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Duke Realty's (DRE) Q1 FFO and Revenues Surpass Estimates
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Duke Realty Corporation’s first-quarter 2018 funds from operations (FFO) per share of 31 cents surpassed the Zacks Consensus Estimate by a penny. However, the figure was lower than the year-ago figure of 32 cents.
Further, the company witnessed a decline in core FFO per share, which was 30 cents for the quarter under review compared with 32 cents recorded in first-quarter 2017.
Total revenues of $234.6 million in the reported quarter jumped 29.5% on a year-over-year basis, handily surpassing the Zacks Consensus Estimate of $183.8 million.
Quarter in Detail
Duke Realty leased around 6.9 million square feet of space in the reported quarter. Its tenant retention for the quarter was 68% and re-lease was 94% for all the leases that expired. Moreover, it registered same-property net operating income growth of 3.4% year over year. In fact, the company reported overall cash and annualized net effective rent growth related to new and renewal leases of 12% and 25.6%, respectively.
As of Mar 31, 2018, the company’s total occupancy, including properties under development, was 94.4%, up 60 basis points (bps) from the prior-quarter end. In-service occupancy as of the same date was 97%, up 130 bps from the prior-quarter figure.
Notably, the company completed the first quarter with a development pipeline aggregating 2.5 million square feet and project costs of $226 million that was 45% pre-leased.
Duke Realty exited the reported quarter with $160.9 million of cash and cash equivalents, significantly up from $67.6 million as of Dec 31, 2017.
2018 Guidance
Duke Realty updated 2018 guidance for core FFO per share of $1.26-$1.32, up from $1.24-$1.30. The Zacks Consensus Estimate for the same is currently pegged at $1.27.
Notably, the company’s guidance is based on the increased occupancy in new properties and faster-than-expected acquisitions.
Dividend Update
Concurrent with its earnings release, Duke Realty announced a quarterly cash dividend on common stock of 20 cents per share. The first-quarter dividend will be paid on May 31 to shareholders of record as of May 16, 2018.
Our Viewpoint
In a bid to transform into a domestic-focused industrial-property REIT, Duke Realty resorted to the sale of sub-urban office assets and medical-office buildings in the past. The company is well positioned to benefit from escalating demand for industrial properties by offering modern distribution facilities in strategic in-fill locations.
However, large-scale asset dispositions are expected to have a dilutive effect on earnings in the near term. Further, stiff competition and rate hike remain concerns.
Duke Realty Corporation Price, Consensus and EPS Surprise
We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. (ARE - Free Report) , Regency Centers Corporation (REG - Free Report) and Welltower Inc. (WELL - Free Report) . Alexandria and Regency Centers are scheduled to release results on Apr 30, while Welltower is slated to report numbers on May 1.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Duke Realty's (DRE) Q1 FFO and Revenues Surpass Estimates
Duke Realty Corporation’s first-quarter 2018 funds from operations (FFO) per share of 31 cents surpassed the Zacks Consensus Estimate by a penny. However, the figure was lower than the year-ago figure of 32 cents.
Further, the company witnessed a decline in core FFO per share, which was 30 cents for the quarter under review compared with 32 cents recorded in first-quarter 2017.
Total revenues of $234.6 million in the reported quarter jumped 29.5% on a year-over-year basis, handily surpassing the Zacks Consensus Estimate of $183.8 million.
Quarter in Detail
Duke Realty leased around 6.9 million square feet of space in the reported quarter. Its tenant retention for the quarter was 68% and re-lease was 94% for all the leases that expired. Moreover, it registered same-property net operating income growth of 3.4% year over year. In fact, the company reported overall cash and annualized net effective rent growth related to new and renewal leases of 12% and 25.6%, respectively.
As of Mar 31, 2018, the company’s total occupancy, including properties under development, was 94.4%, up 60 basis points (bps) from the prior-quarter end. In-service occupancy as of the same date was 97%, up 130 bps from the prior-quarter figure.
Notably, the company completed the first quarter with a development pipeline aggregating 2.5 million square feet and project costs of $226 million that was 45% pre-leased.
Duke Realty exited the reported quarter with $160.9 million of cash and cash equivalents, significantly up from $67.6 million as of Dec 31, 2017.
2018 Guidance
Duke Realty updated 2018 guidance for core FFO per share of $1.26-$1.32, up from $1.24-$1.30. The Zacks Consensus Estimate for the same is currently pegged at $1.27.
Notably, the company’s guidance is based on the increased occupancy in new properties and faster-than-expected acquisitions.
Dividend Update
Concurrent with its earnings release, Duke Realty announced a quarterly cash dividend on common stock of 20 cents per share. The first-quarter dividend will be paid on May 31 to shareholders of record as of May 16, 2018.
Our Viewpoint
In a bid to transform into a domestic-focused industrial-property REIT, Duke Realty resorted to the sale of sub-urban office assets and medical-office buildings in the past. The company is well positioned to benefit from escalating demand for industrial properties by offering modern distribution facilities in strategic in-fill locations.
However, large-scale asset dispositions are expected to have a dilutive effect on earnings in the near term. Further, stiff competition and rate hike remain concerns.
Duke Realty Corporation Price, Consensus and EPS Surprise
Duke Realty Corporation Price, Consensus and EPS Surprise | Duke Realty Corporation Quote
Currently, Duke Realty has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. (ARE - Free Report) , Regency Centers Corporation (REG - Free Report) and Welltower Inc. (WELL - Free Report) . Alexandria and Regency Centers are scheduled to release results on Apr 30, while Welltower is slated to report numbers on May 1.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>