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Duke Realty Reports Third Quarter 2018 Results

7.5 Percent Increase to Quarterly Dividend

$141 Million of Development Starts

27.9 Percent Growth in Rents on Leasing Activity

Earnings Guidance Increased

INDIANAPOLIS, Oct. 24, 2018 (GLOBE NEWSWIRE) -- Duke Realty Corporation (NYSE: DRE), the largest domestic only, logistics REIT today reported results for the third quarter 2018.

Jim Connor, Chairman and Chief Executive Officer said, "We have completed a strong quarter of earnings growth, as our leasing results throughout the year have driven an increase to Core FFO per share of 6.1 percent compared to the second quarter of 2018 and 16.7 percent compared to the third quarter of 2017.  We are also pleased to announce an increase to our quarterly dividend from $0.20 per share to $0.215 per share.  This 7.5 percent increase to our quarterly dividend is based on our expectations of continued earnings growth allowing us to continue coverage of our ongoing dividends in the range of 65 to 75 percent of AFFO.

Operational performance was also outstanding, as we generated growth in same-property net operating income of 6.3 percent for the quarter over the third quarter of 2017, which was the result of both continued rental rate growth and increased occupancy. New and renewal leases executed during the quarter will result in rent growth of 11.2 percent on a cash basis and 27.9 percent growth in annualized net effective rents."

Mark Denien, Executive Vice President and Chief Financial Officer, stated, "We utilized a portion of the proceeds from the $450 million unsecured note issuance that we executed in September to repay two secured loans totaling $224 million.  These transactions resulted in a reduction to our cost of borrowing and effectively eliminated secured debt as a meaningful component of our financing structure.  Additionally, we do not have any significant debt maturities until 2021.

We finished the quarter with $133 million of available cash, $128 million of cash held in escrow for future 1031 exchanges and $277 million of interest bearing notes receivable that will mature at various times through January 2020.  These sources of liquidity will fund near term growth in our development pipeline."

Quarterly Highlights

  • A complete reconciliation, in dollars and per share amounts, of net income to funds from operations ("FFO"), as defined by NAREIT, as well as to Core FFO, is included in the financial tables included in this release.
     
  • Net income was $0.15 per diluted share for the third quarter of 2018, compared to $0.46 per diluted share for the third quarter of 2017. The decrease to net income per diluted share was due to significant gains recognized from the sale of medical office and suburban office properties during the third quarter of 2017.
     
  • FFO, as defined by NAREIT, was $0.36 per diluted share for the third quarter of 2018, compared to $0.26 per diluted share for the third quarter of 2017.  FFO per diluted share, as defined by NAREIT, increased due to increased investments in new industrial properties, overall improved operations and the recognition of $17 million of losses on debt extinguishment during the third quarter of 2017.
     
  • Core FFO was $0.35 per diluted share for the third quarter of 2018, compared to $0.30 per diluted share for the third quarter of 2017. With the exception of the losses on debt extinguishment during the third quarter of 2017, the increase in Core FFO per diluted share was driven by the same factors as the increase in FFO per diluted share, as defined by NAREIT.
     
  • Operating performance within the company's industrial portfolio included:

    • Total stabilized occupancy at September 30, 2018 of 97.9 percent compared to 98.2 percent at June 30, 2018 and 98.0 percent at September 30, 2017

    • Total in-service occupancy at September 30, 2018 of 96.8 percent compared to 97.4 percent at June 30, 2018 and 95.7 percent at September 30, 2017

    • Total occupancy, including properties under development, of 93.7 percent at September 30, 2018 compared to 94.0 percent at June 30, 2018 and 93.2 percent at September 30, 2017

    • Tenant retention of 82.7 percent

    • Same-property net operating income growth of 6.3 percent and 4.6 percent for the three and nine-month periods ended September 30, 2018 compared to the same periods in 2017

    • Total leasing activity of 5.2 million square feet for the quarter

    • Overall cash and annualized net effective rent growth on new and renewal leases of 11.2 percent and 27.9 percent, respectively, for the quarter

  • Successful execution of capital transactions in the third quarter included:

    • Issued $450 million of unsecured notes, maturing in September 2028, at an effective rate of 4.1 percent

    • Repaid two secured loans, totaling $224 million, that bore interest at an average effective rate of 7.6 percent

    • Issued 990,400 common shares under our ATM program, at an average issuance price of $29.24 per share, for total net proceeds of $28 million

    • Started six new development projects with expected costs of $141 million

Real Estate Investment Activity

Mr. Connor further stated, "We started $141 million of developments during the quarter, totaling 2.0 million square feet, which were 51 percent pre-leased.  Our development pipeline at September 30, 2018 was 52 percent leased and consisted of 25 properties totaling 10.6 million square feet, with expected costs of $854 million.  A significant portion of the unleased space in these new development properties is located in Tier One markets where we expect future lease up efforts to result in significant ongoing net operating income and rent growth potential outside of our same property population."

