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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 2, 2018
 
 
 
DCT INDUSTRIAL TRUST INC.
DCT INDUSTRIAL OPERATING PARTNERSHIP LP
(Exact name of registrant as specified in its charter)
 
 
 

Maryland (DCT Industrial Trust Inc.)
001-33201
82-0538520
Delaware (DCT Industrial Operating Partnership LP)
333-195185
82-0538522
(State or other jurisdiction of
Incorporation or organization)
(Commission
File Number)
(IRS Employer
Identification No.)
555 17th Street, Suite 3700
Denver, CO 80202
(Address of principal executive offices)
(303) 597-2400
(Registrant’s telephone number, including area code)
 
 
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
DCT Industrial Trust Inc.
 
 
Emerging growth company
 
¨
DCT Industrial Operating Partnership LP
 
 
Emerging growth company
 
o
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

¨
 


1




Item 2.02 Results of Operations and Financial Condition.
On August 2, 2018, we issued a press release entitled “DCT INDUSTRIAL TRUST REPORTS SECOND QUARTER 2018 RESULTS” which sets forth disclosure regarding our results of operations for the second quarter ended June 30, 2018. A copy of this press release as well as a copy of the supplemental information referred to in the press release are made available on our website and are attached hereto as Exhibits 99.1 and 99.2 and incorporated herein by reference. This Item 2.02 and the attached exhibits 99.1 and 99.2 are provided under Item 2.02 of Form 8-K and are furnished to, and shall not be deemed to be “filed” with, the Securities and Exchange Commission.
Please note that the full text of the press release and supplemental schedules are available through DCT Industrial’s website at http://www.dctindustrial.com.  The information contained on DCT Industrial’s website is not incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits.
(d) Exhibits: 
Exhibit Number
  
Description
 99.1
  
 99.2
  

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
DCT INDUSTRIAL TRUST INC.
August 2, 2018
 
 
 
 
 
 
By:
 
/s/ John G. Spiegleman
 
 
 
 
Name: John G. Spiegleman
 
 
 
 
Title:   Executive Vice President and General Counsel
 
 
 
 
 
 
 
 
 
 
 
 
DCT INDUSTRIAL OPERATING PARTNERSHIP LP
 
By: DCT Industrial Trust Inc., its general partner
August 2, 2018
 
 
 
 
 
 
By:
 
/s/ John G. Spiegleman
 
 
 
 
Name: John G. Spiegleman
 
 
 
 
Title:   Executive Vice President and General Counsel
 

2
(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
394491578_dctindustrialreportsa06.jpg
Press Release
FOR IMMEDIATE RELEASE:


DCT INDUSTRIAL TRUST® REPORTS SECOND QUARTER 2018 RESULTS

Net Earnings of $0.25 per Diluted Share

FFO, as adjusted, of $0.63 per Diluted Share

Consolidated Operating Occupancy of 96.9 Percent

Rent Growth of 32.0 Percent on a Straight-Line Basis and 10.5 Percent on a Cash Basis

Quarterly Same-Store Portfolio NOI Growth of 5.1 Percent on a Cash Basis and
3.9 Percent on a Straight-Line Basis

Executed 1.1 Million Square Feet of Development Leases Bringing the Development
Pipeline to 20.4 Percent Leased

DENVER, August 2, 2018, - DCT Industrial Trust® (NYSE: DCT), a leading real estate company, today announced financial results for the quarter ending June 30, 2018.

“In anticipation of the upcoming shareholder vote on DCT’s proposed merger with Prologis, I want to acknowledge the dedication of our talented employees, whose hard work and perseverance led to DCT’s sector-leading results over the past decade,” said Phil Hawkins, President and CEO of DCT Industrial. “I also want to thank the investors and analysts who recognized the value of our strategy, organization and portfolio. We are proud of all we have accomplished at DCT and appreciate your support.”

Net income attributable to common stockholders (“Net Earnings”) for Q2 2018 was $0.25 per diluted share compared with $0.45 per diluted share reported for Q2 2017 a 44.4 percent decrease.

Funds from operations (“FFO”), as adjusted, attributable to common stockholders and unitholders for Q2 2018 was $0.63 per diluted share, compared with $0.60 per diluted share for Q2 2017, a 5.0 percent increase. These results exclude $5.5 million of merger transaction costs for the quarter ending June 30, 2018, and an impairment loss on land of $0.9 million for the quarter ending June 30, 2017.

Property Results and Leasing Activity
As of June 30, 2018, DCT Industrial owned 388 consolidated operating properties, totaling 63.5 million square feet, with occupancy of 96.9 percent, a decrease of 80 basis points from Q1 2018 and a decrease of 60 basis points over Q2 2017. Additionally, approximately 276,000 square feet or 0.4 percent of DCT Industrial’s total consolidated operating portfolio was leased but not occupied as of June 30, 2018, which does not take into consideration 448,000 square feet of leased space in developments under construction or in pre-development. During Q2 2018, the impact of acquisitions, dispositions and placing developments and redevelopments into operations decreased consolidated operating occupancy by 10 basis points, compared to Q1 2018.

In Q2 2018, the Company signed leases totaling 3.1 million square feet with rental rates increasing 32.0 percent on a straight-line basis and 10.5 percent on a cash basis, compared to the corresponding expiring leases. Over the previous four quarters, rental rates on signed leases increased 28.3 percent on a straight-line basis and 10.2 percent on a cash basis. The Company’s tenant retention rate was 74.0 percent in Q2 2018.


1


Net operating income (“NOI”) was $83.5 million in Q2 2018, compared with $79.5 million in Q2 2017. NOI was $165.9 million for the first six months of 2018, compared with $158.7 million for the first six months of 2017.

