Edgar Filing: DCT Industrial Trust Inc.

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2013

¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 001-33201

DCT INDUSTRIAL TRUST INC.

(Exact name of registrant as specified in its charter)


Maryland		82-0538520
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

518 Seventeenth Street, Suite 800 Denver, Colorado		80202
(Address of principal executive offices)		(Zip Code)

(303) 597-2400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of April 26, 2013, 291,356,503 shares of common stock of DCT Industrial Trust Inc., par value $0.01 per share, were outstanding.

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Index to Form 10-Q


			Page
PART I.		FINANCIAL INFORMATION

	Item 1.	Consolidated Financial Statements:
		Consolidated Balance Sheets as of March 31, 2013 (unaudited) and December 31, 2012		1
		Consolidated Statements of Operations for the three months ended March 31, 2013 and 2012 (unaudited)		2
		Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2013 and 2012 (unaudited)		3
		Consolidated Statement of Changes in Equity for the three months ended March 31, 2013 (unaudited)		4
		Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and 2012 (unaudited)		5
		Notes to Consolidated Financial Statements (unaudited)		6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		37
	Item 4.	Controls and Procedures		38

PART II.		OTHER INFORMATION

	Item 1.	Legal Proceedings		38
	Item 1A.	Risk Factors		38
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		38
	Item 3.	Defaults upon Senior Securities		38
	Item 4.	Mine Safety Disclosure		38
	Item 5.	Other Information		38
	Item 6.	Exhibits		39

	SIGNATURES			40

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share information)


	March 31,			December 31,
	2013			2012
	(unaudited)
ASSETS
Land	$	795,083		$	780,235
Buildings and improvements		2,519,914			2,481,206
Intangible lease assets		79,539			78,467
Construction in progress		42,716			45,619

Total investment in properties		3,437,252			3,385,527
Less accumulated depreciation and amortization		(631,986	)		(605,888	)

Net investment in properties		2,805,266			2,779,639
Investments in and advances to unconsolidated joint ventures		129,415			130,974

Net investment in real estate		2,934,681			2,910,613
Cash and cash equivalents		19,498			12,696
Restricted cash		5,085			10,076
Deferred loan costs, net		9,313			6,838
Straight-line rent and other receivables, net of allowance for doubtful accounts of $1,395 and $1,251, respectively		51,493			51,179
Other assets, net		12,672			12,945
Assets held for sale		11,350			52,852

Total assets	$	3,044,092		$	3,057,199


LIABILITIES AND EQUITY		—
Liabilities:
Accounts payable and accrued expenses	$	49,571		$	57,501
Distributions payable		21,637			21,129
Tenant prepaids and security deposits		22,288			24,395
Other liabilities		5,322			7,213
Intangible lease liability, net		19,795			20,148
Line of credit		50,000			110,000
Senior unsecured notes		1,075,000			1,025,000
Mortgage notes		317,704			317,314
Liabilities related to assets held for sale		400			940

Total liabilities		1,561,717			1,583,640


Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none outstanding		—			—
Shares-in-trust, $0.01 par value, 100,000,000 shares authorized, none outstanding		—			—
Common stock, $0.01 par value, 500,000,000 shares authorized 284,695,132 and 280,310,488 shares issued and outstanding as of March 31, 2013 and December 31, 2012, respectively		2,847			2,803
Additional paid-in capital		2,262,631			2,232,682
Distributions in excess of earnings		(890,503	)		(871,655	)
Accumulated other comprehensive loss		(33,766	)		(34,766	)

Total stockholders’ equity		1,341,209			1,329,064
Noncontrolling interests		141,166			144,495

Total equity		1,482,375			1,473,559

Total liabilities and equity	$	3,044,092		$	3,057,199

The accompanying notes are an integral part of these Consolidated Financial Statements.

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(unaudited, in thousands, except per share information)


	Three Months Ended March 31,
	2013			2012
REVENUES:
Rental revenues	$	72,396		$	61,416
Institutional capital management and other fees		812			1,055

Total revenues		73,208			62,471


OPERATING EXPENSES:
Rental expenses		8,864			7,578
Real estate taxes		11,079			9,625
Real estate related depreciation and amortization		32,615			29,602
General and administrative		6,420			5,784
Casualty gains		(59	)		(83	)

Total operating expenses		58,919			52,506

Operating income		14,289			9,965

OTHER INCOME AND EXPENSE:
Development profits		268			—
Equity in earnings (loss) of unconsolidated joint ventures, net		391			(854	)
Interest expense		(16,860	)		(16,930	)
Interest and other income (expense)		162			197
Income tax benefit (expense) and other taxes		(109	)		(268	)

Loss from continuing operations		(1,859	)		(7,890	)
Income from discontinued operations		3,495			1,060

Consolidated net income (loss) of DCT Industrial Trust Inc.		1,636			(6,830	)
Net (income) loss attributable to noncontrolling interests		(357	)		826

Net income (loss) attributable to common stockholders		1,279			(6,004	)

Distributed and undistributed earnings allocated to participating securities		(173	)		(128	)

Adjusted net income (loss) attributable to common stockholders	$	1,106		$	(6,132	)


EARNINGS PER COMMON SHARE – BASIC AND DILUTED:
Loss from continuing operations	$	(0.01	)	$	(0.03	)
Income from discontinued operations		0.01			0.00

Net income (loss) attributable to common stockholders	$	0.00		$	(0.03	)


WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted		281,063			246,367


Distributions declared per common share	$	0.07		$	0.07

The accompanying notes are an integral part of these Consolidated Financial Statements.

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

(unaudited, in thousands)


	Three Months Ended March 31,
	2013			2012

Consolidated net income (loss) of DCT Industrial Trust Inc.	$	1,636		$	(6,830	)
Other Comprehensive Income:
Net unrealized gain on cash flow hedging derivatives		6			1,565
Realized income related to hedging activities		93			—
Amortization of cash flow hedging derivatives		1,000			251

Other Comprehensive income		1,099			1,816

Comprehensive income (loss)		2,735			(5,014	)

Comprehensive (income) loss attributable to noncontrolling interests		(456	)		534


Comprehensive income (loss) attributable to common stockholders	$	2,279		$	(4,480	)

The accompanying notes are an integral part of these Consolidated Financial Statements.

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Consolidated Statement of Changes in Equity

(unaudited, in thousands)


														Accumulated
								Additional			Distributions			Other			Non-
				Common Stock				Paid-in			in Excess			Comprehensive			controlling
	Total			Shares		Amount		Capital			of Earnings			Loss			Interests
Balance at December 31, 2012	$	1,473,559			280,310	$	2,803	$	2,232,682		$	(871,655	)	$	(34,766	)	$	144,495
Net income		1,636			—		—		—			1,279			—			357
Other comprehensive income		1,099			—		—		—			—			1,000			99
Issuance of common stock, net of offering costs		27,500			3,806		38		27,462			—			—			—
Issuance of common stock, stock-based compensation plans		(25	)		196		2		(27	)		—			—			—
Amortization of stock-based compensation		1,072			—		—		386			—			—			686
Distributions to common stockholders and noncontrolling interests		(21,851	)		—		—		—			(20,127	)		—			(1,724	)
Purchases and redemptions of noncontrolling interests		(615	)		383		4		2,128			—			—			(2,747	)

Balance at March 31, 2013	$	1,482,375			284,695	$	2,847	$	2,262,631		$	(890,503	)	$	(33,766	)	$	141,166

The accompanying notes are an integral part of these Consolidated Financial Statements.

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(unaudited, in thousands)


	Three Months Ended
	March 31,
	2013			2012
OPERATING ACTIVITIES:
Consolidated net income (loss) of DCT Industrial Trust Inc.	$	1,636		$	(6,830	)
Adjustments to reconcile consolidated net loss of DCT Industrial Trust Inc. to net cash provided by operating activities:
Real estate related depreciation and amortization		32,690			32,166
Gain on dispositions of real estate interests		(2,877	)		(88	)
Distributions of earnings from unconsolidated joint ventures		1,563			587
Development profits		(268	)		—
Equity in (earnings) loss of unconsolidated joint ventures, net		111			854
Stock-based compensation		1,072			980
Casualty gains		(59	)		(155	)
Straight-line rent		(1,516	)		(2,020	)
Other		2,189			209
Changes in operating assets and liabilities:
Other receivables and other assets		(1,298	)		(662	)
Accounts payable, accrued expenses and other liabilities		(9,681	)		(6,213	)

Net cash provided by operating activities		23,562			18,828

INVESTING ACTIVITIES:
Real estate acquisitions		(35,010	)		(8,556	)
Capital expenditures and development activities		(29,949	)		(17,632	)
Proceeds from dispositions of real estate investments		51,180			4,722
Investments in unconsolidated joint ventures		(579	)		(1,951	)
Distributions of investments in unconsolidated joint ventures		640			226
Other investing activities		11			(129	)

Net cash used in investing activities		(13,707	)		(23,320	)

FINANCING ACTIVITIES:
Proceeds from senior unsecured revolving line of credit		56,000			61,000
Repayments of senior unsecured revolving line of credit		(116,000	)		(36,000	)
Proceeds from senior unsecured notes		225,000			—
Repayments of senior unsecured notes		(175,000	)		—
Proceeds from mortgage notes		9,303			—
Principal payments on mortgage notes		(8,332	)		(2,295	)
Payments of deferred loan costs		(3,101	)		(11	)
Proceeds from issuance of common stock, net		27,942			—
Offering costs for issuance of common stock and OP Units		(443	)		(88	)
Redemption of noncontrolling interests		(606	)		(882	)
Dividends to common stockholders		(19,656	)		(17,240	)
Distributions to noncontrolling interests		(1,507	)		(1,876	)
Contributions from noncontrolling interests		—			30
Other financing activity		3,347			—

Net cash (used in) provided by financing activities		(3,053	)		2,638

NET DECREASE IN CASH AND CASH EQUIVALENTS		6,802			(1,854	)
CASH AND CASH EQUIVALENTS, beginning of period		12,696			12,834

CASH AND CASH EQUIVALENTS, end of period	$	19,498		$	10,980


Supplemental Disclosures of Cash Flow Information
Cash paid for interest, net of capitalized interest	$	16,609		$	16,380
Supplemental Disclosures of Non-Cash Activities
Retirement of fully depreciated and amortized assets, net	$	4,599		$	9,138
Redemptions of OP Units settled in shares of common stock	$	2,413		$	7,833

The accompanying notes are an integral part of these Consolidated Financial Statements.

