DCT Industrial Trust Inc. - FORM 8-K - EX-99.2

Attached files

file	filename
8-K - 8-K - DCT Industrial Trust Inc.	d720122d8k.htm
EX-99.1 - EX-99.1 - DCT Industrial Trust Inc.	d720122dex991.htm

Exhibit 99.2

LOGO

FIRST QUARTER | 2014 SUPPLEMENTAL REPORTING PACKAGE

Table of Contents


Quarterly Highlights			2
Consolidated Statements of Operations			3
Consolidated Balance Sheets			4
Funds from Operations			5
Selected Financial Data			6
Property Overview			7-8
Consolidated Leasing Summary			9
Acquisition and Disposition Summary			10
Development Overview			11
Indebtedness			12
Capitalization and Fixed Charge Coverage			13
Investment in Unconsolidated Ventures Summary			14
Definitions			15-17

Forward Looking Statement

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, including, in particular, the strength of the United States economic recovery and global economic recovery;

•

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 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.


First Quarter 2014				Page 1
Supplemental Reporting Package

Quarterly Highlights


Portfolio Repositioning⁽¹⁾		Portfolio Occupancy (%)⁽²⁾

Total Leasing Volume (square feet, in millions)		Acquisitions and Dispositions⁽³⁾ ($ in millions)

Top 10 Markets⁽⁴⁾

Consolidated Operating


	ABR		Occupancy			Occupancy⁽²⁾
Market	(thousands)		Q1 2014			Q1 2013			Change
Southern California	$	28,768		93.6	%		98.3	%		-4.7	%
Chicago		25,111		92.6	%		96.7	%		-4.1	%
Houston		18,805		95.6	%		94.9	%		0.7	%
Atlanta		18,562		88.9	%		86.3	%		2.6	%
Dallas		17,196		98.2	%		94.6	%		3.6	%
Northern California		16,043		87.9	%		97.7	%		-9.8	%
Cincinnati		12,158		93.9	%		91.6	%		2.3	%
Pennsylvania		11,285		92.1	%		92.0	%		0.1	%
Baltimore/Washington		10,814		88.9	%		92.0	%		-3.1	%
Miami		10,040		99.2	%		97.6	%		1.6	%

Total/Weighted Average	$	168,782		92.8	%		93.7	%		-0.9	%

⁽¹⁾	Percentages are based on annualized base rent as previously reported.

⁽²⁾	Prior period amounts are as previously reported.

⁽³⁾	Includes consolidated property acquisitions or dispositions.

⁽⁴⁾	Based on annualized base rent as of March 31, 2014. Occupancy is as of period end.


First Quarter 2014				Page 2
Supplemental Reporting Package

Consolidated Statements of Operations

(unaudited, amounts in thousands, except per share data)


	Three Months Ended March 31,
	2014			2013
REVENUES:
Rental revenues	$	82,619		$	67,309
Institutional capital management and other fees		764			812

Total revenues		83,383			68,121

OPERATING EXPENSES:
Rental expenses		12,402			8,349
Real estate taxes		13,197			10,579
Real estate related depreciation and amortization		36,433			30,196
General and administrative		6,834			6,339
Impairment losses		4,359			—
Casualty and involuntary conversion gain		—			(59	)

Total operating expenses		73,225			55,404

Operating income		10,158			12,717
OTHER INCOME (EXPENSE):
Development profit, net of taxes		728			268
Equity in earnings of unconsolidated joint ventures, net		3,613			391
Gain on acquisitions and dispositions of real estate interests		2,045			—
Interest expense		(16,056	)		(16,860	)
Interest and other income		28			162
Income tax expense and other taxes		(57	)		(109	)

Income (loss) from continuing operations		459			(3,431	)
Discontinued operations:
Operating income and other expenses		141			2,190
Gain (loss) on dispositions of real estate interests from discontinued operations		(132	)		2,877

Income from discontinued operations		9			5,067

Consolidated net income of DCT Industrial Trust Inc.		468			1,636
Net income attributable to noncontrolling interests		(151	)		(357	)

Net income attributable to common stockholders		317			1,279

Distributed and undistributed earnings allocated to participating securities		(166	)		(173	)

Adjusted net income attributable to common stockholders	$	151		$	1,106

EARNINGS PER COMMON SHARE – BASIC
Income (loss) from continuing operations	$	0.00		$	(0.01	)
Income from discontinued operations		0.00			0.01

Net income attributable to common stockholders	$	0.00		$	0.00

EARNINGS PER COMMON SHARE – DILUTED
Income (loss) from continuing operations	$	0.00		$	(0.01	)
Income from discontinued operations		0.00			0.01

Net income attributable to common stockholders	$	0.00		$	0.00

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		323,942			281,063
Diluted		324,994			281,063


First Quarter 2014				Page 3
Supplemental Reporting Package

Consolidated Balance Sheets

(amounts in thousands)


	March 31,			December 31,
	2014			2013
	(unaudited)
ASSETS:
Operating properties	$	3,544,095		$	3,442,442
Properties under development		132,829			142,903
Properties under redevelopment		—			12,194
Properties in pre-development including land held		50,478			73,512

Total investment in properties		3,727,402			3,671,051
Less accumulated depreciation and amortization		(680,140	)		(654,097	)

