DCT Industrial Trust Inc. - FORM 8-K - EX-99.2 - DCT INDUSTRIAL SECOND QUARTER 2012 SUPPLEMENTAL REPORTING PACKAGE - August 2, 2012

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Table of Contents

Exhibit 99.2

 

LOGO

Second Quarter 2012

Supplemental Reporting Package

 

LOGO

Table of Contents

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

Institutional Capital Management 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. 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 impact of the economic downturn and the strength of the economic recovery and the potential impact of the financial crisis in Europe;

 

•  

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 developments;

 

•  

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.

 

 

Second Quarter 2012

 

Supplemental Reporting Package

    LOGO    Page 1     

Table of Contents

Quarterly Highlights

 

Same Store Net Operating Income Growth(1)

 

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Portfolio Occupancy (%)(1)

 

LOGO

 

Total Leasing Volume

 

(square feet, in millions)

 

LOGO

  

 

Acquisitions/Dispositions(2)

 

(in millions)

 

LOGO

Top 10 Markets(3)

Total Consolidated

 

Market

    ABR
(millions)		      Occupancy
6/30/12		     Occupancy
6/13/11		     Change  

Houston

    $ 19.5         97.8 %      92.9 %      4.9 % 

Southern California

      19.3         99.8 %      94.1 %      5.7 % 

Atlanta

      16.7         90.8 %      94.2 %      -3.4 % 

Northern California

      15.5         96.6 %      82.2 %      14.4 % 

Dallas

      15.2         86.8 %      88.6 %      -1.8 % 

Cincinnati

      12.7         88.7 %      78.4 %      10.3 % 

Chicago

      12.3         95.9 %      87.8 %      8.1 % 

Memphis

      11.9         81.4 %      100.0 %      -18.6 % 

Baltimore/Washington, D.C.

      10.1         92.0 %      83.7 %      8.3 % 

New Jersey

      7.9         87.0 %      87.6 %      -0.6 % 
  

 

 

     

 

 

    

 

 

    

 

 

  

Total

    $ 141.1         92.5 %      89.9 %      2.6 % 
  

 

 

     

 

 

    

 

 

    

 

 

  

 

(1) 

Prior period amounts are as previously reported and not restated for current quarter same store pool. See Definitions for same store properties.

(2) 

Includes consolidated property and land acquisitions and dispositions.

(3) 

Based on annualized base rent as of June 30, 2012.

 

 

Second Quarter 2012

 

Supplemental Reporting Package

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Table of Contents

Consolidated Statements of Operations

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

 

     Three Months Ended
June 30,		     Six Months  Ended
June 30,		  
     2012     2011     2012     2011  

REVENUES:

         

Rental revenues

    $ 63,784      $ 58,772      $ 127,768      $ 116,812   

Institutional capital management and other fees

      1,151        1,129        2,206        2,148   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

      64,935        59,901        129,974        118,960   
  

 

 

    

 

 

    

 

 

    

 

 

  

OPERATING EXPENSES:

         

Rental expenses

      7,811        8,246        15,628        16,345   

Real estate taxes

      9,337        8,450        19,304        17,318   

Real estate related depreciation and amortization

      30,747        29,615        61,596        58,103   

General and administrative

      6,513        7,063        12,299        14,119   

Casualty gains

      (57 )      —          (212 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

  

Total operating expenses

      54,351        53,374        108,615        105,885   
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating income

      10,584        6,527        21,359        13,075   

OTHER INCOME AND EXPENSE:

         

Equity in earnings (loss) of unconsolidated joint ventures, net

      430        (1,126 )      (424 )      (2,483 ) 

Impairment losses on investments in unconsolidated joint ventures

      —          (1,934 )      —          (1,934 ) 

Interest expense

      (17,540 )      (13,955 )      (34,470 )      (29,367 ) 

Interest and other income (expense)

      (37 )      13        160        99   

Income tax expense and other taxes

      (287 )      (121 )      (555 )      (161 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Loss from continuing operations

      (6,850 )      (10,596 )      (13,930 )      (20,771 ) 

Discontinued operations:

         

Operating income and other expenses

      699        1,019        860        1,391   

Gain (loss) on dispositions of real estate interests from discontinued operations

      (11,390 )      42        (11,302 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

  

Income (loss) from discontinued operations

      (10,691 )      1,061        (10,442 )      1,391   
  

 

 

    

 

 

    

 

 

    

 

 

  

Consolidated net loss of DCT Industrial Trust Inc.

      (17,541 )      (9,535 )      (24,372 )      (19,380 ) 

Net loss attributable to noncontrolling interests

      1,756        1,060        2,583        2,369   
  

 

 

    

 

 

    

 

 

    

 

 

  

Net loss attributable to common stockholders

      (15,785 )      (8,475 )      (21,789 )      (17,011 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Distributed and undistributed earnings allocated to participating securities

      (137 )      (127 )      (266 )      (244 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted net loss attributable to common stockholders

    $ (15,922 )    $ (8,602 )    $ (22,055 )    $ (17,255 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

EARNINGS PER COMMON SHARE – BASIC AND DILUTED:

         

Loss from continuing operations

    $ (0.02 )    $ (0.04 )    $ (0.05 )    $ (0.08 ) 

Income (loss) from discontinued operations

      (0.04 )      0.00        (0.04 )      0.01   
  

 

 

    

 

 

    

 

 

    

 

 

  

Net loss attributable to common stockholders

    $ (0.06 )    $ (0.04 )    $ (0.09 )    $ (0.07 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

         

Basic and diluted shares

      248,107        245,413        247,227        239,261   
  

 

 

    

 

 

    

 

 

    

 

 

  

 

 

Second Quarter 2012

 

Supplemental Reporting Package

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Table of Contents

Consolidated Balance Sheets

(amounts in thousands)

 

     June 30,
2012		     December 31,
2011		  
     (unaudited)        