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 - Organization

DCT Industrial Trust Inc. is a leading industrial real estate company specializing in the acquisition, development, leasing and management of bulk distribution and light industrial properties located in high-volume distribution markets in the United States and Mexico. As used herein, “DCT Industrial Trust,” “DCT,” “the Company,” “we,” “our” and “us” refer to DCT Industrial Trust Inc. and its consolidated subsidiaries and partnerships except where the context otherwise requires. We were formed as a Maryland corporation in April 2002 and have elected to be treated as a real estate investment trust (“REIT”) for United States (“U.S.”) federal income tax purposes. We are structured as an umbrella partnership REIT under which substantially all of our current and future business is, and will be, conducted through a majority owned and controlled subsidiary, DCT Industrial Operating Partnership LP (the “operating partnership”), a Delaware limited partnership, for which DCT Industrial Trust Inc. is the sole general partner. We own our properties through our operating partnership and its subsidiaries. As of March 31, 2013, we owned approximately 93.4% of the outstanding equity interests in our operating partnership.

As of March 31, 2013, the Company owned interests in approximately 74.5 million square feet of properties leased to approximately 880 customers, including:

•

58.8 million square feet comprising 405 consolidated properties owned in our operating portfolio which were 92.6% occupied;

•

14.2 million square feet comprising 45 unconsolidated properties which were 84.4% occupied and operated on behalf of four institutional capital management partners;

•

0.3 million square feet comprising four consolidated properties under redevelopment;

•

0.8 million square feet comprising two consolidated buildings in development; and

•

0.4 million square feet comprising one consolidated building classified as held for sale.

Note 2 - Summary of Significant Accounting Policies

Interim Financial Information

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited Consolidated Financial Statements include all adjustments, consisting of normal recurring items, necessary for their fair presentation in conformity with GAAP. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with our audited Consolidated Financial Statements as of December 31, 2012 and related notes thereto as filed on Form 10-K on February 21, 2013.

Basis of Presentation

The accompanying Consolidated Financial Statements include the financial position, results of operations and cash flows of the Company, its wholly-owned qualified REIT and taxable REIT subsidiaries, the operating partnership and its consolidated joint ventures, in which it has a controlling interest. Third-party equity interests in the operating partnership and consolidated joint ventures are reflected as noncontrolling interests in the Consolidated Financial Statements. We also have noncontrolling partnership interests in unconsolidated institutional capital management and other joint ventures, which are accounted for under the equity method. All significant intercompany amounts have been eliminated.

Principles of Consolidation

We hold interests in both consolidated and unconsolidated joint ventures. All joint ventures over which we have

financial and operating control, and variable interest entities (“VIE’s”) in which we have determined that we are the primary beneficiary, are included in the Consolidated Financial Statements. We use the equity method of accounting for joint ventures over which we do not have a controlling interest or where we do not exercise significant control over major operating and management decisions, but where we exercise significant influence and include our share of earnings or losses of these joint ventures in our consolidated net loss.

We analyze our joint ventures in accordance with GAAP to determine whether they are VIE’s and, if so, whether we are the primary beneficiary. Our judgment with respect to our level of influence or control over an entity and whether we are the primary beneficiary of a VIE involves consideration of various factors including the form of our ownership interest, our representation on the entity’s board of directors, the size of our investment (including loans) and our ability to participate in major decisions. Our ability to correctly assess our influence or control over an entity affects the presentation of these investments in the Consolidated Financial Statements and, consequently, our financial position and results of operations.

Reclassifications

Certain items in our Consolidated Financial Statements for 2012 have been reclassified to conform to the 2013 presentation. Income statement amounts for properties disposed of or classified as held for sale have been reclassified to discontinued operations for all periods presented. Income statement related disclosures in the accompanying notes exclude amounts that have been reclassified to discontinued operations.

Use of Estimates

The preparation of the Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

We record rental revenues on a straight-line basis under which contractual rent increases are recognized evenly over the full lease term. Certain properties have leases that provide for tenant occupancy during periods where no rent is due or where minimum rent payments change during the term of the lease. Accordingly, we record receivables from tenants that we expect to collect over the remaining lease term rather than currently, which are recorded as a straight-line rent receivable. When we acquire a property, the terms of existing leases are considered to commence as of the acquisition date for the purposes of this calculation. The total increase to “Rental revenues” due to straight-line rent adjustments was approximately $1.5 million and $1.9 million, for the three months ended March 31, 2013 and 2012, respectively.

Tenant recovery income includes payments and amounts due from tenants pursuant to their leases for real estate taxes, insurance and other recoverable property operating expenses and is recognized as “Rental revenues” during the same period the related expenses are incurred. Tenant recovery income recognized as “Rental revenues” was approximately $15.6 million and $12.4 million, for the three months ended March 31, 2013 and 2012, respectively.

We maintain an allowance for estimated losses that may result from the inability of our tenants to make required payments. If a tenant fails to make contractual payments beyond any allowance, we may recognize additional bad debt expense in future periods equal to the net outstanding balances. As of March 31, 2013 and December 31, 2012, our allowance for doubtful accounts was approximately $1.4 million and $1.3 million, respectively.

In connection with property acquisitions qualifying as business combinations, we may acquire leases with rental rates above or below the market rental rates. Such differences are recorded as an intangible lease asset or liability and amortized to “Rental revenues” over the reasonably assured term of the related leases. The unamortized balances of these assets and liabilities associated with the early termination of leases are fully amortized to their respective revenue line items in our Consolidated Statements of Operations over the shorter of the expected life of such assets and liabilities or the remaining lease term. The total net impact to “Rental revenues” due to the amortization of above and below market rents was an increase of approximately $0.4 million and $0.2 million for the three months ended March 31, 2013 and 2012, respectively.

Early lease termination fees are recorded in “Rental revenues” on a straight-line basis over the estimated remaining contractual lease term or upon collection if collectability is not assured. The total net impact to “Rental revenues” due to early lease termination fees was an increase of approximately $0.1 million and $0.1 million for the three months ended March 31, 2013 and 2012, respectively.

We earn revenues from asset management fees, acquisition fees, property management fees and fees for other services pursuant to joint venture and other agreements. These are included in our Consolidated Statements of Operations in “Institutional capital management and other fees.” We recognize revenues from asset management fees, acquisition fees, property management fees and fees for other services when the related fees are earned and are realized or realizable.

New Accounting Standards

In the first quarter of 2013 the Financial Accounting Standards Board (the “FASB”) issued an accounting standard update that requires disclosure of the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount is required under GAAP to be reclassified in its entirety to net income. Additionally, the update requires disclosure of changes in each component of other comprehensive income. The disclosure requirements were retroactively effective for us on January 1, 2013. As this guidance only requires expanded disclosure, the adoption did not have a material impact on our consolidated financial statements.

Note 3 - Investment in Properties

Our consolidated investment in properties consist of operating properties, redevelopment properties, properties under development, properties in pre-development and land held for future development or other purposes. The following table provides our historical cost of our investment in properties (in thousands).


	March 31,			December 31,
	2013			2012
Operating properties	$	3,262,795		$	3,209,024
Properties under development		77,432			80,008
Properties under redevelopment		16,440			14,699
Properties in pre-development including land held		80,585			81,796

Total Investment in Properties		3,437,252			3,385,527
Less accumulated depreciation and amortization		(631,986	)		(605,888	)

Net Investment in Properties	$	2,805,266		$	2,779,639

Acquisition Activity

During the three months ended March 31, 2013, we acquired five buildings comprising 0.5 million square feet. These properties located in the Atlanta and Southern California markets were acquired for a total purchase price of approximately $35.8 million. Related to these acquisitions, we incurred acquisition costs of approximately $0.4 million during the three months ended March 31, 2013, included in “General and administrative” in our Consolidated Statement of Operations. During the three months ended March 31, 2012, we incurred acquisition costs of approximately $0.2 million.

Development Activity

2013 Development Activity

During the three months ended March 31, 2013, we continued to expand our development activities. The table below represents a summary of our consolidated development activity as of March 31, 2013. As of March 31, 2013, we had two build-to-suit for sale projects under contract. During the three months ended March 31, 2013, we recognized development profits of approximately $0.3 million related to the development of the Dulles Summit Lot 10 project which is under contract to be sold to a third party for a total of $8.0 million. The 8^th and Vineyard A project was under contract, but as development activities recently commenced, no profit was earned during the three months ended March 31, 2013.


Project	Market		Acres		Number of Buildings		Square Feet		Percent owned			Cumulative Costs at 03/31/13		Projected Investment		Completion Date			Percentage Leased
							(in thousands)					(in thousands)		(in thousands)
Consolidated Development Activities:
Stabilized in Q1 2013
Northwest 8 Distribution Center		Houston		16		1		267		100	%	$	13,241	$	13,238		Q3-2012	⁽¹⁾		100	%
Dulles Summit Distribution Building E		Baltimore/ Washington		6		1		76		100	%		6,515		7,123		Q3-2012	⁽¹⁾		100	%

		Total		22		2		343		100	%	$	19,756	$	20,361					100	%


Development Projects in Lease Up
DCT 55		Chicago		33		1		604		100	%	$	23,009	$	27,917		Q4-2012	⁽²⁾		0	%
DCT Commerce Center at Pan American West (Building A)		Miami		7		1		168		100	%		13,850		14,594		Q1-2013	⁽²⁾		89	%

		Total		40		2		772		100	%	$	36,859	$	42,511					19	%


Under Construction
DCT Commerce Center at Pan American West (Building B)		Miami		7		1		167		100	%	$	10,482	$	13,278		Q2-2013	⁽²⁾		74	%
Slover Logistics Center I		Southern California		28		1		652		100	%		18,715		36,725		Q4-2013	⁽²⁾		100	%
DCT Airtex Industrial Center		Houston		13		1		267		100	%		6,499		14,678		Q3-2013	⁽²⁾		0	%
Rockdale Distribution Center - Expansion		Nashville		15		expansion		225		100	%		3,382		8,093		Q3-2013	⁽²⁾		100	%
DCT Beltway Tanner Business Park		Houston		11		1		136		100	%		4,725		15,395		Q3-2013	⁽²⁾		0	%

		Total		74		4		1,447		100	%	$	43,803	$	88,169					69	%



Total Development Activities				114		6		2,219		100	%	$	80,662	$	130,680					52	%


Build-to-Suit for Sale
Dulles Summit Outparcels		Baltimore/ Washington		5		1		61		50	%	$	7,247	$	7,429		Q2-2013	⁽²⁾
8th & Vineyard A		Southern California		6		1		130		91	%		1,999		8,960		Q4-2013	⁽²⁾

				11		2		191				$	9,246	$	16,389

(1)	This is the projected stabilization date.

