x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Indiana (Duke Realty Corporation) | 35-1740409 (Duke Realty Corporation) | |
Indiana (Duke Realty Limited Partnership) | 35-1898425 (Duke Realty Limited Partnership) | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) | |
600 East 96thStreet, Suite 100 Indianapolis, Indiana | 46240 | |
(Address of Principal Executive Offices) | (Zip Code) |
Duke Realty Corporation | Yes x | No o | Duke Realty Limited Partnership | Yes x | No o |
Duke Realty Corporation | Yes x | No o | Duke Realty Limited Partnership | Yes x | No o |
Large accelerated filer x | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | Emerging growth company o |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer x | Smaller reporting company o | Emerging growth company o |
Duke Realty Corporation | Yes o | No x | Duke Realty Limited Partnership | Yes o | No x |
Class | Outstanding Common Shares of Duke Realty Corporation at October 25, 2017 | |
Common Stock |
• | enhances investors' understanding of the General Partner and the Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business; |
• | eliminates duplicative disclosure and provides a more streamlined and readable presentation of information since a substantial portion of the Company's disclosure applies to both the General Partner and the Partnership; and |
• | creates time and cost efficiencies through the preparation of one combined report instead of two separate reports. |
Page | |||
Duke Realty Corporation: | |||
Duke Realty Limited Partnership: | |||
Duke Realty Corporation and Duke Realty Limited Partnership: | |||
September 30, 2017 | December 31, 2016 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Real estate investments: | |||||||
Real estate assets | $ | $ | |||||
Construction in progress | |||||||
Investments in and advances to unconsolidated companies | |||||||
Undeveloped land | |||||||
Accumulated depreciation | ( | ) | ( | ) | |||
Net real estate investments | |||||||
Real estate investments and other assets held-for-sale | |||||||
Cash and cash equivalents | |||||||
Accounts receivable, net of allowance of $1,020 and $1,391 | |||||||
Straight-line rent receivable, net of allowance of $3,655 and $5,268 | |||||||
Receivables on construction contracts, including retentions | |||||||
Deferred leasing and other costs, net of accumulated amortization of $206,242 and $186,798 | |||||||
Restricted cash held in escrow for like-kind exchange | |||||||
Notes receivable from property sales | |||||||
Other escrow deposits and assets | |||||||
$ | $ | ||||||
LIABILITIES AND EQUITY | |||||||
Indebtedness: | |||||||
Secured debt, net of deferred financing costs of $699 and $969 | $ | $ | |||||
Unsecured debt, net of deferred financing costs of $18,583 and $22,083 | |||||||
Unsecured line of credit | |||||||
Liabilities related to real estate investments held-for-sale | |||||||
Construction payables and amounts due subcontractors, including retentions | |||||||
Accrued real estate taxes | |||||||
Accrued interest | |||||||
Other liabilities | |||||||
Tenant security deposits and prepaid rents | |||||||
Total liabilities | |||||||
Shareholders' equity: | |||||||
Common shares ($0.01 par value); 600,000 shares authorized; 356,130 and 354,756 shares issued and outstanding, respectively | |||||||
Additional paid-in capital | |||||||
Accumulated other comprehensive income | |||||||
Distributions in excess of net income | ( | ) | ( | ) | |||
Total shareholders' equity | |||||||
Noncontrolling interests | |||||||
Total equity | |||||||
$ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||
Rental and related revenue | $ | $ | $ | $ | |||||||||||
General contractor and service fee revenue | |||||||||||||||
Expenses: | |||||||||||||||
Rental expenses | |||||||||||||||
Real estate taxes | |||||||||||||||
General contractor and other services expenses | |||||||||||||||
Depreciation and amortization | |||||||||||||||
Other operating activities: | |||||||||||||||
Equity in earnings of unconsolidated companies | |||||||||||||||
Gain on dissolution of unconsolidated company | |||||||||||||||
Promote income | |||||||||||||||
Gain on sale of properties | |||||||||||||||
Gain on land sales | |||||||||||||||
Other operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Impairment charges | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Operating income | |||||||||||||||
Other income (expenses): | |||||||||||||||
Interest and other income, net | |||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Loss on debt extinguishment | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Acquisition-related activity | ( | ) | ( | ) | |||||||||||
Income from continuing operations before income taxes | |||||||||||||||
Income tax (expense) benefit | ( | ) | ( | ) | |||||||||||
Income from continuing operations | |||||||||||||||
Discontinued operations: | |||||||||||||||
Income before gain on sales | |||||||||||||||
Gain on sale of depreciable properties | |||||||||||||||
Income tax (expense) benefit | ( | ) | |||||||||||||
Income from discontinued operations | |||||||||||||||
Net income | |||||||||||||||
Net income attributable to noncontrolling interests | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net income attributable to common shareholders | $ | $ | $ | $ | |||||||||||
Basic net income per common share: | |||||||||||||||
Continuing operations attributable to common shareholders | $ | $ | $ | $ | |||||||||||
Discontinued operations attributable to common shareholders | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Diluted net income per common share: | |||||||||||||||
Continuing operations attributable to common shareholders | $ | $ | $ | $ | |||||||||||
Discontinued operations attributable to common shareholders | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Weighted average number of common shares outstanding | |||||||||||||||
Weighted average number of common shares and potential dilutive securities | |||||||||||||||
Comprehensive income: | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Other comprehensive loss: | |||||||||||||||
Amortization of interest contracts | ( | ) | ( | ) | ( | ) | |||||||||
Other | ( | ) | ( | ) | |||||||||||
Total other comprehensive loss | ( | ) | ( | ) | ( | ) | |||||||||
Comprehensive income | $ | $ | $ | $ |
2017 | 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | $ | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation of buildings and tenant improvements | ||||||||
Amortization of deferred leasing and other costs | ||||||||
Amortization of deferred financing costs | ||||||||
Straight-line rental income and expense, net | ( | ) | ( | ) | ||||
Impairment charges | ||||||||
Loss on debt extinguishment | ||||||||
Gain on dissolution of unconsolidated company | ( | ) | ||||||
Gains on land and depreciated property sales | ( | ) | ( | ) | ||||
Third-party construction contracts, net | ||||||||
Other accrued revenues and expenses, net | ||||||||
Equity in earnings in excess of operating distributions received from unconsolidated companies | ( | ) | ( | ) | ||||
Net cash provided by operating activities | ||||||||
Cash flows from investing activities: | ||||||||
Development of real estate investments | ( | ) | ( | ) | ||||
Acquisition of real estate investments and related intangible assets | ( | ) | ( | ) | ||||
Acquisition of undeveloped land | ( | ) | ( | ) | ||||
Second generation tenant improvements, leasing costs and building improvements | ( | ) | ( | ) | ||||
Other deferred leasing costs | ( | ) | ( | ) | ||||
Other assets | ( | ) | ||||||
Proceeds from land and depreciated property sales, net | ||||||||
Capital distributions from unconsolidated companies | ||||||||
Capital contributions and advances to unconsolidated companies | ( | ) | ( | ) | ||||
Net cash provided by investing activities | ||||||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of common shares, net | ||||||||
Proceeds from unsecured debt | ||||||||
Payments on unsecured debt | ( | ) | ( | ) | ||||
Payments on secured indebtedness including principal amortization | ( | ) | ( | ) | ||||
Repayments of line of credit, net | ( | ) | ( | ) | ||||
Distributions to common shareholders | ( | ) | ( | ) | ||||
Distributions to noncontrolling interests | ( | ) | ( | ) | ||||
Tax payments on stock-based compensation awards | ( | ) | ( | ) | ||||
Change in book overdrafts | ( | ) | ||||||
Deferred financing costs | ( | ) | ( | ) | ||||
Redemption of Limited Partner Units | ( | ) | ||||||
Net cash used for financing activities | ( | ) | ( | ) | ||||
Net increase in cash and cash equivalents | ||||||||
Cash and cash equivalents at beginning of period | ||||||||
Cash and cash equivalents at end of period | $ | $ | ||||||
Non-cash investing and financing activities: | ||||||||
Notes receivable from buyers in property sales | $ | $ | ||||||
Conversion of Limited Partner Units to common shares | $ | — | $ |
Common Shareholders | ||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Distributions in Excess of Net Income | Noncontrolling Interests | Total | |||||||||||||||||||
Balance at December 31, 2016 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Net income | — | — | — | |||||||||||||||||||||
Other comprehensive loss | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||
Issuance of common shares | — | — | — | |||||||||||||||||||||
Stock-based compensation plan activity | ( | ) | — | ( | ) | |||||||||||||||||||
Conversion/redemption of Limited Partner Units | — | — | ( | ) | ( | ) | ||||||||||||||||||
Distributions to common shareholders ($0.57 per share) | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||
Balance at September 30, 2017 | $ | $ | $ | $ | ( | ) | $ | $ |
September 30, 2017 | December 31, 2016 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Real estate investments: | |||||||
Real estate assets | $ | $ | |||||
Construction in progress | |||||||
Investments in and advances to unconsolidated companies | |||||||
Undeveloped land | |||||||
Accumulated depreciation | ( | ) | ( | ) | |||
Net real estate investments | |||||||
Real estate investments and other assets held-for-sale | |||||||
Cash and cash equivalents | |||||||
Accounts receivable, net of allowance of $1,020 and $1,391 | |||||||
Straight-line rent receivable, net of allowance of $3,655 and $5,268 | |||||||
Receivables on construction contracts, including retentions | |||||||
Deferred leasing and other costs, net of accumulated amortization of $206,242 and $186,798 | |||||||
Restricted cash held in escrow for like-kind exchange | |||||||
Notes receivable from property sales | |||||||
Other escrow deposits and other assets | |||||||
$ | $ | ||||||
LIABILITIES AND EQUITY | |||||||
Indebtedness: | |||||||
Secured debt, net of deferred financing costs of $699 and $969 | $ | $ | |||||
Unsecured debt, net of deferred financing costs of $18,583 and $22,083 | |||||||
Unsecured line of credit | |||||||
Liabilities related to real estate investments held-for-sale | |||||||
Construction payables and amounts due subcontractors, including retentions | |||||||
Accrued real estate taxes | |||||||
Accrued interest | |||||||
Other liabilities | |||||||
Tenant security deposits and prepaid rents | |||||||
Total liabilities | |||||||
Partners' equity: | |||||||
Common equity (356,130 and 354,756 General Partner Units issued and outstanding, respectively) | |||||||
Limited Partners' common equity (3,288 and 3,408 Limited Partner Units issued and outstanding, respectively) | |||||||
Accumulated other comprehensive income | |||||||
Total partners' equity | |||||||
Noncontrolling interests | |||||||
Total equity | |||||||
$ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||
Rental and related revenue | $ | $ | $ | $ | |||||||||||
General contractor and service fee revenue | |||||||||||||||
Expenses: | |||||||||||||||
Rental expenses | |||||||||||||||
Real estate taxes | |||||||||||||||
General contractor and other services expenses | |||||||||||||||
Depreciation and amortization | |||||||||||||||
Other operating activities: | |||||||||||||||
Equity in earnings of unconsolidated companies | |||||||||||||||
Gain on dissolution of unconsolidated company | |||||||||||||||
Promote income | |||||||||||||||
Gain on sale of properties | |||||||||||||||
Gain on land sales | |||||||||||||||
Other operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Impairment charges | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Operating income | |||||||||||||||
Other income (expenses): | |||||||||||||||
Interest and other income, net | |||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Loss on debt extinguishment | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Acquisition-related activity | ( | ) | ( | ) | |||||||||||
Income from continuing operations before income taxes | |||||||||||||||
Income tax (expense) benefit | ( | ) | ( | ) | |||||||||||
Income from continuing operations | |||||||||||||||
Discontinued operations: | |||||||||||||||
Income before gain on sales | |||||||||||||||
Gain on sale of depreciable properties | |||||||||||||||
Income tax (expense) benefit | ( | ) | |||||||||||||
Income from discontinued operations | |||||||||||||||
Net income | |||||||||||||||
Net loss (income) attributable to noncontrolling interests | ( | ) | ( | ) | ( | ) | |||||||||
Net income attributable to common unitholders | $ | $ | $ | $ | |||||||||||
Basic net income per Common Unit: | |||||||||||||||
