Despite reporting better-than-expected results in the second
quarter, shares of
Duke Realty Corp.
) fell 19 cents during the last Thursday's regular trading session,
owning to broader market concerns. The shares were just up a cent
in Friday's session.
This real estate investment trust (REIT) reported second-quarter
2014 core funds from operations (FFO) per share of 30 cents, a
penny ahead of the Zacks Consensus Estimate and 3 cents above the
prior-year quarter figure. The performance was driven by a notable
rise in revenues and occupancy growth.
Total revenue for second-quarter 2014 was $303.0 million, which
rose 13.9% year over year and exceeded the Zacks Consensus Estimate
of $232.0 million.
Quarter in Detail
Duke Realty leased around 9.0 million square feet of space in
the quarter under review. Also, tenant retention was about 68% and
the company experienced overall renewal rental rate growth of 7.6%.
Overall, portfolio occupancy was 93.2%, marginally up from 93.1% in
the prior-year quarter. Consequently, same-property net operating
income increased 3.5% from the year-ago period.
As of Jun 30, 2014, in-service portfolio occupancy rose by 130
basis points year over year to 94.5%. By segment, in-service
occupancy in the bulk distribution portfolio was 95.6% (up 120 bps
year over year) while in the medical office and suburban office
portfolios, it was 93.9% (up 120 bps year over year) and 87.7% (up
120 bps year over year), respectively, at the quarter-end.
In second-quarter 2014, Duke Realty purchased a modern bulk
industrial facility in Pennsylvania for $73 million. On the other
hand, the company shed buildings worth $278 million in the quarter.
As of Jun 2014, Duke Realty had 27 wholly-owned and four JV
industrial projects in its development pipeline.
Duke Realty exited the quarter with $21.2 million of cash and
cash equivalents, up from $19.5 million as of Mar 31, 2014.
2014 Guidance Raised
Duke Realty increased its core FFO guidance for full year to
$1.15 - $1.19 per share, from $1.12 - $1.18 per share guided
earlier. The Zacks Consensus Estimate of $1.17 for the same also
lies within this range.
Concurrent with its earnings release, Duke Realty declared a
quarterly cash dividend of 17 cents per share on its common stock.
The second-quarter dividend will be paid on Aug 29, 2014 to
shareholders of record as of Aug 14.
After posting in line results in the past quarter, Duke Realty
came up with positive results this quarter but broader market
concerns kept investors cautious. Nevertheless, we expect the
company's focus on key markets, improved operating portfolio
performance and enhancement activity to drive growth going forward
for this Zacks Rank #2 (Buy) stock.
Some better-ranked stocks in the REIT-Equity Trust - Other
industry include Pebblebrook Hotel Trust (
), Ashford Hospitality Trust, Inc. (
) and W. P. Carey Inc. (
). All of these carry a Zacks Rank #1 (Strong Buy).
Note: FFO, a widely used metric to gauge the performance of
REITs, is obtained after adding depreciation and amortization and
other non-cash expenses to net income.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
DUKE REALTY CP (DRE): Free Stock Analysis
PEBBLEBROOK HTL (PEB): Free Stock Analysis
ASHFORD HOSPTLY (AHT): Free Stock Analysis
WP CAREY INC (WPC): Free Stock Analysis Report
To read this article on Zacks.com click here.