(2)	The completion date represents the date of building shell completion.

Disposition Activity

During the three months ended March 31, 2013, we sold three operating properties totaling approximately 1.8 million square feet to third-parties in the Atlanta, Louisville, and Memphis markets, for combined gross proceeds of $50.5 million. We recognized gains of approximately $2.9 million on these dispositions. All gains associated with these sales are reflected in “Income (loss) from discontinued operations” in the Consolidated Financial Statements.

Intangible Lease Assets and Liabilities

Aggregate amortization expense for intangible lease assets recognized in connection with property acquisitions (excluding assets and liabilities related to above and below market rents; see Note 2 - Summary of Significant Accounting Policies for additional information) was approximately $2.6 million and $2.7 million for the three months ended March 31, 2013 and 2012, respectively. Our intangible lease assets included the following as of March 31, 2013 and December 31, 2012 (in thousands).


	March 31, 2013									December 31, 2012
	Gross			Accumulated Amortization			Net			Gross			Accumulated Amortization			Net
Other intangible lease assets	$	74,020		$	(28,873	)	$	45,147		$	71,846		$	(26,181	)	$	45,665
Above market rent	$	5,519		$	(3,285	)	$	2,234		$	6,621		$	(4,348	)	$	2,273
Below market rent	$	(26,017	)	$	6,222		$	(19,795	)	$	(27,590	)	$	7,442		$	(20,148	)

Note 4 - Investments in and Advances to Unconsolidated Joint Ventures

We enter into joint ventures primarily for purposes of developing industrial real estate and to establish commingled investment vehicles with institutional partners. Our investments in these joint ventures are included in “Investments in and advances to unconsolidated joint ventures” in our Consolidated Balance Sheets. The following table summarizes our unconsolidated joint ventures as of March 31, 2013 and December 31, 2012 (dollars in thousands).


	DCT Ownership					Unconsolidated Investment in
	as of					and Advances as of
	March 31,			Number of		March 31,		December 31,
Unconsolidated Joint Ventures	2013			Buildings		2013		2012
Institutional Joint Ventures:
DCT/SPF Industrial Operating LLC		20.0	%		13	$	42,039	$	42,571
TRT-DCT Venture I		3.6	%		14		570		558
TRT-DCT Venture II		11.4	%		5		1,957		1,990
TRT-DCT Venture III		10.0	%		4		1,199		1,225

Total Institutional Joint Ventures					36		45,765		46,344

Other:
Stirling Capital Investments (SCLA)⁽¹⁾		50.0	%		6		52,675		53,840
IDI/DCT, LLC		50.0	%		3		27,635		27,736
IDI/DCT Buford, LLC (land only)		75.0	%		—		3,340		3,054

Total Other					9		83,650		84,630

Total					45	$	129,415	$	130,974

⁽¹⁾	Although we contributed 100% of the initial cash equity capital required by the venture, our partners retain certain participation rights in the venture’s available cash flows.

Guarantees

There are no lines of credit or side agreements related to, or between, our unconsolidated joint ventures and us, and there are no derivative financial instruments between our unconsolidated joint ventures and us. In addition, we believe we have no material exposure to financial guarantees.

Note 5 - Financial Instruments and Hedging Activities

Fair Value of Financial Instruments

As of March 31, 2013 and December 31, 2012, the fair values of cash and cash equivalents, restricted cash held in escrow, accounts receivable and accounts payable approximated their carrying values because of the short-term nature of these instruments. The estimated fair values of other financial instruments subject to fair value disclosures were determined based on available market information and valuation methodologies appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates. Our estimates may differ from the actual amounts that we could realize upon disposition. The following table summarizes these financial instruments as of March 31, 2013 and December 31, 2012 (in thousands).


	Balances as of				Balances as of
	March 31, 2013				December 31, 2012
	Carrying		Estimated		Carrying		Estimated
	Amounts		Fair Value		Amounts		Fair Value
Borrowings⁽¹⁾:
Senior unsecured revolving credit facility	$	50,000	$	50,000	$	110,000	$	110,000
Fixed rate debt⁽²⁾	$	992,704	$	1,108,670	$	1,167,314	$	1,306,761
Variable rate debt	$	400,000	$	400,000	$	175,000	$	176,922

⁽¹⁾

The fair values of our borrowings were estimated using a discounted cash flow methodology. Credit spreads and market interest rates used to determine the fair value of these instruments are based on unobservable Level 3 inputs which management has determined to be its best estimate of current market values.

⁽²⁾	The carrying amount of our fixed rate debt includes premiums and discounts as a result of the difference between the fair value and face value of debt assumed in connection with our acquisition activities.

The following table displays a reconciliation of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2013 and 2012. During the same periods, we had no assets measured at fair value on a recurring basis. The table also displays gains and losses due to changes in fair value, including both realized and unrealized, recognized in the Consolidated Statements of Operations for Level 3 liabilities. When assets and liabilities are transferred between levels, we recognize the transfer at the beginning of the period (in thousands).


	During the Three Months Ended March 31,
	2013		2012
Level 3 Liabilities:
Interest Rate Swaps:
Beginning balance at January 1	$	—	$	(26,746	)
Net unrealized gains included in accumulated other comprehensive loss		—		1,565

Ending balance at March 31	$	—	$	(25,181	)

Hedging Activities

To manage interest rate risk for variable rate debt and issuances of fixed rate debt, we primarily use treasury locks and interest rate swaps as part of our cash flow hedging strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. Such derivatives have been used to hedge the variability in existing and future interest expense associated with existing variable rate borrowings and forecasted issuances of debt, which may include the issuances of new debt, as well as refinancing of existing debt upon maturity.

Accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the designation of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.

For derivatives designated as “cash flow” hedges, the effective portion of the changes in the fair value of the derivative is initially reported in “Accumulated other comprehensive loss” in our Consolidated Statement of Changes in Comprehensive Income (i.e., not included in earnings) and subsequently reclassified into earnings when the hedged transaction affects earnings or the hedging relationship is no longer effective at which time the ineffective portion of the derivative’s changes in fair value is recognized directly into earnings. We assess the effectiveness of each hedging relationship whenever financial statements are issued or earnings are reported and at least every three months. We do not use derivatives for trading or speculative purposes.

The following table presents the effect of our derivative financial instruments on our accompanying financial statements for the three months ended March 31, 2013 and 2012 (amounts in thousands).


	For the Three Months Ended March 31,
	2013			2012

Derivatives Designated as Hedging Instruments

Derivative type		Interest rate contracts			Interest rate contracts

Amount of gain recognized in Other Comprehensive Income (“OCI”) (effective portion)	$	99		$	1,565

Location of gain or (loss) reclassified from accumulated OCI into income (effective portion)		Interest expense and Equity in (earnings) loss of unconsolidated joint venture			Interest expense

Amount of loss reclassified from accumulated OCI into income (effective portion)	$	(1,000	)	$	(251	)

Location of gain or (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)		Interest expense			Interest expense

Amount of loss recognized in income due to missed forecast (ineffective portion and amount excluded from effectiveness testing)	$	—		$	—

As of March 31, 2013 and December 31, 2012, we did not have any hedges in place.

Amounts reported in “Accumulated other comprehensive loss” related to derivatives will be amortized to “Interest expense” as interest payments are made on our current debt and anticipated debt issuances. During the next 12 months, we estimate that approximately $4.0 million will be reclassified from “Accumulated other comprehensive loss” to “Interest expense” resulting in an increase in such expense.

Note 6 - Outstanding Indebtedness

As of March 31, 2013 our outstanding indebtedness of approximately $1.4 billion consisted of mortgage notes, senior unsecured notes, and a line of credit, excluding approximately $45.6 million representing our proportionate share of non-recourse debt associated with unconsolidated joint ventures. As of December 31, 2012, our outstanding indebtedness of approximately $1.5 billion consisted of mortgage notes, senior unsecured notes and a senior unsecured revolving credit facility, which excludes $45.0 million representing our proportionate share of debt associated with unconsolidated joint ventures.

As of March 31, 2013, the gross book value of our consolidated properties was approximately $3.4 billion and the gross book value of all properties securing our mortgage debt was approximately $0.7 billion. As of December 31, 2012, the gross book value of our consolidated properties was approximately $3.4 billion and the gross book value of all properties securing our mortgage debt was approximately $0.7 billion. Our debt has various covenants with which we were in compliance as of March 31, 2013 and December 31, 2012.

Debt Issuances

On February 20, 2013, DCT entered into an amendment with our syndicated bank group whereby we extended and increased our existing $175.0 million senior unsecured term loan to $225.0 million for a period of five years, extended our existing $300.0 million senior unsecured line of credit for a period of four years and received a commitment for an additional $175.0 million senior unsecured term loan with a term of two years, of which we had issued $175.0 million as of March 31, 2013. The term loan amendment was a modification of debt for accounting purposes.

Debt Retirements

During the three months ended March 31, 2013, we used proceeds from our senior unsecured term loan to repay a $175.0 million senior unsecured note that was scheduled to mature in June, 2013.

Line of Credit

As of March 31, 2013, we had $50.0 million outstanding and $250.0 million available under the unsecured revolving credit facility. As of December 31, 2012, we had $110.0 million outstanding and $190.0 million available under the unsecured revolving credit facility.

Note 7 - Noncontrolling Interests

Noncontrolling interests are the portion of equity, or net assets, in a subsidiary not attributable, directly or indirectly, to a parent. Our noncontrolling interests primarily represent limited partnership interests in the operating partnership and equity interests held by third-party partners in consolidated real estate joint ventures, including related parties as discussed in Note 9 – Related Party Transactions. Noncontrolling interests representing interests in the operating partnership primarily include limited partnership interest in our operating partnership (“OP Units”) and LTIP Units which are classified as permanent equity in accordance with GAAP and are included in “Noncontrolling interests” in the Consolidated Balance Sheets.

The following table illustrates the noncontrolling interests’ share of consolidated net loss during the three months ended March 31, 2013 and 2012 (in thousands).