Continuing operations attributable to common unitholders | $ | $ | $ | $ | |||||||||||
Discontinued operations attributable to common unitholders | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Diluted net income per Common Unit: | |||||||||||||||
Continuing operations attributable to common unitholders | $ | $ | $ | $ | |||||||||||
Discontinued operations attributable to common unitholders | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Weighted average number of Common Units outstanding | |||||||||||||||
Weighted average number of Common Units and potential dilutive securities | |||||||||||||||
Comprehensive income: | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Other comprehensive loss: | |||||||||||||||
Amortization of interest contracts | ( | ) | ( | ) | ( | ) | |||||||||
Other | ( | ) | ( | ) | |||||||||||
Total other comprehensive loss | ( | ) | ( | ) | ( | ) | |||||||||
Comprehensive income | $ | $ | $ | $ |
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation of buildings and tenant improvements | |||||||
Amortization of deferred leasing and other costs | |||||||
Amortization of deferred financing costs | |||||||
Straight-line rental income and expense, net | ( | ) | ( | ) | |||
Impairment charges | |||||||
Loss on debt extinguishment | |||||||
Gain on dissolution of unconsolidated company | ( | ) | |||||
Gains on land and depreciated property sales | ( | ) | ( | ) | |||
Third-party construction contracts, net | |||||||
Other accrued revenues and expenses, net | |||||||
Equity in earnings in excess of operating distributions received from unconsolidated companies | ( | ) | ( | ) | |||
Net cash provided by operating activities | |||||||
Cash flows from investing activities: | |||||||
Development of real estate investments | ( | ) | ( | ) | |||
Acquisition of real estate investments and related intangible assets | ( | ) | ( | ) | |||
Acquisition of undeveloped land | ( | ) | ( | ) | |||
Second generation tenant improvements, leasing costs and building improvements | ( | ) | ( | ) | |||
Other deferred leasing costs | ( | ) | ( | ) | |||
Other assets | ( | ) | |||||
Proceeds from land and depreciated property sales, net | |||||||
Capital distributions from unconsolidated companies | |||||||
Capital contributions and advances to unconsolidated companies | ( | ) | ( | ) | |||
Net cash provided by investing activities | |||||||
Cash flows from financing activities: | |||||||
Contributions from the General Partner | |||||||
Proceeds from unsecured debt | |||||||
Payments on unsecured debt | ( | ) | ( | ) | |||
Payments on secured indebtedness including principal amortization | ( | ) | ( | ) | |||
Repayments of line of credit, net | ( | ) | ( | ) | |||
Distributions to common unitholders | ( | ) | ( | ) | |||
Distributions to noncontrolling interests | ( | ) | ( | ) | |||
Tax payments on stock-based compensation awards | ( | ) | ( | ) | |||
Change in book overdrafts | ( | ) | |||||
Deferred financing costs | ( | ) | ( | ) | |||
Redemption of Limited Partner Units | ( | ) | |||||
Net cash used for financing activities | ( | ) | ( | ) | |||
Net increase in cash and cash equivalents | |||||||
Cash and cash equivalents at beginning of period | |||||||
Cash and cash equivalents at end of period | $ | $ | |||||
Non-cash investing and financing activities: | |||||||
Notes receivable from buyers in property sales | $ | $ | |||||
Conversion of Limited Partner Units to common shares of the General Partner | $ | $ |
Common Unitholders | |||||||||||||||||||||||
General | Limited | Accumulated | |||||||||||||||||||||
Partner's | Partners' | Other | Total | ||||||||||||||||||||
Common Equity | Common Equity | Comprehensive Income | Partners' Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||
Balance at December 31, 2016 | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Net income | — | ||||||||||||||||||||||
Other comprehensive loss | — | — | ( | ) | ( | ) | — | ( | ) | ||||||||||||||
Capital contribution from the General Partner | — | — | — | ||||||||||||||||||||
Stock-based compensation plan activity | ( | ) | — | — | |||||||||||||||||||
Conversion/redemption of Limited Partner Units | ( | ) | — | ( | ) | — | ( | ) | |||||||||||||||
Distributions to Partners ($0.57 per Common Unit) | ( | ) | ( | ) | — | ( | ) | — | ( | ) | |||||||||||||
Distributions to noncontrolling interests | — | — | — | — | ( | ) | ( | ) | |||||||||||||||
Balance at September 30, 2017 | $ | $ | $ | $ | $ | $ |
Real estate assets | $ | ||
Lease related intangible assets | |||
Total acquired assets | |||
Below market lease liability | |||
Fair value of acquired net assets | $ |
Low | High | |
Exit capitalization rate | ||
Net rental rate per square foot | $ | $ |
Book Value at 12/31/2016 | Book Value at 9/30/2017 | Fair Value at 12/31/2016 | Payments/Payoffs | Adjustments to Fair Value | Fair Value at 9/30/2017 | ||||||||||||||||||
Fixed rate secured debt | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
Variable rate secured debt | ( | ) | |||||||||||||||||||||
Unsecured debt | ( | ) | |||||||||||||||||||||
Unsecured line of credit | ( | ) | |||||||||||||||||||||
Total | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
Less: Deferred financing costs | |||||||||||||||||||||||
Total indebtedness as reported on the consolidated balance sheets | $ | $ |
• | In June 2017, we repaid our $ |
• | In June 2017, we also repaid $ |
• | In July 2017, we repaid $ |
Description | Borrowing Capacity | Maturity Date | Outstanding Balance at September 30, 2017 | ||||||
Unsecured Line of Credit - Partnership | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Management fees | $ | $ | $ | $ | |||||||||||
Leasing fees | |||||||||||||||
Construction and development fees |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
General Partner | |||||||||||||||
Net income attributable to common shareholders | $ | $ | $ | $ | |||||||||||
Less: dividends on participating securities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Basic net income attributable to common shareholders | |||||||||||||||
Add back dividends on dilutive participating securities | |||||||||||||||
Noncontrolling interest in earnings of common unitholders | |||||||||||||||
Diluted net income attributable to common shareholders | $ | $ | $ | $ | |||||||||||
Weighted average number of common shares outstanding | |||||||||||||||
Weighted average Limited Partner Units outstanding | |||||||||||||||
Other potential dilutive shares | |||||||||||||||
Weighted average number of common shares and potential dilutive securities | |||||||||||||||
Partnership | |||||||||||||||
Net income attributable to common unitholders | $ | $ | $ | $ | |||||||||||
Less: distributions on participating securities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Basic net income attributable to common unitholders | $ | $ | $ | $ | |||||||||||
Add back distributions on dilutive participating securities | |||||||||||||||
Diluted net income attributable to common unitholders | $ | $ | $ | $ | |||||||||||
Weighted average number of Common Units outstanding | |||||||||||||||
Other potential dilutive units | |||||||||||||||
Weighted average number of Common Units and potential dilutive securities |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
General Partner and Partnership | |||||||||||
Other potential dilutive shares or units: | |||||||||||
Anti-dilutive outstanding potential shares or units under fixed stock option and other stock-based compensation plans |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues | ||||||||||||||||
Rental Operations: | ||||||||||||||||
Industrial | $ | $ | $ | $ | ||||||||||||
Non-reportable Rental Operations | ||||||||||||||||
Service Operations | ||||||||||||||||
Total segment revenues | ||||||||||||||||
Other revenue | ||||||||||||||||
Consolidated revenue from continuing operations | ||||||||||||||||
Discontinued operations | ||||||||||||||||
Consolidated revenue | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
PNOI | ||||||||||||||||
Industrial | $ | $ | $ | $ | ||||||||||||
Non-reportable Rental Operations | ||||||||||||||||
PNOI, excluding all sold/held-for-sale properties | ||||||||||||||||
PNOI from sold/held-for-sale properties included in continuing operations | ||||||||||||||||
PNOI, continuing operations | $ | $ | $ | $ | ||||||||||||
Earnings from Service Operations | ||||||||||||||||
Rental Operations revenues and expenses excluded from PNOI: | ||||||||||||||||
Straight-line rental income and expense, net | ||||||||||||||||
Revenues related to lease buyouts | ||||||||||||||||
Amortization of lease concessions and above and below market rents | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Intercompany rents and other adjusting items | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Non-Segment Items: | ||||||||||||||||
Equity in earnings of unconsolidated companies | ||||||||||||||||
Gain on dissolution of unconsolidated company | ||||||||||||||||
Promote income | ||||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Depreciation and amortization expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Gain on sale of properties | ||||||||||||||||
Impairment charges | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Interest and other income, net | ||||||||||||||||
General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Gain on land sales | ||||||||||||||||
Other operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Loss on extinguishment of debt | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Acquisition-related activity | ( | ) | ( | ) | ||||||||||||
Other non-segment revenues and expenses, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Income from continuing operations before income taxes | $ | $ | $ | $ |
September 30, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Rental Operations: | |||||||
Industrial | $ | $ | |||||
Non-reportable Rental Operations | |||||||
Service Operations | |||||||
Total segment assets | |||||||
Non-segment assets | |||||||
Consolidated assets | $ | $ |
September 30, 2017 | December 31, 2016 | ||||||
Buildings and tenant improvements | $ | $ | |||||
Land and improvements | |||||||
Real estate assets | $ | $ |
Held-for-Sale at September 30, 2017 | Sold Year-to-Date in 2017 | Sold in 2016 | Total | ||||
Total properties included in discontinued operations | |||||||
Properties excluded from discontinued operations | |||||||
Total properties sold or classified as held-for-sale |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Depreciation and amortization | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Operating income | |||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Income before gain on sales | |||||||||||||||
Gain on sale of depreciable properties | |||||||||||||||
Income from discontinued operations before income taxes | |||||||||||||||
Income tax benefit (expense) | ( | ) | |||||||||||||
Income from discontinued operations | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Income from continuing operations attributable to common shareholders | $ | $ | $ | $ | |||||||||||
Income from discontinued operations attributable to common shareholders | |||||||||||||||
Net income attributable to common shareholders | $ | $ | $ | $ |
Held-for-Sale Properties | |||||||||||||||||||||||
September 30, 2017 | December 31, 2016 | ||||||||||||||||||||||
Included in Continuing Operations | Included in Discontinued Operations | Total | Included in Continuing Operations | Included in Discontinued Operations | Total | ||||||||||||||||||
Land and improvements | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Buildings and tenant improvements | |||||||||||||||||||||||
Undeveloped land | |||||||||||||||||||||||
Accumulated depreciation | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Deferred leasing and other costs, net | |||||||||||||||||||||||
Other assets | |||||||||||||||||||||||
Total assets held-for-sale | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Total liabilities held-for-sale | $ | $ | $ | $ | $ | $ |
Class of stock/units | Quarterly Amount per Share or Unit | Record Date | Payment Date | ||
Common - Quarterly | $ |
• | Changes in general economic and business conditions, including the financial condition of our tenants and the value of our real estate assets; |
• | The General Partner's continued qualification as a REIT for U.S. federal income tax purposes; |
• | Heightened competition for tenants and potential decreases in property occupancy; |
• | Potential changes in the financial markets and interest rates; |
• | Volatility in the General Partner's stock price and trading volume; |
• | Our continuing ability to raise funds on favorable terms, or at all; |
• | Our ability to successfully identify, acquire, develop and/or manage properties on terms that are favorable to us; |
• | Potential increases in real estate construction costs; |
• | Our ability to successfully dispose of properties on terms that are favorable to us, including, without limitation, through one or more transactions that are consistent with our previously disclosed strategic plans; |
• | Our ability to retain our current credit ratings; |
• | Inherent risks in the real estate business, including, but not limited to, tenant defaults, potential liability relating to environmental matters and liquidity of real estate investments; and |
