Duke Realty Corporation

NYSE:DRE Stock Report

Market Cap: US$18.8b

This company has been acquired

The company may no longer be operating, as it has been acquired. Find out why through their latest events.

Duke Realty Future Growth

Future criteria checks 1/6

Key information

-4.3%

Earnings growth rate

-7.88%

EPS growth rate

REITs earnings growth15.9%
Revenue growth rate11.4%
Future return on equity6.68%
Analyst coverage

Good

Last updatedn/a

Recent future growth updates

Recent updates

Seeking Alpha • Sep 08

Duke Realty: Great Company, But Too Expensive To Buy

Summary DRE is well-poised to benefit from the increase in rental rates, it has a strong balance sheet and great credit ratings. Duke’s current portfolio is stable and its new developments concentrate in very low vacancy areas. The current valuation is too expensive for new investors as Prologis offered Duke shareholders 0.475 shares of PLD after the acquisition. Investment thesis Duke Realty Corporation (DRE) is well-poised to benefit from the double-digit increase in rental rates and the rise in demand for its strategically located high-quality industrial real estate properties. 52% of the company's new developments have already been pre-leased. In addition, DRE has great expansionary efforts and a strong balance-sheet position. The only downside is that the company trades at the fair valuation of the Prologis (PLD) acquisition with a very low dividend yield at the moment. Duke Realty's business model DRE is a U.S.-only logistics REIT. The company is a member of the S&P 500 index. The management's main goal is to acquire, develop and rent out top-tier logistics facilities across the country. They have a highly reliable tenant base, their Top 10 tenants include Amazon (AMZN), Home Depot (HD), and UPS (UPS). DRE's portfolio of modern (the average year of the properties is 13 years old) and high-quality logistics facilities (they have the largest square foot properties among the company's peers) makes it well-poised to capitalize on growing and favorable industrial real estate market fundamentals. Company Presentation External trends In the last 2-3 years the warehouse market was booming like never before. The demand was very high due to the pandemic and the e-commerce businesses expanded rapidly. In addition, the supply was tight and there were relatively few quality warehouses in great locations. Now developers starting to notice that tenant demand is cooling, due to numerous new warehouse developments finished in recent years the supply has been rising and the U.S. economy shows signs of weakness. This means investors have to notice the short-term trend change and adjust their REIT portfolios accordingly. However, I would not consider massive logistics REIT selloffs due to this upcoming short-term bust cycle. Prologis expects rent growth of 22% in the U.S. during the year with vacancy rates remaining near all-time lows of 3.3%. Duke's portfolio is stable and its new developments concentrate in very low vacancy areas. I believe that during the next years rental rates will keep rising above inflation, which means investors can expect nice FFO and CAD figures. At the same time, I also expect that vacancy rates will increase not because the current tenants will leave but because newly built warehouses could be harder to rent out in a recession. But even if vacancy rates increase by 50-100 basis points the elevated rental income will compensate and investors will see shareholder value growth. Valuation Duke Realty maintains a robust balance sheet position, it has a conservative 65-75% AFFO payout ratio and its development pipeline is already 52% pre-leased. The company ended the second quarter with more than $40 million of cash and cash equivalents and has no significant debt maturities until 2026. It also has a favorable credit rating of Baa1/BBB+, which enables DRE to borrow at a favorable rate. This credit rating might be even better after the Prologis-Duke merger. This gives Duke Realty enough financial flexibility and facilitates its development activities. In terms of valuation, Prologis made a clear valuation of the company when it offered $26 billion for the company. Duke Realty shareholders will receive 0.475 of a Prologis share for each Duke Realty share owned. This means that the current valuation is spot on (PLD - $123*0,475= $58.425). DRE is trading almost exactly at this price. Of course, the price of PLD will change until the acquisition happens, it is expected to close in the fourth quarter of 2022 but I do not believe much stock price appreciation will happen to PLD. This valuation is also supported by the dividend yield. An under 2% dividend yield is anything but attractive for DRE. I would consider it a great buying opportunity above a 3% dividend yield. Zacks.com Company-specific Risks Duke Realty is in a stable position. I see no existential threats to its business model or its financial health. There are only small risk factors that investors should be aware of. A development boom in the warehouse market and among logistical properties may increase competition and curb pricing power. Amazon has started to cancel lease agreements for the future which might sound scary but Amazon represented only 1% of Duke Realty's new leasing and 3% of development starts. The rising supply of warehouses and vacancy levels might cause some pressure in the upcoming quarters. It is also worth mentioning that its huge development pipeline exposes the company to various operational risks such as construction cost overruns (especially with soaring material costs and labor costs) and lease-up risks. DRE's dividend The company has been a consistent dividend payer for 27 years. In addition, the management has been raising the dividend for 7 consecutive years. Its FFO payout ratio is well covered, it is approximately around 60%. Its AFFO payout ratio is at healthy levels of about 65-75%. Analysts estimate a 9.8% increase which is very close to the current and past months' U.S. CPI. In this high inflation environment, we can safely say that DRE is a good choice for income investors. The table is created by the author. All figures are from the company's financial statements and SA Earnings Estimates.
Seeking Alpha • Sep 01