	Three Months Ended
	March 31,
	2013			2012

Noncontrolling interests’ share of loss from continuing operations	$	(122	)	$	926

Noncontrolling interests’ share of income from discontinued operations		(235	)		(100	)

Net (income) loss attributable to noncontrolling interests	$	(357	)	$	826

OP Units

As of March 31, 2013 and December 31, 2012, we owned approximately 93.4% and 93.3%, respectively, of the outstanding equity interests in the operating partnership. Upon redemption by the unitholder, we have the option of redeeming the units of OP Units with cash or with shares of our common stock on a one-for-one basis, subject to adjustment.

During the three months ended March 31, 2013, 0.5 million OP Units were redeemed for approximately $0.6 million in cash and 0.4 million shares of common stock. During the three months ended March 31, 2012, 1.2 million OP Units were redeemed for approximately $0.9 million in cash and 1.0 million shares of common stock.

As of March 31, 2013, there was a total of 19.1 million OP Units outstanding and redeemable, with a redemption value of approximately $141.1 million based on the closing price of our common stock on March 31, 2013. As of December 31, 2012 there was a total of 19.5 million OP Units outstanding with a redemption value of approximately $126.8 million based on the closing price of our common stock on December 31, 2012, all of which were redeemable for cash or stock, at our election.

LTIP Units

We may grant limited partnership interests in the operating partnership called LTIP Units. LTIP Units, which we grant either as free-standing awards or together with other awards under the Long-Term Incentive Plan, as amended, are valued by reference to the value of our common stock, and are subject to such conditions and restrictions as our compensation committee may determine, including continued employment or service, computation of financial metrics and achievement of pre-established performance goals and objectives. LTIP Units typically vest ratably over a period of four to five years depending on the grant. Vested LTIP Units can generally be converted to OP Units on a one-for-one basis.

During the three months ended March 31, 2013, approximately 0.7 million LTIP Units were granted to certain senior executives, which vest over a four year period with a total fair value of $4.6 million at the date of grant as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation using a volatility factor of 52% and risk-free interest rate of 0.84%. During the three months ended March 31, 2013, there were no conversions of vested LTIP Units into OP Units. As of March 31, 2013, approximately 3.0 million LTIP Units were outstanding of which 1.0 million were vested. In addition, during the three months ended March 31, 2013 we issued 0.4 million LTIP Units for awards issued in connection with our multi-year outperformance program that ended December 31, 2012.

During the three months ended March 31, 2012, approximately 0.7 million LTIP Units were granted to certain senior executives, which vest over a four year period with a total fair value of $3.7 million at the date of grant as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation using a volatility factor of 72% and a risk-free interest rate of 0.82%. During the three months ended March 31, 2012, 0.1 million vested LTIP Units were converted into 0.1 million OP Units. As of December 31, 2012, approximately 1.9 million LTIP Units were outstanding of which 0.4 million were vested.

Note 8 - Stockholders’ Equity

Common Stock

As of March 31, 2013, approximately 284.7 million shares of common stock were issued and outstanding.

On November 20, 2012, we registered a second continuous equity offering program, to replace our continuous equity offering program previously registered on March 23, 2010. Pursuant to this offering, we may sell up to 20 million shares of common stock from time-to-time through November 20, 2015 in “at-the-market” offerings or certain other transactions. We intend to use the proceeds from any sale of shares for general corporate purposes, which may include funding acquisitions and repaying debt. During the three months ended March 31, 2013, we issued approximately 3.8 million shares through this offering, at an average price of $7.34 per share, for proceeds of $27.9 million before offering expenses. As of March 31, 2013, 6.7 million shares remain available to be issued under this program.

During the three months ended March 31, 2013, we issued approximately 0.4 million shares of common stock, related to the redemption of OP Units (see additional information in Note 7 - Noncontrolling Interests above), and approximately 0.2 million shares of common stock related to vested shares of restricted stock, phantom shares and stock option exercises. The net proceeds from the sales of our securities are transferred to our operating partnership for a number of OP Units equal to the shares of common stock sold in our public offerings.

Equity-Based Compensation

On October 10, 2006, we established the Long-Term Incentive Plan, as amended, to grant restricted stock, stock options and other awards to our personnel and directors. Awards granted under this plan are measured at fair value on the grant date and amortized to compensation expense on a straight-line basis over the service period during which the awards fully vest. Such expense is included in “General and administrative” expense in our Consolidated Statements of Operations. Options issued under the Long-Term Incentive Plan are valued using the Black-Scholes option pricing model, which relies on assumptions we make related to the expected term of the options, volatility, dividend yield and risk free interest rate.

Multi-Year Outperformance Program

During the three months ended March 31, 2013 we issued 0.4 million LTIP Units for awards issued in connection with our multi-year outperformance program that ended December 31, 2012.

Restricted Stock

Holders of restricted stock have voting rights and rights to receive dividends. Restricted stock may not be sold, assigned, transferred, pledged or otherwise disposed of and is subject to a risk of forfeiture prior to the expiration of the applicable vesting period. The restricted stock fair value on the date of grant is amortized on a straight-line basis as stock-based compensation expense over the service period during which term the stock fully vests. Restricted stock typically vests ratably over a period of four or five years, depending on the grant. During the three months ended March 31, 2013, we granted approximately 0.3 million shares of restricted stock to certain officers and employees at the weighted-average fair market value of $7.13 per share.

Note 9 - Related Party Transactions

8^th and Vineyard Consolidated Joint Venture

In May 2010, we entered into the 8^th and Vineyard joint venture with Iowa Investments, LLC, an entity owned by one of our executives, to purchase 19.3 acres of land held for development in Southern California. Pursuant to the joint venture agreement, we will first receive a return of all capital along with a preferred return. Thereafter, Iowa Investments, LLC will receive a return of all capital along with a promoted interest. The land parcel acquired by 8^th and Vineyard was purchased from an entity in which the same executive had a minority ownership. The total acquisition price of $4.7 million was determined to be at fair value.

Southern California Consolidated Ventures

We entered into four agreements, two in December 2010 and two in January 2011, whereby we acquired a weighted average ownership interest, based on square feet, of approximately 48.4% in five bulk industrial buildings located in the Southern California market. Entities controlled by one of our executives have a weighted average ownership in these properties of approximately 43.7%, based on square feet, and the remaining 7.9% ownership is held by a third-party. Each venture partner will earn returns in accordance with their ownership interests. DCT has controlling rights including management of the operations of the properties and we have consolidated the properties in accordance with GAAP and accounted for the transactions as business combinations. The total acquisition price of $46.3 million was determined to be at fair value.

Note 10 - Earnings per Share

We use the two-class method of computing earnings per common share which is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Under the two-class method, earnings per common share are computed by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period.

A participating security is defined by GAAP as an unvested share-based payment award containing non-forfeitable rights to dividends and must be included in the computation of earnings per share pursuant to the two-class method. Nonvested restricted stock and LTIP Units are considered participating securities as these share-based awards contain non-forfeitable rights to dividends irrespective of whether the awards ultimately vest or expire.

The following table sets forth the computation of basic and diluted earnings per common share for the three months ended March 31, 2013 and 2012 (in thousands, except per share amounts).


	Three Months Ended March 31,
	2013			2012
Earnings per Common share - Basic and Diluted
Numerator
Loss from continuing operations	$	(1,859	)	$	(7,890	)
(Income) loss from continuing operations attributable to noncontrolling interests		(122	)		926

Loss from continuing operations attributable to common stockholders		(1,981	)		(6,964	)
Less: Distributed and undistributed earnings allocated to participating securities		(173	)		(128	)

Numerator for adjusted loss from continuing operations attributable to common stockholders		(2,154	)		(7,092	)

Income from discontinued operations		3,495			1,060
Noncontrolling interests’ share of income from discontinued operations		(235	)		(100	)

Numerator for income from discontinued operations attributable to common stockholders		3,260			960


Adjusted net income (loss) attributable to common stockholders	$	1,106		$	(6,132	)


Denominator
Weighted average common shares outstanding - basic and dilutive		281,063			246,367


Earnings per Common Share - Basic and Diluted
Loss from continuing operations	$	(0.01	)	$	(0.03	)
Income from discontinued operations		0.01			0.00


Net income (loss) attributable to common stockholders	$	0.00		$	(0.03	)

Potentially Dilutive Shares

For the three months ended March 31, 2013 and 2012, we excluded from diluted earnings per share the weighted average common share equivalents related to approximately 5.7 million and 5.5 million stock options and phantom stock, respectively, because their effect would be anti-dilutive.

Note 11 - Segment Information

The Company’s segments are based on our internal reporting of operating results used to assess performance based on our properties’ geographical markets. Our markets are aggregated into three reportable regions or segments, East, Central and West, which are based on the geographical locations of our properties. Management considers rental revenues and property net operating income aggregated by segment to be the appropriate way to analyze performance. Certain reclassifications have been made to prior year results to conform to the current presentation related to discontinued operations (see Note 12 - Discontinued Operations and Assets Held for Sale for additional information).

The following table reflects our total assets, net of accumulated depreciation and amortization, by segment, as of March 31, 2013 and December 31, 2012 (in thousands).


	March 31, 2013		December 31, 2012
Segments:
East assets	$	879,284	$	875,845
Central assets		1,095,733		1,107,561
West assets		893,524		863,003

Total segment net assets		2,868,541		2,846,409
Non-segment assets:
Non-segment cash and cash equivalents		13,540		8,653
Other non-segment assets⁽¹⁾		150,661		149,285
Assets held for sale		11,350		52,852

Total assets	$	3,044,092	$	3,057,199

(1)	Other non-segment assets primarily consists of corporate assets including investments in and advances to unconsolidated joint ventures, notes receivable, deferred loan costs, other receivables and other assets.

The following table sets forth the rental revenues of our segments in continuing operations for the three months ended March 31, 2013 and 2012 (in thousands).


	Three Months Ended March 31,
	2013		2012
East	$	21,880	$	20,385
Central		31,107		25,788
West		19,409		15,243

Rental revenues		72,396		61,416
Institutional capital management and other fees		812		1,055

Total revenues	$	73,208	$	62,471

The following table sets forth property net operating income of our segments in continuing operations and a reconciliation of our property NOI to our reported “Loss from continuing operations” for the three months ended March 31, 2013 and 2012 (in thousands).


