DCT » Topics » Liquidity and Capital Resources

This excerpt taken from the DCT 10-K filed Feb 29, 2008.

Liquidity and Capital Resources

FACE="Times New Roman" SIZE="2">Overview

We currently expect that our principal sources of working capital and funding for potential capital
requirements for expansions and renovation of properties, developments, acquisitions, distributions to investors and debt service will include:

 







  

Cash flows from operations;

 







  

Proceeds from capital recycling, including asset contributions and dispositions;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

Borrowings under our senior unsecured credit facility;

 







  

Other forms of secured or unsecured financings;

 







  

Current cash balances; and

 







  

Distributions from our institutional capital management program.

FACE="Times New Roman" SIZE="2">We believe that our sources of capital are adequate and will continue to be adequate to meet our short-term liquidity requirements and capital commitments. These liquidity requirements and capital commitments include
operating activities, debt service obligations, regular quarterly equityholder distributions, capital expenditures at our properties, development funding requirements, forward purchase commitments (as more fully described below) and future
acquisitions.

We expect to utilize the same sources of capital we rely on to meet our short-term liquidity requirements to meet our long-term liquidity
requirements. We expect these resources will be adequate to fund our operating activities, debt service obligations and equityholder distributions and will be sufficient to fund our ongoing acquisition and development activities as well as to
provide capital for investment in future development and other joint ventures along with additional potential forward purchase commitments. In addition, we may engage in future offerings of common stock or other securities.

STYLE="margin-top:12px;margin-bottom:0px">Cash Flows

During the year ended December 31, 2007
compared to the same period in 2006, our cash provided by operating activities increased $25.2 million, from $91.7 million to $116.9 million, primarily related to increased operating income from our consolidated operating properties, which is
affected by rental rates, occupancy levels and operating expenses related to our operating properties.

During the year ended December 31, 2007, our
cash used by investing activities decreased compared to the same period in 2006 by approximately $965.1 million, from $968.8 million to $3.7 million, primarily related to $836.1 million less in property acquisitions and $88.5 million more in
net proceeds from property dispositions. Additionally, we invested $73.0 million more in our unconsolidated joint ventures in 2007 than 2006, primarily related to the formation of our third institutional joint venture and our investment in SCLA, and
loaned approximately $16.0 million to another institutional joint venture. We used $30.8 million less for capital expenditures primarily due to less consolidated development activities and fewer construction projects completed during the year ended
December 31, 2007, and the completion of several large projects started in late 2005 during 2006.

During the year ended December 31, 2007, we
used $106.1 million for financing activities compared to $805.4 million provided by financing activities during the same period in 2006. We raised approximately $354.2 million from our common stock offerings in 2006 and issued $425.0 million in
unsecured debt. In 2007, our cash distributions to our equityholders increased by $85.1 million for the year ended December 31, 2007 compared to the same period in 2006 related to the increase in common stock and OP Units outstanding as of
December 31, 2007.

During the year ended December 31, 2006 compared to the same period in 2005, our cash provided by operating activities
increased $25.4 million, also primarily related to increased operating income from our consolidated

 


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operating properties. Cash used by investing activities increased $217.9 million for the year ended December 31, 2006 compared to the same period in
2005 primarily related to $397.8 million more property acquisitions, offset by $265.6 million more in net proceeds from property dispositions. Cash provided by financing activities increased by $49.5 million for the year ended December 31, 2006
compared to the same period in 2005 primarily related to unsecured debt issuances, offset by $310.0 million in less gross proceeds from the sale of our common stock.

FACE="Times New Roman" SIZE="2">During the year ended December 31, 2007, we paid distributions of $127.0 million, which were satisfied through our existing cash balances, cash provided by operations and short-term borrowings. During the year
ended December 31, 2006, we paid cash distributions of approximately $41.8 million, which included the cash portion of distributions declared for the year ended December 31, 2006, and issued $51.7 million in common stock pursuant to our
previous distribution reinvestment plan.

This excerpt taken from the DCT 10-K filed Mar 16, 2006.

Liquidity and Capital Resources

We are not aware of any material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting real estate generally, which we anticipate may have a material impact on either capital resources or the revenues or income to be derived from the operation of real estate properties. We believe that capital will continue to flow into the real estate industry and industrial real estate in particular, which will continue to foster a competitive environment for the assets we are seeking to acquire. Consequently, we, through the activities of our advisor, have assembled a team of 38 professionals with over 450 years of aggregate experience who are dedicated to the acquisition and operation of properties that meet our investment criteria. The ability of our advisor to find and acquire these properties at a pace that is consistent with the capital that has been raised through our public offerings, and that has and will continue to be raised through our partnership’s private placement and other financing activities, will directly impact our financial performance and the metrics that management uses to evaluate our performance, including funds from operations available to pay distributions.