ASSETS:

     

Operating properties

    $ 3,064,664      $ 3,100,172   

Properties under development

      28,825        9,525   

Properties under redevelopment

      6,938        4,284   

Properties in pre-development including land held

      45,125        47,082   
  

 

 

    

 

 

  

Total investment in properties

      3,145,552        3,161,063   

Less accumulated depreciation and amortization

      (595,015 )      (589,314 ) 
  

 

 

    

 

 

  

Net investment in properties

      2,550,537        2,571,749   

Investments in and advances to unconsolidated joint ventures

      136,795        139,278   
  

 

 

    

 

 

  

Net investment in real estate

      2,687,332        2,711,027   

Cash and cash equivalents

      3,407        12,834   

Notes receivable

      359        1,053   

Deferred loan costs, net

      7,592        8,567   

Straight-line rent and other receivables, net

      44,102        42,349   

Other assets, net

      16,495        17,468   

Assets held for sale

      35,031        —     
  

 

 

    

 

 

  

Total assets

    $ 2,794,318      $ 2,793,298   
  

 

 

    

 

 

  

LIABILITIES AND EQUITY:

     

Accounts payable and accrued expenses

    $ 35,726      $ 45,785   

Distributions payable

      19,130        19,057   

Tenant prepaids and security deposits

      20,945        22,864   

Other liabilities

      34,410        29,797   

Intangible lease liability, net

      17,978        18,897   

Line of credit

      105,000        —     

Senior unsecured notes

      935,000        935,000   

Mortgage notes

      287,867        317,783   

Liabilities related to assets held for sale

      1,073        —     
  

 

 

    

 

 

  

Total liabilities

      1,457,129        1,389,183   
  

 

 

    

 

 

  

Total stockholders’ equity

      1,174,156        1,207,969   

Noncontrolling interests

      163,033        196,146   
  

 

 

    

 

 

  

Total liabilities and equity

    $ 2,794,318      $ 2,793,298   
  

 

 

    

 

 

  

 

 

Second Quarter 2012

 

Supplemental Reporting Package

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Table of Contents

Funds from Operations

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

 

     Three Months Ended June 30,     Six Months Ended June 30,  
            2012                 2011                 2012                 2011        

Reconciliation of net loss attributable to common stockholders to FFO:

         

Net loss attributable to common stockholders

    $ (15,785 )    $ (8,475 )    $ (21,789 )    $ (17,011 ) 

Adjustments:

         

Real estate related depreciation and amortization

      31,576       32,298       63,742       63,441  

Equity in (earnings) loss of unconsolidated joint ventures, net

      (430 )      1,126       424       2,483  

Equity in FFO of unconsolidated joint ventures

      2,459       719       5,294       1,036  

Impairment losses on depreciable real estate

      11,422       1,892       11,422       1,934  

Gain on dispositions of real estate interests

      (32 )      —          (120 )      —     

Noncontrolling interest in the above adjustments

      (4,373 )      (3,573 )      (8,117 )      (7,197 ) 

FFO attributable to unitholders

      2,392       2,262       5,101       4,523  
  

 

 

    

 

 

    

 

 

    

 

 

  

FFO basic and diluted

      27,229       26,249       55,957       49,209  
  

 

 

    

 

 

    

 

 

    

 

 

  

FFO attributable to common stockholders and unitholders(1):

        

Adjustments:

         

Acquisition costs(2)

     557       663       794       1,063  
  

 

 

    

 

 

    

 

 

    

 

 

  

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

    $ 27,786     $ 26,912     $ 56,751     $ 50,272  
  

 

 

    

 

 

    

 

 

    

 

 

  

FFO per common share and unit – basic and diluted

    $ 0.10     $ 0.10     $ 0.20     $ 0.18  
  

 

 

    

 

 

    

 

 

    

 

 

  

FFO, as adjusted, per common share and unit – basic and diluted

    $ 0.10     $ 0.10     $ 0.21     $ 0.19  
  

 

 

    

 

 

    

 

 

    

 

 

  

FFO weighted average common shares and units outstanding:

         

Common shares for earnings per share – basic

      248,107       245,413       247,227       239,261  

Participating securities

      2,007       1,838       1,793       1,728  

Units

      23,926       25,100       24,839       25,310  
  

 

 

    

 

 

    

 

 

    

 

 

  

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

      274,040       272,351       273,859       266,299  

Dilutive common stock equivalents

      618       505       599       507  
  

 

 

    

 

 

    

 

 

    

 

 

  

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

      274,658       272,856       274,458       266,806  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

(1)

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

(2)

Excluding amounts attributable to noncontrolling interests.

 

 

Second Quarter 2012

 

Supplemental Reporting Package

    LOGO    Page 5     

Table of Contents

Selected Financial Data

(unaudited, amounts in thousands)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
           2012                 2011                 2012                 2011        

NET OPERATING INCOME:(1)

         

Rental revenues

    $ 63,784      $ 58,772      $ 127,768      $ 116,812   

Rental expenses and real estate taxes

      (17,148 )      (16,696 )      (34,932 )      (33,663 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net operating income(2)

    $ 46,636      $ 42,076      $ 92,836      $ 83,149   
  

 

 

    

 

 

    

 

 

    

 

 

  

TOTAL CONSOLIDATED PROPERTIES:(3)

         

Square feet as of period end

      58,978        59,288        58,978        59,288   

Average occupancy

      90.7 %      87.9 %      90.6 %      87.5 % 

Occupancy as of period end

      90.2 %      88.1 %      90.2 %      88.1 % 

CONSOLIDATED OPERATING PROPERTIES:(3)

         

Square feet as of period end

      58,871        58,940        58,871        58,940   

Average occupancy

      90.8 %      88.3 %      90.6 %      87.9 % 

Occupancy as of period end

      90.3 %      88.6 %      90.3 %      88.6 % 

SAME STORE PROPERTIES:(4)