	Three Months Ended March 31,
	2013			2012

East	$	15,869		$	15,051
Central		21,714			17,811
West		14,870			11,351

Property NOI⁽¹⁾		52,453			44,213
Institutional capital management and other fees		812			1,055
Real estate related depreciation and amortization		(32,615	)		(29,602	)
Casualty gains		59			83
General and administrative		(6,420	)		(5,784	)
Development profits, net of tax		268			—
Equity in earnings (loss) of unconsolidated joint ventures, net		391			(854	)
Interest expense		(16,860	)		(16,930	)
Interest and other income (expense)		162			197
Income tax benefit (expense) and other taxes		(109	)		(268	)

Loss from continuing operations	$	(1,859	)	$	(7,890	)

⁽¹⁾

Property net operating income (“property NOI”) is defined as rental revenues, including reimbursements, less rental expenses and real estate taxes, which excludes institutional capital management fees, depreciation, amortization, casualty gains, impairment, general and administrative expenses, equity in earnings (loss) of unconsolidated joint ventures, interest expense, interest and other income and income tax benefit (expense) and other taxes. We consider property NOI to be an appropriate supplemental performance measure because property NOI reflects the operating performance of our properties and excludes certain items that are not considered to be controllable in connection with the management of the property such as depreciation, amortization, impairment, general and administrative expenses and interest expense. However, property NOI should not be viewed as an alternative measure of our financial performance since it excludes expenses which could materially impact our results of operations. Further, our property NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating property NOI. Therefore, we believe net income (loss) attributable to common stockholders, as defined by GAAP, to be the most appropriate measure to evaluate our overall financial performance.

Included in the Central operating segment rental revenues for the three months ended March 31, 2013 and 2012 was approximately $1.8 million and $1.7 million, respectively, attributable to the Mexico operations. Included in the Central operating segment net assets as of March 31, 2013 and December 31, 2012 was approximately $73.2 million and $74.2 million, respectively, attributable to the Mexico operations.

Note 12 - Discontinued Operations and Assets Held for Sale

We report results of operations from real estate assets that meet the definition of a component of an entity and have been sold, or meet the criteria to be classified as held for sale, as discontinued operations. During the three months ended March 31, 2013, we sold three operating properties, comprising 1.6 million square feet in the East operating segment and 0.2 million square feet in the Central operating segment to unrelated third-parties. The sale of these properties resulted in gains of approximately $2.9 million. We also classified one property in our East operating segment as held for sale as of March 31, 2013.

The following table summarizes the components of income (loss) from discontinued operations for the three months ended March 31, 2013 and 2012 (in thousands).


	Three Months Ended March 31,
	2013			2012
Rental revenues	$	902		$	4,766
Rental expenses and real estate taxes		(191	)		(1,191	)
Real estate related depreciation and amortization		(75	)		(2,564	)

Operating income		636			1,011
Casualty gains		—			59
Impairment losses		—			67
Interest expense		—			(98	)
Interest and other income (expense)		(18	)		—

Operating income and other income (expense)		618			1,039
Gain on dispositions of real estate interests		2,877			21


Income (loss) from discontinued operations	$	3,495		$	1,060

Note 13 - Subsequent Events

GAAP requires an entity to disclose events that occur after the balance sheet date but before financial statements are issued or are available to be issued (“subsequent events”) as well as the date through which an entity has evaluated subsequent events. There are two types of subsequent events. The first type consists of events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, (“recognized subsequent events”). The second type consists of events that provide evidence about conditions that did not exist at the date of the balance sheet but arose subsequent to that date (“nonrecognized subsequent events”). No significant recognized or nonrecognized subsequent events were noted.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

We make statements in this report that are considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation:

•

national, international, regional and local economic conditions, including, in particular, the strength of the United States economic recovery and the potential impact of the financial crisis in Europe;

•

the general level of interest rates and the availability of capital;

•

the competitive environment in which we operate;

•

real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets;

•

decreased rental rates or increasing vacancy rates;

•

defaults on or non-renewal of leases by tenants;

•

acquisition and development risks, including failure of such acquisitions and development projects to perform in accordance with projections;

•

the timing of acquisitions, dispositions and development;

•

natural disasters such as fires, floods, tornadoes, hurricanes and earthquakes;

•

energy costs;

•

the terms of governmental regulations that affect us and interpretations of those regulations, including the costs of compliance with those regulations, changes in real estate and zoning laws and increases in real property tax rates;

•

financing risks, including the risk that our cash flows from operations may be insufficient to meet required payments of principal, interest and other commitments;

•

lack of or insufficient amounts of insurance;

•

litigation, including costs associated with prosecuting or defending claims and any adverse outcomes;

•

the consequences of future terrorist attacks or civil unrest;

•

environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us; and

•

other risks and uncertainties detailed in the section entitled “Risk Factors.”

In addition, our current and continuing qualification as a real estate investment trust, or REIT, involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, or the Code, and depends on our ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership.

We assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The reader should carefully review our financial statements and the notes thereto, as well as the section entitled “Risk Factors” in this Report.

Overview

We were formed as a Maryland corporation in April 2002 and have elected to be treated as a real estate investment trust (“REIT”) for United States (“U.S.”) federal income tax purposes. As used herein, “DCT Industrial Trust,” “DCT,” “the Company,” “we,” “our” and “us” refer to DCT Industrial Trust Inc. and its consolidated subsidiaries and partnerships except where the context otherwise requires. We are structured as an umbrella partnership REIT under which substantially all of our current and future business is, and will be, conducted through a majority owned and controlled subsidiary, DCT Industrial Operating Partnership LP (the “operating partnership”), a Delaware limited partnership, for which DCT Industrial Trust Inc. is the sole general partner. We own our properties through our operating partnership and its subsidiaries. As of March 31, 2013, we owned approximately 93% of the outstanding equity interests in our operating partnership.

As of March 31, 2013, the Company owned interests in approximately 74.5 million square feet of properties leased to approximately 880 customers, including:

•

58.8 million square feet comprising 405 consolidated properties owned in our operating portfolio which were 92.6% occupied;

•

14.2 million square feet comprising 45 unconsolidated properties which were 84.4% occupied and operated on behalf of four institutional capital management partners;

•

0.3 million square feet comprising four consolidated properties under redevelopment;

•

0.8 million square feet comprising two consolidated buildings in development; and

•

0.4 million square feet comprising one consolidated building classified as held for sale.

The Company also has five consolidated buildings and one unconsolidated expansion project under construction and several projects in predevelopment. See “Notes to Consolidated Financial Statements Note 3 - Investment in Properties” for further detail related to our development activity.

Our primary business objectives are to maximize long-term growth in earnings and Funds from Operations, or FFO, as defined on pages 35 and 36, and to maximize the value of our portfolio and the total return to our stockholders. In our pursuit of these long-term objectives, we seek to:

•

maximize cash flows from existing operations;

•

deploy capital into quality acquisitions and development opportunities which meet our asset, location and financial criteria; and

•

recycle capital by selling assets that no longer fit our investment criteria and reinvesting in higher return opportunities.

Outlook

We seek to maximize long-term earnings growth and value within the context of overall economic conditions, primarily through increasing rents and operating income at existing properties and acquiring and developing high-quality properties in major distribution markets.

Fundamentals for industrial real estate continue to modestly improve in response to general improvement in the economy. According to national statistics, net absorption (the net change in total occupied space) of industrial real estate turned positive in the second quarter of 2010 and national occupancy rates have increased each quarter since then. We expect moderate economic growth to continue throughout 2013, which should result in continued positive demand for warehouse space as companies expand their distribution and production platforms. Rental rates in our markets appeared to have bottomed and in a number of markets have begun to increase, although they do remain below peak levels. Rental concessions, such as free rent, have also begun to decline in most markets. Consistent with recent experience and based on current market conditions, we expect average net effective rental rates on new leases signed in 2013 to be slightly higher than the rates on expiring leases. As positive net absorption of warehouse space continues, we expect the rental rate environment to continue to improve. According to a national research company, average market rental rates nationally are expected to continue to increase moderately in 2013 as vacancy rates drop below 10% of available supply.

New development has begun to increase modestly in certain markets where fundamentals have improved more rapidly, however construction levels are still modest in absolute terms and well below peak levels and we expect they will remain so until rental rates, other leasing fundamentals and the availability of financing improve sufficiently to justify new construction on a larger scale. With limited new supply in the near term, we expect that the operating environment will become increasingly favorable for landlords with improvement of rental and occupancy rates.

For DCT Industrial, we expect same store net operating income to be higher in 2013 than it was in 2012. The benefit of higher occupancy in 2013 is expected to be somewhat offset by the impact of declining net effective rental rates on leases signed in 2012 compared to expiring leases, most of which were signed prior to the market downturn.

In terms of capital investment, we will continue to pursue acquisitions of well-located distribution facilities at prices where we can apply our leasing experience and market knowledge to generate attractive returns. Going forward, we will pursue the acquisition of buildings and land and consider selective development of new buildings in markets where we perceive demand and market rental rates will provide attractive financial returns.

We anticipate having sufficient liquidity to fund our operating expenses, including costs to maintain our properties and distributions, though we may finance investments, including acquisitions and developments, with the issuance of new shares, proceeds from asset sales or through additional borrowings. Please see “Liquidity and Capital Resources” for additional discussion.

Inflation

Although the U.S. economy has recently been experiencing a slight increase of inflation rates, and a wide variety of industries and sectors are affected differently by changing commodity prices, inflation has not had a significant impact on us in our markets. Most of our leases require the tenants to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. In addition, most of our leases expire within five years which enables us to replace existing leases with new leases at then-existing market rates.

Significant Transactions During 2013

Summary of the three months ended March 31, 2013

•

Acquisitions

•

During the three months ended March 31, 2013, we acquired five buildings comprising 0.5 million square feet in the Atlanta and Southern California markets for a total purchase price of approximately $35.8 million.

•

In March 2013, the Company entered into a binding agreement to purchase its joint venture partner’s 96.4% interest in seven buildings comprising 1,918,000 square feet owned by TRT-DCT Industrial JV I, for an incremental investment of $85.9 million which we expect to close in Q2 2013.

•

Development Activities

•

During the three months ended March 31, 2013, two projects totaling 343,000 square feet in Houston and Washington, D.C. were completed and stabilized. In addition, construction was shell complete on two projects totaling 772,000 square feet in Chicago and Miami. The table below reflects a summary of development activities as of March 31, 2013.