Net investment in properties		3,047,262			3,016,954
Investments in and advances to unconsolidated joint ventures		101,198			124,923

Net investment in real estate		3,148,460			3,141,877
Cash and cash equivalents		17,025			32,226
Restricted cash		2,489			12,621
Deferred loan costs, net		9,704			10,251
Straight-line rent and other receivables, net		50,596			46,247
Other assets, net		15,860			14,545
Assets held for sale		22,869			8,196

Total assets	$	3,267,003		$	3,265,963

LIABILITIES AND EQUITY:
Accounts payable and accrued expenses	$	61,640		$	63,281
Distributions payable		24,265			23,792
Tenant prepaids and security deposits		24,632			28,542
Other liabilities		6,257			10,122
Intangible lease liability, net		19,868			20,389
Line of credit		34,000			39,000
Senior unsecured notes		1,122,459			1,122,407
Mortgage notes		279,782			290,960
Liabilities related to assets held for sale		5,961			278

Total liabilities		1,578,864			1,598,771

Total stockholders’ equity		1,568,695			1,543,806
Noncontrolling interests		119,444			123,386

Total liabilities and equity	$	3,267,003		$	3,265,963


First Quarter 2014				Page 4
Supplemental Reporting Package

Funds from Operations

(unaudited, amounts in thousands, except per share and unit data)


	Three Months Ended March 31,
	2014			2013
Reconciliation of net income attributable to common stockholders to FFO:
Net income attributable to common stockholders	$	317		$	1,279
Adjustments:
Real estate related depreciation and amortization		36,433			32,690
Equity in earnings of unconsolidated joint ventures, net		(3,613	)		(391	)
Equity in FFO of unconsolidated joint ventures		2,716			2,353
Impairment losses on depreciable real estate		4,491			—
Gain on acquisitions and dispositions of real estate interests		(2,045	)		(2,877	)
Gain on dispositions of non-depreciable real estate		98			—
Noncontrolling interest in the above adjustments		(2,164	)		(2,323	)
FFO attributable to unitholders		1,994			2,217

FFO attributable to common stockholders and unitholders⁽¹⁾		38,227			32,948

Adjustments:
Acquisition costs		725			377

FFO, as adjusted, attributable to common stockholders and unitholders – basic and diluted	$	38,952		$	33,325

FFO per common share and unit — basic and diluted	$	0.11		$	0.11

FFO, as adjusted, per common share and unit — basic and diluted	$	0.11		$	0.11

FFO weighted average common shares and units outstanding:
Common shares for earnings per share—basic		323,942			281,063
Participating securities		2,228			2,250
Units		17,828			20,283

FFO weighted average common shares, participating securities and units outstanding – basic		343,998			303,596
Dilutive common stock equivalents		1,052			813

FFO weighted average common shares, participating securities and units outstanding – diluted		345,050			304,409

⁽¹⁾	Funds from operations, FFO, as defined by the National Association of Real Estate Investment Trusts (NAREIT).


First Quarter 2014				Page 5
Supplemental Reporting Package

Selected Financial Data

(unaudited, amounts in thousands)


	Three Months Ended March 31,
	2014			2013
NET OPERATING INCOME:⁽¹⁾
Rental revenues	$	82,619		$	67,309
Rental expenses and real estate taxes		(25,599	)		(18,928	)

Net operating income⁽²⁾	$	57,020		$	48,381

TOTAL CONSOLIDATED PROPERTIES:⁽³⁾
Square feet as of period end		64,496			60,250
Average occupancy		91.6	%		90.8	%
Occupancy as of period end		91.8	%		91.3	%
CONSOLIDATED OPERATING PROPERTIES:⁽³⁾
Square feet as of period end		63,809			59,165
Average occupancy		92.2	%		92.5	%
Occupancy as of period end		92.8	%		92.7	%
SAME STORE PROPERTIES:⁽⁴⁾
Square feet as of period end		53,375			53,375
Average occupancy		92.7	%		92.3	%
Occupancy as of period end		93.1	%		92.3	%
Rental revenues	$	69,969		$	66,853
Rental expenses and real estate taxes		(21,506	)		(18,783	)

Same store net operating income		48,463			48,070
Less: revenue from lease terminations		(925	)		(115	)
Add: early termination straight-line rent adjustment		263			19

Net operating income (excluding revenue from lease terminations)		47,801			47,974

Less: straight-line rents, net of related bad debt expense		(878	)		(1,271	)
Less: amortization of below market rents, net		(350	)		(399	)

Cash net operating income (excluding revenue from lease terminations)	$	46,573		$	46,304

Net operating income growth (excluding revenue from lease terminations)		-0.4	%
Cash net operating income growth (excluding revenue from lease terminations)		0.6	%
SUPPLEMENTAL CONSOLIDATED CASH FLOW AND OTHER INFORMATION:
Straight-line rents - increase to revenue, net of related bad debt expense⁽³⁾	$	2,111		$	1,537
Straight-line rent receivable (balance sheet)⁽³⁾	$	43,793		$	40,418
Net amortization of below market rents – increase to revenue⁽³⁾	$	427		$	399
Capitalized interest	$	1,948		$	2,044
Noncash interest expense⁽³⁾	$	1,137		$	1,046
Stock-based compensation amortization	$	1,304		$	1,072
Revenue from lease terminations⁽³⁾	$	925		$	115
Bad debt expense, excluding bad debt expense related to straight-line rents⁽³⁾	$	329		$	171
CONSOLIDATED CAPITAL EXPENDITURES:⁽³⁾
Development	$	26,252		$	21,467
Redevelopment		363			1,777
Due diligence		2,056			614
Casualty expenditures		392			2,119
Building and land improvements		1,542			927
Tenant improvements and leasing costs		9,678			6,043

Total capital expenditures	$	40,283		$	32,947

⁽¹⁾	Excludes discontinued operations.