Duke Realty declares $0.28 dividend

Duke Realty (NYSE:DRE) declared $0.28/share quarterly dividend, in line with previous. Forward yield 1.9% Payable Sept. 30; for shareholders of record Sept. 15; ex-div Sept. 14. See DRE Dividend Scorecard, Yield Chart, & Dividend Growth.
Seeking Alpha • Jul 27

Duke Realty FFO of $0.45, revenue of $285.29M

Duke Realty press release (NYSE:DRE): Q2 FFO of $0.45; GAAP EPS of $0.27. Revenue of $285.29M (+5.0% Y/Y).
Seeking Alpha • Jul 15

Duke Realty downgraded to Neutral at Baird ahead of Prologis deal

Baird analyst David Rodgers downgraded Duke Realty (NYSE:DRE) to Market Weight on Friday, as he sees price discovery and recession fears limiting high-multiple returns. In his view, the Industrial correction is not yet complete. While he sees upside in stock next year, H2 2022 should continue to be challenging, he said. "The clarity on on negative spreads, continued price discovery and the sharpness of a pending recession are likely to keep value gaps wide near term," Rodgers wrote in a note to clients. "With this in mind, we are lowering DRE's rating to Neutral to match PLD." The Neutral rating on Duke (DRE) aligns with the Quant rating and the average SA Author's rating. DRE stock, meanwhile, is rising 2.0% in Friday morning trading. Recall that last month, Prologis (PLD) and Duke (DRE) agreed to a merger in which PLC will acquire DRE in an all-stock transaction valued at ~$26B at the time.
Seeking Alpha • Jun 06

Duke Realty: Acquisition By Prologis Stuck In A Valuation Dilemma

Prologis offered to acquire DRE at a premium of 29 percent, which was rejected by the board members of DRE. After being rejected, Prologis went hostile with an assumption that it offered sufficient premium (much higher than industry average) to DRE’s investors. DRE is not under any kind of financial stress, thus are not compelled to accept a bid if the board members believe that the firm is being undervalued.
Seeking Alpha • Mar 09

Duke Realty - Long-Term REIT Value And Growth

Duke Realty operates in one of the strongest REIT industries thanks to ongoing secular trends and the need for efficient logistics. DRE stock has come down 18% after running hot after the pandemic. Yet, its financials continue to show high (expected) growth rates. Duke Realty is in a great spot to deliver outperforming returns and significant dividend rate hikes on a long-term basis.
Seeking Alpha • Oct 27

Future FROG Of America: Duke Realty

I am bullish on the industrial REIT sector because of the tailwinds provided by e-commerce. Other industrial REITs have attracted my interest and my investment dollars in past years because of superior growth metrics. Duke Realty has rebalanced its portfolio and is well-positioned to generate double-digit revenue growth over the next several years.
Seeking Alpha • Aug 03

Duke Realty: There's Risk Of Paying More Than It's Worth

Duke Realty continues to fare well and investors have responded by pushing shares of the business higher. At present, though, the price being asked by the market in exchange for shares is not a low one. For some investors, this will be worth the wait in order to see a strong return, but for many others it won't be.