Project	Market	Acres		Number of Buildings		Square Feet		Percent owned			Cumulative Costs at 03/31/13		Projected Investment		Completion Date	Percentage Leased
						(in thousands)					(in thousands)		(in thousands)
Consolidated Development Activities:

Stabilized in Q1 2013
Northwest 8 Distribution Center	Houston		16		1		267		100	%	$	13,241	$	13,238	Q3-2012⁽¹⁾		100	%
Dulles Summit Distribution Building E	Baltimore/Washington		6		1		76		100	%		6,515		7,123	Q3-2012⁽¹⁾		100	%

	Total		22		2		343		100	%	$	19,756	$	20,361			100	%


Development Projects in Lease Up
DCT 55	Chicago		33		1		604		100	%	$	23,009	$	27,917	Q4-2012⁽²⁾		0	%
DCT Commerce Center at Pan American West (Building A)	Miami		7		1		168		100	%		13,850		14,594	Q1-2013⁽²⁾		89	%

	Total		40		2		772		100	%	$	36,859	$	42,511			19	%

Under Construction
DCT Commerce Center at Pan American West (Building B)	Miami		7		1		167		100	%	$	10,482	$	13,278	Q2-2013⁽²⁾		74	%
Slover Logistics Center I	Southern California		28		1		652		100	%		18,715		36,725	Q4-2013⁽²⁾		100	%
DCT Airtex Industrial Center	Houston		13		1		267		100	%		6,499		14,678	Q3-2013⁽²⁾		0	%
Rockdale Distribution Center - Expansion	Nashville		15		expansion		225		100	%		3,382		8,093	Q3-2013⁽²⁾		100	%
DCT Beltway Tanner Business Park	Houston		11		1		136		100	%		4,725		15,395	Q3-2013⁽²⁾		0	%

	Total		74		4		1,447		100	%	$	43,803	$	88,169			69	%



Total Development Activities			114		6		2,219		100	%	$	80,662	$	130,680			52	%


Build-to-Suit for Sale
Dulles Summit Outparcels	Baltimore/Washington		5		1		61		50	%	$	7,247	$	7,429	Q2-2013⁽²⁾
8th & Vineyard A	Southern California		6		1		130		91	%		1,999		8,960	Q4-2013⁽²⁾

			11		2		191				$	9,246	$	16,389

(3)	This is the projected stabilization date.

(4)	The completion date represents the date of building shell completion.

•

Dispositions

•

During the three months ended March 31, 2013, we sold three operating properties totaling approximately 1.8 million square feet to third-parties for combined gross proceeds of $50.5 million.

•

Debt Activity

•

On February 20, 2013, we entered into an amendment with our syndicated bank group whereby we extended and increased our existing $175.0 million senior unsecured term loan to $225.0 million for a period of five years, extended our existing $300.0 million senior unsecured line of credit for a period of four years and received a commitment for an additional $175.0 million senior unsecured term loan with a term of two years. We closed on the additional $175.0 million in March 2013, which was used to refinance a scheduled June 2013 maturity of $175.0 million of other senior unsecured debt.

•

As of March 31, 2013, we had $50.0 million outstanding and $250.0 million available under the unsecured revolving credit facility.

•

Equity activity

•

During the three months ended March 31, 2013, we issued approximately 3.8 million shares of common stock through our “continuous equity” offering program at an average price of $7.34 per share before expense, for proceeds of $27.9 million before offering expenses.

•

Leasing Activity

The following table provides a summary of our leasing activity for the three months ended March 31, 2013:


	Number of Leases Signed		Square Feet Signed		Net Effective Rent Per Square Foot⁽¹⁾		GAAP Basis Rent Growth ⁽²⁾			Weighted Average Lease Term⁽³⁾		Turnover Costs Per Square Foot⁽⁴⁾		Weighted Average Retention ⁽⁵⁾
			(in thousands)

First quarter 2013		67		1,444	$	5.07		6.00	%		45	$	2.54		42.62	%

(1)	Net effective rent is the average base rent calculated in accordance with GAAP, over the term of the lease. Does not include month to month leases.

(2)

GAAP basis rent growth is a ratio of the change in monthly Net Effective Rent (on a GAAP basis, including straight-line rent adjustments as required by GAAP) compared to the Net Effective Rent (on a GAAP basis) of the comparable lease. New leases where there were no prior comparable leases, due to extended downtime or materially different lease structures, are excluded.

(3)	The lease term is in months. Assumes no exercise of lease renewal options, if any.

(4)

Turnover costs are comprised of the costs incurred or capitalized for improvements of vacant and renewal spaces, as well as the commissions paid and costs capitalized for leasing transactions. Turnover costs per square foot represent the total turnover costs expected to be incurred on the leases signed during the period and does not reflect actual expenditures for the period.

(5)	Represents the weighted average square feet of tenants renewing their respective leases.

During the three months ended March 31, 2013, we signed 15 leases with free rent, which were for 0.4 million square feet of property with total concessions of $0.3 million.

Customer Diversification

As of March 31, 2013, there were no customers that occupied more than 1.7% of our consolidated properties based on annualized base rent. The following table reflects our 10 largest customers, based on annualized base rent as of March 31, 2013, who occupy a combined 6.2 million square feet of our consolidated properties.


Customer	Percentage of Annualized Base Rent
Schenker, Inc.		1.7	%
Deutsche Post World Net (DHL & Excel)		1.6	%
The Clorox Company		1.3	%
United Parcel Service (UPS)		1.2	%
The Glidden Company		1.2	%
YRC, LLC		1.1	%
Iron Mountain		1.1	%
Crayola LLC		1.0	%
CEVA Logistics		0.9	%
United Stationers Supply Company		0.9	%

Total		12.0	%

Although base rent is supported by long-term lease contracts, tenants who file bankruptcy have the legal right to reject any or all of their leases. In the event that a tenant with a significant number of leases in our properties files bankruptcy and cancels its leases, we could experience a reduction in our revenues and tenant receivables.

Reports have indicated that the parent company, YRC Worldwide, Inc., of one of our top ten tenants has encountered financial difficulties and therefore has the potential to file for bankruptcy. Their subsidiary, YRC, LLC currently leases three truck terminals in infill locations of Los Angeles, at below market rents reflected on the consolidated balance sheet at a carrying value of $13.3 million, net of accumulated amortization as of March 31, 2013. YRC, LLC had an insignificant amount of contractual rent and recoveries due to us as of March 31, 2013. The tenant is not considered delinquent.

We continuously monitor the financial condition of our tenants. We communicate often with those tenants who have been late on payments or filed bankruptcy. We are not currently aware of any significant financial difficulties of any other tenants beyond those described above that would individually cause a material reduction in our revenues, and no tenant represents more than 5% of our annualized base rent.

Results of Operations

Summary of the three months ended March 31, 2013 compared to the same period ended March 31, 2012

DCT Industrial Trust is a leading industrial real estate company specializing in the acquisition, development, leasing and management of bulk distribution and light industrial properties located in high-volume distribution markets in the United States and Mexico. As of March 31, 2013, the Company owned interests in or had under development approximately 74.5 million square feet of properties leased to approximately 880 customers, including 14.2 million square feet managed on behalf of four institutional capital management joint venture partners. Also as of March 31, 2013, we consolidated 405 operating properties, four redevelopment properties, two development properties, and one consolidated property classified as held for sale.

Comparison of the three months ended March 31, 2013 compared to the same period ended March 31, 2012

The following table illustrates the changes in rental revenues, rental expenses and real estate taxes, property net operating income, other revenue and other income (loss) and other expenses for the three months ended March 31, 2013 compared to the three months ended March 31, 2012. Our same store portfolio includes all operating properties that we owned for the entirety of both the current and prior year reporting periods for which the operations had been stabilized. Non-same store operating properties include properties not meeting the same store criteria and by definition exclude development and redevelopment properties. The same store portfolio for the periods presented totaled 370 operating properties and was comprised of 53.4 million square feet. A discussion of these changes follows in the table below (in thousands).


	Three Months Ended March 31,
	2013			2012			$ Change
Rental Revenues
Same store, excluding revenues related to early lease terminations	$	64,181		$	61,129		$	3,052
Non-same store operating properties		8,011			64			7,947
Development and redevelopment		89			118			(29	)
Revenues related to early lease terminations		115			105			10

Total rental revenues		72,396			61,416			10,980

Rental Expenses and Real Estate Taxes
Same store		17,761			17,077			684
Non-same store operating properties		2,117			25			2,092
Development and redevelopment		65			101			(36	)

Total rental expenses and real estate taxes		19,943			17,203			2,740

Property Net Operating Income⁽¹⁾
Same store, excluding revenues related to early lease terminations		46,420			44,052			2,368
Non-same store operating properties		5,894			39			5,855
Development and redevelopment		24			17			7
Revenues related to early lease terminations		115			105			10

Total property net operating income		52,453			44,213			8,240

Other Revenue and Other Income (Loss)
Institutional capital management and other fees		812			1,055			(243	)
Development profits		268			—			268
Equity in earnings (loss) of unconsolidated joint ventures, net		391			(854	)		1,245
Interest and other income (expense)		162			197			(35	)

Total other revenue and other income		1,633			398			1,235
Other Expenses
Real estate related depreciation and amortization		32,615			29,602			3,013
Interest expense		16,860			16,930			(70	)
General and administrative		6,420			5,784			636
Casualty gains		(59	)		(83	)		24
Income tax expense and other taxes		109			268			(159	)


Total other expenses		55,945			52,501			3,444

Income from discontinued operations		3,495			1,060			2,435
Net (income) loss attributable to noncontrolling interests		(357	)		826			(1,183	)

Net income (loss) attributable to common stockholders	$	1,279		$	(6,004	)	$	7,283

⁽¹⁾

Property net operating income, or property NOI, is defined as rental revenues, including reimbursements, less rental expenses and real estate taxes, which excludes institutional capital management fees, depreciation, amortization, casualty gains, impairment, general and administrative expenses, equity in earnings (loss) of unconsolidated joint ventures, interest expense, interest and other income (expenses) and income tax benefit (expense) and other taxes. We consider property NOI to be an appropriate supplemental performance measure because property NOI reflects the operating performance of our properties and excludes certain items that are not considered to be controllable in connection with the management of the property such as depreciation, amortization, impairment, general and administrative expenses and interest expense.

However, property NOI should not be viewed as an alternative measure of our financial performance since it excludes expenses which could materially impact our results of operations. Further, our property NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating property NOI. We believe net income attributable to DCT common stockholders, as defined by GAAP, to be the most appropriate measure to evaluate our overall financial performance. For a reconciliation of our property net operating income to our reported “Loss from continuing operations,” see “Notes to Consolidated Financial Statements, Note 11 - Segment Information.”