         

Square feet as of period end

      55,226        55,226        53,257        53,257   

Average occupancy

      90.8 %      88.5 %      91.3 %      89.5 % 

Occupancy as of period end

      90.2 %      88.7 %      90.8 %      89.9 % 

Rental revenues

    $ 60,604      $ 59,948      $ 117,715      $ 116,248   

Rental expenses and real estate taxes

      (16,200 )      (17,043 )      (32,083 )      (33,023 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Same store net operating income

      44,404        42,905        85,632        83,225   

Less: revenue from lease terminations

      (110 )      (128 )      (183 )      (182 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net operating income (excluding revenue from lease terminations)

      44,294        42,777        85,449        83,043   
  

 

 

    

 

 

    

 

 

    

 

 

  

Less: straight-line rents, net of related bad debt

      (799 )      (1,855 )      (1,492 )      (4,720 ) 

Add back: amortization of below market rents, net

      (83 )      (85 )      (244 )      (234 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Cash net operating income (excluding revenue from lease terminations)

    $ 43,412      $ 40,837      $ 83,713      $ 78,089   
  

 

 

    

 

 

    

 

 

    

 

 

  

Net operating income growth (excluding revenue from lease terminations)

      3.5 %      —          2.9 %      —     

Cash net operating income growth (excluding revenue from lease terminations)

      6.3 %      —          7.2 %      —     

SUPPLEMENTAL CONSOLIDATED CASH FLOW AND OTHER INFORMATION:

         

Straight-line rents – increase to revenue, net of related bad debt expense(3)

   $ 1,141      $ 2,030      $ 3,088      $ 5,132   

Straight-line rent receivable (balance sheet)(3)

   $ 38,027      $ 32,391      $ 38,027      $ 32,391   

Net amortization of below market rents – increase to revenue(3)

    $ 139      $ 67      $ 343      $ 163   

Capitalized interest

    $ 776      $ 912      $ 1,469      $ 1,673   

Stock-based compensation amortization

    $ 1,035      $ 1,283      $ 2,015      $ 2,664   

Revenue from lease terminations(3)

   $ 110      $ 134      $ 214      $ 188   

Bad debt expense, excluding bad debt expense related to straight-line rents(3)

    $ 243      $ 366      $ 360      $ 597   

CONSOLIDATED CAPITAL EXPENDITURES:(3)

         

Development and acquisition capital

    $ 7,468      $ 3,897      $ 12,469      $ 6,495   

Building and land improvements

      3,059        4,188        4,153        6,478   

Tenant improvements and leasing costs

      9,342        6,048        14,372        10,909   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total capital expenditures

    $ 19,869      $ 14,133      $ 30,994      $ 23,882   
  

 

 

    

 

 

    

 

 

    

 

 

  

 

(1)

Excludes discontinued operations.

(2)

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

(3)

Includes discontinued operations.

(4)

See the Definitions for same store properties.

 

 

Second Quarter 2012

 

Supplemental Reporting Package

    LOGO    Page 6     

Table of Contents

Property Overview

As of June 30, 2012

 

 

 

Markets

    Number of
Buildings		      Percent
Owned(1) 		    Square Feet      Percentage of
Total Square
Feet		     Occupancy
Percentage		     Annualized  Base
Rent(2)		     Percent of Total
Annualized Base
Rent		  
                  (in thousands)                  (in thousands)        

CONSOLIDATED OPERATING:

                 

Atlanta

      38         100.0 %      6,098         10.4 %      90.8 %    $ 16,651       8.2 % 

Baltimore/Washington D.C.

      17         100.0 %      2,057         3.5 %      92.0 %      10,062        4.9 % 

Central Pennsylvania

      8         100.0 %      1,453         2.5 %      84.6 %      4,694        2.3 % 

Chicago

      21         100.0 %      4,029         6.8 %      95.9 %      12,312        6.0 % 

Cincinnati

      32         100.0 %      4,492         7.6 %      88.7 %      12,680        6.2 % 

Columbus

      14         100.0 %      4,301         7.3 %      78.3 %      7,557        3.7 % 

Dallas

      47         100.0 %      4,838         8.2 %      86.8 %      15,241        7.5 % 

Denver

      2         100.0 %      278         0.5 %      91.7 %      1,228        0.6 % 

Houston

      52         100.0 %      3,623         6.1 %      97.9 %      19,473        9.6 % 

Indianapolis

      7         100.0 %      2,299         3.9 %      97.8 %      7,017        3.4 % 

Louisville

      4         100.0 %      1,330         2.3 %      99.3 %      4,205        2.1 % 

Memphis

      11         100.0 %      5,218         8.8 %      81.4 %      11,886        5.8 % 

Mexico

      15         100.0 %      1,653         2.8 %      93.4 %      6,510        3.2 % 

Miami

      7         100.0 %      812         1.4 %      99.5 %      5,907        2.9 % 

Nashville

      4         100.0 %      1,839         3.1 %      77.0 %      3,916        1.9 % 

New Jersey

      12         100.0 %      1,669         2.8 %      92.6 %      7,931        3.9 % 

Northern California

      25         100.0 %      2,784         4.7 %      96.6 %      15,496        7.6 % 

Orlando

      20         100.0 %      1,864         3.2 %      88.8 %      6,595        3.2 % 

Phoenix

      15         100.0 %      1,794         3.0 %      85.3 %      5,608        2.8 % 

San Antonio

      13         100.0 %      1,176         2.0 %      97.9 %      3,673        1.8 % 

Seattle

      9         100.0 %      1,422         2.4 %      92.5 %      5,789        2.8 % 

Southern California

      28         89.0 %      3,842         6.5 %      99.8 %      19,327        9.5 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Total/weighted average – operating properties

      401         99.3 %      58,871         99.9 %      90.3 %      203,758        100.0 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

REDEVELOPMENT PROPERTIES:

                 

New Jersey

      1         100.0 %      107         0.1 %      0.0 %      —          0.0 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Total/weighted average – redevelopment properties

      1         100.0 %      107         0.1 %      0.0 %      —          0.0 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Total/weighted average – consolidated properties

      402         99.3 %      58,978         100.0 %      90.2 %    $ 203,758 (3)      100.0 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Continued on next page

See footnotes on next page.

