Duke Realty Corporation (NYSE: DRE) has joined in with other REIT operations in announcing the sale of common stock in order to pay down debt. The company plans to sell 64 million shares of common stock, or 73.6 million shares if the underwriters exercise their overallotment option. The company also has guidance and a dividend update out after the close (updated 4:28 PM EST).
The offering is under an effective shelf registration with Merrill Lynch (B of A), J.P. Morgan, and Morgan Stanley all listed as joint book-runners for the offering.
The use of proceeds is to pay down debt under Duke’s unsecured line of credit, as well as for general purposes.
After a close of more than 10% higher at $8.44, this would represent more than $500 million at current prices. Its market cap is $1.25 billion, and the 52-week trading range is $3.85 to $27.21.
UPDATE 4:28 PM EST…..After the secondary notice it offered FFO (EPS for REITs) guidance of $0.70 to $0.72 for Q1, well above estimates of $0.51 FFO. For 2009, it sees FFO at $2.06 to $2.36, while estimates are $2.02 FFO. Unfortunately, this will be a net loss for the year on a traditional earnings basis on items. Outside of the proposed financing and effects of debt purchases, it is maintaining $1.85 to $2.15 FFO guidance for 2009.
It also said that stabilized in service properties were 89.7% leased at the end of March versus a 92.4% rate at the end of 2008. That decrease in leased space percentages is due to the portfolio now being larger. Lastly, Duke said its prior $0.25 dividend will be $0.17 per share for each quarter ahead in the rest of 2009, assuming the completion of the financing.
JON C. OGG