Rental Revenues

Rental revenues, which are comprised of base rent, straight-line rent, amortization of above and below market rent intangibles, tenant recovery income, early lease termination fees and other rental revenues, increased by $11.0 million, or 17.9% for the three months ended March 31, 2013 compared to the same period in 2012, primarily due to the following changes:

•

$7.9 million increase in our non-same store rental revenues, including development and redevelopment properties, primarily as a result of an increase in the number of properties, partially offset by a decrease in non-same store average occupancy period over period. The average occupancy of the non-same store properties decreased to 79.6% for the three months ended March 31, 2013 from 85.7% for the three months ended March 31, 2012. Since December 31, 2011, we acquired and continue to own 32 additional operating properties, four redevelopment properties and one development property, and we completed development or redevelopment of four properties.

•

$3.1 million increase in total revenue in our same store portfolio due primarily to the following:

•

$2.6 million increase in base rent primarily related to a 220 basis point increase in average occupancy period over period; and

•

$1.4 million increase in operating expense recoveries related to the increase in occupancy; which was partially offset by

•

$1.1 million decrease in other revenues primarily related to decrease in straight-line rental revenue.

The following table illustrates the various components of our total rental revenues for the three months ended March 31, 2013 and 2012 (in thousands).


	Three Months Ended March 31,
	2013		2012		$ Change
Base rent	$	53,984	$	46,083	$	7,901
Straight-line rent		1,519		1,933		(414	)
Amortization of above and below market rent intangibles		399		177		222
Tenant recovery income		15,570		12,443		3,127
Other		809		675		134
Revenues related to early lease terminations		115		105		10


Total rental revenues	$	72,396	$	61,416	$	10,980

Rental Expenses and Real Estate Taxes

Rental expenses and real estate taxes increased by approximately $2.7 million, or 15.9%, for the three months ended March 31, 2013 compared to the same period in 2012, primarily due to:

•

$2.0 million net increase in rental expenses and real estate taxes related to the properties acquired and development and redevelopment properties placed into operation during the period; and

•

$0.7 million net increase in rental expenses and real estate taxes in our same store portfolio, which was primarily driven by increases in property maintenance and property insurance.

Other Revenue and Other Income (Loss)

Total other revenue and other income (loss) increased by approximately $1.2 million for the three months ended March 31, 2013 as compared to the same period in 2012, primarily due to:

•

$1.2 million increase in equity in earnings (loss) of unconsolidated joint ventures primarily as a result of a 2012 adjustment to depreciation that did not recur in 2013;

•

$0.3 million in development profits in the current period with no corresponding activity in 2012; partially offset by

•

$0.2 million decrease in institutional capital management fees due to our acquisition of a joint venture partner’s interest in one of our joint ventures in 2012.

Other Expenses

Other expenses increased by approximately $3.4 million, or 6.6%, for the three months ended March 31, 2013 as compared to the same period in 2012, primarily as a result of:

•

$3.0 million increase in depreciation expense resulting from real estate acquisitions and capital additions;

•

$0.6 million increase in general and administrative expenses primarily related to higher personnel costs, partially offset by an increase in capitalized overhead as a result of increased development, leasing and other capital activities; and

•

$0.2 million decrease in income tax expense and other taxes.

Income from Discontinued Operations

Income from discontinued operations increased by $2.4 million for the three months ended March 31, 2013 as compared to the same period in 2012. This increase is primarily related to the gain on dispositions totaling $2.9 million recorded in 2013, partially offset by less net operating income of properties included in discontinued operations due to disposals.

Segment Summary for the three months ended March 31, 2013 compared to the same period ended March 31, 2012

The Company’s segments are based on our internal reporting of operating results used to assess performance based on our properties’ geographical markets. Our markets are aggregated into three reportable regions or segments, East, Central and West, which are based on the geographical locations of our properties. These regions are comprised of the markets by which management and their operating teams conduct and monitor business (see further detail on our Segments in “Notes to the Consolidated Financial Statements, Note 11 - Segment Information”). Management considers rental revenues and property net operating income aggregated by segment to be the appropriate way to analyze performance.

The following table illustrates the changes in our consolidated operating properties in continuing operations by segment as of, and for the three months ended March 31, 2013 compared to March 31, 2012, respectively (dollar amounts and square feet in thousands).


	As of March 31,										Three Months Ended March 31,
	Number of buildings		Square feet		Occupancy at period end			Segment assets⁽¹⁾			Rental revenues⁽²⁾		Property net operating income⁽³⁾
EAST:
2013		120		19,977		86.7	%	$	879,284		$	21,880	$	15,869
2012		111		19,370		86.8	%		930,054			20,385	$	15,051

Change		9		607		(0.1	)%	$	(50,770	)	$	1,495	$	818


CENTRAL:
2013		198		28,065		91.9	%	$	1,095,733		$	31,107	$	21,714
2012		185		24,825		90.8	%		1,031,617			25,788		17,811

Change		13		3,240		1.1	%	$	64,116		$	5,319	$	3,903


WEST:
2013		93		11,809		97.1	%	$	893,524		$	19,409	$	14,870
2012		77		9,840		94.1	%		653,149			15,243		11,351

Change		16		1,969		3.0	%	$	240,375		$	4,166	$	3,519

⁽¹⁾	Segment assets include all assets held by operating properties included in a segment, less non-segment cash and cash equivalents.

⁽²⁾	Segment rental revenues include operating properties and revenues from development properties. Properties which were sold or held for sale during the period are not included in these results.

⁽³⁾	For the definition of property net operating income, or property NOI, and a reconciliation of our property net operating income to our reported “Income (Loss) from Continuing Operations,” see “Notes to Consolidated Financial Statements, Note 11 - Segment Information.”

The following table reflects our total assets, net of accumulated depreciation and amortization, by segment as of March 31, 2013 and 2012 (in thousands).


	March 31, 2013		December 31, 2012		Change
Segments:
East assets	$	879,284	$	875,845	$	3,439
Central assets		1,095,733		1,107,561		(11,828	)
West assets		893,524		863,003		30,521

Total segment net assets		2,868,541		2,846,409		22,132
Non-segment assets:
Non-segment cash and cash equivalents		13,540		8,653		4,887
Other non-segment assets⁽¹⁾		150,661		149,285		1,376
Assets held for sale		11,350		52,852		(41,502	)

Total assets	$	3,044,092	$	3,057,199	$	(13,107	)

⁽¹⁾	Other non-segment assets primarily consists of corporate assets including investments in and advances to unconsolidated joint ventures, notes receivable, deferred loan costs, other receivables and other assets.

East Segment

•

East Segment assets increased by $3.4 million to $879.3 million as of March 31, 2013. This increase primarily related to the acquisition of two properties during the three months ended March 31, 2013.

•

East Segment property NOI, after reclassification for discontinued operations, increased approximately $0.8 million, for the three months ended March 31, 2012 as compared to the same period in 2012, primarily as a result of the acquisitions in the East operating segment during the period.

Central Segment

•

Central Segment assets decreased by $11.8 million, to $1,095.7 million as of March 31, 2013. This decrease primarily related to the disposition of one property during the three months ended March 31, 2013.

•

Central Segment property NOI, after reclassification for discontinued operations, increased approximately $3.9 million, for the three months ended March 31, 2013 as compared to the same period in 2012, primarily as a result of:

•

$5.3 million increase in rental revenues, of which $3.6 million is attributed to property acquisitions and $1.7 million which is attributed to an increase in occupancy and higher rental revenues at existing properties; which was partially offset by

•

$1.4 million increase in operating expenses primarily comprised of the following:

•

$0.8 million increase in property taxes, of which $0.6 million was related to property taxes on acquisitions and the remainder related to increasing property tax expense on existing properties; and

•

$0.6 million increase in various other operating expenses, including property maintenance and property insurance.

West Segment

•

West Segment assets increased by $30.5 million, to $893.5 million as of March 31, 2013. This increase primarily related to the acquisition of three operating properties during the three months ended March 31, 2013.

•

West Segment property NOI, after reclassification for discontinued operations, increased approximately $3.5 million for the three months ended March 31, 2013 as compared to the same period in 2012, primarily as a result of:

•

$4.2 million increase in rental revenues, of which $3.2 million is attributed to property acquisitions and $1.0 million which is attributed to an increase in occupancy and higher rental revenues at existing properties; which was partially offset by

•

$0.7 million increase in operating expenses primarily comprised of property taxes and property insurance.

Liquidity and Capital Resources

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 and dispositions;

•

Borrowings under our senior unsecured revolving credit facility;

•

Other forms of secured or unsecured financings;

•

Offerings of common stock or other securities;

•

Current cash balances; and

•

Distributions from our institutional capital management and other joint ventures.

Our sources of capital will be used to meet our liquidity requirements and capital commitments, including operating activities, debt service obligations, equity holder distributions, capital expenditures at our properties, development funding requirements and future acquisitions. We expect to utilize the same sources of capital to meet our short-term and long-term liquidity requirements, and expect that these sources will be sufficient to meet our short-term liquidity needs.

Cash Flows

“Cash and cash equivalents” were $19.5 million and $12.7 million as of March 31, 2013 and December 31, 2012, respectively. Net cash provided by operating activities increased by $4.8 million to $23.6 million during the three months ended March 31, 2013 compared to $18.8 million during the same period in 2012. This change was primarily due to increased property net operating income, partially offset by an increase in net cash payments related to changes in operating assets and liabilities compared to the three months ended March 31, 2012.

Net cash used in investing activities decreased $9.6 million to $13.7 million during the three months ended March 31, 2013 compared to $23.3 million during the same period in 2012. This change was primarily due to an increase in cash inflows from dispositions during 2013 totaling $51.2 million, compared to $4.7 million in the prior period, partially offset by an increase in cash outflows related to acquisitions totaling $35.0 million, compared to $8.6 million in the prior period, and capital expenditures totaling $29.9 million, compared to $17.6 million in the prior period.

Net cash used in financing activities was $3.1 million during the three months ended March 31, 2013, compared to net cash provided by financing activities of $2.6 million in the prior period. This change was primarily due to net repayments of borrowings of $9.0 million during the three months ended March 31, 2013, compared to net borrowings of $22.7 million during the prior period, partially offset by proceeds from issuance of common stock of $27.9 million during the three months ended March 31, 2013.

Common Stock

As of March 31, 2013, approximately 284.7 million shares of common stock were issued and outstanding.