 

 

Second Quarter 2012

 

Supplemental Reporting Package

    LOGO    Page 7     

Table of Contents

Property Overview

(continued)

As of June 30, 2012

 

 

 

Markets

    Number of
Buildings		      Percent
Owned(1) 		    Square Feet      Percentage of
Total Square Feet		     Occupancy
Percentage		     Annualized  Base
Rent(2)		      Percent of Total
Annualized Base
Rent		  
                  (in thousands)                  (in thousands)         

UNCONSOLIDATED OPERATING PROPERTIES:

                  

IDI (Chicago, Nashville, Savannah)

      3         50.0 %      1,423         8.4 %      44.8 %      1,533         3.0 % 

Southern California Logistics Airport(4)

     6         50.0 %      1,984         11.6 %      97.8 %      6,847         13.7 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Total/weighted average – unconsolidated operating properties

      9         50.0 %      3,407         20.0 %      75.7 %      8,380         16.7 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

OPERATING PROPERTIES IN CO-INVESTMENT VENTURES:

                  

Atlanta

      3         11.5 %      1,194         7.0 %      88.5 %      2,913         5.8 % 

Central Pennsylvania

      4         8.2 %      1,210         7.1 %      55.1 %      2,697         5.4 % 

Charlotte

      1         3.6 %      472         2.8 %      100.0 %      1,604         3.2 % 

Chicago

      4         18.0 %      1,525         8.9 %      100.0 %      6,026         12.0 % 

Cincinnati

      4         15.4 %      1,243         7.3 %      98.7 %      3,985         8.0 % 

Columbus

      2         5.7 %      451         2.6 %      100.0 %      1,326         2.6 % 

Dallas

      4         16.8 %      1,726         10.1 %      87.1 %      4,969         9.9 % 

Denver

      5         20.0 %      773         4.5 %      94.4 %      3,216         6.4 % 

Indianapolis

      1         11.4 %      475         2.8 %      89.0 %      1,651         3.3 % 

Louisville

      4         10.0 %      736         4.3 %      100.0 %      2,126         4.2 % 

Memphis

      1         20.0 %      1,039         6.1 %      74.1 %      2,331         4.6 % 

Minneapolis

      3         3.6 %      472         2.8 %      100.0 %      2,339         4.7 % 

Nashville

      2         20.0 %      1,020         6.0 %      100.0 %      1,395         2.8 % 

New Jersey

      2         10.2 %      216         1.3 %      96.3 %      836         1.7 % 

Northern California

      1         3.6 %      396         2.3 %      100.0 %      1,188         2.4 % 

Orlando

      2         20.0 %      696         4.1 %      100.0 %      3,159         6.3 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Total/weighted average – co-investment operating properties

      43         14.1 %      13,644         80.0 %      90.5 %      41,761         83.3 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Total/weighted average – unconsolidated properties

      52         21.3 %      17,051         100.0 %      87.6 %      50,141         100.0 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

SUMMARY:

                  

Total/weighted average – operating properties

      453         81.8 %      75,922         99.9 %      89.6 %      253,899         100.0 % 

Total/weighted average – redevelopment properties

      1         100.0 %      107         0.1 %      0.0 %      —           0.0 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Total/weighted average – all properties

      454         81.8 %      76,029         100.0 %      89.6 %      253,899         100.0 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

 

(1) 

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

(2) 

Excludes future contractual rent increases and decreases.

(3) 

Excludes total annualized base rent associated with tenants in free rent periods of $5.7 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.

 

 

Second Quarter 2012

 

Supplemental Reporting Package

    LOGO    Page 8     

Table of Contents

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 thousands)         

FOUR QUARTERS ROLLING

                  

New

      159        5,838         -12.3 %      -1.0 %      62       $ 16,989      $ 2.91  

Renewal

      174        10,953         -5.3 %      2.7 %      54         10,624         0.97   

Development and redevelopment

      5        301         N/A        N/A        121         N/A         N/A   
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  

Total/Weighted Average

      338        17,092         -6.3 %      2.2 %      58       $ 27,613      $ 1.64  
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  

Weighted Average Retention

      75.2 %                
  

 

 

                 

SECOND QUARTER 2012

                  

New

      39        1,993         -12.1 %      0.3 %      49       $ 4,624      $ 2.32  

Renewal

      54        3,651         -4.8 %      1.1 %      47         2,957         0.81   

Development and redevelopment

      2        179         N/A        N/A        170         N/A         N/A   
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  

Total/Weighted Average

      95        5,823         -6.1 %      1.0 %      51       $ 7,581      $ 1.35  
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  

Weighted Average Retention

      74.6 %                
  

 

 

                 

YEAR TO DATE 2012

                  

New

      70        3,254         -9.7 %      3.6 %      56       $ 8,525      $ 2.62  

Renewal

      96        5,687         -4.4 %      1.3 %      48         5,118         0.90   

Development and redevelopment

      3        212         N/A        N/A        149         N/A         N/A   
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  

Total/Weighted Average

      169        9,153         -5.3 %      1.7 %      53       $ 13,643      $ 1.52  
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  

Weighted Average Retention

      73.2 %                
  

 

 

                 

Lease Expirations for Consolidated Properties as of June 30, 2012(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)         

2012(4)

      3,185       $ 13,689        5.9 % 

2013

      8,807         38,455         16.7 % 

2014

      9,149         36,038         15.6 % 

2015

      7,989         32,666         14.2 % 

2016

      7,148         31,350         13.6 % 

Thereafter

      16,897         78,352         34.0 % 
  

 

 

     

 

 

     

 

 

  

Total occupied

      53,175       $ 230,550        100.0 % 
  

 

 

     

 

 

     

 

 

  

Available or lease but not occupied

      5,803         
  

 

 

        

Total consolidated properties

      58,978         
  

 

 

        

 

(1) 

Does not include month-to-month leases.

