Exhibit 99.1
DCT INDUSTRIAL TRUST REPORTS 2007
FOURTH QUARTER AND YEAR END RESULTS
Full Year 2007 FFO per Share Increases 15%
Announces $0.16 per Share Quarterly Dividend
DENVER, Colo., February 14, 2008 — DCT Industrial Trust Inc. (NYSE: DCT), a leading industrial real estate investment trust, today announced financial results for the fourth quarter and year ended December 31, 2007.
Funds from operations (FFO) attributable to common stockholders totaled $36.5 million for the fourth quarter of 2007, and $137.6 million for the year ended December 31, 2007. Fourth quarter FFO of $0.18 per diluted share represented an increase of 20% from $0.15 per diluted share reported for the fourth quarter of 2006, excluding a one-time internalization charge of $172.2 million. For the year ended December 31, 2007, FFO increased 15% to $0.69 per diluted share, compared to $0.60 per diluted share reported for the year ended December 31, 2006, which excludes the internalization charge.
Net income attributable to common stockholders for the fourth quarter of 2007 was $5.7 million, or $0.03 per diluted share, compared to $2.9 million, or $0.02 per diluted share, reported for the fourth quarter of 2006, excluding the internalization charge. Net income for the year ended December 31, 2007 was $40.1 million, or $0.24 per diluted share, compared to a loss of $6.9 million, or $(0.04) per diluted share, for the year ended December 31, 2006, which excludes the internalization charge.
DCT Industrial earned approximately $2.4 million of gains on the contribution or sale of real estate in the fourth quarter 2007, which are included in both net income and FFO. Net income for the year includes $42.9 million of gain on sales or contributions of real estate, of which $15.1 million was recognized in FFO.
518 17th Street, 17th Floor • Denver, CO 80202
303.597.2400 • dctindustrial.com
Phil Hawkins, Chief Executive Officer of DCT Industrial, commented, “2007 was an excellent year for the Company as we made substantial progress on our key areas of focus: maximizing returns from our portfolio, creating value from our development and redevelopment initiatives, growing our institutional capital management business, and increasing our presence in Mexico. We will continue to focus and execute on the same core goals in 2008, which we believe position the Company well for continued growth.”
Hawkins continued, “While fourth quarter results were strong, we are mindful of the recent disruption in the credit markets, as well as signs that the U.S. economy is softening. With current market conditions, we are fortunate to have a very strong balance sheet and substantial capacity to fund our business. In my view, the importance of such liquidity and capacity will be even greater than in the recent past; therefore we will be very disciplined in managing our capital and preserving our liquidity and flexibility.”
Operating Portfolio
As of December 31, 2007, the Company owned 382 consolidated operating properties, or 53.6 million square feet, compared to 379 consolidated operating properties, or 56.2 million square feet, as of December 31, 2006. Net operating income was $50.1 million in the fourth quarter of 2007, an increase of 2.3% compared to the fourth quarter of 2006. DCT Industrial’s consolidated operating portfolio occupancy was 94.0% at December 31, 2007, compared to 92.6% at December 31, 2006. Including operating properties held in joint ventures, for a total of 65.3 million square feet, occupancy at December 31, 2007 was 94.9%, up from 93.0% a year ago when total square footage was 60.0 million.
Same store net operating income increased 1.7% on a cash basis and 0.3% on a GAAP basis in the fourth quarter of 2007, when compared to the same period last year, excluding lease termination revenue and lease buy-outs. Occupancy of same store properties was 93.9% at December 31, 2007, compared to 93.1% at December 31, 2006.
DCT Industrial signed 1.9 million square feet of leases during the fourth quarter, and 7.5 million square feet during the entire year. The Company’s tenant retention remained strong, with a rate of 74.7% for the fourth quarter of 2007 and 71.5% for the full year. Realized rent growth on signed leases for which there was a prior tenant averaged 11.2% on a GAAP basis in the fourth quarter of
2
2007, and 11.0% for the year ended December 31, 2007. On a cash basis, rents on signed leases increased by 4.6% in the fourth quarter of 2007 and by 2.6% for the year ended December 31, 2007.
