DCT Industrial Trust Inc.(R) DCT -3.43% , a leading industrial real estate company, today announced financial results for the quarter and year-to-date, ending September 30, 2011.
Funds from Operations ("FFO"), as adjusted, attributable to common stockholders and unitholders for the third quarter of 2011 totaled $26.5 million, or $0.10 per diluted share, compared with $21.6 million, or $0.09 per diluted share, for the third quarter of 2010. These results exclude $0.3 million and $3.0 million of acquisition costs and impairment losses for the quarters ending September 30, 2011 and 2010, respectively.
FFO, as adjusted, attributable to common stockholders and unitholders for the nine months ending September 30, 2011 totaled $76.7 million, or $0.29 per diluted share, compared with $69.1 million, or $0.29 per diluted share, for the first nine months of 2010. These results exclude $3.3 million and $9.1 million of acquisition costs, impairment losses and debt modification costs for the nine months ending September 30, 2011 and 2010, respectively.
Including acquisition costs of $0.3 million, FFO was $26.1 million, or $0.10 per diluted share for the three months ending September 30, 2011. For the nine months ending September 30, 2011, including $3.3 million of acquisition costs and impairment losses, FFO was $73.4 million, or $0.27 per diluted share.
Net loss attributable to common stockholders for the third quarter of 2011 was $8.1 million, or $0.03 per diluted share, compared with a net loss of $8.7 million, or $0.04 per diluted share, reported for the third quarter of 2010. Net loss attributable to common stockholders for the nine months ending September 30, 2011 was $25.1 million, or $0.11 per diluted share, compared with a net loss of $26.6 million, or $0.13 per diluted share, for the nine months ending September 30, 2010.
"We had an excellent quarter. Our market teams continue to do an outstanding job leasing space as well as sourcing attractive capital deployment opportunities," said Phil Hawkins, President and Chief Executive Officer of DCT Industrial. "Despite increased economic headwinds, leasing markets remain active as tenants continue to seek cost-effective distribution solutions that help meet their supply-chain objectives."
Property Results and Leasing Activity
As of September 30, 2011, DCT Industrial owned 421 consolidated properties, totaling 60.4 million square feet with occupancy of 89.9 percent, up from 88.1 percent as of June 30, 2011 and up 560 basis-points from September 30, 2010.
Net operating income ("NOI") was $47.4 million in the third quarter of 2011, compared with $41.6 million reported for the third quarter of 2010. Third quarter 2011 same-store NOI, excluding revenue from lease terminations, increased 1.0 percent on a GAAP basis and declined 0.5 percent on a cash basis, when compared to the same period last year. Occupancy of same-store properties averaged 89.8 percent in the third quarter of 2011, an increase of 310 basis-points compared with an average of 86.7 percent in the third quarter of 2010. Occupancy of same-store properties ended at 90.2 percent as of September 30, 2011.
The Company signed leases totaling 4.1 million square feet in the third quarter of 2011. Year-to-date leasing activity has totaled 11.1 million square feet which compares to 6.7 million square feet in the first nine months of 2010. As of September 30, 2011, 0.6 million square feet, or 1.0 percent of DCT Industrial's total consolidated portfolio, was leased but not occupied.
In the third quarter of 2011, rental rates on signed leases increased 1.9 percent on a GAAP basis and decreased 6.8 percent on a cash basis compared to prior leases. Over the previous four quarters, rental rates on signed leases declined 4.4 percent on a GAAP basis and 9.9 percent on a cash basis. The Company's tenant retention rate was 79.1 percent in the third quarter of 2011 and 73.6 percent year-to-date.
Building Acquisitions and Development
During the third quarter, DCT Industrial acquired properties in Southern California, Atlanta, Denver, Houston and Orlando. Additionally, in October, the Company purchased a 121,000 square foot building in the Seattle market. These six acquisitions include 14 buildings totaling 1.2 million square feet and were acquired for $78.7 million. The buildings are expected to generate an average year-one cash yield of 6.3 percent and an average 7.3 percent cash yield once stabilized.
