Duke Realty (DRE) Surpasses FFO & Revenue Estimates In Q1
Zacks Investment Research | Apr 26, 2017 11:22PM ET
Duke Realty Corporation’s (NYSE:DRE) first-quarter 2017 core funds from operations (“FFO”) per share of 32 cents surpassed the Zacks Consensus Estimate of 29 cents and came in 4 cents ahead of the year-ago figure. In-service occupancy reached a record level of 97.7% in the quarter.
Total rental and related revenue for the quarter was $217.9 million, up approximately 8% year over year. This number also surpassed the Zacks Consensus Estimate of $204 million.
Quarter in Detail
Duke Realty leased around 5.5 million square feet of space in the quarter. Its tenant retention for the quarter was 84%. Moreover, the company registered same-property net operating income growth of 5.2% year over year, driven by occupancy growth and rental rate increase. In fact, the company reported overall rent growth related to new and renewal leases of 23.5%.
As of Mar 31, 2017, the company’s total occupancy, including properties under development, was 95.8%, up 2 basis points (bps) from the prior-quarter end. In-service occupancy as of the same date was 97.7%, up 2 bps from the prior-quarter end. In-service portfolio occupancy in bulk distribution portfolio expanded 2 bps from the prior-quarter end to 97.9%. However, the same in the medical office portfolio contracted 1 basis point from the prior-quarter end to 94.3%.
Notably, the company concluded the quarter with a solid development pipeline aggregating 11 million square feet, total expected project costs of $875 million and 73% pre-leased.
Duke Realty exited the quarter with $13.4 million of cash and cash equivalents, up from $12.6 million as of Dec 31, 2016.
2017 Guidance
Duke Realty provided 2017 revised guidance for core FFO per share of $1.24–$1.30. The Zacks Consensus Estimate of $1.25 lies within this range.
Moreover, the company revised its current year guidance for net income and expects it in the range of 68–87cents per share.
The company also increased estimates for dispositions and development starts to a range of $300-$500 million and $500-$700 million, respectively.
Dividend Update
Concurrent with its earnings release, Duke Realty announced a quarterly cash dividend on common stock of 19 cents per share. The first-quarter dividend will be paid on May 31 to shareholders of record as of May 16, 2017.
Our Viewpoint
Duke Realty’s strategically located portfolio of industrial assets is likely to assist it in leveraging on the growing demand for premium logistic facilities amid manageable supply. Moreover, considering the building dispositions of wholly owned and joint venture properties accomplished in first-quarter 2017, the company effectively concluded its exit from this asset category.
Get The News You Want
However, the disposition efforts have a near-term dilutive effect. Also, significant competition from developers, owners and operators of commercial real estate, and rate hike add to its worries.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.