Institutional Capital Management
The Company’s institutional capital management business had assets under management of $686.2 million at December 31, 2007, representing an increase of $434.2 million from December 31, 2006. This represented 11.2 million square feet under management at December 31, 2007, compared to 3.7 million square feet at December 31, 2006. Capital management and other fee revenue totaled $1.1 million in the fourth quarter of 2007 and $2.9 million for the year, compared to $0.9 million in the fourth quarter of 2006 and $1.3 million for the year ended December 31, 2006.
During the fourth quarter of 2007, DCT Industrial and JPMorgan Asset Management purchased approximately $116.3 million of assets directly into the JP Morgan Venture, totaling 1.8 million square feet. In January 2008, the JP Morgan Venture acquired a 340,000 square foot building in Orlando, bringing total assets under management in the venture to approximately $284.0 million.
Mexico
DCT Industrial made significant progress in Mexico during the fourth quarter of 2007, including the acquisition of three buildings in Tijuana totaling 203,000 square feet and two buildings in Guadalajara totaling 149,000 square feet. The Company also closed on a forward commitment development with Nexxus for a 107,000 square foot building in Monterrey, which will be expanded to 189,000 square feet. The overall occupancy of the properties acquired in Mexico during the fourth quarter was 97.8%. As of December 31, 2007, the Company had an additional 673,000 square feet under development through its Nexxus partnership. Finally, the Nexxus partnership sold a 78,000 square foot building to a user during the fourth quarter.
Investment, Disposition and Development Activity
During the fourth quarter of 2007, DCT Industrial acquired four properties in the U.S. totaling 860,000 square feet. The Company also sold two buildings in Atlanta for a combined price of $21.7 million during the fourth quarter. One of the buildings, Buford 100, a 499,000 square foot development property, was sold to a user.
3
As of December 31, 2007, DCT Industrial had 7.4 million square feet under development. During the fourth quarter, the Company entered into a development joint venture with Industrial Developments International (IDI) to develop up to 1.9 million square feet in the Chicago, Nashville, Northern California, and Savannah markets. DCT Industrial plans to contribute approximately 50 acres in Atlanta to the joint venture, which will support approximately 600,000 square feet of development.
“From an investment perspective, we had a very active year,” said Jim Cochran, President and Chief Investment Officer of DCT Industrial. “We grew our Mexico portfolio to more than 1.4 million square feet either owned or under control, substantially grew our institutional capital management business, initiated a successful capital relationship with JP Morgan Asset Management, entered into a new development joint venture with IDI, recycled over $365 million of assets through contributions or sales, and got SCLA up and running with 926,000 square feet of development in four buildings. Currently, more than two-thirds of our development is focused in coastal markets and in Mexico, where customer demand has been strong.”
Balance Sheet
DCT Industrial’s balance sheet remained strong, with consolidated debt to book value of total assets (before depreciation) of 37.4% as of December 31, 2007, compared to 36.1% at December 31, 2006. The Company’s fixed charge coverage for 2007 was 3.0 times, compared to 2.8 times for 2006.
Dividend
DCT Industrial’s Board of Directors has declared a $0.16 per share quarterly cash dividend, payable on April 18, 2008, to stockholders of record as of April 7, 2008.
Guidance
DCT Industrial has revised its guidance for 2008 and now expects FFO per diluted share of $0.68 to $0.73 and net income of $0.13 to $0.18 per diluted share. The change in guidance primarily results from a more conservative approach to development and acquisitions
4
activity in 2008 given the increasing uncertainty in the capital markets. Previous guidance was for FFO per diluted share of $0.70 to $0.75 and net income of $0.15 to $0.20 per diluted share.
Conference Call Information
DCT Industrial will host a conference call to discuss fourth quarter results and its recent business activities on Friday, February 15, 2008 at 12:00 PM Eastern. Stockholders and interested parties may listen to a live broadcast of the conference call by dialing (800) 860-2442 or (412) 585-4600. A telephone replay will be available for one week following the call by dialing (877) 344-7529 or (412) 317-0088 and entering the passcode: 415061#. A live webcast and replay of the conference call will be available on the investor relations page of DCT’s website atwww.dctindustrial.com.
Supplemental information will be available in the Investor Relations section of the Company’s website atwww.dctindustrial.com or by e-mail request atinvestorrelations@dctindustrial.com. Interested parties may also obtain supplemental information from the SEC’s website atwww.sec.gov.
