Market Overview

DCT Industrial Trust® Reports Second Quarter 2018 Results

Share:

Net Earnings of $0.25 per Diluted Share

FFO, as adjusted, of $0.63 per Diluted Share

Consolidated Operating Occupancy of 96.9 Percent

Rent Growth of 32.0 Percent on a Straight-Line Basis and 10.5
Percent on a Cash Basis

Quarterly Same-Store Portfolio NOI Growth of 5.1 Percent on a Cash
Basis and 3.9 Percent on a Straight-Line Basis

Executed 1.1 Million Square Feet of Development Leases Bringing
the Development Pipeline to 20.4 Percent Leased

DCT Industrial Trust® (NYSE:DCT), a leading real estate company, today
announced financial results for the quarter ending June 30, 2018.

"In anticipation of the upcoming shareholder vote on DCT's proposed
merger with Prologis, I want to acknowledge the dedication of our
talented employees, whose hard work and perseverance led to DCT's
sector-leading results over the past decade," said Phil Hawkins,
President and CEO of DCT Industrial. "I also want to thank the investors
and analysts who recognized the value of our strategy, organization and
portfolio. We are proud of all we have accomplished at DCT and
appreciate your support."

Net income attributable to common stockholders ("Net Earnings") for Q2
2018 was $0.25 per diluted share compared with $0.45 per diluted share
reported for Q2 2017 a 44.4 percent decrease.

Funds from operations ("FFO"), as adjusted, attributable to common
stockholders and unitholders for Q2 2018 was $0.63 per diluted share,
compared with $0.60 per diluted share for Q2 2017, a 5.0 percent
increase. These results exclude $5.5 million of merger transaction costs
for the quarter ending June 30, 2018, and an impairment loss on land of
$0.9 million for the quarter ending June 30, 2017.

Property Results and Leasing Activity

As of June 30, 2018, DCT Industrial owned 388 consolidated operating
properties, totaling 63.5 million square feet, with occupancy of 96.9
percent, a decrease of 80 basis points from Q1 2018 and a decrease of 60
basis points over Q2 2017. Additionally, approximately 276,000 square
feet or 0.4 percent of DCT Industrial's total consolidated operating
portfolio was leased but not occupied as of June 30, 2018, which does
not take into consideration 448,000 square feet of leased space in
developments under construction or in pre-development. During Q2 2018,
the impact of acquisitions, dispositions and placing developments and
redevelopments into operations decreased consolidated operating
occupancy by 10 basis points, compared to Q1 2018.

In Q2 2018, the Company signed leases totaling 3.1 million square feet
with rental rates increasing 32.0 percent on a straight-line basis and
10.5 percent on a cash basis, compared to the corresponding expiring
leases. Over the previous four quarters, rental rates on signed leases
increased 28.3 percent on a straight-line basis and 10.2 percent on a
cash basis. The Company's tenant retention rate was 74.0 percent in Q2
2018.

Net operating income ("NOI") was $83.5 million in Q2 2018, compared with
$79.5 million in Q2 2017. NOI was $165.9 million for the first six
months of 2018, compared with $158.7 million for the first six months of
2017.

Comparing Q2 2018 to Q2 2017, NOI from the Quarterly Same-Store
Portfolio increased 5.1 percent on a cash basis and 3.9 percent on a
straight-line basis. NOI from the Annual Same-Store Portfolio for Q2
2018 increased 4.9 percent on a cash basis and 3.8 percent on a
straight-line basis when compared to Q2 2017. Additionally, NOI from the
Annual Same-Store Portfolio for the first six months of 2018 increased
5.7 percent on a cash basis and 3.3 percent on a straight-line basis
when compared to the first six months 2017. All same-store NOI amounts
exclude revenue from lease terminations.

Quarterly Same-Store Portfolio occupancy averaged 97.6 percent in Q2
2018, an increase of 40 points compared with Q2 2017. Quarterly
Same-Store Portfolio occupancy as of June 30, 2018 was 97.4 percent.

