DCT Industrial Trust® Reports Third Quarter 2016 Results

Net Earnings of $0.17 per Diluted Share

FFO, as adjusted, of $0.60 per Share

Consolidated Operating Occupancy Increased to 96.2 Percent

Same-Store NOI Growth of 9.6 Percent on a Cash Basis and 8.8 Percent on a Straight-Line Basis

Rent Growth of 16.8 Percent on a Straight-Line Basis and 5.6 Percent on a Cash Basis

Stabilized 800,000 Square Feet of Development at an Average Yield of 7.4 Percent; Executed 900,000 Square Feet of Development Leases

Increased Dividend $0.02 to $0.31 per Share, Up 6.9 Percent

Raised and Narrowed 2016 Net Earnings Guidance to between $0.87 and $0.91 Per Diluted Share

Raised and Narrowed 2016 FFO Guidance, as adjusted, to between $2.23 and $2.25 Per Diluted Share

DENVER--()--DCT Industrial Trust® (NYSE: DCT), a leading real estate company, today announced financial results for the quarter ending September 30, 2016.

“Leasing in our development pipeline continues to exceed expectations, reflecting the quality of our development projects which are located in high-demand submarkets. We continue to see strong, broad-based customer demand across all markets and industry verticals including e-commerce, consumer, auto and housing.”

“DCT had a great third quarter highlighted by strong occupancy, rental rate and same-store NOI growth,” said Phil Hawkins, President and CEO for DCT Industrial. “Leasing in our development pipeline continues to exceed expectations, reflecting the quality of our development projects which are located in high-demand submarkets. We continue to see strong, broad-based customer demand across all markets and industry verticals including e-commerce, consumer, auto and housing.”

Net income attributable to common stockholders (“Net Earnings”) for Q3 2016 was $15.6 million, or $0.17 per diluted share, compared to $8.5 million, or $0.09 per diluted share, reported for Q3 2015, an increase of 88.9 percent per diluted share.

Funds from operations (“FFO”), as adjusted, attributable to common stockholders and unitholders for Q3 2016 totaled $57.1 million, or $0.60 per diluted share, compared with $46.9 million, or $0.50 per diluted share for Q3 2015, a 20.0 percent increase. These results exclude $0.5 million of acquisition costs and a $1.0 million decrease in interest expense related to hedge ineffectiveness for the quarter ending September 30, 2016 and $0.5 million of acquisition costs for the quarter ending September 30, 2015.

Property Results and Leasing Activity

As of September 30, 2016, DCT Industrial owned 398 consolidated operating properties, totaling 64.7 million square feet, with occupancy of 96.2 percent, an increase of 60 basis points from Q2 2016 and an increase of 170 basis points over Q3 2015. On a same-portfolio basis, the impact of dispositions and placing developments into operations increased occupancy by 10 basis points. Approximately 829,000 square feet, or 1.3 percent of DCT Industrial’s total consolidated portfolio was leased but not occupied at September 30, 2016, which does not take into consideration 733,000 square feet of leases in developments under construction or in pre-development.

In Q3 2016, the Company signed leases totaling 3.9 million square feet with rental rates increasing 16.8 percent on a straight-line basis and 5.6 percent on a cash basis, compared to the corresponding expiring leases. Over the previous four quarters, rental rates on signed leases increased 20.8 percent on a straight-line basis and 8.4 percent on a cash basis. The Company’s tenant retention rate was 92.9 percent in Q3 2016.

Net operating income (“NOI”) was $76.1 million in Q3 2016, compared with $65.1 million in Q3 2015. In Q3 2016, same-store NOI, excluding revenue from lease terminations, increased 8.8 percent on a straight-line basis and 9.6 percent on a cash basis, when compared to Q3 2015. Same-store occupancy averaged 95.7 percent in Q3 2016, an increase of 120 basis points from Q3 2015. Same-store occupancy as of September 30, 2016 was 96.0 percent.

Investment Activity

Acquisitions

From June 30 to November 3, 2016, DCT Industrial acquired six buildings for $60.8 million. Totaling 749,000 square feet, these buildings were 83.9 percent occupied at the time of closing. The Company expects a year-one weighted-average cash yield of 5.4 percent and anticipates a weighted-average stabilized cash yield of 6.1 percent on the acquired assets.