Comparing Q2 2018 to Q2 2017, NOI from the Quarterly Same-Store Portfolio increased 5.1 percent on a cash basis and 3.9 percent on a straight-line basis. NOI from the Annual Same-Store Portfolio for Q2 2018 increased 4.9 percent on a cash basis and 3.8 percent on a straight-line basis when compared to Q2 2017. Additionally, NOI from the Annual Same-Store Portfolio for the first six months of 2018 increased 5.7 percent on a cash basis and 3.3 percent on a straight-line basis when compared to the first six months 2017. All same-store NOI amounts exclude revenue from lease terminations.

Quarterly Same-Store Portfolio occupancy averaged 97.6 percent in Q2 2018, an increase of 40 points compared with Q2 2017. Quarterly Same-Store Portfolio occupancy as of June 30, 2018 was 97.4 percent.

For definitions of Financial Measures see page 9 of this release and page 22 in DCT Industrial’s Second Quarter 2018 Supplemental Reporting Package.

Investment Activity
Acquisitions
Since DCT Industrial’s Q1 2018 Earnings Release, the Company acquired two buildings totaling 184,000 square feet for $27.0 million. The buildings were 64.0 percent occupied at the time of closing. The Company expects a year-one weighted-average cash yield of 2.9 percent and a weighted-average stabilized cash yield of 4.8 percent on the acquired assets.

The table below summarizes acquisitions since the Company's Q1 2018 Earnings Release:
Market
Submarket
Square Feet
Occupancy
Closed
Seattle
Sumner
118,000
100.0
%
May-18
Denver
Northeast
66,000
0.0
%
May-18
Total/Weighted Average
 
184,000
64.0
 
%
 

Development
Since the Company’s Q1 2018 Earnings Release, DCT Industrial executed 1.1 million square feet of development leases bringing the development pipeline to 20.4 percent leased. The Company also commenced construction on 2.2 million square feet with a projected investment of $168.9 million and purchased 103.0 acres for the future development of 1.3 million square feet.

Highlights since DCT Industrial’s Q1 2018 Earnings Release:
In Q2 2018:
Executed a full-building lease for DCT Rockline Commerce Center Building I, a 112,000 square foot development in the Lehigh Valley submarket of Pennsylvania.
Executed a 466,000 square foot pre-lease for the expansion of SCLA Building 3 located in the Victorville submarket of Southern California. This will bring the 584,000 square foot building to 1.1 million square feet upon completion. The Company commenced construction on the expansion in July with shell construction scheduled to be complete in Q2 2019.
Commenced construction on DCT Pinnacle Industrial Center, a 407,000 square foot building in the I-55 submarket of Chicago. Shell construction is scheduled to be complete in Q4 2018.
Acquired 84.0 acres in the Central New Jersey submarket to develop DCT Northline, a two-building project totaling 1.1 million square feet. Additionally, in Q2 the Company commenced construction on DCT Northline Building I, a 913,000 square foot facility. Shell construction is scheduled to be complete in Q2 2019.


2


Acquired 8.2 acres and commenced construction on DCT Conewago Commerce Center, a 100,000 square foot pre-leased build-to-suit located in the Central Pennsylvania submarket. Shell construction is scheduled to be complete in Q4 2018.
Acquired 10.8 acres in the Northwest submarket of Cincinnati to develop DCT Enterprise Drive, a 157,000 square foot facility.

Since June 30, 2018:
Executed a 339,000 square foot pre-lease for Blair Logistics Center Building A, bringing the 543,000 square foot building located in the Fife/Tacoma submarket of Seattle to 62.3 percent pre-leased.
Executed a 76,000 square foot lease in DCT Stockyards Industrial Center, bringing the 167,000 square foot building located in the City South submarket of Chicago to 83.7 percent leased.
Executed an 80,000 square foot lease for DCT Greenwood, bringing the 140,000 square foot building located in the I-55 submarket of Chicago to 56.7 percent leased.
Commenced construction on DCT Fontana West Logistics Center, a 207,000 square building in the Inland Empire West submarket of Southern California. Shell construction is scheduled to be complete in Q2 2019.
Commenced construction on DCT Jurupa Logistics Center II, a 103,000 square building in the Inland Empire West submarket of Southern California. Shell construction is scheduled to be complete in Q1 2019.

Dispositions
Since DCT Industrial’s Q1 2018 Earnings Release, the Company sold eight buildings totaling 588,000 square feet. These transactions generated total gross proceeds of $22.4 million and have an expected year-one weighted-average cash yield of 7.3 percent.

The table below summarizes dispositions since the Company's Q1 2018 Earnings Release:
Market
Submarket
Square Feet
Occupancy
Closed
Chicago (2 buildings)
Central Kane/DuPage
282,000
98.3
%
June-18
Chicago
Southwest Suburbs
205,000
100.0
%
June-18
Cincinnati (5 buildings)
Northern Kentucky
101,000
100.0
%
June-18
Total/Weighted Average
 
588,000
99.0
 
%
 

Guidance and Shareholder Meeting
In light of DCT Industrial’s proposed merger announced in April 2018, the Company will no longer provide guidance nor is it affirming past guidance.

In accordance with that certain Proxy Statement/Prospectus filed on July 11, 2018 (the “Proxy”), a Special Meeting of the stockholders of DCT Industrial Trust Inc. will be held on August 20, 2018. Additional details can be found in the Proxy.

Supplemental information is available in the Investors section of the Company’s website at www.dctindustrial.com or by e-mail request to investorrelations@dctindustrial.com. Interested parties may also obtain additional information from the SEC’s website at www.sec.gov.