Development

The third quarter included the following development activity:

Consolidated Properties

  • During the quarter, the company started $108 million of consolidated development projects totaling 1.4 million square feet, which were 75 percent pre-leased in total.  These development projects included a 340,000 square foot development in Southern California that was started on a speculative basis and then fully leased; a 618,000 square foot build-to-suit development in Cincinnati; and a 338,000 square foot speculative development in Houston.

  • Six projects totaling 3.4 million square feet, which were 69 percent leased in total, were placed in service during the quarter. 

Unconsolidated Joint Venture Properties

  • During the quarter, a 50 percent-owned joint venture started two speculative developments in Indianapolis totaling 645,000 square feet.
     
  • A 400,000 square foot logistics project in Indianapolis, which was 100 percent leased, was placed in service during the quarter by a 50 percent-owned joint venture. 

Building Dispositions

Building dispositions totaled $9 million in the third quarter, with the only building sale being a property in Indianapolis, IN, totaling 284,000 square feet, which was sold from a 50 percent-owned joint venture.

Distributions Declared

The company's board of directors declared a quarterly cash distribution on its common stock of $0.215 per share, or $0.86 per share on an annualized basis. The third quarter dividend will be payable on November 30, 2018 to shareholders of record on November 15, 2018.

Revisions to 2018 Guidance

A reconciliation of the company's guidance for diluted net income per common share to FFO, as defined by NAREIT, and to Core FFO, is included in the financial tables to this release. The company revised its guidance for net income to a range of $1.02 to $1.10 per diluted share from its previous guidance of $0.97 to $1.12 per diluted share.  The company revised its guidance for FFO, as defined by NAREIT, to a range of $1.33 to $1.39 per diluted share from its previous guidance of $1.29 to $1.37.

Commenting on the revision to the company's 2018 guidance, Mr. Connor stated, "As we near the end of 2018 and our leasing and rental growth results have continued to come in at the higher end of our estimates, we have increased and narrowed our guidance for Core FFO to a range of $1.31 to $1.35 per diluted share from the previous range of $1.29 to $1.35 per diluted share.  For these same reasons, we have also increased our guidance for growth in same-property net operating income to a range of 4.2 percent to 4.8 percent from the previous range of 3.5 percent to 4.5 percent."

A summary of further guidance changes is as follows:

  • The guidance for growth in AFFO, on a share adjusted basis, was narrowed to a range of 5.5 percent to 9.1 percent from the previous range of 4.5 percent to 10.0 percent.

  • The estimate for building dispositions was increased to a range of $500 million to $600 million from the previous range of $470 million to $600 million.

  • The estimate for building acquisitions was narrowed to a range of $200 million to $300 million from the previous range of $100 million to $400 million.

  • The estimate for earnings from service operations was increased to a range of $5 million to $7 million from the previous range of $2 million to $5 million.

An updated version of the company's 2018 guidance will be available by 6:00 p.m. Eastern Time today through the Investor Relations section of the company's website.

FFO and AFFO Reporting Definitions

FFO: FFO is computed in accordance with standards established by NAREIT.  NAREIT defines FFO as net income (loss) excluding gains (losses) on sales of depreciable property, impairment charges related to depreciable real estate assets; plus real estate related depreciation and amortization, and after similar adjustments for unconsolidated joint ventures. The company believes FFO to be most directly comparable to net income as defined by generally accepted accounting principles ("GAAP"). The company believes that FFO should be examined in conjunction with net income (as defined by GAAP) as presented in the financial statements accompanying this release. FFO does not represent a measure of liquidity, nor is it indicative of funds available for the company’s cash needs, including the company’s ability to make cash distributions to shareholders.