Management expects that our principal sources of working capital and funding for acquisitions and potential capital requirements for expansion and renovation of properties will include:

 

    Borrowings under our unsecured credit facility;

 

    Other forms of secured or unsecured financing;

 

    Capital from co-investment partners;

 

    Additional proceeds from our fourth public offering of common stock;

 

    Proceeds from our partnership’s private placement;

 

    Proceeds from our distribution reinvestment plan; and

 

    Cash flow from operations.

Over the short term, we believe that our sources of capital, specifically our cash flow from operations, borrowings under our unsecured credit facility, the remaining proceeds from our fourth public offering and our ability to raise capital through our partnership’s private placement are adequate and will continue to be adequate to meet our liquidity requirements and capital commitments. These liquidity and capital requirements and commitments include the payment of debt service, regular quarterly investor distributions, capital expenditures at our properties, forward purchase commitments (as more fully described below), the purchase of 25 properties which are currently the subject of an executed letter of intent, under contract or have closed since December 31, 2005 and future acquisitions of unidentified properties. The properties that had been identified as of December 31, 2005 total 5.8 million square feet and have an aggregate purchase price of approximately $263.2 million. We anticipate that the acquisitions that have not yet closed will close over the next several months. However, the contracts related to these acquisitions are subject to a number of contingencies and there can be no assurances that these acquisitions will transpire.

Over the longer term, we anticipate that we will continue to utilize the same sources of capital, with the exception of the proceeds from our fourth public offering, that we rely on to meet our short term liquidity requirements. In addition, we may obtain capital through other secured and unsecured financings or from co-investment partners and we may also conduct additional public offerings or recommence our fourth public

 

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offering. We expect these resources will be adequate to fund our operating activities, including debt service and distributions, which we anticipate will grow over time, and will be sufficient to fund our ongoing acquisition activities as well as providing capital for investment in future development and other joint ventures along with additional potential forward purchase commitments. Over the longer term, we also expect that our cash flow from operations will be sufficient to adequately fund our regular distributions. In addition, we intend to seek to enter into additional joint ventures similar to the one we entered into on February 21, 2006 (as described above), and expect that our cash flow from operations over the longer term will be comprised of both rents from our properties and fees earned for asset management and other services performed on behalf of such joint ventures.

During the years ended December 31, 2005, 2004 and 2003, our cash generated from financing activities increased year to year and we generated approximately $756.0 million, $558.0 million, and $152.3 million, respectively. During these years, we generated net proceeds of approximately $737.2 million, $522.2 million and $112.0 million, respectively, through our public offerings and our partnership’s private placement. In addition, we issued debt of approximately $60.9 million, $55.0 million and $51.9 million, respectively. During the years ended December 31, 2005, 2004 and 2003, our cash provided by operating activities increased from year to year and we generated approximately $66.3 million, $21.5 million and $1.7 million, respectively. These sources of capital were utilized to fund approximately $750.3 million, $548.5 million and $149.6 million of cash invested in real estate during the years ended December 31, 2005, 2004 and 2003, respectively. Management anticipates that over time, debt proceeds as well as cash provided by operating activities will represent an increasing percentage of our sources of capital as will capital from co-investment partners.

This excerpt taken from the DCT 10-Q filed May 10, 2005.

Liquidity and Capital Resources

Overview

        Other than national economic conditions affecting real estate in general, our management is not currently aware of any material trends or uncertainties, favorable or unfavorable that may have a material impact on either capital resources or the revenues or income to be derived from the operation of real estate properties.

        Management currently expects that our principal sources of working capital and funding for acquisitions and potential capital requirements for expansion and renovation of properties will include:

    Proceeds from our current or future public offerings of common stock;

    Proceeds from our partnership's private placement;

    Borrowings under our secured credit facility;

    Other forms of secured or unsecured financings;

    Capital from co-investment partners; and

    Cash flow from operations.

        Over the short term, we believe that our sources of capital, specifically our cash flow from operations, borrowings under our credit facility and our ability to raise capital through public offerings and our partnership's private placement, are adequate and will continue to be adequate to meet our liquidity requirements and capital commitments. These liquidity requirements and capital commitments include the payment of distributions, capital expenditures at our properties, forward purchase commitments (as more fully described below) and the acquisition of 28 buildings which are currently under contract or have closed since March 31, 2005. These buildings total approximately 4.1 million square feet and have an aggregate purchase price of approximately $190.0 million. We anticipate that the acquisitions that have not yet closed will close over the next several months. However, the contracts related to such acquisitions are subject to a number of contingencies and there are no assurances that these acquisitions will transpire.

