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DCT Industrial Clocks Strong 2017

Denver-Based Industrial REIT Reports $320 Million NOI
February 2, 2018
Denver-based DCT Industrial Trust Inc. recorded a strong fourth quarter and full year 2017 as the industrial real estate market in metro Denver and across the country continued its growth spurt.

DCT Industrial (NYSE: DCT), a real estate investment trust with holdings in markets throughout the U.S., recorded net operating income of $81.7 million in the fourth quarter of 2017 and $320 million in the full year, compared with $294.5 million in 2016, according to its most recent earnings release.

Per-share earnings were 22 cents per diluted share the fourth quarter and $1.11 per share for the full year 2017.

Fourth-quarter 2017 was a busy one for DCT, which executed 2.3 million square feet of leases with rental rates increasing 21.5 percent on a straight-line basis when compared to corresponding expiring leases and commencing construction on more than 1 million square feet of new development. The company also made large land acquisitions for further development.

In addition, DCT sold 10 buildings totaling 2.3 million square feet in the fourth quarter, and in doing so exited the Charlotte, NC and Memphis, TN markets. The transactions resulted in total gross proceeds of $129.3 million.

DCT, as well as other companies that focus on the industrial segment of the commercial market, have benefited from continued demand for industrial space across the country since the end of the recession.

In metro Denver, average asking rents have grown significantly since 2013, rising by 5.3 percent to more than $9 per square foot in 2017, according to CoStar data. While vacancy rates hit rock bottom in 2016, new construction deliveries have brought the average vacancy rate up slightly to 4.7 percent in 2017, but pre-leasing activity has kept supply low across the metro area relative to demand.

"DCT had a good fourth quarter, concluding another outstanding year," said Phil Hawkins, president and CEO of DCT Industrial. "Given strong customer demand and low market vacancies, we expect 2018 will be another successful year for DCT - creating value as well as growing rents and net operating income."

As of Dec. 31, DCT owned 398 properties, totaling 65.1 million square feet, with an occupancy rate of about 97.8 percent, a slight decrease from both the prior quarter and the previous year. Another 0.6 percent was leased but not yet occupied at the end of 2017.

Shares of DCT Industrial were down about 1 percent at nearly $58 in midday trading.

Molly Armbrister, Denver Market Reporter  CoStar Group   

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