On Sep 30, 2013, we reiterated our long-term Neutral
Duke Realty Corporation
). This is based on the company's strategic portfolio
restructuring activity and a strong balance sheet position. Yet,
stiff competition, rising interest rates and a volatile office
sector remain our plausible concerns.
Why the Reiteration?
Duke Realty primarily strategizes toward growing its
investments in premium industrial assets across existing and
vibrant new markets, enhancing medical office portfolio and
reducing exposure to suburban office assets and other
Additionally, with exposure to the healthcare sector, Duke
Realty remains less prone to market volatility as the healthcare
segment enjoys a steady demand. Moreover, the company has a
relatively healthy balance sheet with adequate liquidity.
Moreover, Duke Realty's second-quarter 2013 core funds from
operations (FFO) of 27 cents per share was a cent higher than the
year-ago figure and in line with the Zacks Consensus Estimate.
This was aided by better rental revenues growth as well as a
reduction in general and administrative expenses. Encouragingly,
the company raised the lower end of its 2013 core FFO
However, the weak office market scenario at present and
exposure to vulnerable suburban office and industrial assets
remain plausible concerns for this Zacks Rank #3 (Hold) stock. In
addition, stiff competition from commercial property developers,
a large development pipeline and rising interest rates remain
Over the last 30 days, the Zacks Consensus Estimate for 2013
FFO per share moved south by a cent to $1.08. On the other hand,
the Zacks Consensus Estimate for 2014 FFO per share remained
stable at $1.14.
Other Stocks to Consider
Better performing REITs that are worth a look include
Sovran Self Storage Inc.
Cousins Properties Inc.
). Sovran Self Storage and CubeSmart carry a Zacks Rank #1
(Strong Buy) and Cousins Properties carries a Zacks Rank #2
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.
CUBESMART (CUBE): Free Stock Analysis Report
COUSIN PROP INC (CUZ): Free Stock Analysis
DUKE REALTY CP (DRE): Free Stock Analysis
SOVRAN SLF STOR (SSS): Free Stock Analysis
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