About DCT Industrial Trust®
DCT Industrial is a leading logistics real estate company specializing in the ownership, development, acquisition, leasing and management of bulk-distribution and light-industrial properties in high-demand distribution markets in the United States. DCT’s actively-managed portfolio is strategically located near population centers and well-positioned to take advantage of market dynamics. As of June 30, 2018, the Company owned interests in approximately 74.0 million square feet of properties leased to approximately


3


830 customers. DCT maintains a Baa2 rating from Moody’s Investors Service and a BBB from S&P Global Ratings. Additional information is available at www.dctindustrial.com.

Click here to subscribe to Mobile Alerts for DCT Industrial.

CONTACT:
Melissa Sachs
DCT Industrial Trust
303-597-2400
investorrelations@dctindustrial.com
###



4


DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share information)

 
 
June 30, 2018
 
December 31, 2017
ASSETS
 
(unaudited)
 
 
Land
 
$
1,216,121

 
$
1,162,908

Buildings and improvements
 
3,385,873

 
3,284,976

Intangible lease assets
 
57,869

 
65,919

Construction in progress
 
173,139

 
149,994

Total investment in properties
 
4,833,002

 
4,663,797

Less accumulated depreciation and amortization
 
(961,173
)
 
(919,186
)
Net investment in properties
 
3,871,829

 
3,744,611

Investments in and advances to unconsolidated joint ventures
 
73,031

 
72,231

Net investment in real estate
 
3,944,860

 
3,816,842

Cash and cash equivalents
 
19,843

 
10,522

Restricted cash
 
15,813

 
14,768

Straight-line rent and other receivables, net of allowance for doubtful
   accounts of $230 and $425, respectively
 
82,726

 
80,119

Other assets, net
 
19,904

 
25,740

Assets held for sale
 

 
62,681

Total assets
 
$
4,083,146

 
$
4,010,672

 
 
 
 
 
LIABILITIES AND EQUITY
 
 

 
 

Liabilities:
 
 

 
 

Accounts payable and accrued expenses
 
$
106,714

 
$
115,150

Distributions payable
 
35,184

 
35,070

Tenant prepaids and security deposits
 
36,654

 
34,946

Other liabilities
 
36,669

 
34,172

Intangible lease liabilities, net
 
16,985

 
18,482

Line of credit
 
324,000

 
234,000

Senior unsecured notes
 
1,287,426

 
1,328,225

Mortgage notes
 
163,330

 
160,129

Liabilities related to assets held for sale
 

 
1,035

Total liabilities
 
2,006,962

 
1,961,209

 
 
 
 
 
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, 500,000,000 shares authorized, 94,113,116
and 93,707,264 shares issued and outstanding as of June 30, 2018 and
December 31, 2017, respectively
 
941

 
937

Additional paid-in capital
 
3,000,086

 
2,985,122

Distributions in excess of earnings
 
(1,015,254
)
 
(1,022,605
)
Accumulated other comprehensive loss
 
(5,036
)
 
(11,893
)
Total stockholders’ equity
 
1,980,737

 
1,951,561

Noncontrolling interests
 
95,447

 
97,902

Total equity
 
2,076,184

 
2,049,463

Total liabilities and equity
 
$
4,083,146

 
$
4,010,672





5


DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited, in thousands, except per share information)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2018
 
2017
 
2018
 
2017
REVENUES:
 
 
 
 

 
 
 
 
Rental revenues
 
$
109,781

 
$
104,217

 
$
219,204

 
$
209,641

Institutional capital management and other fees
 
288

 
304

 
672

 
776

Total revenues
 
110,069

 
104,521

 
219,876

 
210,417

 
 
 
 
 
 
 
 
 
OPERATING EXPENSES:
 
 

 
 

 
 
 
 
Rental expenses
 
9,246

 
9,226

 
19,485

 
18,688

Real estate taxes
 
17,061

 
15,529

 
33,785

 
32,295

Real estate related depreciation and amortization
 
41,896

 
41,447

 
83,128

 
83,052

General and administrative
 
12,824

 
7,821

 
20,288

 
15,013

Casualty loss (gain)
 
240

 

 
245

 
(270
)
Total operating expenses
 
81,267

 
74,023

 
156,931

 
148,778

Operating income
 
28,802

 
30,498

 
62,945

 
61,639

 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE):
 
 

 
 

 
 
 
 
Equity in earnings of unconsolidated joint ventures, net
 
1,089

 
2,737

 
2,166

 
4,253

Gain on dispositions of real estate interests
 
11,784

 
28,076

 
43,974

 
28,102

Interest expense
 
(16,133
)
 
(16,805
)
 
(32,183
)
 
(33,560
)
Other expense
 
(114
)
 
(7
)
 
(80
)
 
(12
)
Impairment loss on land
 

 
(938
)
 
(371
)
 
(938
)
Income tax benefit expense and other taxes
 
(140
)
 
(69
)
 
(221
)
 
(203
)
Consolidated net income of DCT Industrial Trust Inc.
 
25,288

 
43,492

 
76,230

 
59,281

Net income attributable to noncontrolling interests
 
(1,172
)
 
(1,858
)
 
(3,291
)
 
(2,688
)
Net income attributable to common stockholders
 
24,116

 
41,634

 
72,939

 
56,593

Distributed and undistributed earnings allocated to participating securities
 
(191
)
 
(162
)
 
(408
)
 
(323
)
Adjusted net income attributable to common stockholders
 
$
23,925

 
$
41,472

 
$
72,531

 
$
56,270

 
 
 
 
 
 
 
 
 
NET EARNINGS PER COMMON SHARE:
 
 

 
 

 
 
 
 
Basic
 
$
0.25

 
$
0.45

 
$
0.77

 
$
0.61

Diluted
 
$
0.25

 
$
0.45

 
$
0.77

 
$
0.61

 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 
 
 
Basic
 
94,101

 
92,307

 
93,956

 
92,030

Diluted
 
94,124

 
92,429

 
93,981

 
92,156

 
 
