Duke Realty Reports Fourth Quarter and Full Year 2015 Results
2015 Core FFO per Share of $1.17 and AFFO per Share of $1.01
Record Occupancy Level
2016 Guidance Issued
/EINPresswire.com/ -- INDIANAPOLIS, IN -- (Marketwired) -- 01/27/16 -- Duke Realty Corporation (NYSE: DRE), a leading industrial and medical office property REIT, today reported results for the fourth quarter and full year 2015.
Jim Connor, President and Chief Executive Officer, said, "We finished 2015 with a very strong fourth quarter from an operational perspective with in-service portfolio occupancy at an all time record high of 96.1 percent, which is especially impressive considering that we placed in service 23 development projects, totaling 6.2 million square feet, during the year. We also renewed 9.2 million square feet of leases during 2015, averaging annual net effective rent growth across all product types of 11.9 percent for the year and 13.8 percent for the fourth quarter.
We also continued to dispose of non-strategic land and buildings totaling $146 million during the quarter, bringing the full year combined building and land dispositions to just under $2 billion. We recycled these proceeds into over $680 million of high quality bulk distribution and medical office developments, as well as paying off over $1.0 billion of debt to significantly bolster the balance sheet, while at the same time growing AFFO per share over the prior year.
Lastly, I am very excited to assume the role as our company's Chief Executive Officer and continue to execute our strategy and drive strong risk-adjusted returns for our shareholders."
Quarterly and Full Year Highlights
- Core Funds from Operations ("Core FFO") per diluted share of $0.29 for the quarter and $1.17 for the year. Funds from Operations ("FFO") per diluted share, as defined by the National Association of Real Estate Investment Trusts ("NAREIT"), of $0.21 for the quarter and $0.86 for the year.
- Adjusted Funds from Operations ("AFFO") of $0.24 per diluted share for the quarter and $1.01 per diluted share for the year.
- Strong operating momentum:
- Total portfolio occupancy of 94.0 percent and in-service portfolio occupancy of 96.1 percent;
- Total leasing activity of 6.7 million square feet for the quarter and 21.7 million square feet for the year;
- Same-property net operating income growth of 3.1 percent as compared to the quarter ended December 31, 2014 and 4.7 percent as compared to the year ended December 31, 2014.
- Total portfolio occupancy of 94.0 percent and in-service portfolio occupancy of 96.1 percent;
- Successful execution of capital transactions:
- Began $238 million of new developments during the quarter and $684 million during the year. Development starts for the year were comprised of $528 million of industrial projects and $156 million of medical office projects;
- Completed $108 million of building dispositions during the quarter and $1.8 billion for the full year;
- Sold $38 million of undeveloped land during the quarter and $132 million during the full year;
- Repaid $150 million of 5.5 percent unsecured notes, that had an original maturity date of March 2016, during the quarter. Repaid $831 million of unsecured notes and $231 million of secured debt during the year.
- Began $238 million of new developments during the quarter and $684 million during the year. Development starts for the year were comprised of $528 million of industrial projects and $156 million of medical office projects;
Mark Denien, Chief Financial Officer, commented, "We significantly improved our balance sheet in 2015 and we expect it to further improve throughout 2016, putting the company in a very strong position to be opportunistic in our investment opportunities on a self-funding basis. Our recent deleveraging efforts and commitment to further improvements resulted in an increase in our credit outlook from stable to positive by both Moody's Investors Service and Standard & Poor's Rating Services last week. We are now rated Baa2 (positive) by Moody's and BBB (positive) by Standard & Poor's."