(2) 

Assumes no exercise of lease renewal options.

(3) 

Includes contractual rent changes.

(4) 

Includes month-to-month leases.

 

 

Second Quarter 2012

 

Supplemental Reporting Package

    LOGO    Page 9     

Table of Contents

Acquisition and Disposition Summary

For the Six Months Ended June 30, 2012

 

 

 

     Property Name   Market      Size      Occupancy at
Acquisition/Disposition		     Occupancy at
June 30, 2012		  

ACQUISITIONS:

             

January

    4802 W Van Buren     Phoenix         76,000 sq. ft.         100.0 %      100.0 % 

March

    DCT 55     Chicago         32.6 acres         N/A        N/A   

April

    2995 Evergreen Drive     Atlanta         157,000 sq. ft         100.0 %      100.0 % 

April

    785 Center Avenue     Chicago         304,000 sq. ft.         50.2 %      50.2 % 

May

    Claymoore Business Center
(2 buildings)		     Houston         98,000 sq. ft.         95.8 %      95.8 % 

June

    11400 NW 34th Street     Miami         50,000 sq. ft.         100.0 %      100.0 % 

June

    4117 Pinnacle Point Drive     Dallas         550,000 sq. ft.         100.0 %      100.0 % 

June

    116 Lehigh Drive    
 		 New
Jersey		   
  		      107,000 sq. ft.         0.0 %      0.0 % 

June

    7425 Pinemont     Houston         111,000 sq. ft.         82.6 %      82.6 % 

Total YTD Purchase Price – $82.7 million

             

DISPOSITIONS:

             

January

    5470 Oakbrook Parkway     Atlanta         85,000 sq. ft.         85.5 %      N/A   

February

    2820 Peterson Place     Atlanta         19,000 sq. ft.         100.0 %      N/A   

May

    5417 Wyoming Avenue     Charlotte         80,000 sq. ft.         0.0 %      N/A   

June

    Oak/Reg Service Center
(13 buildings)		     Atlanta         547,000 sq. ft         69.3 %      N/A   

Total YTD Sales Price – $27.7 million

             

 

 

Second Quarter 2012

 

Supplemental Reporting Package

    LOGO    Page 10     

Table of Contents

Development Overview

As of June 30, 2012

 

 

 

Project

   Market     Acres     Number of
Buildings		     Square Feet     Percent
Owned		     Costs Incurred     Total
Projected
Investment 		    Expected
Completion 		    Percentage
Leased		  
            Q2-2012     Total        
                      (in thousands)           (in thousands)     (in thousands)     (in thousands)              

UNDER CONSTRUCTION:

                    

Dulles Summit

    
 		 Baltimore/
Washington D.C.		   
  		     13        2        179        95 %    $ 2,759     $ 14,345     $ 16,743       Q3-2012 (1)      100 % 

Northwest 8 Distribution Center(2)

     Houston        16        1        267        0 %      21        72        13,563        Q3-2012        0 % 

DCT Commerce Center at Pan American West (Building A)

     Miami        7        1        167        100 %      1,360        5,773        14,101        Q3-2012        0 % 

DCT 55

     Chicago        33        1        604        100 %      1,794        8,635        28,017        Q4-2012        0 % 
   

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

      
    TOTAL        69        5        1,217        $ 5,934     $ 28,825     $ 72,424      
   

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

      

Yield – Under Construction (projected):

       8.1 %                 
   

 

 

                  

PREDEVELOPMENT:

                    

DCT Airtex Industrial Center

     Houston        13            100 %    $ 205     $ 2,903        

DCT Commerce Center at Pan American West (Building B)

     Miami        7            100 %      23        4,218         

8th & Vineyard

     So. California        19            91 %      67        5,685         

Slover Logistics Center

     So. California        28            100 %      174        14,802         

Southern California Logistics

     So. California        7            50 %      335        335         

Dulles Summit Out Parcels.

    
 		 Baltimore/
Washington D.C.		   
  		     5            50 %      3        2,358         
   

 

 

          

 

 

    

 

 

        
    TOTAL        79            $ 807     $ 30,301        
   

 

 

          

 

 

    

 

 

        

 

(1)

The project is expected to be shell complete as of Q3 2012.

(2)

This project is a forward purchase commitment with an unrelated third-party to acquire an industrial facility upon its completion.

 

 

Second Quarter 2012

 

Supplemental Reporting Package

    LOGO    Page 11     

Table of Contents

Indebtedness

(dollar amounts in thousands)

As of June 30, 2012

 

 

 

Description

    Stated Interest Rate     Effective Interest Rate     Maturity Date      Balance as of
June 30, 2012		  

SENIOR UNSECURED NOTES:

          

2013 Notes, fixed rate

      6.11 %      6.36 %      June 2013       $ 175,000   

2014 Notes, fixed rate

      5.68 %      6.03 %      January 2014         50,000   

2015 Notes, fixed rate

      5.63 %      5.63 %      June 2015         40,000   

2015 Notes, variable rate(1)

      2.34 %      2.34 %      June 2015         175,000   

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   

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

      5.50 %      5.50 %      August 2022         40,000   

2023 Notes, fixed rate

      5.57 %      5.57 %      August 2023         35,000   
         

 

 

  
            935,000   
         

 

 

  

MORTGAGE NOTES:

          