For definitions of Financial Measures see page 9 of this release and
page 22 in DCT Industrial's Second Quarter 2018 Supplemental Reporting
Package.

Investment Activity

Acquisitions

Since DCT Industrial's Q1 2018 Earnings Release, the Company acquired
two buildings totaling 184,000 square feet for $27.0 million. The
buildings were 64.0 percent occupied at the time of closing. The Company
expects a year-one weighted-average cash yield of 2.9 percent and a
weighted-average stabilized cash yield of 4.8 percent on the acquired
assets.

The table below summarizes acquisitions since the Company's Q1 2018
Earnings Release:

Market   Submarket   Square Feet   Occupancy   Closed
Seattle   Sumner   118,000   100.0 %   May-18
Denver   Northeast   66,000   0.0 %   May-18
Total/Weighted Average 184,000 64.0 %

Development

Since the Company's Q1 2018 Earnings Release, DCT Industrial executed
1.1 million square feet of development leases bringing the development
pipeline to 20.4 percent leased. The Company also commenced construction
on 2.2 million square feet with a projected investment of $168.9 million
and purchased 103.0 acres for the future development of 1.3 million
square feet.

Highlights since DCT Industrial's Q1 2018 Earnings Release:

In Q2 2018:

  • Executed a full-building lease for DCT Rockline Commerce Center
    Building I, a 112,000 square foot development in the Lehigh Valley
    submarket of Pennsylvania.
  • Executed a 466,000 square foot pre-lease for the expansion of SCLA
    Building 3 located in the Victorville submarket of Southern
    California. This will bring the 584,000 square foot building to 1.1
    million square feet upon completion. The Company commenced
    construction on the expansion in July with shell construction
    scheduled to be complete in Q2 2019.
  • Commenced construction on DCT Pinnacle Industrial Center, a 407,000
    square foot building in the I-55 submarket of Chicago. Shell
    construction is scheduled to be complete in Q4 2018.
  • Acquired 84.0 acres in the Central New Jersey submarket to develop DCT
    Northline, a two-building project totaling 1.1 million square feet.
    Additionally, in Q2 the Company commenced construction on DCT
    Northline Building I, a 913,000 square foot facility. Shell
    construction is scheduled to be complete in Q2 2019.
  • Acquired 8.2 acres and commenced construction on DCT Conewago Commerce
    Center, a 100,000 square foot pre-leased build-to-suit located in the
    Central Pennsylvania submarket. Shell construction is scheduled to be
    complete in Q4 2018.
  • Acquired 10.8 acres in the Northwest submarket of Cincinnati to
    develop DCT Enterprise Drive, a 157,000 square foot facility.

Since June 30, 2018:

  • Executed a 339,000 square foot pre-lease for Blair Logistics Center
    Building A, bringing the 543,000 square foot building located in the
    Fife/Tacoma submarket of Seattle to 62.3 percent pre-leased.
  • Executed a 76,000 square foot lease in DCT Stockyards Industrial
    Center, bringing the 167,000 square foot building located in the City
    South submarket of Chicago to 83.7 percent leased.
  • Executed an 80,000 square foot lease for DCT Greenwood, bringing the
    140,000 square foot building located in the I-55 submarket of Chicago
    to 56.7 percent leased.
  • Commenced construction on DCT Fontana West Logistics Center, a 207,000
    square building in the Inland Empire West submarket of Southern
    California. Shell construction is scheduled to be complete in Q2 2019.
  • Commenced construction on DCT Jurupa Logistics Center II, a 103,000
    square building in the Inland Empire West submarket of Southern
    California. Shell construction is scheduled to be complete in Q1 2019.

Dispositions

Since DCT Industrial's Q1 2018 Earnings Release, the Company sold eight
buildings totaling 588,000 square feet. These transactions generated
total gross proceeds of $22.4 million and have an expected year-one
weighted-average cash yield of 7.3 percent.

