Exhibit 99.1
 | News Release | |
| FOR IMMEDIATE RELEASE | ||
DUKE REALTY CORPORATION REPORTS
FIRST QUARTER 2010 RESULTS
Recurring Funds from Operations In-Line with Expectations
Earnings Guidance Reaffirmed
Positive Momentum in Operating Performance
Balance Sheet Strengthened- Executing Capital Strategy
(INDIANAPOLIS, April 28, 2010) – Duke Realty Corporation (NYSE: DRE), a leading industrial and office property REIT, today reported results for the first quarter 2010.
Operating Highlights
| • | Recurring funds from operations per diluted share (“Recurring FFO”) was $0.28 for the quarter. There were no material non-recurring adjustments to FFO recognized in the quarter. |
| • | Positive momentum in operating performance: |
| • | Overall portfolio occupancy at 87.5 percent, up from 87.2 percent at year end 2009; |
| • | Tenant retention rate over 82 percent; |
| • | Over 5.5 million square feet of leases completed during the quarter. |
| • | Executing capital strategy; balance sheet strengthened: |
| • | $100.0 million of unsecured bonds retired in January with available cash; |
| • | $122.6 million in proceeds generated from first quarter asset dispositions; |
| • | $250.0 million offering of 6.75% unsecured bonds; |
| • | $212.2 million par value unsecured bonds with 2011 and 2013 maturity dates repurchased in April 2010. |
Duke Realty Corporation Reports First Quarter Results
April 28, 2010
Page 2 of 12
“We are beginning to see signs that the economy is improving,” said Dennis D. Oklak, chairman and chief executive officer. “For the quarter, we were able to maintain occupancy levels from year end 2009 on our overall portfolio, execute the highest first quarter leasing activity in five years, and successfully dispose of non-strategic assets in alignment with our operating strategy. Additionally, I am very pleased with how we are executing on our capital strategy.”
Financial Performance
| • | Recurring FFO for the first quarter was $0.28 compared with $0.50 for the first quarter of 2009. The variance is primarily attributable to an increase in our weighted average share count due to the common equity offering in April 2009. |
| • | Net income per diluted share (EPS) for first quarter 2010 was a loss of $0.07, as compared to earnings of $0.15 for the same quarter in 2009. The variance is primarily attributable to $33.1 million of gains realized from the repurchase of the company’s unsecured bonds during the first quarter of 2009. |
Capital Markets
The company has continued to address near-term debt obligations and execute on deleveraging actions, including:
| • | Retired $100 million of 6.25% unsecured bonds with available cash. |
| • | Repurchased in the open market $15 million principal amount of its 2011 exchangeable notes. |
| • | On April 1, 2010, executed a $250 million offering of 6.75% senior unsecured notes due March 15, 2020. |
| • | Also in April, repurchased $212.2 million principal amount of unsecured bonds through a tender offer comprised of the following: |
| • | $66.4 million of its 6.95% March 2011 senior notes, repurchased on April 1, 2010; |
| • | $95.8 million of its 5.625% August 2011 senior notes repurchased on April 20, 2010; and |
| • | $50.0 million of its 6.25% May 2013 senior notes repurchased on April 20, 2010. |
Duke Realty Corporation Reports First Quarter Results
April 28, 2010
Page 3 of 7
As a result of these and previously announced capital transactions, the company has $880 million of available liquidity to repay 2011 maturities and pursue strategic opportunities. This liquidity consists of $850 million available on the company’s unsecured line of credit and $30 million of cash on hand as of March 31, 2010.
Portfolio Performance
Specific operational highlights include:
| • | Overall portfolio occupancy, including projects under development of 87.5 percent as of March 31, 2010, compared to 87.2 percent at December 31, 2009. |
| • | Tenant retention for the quarter of 82.7 percent. |
| • | Same property net operating income decreased by 2.5 percent for the first quarter of 2010, compared with the three-month period ended March 31, 2009; in-line with expectations. |
“Although the environment remains challenging, we are pleased to report that the second half of the first quarter showed a significant improvement in our operations. The primary driver was leasing activity in our bulk warehouse portfolio,” stated Mr. Oklak.
Real Estate Investment Activity
Development
Wholly Owned Properties
| • | The company’s wholly owned development pipeline at March 31, 2010 consists of three significantly pre-leased projects. The total estimated costs of these projects upon stabilization are $95.5 million, with $17.1 million in costs remaining to be funded. The pipeline is 463,000 square feet and 99.0 percent pre-leased in the aggregate. |
| • | During the first quarter 2010, the company placed into service a 202,000 square foot office building that was 100.0% pre-leased. |
Joint Venture Properties
| • | The company’s joint venture development pipeline at March 31, 2010, consists of three projects which total 956,000 square feet and are 52 percent pre-leased. The total estimated costs of these projects upon |
Duke Realty Corporation Reports First Quarter Results
April 28, 2010
Page 4 of 7
stabilization are $326.6 million, with $185.3 million in remaining costs to be funded. (All joint venture costs and square footage are reported for 100 percent ownership.)