⁽²⁾	See reconciliation of net operating income to income (loss) from continuing operations in Definitions.

⁽³⁾	Includes discontinued operations and assets held for sale.

⁽⁴⁾	See the Definitions for same store properties.


First Quarter 2014				Page 6
Supplemental Reporting Package

Property Overview

As of March 31, 2014


Markets	Number of Buildings		Percent Owned⁽¹⁾			Square Feet		Percentage of Total Square Feet			Occupancy Percentage⁽⁵⁾			Annualized Base Rent^(2) (6)			Percent of Total Annualized Base Rent
						(in thousands)								(in thousands)
CONSOLIDATED OPERATING:
Atlanta		41		100.0	%		6,592		10.2	%		88.9	%	$	18,562			7.9	%
Baltimore/Washington D.C.		19		100.0	%		2,236		3.5	%		88.9	%		10,814			4.6	%
Charlotte		1		100.0	%		472		0.7	%		100.0	%		1,604			0.7	%
Chicago		39		100.0	%		8,291		12.9	%		92.6	%		25,111			10.6	%
Cincinnati		31		100.0	%		3,782		5.9	%		93.9	%		12,158			5.1	%
Columbus		12		100.0	%		3,480		5.4	%		100.0	%		7,501			3.2	%
Dallas		35		100.0	%		5,231		8.1	%		98.2	%		17,196			7.3	%
Denver		2		100.0	%		278		0.4	%		96.5	%		1,230			0.5	%
Houston		43		100.0	%		3,269		5.1	%		95.6	%		18,805			8.0	%
Indianapolis		7		100.0	%		2,299		3.6	%		91.8	%		7,130			3.0	%
Louisville		3		100.0	%		1,109		1.7	%		91.0	%		3,357			1.4	%
Memphis		8		100.0	%		3,712		5.7	%		86.5	%		8,788			3.7	%
Miami		10		100.0	%		1,362		2.1	%		99.2	%		10,040			4.3	%
Nashville		4		100.0	%		2,064		3.2	%		96.5	%		5,918			2.5	%
New Jersey		15		100.0	%		2,033		3.1	%		90.6	%		9,766			4.1	%
Northern California		27		100.0	%		3,171		4.9	%		87.9	%		16,043			6.8	%
Orlando		20		100.0	%		1,864		2.9	%		86.8	%		6,449			2.7	%
Pennsylvania		14		100.0	%		2,828		4.4	%		92.1	%		11,285			4.8	%
Phoenix		18		100.0	%		2,101		3.3	%		91.8	%		7,504			3.2	%
Seattle		14		100.0	%		1,696		2.6	%		95.4	%		7,923			3.4	%
Southern California		42		92.9	%		5,939		9.2	%		93.6	%		28,768			12.2	%

Total/weighted average – operating properties		405		99.3	%		63,809		98.9	%		92.8	%		235,952			100.0	%

DEVELOPMENT PROPERTIES:
Houston		2		100.0	%		400		0.6	%		0.0	%		—			0.0	%
Seattle		1		100.0	%		188		0.3	%		0.0	%		—			0.0	%
Southern California		1		94.0	%		99		0.2	%		0.0	%		—			0.0	%

Total/weighted average – development properties		4		99.1	%		687		1.1	%		0.0	%		—			0.0	%

Total/weighted average – consolidated properties		409		99.3	%		64,496		100.0	%		91.8	%	$	235,952	⁽³⁾		100.0	%

See footnotes on next page.


First Quarter 2014				Page 7
Supplemental Reporting Package

Property Overview

(continued)

As of March 31, 2014


Markets	Number of Buildings		Percent Owned⁽¹⁾			Square Feet		Percentage of Total Square Feet			Occupancy Percentage⁽⁵⁾			Annualized Base Rent⁽²⁾		Percent of Total Annualized Base Rent
						(in thousands)								(in thousands)
UNCONSOLIDATED OPERATING PROPERTIES:
IDI (Nashville and Savannah)		2		50.0	%		1,060		12.4	%		84.3	%	$	969		3.8	%
Southern California Logistics Airport⁽⁴⁾		6		50.0	%		2,160		25.2	%		99.6	%		7,913		30.8	%

Total/weighted average – unconsolidated operating properties		8		50.0	%		3,220		37.6	%		94.6	%		8,882		34.6	%