The table below summarizes acquisitions from June 30 to November 3, 2016:

Market     Submarket     Square Feet    

Occupancy
at Closing

    Closed    

Anticipated
Yield1

Southern California (2 buildings)     Riverside     255,000     100.0%     Aug-16     4.3%
Cincinnati Northwest 301,000 59.9% Sept-16 7.9%
Dallas Northwest 82,000 100.0% Sept-16 7.0%
Northern California 880 Corridor 66,000 100.0% Oct-16 7.5%
Chicago     I-55 Corridor     45,000     100.0%     Oct-16     6.1%
Total/Weighted Average 749,000 83.9% 6.1%

1

 

Anticipated yield represents year-one cash yield for stabilized acquisitions and projected stabilized cash yield for value-add acquisitions.

 

Development and Redevelopment

Since June 30, 2016, DCT Industrial stabilized 800,000 square feet of development at an anticipated weighted-average yield of 7.4 percent and a projected investment of $48.3 million. Additionally, the Company executed 900,000 square feet of development leases, bringing the pipeline to 40.3 percent leased. The Company also purchased 24.5 acres to develop 300,000 square feet.

Highlights since DCT Industrial’s Q2 2016 Earnings release:

  • Executed a 227,000 square foot pre-lease for DCT North Satellite Distribution Center bringing the 549,000 square foot development, located in the I-85/Northwest submarket of Atlanta, to 41.3 percent leased. Construction is scheduled to be complete in Q1 2017.
  • Executed a 181,000 square foot pre-lease for DCT Waters Ridge bringing the 347,000 square foot development, located in the Northwest submarket of Dallas, to 52.3 percent leased. Construction is scheduled to be complete in Q4 2016.
  • Executed a 156,000 square foot pre-lease for SCLA Building 18, a 370,000 square foot building located in Victorville, CA, which is owned by an unconsolidated joint venture.1 The building is 42.0 percent leased with construction scheduled to commence in Q4 2016.
  • Executed a 67,000 square foot lease for DCT Fife Distribution Center North bringing the 152,000 square foot development, located in the Fife/Tacoma submarket of Seattle, to 100.0 percent leased.
  • Executed two leases totaling 98,000 square feet for DCT Northwest Crossroads Logistics Centre II bringing the 320,000 square foot building, located in the Northwest submarket of Houston, to 100.0 percent leased.
  • Executed a 36,000 square foot lease for DCT Freeport West bringing the 108,000 square foot development, located in the DFW Airport submarket of Dallas, to 100.0 percent leased. Construction was completed in Q3 2016.
  • Commenced redevelopment of 10810 Painter Avenue, a 115,000 square foot building located in the Mid-Counties submarket of Los Angeles. Construction is scheduled to be complete in Q2 2017.
  • Acquired 14.6 acres in the Northeast submarket of Denver to develop DCT Summit Distribution Center, a 168,000 square foot distribution building.
1  

DCT Industrial does not control this unconsolidated joint venture.

 

Dispositions

Since June 30, 2016, a joint venture, in which DCT Industrial owned a 10.0 percent interest, sold a 126,000 square foot building, located in the Jefferson Riverport submarket of Louisville. This transaction generated gross proceeds to DCT Industrial of $0.5 million with an expected year-one weighted-average cash yield of 3.4 percent

Capital Markets

DCT Industrial raised $33.5 million in net proceeds from the sale of common stock through its “at the market” equity offering. The Company issued approximately 700,000 shares at a weighted-average price of $49.12 per share. The proceeds were used to fund development and general corporate activities.

Dividend

DCT Industrial’s Board of Directors declared a $0.31 per share quarterly cash dividend, an increase of 6.9 percent, payable on January 5, 2017 to stockholders of record as of December 23, 2016.

Guidance

The Company raised and narrowed 2016 Net Earnings guidance to between $0.87 and $0.91 per diluted share, up from $0.84 to $0.90. Net Earnings guidance excludes any gain or loss related to potential future dispositions.