About DCT Industrial Trust
DCT Industrial Trust Inc. is a leading real estate company specializing in the ownership, acquisition, development and management of bulk distribution and light industrial properties located in 25 of the highest volume distribution markets in the U.S. and in Mexico. As of December 31, 2007, DCT Industrial owned, managed or had under development 448 properties totaling more than 74 million square feet leased to more than 780 corporate customers. Additional information is available atwww.dctindustrial.com.
CONTACT:
Sara Knapp
Corporate Communications
DCT Industrial Trust Inc.
303-597-1550 or investorrelations@dctindustrial.com
5
DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share and per share information)
| December 31, 2007 | December 31, 2006 | |||||||
ASSETS | ||||||||
Land | $ | 519,584 | $ | 513,143 | ||||
Buildings and improvements | 2,139,961 | 2,120,821 | ||||||
Intangible lease assets | 188,079 | 198,222 | ||||||
Construction in progress | 35,282 | 32,702 | ||||||
Total Investment in Properties | 2,882,906 | 2,864,888 | ||||||
Less accumulated depreciation and amortization | (310,691 | ) | (199,574 | ) | ||||
Net Investment in Properties | 2,572,215 | 2,665,314 | ||||||
Investments in and advances to unconsolidated joint ventures | 102,750 | 42,336 | ||||||
Net Investment in Real Estate | 2,674,965 | 2,707,650 | ||||||
Cash and cash equivalents | 30,481 | 23,310 | ||||||
Notes receivable | 27,398 | 9,205 | ||||||
Deferred loan costs, net | 4,828 | 6,175 | ||||||
Deferred loan costs – financing obligations, net | 1,345 | 16,467 | ||||||
Straight-line rent and other receivables | 26,879 | 17,137 | ||||||
Other assets, net | 14,156 | 27,637 | ||||||
Assets held for sale | — | 41,895 | ||||||
Total Assets | $ | 2,780,052 | $ | 2,849,476 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 31,267 | $ | 27,341 | ||||
Distributions payable | 32,994 | 30,777 | ||||||
Tenant prepaids and security deposits | 13,896 | 12,329 | ||||||
Other liabilities | 8,117 | 14,135 | ||||||
Intangible lease liability, net | 9,022 | 17,595 | ||||||
Lines of credit | 82,000 | 34,278 | ||||||
Senior unsecured notes | 425,000 | 425,000 | ||||||
Mortgage notes | 649,568 | 641,081 | ||||||
Financing obligations | 14,674 | 191,787 | ||||||
Liabilities related to assets held for sale | — | 276 | ||||||
Total Liabilities | 1,266,538 | 1,394,599 | ||||||
Minority interests | 349,912 | 225,920 | ||||||
Stockholders’ 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, 350,000,000 shares authorized, 168,379,863 and 168,354,596 shares issued and outstanding as of December 31, 2007 and 2006, respectively | 1,684 | 1,684 | ||||||
Additional paid-in capital | 1,593,165 | 1,595,808 | ||||||
Distributions in excess of earnings | (425,280 | ) | (357,076 | ) | ||||
Accumulated other comprehensive loss | (5,967 | ) | (11,459 | ) | ||||
Total Stockholders’ Equity | 1,163,602 | 1,228,957 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 2,780,052 | $ | 2,849,476 | ||||
Book value of total assets before depreciation: | ||||||||
Total Assets | $ | 2,780,052 | $ | 2,849,476 | ||||
Add back accumulated depreciation and amortization | 310,691 | 199,574 | ||||||
Book value of total assets before depreciation and amortization | $ | 3,090,743 | $ | 3,049,050 | ||||
Percentage of debt to total assets | 41.6 | % | 37.4 | % | ||||
Percentage of debt to book value of total assets before depreciation and amortization | 38.6 | % | 36.1 | % | ||||
6
DCT Industrial Trust Inc. and Subsidiaries