OPERATING PROPERTIES IN CO-INVESTMENT VENTURES:
Chicago		2		20.0	%		1,033		12.1	%		100.0	%		3,238		12.6	%
Cincinnati		1		20.0	%		543		6.4	%		100.0	%		1,656		6.4	%
Dallas		1		20.0	%		540		6.3	%		100.0	%		1,390		5.4	%
Denver		5		20.0	%		772		9.0	%		97.4	%		3,121		12.1	%
Louisville		4		10.0	%		736		8.6	%		100.0	%		1,353		5.2	%
Nashville		2		20.0	%		1,020		11.9	%		100.0	%		2,768		10.8	%
Orlando		2		20.0	%		696		8.1	%		100.0	%		3,308		12.9	%

Total/weighted average – co-investment operating properties		17		18.6	%		5,340		62.4	%		99.6	%		16,834		65.4	%

Total/weighted average – unconsolidated properties		25		30.4	%		8,560		100.0	%		97.7	%	$	25,716		100.0	%

SUMMARY:
Total/weighted average – operating properties		430		91.2	%		72,369		99.1	%		93.4	%	$	261,668		100.0	%
Total/weighted average – development properties		4		99.1	%		687		0.9	%		0.0	%		—		0.0	%

Total/weighted average – all properties		434		91.3	%		73,056		100.0	%		92.5	%	$	261,668		100.0	%

⁽¹⁾	Percent owned is based on equity ownership weighted by square feet.

⁽²⁾	Annualized base rent is calculated as monthly contractual base rent (cash basis) per the terms of the lease, as of March 31, 2014, multiplied by 12.

⁽³⁾	Excludes total annualized base rent associated with tenants currently in free rent periods of $10.9 million based on the first month’s cash base rent.

⁽⁴⁾	Although we contributed 100% of the initial cash equity capital required by the venture, after return of certain preferential distributions on capital invested, profits and losses are generally split 50/50.

⁽⁵⁾	Based on leases commenced as of March 31, 2014.

⁽⁶⁾	Excludes total annualized base rent of $1.7 million from one non-industrial property acquired for future development.


First Quarter 2014				Page 8
Supplemental Reporting Package

Consolidated Leasing Summary

Leasing Statistics⁽¹⁾


	Number of Leases Signed			Square Feet Signed		Cash Basis Rent Growth			GAAP Basis Rent Growth			Weighted Average Lease Term⁽²⁾		Turnover Costs		Turnover Costs Per Square Foot
				(in thousands)								(in months)		(in thousands)
FIRST QUARTER 2014
New		31			1,445		3.1	%		10.0	%		65	$	5,086	$	3.52
Renewal		35			2,813		7.0	%		17.7	%		68		6,611		2.35
Development and redevelopment		2			93		N/A			N/A			69		N/A		N/A

Total/Weighted Average		68			4,351		5.7	%		15.1	%		67	$	11,697	$	2.75

Weighted Average Retention		80.8	%

FOUR QUARTERS ROLLING
New		126			4,947		1.8	%		11.0	%		57	$	15,830	$	3.20
Renewal		164			10,213		0.5	%		8.9	%		54		13,992		1.37
Development and redevelopment		10			1,583		N/A			N/A			79		N/A		N/A

Total/Weighted Average		300			16,743		0.8	%		9.4	%		57	$	29,822	$	1.97

Weighted Average Retention		78.1	%

Lease Expirations for Consolidated Properties as of March 31, 2014⁽²⁾


Year	Square Feet Related to Expiring Leases		Annualized Base Rent of Expiring Leases⁽³⁾		Percentage of Total Annualized Base Rent
	(in thousands)		(in thousands)
2014⁽⁴⁾		5,953	$	26,294		9.8	%
2015		9,676		39,259		14.7	%
2016		9,904		43,272		16.1	%
2017		9,297		37,352		14.0	%
2018		6,661		30,691		11.5	%
Thereafter		17,697		90,659		33.9	%

Total occupied		59,188	$	267,527		100.0	%

Available or leased but not occupied		5,308

Total consolidated properties		64,496

(1)	Excludes month-to-month leases.

(2)	Assumes no exercise of lease renewal options.

(3)	Includes contractual rent changes.

(4)	Includes month-to-month leases.


First Quarter 2014				Page 9
Supplemental Reporting Package

Acquisition and Disposition Summary

For the Three Months Ended March 31, 2014

Property Name

Market

Size

Occupancy at
Acquisition/
Disposition

Occupancy at
March 31,
2014

(building in sq. ft)

BUILDING ACQUISITIONS:

January

1501 Michael Drive

Chicago

174,000

100.0

January

511 S Royal

Dallas

71,000

100.0

February

8041 S 228th Street

Seattle

42,000

66.6

March

3401 S Chicago Street

Chicago

184,000

32.6

March

Fife 45

Seattle

56,000

100.0

March

Prairie Point West⁽¹⁾

Chicago

363,000

100.0

Total YTD Purchase Price - $40.7 million

890,000

84.5

LAND ACQUISITIONS:

January

Freeport North

Dallas

6.4 acres

N/A

March

Fife North and Fife South

Seattle

8.6 acres

N/A

Total YTD Land Purchase Price - $2.9 million

15.0 acres

BUILDING DISPOSITIONS:

January

8th & Vineyard A⁽²⁾

So. California

130,000

N/A

Total YTD Sales Price - $9.9 million

130,000

LAND DISPOSITIONS:

March

Boone Industrial Park

Indianapolis

28.4 acres

N/A

Total YTD Sales Price - $1.1 million

28.4 acres

(1)	During March 2014, we purchased our partner’s 50.0% interest in one property from the IDI-DCT joint venture for $10.3 million.