Core FFO: Core FFO is computed as FFO adjusted for certain items that are generally non-cash in nature and that materially distort the comparative measurement of company performance over time. The adjustments include gains on sale of undeveloped land, impairment charges not related to depreciable real estate assets, tax expenses or benefits related to (i) changes in deferred tax asset valuation allowances, (ii) changes in tax exposure accruals that were established as the result of the adoption of new accounting principles, or (iii) taxable income (loss) related to other items excluded from FFO or Core FFO (collectively referred to as “other income tax items”), gains (losses) on debt transactions, gains (losses) on and related costs of acquisitions, gains on sale of merchant buildings,  gains (losses) from involuntary conversion related to weather events or natural disasters, promote income and severance charges related to major overhead restructuring activities. Although the company’s calculation of Core FFO differs from NAREIT’s definition of FFO and may not be comparable to that of other REITs and real estate companies, the company believes it provides a meaningful supplemental measure of its operating performance.

AFFO: AFFO is a supplemental performance measure defined by the company as Core FFO (as defined above), less recurring building improvements and total second generation capital expenditures (the leasing of vacant space that had previously been under lease by the company is referred to as second generation lease activity) related to leases commencing during the reporting period and adjusted for certain non-cash items including straight line rental income and expense, non-cash components of interest expense and stock compensation expense, and after similar adjustments for unconsolidated partnerships and joint ventures.

Same-Property Performance

The company includes same-property net operating income growth as a property-level supplemental measure of performance.  The company utilizes same-property net operating income growth as a supplemental measure to evaluate property-level performance, and jointly-controlled properties are included at the company's ownership percentage.

A reconciliation of net income from continuing operations to same property net operating income is included in the financial tables to this release.  A description of the properties that are excluded from the company’s same-property net operating income measure is included on page 17 of its September 30, 2018 supplemental information.

About Duke Realty Corporation

Duke Realty Corporation owns and operates approximately 152 million rentable square feet of industrial assets in 20 major logistics markets. Duke Realty Corporation is publicly traded on the NYSE under the symbol DRE and is listed on the S&P 500 Index. More information about Duke Realty Corporation is available at www.dukerealty.com.

Third Quarter Earnings Call and Supplemental Information

Duke Realty Corporation is hosting a conference call tomorrow, October 25, 2018, at 3:00 p.m. ET to discuss its third quarter operating results. All investors and other interested parties are invited to listen to the call. Access is available through the Investor Relations section of the company's website.

A copy of the company's supplemental information will be available by 6:00 p.m. ET today through the Investor Relations section of the company's website.

Cautionary Notice Regarding Forward-Looking Statements

This news release may contain forward-looking statements within the meaning of the federal securities laws.  All statements, other than statements of historical facts, including, among others, statements regarding the company’s future financial position or results, future dividends, and future performance, are forward-looking statements. Those statements include statements regarding the intent, belief, or current expectations of the company, members of its management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as "may," "will," "seeks," "anticipates," "believes," "estimates," "expects," "plans," "intends," "should," or similar expressions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that actual results may differ materially from those contemplated by such forward-looking statements. Many of these factors are beyond the company’s abilities to control or predict. Such factors include, but are not limited to, (i) general adverse economic and local real estate conditions; (ii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business; (iii) financing risks, such as the inability to obtain equity, debt or other sources of financing or refinancing on favorable terms, if at all; (iv) the company’s ability to raise capital by selling its assets; (v) changes in governmental laws and regulations; (vi) the level and volatility of interest rates and foreign currency exchange rates; (vii) valuation of joint venture investments; (viii) valuation of marketable securities and other investments; (ix) valuation of real estate; (x) increases in operating costs; (xi) changes in the dividend policy for the company’s common stock; (xii) the reduction in the company’s income in the event of multiple lease terminations by tenants; (xiii) impairment charges, (xiv) the effects of geopolitical instability and risks such as terrorist attacks; (xv) the effects of weather and natural disasters such as floods, droughts, wind, tornadoes and hurricanes; and (xvi) the effect of any damage to our reputation resulting from developments relating to any of items (i) – (xv). Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the company's filings with the Securities and Exchange Commission.  The company refers you to the section entitled “Risk Factors” contained in the company's Annual Report on Form 10-K for the year ended December 31, 2017. Copies of each filing may be obtained from the company or the Securities and Exchange Commission.

The risks included here are not exhaustive and undue reliance should not be placed on any forward-looking statements, which are based on current expectations. All written and oral forward-looking statements attributable to the company, its management, or persons acting on their behalf are qualified in their entirety by these cautionary statements. Further, forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time unless otherwise required by law.