Summary Consolidated Statements of Operations
(in thousands, except per share information)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
REVENUES: | ||||||||||||||||
Rental revenues | $ | 65,742 | $ | 62,856 | $ | 257,352 | $ | 217,881 | ||||||||
Institutional capital management and other fees | 1,136 | 858 | 2,871 | 1,256 | ||||||||||||
Total Revenues | 66,878 | 63,714 | 260,223 | 219,137 | ||||||||||||
OPERATING EXPENSES: | ||||||||||||||||
Rental expenses | 8,273 | 7,264 | 30,661 | 22,953 | ||||||||||||
Real estate taxes | 7,404 | 6,667 | 32,457 | 26,979 | ||||||||||||
Real estate related depreciation and amortization | 28,523 | 28,663 | 115,400 | 107,753 | ||||||||||||
General and administrative | 4,712 | 4,520 | 19,547 | 7,861 | ||||||||||||
Asset management fees, related party | — | 519 | — | 13,426 | ||||||||||||
Total Operating Expenses | 48,912 | 47,633 | 198,065 | 178,972 | ||||||||||||
Operating Income | 17,966 | 16,081 | 62,158 | 40,165 | ||||||||||||
OTHER INCOME AND EXPENSE: | ||||||||||||||||
Equity in income (losses) of unconsolidated joint ventures, net | 334 | (35 | ) | 433 | (289 | ) | ||||||||||
Loss on contract termination and related internalization expenses | — | (172,188 | ) | — | (172,188 | ) | ||||||||||
Interest expense | (14,400 | ) | (20,077 | ) | (61,155 | ) | (66,692 | ) | ||||||||
Interest income and other | 688 | 370 | 4,666 | 5,368 | ||||||||||||
Income taxes | (233 | ) | (794 | ) | (1,511 | ) | (1,392 | ) | ||||||||
Income (Loss) Before Minority Interests | 4,355 | (176,643 | ) | 4,591 | (195,028 | ) | ||||||||||
Minority interests | (699 | ) | 21,634 | (584 | ) | 22,338 | ||||||||||
Income (Loss) From Continuing Operations | 3,656 | (155,009 | ) | 4,007 | (172,690 | ) | ||||||||||
Income from discontinued operations | 2,272 | 5,191 | 10,167 | 5,586 | ||||||||||||
Income (Loss) Before Gain (Loss) On Disposition Of Real Estate Interests | 5,928 | (149,818 | ) | 14,174 | (167,104 | ) | ||||||||||
Gain (loss) on dispositions of real estate interests, net of minority interest | (257 | ) | 1,631 | 25,938 | 9,061 | |||||||||||
NET INCOME (LOSS) | $ | 5,671 | $ | (148,187 | ) | $ | 40,112 | $ | (158,043 | ) | ||||||
INCOME (LOSS) PER COMMON SHARE – BASIC: | ||||||||||||||||
Income (Loss) From Continuing Operations | $ | 0.02 | $ | (1.00 | ) | $ | 0.03 | $ | (1.15 | ) | ||||||
Income from discontinued operations | 0.01 | 0.03 | 0.06 | 0.04 | ||||||||||||
Gain (loss) on dispositions of real estate interests, net of minority interest | (0.00 | ) | 0.01 | 0.15 | 0.06 | |||||||||||
Net Income (Loss) | $ | 0.03 | $ | (0.96 | ) | $ | 0.24 | $ | (1.05 | ) | ||||||
INCOME (LOSS) PER COMMON SHARE – DILUTED: | ||||||||||||||||
Income (Loss) From Continuing Operations | $ | 0.02 | $ | (1.00 | ) | $ | 0.03 | $ | (1.15 | ) | ||||||
Income from discontinued operations | 0.01 | 0.03 | 0.06 | 0.04 | ||||||||||||
Gain (loss) on dispositions of real estate interests, net of minority interest | (0.00 | ) | 0.01 | 0.15 | 0.06 | |||||||||||
Net Income (Loss) | $ | 0.03 | $ | (0.96 | ) | $ | 0.24 | $ | (1.05 | ) | ||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||
Basic | 168,366 | 155,037 | 168,358 | 150,320 | ||||||||||||
Diluted | 205,846 | 155,037 | 200,823 | 150,320 | ||||||||||||
Net income (loss) excluding internalization charge: | ||||||||||||||||
Net Income (Loss) | $ | 5,671 | $ | (148,187 | ) | $ | 40,112 | $ | (158,043 | ) | ||||||
Loss on contract termination and related internalization expenses, net of minority interest | — | 151,095 | — | 151,095 | ||||||||||||