(2)	During January 2014, we completed the build-to-suit and sold 8th & Vineyard A, a 130,000 square foot building located in the Inland Empire West submarket of Southern California.


First Quarter 2014				Page 10
Supplemental Reporting Package

Development Overview


												Costs Incurred
Project	Market	Acres			Number of Buildings		Square Feet		Percent Owned			Q1-2014		Cumulative Costs at 3/31/2014		Projected Investment		Completion Date⁽³⁾		Percent Leased
							(in thousands)					(in thousands)		(in thousands)		(in thousands)
Consolidated Development Activities:
Projects Under Development
Development Projects in Lease Up
DCT Beltway Tanner Business Park	Houston		11			1		133		100	%		425		10,626		15,424		Q1-2014		79	%
DCT Airtex Industrial Center	Houston		13			1		267		100	%		654		12,815		14,657		Q4-2013		100	%
DCT Summer South Distribution Center	Seattle		9			1		188		100	%		1,191		10,385		12,536		Q1-2014		0	%

	Total		33			3		588		100	%	$	2,270	$	33,826	$	42,617				63	%

Under Construction
DCT Airtex Industrial Center II	Houston		7			1		125		100	%	$	474	$	1,929	$	9,882		Q4-2014		0	%
DCT White River Corporate Center Phase I	Seattle		30			1		649		100	%		7,661		30,712		42,747		Q3-2014		0	%
DCT Auburn 44	Seattle		3			1		49		100	%		1,383		4,724		4,724		Q2-2014		100	%
Slover Logistics Center II	So. California		28			1		610		100	%		8,572		32,813		37,121		Q2-2014		100	%
DCT Rialto Logistics Center	So. California		42			1		928		100	%		1,490		22,970		59,560		Q4-2014		0	%

	Total		110			5		2,361		100	%	$	19,580	$	93,148	$	154,034				28	%

Projects Under Development			143			8		2,949		100	%	$	21,850	$	126,974	$	196,651				35	%

Projected Stabilized Yield - Projects Under Development⁽¹⁾			7.3	%

Development Projects for Sale
8th & Vineyard A⁽⁶⁾	So. California		6			1		130		91	%	$	392	$	8,165	$	8,165		Q1-2014		N/A
8th & Vineyard B	So. California		4			1		99		91	%		612		5,855		6,117		Q1-2014		N/A

	Total		10			2		229		91	%	$	1,004	$	14,020	$	14,282

Development Projects Moved to Operating
DCT 55⁽⁵⁾	Chicago		33			1		604		100	%	$	686	$	26,904	$	28,810		Q4-2012		66	%

Pre-Development⁽²⁾
DCT River West	Atlanta		47							100	%	$	192	$	6,819
DCT Freeport North	Dallas		6							100	%		1,315		1,315
DCT Northwest Crossroads Phase I	Houston		21							100	%		575		4,114
DCT Northwest Crossroads Phase II	Houston		18							100	%		50		2,957
DCT White River Corporate Center Phase II North	Seattle		13							100	%		270		6,147
DCT White River Corporate Center Phase II South	Seattle		4							100	%		88		1,313
DCT Fife 45 North	Seattle		5							100	%		1,175		1,175
DCT Fife 45 South	Seattle		4							100	%		908		908
8th & Vineyard C	So. California		3							91	%		139		1,287
8th & Vineyard D	So. California		4							91	%		72		1,543
8th & Vineyard E	So. California		2							91	%		103		945
DCT Jurupa Ranch⁽⁴⁾	So. California		39							100	%		59		26,428
DCT Airport Distribution Center North Building C	Orlando		8							100	%		229		1,584
Seneca Commerce Center Phase I	Miami		14							90	%		379		1,556
Seneca Commerce Center Phase II	Miami		11							90	%		103		1,319
Seneca Commerce Center Phase III	Miami		11							90	%		9		1,228

	Total		210									$	5,666	$	60,638

⁽¹⁾	Yield computed on a GAAP basis including rents on a straight-line basis.

⁽²⁾	Excludes land held totaling 119 acres with cumulative costs of approximately $16.3 million at March 31, 2014.

⁽³⁾	The completion date represents the date of building shell completion or estimated date of shell completion.

⁽⁴⁾	The property is currently leased through December 2014.

⁽⁵⁾	The property has been shell complete for more than 12 months and is classified as an operating property.

⁽⁶⁾	During January 2014, we completed the build-to-suit and sold 8^th & Vineyard A.