• | Other risks and uncertainties described herein, as well as those risks and uncertainties discussed from time to time in our other reports and other public filings with the Securities and Exchange Commission (the "SEC"). |
• | Owned or jointly controlled 501 primarily industrial properties, of which 480 properties with 135.3 million square feet were in service and 21 properties with 11.1 million square feet were under development. The 480 in-service properties were comprised of 439 consolidated properties with 124.4 million square feet and 41 jointly controlled unconsolidated properties with 11.0 million square feet. The 21 properties under development consisted of 16 consolidated properties with 8.8 million square feet and five jointly controlled unconsolidated properties with 2.3 million square feet. |
• | Owned directly, or through ownership interests in unconsolidated joint ventures (with acreage not adjusted for our percentage ownership interest), approximately 1,900 acres of land and controlled approximately 1,600 acres through purchase options. |
Total Square Feet (in thousands) | Percent of Total Square Feet | Percent Leased* | Average Annual Net Effective Rent** | ||||||||||||||||||
Type | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||
Industrial | 123,106 | 111,148 | 99.0 | % | 93.7 | % | 96.2 | % | 97.5 | % | $4.32 | $4.10 | |||||||||
Non-reportable Rental Operations | 1,246 | 7,456 | 1.0 | % | 6.3 | % | 83.5 | % | 91.1 | % | $18.51 | $21.77 | |||||||||
Total Consolidated | 124,352 | 118,604 | 100.0 | % | 100.0 | % | 96.0 | % | 97.1 | % | $4.44 | $5.14 | |||||||||
Unconsolidated Joint Ventures | 10,951 | 13,269 | 88.8 | % | 94.8 | % | $4.16 | $6.24 | |||||||||||||
Total Including Unconsolidated Joint Ventures | 135,303 | 131,873 | 95.5 | % | 96.9 | % | |||||||||||||||
* Represents the percentage of total square feet leased based on executed leases and without regard to whether the leases have commenced. | |||||||||||||||||||||
**Represents average annual base rental payments per leased square foot, on a straight-line basis for the term of each lease, from space leased to tenants at the end of the most recent reporting period. This amount excludes additional amounts paid by tenants as reimbursement for operating expenses. |
Consolidated Properties | Unconsolidated Joint Venture Properties | Total Including Unconsolidated Joint Venture Properties | ||||||
Vacant square feet at December 31, 2016 | 3,298 | 425 | 3,723 | |||||
Acquisitions | 1,651 | — | 1,651 | |||||
Vacant space in completed developments | 2,015 | 708 | 2,723 | |||||
Dispositions | (504 | ) | (102 | ) | (606 | ) | ||
Expirations | 3,340 | 535 | 3,875 | |||||
Early lease terminations | 1,473 | 5 | 1,478 | |||||
Property structural changes/other | 14 | (1 | ) | 13 | ||||
Leasing of previously vacant space | (6,362 | ) | (341 | ) | (6,703 | ) | ||
Vacant square feet at September 30, 2017 | 4,925 | 1,229 | 6,154 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2017 | 2016 | 2017 | 2016 | ||||
New Leasing Activity - First Generation | 2,168 | 2,394 | 5,286 | 6,721 | |||
New Leasing Activity - Second Generation | 1,435 | 594 | 3,375 | 3,961 | |||
Renewal Leasing Activity | 1,666 | 1,445 | 5,290 | 6,993 | |||
Total Consolidated Leasing Activity | 5,269 | 4,433 | 13,951 | 17,675 | |||
Unconsolidated Joint Venture Leasing Activity | 711 | 184 | 2,182 | 1,928 | |||
Total Including Unconsolidated Joint Venture Leasing Activity | 5,980 | 4,617 | 16,133 | 19,603 |
Square Feet of New Second Generation Leases Signed (in thousands) | Average Term in Years | Estimated Tenant Improvement Cost per Square Foot | Leasing Commissions per Square Foot | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||
Three Months | ||||||||||||||||||||
Industrial | 1,412 | 589 | 5.1 | 5.8 | $1.77 | $2.68 | $1.60 | $2.05 | ||||||||||||
Non-reportable Rental Operations | 23 | 5 | 12.6 | 8.1 | $5.05 | $56.01 | $1.55 | $12.47 | ||||||||||||
Total Consolidated | 1,435 | 594 | 5.2 | 5.8 | $1.82 | $3.13 | $1.60 | $2.14 | ||||||||||||
Unconsolidated Joint Ventures | 39 | — | 10.8 | — | $4.47 | — | $4.02 | — | ||||||||||||
Total Including Unconsolidated Joint Ventures | 1,474 | 594 | 5.4 | 5.8 | $1.89 | $3.13 | $1.66 | $2.14 | ||||||||||||
Nine Months | ||||||||||||||||||||
Industrial | 3,328 | 3,908 | 5.2 | 6.8 | $1.87 | $2.49 | $1.70 | $1.83 | ||||||||||||
Non-reportable Rental Operations | 47 | 53 | 9.6 | 7.1 | $13.87 | $15.30 | $4.49 | $10.95 | ||||||||||||
Total Consolidated | 3,375 | 3,961 | 5.3 | 6.8 | $2.04 | $2.66 | $1.73 | $1.95 | ||||||||||||
Unconsolidated Joint Ventures | 200 | 346 | 9.9 | 7.4 | $1.37 | $5.15 | $2.53 | $2.64 | ||||||||||||
Total Including Unconsolidated Joint Ventures | 3,575 | 4,307 | 5.5 | 6.8 | $2.00 | $2.86 | $1.78 | $2.00 |
Square Feet of Leases Renewed (in thousands) | Percent of Expiring Leases Renewed | Average Term in Years | Growth (Decline) in Net Effective Rents* | Estimated Tenant Improvement Cost per Square Foot | Leasing Commissions per Square Foot | |||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
Three Months | ||||||||||||||||||||||||||||||||
Industrial | 1,666 | 1,377 | 70.8 | % | 66.5 | % | 5.2 | 4.1 | 22.0 | % | 20.9 | % | $0.87 | $0.58 | $1.39 | $0.83 | ||||||||||||||||
Non-reportable Rental Operations | — | 68 | — | % | 83.8 | % | — | 5.0 | — | % | 11.6 | % | — | $1.34 | — | $5.66 | ||||||||||||||||
Total Consolidated | 1,666 | 1,445 | 70.1 | % | 67.1 | % | 5.2 | 4.1 | 22.0 | % | 19.4 | % | $0.87 | $0.62 | $1.39 | $1.06 | ||||||||||||||||
Unconsolidated Joint Ventures | 80 | 134 | 54.3 | % | 100.0 | % | 3.0 | 4.3 | 19.4 | % | 18.9 | % | — | $3.14 | $1.20 | $1.35 | ||||||||||||||||
Total Including Unconsolidated Joint Ventures | 1,746 | 1,579 | 69.2 | % | 69.0 | % | 5.1 | 4.1 | 21.8 | % | 19.4 | % | $0.83 | $0.83 | $1.38 | $1.08 | ||||||||||||||||
Nine Months | ||||||||||||||||||||||||||||||||
Industrial | 5,271 | 6,459 | 75.5 | % | 68.6 | % | 5.0 | 3.5 | 19.1 | % | 15.8 | % | $0.59 | $0.45 | $1.32 | $0.73 | ||||||||||||||||
Non-reportable Rental Operations | 19 | 534 | 30.2 | % | 79.3 | % | 6.7 | 9.4 | 16.7 | % | 5.3 | % | $4.87 | $3.26 | $5.29 | $2.68 | ||||||||||||||||
Total Consolidated | 5,290 | 6,993 | 75.1 | % | 69.3 | % | 5.0 | 4.0 | 19.1 | % | 13.1 | % | $0.60 | $0.67 | $1.33 | $0.88 | ||||||||||||||||
Unconsolidated Joint Ventures | 445 | 1,403 | 57.6 | % | 82.9 | % | 4.0 | 5.1 | 23.1 | % | (1.5 | )% | $0.31 | $0.75 | $1.33 | $2.02 | ||||||||||||||||
Total Including Unconsolidated Joint Ventures | 5,735 | 8,396 | 73.4 | % | 71.3 | % | 5.0 | 4.2 | 19.4 | % | 9.8 | % | $0.58 | $0.68 | $1.33 | $1.07 | ||||||||||||||||
* Represents the percentage change in net effective rent between the original leases and the renewal leases. Net effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. |
Total Consolidated Portfolio | Industrial | Non-reportable | ||||||||||||||||||||
Year of Expiration | Square Feet | Annual Rental Revenue* | Number of Leases | Square Feet | Annual Rental Revenue* | Square Feet | Annual Rental Revenue* | |||||||||||||||
Remainder of 2017 | 1,891 | $ | 6,490 | 23 | 1,890 | $ | 6,481 | 1 | $ | 9 | ||||||||||||
2018 | 10,225 | 40,280 | 123 | 10,218 | 40,201 | 7 | 79 | |||||||||||||||
2019 | 13,811 | 54,822 | 146 | 13,799 | 54,673 | 12 | 149 | |||||||||||||||
2020 | 13,405 | 61,350 | 147 | 13,381 | 61,132 | 24 | 218 | |||||||||||||||
2021 | 12,944 | 56,368 | 124 | 12,885 | 55,873 | 59 | 495 | |||||||||||||||
2022 | 17,522 | 71,147 | 119 | 17,462 | 70,124 | 60 | 1,023 | |||||||||||||||
2023 | 6,132 | 28,469 | 62 | 6,119 | 28,314 | 13 | 155 | |||||||||||||||
2024 | 9,731 | 44,699 | 51 | 9,712 | 44,288 | 19 | 411 | |||||||||||||||
2025 | 8,562 | 35,661 | 37 | 8,538 | 35,096 | 24 | 565 | |||||||||||||||
2026 | 7,365 | 32,938 | 28 | 7,354 | 32,668 | 11 | 270 | |||||||||||||||
2027 and Thereafter | 17,259 | 89,376 | 56 | 16,800 | 80,597 | 459 | 8,779 | |||||||||||||||
Total Leased | 118,847 | $ | 521,600 | 916 | 118,158 | $ | 509,447 | 689 | $ | 12,153 | ||||||||||||
Total Portfolio Square Feet | 123,759 | 122,876 | 883 | |||||||||||||||||||
Percent Leased | 96.0 | % | 96.2 | % | 78.0 | % | ||||||||||||||||
* Annualized rental revenue represents average annual base rental payments, on a straight-line basis for the term of each lease, from space leased to tenants at the end of the most recent reporting period. Annualized rental revenue excludes additional amounts paid by tenants as reimbursement for operating expenses. |
Year-to-Date 2017 Acquisitions | Full Year 2016 Acquisitions | ||||||||||||||||||
Type | Acquisition Price* | In-Place Yield** | Percent Leased at Acquisition Date*** | Acquisition Price* | In-Place Yield** | Percent Leased at Acquisition Date*** | |||||||||||||
Industrial | $ | 615,153 | 2.5 | % | 68.8 | % | $ | 167,339 | 6.7 | % | 91.3 | % | |||||||
Non-reportable Rental Operations | 10,829 | 6.1 | % | 100.0 | % | 72,844 | 7.4 | % | 94.5 | % | |||||||||
Total | $ | 625,982 | 2.6 | % | 69.3 | % | $ | 240,183 | 6.9 | % | 91.7 | % | |||||||
* Includes fair value of real estate assets and net acquired lease-related intangible assets, including above or below market leases, but excludes other acquired working capital assets and liabilities. | |||||||||||||||||||
** In-place yields of completed acquisitions are calculated as the current annualized net rental payments from space leased to tenants at the date of acquisition, divided by the acquisition price of the acquired real estate. Annualized net rental payments are comprised of base rental payments, excluding additional amounts payable by tenants as reimbursement for operating expenses, less current annualized operating expenses not recovered through tenant reimbursements. | |||||||||||||||||||
*** Represents percentage of total square feet leased based on executed leases and without regard to whether the leases have commenced, at the date of acquisition. |
Year-to-Date 2017 Dispositions | Full Year 2016 Dispositions | ||||||||||||||||||
Type | Sales Price | In-Place Yield* | Percent Occupied** | Sales Price | In-Place Yield* | Percent Occupied** | |||||||||||||
Industrial | $ | 18,042 | 6.1 | % | 100.0 | % | $ | 162,831 | 6.4 | % | 96.7 | % | |||||||
Non-reportable Rental Operations | 2,718,072 | 4.8 | % | 93.9 | % | 353,734 | 8.1 | % | 88.2 | % | |||||||||
Total | $ | 2,736,114 | 4.8 | % | 94.1 | % | $ | 516,565 | 7.6 | % | 92.5 | % | |||||||
* In-place yields of completed dispositions are calculated as annualized net operating income from space leased to tenants at the date of sale on a lease-up basis, including full rent from all executed leases, even if currently in a free rent period, divided by the sales price. Annualized net operating income is comprised of base rental payments, excluding reimbursement of operating expenses, less current annualized operating expenses not recovered through tenant reimbursements. | |||||||||||||||||||
** Represents percentage of total square feet leased based on executed leases and without regard to whether the leases have commenced, at the date of sale. |
Ownership Type | Square Feet | Percent Leased | Total Estimated Project Costs | Total Incurred to Date | Amount Remaining to be Spent | ||||||||||
Consolidated properties | 8,832 | 64% | $ | 640,806 | $ | 395,208 | $ | 245,598 | |||||||
Unconsolidated joint venture properties | 2,265 | 59% | 110,568 | 37,122 | 73,446 | ||||||||||
Total | 11,097 | 63% | $ | 751,374 | $ | 432,330 | $ | 319,044 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Rental and related revenue from continuing operations | $ | 169,611 | $ | 162,322 | $ | 507,123 | $ | 480,819 | |||||||
General contractor and service fee revenue | 25,217 | 19,351 | 58,192 | 68,546 | |||||||||||
Operating income | 73,367 | 141,258 | 318,120 | 349,791 | |||||||||||
General Partner | |||||||||||||||
Net income attributable to common shareholders | $ | 165,269 | $ | 112,014 | $ | 1,446,012 | $ | 264,388 | |||||||
Weighted average common shares outstanding | 355,905 | 351,856 | 355,614 | 348,341 | |||||||||||
Weighted average common shares and potential dilutive securities | 362,102 | 358,981 | 361,947 | 355,405 | |||||||||||
Partnership | |||||||||||||||
Net income attributable to common unitholders | $ | 166,804 | $ | 113,145 | $ | 1,459,439 | $ | 267,058 | |||||||
Weighted average Common Units outstanding | 359,206 | 355,351 | 358,921 | 351,840 | |||||||||||
Weighted average Common Units and potential dilutive securities | 362,102 | 358,981 | 361,947 | 355,405 | |||||||||||
General Partner and Partnership | |||||||||||||||
Basic income per common share or Common Unit: | |||||||||||||||
Continuing operations | $ | 0.12 | $ | 0.31 | $ | 0.63 | $ | 0.72 | |||||||
Discontinued operations | $ | 0.34 | $ | 0.01 | $ | 3.43 | $ | 0.03 | |||||||
Diluted income per common share or Common Unit: | |||||||||||||||
Continuing operations | $ | 0.12 | $ | 0.31 | $ | 0.63 | $ | 0.72 | |||||||
Discontinued operations | $ | 0.34 | $ | 0.01 | $ | 3.40 | $ | 0.03 | |||||||
Number of in-service consolidated properties at end of period | 439 | 486 | 439 | 486 | |||||||||||
In-service consolidated square footage at end of period | 124,352 | 118,604 | 124,352 | 118,604 | |||||||||||
Number of in-service joint venture properties at end of period | 41 | 59 | 41 | 59 | |||||||||||
In-service joint venture square footage at end of period | 10,951 | 13,269 | 10,951 | 13,269 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income attributable to common shareholders of the General Partner | $ | 165,269 | $ | 112,014 | $ | 1,446,012 | $ | 264,388 | |||||||