Contact Information:

Investors:
Ron Hubbard
317.808.6060

Media:
Helen McCarthy
317.708.8010



Duke Realty Corporation and Subsidiaries
Consolidated Statement of Operations
(Unaudited and in thousands, except per share amounts)
               
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
   2018     2017     2018     2017 
Revenues:  
  Rental and related revenue   $   196,912     $   169,611     $   582,461     $   507,123  
  General contractor and service fee revenue      34,986        25,217        94,552        58,192  
     231,898        194,828        677,013        565,315  
Expenses:  
  Rental expenses      17,704        16,224        54,869        46,967  
  Real estate taxes      31,515        28,157        93,857        81,569  
  General contractor and other services expenses      33,730        24,079        89,392        54,077  
  Depreciation and amortization      78,855        67,992        232,216        197,028  
     161,804        136,452        470,334        379,641  
Other operating activities:  
  Equity in earnings of unconsolidated joint ventures      5,552        1,841        15,521        58,523  
  Promote income      —        —        —        20,007  
  Gain on sale of properties      (107 )      21,952        194,741        93,339  
  Gain on land sales      3,915        5,665        7,221        8,449  
  Other operating expenses      (668 )      (770 )      (2,591 )      (2,226 )
  Impairment charges      —        (3,622 )      —        (4,481 )
  General and administrative expenses      (8,959 )      (10,075 )      (43,441 )      (41,165 )
     (267 )      14,991        171,451        132,446  
 
  Operating income    69,827        73,367        378,130        318,120  
 
Other income (expenses):  
  Interest and other income, net      4,129        6,404        13,319        9,197  
  Interest expense      (21,462 )      (20,835 )      (62,137 )      (65,401 )
  Loss on debt extinguishment      (89 )      (16,568 )      (240 )      (26,104 )
Income from continuing operations, before income taxes      52,405        42,368        329,072        235,812  
  Income tax benefit (expense)      897        (359 )      (9,495 )      (7,918 )
  Income from continuing operations    53,302        42,009        319,577        227,894  
 
Discontinued operations:  
  Income before gain on sales and income taxes      85        2,563        108        17,747  
  Gain on sale of depreciable properties      136        120,179        3,157        1,229,270  
  Income tax benefit (expense)      —        876        —        (10,736 )
  Income from discontinued operations    221        123,618        3,265        1,236,281  
 
Net income      53,523        165,627        322,842        1,464,175  
Net income attributable to noncontrolling interests      (498 )      (358 )      (3,009 )      (18,163 )
  Net income attributable to common shareholders $   53,025     $   165,269     $   319,833     $   1,446,012  
 
Basic net income per common share:  
  Continuing operations attributable to common shareholders   $   0.15     $   0.12     $   0.88     $   0.63  
  Discontinued operations attributable to common shareholders      —        0.34        0.01        3.43  
Total   $   0.15     $   0.46     $   0.89     $   4.06  
 
Diluted net income per common share:  
  Continuing operations attributable to common shareholders   $   0.15     $   0.12     $   0.88     $   0.63  
  Discontinued operations attributable to common shareholders      —        0.34        0.01        3.40  
Total   $   0.15     $   0.46     $   0.89     $   4.03  
 

 

  Duke Realty Corporation and Subsidiaries
  Consolidated Balance Sheets
  (Unaudited and in thousands)
 
 
  September 30,   December 31,
   2018     2017 
  Assets    
Real estate investments:    
  Real estate assets   $   6,943,629     $   6,593,567  
  Construction in progress      515,324        401,407  
  Investments in and advances to unconsolidated joint ventures      107,811        126,487  
  Undeveloped land      314,075        226,987  
     7,880,839        7,348,448  
  Accumulated depreciation      (1,294,370 )      (1,193,905 )
   
  Net real estate investments    6,586,469        6,154,543  
 
Real estate investments and other assets held-for-sale      53,653        17,550  
 
Cash and cash equivalents      133,405        67,562  
Accounts receivable, net      19,494        19,427  
Straight-line rents receivable, net      102,480        93,005  
Receivables on construction contracts, including retentions      33,699        13,480  
Deferred leasing and other costs, net      305,143        292,682  
Restricted cash held in escrow for like-kind exchange      127,597        116,405  
Notes receivable from property sales      276,744        426,657  
Other escrow deposits and other assets      186,126        186,885  
 
  $   7,824,810     $   7,388,196  
 
  Liabilities and Equity    
Indebtedness:  
  Secured debt, net of deferred financing costs   $   80,716     $   311,349  
  Unsecured debt, net of deferred financing costs      2,553,460        2,111,542  
     2,634,176        2,422,891  
Liabilities related to real estate investments held-for-sale  
     606        1,163  
 