First Quarter 2014				Page 11
Supplemental Reporting Package

Indebtedness

(dollar amounts in thousands)

As of March 31, 2014


Description	Stated Interest Rate			Effective Interest Rate			Maturity Date	Balance as of March 31, 2014
SENIOR UNSECURED NOTES:
2015 Notes, fixed rate		5.63	%		5.63	%	June 2015		40,000
2016 Notes, fixed rate		4.90	%		4.89	%	April & August 2016		99,000
2017 Notes, fixed rate		6.31	%		6.31	%	June 2017		51,000
2018 Notes, fixed rate		5.62	%		5.62	%	June & August 2018		81,500
2018 Notes, variable rate⁽¹⁾		1.50	%		1.50	%	February 2018		225,000
2019 Notes, fixed rate		4.97	%		4.97	%	August 2019		46,000
2020 Notes, fixed rate		5.43	%		5.43	%	April 2020		50,000
2021 Notes, fixed rate		6.70	%		6.70	%	June & August 2021		92,500
2022 Notes, fixed rate		4.61	%		7.13	%	August & September 2022		130,000
2023 Notes, fixed rate		4.62	%		4.73	%	August & October 2023		310,000
Premiums (discounts), net of amortization									(2,541	)

								$	1,122,459

MORTGAGE NOTES⁽⁴⁾:
Fixed rate secured debt		5.81	%		5.21	%	January 2015 – Aug. 2025		280,440
Premiums (discounts), net of amortization									4,739

								$	285,179

UNSECURED CREDIT FACILITY:
Senior unsecured revolving credit facility⁽²⁾		1.33	%		1.33	%	February 2017		34,000

Total carrying value of consolidated debt								$	1,441,638

Fixed rate debt		5.31	%		5.47	%			82	%
Variable rate debt		1.48	%		1.48	%			18	%

Weighted average interest rate		4.62	%		4.76	%			100	%

DCT PROPORTIONATE SHARE OF UNCONSOLIDATED JOINT VENTURE DEBT⁽³⁾
Institutional joint ventures									826
IDI									11,110
Stirling Capital Investments (SCLA)									36,668

								$	48,604

Scheduled Principal Payments of Debt as of March 31, 2014 (excluding premiums and discounts)


Year	Senior Unsecured Notes		Mortgage Notes⁽⁴⁾		Unsecured Credit Facility		Total
2014	$	—	$	5,634	$	—	$	5,634
2015		40,000		49,981		—		89,981
2016		99,000		61,183		—		160,183
2017		51,000		11,768		34,000		96,768
2018		306,500		6,411		—		312,911
2019		46,000		51,018		—		97,018
2020		50,000		65,055		—		115,055
2021		92,500		18,475		—		110,975
2022		130,000		3,303		—		133,303
2023		310,000		6,363		—		316,363
Thereafter		—		1,249		—		1,249

Total	$	1,125,000	$	280,440	$	34,000	$	1,439,440

⁽¹⁾	The $225.0 million term loan facility bears interest at a variable rate equal to LIBOR, plus a margin of between 1.10% to 2.05% per annum, or, at our election, an alternate base rate plus a margin of between 0.10% to 1.05% per annum, depending on our public debt credit rating.

⁽²⁾

The $300.0 million senior unsecured revolving credit facility matures in February 2017 and bears interest at a variable rate equal to LIBOR, plus a margin of between 1.00% to 1.75% per annum or, at our election, an alternate base rate plus a margin of between 0.00% to 0.75% per annum, depending on our public debt credit rating. There was $266.0 million available under the unsecured revolving credit facility as March 31, 2014.

⁽³⁾	Based on our ownership share as of March 31, 2014.

⁽⁴⁾	Mortgage notes includes approximately $5.1 million of principal debt and $0.3 million of debt premiums associated with properties held for sale as of March 31, 2014.


First Quarter 2014				Page 12
Supplemental Reporting Package

Capitalization and Fixed Charge Coverage

(unaudited, dollar amounts in thousands, except share price)

Capitalization at March 31, 2014


Description	Shares or Units ⁽¹⁾		Share Price		Market Value
	(in thousands)
Common shares outstanding		326,919	$	7.88	$	2,576,122
Operating partnership units outstanding		17,590	$	7.88		138,609

Total equity market capitalization						2,714,731

Consolidated debt						1,441,638
Less: Noncontrolling interests’ share of consolidated debt⁽²⁾						(8,969	)
Proportionate share of debt related to unconsolidated joint ventures						48,604

DCT share of total debt						1,481,273

Total market capitalization					$	4,196,004

DCT share of total debt to total market capitalization						35.3	%

Fixed Charge Coverage


	Three Months Ended March 31,
	2014			2013
Net income attributable to common stockholders⁽³⁾	$	317		$	1,279
Interest expense		16,056			16,860
Proportionate share of interest expense from unconsolidated joint ventures		317			445
Real estate related depreciation and amortization		36,433			32,690
Proportionate share of real estate related depreciation and amortization from unconsolidated joint ventures		1,466			1,489
Income tax expense and other taxes		89			109
Stock-based compensation		1,304			1,072
Noncontrolling interests		151			357
Non-FFO gains on acquisitions and dispositions of real estate interests		(2,045	)		(2,877	)

Adjusted EBITDA	$	54,088		$	51,424

CALCULATION OF FIXED CHARGES
Interest expense	$	16,056		$	16,860
Capitalized interest		1,948			2,044
Amortization of loan costs and debt premium/discount		(113	)		(46	)
Other noncash interest expense		(1,024	)		(1,000	)
Proportionate share of interest expense from unconsolidated joint ventures		317			445

Total fixed charges	$	17,184		$	18,303

Fixed charge coverage		3.1			2.8

⁽¹⁾	Excludes 1.8 million unvested Long-Term Incentive Plan Units, 0.6 million shares of unvested Restricted Stock and 0.2 million Phantom Shares outstanding as of March 31, 2014.