The table below summarizes dispositions since the Company's Q1 2018
Earnings Release:

Market   Submarket   Square Feet   Occupancy   Closed
Chicago (2 buildings)   Central Kane/DuPage   282,000   98.3 %   June-18
Chicago Southwest Suburbs 205,000 100.0 % June-18
Cincinnati (5 buildings)   Northern Kentucky   101,000   100.0 %   June-18
Total/Weighted Average 588,000 99.0 %

Guidance and Shareholder Meeting

In light of DCT Industrial's proposed merger announced in April 2018,
the Company will no longer provide guidance nor is it affirming past
guidance.

In accordance with that certain Proxy Statement/Prospectus filed on July
11, 2018 (the "Proxy"), a Special Meeting of the stockholders of DCT
Industrial Trust Inc. will be held on August 20, 2018. Additional
details can be found in the Proxy.

Supplemental information is available in the Investors section of the
Company's website at www.dctindustrial.com
or by e-mail request to investorrelations@dctindustrial.com.
Interested parties may also obtain additional information from the SEC's
website at www.sec.gov.

About DCT Industrial Trust®

DCT Industrial is a leading logistics real estate company specializing
in the ownership, development, acquisition, leasing and management of
bulk-distribution and light-industrial properties in high-demand
distribution markets in the United States. DCT's actively-managed
portfolio is strategically located near population centers and
well-positioned to take advantage of market dynamics. As of June 30,
2018, the Company owned interests in approximately 74.0 million square
feet of properties leased to approximately 830 customers. DCT maintains
a Baa2 rating from Moody's Investors Service and a BBB from S&P Global
Ratings. Additional information is available at www.dctindustrial.com.

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DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES
Consolidated
Balance Sheets

(in thousands, except share information)

 
June 30, 2018 December 31, 2017
ASSETS (unaudited)
Land $ 1,216,121 $ 1,162,908
Buildings and improvements 3,385,873 3,284,976
Intangible lease assets 57,869 65,919
Construction in progress 173,139   149,994  
Total investment in properties 4,833,002 4,663,797
Less accumulated depreciation and amortization (961,173 ) (919,186 )
Net investment in properties 3,871,829 3,744,611
Investments in and advances to unconsolidated joint ventures 73,031   72,231  
Net investment in real estate 3,944,860 3,816,842
Cash and cash equivalents 19,843 10,522
Restricted cash 15,813 14,768

Straight-line rent and other receivables, net of allowance for
doubtful
 accounts of $230 and $425, respectively

82,726 80,119
Other assets, net 19,904 25,740
Assets held for sale   62,681  
Total assets $ 4,083,146   $ 4,010,672  
 
LIABILITIES AND EQUITY
Liabilities:
Accounts payable and accrued expenses $ 106,714 $ 115,150
Distributions payable 35,184 35,070
Tenant prepaids and security deposits 36,654 34,946
Other liabilities 36,669 34,172
Intangible lease liabilities, net 16,985 18,482
Line of credit 324,000 234,000
Senior unsecured notes 1,287,426 1,328,225
Mortgage notes 163,330 160,129
Liabilities related to assets held for sale   1,035  
Total liabilities 2,006,962   1,961,209  
 
Equity:

Preferred stock, $0.01 par value, 50,000,000 shares authorized,
none
 outstanding

Shares-in-trust, $0.01 par value, 100,000,000 shares authorized,
none outstanding

Common stock, $0.01 par value, 500,000,000 shares authorized,
94,113,116
 and 93,707,264 shares issued and outstanding as
of June 30, 2018 and
 December 31, 2017, respectively

941 937
Additional paid-in capital 3,000,086 2,985,122
Distributions in excess of earnings (1,015,254 ) (1,022,605 )
Accumulated other comprehensive loss (5,036 ) (11,893 )
Total stockholders' equity 1,980,737 1,951,561
Noncontrolling interests 95,447   97,902  
Total equity 2,076,184   2,049,463  
Total liabilities and equity $ 4,083,146   $ 4,010,672  
 

