FFO was $2.46 per share in 2000, a 12.3% jump over 1999. For the fourth quarter, FFO was $0.63 per share, 10.5% more than the $0.57 per share for the fourth quarter of 1999.
"We expect 2001 to be a solid, if not spectacular year," Hefner said in a recent conference call. "We've perfected capital recycling better than any other REIT, in my view. We've done a better job of servicing our office and industrial clients than any other franchise. So I'm just dumb enough to believe a 10% model should, and always, be our goal."
After selling $765 million in property last year at an average capitalization rate of 9.2%, Duke-Weeks plans to sell at least $400 million in properties this year, balanced between office and industrial product. "We're not afraid to sell opportunistically and shrink the size of the company a bit while building up cash," Hefner said.
Clouds on the horizon include Nashville, TN, a market Hefner considers oversupplied, as well as office holdings in Atlanta, "where the amount of space on the market has not come down as fast as we'd hoped it would."
Despite its heavy concentration of properties in the industrial Midwest, Duke-Weeks has just 1.8% of its industry leased to automotive clients, and even GM is looking for additional distribution facilities, Hefner said. "Even though their main business is slowing down, there's a tendency to move the distribution component out of manufacturing," he added.
Duke-Week's largest tenant is St. Louis-based SBC/Ameritech.
The REIT's overall vacancy rate for its 101 million sf was 6.4% at year's end, down from 8.1% at the end of 1999. Also, the company's bad debt expense for the fourth quarter was 0.1% of revenue, in line with the previous three quarters. "There's nothing in these statistics showing any impending train wreck," Hefner said.
While office cap rates "backed up a bit," Hefner says industrial cap rates remain "very strong. There's not the feeding frenzy with the number of investors, but there's still plenty of them."
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