Net income (loss) excluding internalization charge | $ | 5,671 | $ | 2,908 | $ | 40,112 | $ | (6,948 | ) | |||||||
Income (loss) per share excluding internalization charge: | ||||||||||||||||
Income (loss) per share | $ | 0.03 | $ | (0.96 | ) | $ | 0.24 | $ | (1.05 | ) | ||||||
Loss on contract termination and related internalization expenses, net of minority interest | — | 0.98 | — | 1.01 | ||||||||||||
Net income (loss) per share excluding internalization charge | $ | 0.03 | $ | 0.02 | $ | 0.24 | $ | (0.04 | ) | |||||||
7
DCT Industrial Trust Inc. and Subsidiaries
Summary Consolidated Statements of Funds From Operations
(in thousands, except per share information)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
Net income (loss) attributable to common shares | $ | 5,671 | $ | (148,187 | ) | $ | 40,112 | $ | (158,043 | ) | ||||||
Adjustments: | ||||||||||||||||
Real estate related depreciation and amortization | 28,532 | 29,028 | 115,465 | 111,792 | ||||||||||||
Equity in (income) losses of unconsolidated joint ventures, net | (334 | ) | 35 | (433 | ) | 289 | ||||||||||
Equity in FFO of unconsolidated joint ventures | 1,250 | 221 | 2,742 | 545 | ||||||||||||
(Gain) loss on disposition of real estate interests | 314 | (1,859 | ) | (30,748 | ) | (9,409 | ) | |||||||||
Gain on disposition of real estate interests related to discontinued operations | (2,622 | ) | (5,187 | ) | (12,125 | ) | (5,187 | ) | ||||||||
Gain on dispositions of non-depreciated real estate | 184 | 170 | 12,921 | 4,244 | ||||||||||||
Gain on disposition of non-depreciated real estate interests related to discontinued operations | 2,214 | — | 2,214 | — | ||||||||||||
Minority interest in the operating partnership’s share of the above adjustments | (5,378 | ) | (2,746 | ) | (14,711 | ) | (5,561 | ) | ||||||||
Funds from operations attributable to common shares – basic | 29,831 | (128,525 | ) | 115,437 | (61,330 | ) | ||||||||||
FFO attributable to dilutive OP Units | 6,637 | — | 22,180 | — | ||||||||||||
Funds from operations attributable to common shares – diluted | 36,468 | (128,525 | ) | 137,617 | (61,330 | ) | ||||||||||
Loss on contract termination and related internalization expenses, net of minority interests | — | 151,095 | — | 151,095 | ||||||||||||
FFO adjusted for contract termination and related internalization expenses | $ | 36,468 | $ | 22,570 | $ | 137,617 | $ | 89,765 | ||||||||
Basic FFO per common share | $ | 0.18 | $ | (0.83 | ) | $ | 0.69 | $ | (0.41 | ) | ||||||
Diluted FFO per common share | $ | 0.18 | $ | (0.83 | ) | $ | 0.69 | $ | (0.41 | ) | ||||||
FFO adjusted for contract termination and related internalization expenses per common share, diluted | $ | 0.18 | $ | 0.15 | $ | 0.69 | $ | 0.60 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 168,366 | 155,037 | 168,358 | 150,320 | ||||||||||||
Dilutive OP Units | 37,480 | — | 32,465 | — | ||||||||||||
Diluted | 205,846 | 155,037 | 200,823 | 150,320 | ||||||||||||
Guidance:
| Guidance: | Full-Year Range for 2008 | |||||
| (low) | (high) | |||||
Earnings per diluted share | $ | 0.13 | $ | 0.18 | ||
Real estate related depreciation and amortization | 0.55 | 0.55 | ||||
FFO attributable to common shares per diluted share | $ | 0.68 | $ | 0.73 | ||
Guidance excludes future gains or losses from sale of depreciated assets.
8
The following table is a reconciliation of our NOI to our reported Income (Loss) From Continuing Operations for the three and twelve months ended December 31, 2007 and 2006 (in thousands).