Add back: Net income attributable to noncontrolling interests - common limited partnership interests in the Partnership | 1,535 | 1,131 | 13,427 | 2,670 | |||||||||||
Net income attributable to common unitholders of the Partnership | 166,804 | 113,145 | 1,459,439 | 267,058 | |||||||||||
Adjustments: | |||||||||||||||
Depreciation and amortization | 68,029 | 80,688 | 222,914 | 238,647 | |||||||||||
Company share of joint venture depreciation, amortization and other adjustments | 2,171 | 3,772 | 7,266 | 11,664 | |||||||||||
Gain on dissolution of unconsolidated company | — | — | — | (30,697 | ) | ||||||||||
Impairment charges - depreciable property | — | 3,042 | 859 | 3,042 | |||||||||||
Partnership share of gains on depreciable property sales | (143,300 | ) | (83,017 | ) | (1,317,761 | ) | (138,074 | ) | |||||||
Income tax (benefit) expense triggered by depreciable property sales | (516 | ) | (359 | ) | 19,142 | (173 | ) | ||||||||
Gains on depreciable property sales - share of joint venture | 37 | (5,668 | ) | (50,694 | ) | (23,700 | ) | ||||||||
FFO attributable to common unitholders of the Partnership | $ | 93,225 | $ | 111,603 | $ | 341,165 | $ | 327,767 | |||||||
Additional General Partner Adjustments: | |||||||||||||||
Net income attributable to noncontrolling interests - common limited partnership interests in the Partnership | (1,535 | ) | (1,131 | ) | (13,427 | ) | (2,670 | ) | |||||||
Noncontrolling interest share of adjustments | 677 | 15 | 10,307 | (604 | ) | ||||||||||
FFO attributable to common shareholders of the General Partner | $ | 92,367 | $ | 110,487 | $ | 338,045 | $ | 324,493 |
Three Months Ended September 30, | Percent | Nine Months Ended September 30, | Percent | |||||||||||||||||
2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||
Income from continuing operations before income taxes | $ | 42,368 | $ | 108,232 | $ | 235,812 | $ | 257,378 | ||||||||||||
Share of SPNOI from unconsolidated joint ventures | 3,824 | 4,094 | 11,297 | 12,454 | ||||||||||||||||
PNOI excluded from the same property population | (18,940 | ) | (8,379 | ) | (48,795 | ) | (19,033 | ) | ||||||||||||
Earnings from Service Operations | (1,138 | ) | (2,169 | ) | (4,115 | ) | (8,216 | ) | ||||||||||||
Rental Operations revenues and expenses excluded from PNOI | (4,060 | ) | (11,153 | ) | (21,176 | ) | (34,556 | ) | ||||||||||||
Non-Segment Items | 85,605 | 14,717 | 150,064 | 103,000 | ||||||||||||||||
SPNOI | $ | 107,659 | $ | 105,342 | 2.2 | % | $ | 323,087 | $ | 311,027 | 3.9 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2017 | 2016 | 2017 | 2016 | |||||
Number of properties | 407 | 407 | 407 | 407 | ||||
Square feet (in thousands) (1) | 107,785 | 107,785 | 107,785 | 107,785 | ||||
Average commencement occupancy percentage (2) | 97.4% | 97.7% | 97.7% | 97.1% | ||||
Average rental rate - cash basis (3) | $4.18 | $4.06 | $4.15 | $4.04 | ||||
(1) Includes the total square feet of the consolidated properties that are in the same property population as well as 4.3 million square feet of space for unconsolidated joint ventures, which represents our ratable share of the 8.6 million total square feet of space for buildings owned by unconsolidated joint ventures that are in the same property population. | ||||||||
(2) Commencement occupancy represents the percentage of total square feet where the leases have commenced. | ||||||||
(3) Represents the average annualized contractual rent per square foot for the three and nine months ended September 30, 2017 and 2016 for tenants in occupancy in properties in the same property population. Cash rent does not include the tenant's obligation to pay property operating expenses and real estate taxes. If a tenant was within a free rent period at September 30, 2017 or 2016 its rent would equal zero for purposes of this metric. |
Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Rental and related revenue: | |||||||
Industrial | $ | 166,344 | $ | 149,746 | |||
Non-reportable Rental Operations and non-segment revenues | 3,267 | 12,576 | |||||
Total rental and related revenue from continuing operations | $ | 169,611 | $ | 162,322 | |||
Rental and related revenue from discontinued operations | 4,622 | 44,906 | |||||
Total rental and related revenue from continuing and discontinued operations | $ | 174,233 | $ | 207,228 |
• | We acquired 35 properties and placed 31 developments in service from January 1, 2016 to September 30, 2017, which provided incremental revenues from continuing operations of $15.8 million during the three months ended September 30, 2017, as compared to the same period in 2016. |
• | Increased rental rates within our same-property portfolio also contributed to the increase to rental and related revenue from continuing operations. |
• | The sale of 43 in-service properties since January 1, 2016, which did not meet the criteria to be classified within discontinued operations, resulted in a decrease of $10.3 million to rental and related revenue from continuing operations in the three months ended September 30, 2017, as compared to the same period in 2016, which partially offset the aforementioned increases to rental and related revenue from continuing operations. |
Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Rental expenses: | |||||||
Industrial | $ | 14,034 | $ | 11,604 | |||
Non-reportable Rental Operations and non-segment expenses | 2,190 | 5,329 | |||||
Total rental expenses from continuing operations | $ | 16,224 | $ | 16,933 | |||
Rental expenses from discontinued operations | 1,378 | 9,154 | |||||
Total rental expenses from continuing and discontinued operations | $ | 17,602 | $ | 26,087 | |||
Real estate taxes: | |||||||
Industrial | $ | 27,108 | $ | 24,052 | |||
Non-reportable Rental Operations and non-segment expenses | 1,049 | 1,949 | |||||
Total real estate tax expense from continuing operations | $ | 28,157 | $ | 26,001 | |||
Real estate tax expense from discontinued operations | 235 | 5,312 | |||||
Total real estate tax expense from continuing and discontinued operations | $ | 28,392 | $ | 31,313 |
Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Service Operations: | |||||||
General contractor and service fee revenue | $ | 25,217 | $ | 19,351 | |||
General contractor and other services expenses | (24,079 | ) | (17,182 | ) | |||
Net earnings from Service Operations | $ | 1,138 | $ | 2,169 |
General and administrative expenses - three-month period ended September 30, 2016 | $ | 12.5 | |
Decrease to overall pool of overhead costs | (4.9 | ) | |
Increased absorption of costs by wholly owned leasing and development activities (1) | (0.4 | ) | |
Decreased allocation of costs to Service Operations and Rental Operations (2) | 2.9 | ||
General and administrative expenses - three-month period ended September 30, 2017 | $ | 10.1 |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Rental and related revenue: | |||||||
Industrial | $ | 485,785 | $ | 432,945 | |||
Non-reportable Rental Operations and non-segment revenues | 21,338 | 47,874 | |||||
Total rental and related revenue from continuing operations | $ | 507,123 | $ | 480,819 | |||
Rental and related revenue from discontinued operations | 86,026 | 129,087 | |||||
Total rental and related revenue from continuing and discontinued operations | $ | 593,149 | $ | 609,906 |
• | Rental and related revenue from continuing operations includes lease termination fees, which relate to specific tenants who pay a fee to terminate their lease obligation before the end of the contractual lease term. The overall increase in rental and related revenue from continuing operations included an increase of $8.6 million in termination fees compared to the nine months ended September 30, 2016. |
• | Increased expense reimbursements primarily due to increased real estate taxes in our existing properties during the nine months ended September 30, 2017, as compared to the same period in 2016, contributed to the increase to rental and related revenue from continuing operations. |
• | Increased occupancy and rental rates within our same-property portfolio also contributed to the increase to rental and related revenue from continuing operations. Average commencement occupancy and rental rates in our same-property portfolio both increased from the nine months ended September 30, 2016. |
• | We acquired 35 properties and placed 31 developments in service from January 1, 2016 to September 30, 2017, which provided incremental revenues from continuing operations of $44.0 million in the nine months ended September 30, 2017, as compared to the same period in 2016. |
• | The sale of 43 in-service properties, since January 1, 2016, which did not meet the criteria for inclusion within discontinued operations, resulted in a decrease of $30.0 million to rental and related revenue from continuing operations in the nine months ended September 30, 2017, as compared to the same period in 2016, which partially offset the aforementioned increases to rental and related revenue from continuing operations. |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Rental expenses: | |||||||
Industrial | $ | 41,503 | $ | 36,358 | |||
Non-reportable Rental Operations and non-segment expenses | 5,464 | 18,327 | |||||
Total rental expenses from continuing operations | $ | 46,967 | $ | 54,685 | |||
Rental expenses from discontinued operations | 17,893 | 26,401 | |||||
Total rental expenses from continuing and discontinued operations | $ | 64,860 | $ | 81,086 | |||
Real estate taxes: | |||||||
Industrial | $ | 78,538 | $ | 69,553 | |||
Non-reportable Rental Operations and non-segment expenses | 3,031 | 6,134 | |||||
Total real estate tax expense from continuing operations | $ | 81,569 | $ | 75,687 | |||
Real estate tax expense from discontinued operations | 9,887 | 15,201 | |||||
Total real estate tax expense from continuing and discontinued operations | $ | 91,456 | $ | 90,888 |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Service Operations: | |||||||
General contractor and service fee revenue | $ | 58,192 | $ | 68,546 | |||
General contractor and other services expenses | (54,077 | ) | (60,330 | ) | |||
Net earnings from Service Operations | $ | 4,115 | $ | 8,216 |
General and administrative expenses - nine months ended September 30, 2016 | $ | 42.2 | |
Decrease to overall pool of overhead costs | (4.5 | ) | |
Increased absorption of costs by wholly owned leasing and development activities (1) | (4.7 | ) | |
Decreased allocation of costs to Service Operations and Rental Operations (2) | 8.2 | ||
General and administrative expenses - nine months ended September 30, 2017 | $ | 41.2 |
• | property investment; |
• | leasing/capital costs; |
• | dividends and distributions to shareholders and unitholders; |
• | long-term debt maturities; |
• | opportunistic repurchases of outstanding debt; and |
• | other contractual obligations. |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Second generation tenant improvements | $ | 10,538 | $ | 18,541 | |||
Second generation leasing costs | 16,461 | 18,902 | |||||
Building improvements | 7,351 | 1,726 | |||||
Total second generation capital expenditures | $ | 34,350 | $ | 39,169 | |||
Development of real estate investments | $ | 421,702 | $ | 308,199 | |||
Other deferred leasing costs | $ | 22,399 | $ | 25,949 |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Industrial | $ | 32,684 | $ | 33,091 | |||
Non-reportable Rental Operations | 1,666 | 6,078 | |||||
Total | $ | 34,350 | $ | 39,169 |
Future Repayments | ||||||||||||||
Year | Scheduled Amortization | Maturities | Total | Weighted Average Interest Rate of Future Repayments | ||||||||||
Remainder of 2017 | $ | 2,139 | $ | — | $ | 2,139 | 6.26 | % | ||||||
2018 | 7,768 | — | 7,768 | 6.18 | % | |||||||||
2019 | 6,936 | 268,438 | 275,374 | 7.60 | % | |||||||||
2020 | 5,381 | — | 5,381 | 5.78 | % | |||||||||
2021 | 3,416 | 259,047 | 262,463 | 3.99 | % | |||||||||
2022 | 3,611 | 600,000 | 603,611 | 4.20 | % | |||||||||
2023 | 3,817 | 255,000 | 258,817 | 3.72 | % | |||||||||
2024 | 4,036 | 300,000 | 304,036 | 3.92 | % | |||||||||
2025 | 3,938 | — | 3,938 | 5.53 | % | |||||||||
2026 | 2,029 | 375,000 | 377,029 | 3.37 | % | |||||||||
2027 | 358 | — | 358 | 6.42 | % | |||||||||
Thereafter | — | 50,000 | 50,000 | 7.29 | % | |||||||||
$ | 43,429 | $ | 2,107,485 | $ | 2,150,914 | 4.46 | % |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
General Partner | |||||||
Net cash provided by operating activities | $ | 360.5 | $ | 354.4 | |||
Net cash provided by investing activities | $ | 667.8 | $ | 64.3 | |||
Net cash used for financing activities | $ | (1,013.6 | ) | $ | (331.0 | ) | |
Partnership | |||||||
Net cash provided by operating activities | $ | 360.5 | $ | 354.4 | |||
Net cash provided by investing activities | $ | 667.8 | $ | 64.3 | |||
Net cash used for financing activities | $ | (1,013.6 | ) | $ | (331.0 | ) |
• | During the nine months ended September 30, 2017, we paid cash of $620.9 million and $127.7 million, respectively, for real estate and undeveloped land acquisitions, compared to $16.0 million and $77.6 million for real estate and undeveloped land acquisitions in the same period in 2016. |
• | Real estate development costs were $421.7 million during the nine months ended September 30, 2017, compared to $308.2 million for the same period in 2016. |
• | Sales of land and depreciated properties provided $2.28 billion in net proceeds for the nine months ended September 30, 2017, compared to $369.1 million for the same period in 2016. |
