Duke Realty Announces Third Quarter Earnings; Common and Preferred Stock Dividends Also Announced.INDIANAPOLIS Indianapolis (ĭn'dēənă`pəlĭs), city (1990 pop. 731,327), state capital and seat of Marion co., central Ind., on the White River; selected 1820 as the site of the state capital (which was moved there in 1825), inc. 1847. -- Duke Realty realty n. a short form of "real estate." (See: real estate) REALTY. An abstract of real, as distinguished from personalty. Realty relates to lands and tenements, rents or other hereditaments. Vide Real Property. Corporation (NYSE NYSE See: New York Stock Exchange :DRE DRE Digital rectal examination. Mentioned in: Rectal Examination ) reported today that net income available for common shareholders for the third quarter of 2004 was $42.5 million on revenues of $212.4 million, compared to $40.2 million on revenues of $191.3 million for the third quarter last year. On a per share basis, third quarter net income available for common shareholders remained unchanged at $0.30 per share compared to the third quarter of 2003. All per share amounts reported are diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. with basic per share information also included in the financial table accompanying this press release. Diluted funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. ("FFO FFO See: Funds from operations ") were $98.0 million for the third quarter of 2004 versus $96.4 million for the same period in 2003. On a per share basis, third quarter FFO remained unchanged at $0.62 compared to the third quarter of 2003. FFO is a supplemental non-GAAP financial measurement used as a standard in the real estate industry to measure and compare the operating performance of real estate companies. FFO is defined by the National Association of Real Estate Investment Trusts ("NAREIT NAREIT National Association of Real Estate Investment Trusts ") as net income or loss, excluding gains or losses from sales of depreciated Depreciated may refer to:
See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income is included in the financial tables accompanying this press release. Additionally, the Company's Board of Directors declared a quarterly dividend of $.465 per common share, or $1.86 per share on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis. The dividend is payable on November 30, 2004 to common shareholders of record on November 12, 2004. The Board also declared today the following dividends on the Company's outstanding preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. : NYSE Quarterly Class Symbol Amount/Share Record Date Payment Date --------- ---------- ------------ ------------------ ----------------- Series B Not Listed $.99875 December 17, 2004 December 31, 2004 Series I DREPRI $.52813 December 17, 2004 December 31, 2004 Series J DREPRJ $.41406 November 16, 2004 November 30, 2004 Series K DREPRK $.40625 November 16, 2004 November 30, 2004 Commenting on Duke's third quarter performance, Denny Oklak, President and Chief Executive Officer, stated, "Against a slowly improving economy, we are satisfied with our performance during the third quarter. Notably, we had a good quarter of investment activity by attaining a higher expected return Expected Return The average of a probability distribution of possible returns, calculated by using the following formula: on $205 million of acquisitions of buildings with an average age of five years than we relinquished re·lin·quish tr.v. re·lin·quished, re·lin·quish·ing, re·lin·quish·es 1. To retire from; give up or abandon. 2. To put aside or desist from (something practiced, professed, or intended). 3. on $117 million of buildings that we sold that were 20 years old on average. With solid development and third-party construction activity, we were also able to increase our value creation pipeline more than 12 percent to $388 million from $345 million at June 30th. The profitability of our value creation pipeline also improved, with slightly higher expected development yields, and an increase of 45 basis points in the profit margin on our third party construction backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. . Additionally, I am pleased to announce that Dr. Martin Jischke, who was named as an advisory member of our Board of Directors last quarter, has been elected to the Board to fill the vacancy VACANCY. A place which is empty. The term is principally applied to cases where an office is not filled. 