Financial Performance
The following table reconciles FFO per share, as defined by NAREIT, to Core FFO per share as measured by the company, for both the three and twelve months ended December 31, 2015 and 2014:
Twelve Months
Three Months Ended Ended
December 31 December 31
2015 2014 2015 2014
--------- --------- --------- --------
FFO per share - diluted, as defined by
NAREIT $ 0.21 $ 0.20 $ 0.86 $ 1.07
Adjustments:
Gain on land sales (0.03) (0.01) (0.10) (0.03)
Charges for pre-payment of debt 0.01 0.00 0.24 0.00
Adjustments for redemption of
preferred shares 0.00 0.03 0.00 0.04
Impairment charges - non-depreciable
properties 0.10 0.07 0.12 0.10
Overhead restructuring charges 0.00 0.00 0.02 0.00
Acquisition-related activity 0.00 0.00 0.02 0.00
-------- -------- -------- --------
Core FFO per share - diluted $ 0.29 $ 0.30 $ 1.17 $ 1.18
======== ======== ======== ========
- Core FFO was $103 million, or $0.29 per diluted share, for the fourth quarter of 2015, a decrease from $105 million, or $0.30 per diluted share, in the fourth quarter of 2014. Core FFO was $412 million, or $1.17 per diluted share, for the full year 2015, compared to $406 million, or $1.18 per diluted share, in 2014. Core FFO on an absolute and per share basis was impacted in 2015 by the significant property dispositions that were executed throughout 2014 and 2015. The dilution from these dispositions was mostly offset by improved operational performance.
- FFO, as defined by NAREIT, was $0.21 per diluted share for the fourth quarter of 2015, an increase from $0.20 per share in the fourth quarter of 2014. FFO, as defined by NAREIT, was $0.86 per diluted share for the full year 2015 compared to $1.07 per diluted share for the full year 2014. The decrease to FFO as defined by NAREIT, for the full year 2015, was largely the result of the losses on extinguishment of debt recognized in 2015.
- Net income was $0.07 per diluted share for the fourth quarter of 2015, compared to a net loss of $0.01 per diluted share for the fourth quarter of 2014. In addition to the items that impact both net income (loss) and FFO such as impairments of non-depreciable properties, the fourth quarter of 2014 net loss included $14 million of non-cash impairment charges on depreciable properties, which do not impact FFO as defined by NAREIT. Net income was $1.77 per diluted share for the full year 2015 compared to $0.60 per diluted share for 2014. The increase to net income per share was due to significantly higher gains on depreciable property sales during the full year 2015, when compared to the full year 2014.
Portfolio Operating Performance
Strong overall operating performance across all product types:
- In-service occupancy in the bulk distribution portfolio of 96.5 percent on December 31, 2015 compared to 96.2 percent on September 30, 2015 and 96.4 percent on December 31, 2014.
- In-service occupancy in the medical office portfolio of 95.5 percent on December 31, 2015 compared to 95.0 percent on September 30, 2015 and 94.3 percent on December 31, 2014.
- In-service occupancy in the suburban office portfolio of 85.9 percent on December 31, 2015 compared to 89.0 percent on September 30, 2015 and 87.9 percent on December 31, 2014.
- Same-property net operating income growth of 3.1 percent and 4.7 percent for the three and twelve-month periods ended December 31, 2015 compared to the comparable periods in 2014. The growth in same-property net operating income was due to increased occupancy and rental rate growth.
- Tenant retention of 80 percent for the quarter and 76 percent for the year, with overall average annual net effective rental rate growth on renewals of 13.8 percent for the quarter and 11.9 percent for the year.
Real Estate Investment Activity
Development
Jim Connor, President and Chief Executive Officer, stated, "We began development of seven projects totaling 2.4 million square feet with total anticipated costs of $238 million during the fourth quarter. These projects were 61 percent pre-leased in the aggregate. In total, we have $665 million of projects currently under construction that are 58 percent pre-leased in the aggregate. We have a healthy pipeline of industrial and medical office prospects heading into 2016."
The fourth quarter included the following development activity:
Wholly-Owned Properties
- The company started four new industrial developments during the quarter, totaling 1.2 million square feet. Two of these projects were 100 percent leased build-to-suit projects and two were speculative projects.
- The company started two new medical office developments during the quarter, which were 75 percent leased in aggregate, totaling 158,000 square feet.
- Wholly-owned development projects under construction at December 31, 2015 consisted of 15 industrial projects totaling 5.3 million square feet and 10 medical office projects totaling 636,000 square feet.
- Five industrial projects and three industrial expansions totaling 1.6 million square feet, which were 66 percent pre-leased in the aggregate, were placed in service during the quarter. Additionally, one 144,000 square foot suburban office property, which was 13 percent leased, and one 37,000 square foot medical office development, which was 100 percent pre-leased, were placed in service.