⁽²⁾	Amount includes the portion of consolidated debt related to properties in which there are noncontrolling ownership interests.

⁽³⁾	Includes amounts related to discontinued operations, where applicable.


First Quarter 2014				Page 13
Supplemental Reporting Package

Investment in Unconsolidated Ventures Summary

(unaudited, dollar amounts in thousands)

Statements of Operations & Other Data


	For the three months ended March 31, 2014
	TRT- DCT JV III			JP Morgan			IDI/DCT			IDI/DCT Buford			Stirling Capital Investments
Total rental revenues	$	665		$	5,475		$	1,056		$	—		$	3,005
Rental expenses and real estate taxes		175			1,570			308			—			488

Net operating income		490			3,905			748			—			2,517
Depreciation and amortization		232			2,456			588			—			1,232
General and administrative		1			184			1			—			366

Operating income		257			1,265			159			—			919
Interest expense		(160	)		—			(221	)		—			(851	)
Interest and other expense		(4	)		(1	)		(4	)		—			—

Net income (loss)	$	93		$	1,264		$	(66	)	$	—		$	68

Other Data:
Number of buildings		4			13			2			—			6
Square feet (in thousands)		735			4,605			1,060			—			2,160
Occupancy		100.0	%		99.6	%		84.3	%		0.0	%		99.6	%
DCT ownership		10.0	%		20.0	%		50.0	%		75.0	%		50.0	%⁽¹⁾

Balance Sheets
	As of March 31, 2014
	TRT- DCT JV III			JP Morgan			IDI/DCT			IDI/DCT Buford			Stirling Capital Investments
Total investment in properties	$	25,983		$	279,825		$	40,099		$	7,590		$	111,535
Accumulated depreciation and amortization		(6,226	)		(64,789	)		(4,522	)		—			(18,245	)

Net investment in properties		19,757			215,036			35,577			7,590			93,290
Cash and cash equivalents		228			3,128			262			56			534
Other assets		620			5,749			868			4			3,397

Total assets	$	20,605		$	223,913		$	36,707		$	7,650		$	97,221

Other liabilities	$	380		$	5,401		$	423		$	9		$	801
Secure debt maturities – 2014		—			—			—			—			—
Secure debt maturities – 2015		—			—			22,220	⁽³⁾		—			—
Secure debt maturities – 2016		8,265	⁽²⁾		—			—			—			—
Secure debt maturities – 2017		—			—			—			—			73,336	⁽⁴⁾
Secure debt maturities thereafter		—			—			—			—			11,815	⁽⁴⁾

Total secured debt		8,265			—			22,220			—			85,151

Total liabilities		8,645			5,401			22,643			9			85,952
Partners or members’ capital		11,960			218,512			14,064			7,641			11,269

Total liabilities and partners or members’ capital	$	20,605		$	223,913		$	36,707		$	7,650		$	97,221

⁽¹⁾	Although we contributed 100% of the initial cash equity capital required by the venture, after return of certain preferential distributions on capital invested, profits and losses are generally split 50/50.

⁽²⁾	$8.3 million of debt requires principal and interest payments until 2016 and has a stated interest rate of 7.4%.

⁽³⁾	$22.2 million of debt requires interest only payments through October 2015 and has a weighted average variable interest rate of LIBOR plus 2.35%.

⁽⁴⁾	$73.4 million of debt requires interest only payments through October 2017 and has a variable interest rate of LIBOR plus 2.2%. $11.8 million of debt is payable to DCT and requires principal and interest payments through November 2021 and has a fixed rate of 8.5%.


First Quarter 2014				Page 14
Supplemental Reporting Package

Definitions

Adjusted EBITDA:

Adjusted EBITDA represents net loss attributable to common stockholders before interest, taxes, depreciation, amortization, stock-based compensation expense, impairment losses, loss on business combinations, noncontrolling interest, and proportionate share of interest, depreciation and amortization from unconsolidated joint ventures, and excludes non-FFO gains. 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.

Annualized Base Rent:

Annualized Base Rent is calculated as monthly contractual base rent (cash basis) per the terms of the lease, as of period end, multiplied by 12.

Capital Expenditures:

Capital expenditures include building and land improvements, development costs and acquisition capital, tenant improvement and leasing costs required to maintain current revenues and/or improve real estate assets.

Cash Basis Rent Growth:

Cash basis rent growth is the ratio of the change in base rent due in the first month after the lease commencement date compared to the base rent of the last month prior to the termination of the lease, excluding new leases where there were no prior comparable leases. Free rent periods are not considered.

Cash Net Operating Income:

We calculate Cash Net Operating Income as Net Operating Income (as defined below) excluding non-cash amounts recorded for straight-line rents including related bad debt expense and the amortization of above and below market rents. See definition of Net Operating Income for additional information. 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 and 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.

Due Diligence Capital:

Capital improvements related to acquisitions generally incurred within 12 months of the acquisition date.

Effective Interest Rate:

Reflects the impact to interest rates of GAAP adjustments for discounts/premiums and hedging transactions. These rates do not reflect the impact of other interest expense items such as fees and the amortization of loan costs.

Fixed Charges:

Fixed charges include interest expense, interest capitalized, our proportionate share of our unconsolidated joint venture interest expense and adjustments for amortization of discounts, premiums, loan costs and other noncash interest expense.