 
 
 
 
 
 
 
Distributions declared per common share
 
$
0.36

 
$
0.31

 
$
0.72

 
$
0.62





6


Reconciliation of Net Income Attributable to Common Stockholders to Funds from Operations
(unaudited, in thousands, except per share and unit data)
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2018
 
2017
 
2018
 
2017
Reconciliation of net income attributable to common stockholders to FFO:
 
 
 
 
 
 
 
 
Net income attributable to common stockholders
 
$
24,116

 
$
41,634

 
$
72,939

 
$
56,593

Adjustments:
 
 
 
 
 
 
 
 
Real estate related depreciation and amortization
 
41,896

 
41,447

 
83,128

 
83,052

Equity in earnings of unconsolidated joint ventures, net
 
(1,089
)
 
(2,737
)
 
(2,166
)
 
(4,253
)
Equity in FFO of unconsolidated joint ventures(1)
 
2,718

 
3,394

 
5,469

 
6,632

Gain on dispositions of real estate interests
 
(11,784
)
 
(28,076
)
 
(43,974
)
 
(28,102
)
Loss on dispositions of non-depreciable real estate
 

 

 
(3
)
 

Noncontrolling interest in the above adjustments
 
(1,237
)
 
(664
)
 
(1,780
)
 
(2,499
)
FFO attributable to unitholders
 
1,860

 
2,095

 
3,951

 
4,349

FFO attributable to common stockholders and unitholders – basic and diluted(2)
 
56,480

 
57,093

 
117,564

 
115,772

Adjustments:
 
 
 
 
 
 
 
 
Impairment loss on land
 

 
938

 
371

 
938

Acquisition costs
 

 

 

 
13

Merger transaction costs
 
5,462

 

 
5,462

 

Hedge ineffectiveness (non-cash)(3)
 

 
(24
)
 

 
6

FFO, as adjusted, attributable to common stockholders and unitholders – basic
and diluted
 
$
61,942

 
$
58,007

 
$
123,397

 
$
116,729

 
 
 
 
 
 
 
 
 
FFO per common share and unit – basic
 
$
0.58

 
$
0.59

 
$
1.20

 
$
1.20

FFO per common share and unit – diluted
 
$
0.58

 
$
0.59

 
$
1.20

 
$
1.20

 
 
 
 
 
 
 
 
 
FFO, as adjusted, per common share and unit – basic
 
$
0.63

 
$
0.60

 
$
1.26

 
$
1.21

FFO, as adjusted, per common share and unit – diluted
 
$
0.63

 
$
0.60

 
$
1.26

 
$
1.21

 
 
 
 
 
 
 
 
 
FFO weighted average common shares and units outstanding:
 
 
 
 
 
 
 
 
Common shares for net earnings per share
 
94,101

 
92,307

 
93,956

 
92,030

Participating securities
 
530

 
520

 
520

 
494

Units
 
3,210

 
3,520

 
3,267

 
3,592

FFO weighted average common shares, participating securities and units outstanding – basic
 
97,841

 
96,347

 
97,743

 
96,116

Dilutive common stock equivalents
 
23

 
122

 
25

 
126

FFO weighted average common shares, participating securities and units outstanding – diluted
 
97,864

 
96,469

 
97,768

 
96,242


(1) 
Equity in FFO of unconsolidated joint ventures is determined as our share of FFO from each unconsolidated joint venture. See DCT Industrial's second quarter 2018 supplemental reporting package for additional information.
(2) 
FFO as defined by the National Association of Real Estate Investment Trusts (Nareit).
(3) 
Effective as of January 1, 2017 and adopted in the third quarter of 2017, the Company no longer separately records hedge ineffectiveness per the adoption of the Derivatives and Hedging accounting standard update (“ASU”) 2017-12.



7



For information related to our Fixed Charge Coverage Ratio please see our Second Quarter 2018 Supplemental


The following table is a reconciliation of our reported net income attributable to common stockholders to our net operating income for the three and six months ended June 30, 2018 and 2017 (unaudited, in thousands):
 
 
For the Three Months Ended June 30,
For the Six Months Ended June 30,
 
 
2018
 
2017
2018
2017
Reconciliation of net income attributable to common stockholders to NOI:
 
 
 
 
 
 
Net income attributable to common stockholders
 
$
24,116

 
$
41,634

 
$
72,939

 
$
56,593

Net income attributable to noncontrolling interests
 
1,172

 
1,858

 
3,291

 
2,688

Income tax expense and other taxes
 
140

 
69

 
221

 
203

Impairment loss on land
 

 
938

 
371

 
938

Other expense
 
114

 
7

 
80

 
12

Interest expense
 
16,133

 
16,805

 
32,183

 
33,560

Equity in earnings of unconsolidated joint ventures, net
 
(1,089
)
 
(2,737
)
 
(2,166
)
 
(4,253
)
General and administrative expense
 
12,824

 
7,821

 
20,288

 
15,013

Real estate related depreciation and amortization
 
41,896

 
41,447

 
83,128

 
83,052

Gain on dispositions of real estate interests
 
(11,784
)
 
(28,076
)
 
(43,974
)
 
(28,102
)
Casualty loss (gain)
 
240

 

 
245

 
(270
)
Institutional capital management and other fees
 
(288
)
 
(304
)
 
(672
)
 
(776
)
Total NOI
 
$
83,474

 
$
79,462

 
$
165,934

 
$
158,658

 
 
 
 
 
 
 
 
 
Quarterly Same-Store Portfolio NOI:
 
 
 
 
 
 
 
 
Total NOI
 
$
83,474

 
$
79,462

 
 