Fixed rate secured debt

      5.86 %      5.77 %      Oct. 2012-Aug. 2025         285,873   

Premiums (discounts), net of amortization

             1,994   
         

 

 

  
            287,867   
         

 

 

  

UNSECURED CREDIT FACILITY:

          

Senior unsecured revolving credit facility(2)

      N/A        N/A        June 2015         105,000   
         

 

 

  

Total carrying value of consolidated debt

           $ 1,327,867   
         

 

 

  

Fixed rate debt

      5.79 %      5.82 %         79 % 

Variable rate debt

      2.50 %      2.50 %         21 % 
         

 

 

  

Weighted average interest rate

      5.09 %      5.12 %         100 % 
         

 

 

  

DCT PROPORTIONATE SHARE OF UNCONSOLIDATED JOINT VENTURE DEBT(3)

          

Institutional joint ventures

           $ 29,690   

SCLA

             31,330   
         

 

 

  
          $ 61,020   
         

 

 

  

Scheduled Principal Payments of Debt as of June 30, 2012 (excluding premiums)

 

 

 

Year

    Senior Unsecured Notes      Mortgage Notes      Unsecured Credit Facility      Total  

2012

    $ —         $ 21,365       $ —         $ 21,365   

2013

      175,000         44,330         —           219,330   

2014

      50,000         10,013         —           60,013   

2015

      215,000         48,383         105,000         368,383   

2016

      99,000         10,219         —           109,219   

2017

      51,000         6,135         —           57,135   

2018

      81,500         6,221         —           87,721   

2019

      46,000         50,819         —           96,819   

2020

      50,000         64,847         —           114,847   

2021

      92,500         18,256         —           110,756   

Thereafter

      75,000         5,285         —           80,285   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 935,000       $ 285,873       $ 105,000      $ 1,325,873   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

(1) 

The $175 million term loan agreement bears interest at either 0.80% to 1.65% over prime or 1.80% to 2.65% over LIBOR, per annum at our election, depending on our leverage ratio.

(2) 

The $300 million senior unsecured revolving credit facility expires on June 3, 2015 and bears interest at either 0.65% to 1.35% over prime or 1.65% to 2.35% over LIBOR, per annum at our election, depending upon our leverage ratio. We have issued one letter of credit secured by the unsecured revolving credit facility totaling $3.3 million; therefore there was $191.7 million available under the unsecured revolving credit facility as of June 30, 2012.

(3) 

Based on DCT’s ownership as of June 30, 2012.

Hedge Activity: As of June 30, 2012, we had one forward-starting interest rate swap in place to hedge the variability of cash flows associated with forecasted issuances of debt in 2012. This swap has a notional value of $90 million, a LIBOR based strike rate of 5.43%, an effective date of June 2012 and a maturity date of September 2012.

 

 

Second Quarter 2012

 

Supplemental Reporting Package

    LOGO    Page 12     

Table of Contents

Capitalization and Fixed Charge Coverage

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

Capitalization at June 30, 2012

 

 

 

Description

    Shares or  Units(1)      Share Price      Market Value  
     (in thousands)                

Common shares outstanding

      249,280       $ 6.30      $ 1,570,464  

Operating partnership units outstanding

      21,554       $ 6.30        135,790   
        

 

 

  

Total equity market capitalization

            1,706,254   
        

 

 

  

Consolidated debt

           1,327,867   

Less: Noncontrolling interests’ share of consolidated debt(2)

            (6,395 ) 

Proportionate share of debt related to unconsolidated joint ventures

            61,020   
        

 

 

  

DCT share of total debt

            1,382,492   
        

 

 

  

Total market capitalization

          $ 3,088,746  
        

 

 

  

DCT share of total debt to total market capitalization

            44.8 % 
        

 

 

  

Fixed Charge Coverage

 

 

 

     Three months ended June 30,     Six months ended June 30,  
           2012                 2011                 2012                 2011        

Net loss attributable to common stockholders(3)

    $ (15,785 )    $ (8,475 )    $ (21,789 )    $ (17,011 ) 

Interest expense

      17,571        14,768        34,599        30,279   

Proportionate share of interest expense from unconsolidated joint ventures

      865        770        1,686        1,609   

Real estate related depreciation and amortization

      31,576        32,298        63,742        63,441   

Proportionate share of real estate related depreciation and amortization from unconsolidated joint ventures

      1,744        1,576        4,065        3,002   

Income tax expense and other taxes

      287        121        555        161   

Stock-based compensation amortization

      1,035        1,283        2,015        2,664   

Noncontrolling interests

      (1,756 )      (1,060 )      (2,583 )      (2,369 ) 

Non-FFO gains on dispositions of real estate interests

      (32 )      —          (120 )      —     

Impairment losses

      11,422        1,892        11,422        1,934   
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted EBITDA

    $ 46,927     $ 43,173     $ 93,592     $ 83,710  
  

 

 

    

 

 

    

 

 

    

 

 

  

CALCULATION OF FIXED CHARGES

         

Interest expense

    $ 17,571      $ 14,768      $ 34,599      $ 30,279   

Capitalized interest

      776        912        1,469        1,673   

Amortization of loan costs and debt premium/discount

      (210 )      (268 )      (492 )      (481 ) 

Proportionate share of interest expense from unconsolidated joint ventures

      865        770        1,686        1,609   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total fixed charges

    $ 19,002     $ 16,182     $ 37,262     $ 33,080  
  

 

 

    

 

 

    

 

 

    

 

 

  

Fixed charge coverage

      2.5        2.7        2.5        2.5   
  

 

 

    

 

 

    

 

 

    

 

 

  

 

(1) 

Excludes 1.5 million unvested Long-Term Incentive Plan Units, 0.5 million shares of unvested Restricted Stock and 0.1 million unvested Phantom Shares outstanding as of June 30, 2012.

(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.