• | The increased cash outflows reflected in the Other Assets line of the Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 was the result of a portion of the proceeds from the Medical Office Portfolio Disposition being transferred into escrow for use in future like kind exchange transactions, and not meeting the criteria for classification as cash and equivalents. The cash outflows from such transfers totaled $472.4 million during the nine months ended September 30, 2017, compared to $37.4 million during the nine months ended September 30, 2016. During the nine months ended September 30, 2016, we also received a full repayment of a $200.0 million seller-financed mortgage from the buyers of an office portfolio that we sold in April 2015. |
• | Second generation tenant improvements, leasing costs and building improvements totaled $34.4 million for the nine months ended September 30, 2017 compared to $39.2 million for the same period in 2016. |
• | For the nine months ended September 30, 2017, we received $111.6 million in capital distributions from unconsolidated joint ventures, primarily related to selling our interests in two joint ventures in connection with the Medical Office Portfolio Disposition, compared to $52.5 million during the same period in 2016. |
• | For the nine months ended September 30, 2017, we made capital contributions of $6.3 million to unconsolidated joint ventures, compared to $54.9 million during the same period in 2016. |
• | During the nine months ended September 30, 2016, the General Partner issued 8.3 million common shares pursuant to its ATM equity program, for net proceeds of $213.6 million. The General Partner did not issue any shares under its ATM equity program during the nine months ended September 30, 2017. |
• | During the nine months ended September 30, 2016, the Partnership issued $375.0 million of senior unsecured notes that bear interest at a stated rate of 3.25%, have an effective rate of 3.36%, and mature on June 30, 2026. The Partnership did not issue any senior unsecured notes during the nine months ended September 30, 2017. |
• | During the nine months ended September 30, 2017, the Partnership paid cash of $691.5 million to execute the early repayment of a $250.0 million variable rate term loan as well as the early redemption of $414.3 million of senior unsecured notes. During the nine months ended September 30, 2016, the Partnership paid cash of $283.5 million to repurchase and redeem $275.0 million of 5.95% senior unsecured notes. These cash payments for the extinguishment of senior secured notes included repayment and redemption premiums. |
• | During the nine months ended September 30, 2017, the Partnership repaid seven secured loans for $66.3 million. The Partnership repaid five secured loans for $346.4 million during the same period in 2016. |
• | For the nine months ended September 30, 2017, the Partnership repaid $43.0 million of net borrowings on the Partnership's unsecured line of credit, compared to $71.0 million of net borrowings for the same period in 2016. |
• | We paid regular cash dividends or distributions totaling $202.8 million and $187.9 million for the nine months ended September 30, 2017 and 2016, respectively. |
Remainder of 2017 | 2018 | 2019 | 2020 | 2021 | Thereafter | Face Value | Fair Value | ||||||||||||||||||||||||
Fixed rate secured debt | $ | 1,493 | $ | 4,783 | $ | 272,215 | $ | 3,583 | $ | 12,163 | $ | 16,490 | $ | 310,727 | $ | 332,025 | |||||||||||||||
Weighted average interest rate | 6.26 | % | 6.46 | % | 7.63 | % | 5.98 | % | 5.73 | % | 6.07 | % | 7.43 | % | |||||||||||||||||
Variable rate secured debt | $ | — | $ | 300 | $ | 300 | $ | 300 | $ | 300 | $ | 1,300 | $ | 2,500 | $ | 2,500 | |||||||||||||||
Weighted average interest rate | N/A | 1.02 | % | 1.02 | % | 1.02 | % | 1.02 | % | 1.02 | % | 1.02 | % | ||||||||||||||||||
Fixed rate unsecured debt* | $ | 646 | $ | 2,685 | $ | 2,859 | $ | 1,498 | $ | 250,000 | $ | 1,574,999 | $ | 1,832,687 | $ | 1,909,225 | |||||||||||||||
Weighted average interest rate | 6.26 | % | 6.26 | % | 6.26 | % | 6.26 | % | 3.91 | % | 3.96 | % | 3.97 | % | |||||||||||||||||
Variable rate unsecured line of credit* | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 5,000 | $ | 5,000 | $ | 5,000 | |||||||||||||||
Rate at September 30, 2017 | N/A | N/A | N/A | N/A | N/A | 2.17% | 2.17 | % |
3.1 | |||
3.2 | |||
3.3 | |||
3.4 (i) | |||
3.4 (ii) | |||
3.4 (iii) | |||
3.4 (iv) | |||
3.4 (v) | |||
11.1 | Statement Regarding Computation of Earnings.*** | ||
12.1 | |||
12.2 | |||
31.1 | |||
31.2 | |||
31.3 | |||
31.4 | |||
32.1 | |||
32.2 | |||
32.3 | |||
32.4 | |||
101.Def | Definition Linkbase Document | ||
101.Pre | Presentation Linkbase Document | ||
101.Lab | Labels Linkbase Document | ||
101.Cal | Calculation Linkbase Document | ||
101.Sch | Schema Document | ||
101.Ins | Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
# | Represents management contract or compensatory plan or arrangement |
* | Filed herewith. |
** | The certifications attached as Exhibits 32.1, 32.2, 32.3 and 32.4 accompany this Quarterly Report on Form 10-Q and are "furnished" to the Securities and Exchange Commission pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed "filed" by the General Partner or the Partnership, respectively, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. |
*** | Data required by Financial Accounting Standards Board Auditing Standards Codification No. 260 is provided in Note 8 to the Consolidated Financial Statements included in this Report. |
DUKE REALTY CORPORATION | ||
/s/ James B. Connor | ||
James B. Connor | ||
President, Chief Executive Officer and Director | ||
/s/ Mark A. Denien | ||
Mark A. Denien | ||
Executive Vice President and Chief Financial Officer | ||
DUKE REALTY LIMITED PARTNERSHIP | ||
By: DUKE REALTY CORPORATION, its general partner | ||
/s/ James B. Connor | ||
James B. Connor | ||
President, Chief Executive Officer and Director of the General Partner | ||
/s/ Mark A. Denien | ||
Mark A. Denien | ||
Executive Vice President and Chief Financial Officer of the General Partner | ||
Date: | October 27, 2017 | |
Nine Months Ended September 30, 2017 | Year Ended December 31, 2016 | Year Ended December 31, 2015 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2012 | ||||||||||||||||||||
Net income (loss) from continuing operations, less preferred dividends | $ | 227,894 | $ | 300,351 | $ | 190,937 | $ | 198,913 | $ | 47,425 | $ | (109,332 | ) | ||||||||||||
Preferred dividends | — | — | — | 24,943 | 31,616 | 46,438 | |||||||||||||||||||
Interest expense | 65,401 | 112,757 | 138,258 | 162,108 | 168,327 | 174,066 | |||||||||||||||||||
Earnings before fixed charges | $ | 293,295 | $ | 413,108 | $ | 329,195 | $ | 385,964 | $ | 247,368 | $ | 111,172 | |||||||||||||
Interest expense | $ | 65,401 | $ | 112,757 | $ | 138,258 | $ | 162,108 | $ | 168,327 | $ | 174,066 | |||||||||||||
Interest costs capitalized | 14,453 | 16,099 | 16,764 | 17,620 | 16,756 | 9,357 | |||||||||||||||||||
Total fixed charges | 79,854 | 128,856 | 155,022 | 179,728 | 185,083 | 183,423 | |||||||||||||||||||
Preferred dividends | — | — | — | 24,943 | 31,616 | 46,438 | |||||||||||||||||||
Total fixed charges and preferred dividends | $ | 79,854 | $ | 128,856 | $ | 155,022 | $ | 204,671 | $ | 216,699 | $ | 229,861 | |||||||||||||
Ratio of earnings to fixed charges | 3.67 | 3.21 | 2.12 | 2.15 | 1.34 | N/A | (1) | ||||||||||||||||||
Ratio of earnings to fixed charges and preferred dividends | 3.67 | 3.21 | 2.12 | 1.89 | 1.14 | N/A | (2) |
(1) | N/A - The ratio is less than 1.0; deficit of $72.3 million exists for the year ended December 31, 2012. The calculation of earnings includes $278.8 million of non-cash depreciation and amortization expense. |
(2) | N/A - The ratio is less than 1.0; deficit of $118.7 million exists for the year ended December 31, 2012. The calculation of earnings includes $278.8 million of non-cash depreciation and amortization expense. |
Nine Months Ended September 30, 2017 | Year Ended December 31, 2016 | Year Ended December 31, 2015 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2012 | ||||||||||||||||||||
Net income (loss) from continuing operations, less preferred distributions | $ | 227,894 | $ | 300,351 | $ | 190,937 | $ | 198,913 | $ | 47,425 | $ | (109,332 | ) | ||||||||||||
Preferred distributions | — | — | — | 24,943 | 31,616 | 46,438 | |||||||||||||||||||
Interest expense | 65,401 | 112,757 | 138,258 | 162,108 | 168,327 | 174,066 | |||||||||||||||||||
Earnings before fixed charges | $ | 293,295 | $ | 413,108 | $ | 329,195 | $ | 385,964 | $ | 247,368 | $ | 111,172 | |||||||||||||
Interest expense | $ | 65,401 | $ | 112,757 | $ | 138,258 | $ | 162,108 | $ | 168,327 | $ | 174,066 | |||||||||||||
Interest costs capitalized | 14,453 | 16,099 | 16,764 | 17,620 | 16,756 | 9,357 | |||||||||||||||||||
Total fixed charges | 79,854 | 128,856 | 155,022 | 179,728 | 185,083 | 183,423 | |||||||||||||||||||
Preferred distributions | — | — | — | 24,943 | 31,616 | 46,438 | |||||||||||||||||||
Total fixed charges and preferred distributions | $ | 79,854 | $ | 128,856 | $ | 155,022 | $ | 204,671 | $ | 216,699 | $ | 229,861 | |||||||||||||
Ratio of earnings to fixed charges | 3.67 | 3.21 | 2.12 | 2.15 | 1.34 | N/A | (1) | ||||||||||||||||||
Ratio of earnings to fixed charges and preferred distributions | 3.67 | 3.21 | 2.12 | 1.89 | 1.14 | N/A | (2) |
(1) | N/A - The ratio is less than 1.0; deficit of $72.3 million exists for the year ended December 31, 2012. The calculation of earnings includes $278.8 million of non-cash depreciation and amortization expense. |
(2) | N/A - The ratio is less than 1.0; deficit of $118.7 million exists for the year ended December 31, 2012. The calculation of earnings includes $278.8 million of non-cash depreciation and amortization expense. |
1 | I have reviewed this Quarterly Report on Form 10-Q of Duke Realty Corporation; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4 | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5 | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ James B. Connor |
James B. Connor |
President and Chief Executive Officer |
1 | I have reviewed this Quarterly Report on Form 10-Q of Duke Realty Corporation; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4 | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5 | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Mark A. Denien |
Mark A. Denien |
Executive Vice President and Chief Financial Officer |
1 | I have reviewed this Quarterly Report on Form 10-Q of Duke Realty Limited Partnership; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4 | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5 | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ James B. Connor |
James B. Connor |
President and Chief Executive Officer of the General Partner |
1 | I have reviewed this Quarterly Report on Form 10-Q of Duke Realty Limited Partnership; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4 | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5 | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Mark A. Denien |
Mark A. Denien |
Executive Vice President and Chief Financial Officer of the General Partner |
/s/ James B. Connor | |
James B. Connor | |
President and Chief Executive Officer | |
Date: | October 27, 2017 |
/s/ Mark A. Denien | |
Mark A. Denien | |
Executive Vice President and Chief Financial Officer | |
Date: | October 27, 2017 |
/s/ James B. Connor | |
James B. Connor | |
President and Chief Executive Officer of the General Partner | |
Date: | October 27, 2017 |
/s/ Mark A. Denien | |
Mark A. Denien | |
Executive Vice President and Chief Financial Officer of the General Partner | |
Date: | October 27, 2017 |
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Consolidated Statement of Changes in Equity - 9 months ended Sep. 30, 2017 - USD ($) $ in Thousands |
Total |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Accumulated Other Comprehensive Income (Loss) [Member] |
Distributions in Excess of Net Income [Member] |
Non-controlling Interest [Member] |
Duke Realty Limited Partnership [Member] |
Duke Realty Limited Partnership [Member]
Common Stock [Member]
|
Duke Realty Limited Partnership [Member]
Limited Partners' Common Equity [Member]
|
Duke Realty Limited Partnership [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
|
Duke Realty Limited Partnership [Member]
Non-controlling Interest [Member]
|
Duke Realty Limited Partnership [Member]
Stockholders' Equity, Total [Member]
|
---|---|---|---|---|---|---|---|---|---|---|---|---|
Beginning Balance - General Partner at Dec. 31, 2016 | $ 3,493,293 | $ 3,548 | $ 5,192,011 | $ 682 | $ (1,730,423) | $ 27,475 | ||||||
Beginning Balance - Partnership at Dec. 31, 2016 | $ 3,493,293 | $ 3,465,136 | $ 24,691 | $ 682 | $ 2,784 | $ 3,490,509 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net Income | 1,464,175 | 1,446,012 | 18,163 | 1,464,175 | 1,446,012 | 13,427 | 4,736 | 1,459,439 | ||||
Other comprehensive loss | (682) | (682) | (682) | (682) | (682) | |||||||
Issuance of common shares | 7,309 | 3 | 7,306 | |||||||||
Capital contribution from the General Partner | 7,309 | 7,309 | 7,309 | |||||||||
Stock based compensation plan activity | 914 | 9 | (5,510) | (1,147) | 7,562 | 914 | (6,648) | 7,562 | 914 | |||
Conversion/redemption of Limited Partner Units | (457) | 1 | 1,344 | (1,802) | (457) | 1,345 | (1,802) | (457) | ||||
