acquisition costs.
Conference Call Information
DCT Industrial will host a conference call to discuss full year and fourth quarter 2012 results on Friday, February 8, 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 until 9 a.m. Eastern Time, Friday, February 22, 2013 and can be accessed by dialing (877) 344-7529 or (412) 317-0088 and entering the passcode 10023617. 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 February 8, 2014.
Supplemental information is available in the Investors section of the Company's website at www.dctindustrial.com or by e-mail request at firstname.lastname@example.org. 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 December 31, 2012, the Company owned interests in approximately 75.6 million square feet of properties leased to approximately 870 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)
|December 31,||December 31,|
|Buildings and improvements||2,481,206||2,393,346|
|Intangible lease assets||78,467||84,779|
|Construction in progress||45,619||35,386|
|Total investment in properties||3,385,527||3,161,063|
|Less accumulated depreciation and amortization||(605,888||)||(589,314||)|
|Net investment in properties||2,779,639||2,571,749|
|Investments in and advances to unconsolidated joint ventures||130,974||139,278|
|Net investment in real estate||2,910,613||2,711,027|
|Cash and cash equivalents||12,696||12,834|
|Deferred loan costs, net||6,838||8,567|
|Straight-line rent and other receivables, net of allowance for doubtful accounts of $1,251 and $1,256, respectively||51,179||42,349|
|Other assets, net||12,945||11,019|
|Assets held for sale||52,852||-|
|LIABILITIES AND EQUITY|
|Accounts payable and accrued expenses||$||57,501||$||45,785|
|Tenant prepaids and security deposits||24,395||22,864|
|Intangible lease liability, net||20,148||18,897|
|Line of credit||110,000||-|
|Senior unsecured notes||1,025,000||935,000|
|Liabilities related to assets held for sale||940||-|
|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, $0.01 par value, 350,000,000 shares authorized 280,310,488 and 245,943,100 shares issued and outstanding as of December 31, 2012 and December 31, 2011, respectively||2,803||2,459|
|Additional paid-in capital||2,232,682||2,018,075|
|Distributions in excess of earnings||(871,655||)||(783,229||)|
|Accumulated other comprehensive loss||(34,766||)||(29,336||)|
|Total stockholders' equity||1,329,064||1,207,969|
|Total liabilities and equity||$||3,066,502||$||2,793,298|
DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited, in thousands, except per share information)
|Three Months Ended||Twelve Months Ended|
|December 31,||December 31,|
|Institutional capital management and other fees||916||1,138||4,059||4,291|
|Real estate taxes||9,330|