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
Same store NOI | $ | 42,529 | $ | 42,405 | $ | 126,675 | $ | 124,458 | ||||||||
Non-same store NOI and revenues related to early lease terminations and buyout, net | 7,536 | 6,520 | 67,559 | 43,491 | ||||||||||||
Total NOI | 50,065 | 48,925 | 194,234 | 167,949 | ||||||||||||
Institutional capital management and other fees | 1,136 | 858 | 2,871 | 1,256 | ||||||||||||
Real estate related depreciation and amortization | (28,523 | ) | (28,663 | ) | (115,400 | ) | (107,753 | ) | ||||||||
General and administrative expenses | (4,712 | ) | (4,520 | ) | (19,547 | ) | (7,861 | ) | ||||||||
Asset management fees, related party | — | (519 | ) | — | (13,426 | ) | ||||||||||
Equity in income (losses) of unconsolidated joint ventures, net | 334 | (35 | ) | 433 | (289 | ) | ||||||||||
Loss on contract termination and related internalization expenses | — | (172,188 | ) | — | (172,188 | ) | ||||||||||
Interest expense | (14,400 | ) | (20,077 | ) | (61,155 | ) | (66,692 | ) | ||||||||
Interest income and other | 688 | 370 | 4,666 | 5,368 | ||||||||||||
Income taxes | (233 | ) | (794 | ) | (1,511 | ) | (1,392 | ) | ||||||||
Minority interests | (699 | ) | 21,634 | (584 | ) | 22,338 | ||||||||||
Income (Loss) From Continuing Operations | $ | 3,656 | $ | (155,009 | ) | $ | 4,007 | $ | (172,690 | ) | ||||||
The following table is a reconciliation of our same store NOI to our cash basis same store NOI for the three and twelve months ended December 31, 2007 and 2006 (in thousands).
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
Same store NOI | $ | 42,529 | $ | 42,405 | $ | 126,675 | $ | 124,458 | ||||||||
Less straight-line rents | (726 | ) | (1,459 | ) | (2,951 | ) | (4,747 | ) | ||||||||
Less amortization of above/below market rents(1) | 228 | 366 | 533 | 1,100 | ||||||||||||
Cash basis same store NOI | $ | 42,031 | $ | 41,312 | $ | 124,257 | $ | 120,811 | ||||||||
(1) | Excludes $2.1 million net revenue associated with the buyout of a below market lease at 240 Valley Drive. |
9
The following table shows the calculation of our Fixed Charge Coverage for the three and twelve months ended December 31, 2007 and 2006 (in thousands).
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
Net income (loss) | $ | 5,671 | $ | (148,187 | ) | $ | 40,112 | $ | (158,043 | ) | ||||||
Interest expense(1) | 14,409 | 20,186 | 61,209 | 67,272 | ||||||||||||
Pro rata share of interest expense from unconsolidated JVs | 1,185 | 819 | 3,988 | 1,863 | ||||||||||||
Real estate related depreciation and amortization (1) | 28,532 | 29,028 | 115,465 | 111,792 | ||||||||||||
Pro rata share of real estate related depreciation and amortization from unconsolidated JVs | 932 | 260 | 2,291 | 838 | ||||||||||||
Income taxes | 233 | 794 | 1,511 | 1,392 | ||||||||||||
Stock-based compensation amortization expense | 691 | 294 | 2,406 | 346 | ||||||||||||
Minority interests (1) | 1,148 | (20,681 | ) | 7,216 | (21,269 | ) | ||||||||||
Non-FFO (gains) losses on dispositions of real estate interests, net | 90 | (6,876 | ) | (27,738 | ) | (10,352 | ) | |||||||||
Loss on contract termination and related internalization expenses | — | 172,188 | — | 172,188 | ||||||||||||
Adjusted EBITDA | $ | 52,891 | $ | 47,825 | $ | 206,460 | $ | 166,027 | ||||||||
Calculation of Fixed Charges: | ||||||||||||||||
Interest expense excluding financing obligations (1) | $ | 14,138 | $ | 17,371 | $ | 56,887 | $ | 56,232 | ||||||||
Interest expense related to financing obligations | 271 | 2,815 | 4,322 | 11,040 | ||||||||||||
Capitalized interest | 1,812 | 534 | 7,008 | 2,013 | ||||||||||||
Amortization of loan costs and debt premium/discount | 114 | 64 | 411 | 254 | ||||||||||||
Amortization of financing obligations | (36 | ) | (295 | ) | (500 | ) | (1,165 | ) | ||||||||
Pro rata share of interest expense from unconsolidated JVs | 1,185 | 819 | 3,988 | 1,863 | ||||||||||||
Total Fixed Charges | $ | 17,484 | $ | 21,308 | $ | 72,116 | $ | 70,237 | ||||||||
Fixed Charge Coverage | 3.0 | 2.2 | 2.9 | 2.4 | ||||||||||||
Fixed Charge Coverage, Excluding Financing Obligations | 3.1 | 2.5 | 3.0 | 2.8 | ||||||||||||
(1) | Includes amounts related to discontinued operations. |
10
Financial Measures
Net operating income (“NOI”) is defined as rental revenue, including reimbursements, less rental expenses and real estate taxes, and excludes depreciation, amortization, general and administrative expenses and interest expense. DCT Industrial considers NOI, same store NOI and cash basis same store NOI to be appropriate supplemental performance measures because they reflect the operating performance of DCT Industrial’s properties and exclude certain items that are not considered to be controllable in connection with the management of the property such as depreciation, interest expense, interest income and general and administrative expenses. However, these measures should not be viewed as alternative measures of DCT Industrial’s financial performance since they exclude expenses which could materially impact our results of operations. Further, DCT Industrial’s NOI, same store NOI and cash basis same store NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating these measures. Therefore, DCT Industrial believes net income, as defined by GAAP, to be the most appropriate measure to evaluate DCT Industrial’s overall financial performance.