Distributions to Partners | (204,654) | (202,770) | (1,884) | (204,654) | ||||||||
Distributions to common shareholders | (202,770) | (202,770) | ||||||||||
Distributions to noncontrolling interests | (8,407) | (8,407) | (6,523) | (6,523) | ||||||||
Ending Balance - General Partner at Sep. 30, 2017 | $ 4,753,375 | $ 3,561 | $ 5,195,151 | $ 0 | $ (488,328) | $ 42,991 | ||||||
Ending Balance - Partnership at Sep. 30, 2017 | $ 4,753,375 | $ 4,710,384 | $ 41,994 | $ 0 | $ 997 | $ 4,752,378 |
Consolidated Statement of Changes in Equity (Parenthetical) |
9 Months Ended |
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Sep. 30, 2017
$ / shares
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Distributions to common shareholders, per share | $ 0.57 |
Duke Realty Limited Partnership [Member] | |
Distributions to Partners, per Common Unit | $ 0.57 |
General Basis of Presentation (Notes) |
9 Months Ended |
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Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General Basis of Presentation | General Basis of Presentation The interim consolidated financial statements included herein have been prepared by the General Partner and the Partnership. The 2016 year-end consolidated balance sheet data included in this Report was derived from the audited financial statements in the combined Annual Report on Form 10-K of the General Partner and the Partnership for the year ended December 31, 2016 (the "2016 Annual Report"), but does not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). The financial statements have been prepared in accordance with GAAP for interim financial information and in accordance with Rule 10-01 of Regulation S-X of the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenue and expenses during the reporting period. Our actual results could differ from those estimates and assumptions. These financial statements should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations included herein and the consolidated financial statements and notes thereto included in the 2016 Annual Report. The General Partner was formed in 1985, and we believe that it qualifies as a REIT under the provisions of the Internal Revenue Code of 1986, as amended (the "Code"). The Partnership was formed on October 4, 1993, when the General Partner contributed all of its properties and related assets and liabilities, together with the net proceeds from an offering of additional shares of its common stock, to the Partnership. Simultaneously, the Partnership completed the acquisition of Duke Associates, a full-service commercial real estate firm operating in the Midwest whose operations began in 1972. The General Partner is the sole general partner of the Partnership, owning approximately 99.1% of the Common Units at September 30, 2017. The remaining 0.9% of the Common Units are owned by Limited Partners. As the sole general partner of the Partnership, the General Partner has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Partnership. The General Partner and the Partnership are operated as one enterprise. The management of the General Partner consists of the same members as the management of the Partnership. As the sole general partner with control of the Partnership, the General Partner consolidates the Partnership for financial reporting purposes, and the General Partner does not have any significant assets other than its investment in the Partnership. Therefore, the assets and liabilities of the General Partner and the Partnership are substantially the same. Limited Partners have the right to redeem their Limited Partner Units, subject to certain restrictions. Pursuant to the Fifth Amended and Restated Agreement of Limited Partnership, as amended (the "Partnership Agreement"), the General Partner is obligated to redeem the Limited Partner Units in shares of its common stock, unless it determines in its reasonable discretion that the issuance of shares of its common stock could cause it to fail to qualify as a REIT. Each Limited Partner Unit shall be redeemed for one share of the General Partner's common stock, or, in the event that the issuance of shares could cause the General Partner to fail to qualify as a REIT, cash equal to the fair market value of one share of the General Partner's common stock at the time of redemption, in each case, subject to certain adjustments described in the Partnership Agreement. The Limited Partner Units are not required, per the terms of the Partnership Agreement, to be redeemed in registered shares of the General Partner. During the nine months ended September 30, 2017, we substantially completed the disposition of our medical office portfolio (the "Medical Office Portfolio Disposition", see Note 5) and exited from the medical office product segment. As of September 30, 2017, we owned and operated a portfolio primarily consisting of industrial properties and provided real estate services to third-party owners. Substantially all of our Rental Operations (see Note 9) are conducted through the Partnership. We conduct our Service Operations (see Note 9) through Duke Realty Services, LLC, Duke Realty Services Limited Partnership and Duke Construction Limited Partnership ("DCLP"), which are consolidated entities that are 100% owned by a combination of the General Partner and the Partnership. DCLP is owned through a taxable REIT subsidiary. The consolidated financial statements include our accounts and the accounts of our majority-owned or controlled subsidiaries.
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New Accounting Pronouncement (Notes) |
9 Months Ended |
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Sep. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements, Policy [Policy Text Block] | New Accounting Pronouncements Business Combinations In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business ("ASU 2017-01"). ASU 2017-01 provides revised guidance to determine when an acquisition meets the definition of a business or should be accounted for as an asset acquisition, likely resulting in more acquisitions being accounted for as asset acquisitions as opposed to business combinations. Transaction costs are capitalized for asset acquisitions while they are expensed as incurred for business combinations. ASU 2017-01 requires that when substantially all of the fair value of an acquisition is concentrated in a single identifiable asset or a group of similar identifiable assets it does not meet the definition of a business. ASU 2017-01 also revises the definition of a business to include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create an output. ASU 2017-01 will be effective, on a prospective basis, for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted. We adopted ASU 2017-01 prospectively as of January 1, 2017 as permitted under the standard, which has not had a material impact to the consolidated financial statements. Restricted Cash In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash ("ASU 2016-18"). ASU 2016-18 requires entities to show the changes in the total of cash and restricted cash in the statement of cash flows. As a result, entities will no longer present transfers between cash and restricted cash in the statement of cash flows. ASU 2016-18 will be effective for us retrospectively for annual and interim reporting periods beginning after December 15, 2017 with early adoption permitted. We do not believe ASU 2016-18 will have a material impact on our consolidated financial statements. Statement of Cash Flows In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows ("ASU 2016-15"). ASU 2016-15 clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows and how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. ASU 2016-15 will be effective for us retrospectively for annual and interim reporting periods beginning after December 15, 2017 with early adoption permitted. We do not believe ASU 2016-15 will have a material impact on our consolidated financial statements. Stock Compensation In March 2016, the FASB issued ASU 2016-09, Stock Compensation: Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), which simplifies certain aspects of accounting for share-based payment transactions, including income tax consequences, forfeitures and the classification of amounts paid to taxing authorities when shares are withheld to cover employee tax withholdings for certain stock based compensation plans in the statements of cash flows. ASU 2016-09 was effective for us as of January 1, 2017 and did not have a material impact on our consolidated financial statements. Leases In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02"), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). ASU 2016-02 supersedes existing leasing standards. ASU 2016-02 requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASU 2016-02 also requires that lessors expense certain initial direct costs, which are capitalizable under existing leasing standards, as incurred. ASU 2016-02 also specifies that payments for certain lease-related services, which are often included in lease agreements, represent "non-lease" components that will become subject to the guidance in ASU 2014-09, Revenue from Contracts with Customers, when ASU 2016-02 becomes effective. The FASB recently clarified that only new or modified leases subsequent to adoption of ASU 2016-02 will require different accounting for "non-lease" components under the guidance in ASU 2014-09. We are currently evaluating the presentation and disclosure impacts of this accounting change. ASU 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. ASU 2016-02 will impact the accounting and disclosure requirements for the ground leases, and other operating leases, where we are the lessee. ASU 2016-02 will be effective for us under a modified retrospective approach for annual and interim reporting periods beginning after December 15, 2018, with early adoption permitted. A set of practical expedients for implementation, which must be elected as a package and for all leases, may also be elected. These practical expedients include relief from re-assessing lease classification at the adoption date for expired or existing leases, although a right-of-use asset and lease liability would still be recorded for such leases. We are currently assessing the method of adoption and the impact that ASU 2016-02 will have on our consolidated financial statements but have tentatively concluded that we will apply the practical expedients. Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing GAAP revenue recognition guidance as well as impact the existing GAAP guidance governing the sale of non-financial assets. The standard’s core principle is that a company will recognize revenue when it satisfies performance obligations, by transferring promised goods or services to customers, in an amount that reflects the consideration to which the company expects to be entitled in exchange for fulfilling those performance obligations. In doing so, companies will need to exercise more judgment and make more estimates than under existing GAAP guidance. ASU 2014-09 also created guidance governing the sale of non-financial assets with customers and non-customers with the only difference in the treatment of these transactions being presentation in the statement of operations (revenue and expense is reported when the sale is to a customer and net gain or loss is reported when the sale is to a non-customer). Based on the nature of our business, we have concluded that our property sales represent transactions with non-customers. In February 2017, the FASB issued ASU 2017-05, Other Income: Gains and Losses from the Derecognition of Non-financial Assets (“ASU 2017-05”). ASU 2017-05 provides guidance on how entities recognize sales, including partial sales, of non-financial assets (and in-substance non-financial assets) to non-customers. ASU 2017-05 requires the seller to recognize a full gain or loss in a partial sale of non-financial assets, to the extent control is not retained. Any noncontrolling interest retained by the seller would, accordingly, be measured at fair value. Both ASU 2014-09 and ASU 2017-05 will be effective for public entities for annual and interim reporting periods beginning after December 15, 2017 and early adoption is permitted in periods ending after December 15, 2016. ASU 2014-09 and ASU 2017-05 allow for either full or modified retrospective ("cumulative effect") adoption. Both standards must be adopted concurrently. We have concluded that we will adopt both ASU 2014-09 and ASU 2017-05 using the cumulative effect method. We have evaluated each of our revenue streams under ASU 2014-09 and determined that our revenues that will be impacted by this standard primarily include construction and development fees charged to third parties, fees for services performed for unconsolidated joint ventures and sales of real estate. We expect that the amount and timing of revenue recognition from these revenue streams referenced above will be generally consistent with our current measurement and pattern of recognition. In addition, the pattern of recognition for sales of real estate is not expected to change significantly. We have primarily disposed of property and land in all cash transactions with no contingencies and no future involvement in the operations, and therefore, do not expect ASU 2017-05 to significantly impact the recognition of property and land sales.