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES
Consolidated
Statements of Operations

(unaudited, in thousands,
except per share information)

   
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
REVENUES:
Rental revenues $ 109,781 $ 104,217 $ 219,204 $ 209,641
Institutional capital management and other fees 288   304   672   776  
Total revenues 110,069   104,521   219,876   210,417  
 
OPERATING EXPENSES:
Rental expenses 9,246 9,226 19,485 18,688
Real estate taxes 17,061 15,529 33,785 32,295
Real estate related depreciation and amortization 41,896 41,447 83,128 83,052
General and administrative 12,824 7,821 20,288 15,013
Casualty loss (gain) 240     245   (270 )
Total operating expenses 81,267   74,023   156,931   148,778  
Operating income 28,802 30,498 62,945 61,639
 
OTHER INCOME (EXPENSE):
Equity in earnings of unconsolidated joint ventures, net 1,089 2,737 2,166 4,253
Gain on dispositions of real estate interests 11,784 28,076 43,974 28,102
Interest expense (16,133 ) (16,805 ) (32,183 ) (33,560 )
Other expense (114 ) (7 ) (80 ) (12 )
Impairment loss on land (938 ) (371 ) (938 )
Income tax benefit expense and other taxes (140 ) (69 ) (221 ) (203 )
Consolidated net income of DCT Industrial Trust Inc. 25,288 43,492 76,230 59,281
Net income attributable to noncontrolling interests (1,172 ) (1,858 ) (3,291 ) (2,688 )
Net income attributable to common stockholders 24,116   41,634   72,939   56,593  
Distributed and undistributed earnings allocated to participating
securities
(191 ) (162 ) (408 ) (323 )
Adjusted net income attributable to common stockholders $ 23,925   $ 41,472   $ 72,531   $ 56,270  
 
NET EARNINGS PER COMMON SHARE:
Basic $ 0.25   $ 0.45   $ 0.77   $ 0.61  
Diluted $ 0.25   $ 0.45   $ 0.77   $ 0.61  
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 94,101 92,307 93,956 92,030
Diluted 94,124   92,429   93,981   92,156  
 
Distributions declared per common share $ 0.36 $ 0.31 $ 0.72 $ 0.62
 

Reconciliation of Net Income Attributable to Common
Stockholders to Funds from Operations

(unaudited, in
thousands, except per share and unit data)

   

For the Three Months Ended
June 30,

For the Six Months Ended
June 30,

2018   2017   2018   2017
Reconciliation of net income attributable to common stockholders
to FFO:
Net income attributable to common stockholders $ 24,116 $ 41,634 $ 72,939 $ 56,593
Adjustments:
Real estate related depreciation and amortization 41,896 41,447 83,128 83,052
Equity in earnings of unconsolidated joint ventures, net (1,089 ) (2,737 ) (2,166 ) (4,253 )
Equity in FFO of unconsolidated joint ventures(1) 2,718 3,394 5,469 6,632
Gain on dispositions of real estate interests (11,784 ) (28,076 ) (43,974 ) (28,102 )
Loss on dispositions of non-depreciable real estate (3 )
Noncontrolling interest in the above adjustments (1,237 ) (664 ) (1,780 ) (2,499 )
FFO attributable to unitholders 1,860   2,095   3,951   4,349  
FFO attributable to common stockholders and unitholders – basic and
diluted(2)
56,480   57,093   117,564   115,772  
Adjustments:
Impairment loss on land 938 371 938
Acquisition costs 13
Merger transaction costs 5,462 5,462
Hedge ineffectiveness (non-cash)(3)   (24 )   6  

FFO, as adjusted, attributable to common stockholders and
unitholders – basic
 and diluted