Joint Venture Properties
- During the quarter, a 1.0 million square foot industrial project, which was 100 percent pre-leased, was started in Columbus in a 50 percent owned unconsolidated joint venture.
- Joint venture development projects under construction at December 31, 2015 consisted of three industrial projects totaling 1.9 million square feet.
Building Dispositions
Dispositions for the full year 2015 totaled $1.8 billion. Fourth quarter dispositions totaled $108 million and were comprised of thirteen wholly owned suburban office properties, totaling 1.2 million square feet. The most significant of these dispositions was a five building, 728,000 square foot, suburban office portfolio in Cincinnati.
Dividends Declared
The company's board of directors declared a quarterly cash dividend of $0.18 per share, or $0.72 per share on an annualized basis, on the company's common stock. The fourth quarter dividend will be payable February 29, 2016 to shareholders of record on February 16, 2016.
2016 Earnings Guidance
Commenting on the company's 2016 outlook, Mr. Connor stated, "We are introducing 2016 guidance for Core FFO of $1.15 to $1.21 per share, and AFFO of $1.02 to $1.08 per share. This guidance factors in the disposition of substantially all of our remaining suburban office properties and a continued investment in new and largely pre-leased development projects. Due to our strategy to dispose of our remaining suburban office properties, all operational guidance and results will be provided for only our industrial and medical office portfolios on an ongoing basis."
The company's reconciliation of Core FFO to FFO as defined by NAREIT is as follows:
Pessimistic Optimistic
------------- ------------
Core FFO per share - diluted $ 1.15 $ 1.21
Adjustments:
Net gain on land sales 0.00 0.03
Charges for pre-payment of debt (0.02) 0.00
Acquisition-related activity (0.01) 0.00
------------ ------------
FFO per share - diluted, as defined by NAREIT $ 1.12 $ 1.24
============ ============
The assumptions underlying the guidance are as follows:
1. Dispositions of mainly suburban office properties in a range of $600 million to $900 million with proceeds used to fund new development opportunities and debt maturities;
2. Same property net operating income growth of 2.75 percent to 4.25 percent for our industrial and medical office portfolios on a combined basis;
3. Average in-service occupancy of 95.4 percent to 96.4 percent for our industrial and medical office portfolios on a combined basis;
4. Service operations income of $8 million to $12 million.
5. Continued improvement in key leverage metrics.
More specific assumptions and components of our 2016 guidance will be available by 6:00 p.m. Eastern Time today through the Investor Relations-Financials 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, and extraordinary items (computed in accordance with generally accepted accounting principles ("GAAP")); 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 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 benefit 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, adjustments on the repurchase or redemption of preferred stock, gains (losses) on and related costs of acquisitions, 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 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, 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 does not believe same-property net operating income growth to be a primary measure of overall company operating performance. The company utilizes same-property net income growth as a supplemental measure to evaluate property-level performance, without differentiating or making adjustment as to whether a property is consolidated or jointly controlled.
A description of the properties that are excluded from the company's same-property measure is included on page 20 of our December 31, 2015 supplemental information.