Earnings and Revenue Growth Forecasts

NYSE:DRE - Analysts future estimates and past financials data (USD Millions)
DateRevenueEarningsFree Cash FlowCash from OpAvg. No. Analysts
12/31/20241,407436589492
12/31/20231,274436-2178677
12/31/20221,136524-5817956
6/30/20221,122948659659N/A
3/31/20221,1081,021635635N/A
12/31/20211,119852642642N/A
9/30/20211,120917622622N/A
6/30/20211,102494617617N/A
3/31/20211,068358602602N/A
12/31/20201,004298566566N/A
9/30/2020968216541541N/A
6/30/2020948371509509N/A
3/31/2020946402506506N/A
12/31/2019984427506506N/A
9/30/20191,022404517517N/A
6/30/20191,013230512512N/A
3/31/2019986350486486N/A
12/31/2018957378484484N/A
9/30/2018851374460460N/A
6/30/2018812363449449N/A
3/31/2018843275454454N/A
12/31/2017790267450450N/A
9/30/2017809248465465N/A
6/30/2017797314490490N/A
3/31/2017743317494494N/A
12/31/2016746293457457N/A
9/30/2016785269456456N/A
6/30/2016838237402402N/A
3/31/2016878184N/A410N/A
12/31/2015805179N/A387N/A

Analyst Future Growth Forecasts

Earnings vs Savings Rate: DRE's earnings are forecast to decline over the next 3 years (-4.3% per year).

Earnings vs Market: DRE's earnings are forecast to decline over the next 3 years (-4.3% per year).

High Growth Earnings: DRE's earnings are forecast to decline over the next 3 years.

Revenue vs Market: DRE's revenue (11.4% per year) is forecast to grow faster than the US market (7.7% per year).

High Growth Revenue: DRE's revenue (11.4% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: DRE's Return on Equity is forecast to be low in 3 years time (6.7%).

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Company Analysis and Financial Data Status

DataLast Updated (UTC time)
Company Analysis2022/10/03 18:17
End of Day Share Price 2022/09/30 00:00
Earnings2022/06/30
Annual Earnings2021/12/31

Data Sources

The data used in our company analysis is from S&P Global Market Intelligence LLC. The following data is used in our analysis model to generate this report. Data is normalised which can introduce a delay from the source being available.

PackageDataTimeframeExample US Source *
Company Financials10 years
  • Income statement
  • Cash flow statement
  • Balance sheet
Analyst Consensus Estimates+3 years
  • Forecast financials
  • Analyst price targets
Market Prices30 years
  • Stock prices
  • Dividends, Splits and Actions
Ownership10 years
  • Top shareholders
  • Insider trading
Management10 years
  • Leadership team
  • Board of directors
Key Developments10 years
  • Company announcements

* Example for US securities, for non-US equivalent regulatory forms and sources are used.

Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more.

Analysis Model and Snowflake

Details of the analysis model used to generate this report is available on our Github page, we also have guides on how to use our reports and tutorials on Youtube.

Learn about the world class team who designed and built the Simply Wall St analysis model.

Industry and Sector Metrics

Our industry and section metrics are calculated every 6 hours by Simply Wall St, details of our process are available on Github.

Analyst Sources

Duke Realty Corporation is covered by 25 analysts. 7 of those analysts submitted the estimates of revenue or earnings used as inputs to our report. Analysts submissions are updated throughout the day.

AnalystInstitution
David RodgersBaird
Ross SmotrichBarclays
Paul AdornatoBMO Capital Markets Equity Research