$ 61,942   $ 58,007   $ 123,397   $ 116,729  
FFO per common share and unit – basic $ 0.58   $ 0.59   $ 1.20   $ 1.20  
FFO per common share and unit – diluted $ 0.58   $ 0.59   $ 1.20   $ 1.20  
FFO, as adjusted, per common share and unit – basic $ 0.63   $ 0.60   $ 1.26   $ 1.21  
FFO, as adjusted, per common share and unit – diluted $ 0.63   $ 0.60   $ 1.26   $ 1.21  
FFO weighted average common shares and units outstanding:
Common shares for net earnings per share 94,101 92,307 93,956 92,030
Participating securities 530 520 520 494
Units 3,210   3,520   3,267   3,592  
FFO weighted average common shares, participating securities and
units outstanding – basic
97,841 96,347 97,743 96,116
Dilutive common stock equivalents 23   122   25   126  
FFO weighted average common shares, participating securities and
units outstanding – diluted
97,864   96,469   97,768   96,242  
 
    (1)   Equity in FFO of unconsolidated joint ventures is determined as our
share of FFO from each unconsolidated joint venture. See DCT
Industrial's second quarter 2018 supplemental reporting package for
additional information.
(2) FFO as defined by the National Association of Real Estate Investment
Trusts (Nareit).
(3) Effective as of January 1, 2017 and adopted in the third quarter of
2017, the Company no longer separately records hedge ineffectiveness
per the adoption of the Derivatives and Hedging accounting standard
update ("ASU") 2017-12.
 

For information related to our Fixed Charge Coverage Ratio please see
our Second Quarter 2018 Supplemental

The following table is a reconciliation of our reported net income
attributable to common stockholders to our net operating income for the
three and six months ended June 30, 2018 and 2017 (unaudited, in
thousands):

       

For the Three Months Ended
June 30,

     

For the Six Months Ended
June 30,

2018   2017       2018   2017
Reconciliation of net income attributable to common stockholders
to NOI:
 
Net income attributable to common stockholders $ 24,116 $ 41,634 $ 72,939 $ 56,593
Net income attributable to noncontrolling interests 1,172 1,858 3,291 2,688
Income tax expense and other taxes 140 69 221 203
Impairment loss on land 938 371 938
Other expense 114 7 80 12
Interest expense 16,133 16,805 32,183 33,560
Equity in earnings of unconsolidated joint ventures, net (1,089 ) (2,737 ) (2,166 ) (4,253 )
General and administrative expense 12,824 7,821 20,288 15,013
Real estate related depreciation and amortization 41,896 41,447 83,128 83,052
Gain on dispositions of real estate interests (11,784 ) (28,076 ) (43,974 ) (28,102 )
Casualty loss (gain) 240 245 (270 )
Institutional capital management and other fees (288 ) (304 )       (672 )   (776 )
Total NOI $ 83,474 $ 79,462 $ 165,934 $ 158,658
 
Quarterly Same-Store Portfolio NOI:
Total NOI $ 83,474 $ 79,462
Less NOI – non-same-store properties (6,792 ) (5,654 )
Less revenue from lease terminations (385 ) (435 )
Add early termination straight-line rent adjustment 38   117  
NOI, excluding revenue from lease terminations 76,335 73,490
Less straight-line rents, net of related bad debt expense 82 (620 )
Less amortization of above/(below) market rents (551 ) (692 )
Cash NOI, excluding revenue from lease terminations $ 75,866   $ 72,178  
 
Annual Same-Store Portfolio NOI:
Total NOI $ 83,474 $ 79,462 $ 165,934 $ 158,658
Less NOI – non-same-store properties (7,119 ) (5,942 ) (13,771 ) (11,094 )
Less revenue from lease terminations (385 ) (435 ) (648 ) (937 )
Add early termination straight-line rent adjustment 39   117   87   134  
NOI, excluding revenue from lease terminations 76,009 73,202 151,602 146,761
Less straight-line rents, net of related bad debt expense 95 (485 ) (482 ) (3,451 )
Less amortization of above/(below) market rents (542 ) (683 ) (1,097 ) (1,428 )
Cash NOI, excluding revenue from lease terminations $ 75,562   $ 72,034   $ 150,023   $ 141,882  
 

Financial Measures

Terms not otherwise defined below are as defined in our First Quarter
2018 Supplemental Reporting Package.