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Reclassifications |
9 Months Ended |
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Sep. 30, 2017 | |
Disclosure Text Block [Abstract] | |
Reclassifications | ReclassificationsCertain amounts in the accompanying consolidated financial statements for 2016, including the change in presentation for the medical office properties determined to be discontinued operations (see Note 10) and the tax payments on stock-based compensation awards pursuant to ASU 2016-09, have been reclassified to conform to the 2017 consolidated financial statement presentation. |
Variable Interest Entities |
9 Months Ended |
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Sep. 30, 2017 | |
Disclosure Text Block [Abstract] | |
Consolidation Policy for VIEs | Variable Interest Entities Partnership Due to the fact that the Limited Partners do not have kick out rights, or substantive participating rights, the Partnership is a variable interest entity ("VIE"). Because the General Partner holds majority ownership and exercises control over every aspect of the Partnership's operations, the General Partner has been determined as the primary beneficiary and, therefore, consolidates the Partnership. The assets and liabilities of the General Partner and the Partnership are substantially the same, as the General Partner does not have any significant assets other than its investment in the Partnership. All of the Company's debt is an obligation of the Partnership. Unconsolidated Joint Ventures We have equity interests in unconsolidated joint ventures that primarily own and operate rental properties or hold land for development. We consolidate those joint ventures that are considered to be VIEs where we are the primary beneficiary. We analyze our investments in joint ventures to determine if the joint venture is considered a VIE and would require consolidation. We (i) evaluate the sufficiency of the total equity investment at risk, (ii) review the voting rights and decision-making authority of the equity investment holders as a group and whether there are limited partners (or similar owning entities) that lack substantive participating or kick out rights and (iii) establish whether or not activities within the venture are on behalf of an investor with disproportionately few voting rights in making this VIE determination. To the extent that we own interests in a VIE and we (i) are the sole entity that has the power to direct the activities of the VIE and (ii) have the obligation or rights to absorb the VIE's losses or receive its benefits, then we would be determined to be the primary beneficiary and would consolidate the VIE. To the extent we own interests in a VIE, then at each reporting period, we re-assess our conclusions as to which, if any, party within the VIE is considered the primary beneficiary. Consolidated joint ventures that are VIEs are not significant in any period presented in these consolidated financial statements. To the extent that our joint ventures do not qualify as VIEs, they are consolidated if we control them through majority ownership interests or if we are the managing entity (general partner or managing member) and our partner does not have substantive participating rights. Control is further demonstrated by our ability to unilaterally make significant operating decisions, refinance debt and sell the assets of the joint venture without the consent of the non-managing entity and the inability of the non-managing entity to remove us from our role as the managing entity. Consolidated joint ventures that are not VIEs are not significant in any period presented in these consolidated financial statements. |
Acquisitions and Dispositions |
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||
Real Estate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||
Acquisitions and Dispositions | Acquisitions and Dispositions Acquisitions and dispositions for the periods presented were completed in accordance with our strategy to reposition our investment concentration among the product types and markets in which we operate and to increase our overall investments in quality industrial projects. With the exception of certain properties that have been sold or classified as held for sale, the results of operations for all acquired properties have been included in continuing operations within our consolidated financial statements since their respective dates of acquisition. Transaction costs related to asset acquisitions are capitalized and transaction costs related to business combinations and dispositions are expensed. Acquisitions We acquired 20 properties during the nine months ended September 30, 2017. We determined that these 20 properties did not meet the revised definition of a business as the result of adopting ASU 2017-01 and, accordingly, we accounted for them as asset acquisitions as opposed to business combinations. The following table summarizes amounts recognized for each major class of assets (in thousands) for these acquisitions during the nine months ended September 30, 2017:
The leases in the acquired properties had a weighted average remaining life at acquisition of approximately 7.7 years. Fair Value Measurements We determine the fair value of the individual components of real estate asset acquisitions primarily through calculating the "as-if vacant" value of a building, using an income approach, which relies significantly upon internally determined assumptions. We have determined that these estimates primarily rely upon level 3 inputs, which are unobservable inputs based on our own assumptions. The most significant assumptions used in calculating the "as-if vacant" value for acquisition activity during the nine months ended September 30, 2017 are as follows:
An acquisition during the three months ended September 30, 2017 is located in a high performing industrial market in Northern New Jersey which is at the high end of our range of assumptions for net rental rate per square foot. Capitalized acquisition costs were insignificant and the fair value of the 20 properties acquired during the nine months ended September 30, 2017 was substantially the same as the cost of acquisition. Dispositions Dispositions of buildings (see Note 10 for the number of buildings sold as well as for their classification between continuing and discontinued operations) and undeveloped land generated net cash proceeds of $2.28 billion and $369.1 million during the nine months ended September 30, 2017 and 2016, respectively. Dispositions for the nine months ended September 30, 2017 included 84 consolidated properties sold as part of the Medical Office Portfolio Disposition to a subsidiary of Healthcare Trust of America, Inc. ("HTA"), as well as certain other buyers, for a total sales price of $2.60 billion and a gain on sale of $1.26 billion. Seven of these consolidated properties were sold during the three months ended September 30, 2017, for a total sales price of $250.0 million and a gain on sale of $120.4 million. The Medical Office Portfolio Disposition was executed in connection with our strategy to focus solely on the industrial real estate product type. A portion of the sale price for the Medical Office Portfolio Disposition was financed through either unsecured notes, or first mortgage interests in a portion of the sold properties, that we provided to HTA and other buyers, totaling $400.0 million, which is reflected within notes receivable from property sales in the Consolidated Balance Sheets. These instruments mature at various points through January 2020 and all bear interest at 4.0%. We concluded that the value, and the rate of interest, for these financial instruments would approximate fair value as computed using an income approach and that this determination of fair value was primarily based upon level 3 inputs. We have reviewed the creditworthiness of the borrowers and have concluded it is probable that we will collect all amounts due according to their contractual terms. |
Indebtedness |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Indebtedness | Indebtedness All debt is held directly or indirectly by the Partnership. The General Partner does not have any indebtedness, but does guarantee some of the unsecured debt of the Partnership. The following table summarizes the book value and changes in the fair value of our debt (in thousands):
Secured Debt Because our fixed rate secured debt is not actively traded in any marketplace, we utilized a discounted cash flow methodology to determine its fair value. Accordingly, we calculated fair value by applying an estimate of the current market rate to discount the debt's remaining contractual cash flows. Our estimate of a current market rate, which is the most significant input in the discounted cash flow calculation, is intended to replicate debt of similar maturity and loan-to-value relationship. The estimated rates ranged from 3.20% to 3.70%, depending on the attributes of the specific loans. The current market rates we utilized were internally estimated; therefore, we have concluded that our determination of fair value for our fixed rate secured debt was primarily based upon level 3 inputs. During the nine months ended September 30, 2017, we repaid seven fixed rate secured loans, totaling $66.3 million, which had a weighted average stated interest rate of 5.85%. Unsecured Debt At September 30, 2017, all of our unsecured debt bore interest at fixed rates and primarily consisted of unsecured notes that are publicly traded. We utilized broker estimates in estimating the fair value of our fixed rate unsecured debt. Our unsecured notes are thinly traded and, in certain cases, the broker estimates were not based upon comparable transactions. The broker estimates took into account any recent trades within the same series of our fixed rate unsecured debt, comparisons to recent trades of other series of our fixed rate unsecured debt, trades of fixed rate unsecured debt from companies with profiles similar to ours, as well as overall economic conditions. We reviewed these broker estimates for reasonableness and accuracy, considering whether the estimates were based upon market participant assumptions within the principal and most advantageous market and whether any other observable inputs would be more accurate indicators of fair value than the broker estimates. We concluded that the broker estimates were representative of fair value. We have determined that our estimation of the fair value of our fixed rate unsecured debt was primarily based upon level 3 inputs. The estimated trading values of our fixed rate unsecured debt, depending on the maturity and coupon rates, ranged from 99.00% to 130.00% of face value. The indentures (and related supplemental indentures) governing our outstanding series of unsecured notes also require us to comply with financial ratios and other covenants regarding our operations. We were in compliance with all such financial covenants at September 30, 2017. During the nine months ended September 30, 2017, we repaid the following unsecured loans:
Unsecured Line of Credit Our unsecured line of credit at September 30, 2017 is described as follows (in thousands):
The Partnership's unsecured line of credit had an interest rate on borrowings of LIBOR plus 0.93% (equal to 2.17% for outstanding borrowings at September 30, 2017), and had a maturity date of January 1, 2019, which in October 2017 was restated and amended (see Note 11). This line of credit provides us with an option to obtain borrowings from financial institutions that participate in the line at rates that may be lower than the stated interest rate, subject to certain restrictions. This line of credit contains financial covenants that require us to meet certain financial ratios and defined levels of performance, including those related to fixed charge coverage, unsecured interest expense coverage and debt-to-asset value (with asset value being defined in the Partnership's unsecured line of credit agreement). At September 30, 2017, we were in compliance with all financial covenants under this line of credit. To the extent that there are outstanding borrowings, we utilize a discounted cash flow methodology in order to estimate the fair value of our unsecured line of credit. To the extent that credit spreads have changed since the origination of the line of credit, the net present value of the difference between future contractual interest payments and future interest payments based on our estimate of a current market rate would represent the difference between the book value and the fair value. Our estimate of a current market rate is based upon the rate, considering current market conditions and our specific credit profile, at which we estimate we could obtain similar borrowings. As our credit spreads have not changed appreciably, we believe that the contractual interest rate and the current market rate on the line of credit are the same. To the extent there are outstanding borrowings, this current market rate is internally estimated and therefore would be primarily based upon a level 3 input.
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Related Party Transactions |
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Related Party Transactions | Related Party Transactions We provide property management, asset management, leasing, construction and other tenant-related services to unconsolidated companies in which we have equity interests. We recorded the corresponding fees based on contractual terms that approximate market rates for these types of services and have eliminated our ownership percentage of these fees in the consolidated financial statements. The following table summarizes the fees earned from these companies, prior to the elimination of our ownership percentage (in thousands):
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Net Income (Loss) Per Common Share |
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Net Income (Loss) Per Common Share | Net Income Per Common Share or Common Unit Basic net income per common share or Common Unit is computed by dividing net income attributable to common shareholders or common unitholders, less dividends or distributions on share-based awards expected to vest (referred to as "participating securities" and primarily composed of unvested restricted stock units), by the weighted average number of common shares or Common Units outstanding for the period. Diluted net income per common share is computed by dividing the sum of net income attributable to common shareholders and the noncontrolling interest in earnings allocable to Limited Partner Units (to the extent the Limited Partner Units are dilutive), less dividends or distributions on participating securities that are anti-dilutive, by the sum of the weighted average number of common shares outstanding and, to the extent they are dilutive, weighted average number of Limited Partner Units outstanding and any potential dilutive securities for the period. Diluted net income per Common Unit is computed by dividing the net income attributable to common unitholders, less dividends or distributions on participating securities that are anti-dilutive, by the sum of the weighted average number of Common Units outstanding and any potential dilutive securities for the period. The following table reconciles the components of basic and diluted net income per common share or Common Unit (in thousands):
The following table summarizes the data that is excluded from the computation of net income per common share or Common Unit as a result of being anti-dilutive (in thousands):
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Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting Reportable Segments During the nine months ended September 30, 2017, we substantially completed the Medical Office Portfolio Disposition, which resulted in all of our in-service medical office properties being classified within discontinued operations with the exception of a property that did not meet the criteria for classification as held for sale at September 30, 2017 (see Note 10). As a result of this transaction, our medical office properties are no longer presented as a separate reportable segment at September 30, 2017, with substantially all current and prior period operating results being classified within discontinued operations. The remaining medical office property included in continuing operations no longer meets the quantitative thresholds for separate presentation, and is classified as part of our non-reportable Rental Operations. Properties that are not included in our reportable segments, because they do not by themselves meet the quantitative thresholds for separate presentation as a reportable segment, are generally referred to as non-reportable Rental Operations. Our non-reportable Rental Operations primarily include our remaining office properties and medical office property at September 30, 2017. As of September 30, 2017, after consideration of the Medical Office Portfolio Disposition, we had two reportable operating segments, the first consisting of the ownership and rental of industrial real estate investments. All of our industrial properties across the markets in which we operate are aggregated into one reportable segment as they have similar economic characteristics and we provide similar leasing arrangements and services to similar types of, and in many cases, the same tenants. The operations of our industrial properties, as well as our non-reportable Rental Operations, are collectively referred to as "Rental Operations." Our second reportable segment consists of various real estate services such as property management, asset management, maintenance, leasing, development, general contracting and construction management to third-party property owners and joint ventures, and is collectively referred to as "Service Operations." Our reportable segments are managed separately because each segment requires different operating strategies and management expertise. Revenues by Reportable Segment The following table shows the revenues for each of the reportable segments, as well as a reconciliation to consolidated revenues (in thousands):
Supplemental Performance Measure Property-level net operating income on a cash basis ("PNOI") is the non-GAAP supplemental performance measure that we use to evaluate the performance of, and to allocate resources among, the real estate investments in the reportable and operating segments that comprise our Rental Operations. PNOI for our Rental Operations segments is comprised of rental revenues from continuing operations less rental expenses and real estate taxes from continuing operations, along with certain other adjusting items (collectively referred to as "Rental Operations revenues and expenses excluded from PNOI," as shown in the following table). Additionally, we do not allocate interest expense, depreciation expense and certain other non-property specific revenues and expenses (collectively referred to as "Non-Segment Items," as shown in the following table) to our individual operating segments. We evaluate the performance of our Service Operations reportable segment using net income or loss, as allocated to that segment ("Earnings from Service Operations"). The following table shows a reconciliation of our segment-level measures of profitability to consolidated income from continuing operations before income taxes (in thousands and excluding discontinued operations):
The most comparable GAAP measure to PNOI is income from continuing operations before income taxes. PNOI excludes expenses that materially impact our overall results of operations and, therefore, should not be considered as a substitute for income from continuing operations before income taxes or any other measures derived in accordance with GAAP. Furthermore, PNOI may not be comparable to other similarly titled measures of other companies. Assets by Reportable Segment The assets for each of the reportable segments were as follows (in thousands):
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Real Estate Assets, Discontinued Operations and Assets Held for Sale |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Assets Held for Sale | Real Estate Assets, Discontinued Operations and Assets Held for Sale Real Estate Assets Real estate assets, excluding assets held for sale, consisted of the following (in thousands):
Discontinued Operations All of the properties included in discontinued operations are medical office properties. Because of the size of the Medical Office Portfolio Disposition, and the fact that it represented our exit from the medical office product type, we determined that the disposition represented a strategic shift that would have a major effect on our operations and financial results. As such, the consolidated in-service properties in this portfolio met the criteria to be classified within discontinued operations. As the result of its classification within discontinued operations, the in-service assets and liabilities of this portfolio are required to be presented as held for sale for all prior periods presented in our Consolidated Balance Sheets. Operating results pertaining to the properties classified within discontinued operations were reclassified to discontinued operations for all prior periods presented in our Consolidated Statements of Operations and Comprehensive Income. The following table illustrates the number of sold or held-for-sale properties included in, or excluded from, discontinued operations in this report:
Properties sold in 2017 but excluded from discontinued operations included four properties under development, which were disposed as part of the Medical Office Portfolio Disposition, as these properties did not meet the criteria to be included in discontinued operations. For the properties that were classified in discontinued operations, we allocated interest expense to discontinued operations and have included such interest expense in computing income from discontinued operations. Interest expense allocable to discontinued operations was based upon an allocable share of our consolidated unsecured interest expense, as none of the properties included in discontinued operations were encumbered by secured debt. The allocation of unsecured interest expense to discontinued operations was based upon the gross book value of the unencumbered real estate assets included in discontinued operations as it related to the total gross book value of our unencumbered real estate assets. The following table illustrates the operational results of the buildings reflected in discontinued operations (in thousands):
Capital expenditures on a cash basis for the nine months ended September 30, 2017 and 2016 were $20.8 million and $62.4 million, respectively, related to properties within discontinued operations. Allocation of Noncontrolling Interests - General Partner The following table illustrates the General Partner's share of the income attributable to common shareholders from continuing operations and discontinued operations, reduced by the allocation of income between continuing and discontinued operations to the noncontrolling interests (in thousands):
Allocation of Noncontrolling Interests - Partnership Substantially all of the income from discontinued operations for all periods presented in the Partnership's Consolidated Statements of Operations and Comprehensive Income is attributable to the common unitholders. Assets Held for Sale At September 30, 2017, two in-service properties were classified as held for sale, one of which was a medical office property that met the criteria to be classified within discontinued operations. Also at September 30, 2017, 12 acres of undeveloped land to be sold as part of the Medical Office Portfolio Disposition, was classified as held for sale and classified within continuing operations. The following table illustrates aggregate balance sheet information for all held-for-sale properties (in thousands):
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Subsequent Events |
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Subsequent Events [Abstract] | |||||||||||||||||||||||||
Subsequent Events | Subsequent Events Declaration of Dividends/Distributions The General Partner's board of directors declared the following dividends/distributions at its regularly scheduled board meeting held on October 25, 2017:
Line of Credit On October 11, 2017, the Partnership amended and restated its $1.20 billion unsecured revolving credit facility, which was set to mature in January 2019 (see Note 6). The amended and restated credit facility bears interest at LIBOR plus 0.875% and matures January 2022, with two six-month extension options.