The Company raised and narrowed 2016 FFO guidance, as adjusted, to between $2.23 and $2.25 per diluted share, up from $2.16 to $2.22 per diluted share. The Company’s FFO guidance excludes actual and any potential future acquisition costs and non-cash interest expense impact of hedge ineffectiveness.

For additional details, assumptions and definitions related to the Company’s 2016 guidance, please refer to page 8 in DCT Industrial’s third quarter 2016 supplemental reporting package.

Conference Call Information

DCT Industrial will host a conference call to discuss Q3 results on Friday, November 4, 2016 at 11:00 a.m. Eastern Time. Stockholders and interested parties may listen to a live broadcast of the conference call by dialing (877) 506-6112 or (412) 902-6686. A telephone replay will be available through Friday, February 3, 2017 and can be accessed by dialing (877) 344-7529 or (412) 317-0088 and entering the passcode 10094066. A live webcast of the conference call will be available in the Investors section of the DCT Industrial website at www.dctindustrial.com. A webcast replay will also be available shortly following the call until November 4, 2017.

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

About DCT Industrial Trust®

DCT Industrial is a leading real estate company specializing in the ownership, acquisition, development, leasing and management of bulk-distribution and light-industrial properties in high-demand distribution markets in the U.S. DCT’s actively-managed portfolio is strategically located near population centers and well-positioned to take advantage of market dynamics. As of September 30, 2016, the Company owned interests in approximately 73.5 million square feet of properties leased to approximately 900 customers. DCT maintains a Baa2 rating from Moody’s Investors Service and a BBB- from Standard & Poor’s Rating Services. Additional information is available at www.dctindustrial.com.

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DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share information)

 
September 30, 2016 December 31, 2015
ASSETS (unaudited)
Land $ 1,026,776 $ 1,009,905
Buildings and improvements 3,099,166 2,886,859
Intangible lease assets 79,771 84,420
Construction in progress 114,332   159,397  
Total investment in properties 4,320,045 4,140,581
Less accumulated depreciation and amortization (809,408 ) (742,980 )
Net investment in properties 3,510,637 3,397,601
Investments in and advances to unconsolidated joint ventures 93,854   82,635  
Net investment in real estate 3,604,491 3,480,236
Cash and cash equivalents 7,073 18,412
Restricted cash 2,417 31,187

Straight-line rent and other receivables, net of allowance for doubtful
  accounts of $594 and $335, respectively

76,803 60,357
Other assets, net 23,244 15,964
Assets held for sale 10,138   26,199  
Total assets $ 3,724,166   $ 3,632,355  
 
LIABILITIES AND EQUITY
Liabilities:
Accounts payable and accrued expenses $ 106,039 $ 108,788
Distributions payable 27,575 26,938
Tenant prepaids and security deposits 31,772 29,663
Other liabilities 40,177 18,398
Intangible lease liabilities, net 21,126 22,070
Line of credit 70,000
Senior unsecured notes 1,351,537 1,276,097
Mortgage notes 204,102 210,375
Liabilities related to assets held for sale 365   869  
Total liabilities 1,782,693   1,763,198  
 
Equity:

Preferred stock, $0.01 par value, 50,000,000 shares authorized, none
  outstanding

Shares-in-trust, $0.01 par value, 100,000,000 shares authorized, none outstanding

Common stock, $0.01 par value, 500,000,000 shares authorized 90,882,190
  and 88,313,891 shares issued and outstanding as of September 30, 2016
  and December 31, 2015, respectively

909 883
Additional paid-in capital 2,861,623 2,766,193
Distributions in excess of earnings (997,015 ) (992,010 )
Accumulated other comprehensive loss (27,756 ) (23,082 )
Total stockholders’ equity 1,837,761 1,751,984
Noncontrolling interests 103,712   117,173  
Total equity 1,941,473   1,869,157  
Total liabilities and equity $ 3,724,166   $ 3,632,355  
 
       

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(unaudited, in thousands, except per share information)

 
Three Months Ended September 30, Nine Months Ended September 30,
2016     2015 2016     2015
REVENUES:
Rental revenues $ 99,933 $ 88,092 $ 289,507 $ 264,269
Institutional capital management and other fees 341   333   1,039   1,134  
Total revenues 100,274   88,425   290,546   265,403  
 