2. By the constitution of the United States, the president has the power to fill up vacancies that may happen during the recess of the senate. created by the recent departure of Gene Zink." Commenting on the Company's expectations for the fourth quarter, Oklak continued, "In the fourth quarter, we expect per share FFO to be in the range of $0.65 to $0.67. After adjusting for $3.6 million of preferred stock redemption charges Redemption charge The commission a mutual fund charges an investor who is redeeming shares. For example, a 2% redemption charge (also called a back end load) on the sale of shares valued at $1000 will result in payment of $980 (or 98% of the value) to the investor. earlier in the year, our 2004 results should be near the mid-point of the guidance range that we first provided last December. We have performed well in 2004 against most of our key business drivers. Our primary area of disappointment this year is that our occupancy has not increased as much as we originally believed was attainable at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. ." Property information at September 30, 2004 was as follows: --The Company's 873 stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. in-service in-service In-service training adjective Referring to any form of on-the-job training noun In-service training of an employee properties totaling 107.6 million square feet were 90.4 percent leased compared to 90.3 percent and 88.8 percent occupied at June 30, 2004 and September 30, 2003, respectively. --The Company's value creation pipeline increased to $388 million at September 30. The pipeline includes $115 million of developments with an expected stabilized return of 10.0 percent that Duke plans to own indefinitely in·def·i·nite adj. Not definite, especially: a. Unclear; vague. b. Lacking precise limits: an indefinite leave of absence. c. after completion; $86 million of developments with an expected stabilized return of 9.3 percent that the Company intends to sell within approximately one year of completion; and a $187 million backlog of third-party construction volume with an overall pre-tax profit margin of 8.5 percent. --Including recently completed developments that have not reached stabilization Stabilization The action undertakes a country when it buys and sells its own currency to protect its exchange value. Actions registered competitive traders undertake by on the NYSE to meet the exchange requirement that 75% of their traded be stabilizing, meaning that sell orders and developments still under construction, the Company's total portfolio at the end of the third quarter consisted of 114.1 million square feet that were 88.5 percent leased. The Company also disclosed the following information for the third quarter of 2004: --Duke renewed 71.3 percent of leases up for renewal, totaling 1.9 million square feet, on which net effective rents increased by an average of 1.3 percent. --Same property net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased 4.0 percent and 1.4 percent for the three months and nine months ended September 30, 2004, respectively. --The Company's interest and fixed-charge coverage ratios Fixed-Charge Coverage Ratio A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. It is calculated as the following: in the third quarter were 4.0 and 3.0, respectively, and its debt-to-total market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. ratio was 32.0 percent at September 30, 2004. When used in this press release, the word "believes," "expects," "estimates" and similar expressions are intended to identify forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Such statements, including estimates of our future operating performance, are subject to certain risks and uncertainties identified in our reports filed with the SEC that could cause actual results to differ materially. In particular, among the factors that could cause actual results to differ materially are continued qualification as a real estate investment trust, general business and economic conditions, competition, increases in real estate construction costs, interest rates, accessibility of debt and equity capital markets and other risks inherent in the real estate business including tenant defaults, potential liability relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc environmental matters and liquidity of real estate investments. Readers are also advised to refer to Duke's Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. Report as filed with the Securities and Exchange Commission on July 24, 2003 for additional information concerning risks about investing in our securities. Duke Realty Corporation is the largest publicly traded office and industrial real estate company in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Offering a complete range of real estate products and services, Duke produces approximately $800 million in annual revenue from more than 4,200 tenants and focuses on building dominant market positions in each of its 13 geographic platforms across the Midwest and the Southeast. Duke owns interests in more than 114 million square feet of properties, has over 1,000 employees and owns or controls approximately 4,600 acres of undeveloped land that can support more than 69 million square feet of future development. Visit Duke on the web at www.dukerealty.com. A copy of the Company's September 30, 2004 supplemental information fact book will be available after 6:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. today in the Investor Information section of the Company's web site at www.dukerealty.com. Duke is also hosting a conference call tomorrow at 3:00 p.m. Eastern Daylight Time (New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of time) to discuss its third quarter operating results. All investors are invited to listen to this call, which can be accessed through the Investor Information section of the Company's web site at www.dukerealty.com.