About Duke Realty Corporation
Duke Realty Corporation owns, maintains an interest in or has under development approximately 141.8 million rentable square feet of industrial and medical office assets, in 22 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 and Full Year Earnings Call and Supplemental Information
Duke Realty Corporation is hosting a conference call tomorrow, January 28, 2016, at 3:00 p.m. Eastern Time to discuss its fourth quarter and full year 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) - (ix). 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, 2014. 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 Balance Sheets
(Unaudited and in thousands)
December 31, December 31,
2015 2014
------------ ------------
Assets
Real estate investments:
Land and improvements $ 1,391,763 $ 1,412,867
Buildings and tenant improvements 4,740,837 4,986,390
Construction in progress 321,062 246,062
Investments in and advances to unconsolidated
companies 268,390 293,650
Undeveloped Land 383,045 499,960
------------ ------------
7,105,097 7,438,929
Accumulated depreciation (1,192,425) (1,235,337)
------------ ------------
Net real estate investments 5,912,672 6,203,592
Real estate investments and other assets held-
for-sale 45,801 725,051
Cash and cash equivalents 22,533 17,922
Accounts receivable, net 18,846 26,168
Straight-line rents receivable, net 116,781 109,657
Receivables on construction contracts, including
retentions 16,459 36,224
Deferred financing costs, net 28,363 38,734
Deferred leasing and other costs, net 346,374 387,635
Escrow deposits and other assets 409,284 209,856
------------ ------------
$ 6,917,113 $ 7,754,839
============ ============
Liabilities and Equity
Indebtedness:
Secured debt $ 739,996 $ 942,478
Unsecured debt 2,530,743 3,364,161
Unsecured line of credit 71,000 106,000
------------ ------------
3,341,739 4,412,639
Liabilities related to real estate investments
held-for-sale 972 59,092
Construction payables and amounts due
subcontractors, including retentions 54,921 69,470
Accrued real estate taxes 71,617 76,308
Accrued interest 34,447 55,110
Other accrued expenses 61,827 62,632
Other liabilities 106,283 95,566
Tenant security deposits and prepaid rents 40,506 44,142
------------ ------------
Total liabilities 3,712,312 4,874,959
------------ ------------
Shareholders' equity:
Common stock 3,453 3,441
Additional paid-in-capital 4,961,923 4,944,800
Accumulated other comprehensive income 1,806 3,026
Distributions in excess of net income (1,785,250) (2,090,942)
------------ ------------
Total shareholders' equity 3,181,932 2,860,325
Noncontrolling interest 22,869 19,555
------------ ------------
Total equity 3,204,801 2,879,880
------------ ------------
$ 6,917,113 $ 7,754,839
============ ============
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,
-------------------- ---------------------
2015 2014 2015 2014
--------- --------- --------- ----------
Revenues:
Rental and related revenue $ 198,516 $ 206,859 $ 816,065 $ 822,351
General contractor and service
fee revenue 23,047 39,429 133,367 224,500
--------- --------- --------- ----------
221,563 246,288 949,432 1,046,851
--------- --------- --------- ----------
Expenses:
Rental expenses 29,311 32,187 125,666 136,278
Real estate taxes 26,650 27,658 112,879 115,013
General contractor and other
services expenses 20,715 36,375 119,170 200,031
Depreciation and amortization 77,194 83,705 317,329 346,275
--------- --------- --------- ----------
153,870 179,925 675,044 797,597
--------- --------- --------- ----------
Other operating activities:
Equity in earnings (loss) of
unconsolidated companies (19,585) 11,992 (3,304) 94,317
Gain on sale of properties 27,549 29,098 229,702 162,715
Gain on land sales 10,958 3,233 35,054 10,441
Other operating expenses (1,368) (1,159) (5,947) (7,191)
Impairment charges (15,036) (40,215) (22,932) (49,106)
General and administrative
expenses (10,983) (13,730) (58,565) (49,362)
--------- --------- --------- ----------
(8,465) (10,781) 174,008 161,814
--------- --------- --------- ----------
Operating income 59,228 55,582 448,396 411,068
Other income (expenses):
Interest and other income, net 1,611 310 4,667 1,246
Interest expense (38,934) (50,210) (173,574) (196,186)
Loss on debt extinguishment (3,124) (144) (85,713) (283)
Acquisition-related activity (1,506) (228) (8,499) (1,099)
--------- --------- --------- ----------
Income from continuing
operations, before income taxes 17,275 5,310 185,277 214,746
Income tax benefit (expense) (181) 3,439 3,928 844
--------- --------- --------- ----------
Income from continuing
operations 17,094 8,749 189,205 215,590
Discontinued operations:
Income before gain on sales 328 4,152 10,939 11,071