 
 
Less NOI – non-same-store properties
 
(6,792
)
 
(5,654
)
 
 
 
 
Less revenue from lease terminations
 
(385
)
 
(435
)
 
 
 
 
Add early termination straight-line rent adjustment
 
38

 
117

 
 
 
 
NOI, excluding revenue from lease terminations
 
76,335

 
73,490

 
 
 
 
Less straight-line rents, net of related bad debt expense
 
82

 
(620
)
 
 
 
 
Less amortization of above/(below) market rents
 
(551
)
 
(692
)
 
 
 
 
Cash NOI, excluding revenue from lease terminations
 
$
75,866

 
$
72,178

 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Same-Store Portfolio NOI:
 
 
 
 
 
 
 
 
Total NOI
 
$
83,474

 
$
79,462

 
$
165,934

 
$
158,658

Less NOI – non-same-store properties
 
(7,119
)
 
(5,942
)
 
(13,771
)
 
(11,094
)
Less revenue from lease terminations
 
(385
)
 
(435
)
 
(648
)
 
(937
)
Add early termination straight-line rent adjustment
 
39

 
117

 
87

 
134

NOI, excluding revenue from lease terminations
 
76,009

 
73,202

 
151,602

 
146,761

Less straight-line rents, net of related bad debt expense
 
95

 
(485
)
 
(482
)
 
(3,451
)
Less amortization of above/(below) market rents
 
(542
)
 
(683
)
 
(1,097
)
 
(1,428
)
Cash NOI, excluding revenue from lease terminations
 
$
75,562

 
$
72,034

 
$
150,023

 
$
141,882



8



Financial Measures
Terms not otherwise defined below are as defined in our First Quarter 2018 Supplemental Reporting Package.

NOI is defined as rental revenues, which includes expense reimbursements, less rental expenses and real estate taxes, and excludes institutional capital management fees, depreciation, amortization, casualty and involuntary conversion gain (loss), impairment, general and administrative expenses, equity in earnings (loss) of unconsolidated joint ventures, interest expense, interest and other income and income tax expense and other taxes. DCT Industrial considers NOI to be an appropriate supplemental performance measure because NOI reflects the operating performance of DCT Industrial’s properties and excludes certain items that are not considered to be controllable in connection with the management of the properties such as amortization, depreciation, impairment, interest expense, interest and other income, income tax expense and other taxes and general and administrative expenses. We also present NOI excluding lease termination revenue as it is not considered to be indicative of recurring operating performance. However, NOI should not be viewed as an alternative measure of DCT Industrial’s overall financial performance since it excludes expenses which could materially impact our results of operations. Further, DCT Industrial’s NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating NOI. Therefore, DCT Industrial believes net income, as defined by GAAP, to be the most appropriate measure to evaluate DCT Industrial’s overall financial performance.

We calculate Cash NOI as NOI excluding non-cash amounts recorded for straight-line rents including related bad debt expense and the amortization of above and below market rents. DCT Industrial considers Cash NOI to be an appropriate supplemental performance measure because Cash NOI reflects the operating performance of DCT Industrial’s properties and excludes certain non-cash items that are not considered to be controllable in connection with the management of the property such as accounting adjustments for straight-line rent and the amortization of above or below market rent. Additionally, DCT Industrial presents Cash NOI, excluding revenue from lease terminations, as such revenue is not considered indicative of recurring operating performance.

The Quarterly Same-Store Portfolio includes all consolidated stabilized acquisitions acquired before January 1, 2017 and all consolidated Value-Add Acquisitions, developments and Redevelopments stabilized prior to January 1, 2017. Once a property is included in the Quarterly Portfolio, it remains until it is subsequently disposed or placed into redevelopment. We consider NOI and Cash NOI from our Quarterly Same-Store Portfolio to be a useful measure in evaluating our financial performance and to improve comparability between periods by including only properties owned for comparable periods.

The Annual Same-Store Portfolio includes all consolidated stabilized acquisitions acquired before January 1, 2017 and all consolidated Value-Add Acquisitions, developments and Redevelopments stabilized prior to January 1, 2017. Once a property is included in the Annual Same-Store Portfolio, it remains until it is subsequently disposed or placed into redevelopment. We consider NOI from our Annual Same-Store Portfolio to be a useful measure in evaluating our financial performance and to improve comparability between periods by including only properties owned for those comparable periods.

DCT Industrial believes that net income (loss) attributable to common stockholders, 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, non-GAAP measure of DCT Industrial’s operating performance.

NAREIT developed FFO as a relative measure of performance 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 attributable to common stockholders, calculated in accordance with GAAP with the following adjustments:
Add real estate-related depreciation and amortization;
Subtract gains from dispositions of real estate held for investment purposes;
Add impairment losses on depreciable real estate and impairments of in substance real estate investments in investees that are driven by measurable decreases in the fair value of the depreciable real estate held by the unconsolidated joint ventures; and
Adjustments for the preceding items to derive DCT Industrial’s proportionate share of FFO of unconsolidated joint ventures.



9


We also present FFO, as adjusted, which excludes hedge ineffectiveness, certain severance costs, acquisition costs, debt modification costs and impairment losses on properties which are not depreciable. We believe that FFO, as adjusted, excluding hedge ineffectiveness, certain severance costs, acquisition costs, debt modification costs and impairment losses on non-depreciable real estate is useful supplemental information regarding our operating performance as it provides a more meaningful and consistent comparison of our operating performance and allows investors to more easily compare our operating results. 

