Duke Realty Corp. and Commercial Real Estate and Real Estate & Retail

Duke Realty reports massive third-quarter loss

October 29, 2009

Big write-downs on raw land and projects under development led to a wide third-quarter loss for Duke Realty Corp.

The locally based company said Thursday morning it lost $1.02 per diluted share in funds from operations, a common yardstick for real estate investment trusts, for the period ended Sept. 30.

Excluding one-time items including a $297-million write-down, Duke would have reported FFO of 32 cents, beating consensus analyst expectations by a penny. The company reaffirmed expectations it will earn between $1.42 and $1.64 per share in 2009.

The write-downs include $132 million for land holdings now targeted for disposition (including properties in the Indianapolis area), $70 million for properties under development and more than $50 million on a joint-venture project in Atlanta. Duke decided to sell land holdings because it anticipates lower development demand.

Duke reported a net loss of $314 million on revenue of $325 million, compared to net income of $31 million on revenue of $309 million during the same span in 2008.

The company has raised $1.5 billion in capital this year, most of it available as part of a credit facility, to bolster its balance sheet. The company said it has enough cash on hand to pay off all unsecured debt that comes due through 2010.

"Our core operating portfolio has held up reasonably well the last 12 months,"  Chairman and CEO  Dennis D. Oklak said in a statement. "We are focused on leasing our recently placed in service development projects and strategically reducing our undeveloped land inventory."

Occupancy for Duke, which owns 136 million square feet of mostly office and industrial space in 20 U.S. cities, stood at 87 percent at the end of the third quarter, down slightly from the previous quarter.

The company said it will continue to pay a quarterly dividend of 17 cents per share. At the Wednesday close of $11.23, that's a 6-percent annual yield.

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