NOI is defined as rental revenues, which includes expense
reimbursements, less rental expenses and real estate taxes, and excludes
institutional capital management fees, depreciation, amortization,
casualty and involuntary conversion gain (loss), impairment, general and
administrative expenses, equity in earnings (loss) of unconsolidated
joint ventures, interest expense, interest and other income and income
tax expense and other taxes. DCT Industrial considers NOI to be an
appropriate supplemental performance measure because NOI reflects the
operating performance of DCT Industrial's properties and excludes
certain items that are not considered to be controllable in connection
with the management of the properties such as amortization,
depreciation, impairment, interest expense, interest and other income,
income tax expense and other taxes and general and administrative
expenses. We also present NOI excluding lease termination revenue as it
is not considered to be indicative of recurring operating performance.
However, NOI should not be viewed as an alternative measure of DCT
Industrial's overall financial performance since it excludes expenses
which could materially impact our results of operations. Further, DCT
Industrial's NOI may not be comparable to that of other real estate
companies, as they may use different methodologies for calculating NOI.
Therefore, DCT Industrial believes net income, as defined by GAAP, to be
the most appropriate measure to evaluate DCT Industrial's overall
financial performance.

We calculate Cash NOI as NOI excluding non-cash amounts recorded for
straight-line rents including related bad debt expense and the
amortization of above and below market rents. DCT Industrial considers
Cash NOI to be an appropriate supplemental performance measure because
Cash NOI reflects the operating performance of DCT Industrial's
properties and excludes certain non-cash items that are not considered
to be controllable in connection with the management of the property
such as accounting adjustments for straight-line rent and the
amortization of above or below market rent. Additionally, DCT Industrial
presents Cash NOI, excluding revenue from lease terminations, as such
revenue is not considered indicative of recurring operating performance.

The Quarterly Same-Store Portfolio includes all consolidated stabilized
acquisitions acquired before January 1, 2017 and all consolidated
Value-Add Acquisitions, developments and Redevelopments stabilized prior
to January 1, 2017. Once a property is included in the Quarterly
Portfolio, it remains until it is subsequently disposed or placed into
redevelopment. We consider NOI and Cash NOI from our Quarterly
Same-Store Portfolio to be a useful measure in evaluating our financial
performance and to improve comparability between periods by including
only properties owned for comparable periods.

The Annual Same-Store Portfolio includes all consolidated stabilized
acquisitions acquired before January 1, 2017 and all consolidated
Value-Add Acquisitions, developments and Redevelopments stabilized prior
to January 1, 2017. Once a property is included in the Annual Same-Store
Portfolio, it remains until it is subsequently disposed or placed into
redevelopment. We consider NOI from our Annual Same-Store Portfolio to
be a useful measure in evaluating our financial performance and to
improve comparability between periods by including only properties owned
for those comparable periods.

DCT Industrial believes that net income (loss) attributable to common
stockholders, as defined by GAAP, is the most appropriate earnings
measure. However, DCT Industrial considers funds from operations
("FFO"), as defined by the National Association of Real Estate
Investment Trusts ("NAREIT"), to be a useful supplemental, non-GAAP
measure of DCT Industrial's operating performance.

NAREIT developed FFO as a relative measure of performance of an equity
REIT in order to recognize that the value of income-producing real
estate historically has not depreciated on the basis determined under
GAAP.

FFO is generally defined as net income attributable to common
stockholders, calculated in accordance with GAAP with the following
adjustments:

  • Add real estate-related depreciation and amortization;
  • Subtract gains from dispositions of real estate held for investment
    purposes;
  • Add impairment losses on depreciable real estate and impairments of in
    substance real estate investments in investees that are driven by
    measurable decreases in the fair value of the depreciable real estate
    held by the unconsolidated joint ventures; and
  • Adjustments for the preceding items to derive DCT Industrial's
    proportionate share of FFO of unconsolidated joint ventures.