Readers should note that FFO or FFO, as adjusted, 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. NAREIT’s definition of FFO is subject to interpretation, and modifications to the NAREIT definition of FFO are common. Accordingly, DCT Industrial’s FFO, as adjusted, may not be comparable to other REITs’ FFO or FFO, as adjusted, should be considered only as a supplement to net income (loss) as a measure of DCT Industrial’s performance.












































10


Forward-Looking Statements
We make statements in this report 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 and includes statements regarding our anticipated yields. We intend 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 our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we 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 our control including, without limitation: national, international, regional and local economic conditions, the general level of interest rates and the availability of capital; the competitive environment in which we operate; 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, dispositions and development; natural disasters such as fires, floods, tornadoes, hurricanes and earthquakes; energy costs; the terms of governmental regulations that affect us and interpretations of those regulations, including the cost of compliance with those regulations, changes in real estate and zoning laws and increases in real property tax rates; financing risks, including the risk that our cash flows from operations may be insufficient to meet required payments of principal, interest and other commitments; 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 or civil unrest; 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 us; and other risks and uncertainties detailed in the section of our Form 10-K filed with the SEC and updated on Form 10-Q entitled “Risk Factors.” In addition, our current and continuing qualification as a real estate investment trust, or REIT, involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, or the Code, and depends on our ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership. We assume no obligation to update publicly any forward looking statements, whether as a result of new information, future events or otherwise.




11
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
        
Exhibit 99.2


394491578_a2018supplementalcoverspage2.jpg

 
 
 

 
Table of Contents


 



Same-Store Portfolio Analysis
12-13
Value-Add Acquisitions Overview
Debt Covenants and Credit Ratings
20
22-26
Forward-Looking Statements
We make statements in this report 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 and includes statements regarding our anticipated yields. We intend 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 our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we 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 our control including, without limitation:
risks associated with our ability to consummate the merger and the timing and closing of the merger;
national, international, regional and local economic conditions;
the general level of interest rates and the availability of capital;
the competitive environment in which we operate;
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, dispositions and development;
natural disasters such as fires, floods, tornadoes, hurricanes and earthquakes;
energy costs;
the terms of governmental regulations that affect us and interpretations of those regulations, including the costs of compliance with those regulations, changes in real estate and zoning laws and increases in real property tax rates;
financing risks, including the risk that our cash flows from operations may be insufficient to meet required payments of principal, interest and other commitments;
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 or civil unrest;
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 us; and
other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission.
In addition, our current and continuing qualification as a real estate investment trust, or REIT, involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, or the Code, and depends on our ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership.

Second Quarter 2018
Supplemental Reporting Package

394491578_dctsupplementalimage2a06.jpg
Page 2


 
Consolidated Statements of Operations
(unaudited, amounts in thousands, except per share data)

 

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
Rental revenues
$
109,781

 
$
104,217

 
$
219,204

 
$
209,641

Institutional capital management and other fees
 
288

 
 
304

 
 
672

 
 
776

Total revenues
 
110,069

 
 
104,521

 
 
219,876

 
 
210,417

 
 
 
 
 
 
 
 
 
 
 
 
OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
Rental expenses
 
9,246

 
 
9,226

 
 
19,485

 
 
18,688

Real estate taxes
 
17,061

 
 
15,529

 
 
33,785

 
 
32,295

Real estate related depreciation and amortization
 
41,896

 
 
41,447

 
 
83,128

 
 
83,052

General and administrative
 
12,824

 
 
7,821

 
 
20,288

 
 
15,013

Casualty loss (gain)
 
240

 
 

 
 
245

 
 
(270
)
Total operating expenses
 
81,267

 
 
74,023

 
 
156,931

 
 
148,778

Operating income
 
28,802

 
 
30,498

 
 
62,945

 
 
61,639

 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
 
 
 
 
Equity in earnings of unconsolidated joint ventures, net
 
1,089

 
 
2,737

 
 
2,166

 
 
4,253

Gain on dispositions of real estate interests
 
11,784

 
 
28,076

 
 
43,974

 
 
28,102

Interest expense
 
(16,133
)
 
 
(16,805
)
 
 
(32,183
)
 
 
(33,560
)
Other expense
 
(114
)
 
 
(7
)
 
 
(80
)
 
 
(12
)
Impairment loss on land
 

 
 
(938
)
 
 
(371
)
 
 
(938
)
Income tax expense and other taxes
 
(140
)
 
 
(69
)
 
 
(221
)
 
 
(203
)
Consolidated net income of DCT Industrial Trust Inc.
 
25,288

 
 
43,492

 
 
76,230

 
 
59,281

Net income attributable to noncontrolling interests
 
(1,172
)
 
 
(1,858
)
 
 
(3,291
)
 
 
(2,688
)
Net income attributable to common stockholders
 
24,116

 
 
41,634

 
 
72,939

 
 
56,593

Distributed and undistributed earnings allocated to participating securities
 
(191
)
 
 
(162
)
 
 
(408
)
 
 
(323
)
Adjusted net income attributable to common stockholders
$
23,925

 
$
41,472

 
$
72,531

 
$
56,270

 
 
 
 
 
 
 
 
 
 
 
 
NET EARNINGS PER COMMON SHARE:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.25

 
$
0.45

 
$
0.77

 
$
0.61

Diluted
$
0.25

 
$
0.45

 
$
0.77

 
$
0.61

 
 
 
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 
 
 
 
 
 
 
 
 
 
Basic
 
94,101

 
 
92,307

 
 
93,956

 
 
92,030

Diluted
 
94,124

 
 
92,429

 
 
93,981

 
 
92,156



Second Quarter 2018
Supplemental Reporting Package

394491578_dctsupplementalimage2a06.jpg
Page 3


 
Consolidated Balance Sheets
(unaudited, amounts in thousands)

 


 
June 30, 2018
 
December 31, 2017
ASSETS:
 
 
 
 
 