Dispositions
Proceeds from first quarter non-strategic building dispositions were $122.6 million at a stabilized capitalization rate of 9.5 percent and were primarily comprised of Midwest office and non-strategic properties. Significant dispositions included:
| • | Four office buildings located in Columbus, Ohio totaling over 322,000 square feet; |
| • | Three office buildings located in Raleigh, North Carolina totaling over 265,000 square feet that were sold to our CBRE Realty Trust joint venture; |
| • | A retail center located in Cincinnati, Ohio totaling 360,000 square feet; and |
| • | A 247,500 square feet industrial building sold to a user from a joint venture in which the company has a 50% ownership interest. |
Acquisitions
Within our joint venture with CBRE Realty Trust, we acquired two office buildings located in the South Florida area totaling over 222,000 square feet that are 100% leased. The company’s 20% share of the acquisition price was approximately $8.7 million with a projected stabilized return of 9.5%.
Dividends Declared
The company’s board of directors declared a quarterly cash dividend on the company’s common stock of $0.17 per share, or $0.68 per share on an annualized basis. The first quarter dividend will be payable May 31, 2010, to shareholders of record as of May 17, 2010.
The board also declared the following dividends on the company’s outstanding preferred stock:
Class | NYSE Symbol | Quarterly | Record Date | Payment Date | ||||
| Series J | DREPRJ | $0.414063 | May 17, 2010 | May 31, 2010 | ||||
| Series K | DREPRK | $0.406250 | May 17, 2010 | May 31, 2010 | ||||
| Series L | DREPRL | $0.412500 | May 17, 2010 | May 31, 2010 | ||||
| Series M | DREPRM | $0.434375 | June 16, 2010 | June 30, 2010 | ||||
| Series N | DREPRN | $0.453125 | June 16, 2010 | June 30, 2010 | ||||
| Series O | DREPRO | $0.523438 | June 16, 2010 | June 30, 2010 |
Duke Realty Corporation Reports First Quarter Results
April 28, 2010
Page 5 of 7
2010 Earnings Guidance
The company reaffirmed Recurring FFO guidance for 2010 of $0.95 to $1.15 per share.
Information Regarding FFO
We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as net income (loss) before non-controlling interest and excluding gains (losses) on sales of depreciable property 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. We believe FFO to be most directly comparable to net income as defined by GAAP. We believe 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 our cash needs, including our ability to make cash distributions to shareholders. A reconciliation of net income per share, as defined by GAAP, to FFO per share, as defined by NAREIT, is included in the financial information accompanying this release.
For information purposes, we also provide FFO adjusted for certain non-recurring items such as impairment charges, gains (losses) on debt transactions and gains (losses) on the repurchases of preferred stock to reflect what management defines as Recurring FFO. Although our calculation of Recurring FFO differs from NAREIT’s definition of FFO and may not be comparable to that of other REITs and real estate companies, we believe it provides a meaningful supplemental measure of our operating performance. A reconciliation of FFO as defined by NAREIT to Recurring FFO is included in the Financial Performance section of this release.
About Duke Realty Corporation
Duke Realty Corporation owns and operates more than 134 million rentable square feet of industrial and office, including medical office, space in 18 major U.S. cities. Duke Realty Corporation is publicly traded on the NYSE under the symbol DRE and is listed on the S&P MidCap 400 Index. More information about Duke is available atwww.dukerealty.com.
First Quarter Earnings Call and Supplemental Information
Duke is hosting a conference call tomorrow, April 29, 2010, at 3:00 p.m. EDT to discuss its first quarter operating results. All investors and other interested
Duke Realty Corporation Reports First Quarter Results
April 28, 2010
Page 6 of 7
parties are invited to listen to the call. Access is available through the Investor Relations section of the company’s Web site.
A copy of the company’s supplemental information will be available after 6:00 p.m. EDT today through the Investor Relations section of the company’s Web site.