OPERATING EXPENSES:
Rental expenses 8,795 8,900 27,830 27,456
Real estate taxes 15,074 14,056 44,729 42,082
Real estate related depreciation and amortization 40,273 39,431 120,244 116,876
General and administrative 7,370 7,720 20,990 24,912
Impairment losses 371 371
Casualty gain (2,440 )   (2,278 )  
Total operating expenses 69,072   70,478   211,515   211,697  
Operating income 31,202 17,947 79,031 53,706
 
OTHER INCOME (EXPENSE):
Development profit, net of taxes 2,627

Equity in earnings of unconsolidated joint
  ventures, net

1,164 4,493 2,983 6,336
Gain on dispositions of real estate interests 43,052 41,086
Interest expense (15,773 ) (13,078 ) (47,830 ) (40,591 )
Interest and other income (expense) 18 (42 ) 581 (71 )
Income tax expense and other taxes (222 ) (241 ) (510 ) (712 )

Consolidated net income
  of DCT Industrial Trust Inc.

16,389 9,079 77,307 62,381

Net income attributable to noncontrolling
  interests

(829 ) (622 ) (3,938 ) (6,882 )

Net income attributable to common
  stockholders

15,560   8,457   73,369   55,499  

Distributed and undistributed earnings allocated
  to participating securities

(163 ) (166 ) (497 ) (510 )

Adjusted net income attributable
  to common stockholders

$ 15,397   $ 8,291   $ 72,872   $ 54,989  
 
NET EARNINGS PER COMMON SHARE:
Basic $ 0.17   $ 0.09   $ 0.81   $ 0.62  
Diluted $ 0.17   $ 0.09   $ 0.81   $ 0.62  
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 90,250 88,207 89,464 88,162
Diluted 90,723   88,526   89,906   88,472  
 
Distributions declared per common share $ 0.29 $ 0.28 $ 0.87 $ 0.84
 
       

Reconciliation of Net Income Attributable to Common Stockholders to Funds from Operations

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

 

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

2016     2015   2016     2015
Reconciliation of net income attributable to common stockholders to FFO:
Net income attributable to common stockholders $ 15,560 $ 8,457 $ 73,369 $ 55,499
Adjustments:
Real estate related depreciation and amortization 40,273 39,431 120,244 116,876
Equity in earnings of unconsolidated joint ventures, net (1,164 ) (4,493 ) (2,983 ) (6,336 )
Equity in FFO of unconsolidated joint ventures(1) 2,503 2,441 7,321 7,424
Impairment losses on depreciable real estate 371 371
Gain on dispositions of real estate interests (43,052 ) (41,086 )
Gain on dispositions of non-depreciable real estate 18
Noncontrolling interest in the above adjustments (1,908 ) (1,897 ) (4,005 ) (4,086 )
FFO attributable to unitholders 2,343   2,119   6,786   6,214  
FFO attributable to common stockholders and unitholders – basic and diluted(2) 57,607   46,429   157,680   134,894  
Adjustments:
Acquisition costs 468 455 560 1,939
Hedge ineffectiveness (non-cash) (967 )   453    

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

 

$ 57,108   $ 46,884   $ 158,693   $ 136,833  
 
FFO per common share and unit – basic $ 0.61   $ 0.50   $ 1.68   $ 1.45  
FFO per common share and unit – diluted $ 0.61   $ 0.50   $ 1.67   $ 1.45  
 
FFO, as adjusted, per common share and unit – basic $ 0.60   $ 0.50   $ 1.69   $ 1.47  
FFO, as adjusted, per common share and unit – diluted $ 0.60   $ 0.50   $ 1.68   $ 1.47  
 
FFO weighted average common shares and units outstanding:
Common shares for net earnings per share 90,250 88,207 89,464 88,162
Participating securities 582 614 561 604
Units 3,797   4,217   4,023   4,257  
FFO weighted average common shares, participating securities and units outstanding – basic 94,629 93,038 94,048 93,023
Dilutive common stock equivalents 473   319   442   310  

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

95,102   93,357   94,490   93,333  
(1)   Equity in FFO of unconsolidated joint ventures is determined as our share of FFO from each unconsolidated joint venture. See DCT Industrial's third quarter 2016 supplemental reporting package for additional information.
(2) FFO as defined by the National Association of Real Estate Investment Trusts (NAREIT).
 