Construction payables and amounts due subcontractors, including retentions      100,323        54,545  
Accrued real estate taxes      89,671        67,374  
Accrued interest      27,463        17,911  
Other liabilities      208,874        210,825  
Tenant security deposits and prepaid rents      38,773        39,109  
  Total liabilities    3,099,886        2,813,818  
 
Shareholders' equity:  
 
  Common shares      3,583        3,564  
  Additional paid-in-capital      5,240,495        5,205,316  
  Distributions in excess of net income      (571,617 )      (676,036 )
  Total shareholders' equity    4,672,461        4,532,844  
 
Noncontrolling interests      52,463        41,534  
  Total equity      4,724,924        4,574,378  
 
  $   7,824,810     $   7,388,196  
 

 

  Duke Realty Corporation and Subsidiaries
  Summary of EPS, FFO and AFFO
  Three Months Ended September 30,
  (Unaudited and in thousands, except per share amounts)
 
 
                 
    2018     2017  
  Wtd.             Wtd.  
  Avg. Per   Avg. Per  
  Amount Shares Share   Amount Shares Share  
Net income attributable to common shareholders $    53,025           $    165,269        
Less dividends on participating securities    (394 )      (444 )  
Net income per common share-basic    52,631    357,898 $    0.15      164,825    355,905 $    0.46  
Add back:  
  Noncontrolling interest in earnings of unitholders    495    3,302      1,535    3,301  
  Other potentially dilutive securities    —    210      444    2,896  
Net income attributable to common shareholders-diluted $    53,126    361,410 $    0.15      166,804    362,102 $    0.46  
Reconciliation to FFO                            
Net income attributable to common shareholders $    53,025    357,898   $    165,269    355,905  
Adjustments:  
  Depreciation and amortization    78,855        68,029    
  Company share of joint venture depreciation, amortization and other    2,367        2,171    
  Gains on depreciable property sales - discontinued operations    (136 )      (121,348 )  
  Gains on depreciable property sales - continuing operations    107        (21,952 )  
  Income tax benefit triggered by depreciable property sales    (897 )      (516 )  
  Gains on depreciable property sales - unconsolidated joint ventures    (2,008 )      37    
  Noncontrolling interest share of adjustments    (718 )        677      
NAREIT FFO attributable to common shareholders - basic    130,595    357,898 $    0.36      92,367    355,905 $    0.26  
  Noncontrolling interest in income of unitholders    495    3,302      1,535    3,301  
  Noncontrolling interest share of adjustments    718        (677 )  
  Other potentially dilutive securities    2,117      2,896  
NAREIT FFO attributable to common shareholders - diluted $    131,808    363,317 $    0.36   $    93,225    362,102 $    0.26  
  Gains on land sales    (3,915 )            (5,665 )        
  Gains on involuntary conversion - unconsolidated joint venture    (1,397 )            —          
  Loss on debt extinguishment    89              16,568          
  Land impairment charges    —              3,622          
Core FFO attributable to common shareholders - diluted $    126,585    363,317 $    0.35   $    107,750    362,102 $    0.30  
AFFO                            
Core FFO - diluted $   126,585    363,317 $   0.35   $   107,750    362,102 $   0.30  
Adjustments:  
  Straight-line rental income and expense    (6,445 )            (4,292 )        
  Amortization of above/below market rents and concessions    (593 )            1,232          
  Stock based compensation expense    2,208              1,943          
  Noncash interest expense    1,443              1,244          
  Second generation concessions    —              (19 )        
  Second generation tenant improvements    (4,043 )            (3,700 )        
  Second generation leasing costs    (4,440 )            (4,983 )        
  Building improvements    (1,417 )            (5,184 )        
AFFO - diluted $    113,298    363,317   $    93,991    362,102  
 

 

  Duke Realty Corporation and Subsidiaries
  Summary of EPS, FFO and AFFO
  Nine Months Ended September 30,
  (Unaudited and in thousands, except per share amounts)
 
 
 