Fixed Charge Coverage:

We calculate Fixed Charge Coverage as Adjusted EBITDA divided by total Fixed Charges.

Funds from Operations (“FFO”):

DCT Industrial believes that net income 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, plus real estate-related depreciation and amortization, less gains from dispositions of operating real estate held for investment purposes, plus impairment losses on depreciable real estate and impairments of in substance real estate investments in investees that are driven by measureable decreases in the fair value of the depreciable real estate held by the unconsolidated joint ventures and adjustments to derive DCT Industrial’s pro rata share of FFO of unconsolidated joint ventures. We exclude gains and losses on business combinations and include the gains or losses from dispositions of properties which were acquired or developed with the intention to sell or contribute to an investment fund in our definition of FFO. Although the NAREIT definition of FFO predates the guidance for accounting for gains and losses on business combinations, we believe that excluding such gains and losses is consistent with the key objective of FFO as a performance measure. We also present FFO excluding severance, acquisition costs, debt modification costs and impairment losses on properties which are not depreciable. We believe that FFO excluding severance, 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 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 may not be comparable to other REITs’ FFO and FFO should be considered only as a supplement to net income as a measure of DCT Industrial’s performance.

GAAP:

United States generally accepted accounting principles.

GAAP Basis Rent Growth:

GAAP basis rent growth is a ratio of the change in monthly Net Effective Rent (on a GAAP basis, including straight-line rent adjustments as required by GAAP) compared to the Net Effective Rent (on a GAAP basis) of the comparable lease. New leases where there were no prior comparable leases due to materially different lease structures are excluded.

Net Effective Rent:

Average base rental rate over the term of the lease, calculated in accordance with GAAP.


First Quarter 2014				Page 15
Supplemental Reporting Package

Definitions

Net Operating Income (“NOI”):

NOI is defined as rental revenues, including 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 property such as amortization, depreciation, impairment, interest expense, interest income 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 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 (in thousands).


	Three Months Ended March 31,
	2014			2013
Reconciliation of income (loss) from continuing operations to NOI:
Income (loss) from continuing operations	$	459		$	(3,431	)
Income tax expense and other taxes		57			109
Interest and other income		(28	)		(162	)
Interest expense		16,056			16,860
Equity in earnings of unconsolidated joint ventures, net		(3,613	)		(391	)
General and administrative		6,834			6,339
Real estate related depreciation and amortization		36,433			30,196
Impairment losses		4,359			—
Development profit, net of taxes		(728	)		(268	)
Gain on acquisitions and dispositions of real estate interests		(2,045	)		—
Casualty and involuntary conversion gain		—			(59	)
Institutional capital management and other fees		(764	)		(812	)

Total GAAP net operating income		57,020			48,381
Less net operating income – non-same store properties		(8,557	)		(311	)

Same store GAAP net operating income		48,463			48,070
Less revenue from lease terminations		(925	)		(115	)
Add early termination straight-line rent adjustment		263			19

Same store GAAP net operating income, excluding revenue from lease terminations		47,801			47,974
Less straight-line rents, net of related bad debt expense		(878	)		(1,271	)
Less amortization of above/(below) market rents		(350	)		(399	)

Same store cash net operating income, excluding revenue from lease terminations	$	46,573		$	46,304

Projected Stabilized Yield – Projects Under Development:

Calculated as projected stabilized Net Operating Income divided by total projected investment.

Redevelopment:

Represents assets acquired with the intention to reposition or redevelop. May include buildings taken out of service for redevelopment where we generally expect to spend more than 20% of the building’s book value on capital improvements, if applicable.

Retention:

Calculated as (retained square feet + relocated square feet) / ((retained square feet + relocated square feet + expired square feet) - (square feet of vacancies anticipated at acquisition + month-to-month square feet + bankruptcy square feet + early terminations)).

Sales Price:

Contractual price of real estate sold before closing adjustments.

Same Store Population:

The same store population is determined independently for each period presented, quarter-to-date and year-to-date, by including all consolidated operating properties and properties Held for Sale that have been owned and stabilized for the entire current and prior periods presented.

Same Store Net Operating Income Growth:

The change in same store net operating income growth is calculated by dividing the change in NOI, year over year, by the preceding period NOI, based on a same store population for the quarter most recently presented.


First Quarter 2014				Page 16
Supplemental Reporting Package

Definitions

Square Feet:

Represents square feet in building that are available for lease.

Stabilized:

Buildings are generally considered stabilized when 90% occupied.

Stock-based Compensation Amortization Expense:

Represents the non-cash amortization of the cost of employee services received in exchange for an award of an equity instrument based on the award’s fair value on the grant date and amortized over the vesting period.

Total Project Investment:

An estimate of total expected capital expenditures on development properties in accordance with GAAP.

Turnover Costs:

Turnover costs are comprised of the costs incurred or capitalized for improvements of vacant and renewal spaces, as well as the commissions paid and costs capitalized for leasing transactions. The amount indicated for leasing statistics represents the total turnover costs expected to be incurred on the leases signed during the period and does not reflect actual expenditures for the period.


First Quarter 2014				Page 17
Supplemental Reporting Package

Attached files

Stock widget

Investing forum

DCT Industrial Trust Inc. Reports