Cautionary Notice Regarding Forward-Looking Statements
This news release may contain forward-looking statements within the meaning of the federal securities laws. All statements, other than statements of historical facts, including, among others, statements regarding the company’s future financial position, projected financing sources, future transactions with joint venture partners, future dividends, and future performance, are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of the company, members of its management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should,” or similar expressions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that actual results may differ materially from those contemplated by such forward-looking statements. Many of these factors are beyond the company’s abilities to control or predict. Such factors include, but are not limited to, (i) general adverse economic and local real estate conditions, including the current economic recession; (ii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business; (iii) financing risks, such as the inability to obtain equity, debt or other sources of financing or refinancing on favorable terms, if at all; (iv) the company’s ability to raise capital by selling its assets; (v) changes in governmental laws and regulations; (vi) the level and volatility of interest rates and foreign currency exchange rates; (vii) valuation of joint venture investments, (viii) valuation of marketable securities and other investments; (ix) increases in operating costs; (x) changes in the dividend policy for the company’s common stock; (xi) the reduction in the company’s income in the event of multiple lease terminations by tenants; and (xii) impairment charges. Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the company’s filings with the Securities and Exchange Commission. The company refers you to the section entitled “Risk Factors” contained in the company’s Annual Report on Form 10-K for the year ended December 31, 2009. 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 Reports First Quarter Results
April 28, 2010
Page 7 of 7
Contact Information:
Media:
Jim Bremner
317.808.6920
jim.bremner@dukerealty.com
Investors:
Randy Henry
317.808.6060
randy.henry@dukerealty.com
Duke Realty Corporation
Statement of Operations
March 31, 2010
(In thousands, except per share amounts)
| Three Months Ended March 31, | ||||||||
| 2010 | 2009 | |||||||
Revenues: | ||||||||
Rental and related revenue | $ | 222,020 | $ | 217,285 | ||||
General contractor and service fee revenue | 113,641 | 105,088 | ||||||
| 335,661 | 322,373 | |||||||
Expenses: | ||||||||
Rental expenses | 53,792 | 53,416 | ||||||
Real estate taxes | 30,190 | 28,591 | ||||||
General contractor and service operations expenses | 107,162 | 99,447 | ||||||
Depreciation and amortization | 83,461 | 78,986 | ||||||
| 274,605 | 260,440 | |||||||
Other Operating Activities | ||||||||
Equity in earnings of unconsolidated companies | 4,929 | 2,527 | ||||||
Gain on sale of properties | 2,069 | — | ||||||
Earnings from sales of land | — | 357 | ||||||
Undeveloped land carrying costs | (2,251 | ) | (2,365 | ) | ||||
Other operating expenses | (277 | ) | (338 | ) | ||||
General and administrative expense | (13,544 | ) | (9,880 | ) | ||||
| (9,074 | ) | (9,699 | ) | |||||
Operating income | 51,982 | 52,234 | ||||||
Other Income (Expense) | ||||||||
Interest and other income (expense), net | 151 | 123 | ||||||
Interest expense | (59,021 | ) | (51,011 | ) | ||||
Gain (loss) on debt transactions | (354 | ) | 33,062 | |||||
Income (loss) from continuing operations before income taxes | (7,242 | ) | 34,408 | |||||
Income tax benefit | — | 2,707 | ||||||
Income (loss) from continuing operations | (7,242 | ) | 37,115 | |||||
Discontinued Operations: | ||||||||
Income before impairment and gain on sales | 112 | 353 | ||||||
Gain on sale of depreciable properties | 9,778 | 5,119 | ||||||
Income from discontinued operations | 9,890 | 5,472 | ||||||
Net income | 2,648 | 42,587 | ||||||
Dividends on preferred shares | (18,363 | ) | (18,363 | ) | ||||
Net (income) loss attributable to noncontrolling interests | 451 | (977 | ) | |||||
Net income (loss) attributable to common shareholders | ($ | 15,264 | ) | $ | 23,247 | |||
Basic net income (loss) per Common Share: | ||||||||
Continuing operations attributable to common shareholders | ($ | 0.11 | ) | $ | 0.12 | |||
Discontinued operations attributable to common shareholders | $ | 0.04 | $ | 0.03 | ||||
Total | ($ | 0.07 | ) | $ | 0.15 | |||
Diluted net income (loss) per Common Share: | ||||||||
Continuing operations attributable to common shareholders | ($ | 0.11 | ) | $ | 0.12 | |||