 

 

Second Quarter 2012

 

Supplemental Reporting Package

    LOGO    Page 13     

Table of Contents

Institutional Capital Management Summary

(unaudited, dollar amounts in thousands)

Statements of Operations

 

 

 

     For the six months ended June 30, 2012  
     Boubyan Fund I     TRT-DCT JV I     TRT-DCT JV II     TRT-DCT JV III     JP Morgan  

REVENUES:

           

Total rental revenues

    $ 4,867     $ 6,709     $ 3,500     $ 1,550     $ 10,673  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

EXPENSES:

           

Rental expenses

      415        570        290        167        894   

Real estate taxes

      933        1,391        524        116        1,809   

Depreciation and amortization

      2,315        3,637        1,547        660        5,143   

General and administrative

      307        46        7        6        400   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total expenses

      3,970        5,644        2,368        949        8,246   

Interest expense

      (3,358 )      (3,468 )      (1,599 )      (454 )      —     

Interest and other income

      —          3        —          2,464        355   

Taxes

      (46 )      (21 )      (25 )      (4 )      (9 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income (loss)

    $ (2,507 )    $ (2,421 )    $ (492 )    $ 2,607     $ 2,773  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Rental revenues

    $ 4,867      $ 6,709      $ 3,500      $ 1,550      $ 10,673   

Rental expenses and real estate taxes

      1,348        1,961        814        283        2,703   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net operating income

    $ 3,519      $ 4,748      $ 2,686      $ 1,267      $ 7,970   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

Data by Fund as of June 30, 2012:

    Number of
Buildings		      Square feet
(in  thousands)		      Occupancy     DCT
Ownership		  

Boubyan Fund I

      6         2,647         84.6 %      20.0 % 

TRT-DCT JV I

      14         3,561         84.1 %      3.6 % 

TRT-DCT JV II

      5         1,744         92.3 %      11.4 % 

TRT-DCT JV III

      4         736         100.0 %      10.0 % 

JP Morgan

      14         4,956         96.3 %      20.0 % 
  

 

 

     

 

 

     

 

 

    

 

 

  

Total/weighted average

      43         13,644         90.5 %      14.1 % 
  

 

 

     

 

 

     

 

 

    

 

 

  

Balance Sheets

 

 

 

     As of June 30, 2012  
     Boubyan Fund I     TRT-DCT JV I     TRT-DCT JV II     TRT-DCT JV III     JP Morgan  

Total investment in properties

    $ 126,167     $ 206,822     $ 90,657     $ 25,376     $ 289,410  

Accumulated depreciation and amortization

      (30,129 )      (45,833 )      (18,307 )      (4,540 )      (50,773 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment in properties

      96,038        160,989        72,350        20,836        238,637   

Cash and cash equivalents

      1,060        1,174        542        299        3,426   

Other assets

      2,990        3,106        1,950        374        4,422   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

    $ 100,088     $ 165,269     $ 74,842     $ 21,509     $ 246,485  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Other liabilities

    $ 2,935     $ 3,609     $ 1,147     $ 557     $ 4,182  

Secured debt maturities – 2014

      —          —          39,725 (3)      —          —     

Secured debt maturities – 2015

      —          31,735 (2)      10,101 (3)      —          —     

Secured debt maturities thereafter

      94,892 (1)      85,000 (2)      —          8,485 (4)      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total secured debt

      94,892        116,735        49,826        8,485        —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities

      97,827        120,344        50,973        9,042        4,182   

Partners or members’ capital

      2,261        44,925        23,869        12,467        242,303   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities and Partners or members’ capital

    $ 100,088     $ 165,269     $ 74,842     $ 21,509     $ 246,485  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(1) 

$94.9 million has a stated interest rate of 7.6% and requires principal and interest payments through maturity in 2036.

(2) 

$85.0 million of debt requires interest only payments until 2017 and has a stated interest rate of 5.7%. $31.7 million of debt requires principal and interest payments through 2015 and has a stated interest rate of 6.6%.

(3) 

$39.7 million of debt requires interest only payments until 2014 and has a stated interest rate of 6.2%. $10.1 million of debt requires principal and interest payments through 2015 and has a stated interest rate of 6.6%.

(4) 

$8.5 million of debt requires principal and interest payments until 2016 and has a stated interest rate of 7.4%.

 

 

Second Quarter 2012

 

Supplemental Reporting Package

    LOGO    Page 14     

Table of Contents

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.

Effective Interest Rate:

Reflects the impact to interest rates of GAAP adjustments for purchase price allocation 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 adjusted for amortization of discounts, premiums and loan costs.

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 extended downtime or materially different lease structures, are excluded.

Net Effective Rent:

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

 

 

 

 

 

Second Quarter 2012

 

Supplemental Reporting Package

    LOGO    Page 15         

Table of Contents

Definitions

(Continued)

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 gains, 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. Additionally, lease termination revenue is excluded 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 Month Ended
June 30,		     Six Month Ended
June 30,		  
      2012     2011     2012     2011  

Reconciliation of loss from continuing operations to NOI:

         

Loss from continuing operations

    $ (6,850 )    $ (10,596 )    $ (13,930 )    $ (20,771 ) 

Income tax expense (benefit) and other taxes

      287        121        555        161   

Interest and other (income) expense

      37        (13 )      (160 )      (99 ) 

Interest expense

      17,540        13,955        34,470        29,367   

Equity in (earnings) loss of unconsolidated joint ventures, net

      (430 )      1,126        424        2,483   

General and administrative

      6,513        7,063        12,299        14,119   

Real estate related depreciation and amortization

      30,747        29,615        61,596        58,103   

Impairment losses on investments in unconsolidated joint ventures

      —          1,934        —          1,934   

Casualty gains

      (57 )      —          (212 )      —     

Institutional capital management and other fees

      (1,151 )      (1,129 )      (2,206 )      (2,148 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total GAAP net operating income