Operating portfolio
$
4,296,341

 
$
4,249,242

Properties under development
 
359,835

 
 
280,492

Properties in pre-development
 
76,864

 
 
51,883

Properties under redevelopment
 
10,133

 
 
9,481

Value-add acquisitions
 
86,173

 
 
68,673

Land held
 
3,656

 
 
4,026

Total investment in properties
 
4,833,002

 
 
4,663,797

Less accumulated depreciation and amortization
 
(961,173
)
 
 
(919,186
)
Net investment in properties
 
3,871,829

 
 
3,744,611

Investments in and advances to unconsolidated joint ventures
 
73,031

 
 
72,231

Net investment in real estate
 
3,944,860

 
 
3,816,842

Cash and cash equivalents
 
19,843

 
 
10,522

Restricted cash
 
15,813

 
 
14,768

Straight-line rent and other receivables, net
 
82,726

 
 
80,119

Other assets, net
 
19,904

 
 
25,740

Assets held for sale
 

 
 
62,681

Total assets
$
4,083,146

 
$
4,010,672

 
 
 
 
 
 
LIABILITIES AND EQUITY:
 
 
 
 
 
Accounts payable and accrued expenses
$
106,714

 
$
115,150

Distributions payable
 
35,184

 
 
35,070

Tenant prepaids and security deposits
 
36,654

 
 
34,946

Other liabilities
 
36,669

 
 
34,172

Intangible lease liabilities, net
 
16,985

 
 
18,482

Line of credit
 
324,000

 
 
234,000

Senior unsecured notes
 
1,287,426

 
 
1,328,225

Mortgage notes
 
163,330

 
 
160,129

Liabilities related to assets held for sale
 

 
 
1,035

Total liabilities
 
2,006,962

 
 
1,961,209

Total stockholders’ equity
 
1,980,737

 
 
1,951,561

Noncontrolling interests
 
95,447

 
 
97,902

Total liabilities and equity
$
4,083,146

 
$
4,010,672




Second Quarter 2018
Supplemental Reporting Package

394491578_dctsupplementalimage2a06.jpg
Page 4


 
Funds From Operations (FFO)
(unaudited, amounts in thousands, except per share and unit data)
   
 


 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
 
2018
 
2017
 
2018
 
2017
 
Reconciliation of net income attributable to common stockholders to FFO:
 
 
 
 
 
 
 
 
 
 
Net income attributable to common stockholders
 
$
24,116

 
$
41,634

 
$
72,939

 
$
56,593

 
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate related depreciation and amortization
 
 
41,896

 
 
41,447

 
 
83,128

 
 
83,052

 
Equity in earnings of unconsolidated joint ventures, net
 
 
(1,089
)
 
 
(2,737
)
 
 
(2,166
)
 
 
(4,253
)
 
Equity in FFO of unconsolidated joint ventures(1)
 
 
2,718

 
 
3,394

 
 
5,469

 
 
6,632

 
Gain on dispositions of real estate interests
 
 
(11,784
)
 
 
(28,076
)
 
 
(43,974
)
 
 
(28,102
)
 
Loss on dispositions of non-depreciable real estate
 
 

 
 

 
 
(3
)
 
 

 
Noncontrolling interests in the above adjustments
 
 
(1,237
)
 
 
(664
)
 
 
(1,780
)
 
 
(2,499
)
 
FFO attributable to unitholders
 
 
1,860

 
 
2,095

 
 
3,951

 
 
4,349

 
FFO attributable to common stockholders and unitholders – basic and diluted(2)
 
 
56,480

 
 
57,093

 
 
117,564

 
 
115,772

 
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment loss on land
 
 

 
 
938

 
 
371

 
 
938

 
Acquisition costs
 
 

 
 

 
 

 
 
13

 
Hedge ineffectiveness (non-cash)(3)
 
 

 
 
(24
)
 
 

 
 
6

 
Merger transaction costs(4)
 
 
5,462

 
 

 
 
5,462

 
 

 
FFO, as adjusted, attributable to common stockholders and unitholders – basic and diluted
 
$
61,942

 
$
58,007

 
$
123,397

 
$
116,729

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FFO per common share and unit – basic
 
$
0.58

 
$
0.59

 
$
1.20

 
$
1.20

 
FFO per common share and unit – diluted
 
$
0.58

 
$
0.59

 
$
1.20

 
$
1.20

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FFO, as adjusted, per common share and unit – basic
 
$
0.63

 
$
0.60

 
$
1.26

 
$
1.21

 
FFO, as adjusted, per common share and unit – diluted
 
$
0.63

 
$
0.60

 
$
1.26

 
$
1.21

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FFO weighted average common shares and units outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
Common shares for net earnings per share
 
 
94,101

 
 
92,307

 
 
93,956

 
 
92,030

 
Participating securities
 
 
530

 
 
520

 
 
520

 
 
494

 
Units
 
 
3,210

 
 
3,520

 
 
3,267

 
 
3,592

 
FFO weighted average common shares, participating securities and units outstanding – basic
 
 
97,841

 
 
96,347

 
 
97,743

 
 
96,116

 
Dilutive common stock equivalents
 
 
23

 
 
122

 
 
25

 
 
126

 
FFO weighted average common shares, participating securities and units outstanding – diluted
 
 
97,864

 
 
96,469

 
 
97,768

 
 
96,242

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of net operating income (NOI) to FFO:
 
 
 
 
 
 
 
 
 
 
 
 
 
NOI(5)(6)
 
$
83,474

 
$
79,462

 
$
165,934

 
$
158,658

 
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in FFO of unconsolidated joint ventures(1)
 
 
2,718

 
 
3,394

 
 
5,469

 
 
6,632

 
Institutional capital management and other fees
 
 
288

 
 