Discontinued operations attributable to common shareholders | $ | 0.04 | $ | 0.03 | ||||
Total | ($ | 0.07 | ) | $ | 0.15 | |||
Duke Realty Corporation
Statement of Funds From Operations
March 31, 2010
(In thousands, except per share amounts)
| Three Months Ended March 31, (Unaudited) | |||||||||||||||||||
| 2010 | 2009 | ||||||||||||||||||
| Amount | Wtd. Avg. Shares | Per Share | Amount | Wtd. Avg. Shares | Per Share | ||||||||||||||
Net Income (Loss) Attributable to Common Shares | ($ | 15,264 | ) | $ | 23,247 | ||||||||||||||
Less: Dividends on share based awards expected to vest | (502 | ) | (515 | ) | |||||||||||||||
Net Income (Loss) Per Common Share - Basic | (15,766 | ) | 224,153 | ($ | 0.07 | ) | 22,732 | 148,488 | $ | 0.15 | |||||||||
Add back: | |||||||||||||||||||
Noncontrolling interest in earnings of unitholders | — | 1,060 | 6,766 | ||||||||||||||||
Other potentially dilutive securities | 493 | ||||||||||||||||||
Net Income (Loss) Per Common Share - Diluted | ($ | 15,766 | ) | 224,153 | ($ | 0.07 | ) | $ | 23,792 | 155,747 | $ | 0.15 | |||||||
Reconciliation to Funds From Operations (“FFO”) | |||||||||||||||||||
Net Income (Loss) Attributable to Common Shares | ($ | 15,264 | ) | 224,153 | $ | 23,247 | 148,488 | ||||||||||||
Adjustments: | |||||||||||||||||||
Depreciation and amortization | 84,168 | 80,208 | |||||||||||||||||
Company share of joint venture depreciation and amortization | 9,563 | 11,218 | |||||||||||||||||
Earnings from depreciable property sales-wholly owned, continuing operations | (9,778 | ) | (5,119 | ) | |||||||||||||||
Earnings from depreciable property sales-wholly owned, discontinued operations | (2,069 | ) | — | ||||||||||||||||
Earnings from depreciable property sales-JV | (2,304 | ) | — | ||||||||||||||||
Noncontrolling interest share of adjustments | (2,278 | ) | (3,761 | ) | |||||||||||||||
Funds From Operations - Basic | 62,038 | 224,153 | $ | 0.28 | 105,793 | 148,488 | $ | 0.71 | |||||||||||
Noncontrolling interest in earnings (loss) of unitholders | (449 | ) | 6,607 | 1,060 | 6,766 | ||||||||||||||
Noncontrolling interest share of adjustments | 2,278 | 3,761 | |||||||||||||||||
Other potentially dilutive securities | 1,435 | 493 | |||||||||||||||||
Funds From Operations - Diluted | 63,867 | 232,195 | $ | 0.28 | 110,614 | 155,747 | $ | 0.71 | |||||||||||
(Gains) losses on debt transactions | 354 | (33,062 | ) | ||||||||||||||||
(Gains) losses on land sales | — | (357 | ) | ||||||||||||||||
Recurring Funds From Operations - Diluted | $ | 64,221 | 232,195 | $ | 0.28 | 77,195 | 155,747 | $ | 0.50 | ||||||||||
Duke Realty Corporation
Balance Sheet
March 31, 2010
(In thousands, except per share amounts)
| March 31, 2010 | December 31, 2009 | |||||||
ASSETS: | ||||||||
Rental Property | $ | 6,298,396 | $ | 6,390,119 | ||||
Less: Accumulated Depreciation | (1,313,671 | ) | (1,311,733 | ) | ||||
Construction in Progress | 88,485 | 103,298 | ||||||
Land Held for Development | 655,947 | 660,723 | ||||||
Net Real Estate Investments | 5,729,157 | 5,842,407 | ||||||
Cash | 30,999 | 147,322 | ||||||
Accounts Receivable | 20,798 | 20,604 | ||||||
Straight-line Rents Receivable | 133,138 | 131,934 | ||||||
Receivables on Construction Contracts | 40,982 | 18,755 | ||||||
Investments in and Advances to Unconsolidated Companies | 516,356 | 501,121 | ||||||
Deferred Financing Costs, Net | 51,302 | 54,489 | ||||||
Deferred Leasing and Other Costs, Net | 360,702 | 371,286 | ||||||
Escrow Deposits and Other Assets | 208,834 | 216,361 | ||||||
Total Assets | $ | 7,092,268 | $ | 7,304,279 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY: | ||||||||
Secured Debt | $ | 785,769 | $ | 785,797 | ||||
Unsecured Notes | 2,938,688 | 3,052,465 | ||||||
Unsecured Line of Credit | 15,876 | 15,770 | ||||||
Construction Payables and Amounts due Subcontractors | 58,568 | 43,147 | ||||||
Accrued Real Estate Taxes | 80,986 | 84,347 | ||||||
Accrued Interest | 36,612 | 62,971 | ||||||
Accrued Expenses | 27,733 | 48,758 | ||||||
Other Liabilities | 194,901 | 198,906 | ||||||
Tenant Security Deposits and Prepaid Rents | 35,947 | 44,258 | ||||||
Total Liabilities | 4,175,080 | 4,336,419 | ||||||
Preferred Stock | 1,016,625 | 1,016,625 | ||||||
Common Stock and Additional Paid-in Capital | 3,273,760 | 3,269,436 | ||||||
Accumulated Other Comprehensive Income | (4,906 | ) | (5,630 | ) | ||||
Distributions in Excess of Net Income | (1,409,048 | ) | (1,355,086 | ) | ||||
Total Shareholders’ Equity | 2,876,431 | 2,925,345 | ||||||
Non-controlling Interest | 40,757 | 42,515 | ||||||
Total Liabilities and Equity | $ | 7,092,268 | $ | 7,304,279 | ||||