On Jun 13, 2014, we issued an updated research report on
Duke Realty Corporation
), the Indianapolis, IN-based equity real estate investment trust
Duke Realty's strong development platform positions it to explore
new growth opportunities in a better way. In first-quarter 2014,
the company initiated five wholly owned new development projects.
Given its operational strength, we believe that the company can
continue its development activities going forward. Moreover, the
availability of land banks in strategically important locations
augurs well for Duke Realty's development activities.
On Apr 30, Duke Realty reported its first-quarter 2014 core funds
from operations (FFO) of 28 cents per share, which was in line with
the Zacks Consensus Estimate. The reported figure was also up 7.7%
from the prior-year quarter. Results in the quarter were mainly
aided by a rise in revenues, partly offset by higher expenses.
Of late, the company has been focusing more on scaling down its
suburban office assets to bolster its bulk industrial business. We
expect these portfolio repositioning efforts to boost Duke Realty's
internal growth metrics in the near future.
However, the company's significant development pipeline increases
its operational risks, thereby exposing it to rising construction
costs, entitlement delays and lease-up risks. In addition, a rise
in interest rates is anticipated in the long run, which would raise
Duke Realty's interest expense.
Over the last 30 days, the Zacks Consensus Estimate for 2014 and
2015 FFO per share increased by a cent each to $1.16 and $1.23,
respectively. The stock currently has a Zacks Rank #3 (Hold).
Some better-ranked equity REITs include
The GEO Group, Inc.
Terreno Realty Corp.
Aviv REIT, Inc.
). All these stocks sport a Zacks Rank #1 (Strong Buy).
Note: FFO, a widely used metric to gauge the performance of
REITs, are obtained after adding depreciation, amortization and
other non-cash expenses to net income.
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DUKE REALTY CP (DRE): Free Stock Analysis
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