Financial Highlights
(in thousands, except per share data)
-------------------- ---------------------
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- ---------------------
Operating Results 2004 2003 2004 2003
------------------------------------------------ ---------------------
Revenues from continuing
operations $212,405 $191,349 $614,652 $565,419
Earnings from rental
operations 35,727 49,285 124,602 135,209
Earnings from service
operations 6,341 4,471 13,106 11,407
Net income for common
shareholders - Basic 42,527 40,185 110,129 112,200
Net income for common
shareholders - Diluted 46,717 44,547 121,142 124,447
Funds from operations -
Basic 89,277 84,730 256,982 242,252
Funds from operations -
Diluted 98,041 96,370 282,597 276,046
Per Share:
Net income - common
shareholders - Basic $0.30 $0.30 $0.78 $0.83
Net income - common
shareholders - Diluted $0.30 $0.30 $0.77 $0.82
Funds from operations -
Basic $0.63 $0.62 $1.82 $1.79
Funds from operations -
Diluted $0.62 $0.62 $1.80 $1.77
Dividend payout ratio of
funds from operations 75.0% 74.2% 77.2% 77.7%
Weighted average shares
outstanding
Basic - Net income and
Funds from operations 142,273 135,706 140,930 135,423
Diluted - Net income 157,105 151,244 156,956 150,965
Diluted - Funds from
operations 157,105 156,249 156,983 155,971
-------------------------
September 30 December 31
Balance Sheet Data 2004 2003
----------------------------------------------------------------------
Net real estate investments $5,089,014 $4,851,248
Total assets 5,882,080 5,561,249
Total debt 2,659,629 2,335,536
Shareholders' equity 2,654,227 2,666,749
Common shares outstanding at end of period 142,550 136,594
Reconciliation of Net Income to Funds From Operations
(in thousands, except per share data)
Three Months Ended
September 30
-------------------------------------------------
2004 2003
------------------------ ------------------------
Wtd. Wtd.
Avg. Per Avg. Per
Amount Shares Share Amount Shares Share
------------------------ ------------------------
Net Income Available
for Common Shares $42,527 142,273 $0.30 $40,185 135,706 $0.30
Add back:
Minority interest
in earnings of
unitholders 4,190 13,938 4,362 14,667
Other common stock
equivalents 894 871
----------------- -----------------
Fully Diluted Net
Income 46,717 157,105 $0.30 44,547 151,244 $0.30
Adjustments:
Depreciation and
Amortization 61,511 48,250
Company Share of
Joint Venture
Depreciation and
amortization 4,686 4,459
(Earnings) loss
from depreciable
property sales (14,873) (3,349)
Dilutive effect of
Convertible
Preferred D
Shares 0 2,463 5,005
----------------- -----------------
Fully Diluted Funds
From Operations $98,041 157,105 $0.62 $96,370 156,249 $0.62
================= =================
Nine Months Ended
September 30
---------------------------------------------------
2004 2003
------------------------- -------------------------
Wtd. Wtd.
Avg. Per Avg. Per
Amount Shares Share Amount Shares Share
------------------------- -------------------------
Net Income
Available for
Common Shares $110,129 140,930 $0.78 $112,200 135,423 $0.83
Add back:
Minority
interest in
earnings of
unitholders 11,013 13,975 12,247 14,740
Dilutive effect
of Convertible
Preferred D
Shares 1,170
Other common
stock
equivalents 881 802
------------------ ------------------
Fully Diluted Net
Income 121,142 156,956 $0.77 124,447 150,965 $0.82
Adjustments:
Depreciation and
Amortization 167,159 142,539
Company Share of
Joint Venture
Depreciation and
amortization 13,883 14,236
(Earnings) loss
from
depreciable
property sales (19,627) (12,567)
Dilutive effect
of Convertible
Preferred D
Shares 40 27 7,391 5,006
------------------ ------------------
Fully Diluted
Funds From
Operations $282,597 156,983 $1.80 $276,046 155,971 $1.77
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