Gain (loss) on sale of
depreciable properties, net
of tax 7,097 (101) 421,717 19,794
--------- --------- --------- ----------
Income from discontinued
operations 7,425 4,051 432,656 30,865
Net income 24,519 12,800 621,861 246,455
Dividends on preferred shares - (4,788) - (24,943)
Adjustments for
redemption/repurchase of
preferred shares - (11,039) - (13,752)
Net income attributable to
noncontrolling interests (267) 16 (6,551) (2,867)
--------- --------- --------- ----------
Net income (loss)
attributable to common
shareholders $ 24,252 $ (3,011) $ 615,310 $ 204,893
========= ========= ========= ==========
Basic net income (loss) per
common share:
Continuing operations
attributable to common
shareholders $ 0.05 $ (0.02) $ 0.53 $ 0.51
Discontinued operations
attributable to common
shareholders 0.02 0.01 1.24 0.09
--------- --------- --------- ----------
Total $ 0.07 $ (0.01) $ 1.77 $ 0.60
========= ========= ========= ==========
Diluted net income (loss) per
common share:
Continuing operations
attributable to common
shareholders $ 0.05 $ (0.02) $ 0.53 $ 0.51
Discontinued operations
attributable to common
shareholders 0.02 0.01 1.24 0.09
--------- --------- --------- ----------
Total $ 0.07 $ (0.01) $ 1.77 $ 0.60
========= ========= ========= ==========
Duke Realty Corporation and Subsidiaries
Summary of EPS, FFO and AFFO
Three Months Ended December 31
(Unaudited and in thousands, except per share amounts)
-----------------------------------------------------
2015 2014
-------------------------- --------------------------
Wtd. Wtd.
Avg. Per Avg. Per
Amount Shares Share Amount Shares Share
-------- ------- -------- -------- ------- --------
Net income (loss)
attributable to
common shareholders $ 24,252 $ (3,011)
Less: dividends on
participating
securities (1,312) (647)
-------- --------
Net income per common
share- basic 22,940 345,267 $ 0.07 (3,658) 342,853 $ (0.01)
Add back:
Noncontrolling
interest in
earnings of
unitholders 192 3,502 - -
Other potentially
dilutive
securities - 763 - -
-------- ------- -------- -------
Net income (loss)
attributable to
common shareholders-
diluted $ 23,132 349,532 $ 0.07 $ (3,658) 342,853 $ (0.01)
======== ======= ======== =======
Reconciliation to
funds from
operations ("FFO")
Net income (loss)
attributable to
common shareholders $ 24,252 345,267 $ (3,011) 342,853
Adjustments:
Depreciation and
amortization 77,194 93,712
Company share of
joint venture
depreciation,
amortization and
other 5,001 7,223
Impairment charges
- depreciable
property 2,542 14,953
Gains on
depreciable
property sales -
wholly owned,
discontinued
operations (7,097) 101
Gains on
depreciable
property sales -
wholly owned,
continuing
operations (27,549) (29,098)
Income tax
(benefit) expense
triggered by
depreciable
property sales 181 (3,439)
Gains on
depreciable
property sales -
JV (189) (8,997)
Noncontrolling
interest share of
adjustments (503) (876)
-------- ------- -------- -------
NAREIT FFO
attributable to
common shareholders
- basic 73,832 345,267 $ 0.21 70,568 342,853 $ 0.21
Noncontrolling
interest in income
(loss) of
unitholders 192 3,502 (111) 4,081
Noncontrolling
interest share of
adjustments 503 876
Other potentially
dilutive
securities 3,816 3,768
-------- ------- -------- -------
NAREIT FFO
attributable to
common shareholders
- diluted $ 74,527 352,585 $ 0.21 $ 71,333 350,702 $ 0.20
Gain on land sales (10,958) (3,233)
Adjustments for
redemption of
preferred shares - 11,039
Loss on debt
extinguishment 3,124 144
Land impairment
charges, including
joint ventures 34,605 25,262
Overhead
restructuring
charges - -
Acquisition-related
activity 1,506 228
-------- ------- -------- -------
Core FFO attributable
to common
shareholders -
diluted $102,804 352,585 $ 0.29 $104,773 350,702 $ 0.30
======== ======= ======== =======
Adjusted FFO
Core FFO - diluted $102,804 352,585 $ 0.29 $104,773 350,702 $ 0.30
Adjustments:
Straight-line
rental income and
expense (4,147) (4,249)
Amortization of
above/below market
rents and
concessions 698 (31)
Stock based
compensation
expense 1,503 1,591
Noncash interest
expense 1,614 1,881
Second generation
concessions (17) (837)
Second generation
tenant
improvements (7,062) (15,213)
Second generation
leasing
commissions (6,117) (10,106)
Building
improvements (5,232) (4,688)
-------- ------- -------- -------
Adjusted FFO -
diluted $ 84,044 352,585 $ 0.24 $ 73,121 350,702 $ 0.21
======== ======= ======== =======
Duke Realty Corporation and Subsidiaries
Summary of EPS, FFO and AFFO
Twelve Months Ended December 31
(Unaudited and in thousands, except per share amounts)
-------------------------------------------------------
2015 2014
--------------------------- ---------------------------
Wtd. Wtd.