DCT Industrial believes that net income, as defined by GAAP, is the most appropriate earnings measure. However, DCT Industrial considers funds from operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), to be a useful supplemental measure of DCT Industrial’s operating performance. NAREIT developed FFO as a relative measure of performance and liquidity of an equity REIT in order to recognize that the value of income-producing real estate historically has not depreciated on the basis determined under GAAP. FFO is generally defined as net income, calculated in accordance with GAAP, plus real estate-related depreciation and amortization, less gain (or loss) from dispositions of real estate held for investment purposes and adjustments to derive DCT Industrial’s pro rata share of FFO of consolidated and unconsolidated joint ventures. Readers should note that FFO captures neither the changes in the value of DCT Industrial’s properties that result from use or market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of DCT Industrial’s properties, all of which have real economic effect and could materially impact DCT Industrial’s results from operations. Other REITs may not calculate FFO in accordance with the NAREIT definition and, accordingly, DCT Industrial’s FFO may not be comparable to such other REITs’ FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of DCT Industrial’s performance.
DCT Industrial calculates our fixed charge coverage calculation based on adjusted EBITDA, which is defined as earnings (loss) from operations before interest, taxes, depreciation, amortization, stock-based compensation expense and minority interest, and excludes non-FFO gains on disposed assets. We use adjusted EBITDA to measure our operating performance and to provide investors relevant and useful information because it allows fixed income investors to view income from our operations on an unleveraged basis before the effects of non-cash items, such as depreciation and amortization.
11
Forward-Looking Information
The Company makes statements in this document that are considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. The Company intends these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. These forward-looking statements reflect the Company’s current views about its plans, intentions, expectations, strategies and prospects, which are based on the information currently available to the Company and on assumptions it has made. Although the Company believes that its plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, the Company can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond its control including, without limitation: the competitive environment in which the Company operates; real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets; decreased rental rates or increasing vacancy rates; defaults on or non-renewal of leases by tenants; acquisition and development risks, including failure of such acquisitions and development projects to perform in accordance with projections; the timing of acquisitions and dispositions; natural disasters such as hurricanes; national, international, regional and local economic conditions, including, in particular the recent softening of the U.S. economy; the general level of interest rates and the availability of debt financing, particularly in light of the recent disruption in the credit markets; energy costs; the terms of governmental regulations that affect the Company and interpretations of those regulations, including changes in real estate and zoning laws and increases in real property tax rates; financing risks, including the risk that the Company’s cash flows from operations may be insufficient to meet required payments of principal and interest; lack of or insufficient amounts of insurance; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; the consequences of future terrorist attacks; possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by the Company; and other risks and uncertainties detailed from time to time in DCT Industrial Trust’s filings with the Securities Exchange Commission. In addition, the Company’s current and continuing qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, or the Code, and depends on its ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership. The Company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
12