    2018     2017  
  Wtd.             Wtd.  
  Avg. Per         Avg. Per  
  Amount Shares Share   Amount Shares Share  
Net income attributable to common shareholders $    319,833         $    1,446,012        
Less dividends on participating securities    (1,249 )      (1,527 )  
Net income per common share-basic    318,584    357,235 $    0.89      1,444,485    355,614 $    4.06  
Add back:  
  Noncontrolling interest in earnings of unitholders    3,002    3,350      13,427    3,307  
  Other potentially dilutive securities    1,249    2,160      1,527    3,026  
Net income attributable to common shareholders-diluted $    322,835    362,745 $    0.89   $    1,459,439    361,947 $    4.03  
Reconciliation to FFO                            
Net income attributable to common shareholders $    319,833    357,235   $    1,446,012    355,614  
Adjustments:  
  Depreciation and amortization    232,216              222,914          
  Company share of joint venture depreciation, amortization and other    6,647              7,266          
  Impairment charges - depreciable property    —              859          
  Gains on depreciable property sales - discontinued operations    (3,157 )            (1,224,422 )        
  Gains on depreciable property sales - continuing operations    (194,741 )            (93,339 )        
  Income tax expense triggered by depreciable property sales    9,495              19,142          
  Gains on depreciable property sales - unconsolidated joint ventures    (8,186 )            (50,694 )        
  Noncontrolling interest share of adjustments    (395 )            10,307      
NAREIT FFO attributable to common shareholders - basic    361,712    357,235 $    1.01      338,045    355,614 $    0.95  
  Noncontrolling interest in income of unitholders    3,002    3,350      13,427    3,307  
  Noncontrolling interest share of adjustments    395        (10,307 )  
  Other potentially dilutive securities    2,160      3,026  
NAREIT FFO attributable to common shareholders - diluted $    365,109    362,745 $    1.01   $    341,165    361,947 $    0.94  
  Gains on land sales    (7,221 )            (8,449 )        
  Gains on involuntary conversion - unconsolidated joint venture    (1,397 )            —          
  Loss on debt extinguishment    240              26,104          
  Gain on non-depreciable property sale - unconsolidated joint ventures    —              (119 )        
  Land impairment charges    —              3,622          
  Promote income    —              (20,007 )        
  Other income tax items    —              (2,619 )        
Core FFO attributable to common shareholders - diluted $    356,731    362,745 $    0.98   $    339,697    361,947 $    0.94  
AFFO                            
Core FFO - diluted $   356,731    362,745 $   0.98   $   339,697    361,947 $   0.94  
Adjustments:  
  Straight-line rental income and expense    (17,759 )            (12,336 )        
  Amortization of above/below market rents and concessions    (1,598 )            1,895          
  Stock based compensation expense    18,238              16,023          
  Noncash interest expense    4,244              4,448          
  Second generation concessions    (135 )            (94 )        
  Second generation tenant improvements    (12,194 )            (11,197 )        
  Second generation leasing commissions    (16,232 )            (15,260 )        
  Building improvements    (3,165 )            (8,115 )        
AFFO - diluted $    328,130    362,745   $    315,061    361,947  
 

 

Duke Realty Corporation and Subsidiaries
Reconciliation of Same Property Net Operating Income Growth
(Unaudited and in thousands)
 
  Three Months Ended
  September 30, 2018   September 30, 2017
 
Income from continuing operations before income taxes $   52,405     $   42,368  
Share of same property NOI from unconsolidated joint ventures    4,063        4,049  
Income and expense items not allocated to segments    98,202        85,605  
Earnings from service operations    (1,256 )      (1,138 )
Properties not included and other adjustments    (35,163 )      (19,623 )
Same property NOI $   118,251     $   111,261  
 
Percent Change   6.3 %  
 
  Nine Months Ended
  September 30, 2018   September 30, 2017
 
Income from continuing operations before income taxes $   329,072     $   235,812  
Share of same property NOI from unconsolidated joint ventures    12,016        11,990  
Income and expense items not allocated to segments    113,710        150,064  
Earnings from service operations    (5,160 )      (4,115 )
Properties not included and other adjustments    (100,489 )      (59,805 )
Same property NOI $   349,149     $   333,946  
 
Percent Change   4.6 %  
 
 
Duke Realty Corporation and Subsidiaries
Reconciliation of 2018 FFO Guidance
(Unaudited )
 
  Pessimistic   Optimistic
Net income attributable to common shareholders - diluted $    1.02     $    1.10  
Depreciation and gains on sales of depreciated property (including share of joint venture)    0.31        0.29  
NAREIT FFO attributable to common shareholders - diluted $    1.33     $    1.39  
Gains on land sales    (0.02 )      (0.03 )
Other reconciling items    —        (0.01 )
Core FFO attributable to common shareholders - diluted $    1.31     $    1.35  
 

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Duke Realty Corporation