Avg. Per Avg. Per
Amount Shares Share Amount Shares Share
--------- ------- -------- --------- ------- --------
Net income
attributable to
common shareholders $ 615,310 $ 204,893
Less: dividends on
participating
securities (3,081) (2,588)
--------- ---------
Net income per
common share- basic 612,229 345,057 $ 1.77 202,305 335,777 $ 0.60
Add back:
Noncontrolling
interest in
earnings of
unitholders 6,404 3,582 2,627 4,308
Other potentially
dilutive
securities 3,081 3,558 - 361
--------- ------- --------- -------
Net income
attributable to
common
shareholders-
diluted $ 621,714 352,197 $ 1.77 $ 204,932 340,446 $ 0.60
========= ======= ========= =======
Reconciliation to
funds from
operations ("FFO")
Net income
attributable to
common shareholders $ 615,310 345,057 $ 204,893 335,777
Adjustments:
Depreciation and
amortization 320,846 384,617
Company share of
joint venture
depreciation,
amortization and
other 27,247 28,227
Impairment charges
- depreciable
property 3,406 15,406
Gains on
depreciable
property sales -
wholly owned,
discontinued
operations (424,892) (22,763)
Gains on
depreciable
property sales -
wholly owned,
continuing
operations (229,702) (162,715)
Income tax
(benefit) expense
triggered by
depreciable
property sales (753) 2,125
Gains on
depreciable
property sales-JV (13,911) (84,649)
Noncontrolling
interest share of
adjustments 3,265 (2,030)
--------- ------- --------- -------
NAREIT FFO
attributable to
common shareholders
- basic 300,816 345,057 $ 0.87 363,111 335,777 $ 1.08
Noncontrolling
interest in
income of
unitholders 6,404 3,582 2,627 4,308
Noncontrolling
interest share of
adjustments (3,265) 2,030
Other potentially
dilutive
securities 3,558 3,443
--------- ------- --------- -------
NAREIT FFO
attributable to
common shareholders
- diluted $ 303,955 352,197 $ 0.86 $ 367,768 343,528 $ 1.07
Gain on land sales (35,054) (10,441)
Loss on debt
extinguishment 85,713 283
Adjustments for
redemption/repurc
hase of preferred
shares - 13,752
Land impairment
charges,
including joint
ventures 41,637 33,700
Overhead
restructuring
Charges 7,422 -
Acquisition-
related activity 8,499 1,099
--------- ------- --------- -------
Core FFO
attributable to
common shareholders
- diluted $ 412,172 352,197 $ 1.17 $ 406,161 343,528 $ 1.18
========= ======= ========= =======
Adjusted FFO
Core FFO - diluted $ 412,172 352,197 $ 1.17 $ 406,161 343,528 $ 1.18
Adjustments:
Straight-line
rental income and
expense (23,232) (22,170)
Amortization of
above/below
market rents and
concessions 3,659 5,348
Stock based
compensation
expense 16,837 15,197
Noncash interest
expense 6,967 6,930
Second generation
concessions (73) (923)
Second generation
tenant
improvements (28,744) (39,016)
Second generation
leasing
commissions (23,105) (32,080)
Building
improvements (9,771) (9,428)
--------- ------- --------- -------
Adjusted FFO -
diluted $ 354,710 352,197 $ 1.01 $ 330,019 343,528 $ 0.96
========= ======= ========= =======
Contact Information:
Investors:
Ron Hubbard
317.808.6060
Media:
Helen McCarthy
317.708.8010
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