        Over the longer term, we anticipate we will continue to utilize the same sources of capital we rely on to meet our short term liquidity requirements; however, we also expect to utilize additional secured and unsecured financings and capital from co-investment partners. We expect these resources will be adequate to fund our operating activities and distributions, which we presently anticipate will grow over time, and will be sufficient to fund our ongoing acquisition activities as well as providing capital for investment in future development and other joint ventures along with additional potential forward purchase commitments.

        During the three months ended March 31, 2005, and 2004, cash generated from financing activities was approximately $190.0 million and $91.5 million, respectively. This increase was generally comprised of an increase in gross proceeds generated by our public offerings and our partnership's private placement of approximately $53.5 million compared to the same period in 2004. Additionally, cash provided by operating activities increased to approximately $10.8 million for the three months ended March 31, 2005, from approximately $3.1 million for the same period ended March 31, 2004, due to the additional properties owned during the 2005 period. These sources of capital were primarily utilized to fund approximately $76.5 million and $29.7 million of cash invested in real estate during the three months ended March 31, 2005, and 2004, respectively. Our management anticipates that over time, cash provided by operating activities, debt proceeds and cash from co-investment partners will become a larger portion of our capital resources.

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Public Offering

        On June 28, 2004, we filed our third registration statement with the SEC covering our third public offering of our common stock and the registration statement was declared effective on October 18, 2004. The common stock is being offered at a price of $10.50 per share for a maximum of 40,000,000 shares. The registration statement also covers up to 13,000,000 shares available pursuant to our distribution reinvestment plan. We will continue to sell shares under this offering and potential follow-on offerings, providing capital primarily for acquisitions. For the three months ended March 31, 2005, we raised gross proceeds of approximately $137.7 million and as of March 31, 2005, we had sold 25,190,548 shares pursuant to our third public offering for total gross proceeds of approximately $264.1 million.

Our Partnership's Private Placement

        Our partnership is currently offering undivided tenancy-in-common interests in our properties to accredited investors in a private placement exempt from registration under the Securities Act. We anticipate that these tenancy-in-common interests may serve as replacement properties for investors seeking to complete like-kind exchange transactions under Section 1031 of the Internal Revenue Code. Additionally, the tenancy-in-common interests sold to investors will be 100% leased by our partnership, and such leases will contain purchase options whereby our partnership will have the right to acquire the tenancy-in-common interests from the investors commencing at the beginning of the 15th month and terminating at the end of the 18th month of the lease in exchange for limited partnership units in our partnership under Section 721 of the Internal Revenue Code. During the three months ended March 31, 2005, we raised approximately $18.0 million and as of March 31, 2005, we have raised a total of approximately $50.6 million from the sale of undivided tenancy-in-common interests in our properties pursuant to our partnership's private placement.

Forward Capital Commitment Agreement

        In October 2004, we entered into a forward capital commitment with Wachovia Bank National Association ("Wachovia") in connection with our commitment to acquire two buildings located in Atlanta, Georgia, comprising 677,667 square feet from an unrelated third-party developer. We have entered into this binding agreement with Wachovia, the construction lender, to purchase the two buildings at a price of up to $29.0 million. Our obligation to acquire the buildings from the developer upon completion can be satisfied under a variety of scenarios, mostly dependent upon leasing, with a minimum purchase price equal to actual development costs. In order to provide security to Wachovia under this capital commitment, we were required to place $4.9 million in escrow in lieu of a letter of credit, which is included in restricted cash on the condensed consolidated balance sheet. We anticipate funding this commitment in 2006 with proceeds from our public offerings and debt.

Distributions

        The payment of distributions is determined by our Board of Directors and may be adjusted at its discretion at any time. In December 2004, our Board of Directors set the 2005 distribution level at an annualized $0.64 per share. The distribution was set by our Board of Directors at a level we believe to be appropriate and sustainable based upon the evaluation of existing assets within our portfolio, anticipated acquisitions and projected levels of additional capital to be raised, debt to be incurred in the future and the anticipated results of operations. During the three months ended March 31, 2005, our board of directors declared distributions totaling approximately $11.7 million and we paid the fourth quarter 2004 distributions totaling approximately $9.7 million. To fund total distributions, we utilized both funds from operations and debt proceeds.