The table below represents a summary of the acquisitions:
Market Submarket Square Feet Occupancy Closed
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Ontario, CA Inland Empire West 82,000 100.0% Jul-11
Atlanta, GA I-85 / Northeast 77,000 100.0% Jul-11
Denver, CO North Central 118,000 100.0% Aug-11
Houston, TX (7 buildings) Northwest 383,000 95.2% Aug-11
Orlando, FL (3 buildings) Orlando Corporate Park 421,000 60.5% Sept-11
Seattle, WA Renton 121,000 100.0% Oct-11
------------------------- ---------------------- ----------- --------- -------
Total / Weighted Average 1,202,000 84.6%
DCT Industrial commenced development of Dulles Summit Distribution Phase 2 in the Dulles Corridor submarket of Washington, D.C. This project consists of two buildings totaling 178,000 square feet. The Dulles Corridor is the largest and most active submarket in the D.C. metro area and one of the fastest growing regions in the U.S. The project, slated for completion in the second quarter 2012, has been actively marketed and has seen meaningful activity.
Additionally, construction has commenced on a 267,000 square foot building in the Northwest submarket of Houston. DCT Industrial entered into a forward commitment agreement to acquire the building, Northwest 8 Distribution Center, which is slated for completion in the second quarter of 2012. The Northwest submarket is Houston's most mature submarket boasting the highest occupancy and most significant positive absorption in the market. The building's excellent location and state-of-the-art design combined with the strong Houston leasing market, position it to successfully attract customers and generate attractive financial returns.
Year-to-date, DCT Industrial has acquired 24 buildings, including the Seattle acquisition, totaling 2.7 million square feet for $152.3 million, including the $9.8 million share owned by noncontrolling interests. The buildings are expected to generate an average year-one cash yield of 6.2 percent and an average 7.8 percent cash yield once stabilized.
Capital Markets Activity
In August 2011, DCT Industrial closed on a $225 million private placement of senior unsecured notes. The transaction consisted of nine tranches of notes, with an average maturity of 8.5 years and an average interest rate of 4.93 percent. The proceeds were used to pay down our revolving line of credit, retire maturing mortgage debt and for general corporate purposes.
As a result of several refinancing transactions executed in 2011, the Company's average debt maturity has been extended to 5.4 years compared to 3.8 years as of December 31, 2010.
DCT Industrial's Board of Directors has declared a $0.07 per share quarterly cash dividend, payable on January 12, 2012, to stockholders of record as of December 29, 2011.
The Company narrowed the range of guidance for 2011 FFO, as adjusted, to $0.38 to $0.39 per diluted share. Additionally, net loss attributable to common stockholders is expected to be between $(0.13) and $(0.12) per diluted share.
Initial guidance for 2012 FFO is between $0.36 to $0.41 per diluted share. Additionally, net loss attributable to common stockholders is expected to be between $(0.12) and $(0.07) per diluted share.
DCT Industrial's initial guidance for 2012 includes the following assumptions:
-- Average occupancy for the total consolidated portfolio will range between 90 percent and 93 percent
-- Same-store, GAAP net operating income will increase between zero percent and three percent
-- Rental rates on signed leases will decrease approximately zero to five percent on a GAAP basis and five to ten percent on a cash basis
-- Development starts of between $50 million and $100 million
-- $50 million to $150 million of stabilized and value-add acquisitions
-- Capital deployment funded primarily through proceeds from property dispositions
The Company's guidance excludes real estate gains and losses, impairments and acquisition costs.
Conference Call Information
DCT Industrial will host a conference call to discuss third quarter 2011 results and its recent business activities on Wednesday, November 2, 2011 at 11:00 a.m. Eastern Time. Stockholders and interested parties may listen to a live broadcast of the conference call by dialing (877) 317-6789 or (412) 317-6789. A telephone replay will be available until 9 a.m. Eastern Time, Wednesday, November 16, 2011 and can be accessed by dialing (877) 344-7529 or (412) 317-0088 and entering the passcode 10005491. A live webcast of the conference call will be available in the Investor Relations section of the DCT Industrial website at www.dctindustrial.com . A webcast replay will also be available shortly following the call until Friday, March 2, 2012.
Supplemental information is available in the Investor Relations section of the Company's website at www.dctindustrial.com or by e-mail request at
. Interested parties may also obtain supplemental information from the SEC's website at www.sec.gov .