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Acquisitions and Dispositions (Tables) |
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Property, Plant and Equipment [Line Items] | |||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | The following table summarizes amounts recognized for each major class of assets (in thousands) for these acquisitions during the nine months ended September 30, 2017:
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Summary of Most Significant Assumptions Utilized in the Estimations [Table Text Block] | The most significant assumptions used in calculating the "as-if vacant" value for acquisition activity during the nine months ended September 30, 2017 are as follows:
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Indebtedness (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Liabilities Measured on a Recurring Basis, Disclosure Only | The following table summarizes the book value and changes in the fair value of our debt (in thousands):
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Unsecured Line of Credit | Our unsecured line of credit at September 30, 2017 is described as follows (in thousands):
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Related Party Transactions (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fees Earned from Related Parties | The following table summarizes the fees earned from these companies, prior to the elimination of our ownership percentage (in thousands):
|
Net Income (Loss) Per Common Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciling the Components of Basic and Diluted Net Income (Loss) per Common Share | The following table reconciles the components of basic and diluted net income per common share or Common Unit (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Anti-Dilutive Common Share | The following table summarizes the data that is excluded from the computation of net income per common share or Common Unit as a result of being anti-dilutive (in thousands):
|
Segment Reporting (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Revenue from Segments to Consolidated | The following table shows the revenues for each of the reportable segments, as well as a reconciliation to consolidated revenues (in thousands):
|
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Summary of Net Operation Income | The following table shows a reconciliation of our segment-level measures of profitability to consolidated income from continuing operations before income taxes (in thousands and excluding discontinued operations):
|
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Reportable Segments Consolidated Assets | The assets for each of the reportable segments were as follows (in thousands):
|
Real Estate Assets, Discontinued Operations and Assets Held for Sale (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Real Estate Properties [Table Text Block] | Real estate assets, excluding assets held for sale, consisted of the following (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Table Illustration of Number of Properties in Discontinued Operations | The following table illustrates the number of sold or held-for-sale properties included in, or excluded from, discontinued operations in this report:
|
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Table Illustration of Discontinued Operations in Statement of Operations | The following table illustrates the operational results of the buildings reflected in discontinued operations (in thousands):
|
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Allocation of Common Shareholders' Income (Loss) Between Continuing and Discontinued Operations | The following table illustrates the General Partner's share of the income attributable to common shareholders from continuing operations and discontinued operations, reduced by the allocation of income between continuing and discontinued operations to the noncontrolling interests (in thousands):
|
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Schedule of Discontinued Operations, Properties Held-for-Sale, Aggregate Balance Sheet Information [Table Text Block] | he following table illustrates aggregate balance sheet information for all held-for-sale properties (in thousands):
|
Subsequent Events (Tables) |
9 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||
Subsequent Events [Abstract] | |||||||||||||||||||||||||
Schedule of Dividends Declared | The General Partner's board of directors declared the following dividends/distributions at its regularly scheduled board meeting held on October 25, 2017:
|
General Basis of Presentation (Details) |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Common partnership interests of DRLP Owned | 99.10% |
Duke Realty Limited Partnership [Member] | |
Limited Liability Company or Limited Partnership, Members or Limited Partners, Ownership Interest | 0.90% |
Variable Interest Entities (Balances Related to Joint Ventures) (Details) $ in Millions |
Sep. 30, 2017
USD ($)
|
---|---|
Variable Interest Entity, Not Primary Beneficiary, Disclosures [Abstract] | |
Maximum Guarantee Exposure for Joint Venture Loans | $ 77.6 |
Acquisitions and Dispositions (Narrative) (Details) |
9 Months Ended |
---|---|
Sep. 30, 2017
buildings
| |
Property, Plant and Equipment [Line Items] | |
Number Of Real Estate Properties Acquired | 20 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 7 years 8 months 12 days |
Acquisitions and Dispositions (Summary of Allocation of Fair Value of Amounts Recognized) (Details) $ in Thousands |
Sep. 30, 2017
USD ($)
|
---|---|
Property, Plant and Equipment [Line Items] | |
Real estate assets | $ 595,127 |
Lease related intangible assets | 32,079 |
Total acquired assets | 627,206 |
Below market lease liability | 1,224 |
Fair value of acquired net assets | $ 625,982 |
Acquisitions and Dispositions (Summary of Significant Assumptions Utilized in Estimates) (Details) |
9 Months Ended |
---|---|
Sep. 30, 2017
$ / sqft
| |
Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Exit capitalization rate | 4.10% |
Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Exit capitalization rate | 5.32% |
Industrial [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Net rental rate per square foot | 3.50 |
Industrial [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Net rental rate per square foot | 10.00 |
Indebtedness (Summary of Book Value and Changes in Fair Value of Debt) (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
|
Book value | $ 2,131,880 | $ 2,908,477 |
Fair value | 2,248,750 | 3,034,065 |
Payments/Payoffs | (780,302) | |
Adjustments to fair value | (5,013) | |
Long-term Debt, Gross | 2,151,162 | 2,931,529 |
Debt Issuance Costs, Net | 19,282 | 23,052 |
Fixed Rate Secured Debt [Member] | ||
Book value | 310,975 | 381,894 |
Fair value | 332,025 | 415,231 |
Payments/Payoffs | (70,854) | |
Adjustments to fair value | (12,352) | |
Variable Rate Secured Debt [Member] | ||
Book value | 2,500 | 2,800 |
Fair value | 2,500 | 2,800 |
Payments/Payoffs | (300) | |
Adjustments to fair value | 0 | |
Unsecured Debt [Member] | ||
Book value | 1,832,687 | 2,498,835 |
Fair value | 1,909,225 | 2,568,034 |
Payments/Payoffs | (666,148) | |
Adjustments to fair value | 7,339 | |
Unsecured Line of Credit DRLP [Member] | ||
Book value | 5,000 | 48,000 |
Fair value | 5,000 | $ 48,000 |
Payments/Payoffs | (43,000) | |
Adjustments to fair value | $ 0 |
Indebtedness Secured Debt (Details) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017
USD ($)
loans
|
Sep. 30, 2016
USD ($)
|
|
Debt Instrument [Line Items] | ||
Repayments of Secured Debt | $ 71,154 | $ 352,723 |
Fixed Rate Secured Debt [Member] | ||
Debt Instrument [Line Items] | ||
Repayments of Secured Debt | $ 66,300 | |
number of secured loans repaid | loans | 7 | |
Repaid Debt, Weighted Average Interest Rate | 5.85% | |
Minimum [Member] | Fixed Rate Secured Debt [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Effective Percentage | 3.20% | |
Maximum [Member] | Fixed Rate Secured Debt [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Effective Percentage | 3.70% |
Indebtedness (Unsecured Line of Credit) (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
|
Line of credit balance | $ 5,000 | $ 48,000 |
London Interbank Offered Rate (LIBOR) [Member] | ||
Debt Instrument, Description of Variable Rate Basis | LIBOR | |
Unsecured Line of Credit DRLP [Member] | ||
Line of Credit Facility, Covenant Compliance | we were in compliance with all financial covenants under this line of credit. | |
Maximum Capacity | $ 1,200,000 | |
Maturity date | Jan. 01, 2019 | |
Line of credit balance | $ 5,000 | |
Unsecured Line of Credit DRLP [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||
Debt Instrument, Basis Spread on Variable Rate | 0.93% | |
Line of Credit Facility, Interest Rate at Period End | 2.17% | |
Variable Rate UnSecured Debt [Member] [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||
Debt Instrument, Basis Spread on Variable Rate | 1.00% |
Related Party Transactions (Schedule of Fees Earned from Related Parties) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Management Fees [Member] | ||||
Revenue from related party transactions | $ 432 | $ 1,035 | $ 1,962 | $ 3,585 |
Leasing Fees [Member] | ||||
Revenue from related party transactions | 395 | 629 | 909 | 2,061 |
Construction and Development Fees [Member] | ||||
Revenue from related party transactions | $ 2,405 | $ 1,307 | $ 4,090 | $ 6,666 |
Net Income (Loss) Per Common Share (Computation of Anti-Dilutive Common Shares) (Details) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Stock Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities | 0 | 170 | 0 | 170 |
Segment Reporting (Reportable Segments Consolidated Assets) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Total Assets | $ 7,297,471 | $ 6,772,002 |
Corporate, Non-Segment [Member] | ||
Total Assets | 1,174,997 | 314,127 |
Operating Segments [Member] | ||
Total Assets | 6,122,474 | 6,457,875 |
Operating Segments [Member] | Industrial [Member] | ||
Total Assets | 5,803,370 | 4,828,984 |
Operating Segments [Member] | All Other Segments [Member] | ||
Total Assets | 186,433 | 1,501,737 |
Operating Segments [Member] | Service Operations [Member] | ||
Total Assets | $ 132,671 | $ 127,154 |
Real Estate Assets, Discontinued Operations and Assets Held for Sale Real Estate Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Real Estate Assets [Abstract] | ||
Investment Building and Building Improvements | $ 4,315,394 | $ 3,752,423 |
Land and Land Improvements | 1,776,467 | 1,392,382 |
Real Estate Assets | $ 6,091,861 | $ 5,144,805 |
Real Estate Assets, Discontinued Operations and Assets Held for Sale (Table Illustration of Number of Properties in Discontinued Operations) (Details) - buildings |
3 Months Ended | 9 Months Ended | 12 Months Ended |
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2017 |
Dec. 31, 2016 |
|
Number of properties held for sale in discontinued operations | 1 | ||
Number of properties sold in discontinued operations | 80 | 0 | |
Total number of properties in discontinued operations | 81 | ||
Continuing Operations, Number of In-service Properties Held for Sale | 1 | ||
Continuing Operations, Number of Real Estate Properties Sold | 15 | 32 | |
Continuing Operations, Number of Real Estate Properties Sold or Classified as Held for Sale | 48 | ||
Number of Real Estate Properties Held for Sale | 2 | ||
Number of Real Estate Properties Sold | 95 | 32 | |
Total Properties Sold or Classified as Held for Sale | 129 | ||
Medical Office Portfolio Sale [Member] | |||
Continuing Operations, Number of Real Estate Properties Sold | 4 | ||
Total Properties Sold or Classified as Held for Sale | 7 | 84 |
Real Estate Assets, Discontinued Operations and Assets Held for Sale (Table Illustration of Discontinued Operations in Income Statement) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Discontinued Operations | ||||
Payments For Second Generation Tenant Improvements Leasing Costs And Building Improvements | $ 34,350 | $ 39,169 | ||
Revenues | $ 4,622 | $ 44,906 | 86,026 | 129,087 |
Operating Expenses | (1,613) | (14,466) | (27,780) | (41,602) |
Depreciation and amortization | (37) | (18,868) | (25,886) | (56,158) |
Operating income | 2,972 | 11,572 | 32,360 | 31,327 |
Interest expense | (409) | (7,323) | (14,613) | (22,265) |
Income before gain on sales | 2,563 | 4,249 | 17,747 | 9,062 |
Gain on sale of depreciable properties | 120,179 | 319 | 1,229,270 | 485 |
Income from discontinued operations before income taxes | 122,742 | 4,568 | 1,247,017 | 9,547 |
Income tax benefit (expense) | 876 | 0 | (10,736) | 0 |
Income from discontinued operations | $ 123,618 | $ 4,568 | 1,236,281 | 9,547 |
Discontinued Operations [Member] | ||||
Discontinued Operations | ||||
Payments For Second Generation Tenant Improvements Leasing Costs And Building Improvements | $ 20,800 | $ 62,400 |
Real Estate Assets, Discontinued Operations and Assets Held for Sale (Allocation of Shareholders' Income (Loss) Between Continuing and Discontinued Operations) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Discontinued Operations | ||||
Income (loss) from continuing operations attributable to common shareholders | $ 41,618 | $ 107,491 | $ 225,970 | $ 254,936 |
Income (loss) from discontinued operations attributable to common shareholders | 123,651 | 4,523 | 1,220,042 | 9,452 |
Net income attributable to common shareholders | $ 165,269 | $ 112,014 | $ 1,446,012 | $ 264,388 |
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