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        The short term dilution of operating results brought upon by the pace of raising capital meeting or exceeding the pace at which we have deployed such capital during the initial stages of our existence was anticipated and is a byproduct of our continued effort to build a high-quality portfolio. It is our objective to add accretive leverage to the balance sheet and to conservatively fund our distributions from funds from operations over time.

Distribution Reinvestment Plan

        Pursuant to our distribution reinvestment plan, $6.3 million and $1.4 million of the distributions declared during the three months ended March 31, 2005, and 2004, respectively, was satisfied through the issuance of our common stock. For the same period in 2005 and 2004, 631,077 and 148,799 shares, respectively were issued pursuant to our distribution reinvestment plan at a 5.0% discount from our then current public offering share price for a discounted purchase price of $9.975 and $9.50 per share, respectively.

Debt Service Requirements

        As of March 31, 2005, we had total outstanding debt, excluding financing obligations (see "Note 6—Our Partnership's Private Placement" to the condensed consolidated financial statements), of approximately $219 million, exclusive of premiums, consisting primarily of secured, fixed-rate, non-recourse mortgage notes. All of these notes require monthly payments of interest and require, or will ultimately require, monthly repayments of principal (see "Note 3—Debt" to the condensed consolidated financial statements). Currently, cash flow from operations is sufficient to satisfy these debt service requirements and we anticipate that they will continue to be sufficient to satisfy these requirements over time.

        As of March 31, 2005, the gross book value of all of our properties was approximately $855.3 million and the gross book value of all properties securing our fixed rate mortgage debt and secured credit facility was approximately $353.4 million and $282.4 million, respectively. Our debt has various covenants and management believes we were in compliance with all of these covenants at March 31, 2005.

This excerpt taken from the DCT 10-K filed Mar 16, 2005.

Liquidity and Capital Resources

        We are not aware of any material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting real estate generally, which we anticipate may have a material impact on either capital resources or the revenues or income to be derived from the operation of real estate properties. We believe that capital will continue to flow into the real estate industry and industrial real estate in particular, which will continue to foster a competitive environment for the assets we are seeking to acquire. Consequently, we, through the activities of our advisor, have assembled a team of 25 professionals with over 250 years of aggregate experience who are dedicated to the acquisition and operation of properties that meet our investment criteria. The ability of our advisor to find and acquire these properties at a pace that is consistent with the capital that is raised through

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our public offerings, our partnership's private placement and other financing activities will directly impact our financial performance and the metrics that management uses to evaluate our performance, including funds from operations available to pay dividends.

        Management expects that our principal sources of working capital and funding for acquisitions and potential capital requirements for expansion and renovation of properties will include:

    Proceeds from our current or future public offerings of common stock;

    Proceeds from our partnership's private placement;

    Borrowings under our secured credit facility;

    Other forms of secured or unsecured financing;

    Capital from co-investment partners; and

    Cash flow from operations.

        Over the short term, we believe that our sources of capital, specifically our cash flow from operations, borrowings under our credit facility and our ability to raise capital through public offerings and our partnership's private placement are adequate and will continue to be adequate to meet our liquidity requirements and capital commitments. These liquidity requirements and capital commitments include the payment of distributions, capital expenditures at our properties, forward purchase commitments (as more fully described below) and the acquisition of 19 buildings which are currently under contract or have closed since December 31, 2004. These buildings total 5.4 million square feet and have an aggregate purchase price of approximately $216.8 million. We anticipate that the acquisitions that have not yet closed will close over the next several months. However, the contracts related to such acquisitions are subject to a number of contingencies and there are no assurances that these acquisitions will transpire.

        Over the longer term, we anticipate we will continue to utilize the same sources of capital we rely on to meet our short term liquidity requirements as well as additional secured and unsecured financings and capital from co-investment partners. We expect these resources will be adequate to fund our operating activities and distributions, which we presently anticipate will grow over time, and will be sufficient to fund our ongoing acquisition activities as well as providing capital for investment in future development and other joint ventures along with additional potential forward purchase commitments.

        During the years ended December 31, 2004 and 2003, cash generated from financing activities was approximately $558.0 million and $152.3 million, respectively. This increase was generally comprised of an increase in net proceeds generated by our public offerings and our partnership's private placement of approximately $405.6 million. Additionally, cash provided by operating activities increased from approximately $1.7 million for the twelve months ended December 31, 2003 to approximately $21.5 million for the same period ended December 31, 2004. These sources of capital were primarily utilized to fund approximately $548.5 million and $149.6 million of cash invested in real estate in 2004 and 2003, respectively. Our management anticipates that over time, cash provided by operating activities, debt proceeds and cash from co-investment partners will become increasingly more important.

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