      46,636        42,076        92,836        83,149   

Less net operating (income) loss – non-same store properties

      (2,232 )      829        (7,204 )      76   
  

 

 

    

 

 

    

 

 

    

 

 

  

Same store GAAP net operating income

      44,404        42,905        85,632        83,225   

Less revenue from lease terminations

      (110 )      (128 )      (183 )      (182 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Same store GAAP net operating income, excluding revenue from lease terminations

      44,294        42,777        85,449        83,043   

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

      (799 )      (1,855 )      (1,492 )      (4,720 ) 

Add back amortization of above/(below) market rents

      (83 )      (85 )      (244 )      (234 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Same store cash net operating income, excluding revenue from lease terminations

    $ 43,412     $ 40,837     $ 83,713     $ 78,089  
  

 

 

    

 

 

    

 

 

    

 

 

  

Ratio of Consolidated Debt to Book Value of Total Assets (Before Depreciation):

Calculated as (total consolidated debt) / (total assets with accumulated depreciation and amortization added back).

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.

 

 

Second Quarter 2012

 

Supplemental Reporting Package

    LOGO    Page 16     

Table of Contents

Definitions

(Continued)

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. A reconciliation of NOI and cash NOI by period is provided below; amounts are not restated for current period discontinued operations (in thousands).

 

     Consolidated operating data, as previously reported, for the  three months ended:  
      June  30,
2011		     September 30,
2011		     December 31,
2011		     March  31,
2012		     June  30,
2012		  

Reconciliation of loss from continuing operations to NOI:

           

Loss from continuing operations

    $ (9,614 )    $ (9,142 )    $ (4,677 )    $ (6,916 )    $ (6,850 ) 

Income tax expense (benefit) and other taxes

      121        (56 )      38        268        287   

Interest and other (income) expense

      (14 )      356        53        (197 )      37   

Interest expense

      14,768        16,628        17,104        17,028        17,540   

Equity in (earnings) loss of unconsolidated joint ventures, net

      1,126        967        (894 )      854        (430 ) 

General and administrative

      7,063        6,346        5,459        5,785        6,513   

Real estate related depreciation and amortization

      32,298        33,398        31,106        32,139        30,747   

Impairment losses

      —          —          448        —          —     

Impairment losses on investments in unconsolidated joint ventures

      1,934        —          19        —          —     

Casualty gains

      (1,244 )      (54 )      (33 )      (155 )      (57 ) 

Institutional capital management and other fees

      (1,129 )      (1,004 )      (1,138 )      (1,055 )      (1,151 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total GAAP net operating income

      45,309        47,439        47,485        47,751        46,636   

Less net operating (income) loss – non-same store properties

      (5,082 )      (5,877 )      (6,095 )      (4,430 )      (2,232 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Same store GAAP net operating income

      40,227        41,562        41,390        43,321        44,404   

Less revenue from lease terminations

      (134 )      (262 )      (179 )      (73 )      (110 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Same store GAAP net operating income, excluding revenue from lease terminations

      40,093        41,300        41,211        43,248        44,294   

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

      (1,264 )      (875 )      (1,460 )      (1,078 )      (799 ) 

Add back amortization of above/(below) market rents

      (97 )      (190 )      (168 )      (142 )      (83 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Same store cash net operating income, excluding revenue from lease terminations

    $ 38,732     $ 40,235     $ 39,583     $ 42,028     $ 43,412  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     Consolidated operating data, as previously reported, for the  three months ended:  
      June 30,
2010		     September 30,
2010		     December 31,
2010		     March 31,
2011		     June 30,
2011		  

Reconciliation of loss from continuing operations to NOI:

           

Loss from continuing operations

    $ (11,490 )    $ (8,836 )    $ (12,628 )    $ (10,388 )    $ (10,596 ) 

Income tax expense (benefit) and other taxes

      582        235        (137 )      40        121   

Interest and other (income) expense

      (353 )      (227 )      (245 )      (85 )      (13 ) 

Interest expense

      13,225        15,493        15,333        15,511        13,955   

Equity in (earnings) loss of unconsolidated joint ventures, net

      349        1,293        786        1,357        1,126   

General and administrative

      6,362        6,134        6,734        7,056        7,063   

Real estate related depreciation and amortization

      28,948        28,526        28,186        29,846        29,615   

Impairment losses

      4,556        —          4,100        —          —     

Impairment losses on investments in unconsolidated joint ventures

      —          —          216        —          1,934   

Casualty gains

      —          —          —          —          —     

Institutional capital management and other fees

      (1,038 )      (1,046 )      (1,082 )      (1,019 )      (1,129 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total GAAP net operating income

      41,141        41,572        41,263        42,318        42,076   

Less net operating (income) loss—non-same store properties

      (545 )      (425 )      (251 )      (579 )      829   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Same store GAAP net operating income

      40,596        41,147        41,012        41,739        42,905   

Less revenue from lease terminations

      (23 )      (273 )      (96 )      (54 )      (128 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Same store GAAP net operating income, excluding revenue from lease terminations

      40,573        40,874        40,916        41,685        42,777   

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

      (1,360 )      (344 )      (1,610 )      (3,014 )      (1,855 ) 

Add back amortization of above/(below) market rents

      80        (90 )      (17 )      (115 )      (85 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Same store cash net operating income, excluding revenue from lease terminations

    $ 39,293     $ 40,440     $ 39,289     $ 38,556     $ 40,837  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Change in GAAP same store NOI

      -1.2 %      1.0 %      0.7 %      3.8 %      3.5 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Change in cash same store NOI

      -1.4 %      -0.5 %      0.7 %      9.0 %      6.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

Square Feet:

Represents square feet in building that are available for lease.

Stabilized:

Buildings are generally considered stabilized when 95% 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.

Yield – Under Construction (Projected):

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

 

 

 

Second Quarter 2012

 

Supplemental Reporting Package

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