304

 
 
672

 
 
776

 
Loss on dispositions of non-depreciable real estate
 
 

 
 

 
 
(3
)
 
 

 
Casualty (loss) gain
 
 
(240
)
 
 

 
 
(245
)
 
 
270

 
General and administrative expense
 
 
(12,824
)
 
 
(7,821
)
 
 
(20,288
)
 
 
(15,013
)
 
Impairment loss on land
 
 

 
 
(938
)
 
 
(371
)
 
 
(938
)
 
Interest expense
 
 
(20,769
)
 
 
(19,892
)
 
 
(40,972
)
 
 
(39,332
)
 
Capitalized interest expense
 
 
4,636

 
 
3,087

 
 
8,789

 
 
5,772

 
Other expense
 
 
(114
)
 
 
(7
)
 
 
(80
)
 
 
(12
)
 
Income tax expense and other taxes
 
 
(140
)
 
 
(69
)
 
 
(221
)
 
 
(203
)
 
FFO attributable to noncontrolling interests
 
 
(549
)
 
 
(427
)
 
 
(1,120
)
 
 
(838
)
 
FFO attributable to common stockholders and unitholders – basic and diluted(2)
 
 
56,480

 
 
57,093

 
 
117,564

 
 
115,772

 
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition costs
 
 

 
 

 
 

 
 
13

 
Impairment loss on land
 
 

 
 
938

 
 
371

 
 
938

 
Hedge ineffectiveness (non-cash)
 
 

 
 
(24
)
 
 

 
 
6

 
Merger transaction costs
 
 
5,462

 
 

 
 
5,462

 
 

 
FFO, as adjusted, attributable to common stockholders and unitholders – basic and diluted
 
$
61,942

 
$
58,007

 
$
123,397

 
$
116,729

 
(1) 
Equity in FFO of unconsolidated joint ventures is determined as our share of FFO from each unconsolidated joint venture. See Definitions for additional information.

Second Quarter 2018
Supplemental Reporting Package

394491578_dctsupplementalimage2a06.jpg
Page 5


 
Funds From Operations (FFO)
(unaudited, amounts in thousands, except per share and unit data)
   
 


(2) 
FFO as defined by the National Association of Real Estate Investment Trusts (Nareit).
(3) 
Effective as of January 1, 2017 and adopted in the third quarter of 2017, the Company no longer separately records hedge ineffectiveness per the adoption of the Derivatives and Hedging accounting standard update (“ASU”) 2017-12.
(4) 
Costs incurred directly related to the proposed merger with Prologis, Inc. for professional services.
(5) 
See the reconciliation of non-GAAP financial measure to net income attributable to common stockholders in Definitions.
(6) 
Includes FFO from assets held for sale.


Second Quarter 2018
Supplemental Reporting Package

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Page 6


 
Selected Financial Data
(unaudited, amounts in thousands)
   
 


 
 
For the Three Months Ended June 30,
For the Six Months Ended June 30,
 
 
2018
 
2017
2018
 
2017
NOI:
 
 
 
 
 
 
 
 
 
 
 
Rental revenues
 
$
109,781

 
$
104,217

$
219,204

 
$
209,641

Rental expenses and real estate taxes
 
 
(26,307
)
 
 
(24,755
)
 
(53,270
)
 
 
(50,983
)
NOI(1)
 
$
83,474

 
$
79,462

$
165,934

 
$
158,658

 
 
 
 
 
 
 
 
 
 
 
 
TOTAL CONSOLIDATED PROPERTIES:(2)
 
 
 
 
 
 
 
 
 
 
 
Square feet as of period end
 
 
66,434

 
 
65,712

 
66,434

 
 
65,712

Average occupancy
 
 
93.4
%
 
 
95.6
%
 
93.7
%
 
 
95.3
%
Occupancy as of period end
 
 
93.1
%
 
 
95.7
%
 
93.1
%
 
 
95.7
%
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED OPERATING PORTFOLIO:(2)
 
 
 
 
 
 
 
 
 
 
 
Square feet as of period end
 
 
63,549

 
 
63,812

 
63,549

 
 
63,812

Average occupancy
 
 
97.3
%
 
 
97.3
%
 
97.5
%
 
 
97.3
%
Occupancy as of period end
 
 
96.9
%
 
 
97.5
%
 
96.9
%
 
 
97.5
%
 
 
 
 
 
 
 
 
 
 
 
 
SUPPLEMENTAL CONSOLIDATED CASH FLOW AND OTHER INFORMATION:
 
 
 
 
 
 
 
 
Straight-line rent receivable (balance sheet)(2)
 
$
76,066

 
$
74,934

$
76,066

 
$
74,934

Straight-line rents – increase (decrease) to revenue, net of related bad debt expense
 
$
893

 
$
822

$
2,525

 
$
4,220

Free rent
 
$
1,894

 
$
1,173

$
4,099

 
$
4,704

Revenue from lease terminations
 
$
426

 
$
435

$
769

 
$
936

Bad debt expense, excluding expense related to straight-line rent receivable
 
$
(186
)
 
$
(124
)
$
(188
)
 
$
(11
)
Net amortization of (above)/below market rents – increase to revenue
 
$
816

 
$
712

$
1,556

 
$
1,444

Scheduled principal amortization
 
$
1,723

 
$
1,616

$
3,417

 
$
3,230

Capitalized interest
 
$
4,636

 
$
3,087

$
8,789

 
$
5,772

Non-cash interest expense
 
$
1,554

 
$
1,421

$
3,086

 
$
2,690

Stock-based compensation amortization
 
$
1,629

 
$
1,578

$
3,198

 
$
3,004

Capitalized indirect leasing costs(3)
 
$
790

 
$
649