We also present FFO, as adjusted, which excludes hedge ineffectiveness,
certain severance costs, acquisition costs, debt modification costs and
impairment losses on properties which are not depreciable. We believe
that FFO, as adjusted, excluding hedge ineffectiveness, certain
severance costs, acquisition costs, debt modification costs and
impairment losses on non-depreciable real estate is useful supplemental
information regarding our operating performance as it provides a more
meaningful and consistent comparison of our operating performance and
allows investors to more easily compare our operating results.

Readers should note that FFO or FFO, as adjusted, captures neither the
changes in the value of DCT Industrial's properties that result from use
or market conditions, nor the level of capital expenditures and leasing
commissions necessary to maintain the operating performance of DCT
Industrial's properties, all of which have real economic effect and
could materially impact DCT Industrial's results from operations.
NAREIT's definition of FFO is subject to interpretation, and
modifications to the NAREIT definition of FFO are common. Accordingly,
DCT Industrial's FFO, as adjusted, may not be comparable to other REITs'
FFO or FFO, as adjusted, should be considered only as a supplement to
net income (loss) as a measure of DCT Industrial's performance.

Forward-Looking Statements

We make statements in this report that are considered "forward-looking
statements" within the meaning of Section 27A of the Securities Act of
1933, as amended, or the Securities Act, and Section 21E of the
Securities Exchange Act of 1934, as amended, or the Exchange Act, which
are usually identified by the use of words such as "anticipates,"
"believes," "estimates," "expects," "intends," "may," "plans,"
"projects," "seeks," "should," "will," and variations of such words or
similar expressions and includes statements regarding our anticipated
yields. We intend these forward-looking statements to be covered by the
safe harbor provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995 and are including this
statement for purposes of complying with those safe harbor provisions.
These forward-looking statements reflect our current views about our
plans, intentions, expectations, strategies and prospects, which are
based on the information currently available to us and on assumptions we
have made. Although we believe that our plans, intentions, expectations,
strategies and prospects as reflected in or suggested by those
forward-looking statements are reasonable, we can give no assurance that
the plans, intentions, expectations or strategies will be attained or
achieved. Furthermore, actual results may differ materially from those
described in the forward-looking statements and will be affected by a
variety of risks and factors that are beyond our control including,
without limitation: national, international, regional and local economic
conditions, the general level of interest rates and the availability of
capital; the competitive environment in which we operate; real estate
risks, including fluctuations in real estate values and the general
economic climate in local markets and competition for tenants in such
markets; decreased rental rates or increasing vacancy rates; defaults on
or non-renewal of leases by tenants; acquisition and development risks,
including failure of such acquisitions and development projects to
perform in accordance with projections; the timing of acquisitions,
dispositions and development; natural disasters such as fires, floods,
tornadoes, hurricanes and earthquakes; energy costs; the terms of
governmental regulations that affect us and interpretations of those
regulations, including the cost of compliance with those regulations,
changes in real estate and zoning laws and increases in real property
tax rates; financing risks, including the risk that our cash flows from
operations may be insufficient to meet required payments of principal,
interest and other commitments; lack of or insufficient amounts of
insurance; litigation, including costs associated with prosecuting or
defending claims and any adverse outcomes; the consequences of future
terrorist attacks or civil unrest; environmental liabilities, including
costs, fines or penalties that may be incurred due to necessary
remediation of contamination of properties presently owned or previously
owned by us; and other risks and uncertainties detailed in the section
of our Form 10-K filed with the SEC and updated on Form 10-Q entitled
"Risk Factors." In addition, our current and continuing qualification as
a real estate investment trust, or REIT, involves the application of
highly technical and complex provisions of the Internal Revenue Code of
1986, or the Code, and depends on our ability to meet the various
requirements imposed by the Code through actual operating results,
distribution levels and diversity of stock ownership. We assume no
obligation to update publicly any forward-looking statements, whether as
a result of new information, future events or otherwise.

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