   

Guidance

 

The Company is providing the following guidance:

Range for the Full-Year
2016
Low     High
Guidance:
Net earnings per common share - diluted $ 0.87 $ 0.91
Adjustments:
Gains on disposition of real estate interest (0.46 ) (0.46 )
Real estate related depreciation and amortization(1) 1.77 1.75
Hedge ineffectiveness (non-cash) and acquisition costs 0.02 0.02
Noncontrolling interest in adjustments 0.03   0.03  
FFO, as adjusted, per common share and unit - diluted(2) $ 2.23   $ 2.25  
(1)   Includes proportionate share of real estate depreciation and amortization from unconsolidated joint ventures.
(2)

The Company’s FFO guidance excludes actual and any potential future acquisition costs and non-cash interest expense impact of hedge ineffectiveness.

 
       

The following table shows the calculation of our Fixed Charge Coverage Ratio for the three and nine months ended
September 30, 2016 and 2015 (unaudited, in thousands):

 

For the Three Months Ended
September 30,

For the Nine Months Ended
September 30,

 
2016   2015 2016   2015
Net income attributable to common stockholders $ 15,560 $ 8,457 $ 73,369 $ 55,499
Interest expense 15,773 13,078 47,830 40,591

Proportionate share of interest expense from unconsolidated
  joint ventures(1)

276 317 827 970
Real estate related depreciation and amortization 40,273 39,431 120,244 116,876

Proportionate share of real estate related depreciation and
  amortization from unconsolidated joint ventures(1)

1,097 1,203 3,295 3,637
Income tax expense and other taxes 222 241 510 712
Stock-based compensation 1,413 1,342 4,153 3,882
Noncontrolling interests 829 622 3,938 6,882
Non-FFO gain on dispositions of real estate interests (43,052 ) (41,068 )
Impairment losses       371         371  
Adjusted EBITDA $ 75,443   $ 65,062   $ 211,114   $ 188,352  
 
CALCULATION OF FIXED CHARGES:
Interest expense $ 15,773 $ 13,078 $ 47,830 $ 40,591
Capitalized interest 2,040 4,219 7,648 12,053
Amortization of loan costs and debt premium/discount (237 ) 184 (687 ) 276
Other non-cash interest expense(2) (56 ) (1,024 ) (3,524 ) (3,072 )

Proportionate share of interest expense from unconsolidated
  joint ventures(1)

  276     317     827     970  
Total fixed charges $ 17,796   $ 16,774   $ 52,094   $ 50,818  
 
Fixed charge coverage ratio   4.2x   3.9x   4.1x   3.7x  
(1)   Amounts are determined based on our ownership share of such amounts from the unconsolidated joint ventures. See DCT Industrial's third quarter 2016 supplemental reporting package for additional information.
(2) Includes $(1.0) million and $0.5 million of hedge ineffectiveness for the three and nine months ended September 30, 2016, respectively.
 
   

The following table is a reconciliation of our reported net income attributable to common stockholders to our net
operating income for the three and nine months ended September 30, 2016 and 2015 (unaudited, in thousands):

 

For the Three Months Ended
September 30,

For the Nine Months Ended
September 30,

2016   2015 2016   2015
Reconciliation of net income attributable to common stockholders to NOI:
Net income attributable to common stockholders $ 15,560 $ 8,457 $ 73,369 $ 55,499
Net income attributable to noncontrolling interests 829 622 3,938 6,882
Income tax expense and other taxes 222 241 510 712
Interest and other (income) expense (18 ) 42 (581 ) 71
Interest expense 15,773 13,078 47,830 40,591
Equity in earnings of unconsolidated joint ventures, net (1,164 ) (4,493 ) (2,983 ) (6,336 )
General and administrative expense 7,370 7,720 20,990 24,912
Real estate related depreciation and amortization 40,273 39,431 120,244 116,876
Impairment losses 371 371
Development profit, net of taxes (2,627 )
Gain on dispositions of real estate interests (43,052 ) (41,086 )
Casualty gain (2,440 ) (2,278 )
Institutional capital management and other fees   (341 )   (333 )   (1,039 )   (1,134 )
Total NOI 76,064 65,136 216,948 194,731
Less NOI – non-same store properties   (10,996 )   (4,675 )   (38,482 )   (23,519 )
Same store NOI 65,068 60,461 178,466 171,212
Less revenue from lease terminations (249 ) (1,184 ) (901 ) (1,946 )
Add early termination straight-line rent adjustment   30     348     162     255  
Same store NOI, excluding revenue from lease terminations 64,849 59,625 177,727 169,521
Less straight-line rents, net of related bad debt expense (764 ) (954 ) (3,403 ) (2,950 )
Less amortization of above/(below) market rents   (568 )   (702 )   (1,679 )   (1,865 )
Same store Cash NOI, excluding revenue from lease terminations $ 63,517   $ 57,969   $ 172,645   $ 164,706  
 

Financial Measures

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

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

Same Store Properties are determined independently for each period presented, quarter-to-date and year-to-date, by including all consolidated operating properties that have been owned for the entire current and prior period presented. We consider NOI and Cash NOI from Same Store Properties to be a useful measure in evaluating our financial performance and to improve comparability between periods by including only properties owned for comparable periods.

DCT Industrial believes that net income (loss) attributable to common stockholders, as defined by GAAP, is the most appropriate earnings measure. However, DCT Industrial considers funds from operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), to be a useful supplemental, non-GAAP measure of DCT Industrial’s operating performance. NAREIT developed FFO as a relative measure of performance of an equity REIT in order to recognize that the value of income-producing real estate historically has not depreciated on the basis determined under GAAP. FFO is generally defined as net income attributable to common stockholders, calculated in accordance with GAAP, 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 measurable decreases in the fair value of the depreciable real estate held by the unconsolidated joint ventures and adjustments to derive DCT Industrial’s proportionate 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, as adjusted, which excludes hedge ineffectiveness, certain severance costs, acquisition costs, debt modification costs and impairment losses on properties which are not depreciable. We believe that FFO excluding hedge ineffectiveness, certain severance costs, acquisition costs, debt modification costs and impairment losses on non-depreciable real estate is useful supplemental information regarding our operating performance as it provides a more meaningful and consistent comparison of our operating performance and allows investors to more easily compare our operating results. Readers should note that FFO 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 (loss) as a measure of DCT Industrial’s performance.

We calculate Fixed Charge Coverage Ratio as Adjusted EBITDA divided by total 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 non-cash interest expense. DCT Industrial considers Fixed Charge Coverage Ratio to be an appropriate supplemental measure of our ability to satisfy fixed financing obligations.

Forward-Looking Statements

We make statements in this report that are considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions and includes statements regarding our anticipated yields. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation: national, international, regional and local economic conditions, the general level of interest rates and the availability of capital; the competitive environment in which we operate; real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets; decreased rental rates or increasing vacancy rates; defaults on or non-renewal of leases by tenants; acquisition and development risks, including failure of such acquisitions and development projects to perform in accordance with projections; the timing of acquisitions, dispositions and development; natural disasters such as fires, floods, tornadoes, hurricanes and earthquakes; energy costs; the terms of governmental regulations that affect us and interpretations of those regulations, including the cost of compliance with those regulations, changes in real estate and zoning laws and increases in real property tax rates; financing risks, including the risk that our cash flows from operations may be insufficient to meet required payments of principal, interest and other commitments; lack of or insufficient amounts of insurance; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; the consequences of future terrorist attacks or civil unrest; environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us; and other risks and uncertainties detailed in the section of our Form 10-K filed with the SEC and updated on Form 10-Q entitled “Risk Factors.” In addition, our current and continuing qualification as a real estate investment trust, or REIT, involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, or the Code, and depends on our ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership. We assume no obligation to update publicly any forward looking statements, whether as a result of new information, future events or otherwise.

Contacts

DCT Industrial Trust
Melissa Sachs, 303-597-2400
investorrelations@dctindustrial.com

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Release Summary

DCT Industrial Trust® (NYSE: DCT), a leading industrial real estate company, today announced financial results for the quarter ending September 30, 2016.

DCT Industrial Trust