On November 20, 2012, we registered a second “continuous equity” offering program, to replace our continuous equity offering program previously registered on March 23, 2010. Pursuant to this offering, we may sell up to 20 million shares of common stock from time-to-time through November 20, 2015 in “at-the-market” offerings or certain other transactions. We intend to use the proceeds from any sale of shares for general corporate purposes, which may include funding acquisitions and repaying debt. During the three months ended March 31, 2013, we issued approximately 3.8 million shares through this offering, at an average price of $7.34 per share for proceeds of $27.9 million before offering expenses. We did not issue any shares under the previously registered offering program during the three months ended March 31, 2012. As of March 31, 2013, 6.7 million shares remain available to be issued under this program. During April 2013, we issued approximately 6.6 million of the remaining available shares, at an average price of $7.32 per share, for proceeds of $48.2 million before offering expenses.

Distributions

During the three months ended March 31, 2013, our board of directors declared distributions to stockholders totaling approximately $21.9 million, including distributions to OP unitholders. During the same period in 2012, our board of directors declared distributions to stockholders of approximately $19.2 million. Existing cash balances, cash provided from operations and borrowings under our senior unsecured revolving credit facility were used for distributions paid during 2013 and 2012.

The payment of quarterly distributions is determined by our board of directors and may be adjusted at its discretion at any time. During April 2013, our board of directors declared quarterly cash dividends of $0.07 per share and unit, payable on July 17, 2013 to stockholders and OP unitholders of record as of July 5, 2013.

Outstanding Indebtedness

As of March 31, 2013 our outstanding indebtedness of approximately $1.4 billion consisted of mortgage notes, senior unsecured notes, and a senior unsecured revolving credit facility, excluding approximately $45.6 million representing our proportionate share of non-recourse debt associated with unconsolidated joint ventures. As of December 31, 2012, our outstanding indebtedness of approximately $1.5 billion consisted of mortgage notes, senior unsecured notes and a senior unsecured revolving credit facility, excluding $45.0 million representing our proportionate share of debt associated with unconsolidated joint ventures.

Our debt instruments require monthly, quarterly or semiannual payments of interest and many require monthly or quarterly repayments of principal. Currently, cash flows from our operations are sufficient to satisfy these debt service requirements and we anticipate that cash flows from operations will continue to be sufficient to satisfy our debt service excluding principal maturities, which we plan to fund from refinancing and/or new debt. During the three months ended March 31, 2013 and 2012, our debt payments, including principal payments and refinancing activities, interest and extinguishments, totaled $200.9 million and $19.1 million, respectively.

Debt Issuance, Payoffs and Assumptions

On February 20, 2013, DCT entered into an amendment with our syndicated bank group whereby we extended and increased our existing $175.0 million senior unsecured term loan to $225.0 million for a period of five years, extended our existing $300.0 million senior unsecured line of credit for a period of four years and received a commitment for an additional $175.0 million senior unsecured term loan with a term of two years. We closed on the additional $175.0 million in March 2013, which was used to refinance a scheduled June 2013 maturity of $175.0 million of other senior unsecured debt.

Line of Credit

As of March 31, 2013, we had $50.0 million outstanding and $250.0 million available under the unsecured revolving credit facility. As of December 31, 2012, we had $110.0 million and $190.0 million available under the unsecured revolving credit facility.

The senior unsecured revolving credit facility agreement contains various covenants with which we were in compliance with as of March 31, 2013.

Debt Maturities

The following table sets forth the scheduled maturities of our debt, including principal amortization, and excluding unamortized premiums, as of March 31, 2013 (in thousands).


Year	Senior Unsecured Notes		Mortgage		Senior Unsecured Revolving Credit Facility		Total
2013	$	—	$	31,808	$	—	$	31,808
2014		50,000		11,288		—		61,288
2015		175,000		49,817		—		224,817
2016		139,000		61,012		—		200,012
2017		51,000		11,586		50,000		112,586
Thereafter		660,000		145,428		—		805,428

Total	$	1,075,000	$	310,939	$	50,000	$	1,435,939

Financing Strategy

We do not have a formal policy limiting the amount of debt we incur, although we currently intend to operate so that our financial metrics are generally consistent with investment grade peers in the real estate industry. We continually evaluate our secured and unsecured leverage and among other relevant metrics, our fixed charge coverage. Our charter and our bylaws do not limit the indebtedness that we may incur. We are, however, subject to certain covenants which may limit our outstanding indebtedness.

Contractual Obligations

The following table reflects our contractual obligations as of March 31, 2013, specifically our obligations under long-term debt agreements, operating and ground lease agreements and purchase obligations (in thousands).


	Payments due by Period
Contractual Obligations⁽¹⁾	Total		Less than 1 Year		1 - 3 Years		4 - 5 Years		More Than 5 Years
Scheduled long-term debt maturities, including interest⁽²⁾	$	1,765,319	$	144,294	$	717,863	$	242,910	$	660,252
Operating lease commitments		2,994		820		1,571		597		6
Ground lease commitments⁽³⁾		13,338		278		1,632		1,102		10,326

Total	$	1,781,651	$	145,392	$	721,066	$	244,609	$	670,584

⁽¹⁾

From time-to-time in the normal course of our business, we enter into various contracts with third-parties that may obligate us to make payments, such as maintenance agreements at our properties. Such contracts, in the aggregate, do not represent material obligations, are typically short-term and cancellable within 90 days and are not included in the table above. Also, excluded from the total are our estimated construction costs to complete development projects of approximately $50.6 million, none of which are legally committed.

⁽²⁾	Variable interest rate payments are estimated based on the LIBOR rate at March 31, 2013.

⁽³⁾	Three of our buildings comprised of 0.7 million square feet reside on 38 acres of land which is leased from an airport authority.

Off-Balance Sheet Arrangements

As of March 31, 2013 and December 31, 2012, respectively, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors, other than items discussed herein.

As of March 31, 2013, our proportionate share of the total construction loans of our unconsolidated development joint ventures, including undrawn amounts, was $35.0 million, which is scheduled to mature during 2017. Our proportionate share of the total construction loans, including undrawn amounts, of our unconsolidated development joint ventures includes 50% of the construction loans associated with the SCLA joint venture which are non-recourse to the venture partners.

Indebtedness and Other Off-Balance Sheet Arrangements

There are no lines of credit or side agreements related to, or between, our unconsolidated joint ventures and us, and there are no other derivative financial instruments between our unconsolidated joint ventures and us. In addition, we believe we have no material exposure to financial guarantees, except as discussed above.

We may elect to fund additional capital to a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans, although such funding is not required contractually or otherwise. As of March 31, 2013, our proportionate share of non-recourse debt associated with unconsolidated joint ventures is $45.6 million. The maturities of our proportionate share of the non-recourse debt are summarized in the table below (in thousands):


Year	DCT’s Proportionate Share of Secured Non-Recourse Debt in Unconsolidated Joint Ventures
2013	$	—
2014		4,513
2015		2,257
2016		840
2017		38,010
Thereafter		—

Total	$	45,620

Funds From Operations

We believe that net income attributable to common stockholders, as defined by GAAP, is the most appropriate earnings measure. However, we consider Funds from Operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), to be a useful supplemental, non-GAAP measure of DCT Industrial’s operating performance. NAREIT developed FFO as a relative measure of performance of an equity REIT in order to recognize that the value of income-producing real estate historically has not depreciated on the basis determined under GAAP. FFO is generally defined as net income attributable to common stockholders, calculated in accordance with GAAP, plus real estate-related depreciation and amortization, less gains from dispositions of operating real estate held for investment purposes, plus impairment losses on depreciable real estate and impairments of in substance real estate investments in investees that are driven by measureable decreases in the fair value of the depreciable real estate held by the unconsolidated joint ventures and adjustments to derive our pro rata share of FFO of unconsolidated joint ventures. We exclude gains and losses on business combinations and include the gains or losses from dispositions of properties which were acquired or developed with the intention to sell or contribute to an investment fund in our definition of FFO. Although the NAREIT definition of FFO predates the guidance for accounting for gains and losses on business combinations, we believe that excluding such gains and losses is consistent with the key objective of FFO as a performance measure. We also present FFO excluding acquisition costs, debt modification costs and impairment losses on properties which are not depreciable. We believe that FFO excluding acquisition costs, debt modification costs and impairment losses on non-depreciable real estate is useful supplemental information regarding our operating performance as it provides a more meaningful and consistent comparison of our operating performance and allows investors to more easily compare our operating results. Readers should note that FFO captures neither the changes in

the value of our properties that result from use or market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations. NAREIT’s definition of FFO is subject to interpretation, and modifications to the NAREIT definition of FFO are common. Accordingly, our FFO may not be comparable to other REITs’ FFO and FFO should be considered only as a supplement to net income as a measure of our performance.

The following table presents the calculation of our FFO reconciled from “Net loss attributable to common stockholders” for the periods indicated below on a historical basis (unaudited, amounts in thousands, except per share and unit data).


	Three Months Ended March 31,
	2013			2012
Reconciliation of net income (loss) attributable to common stockholders to FFO:
Net income (loss) attributable to common stockholders	$	1,279		$	(6,004	)
Adjustments:
Real estate related depreciation and amortization		32,690			32,166
Equity in (earnings) loss of unconsolidated joint ventures, net		(391	)		854
Equity in FFO of unconsolidated joint ventures		2,353			2,834
Gain on dispositions of real estate interests		(2,877	)		(88	)
Noncontrolling interest in the above adjustments		(2,323	)		(3,744	)
FFO attributable to unitholders		2,217			2,709

FFO basic and diluted	$	32,948		$	28,727


FFO per common share and unit - basic and diluted	$	0.11		$	0.10

FFO weighted average common shares and units outstanding:
Common shares for earnings per share - basic		281,063			246,367
Participating securities		2,250			1,580
Units		20,283			25,731

FFO weighted average common shares, participating securities and units outstanding – basic		303,596			273,678
Dilutive common stock equivalents		813			584

FFO weighted average common shares, participating securities and units outstanding - diluted		304,409			274,262

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the exposure to losses resulting from changes in market prices such as interest rates, foreign currency exchange rates and rental rates. Our future earnings and cash flows are dependent upon prevailing market rates. Accordingly, we manage our market risk by matching projected cash inflows from operating, investing and financing activities with projected cash outflows for debt service, acquisitions, capital expenditures, distributions to stockholders and OP unitholders and other cash requirements. The majority of our outstanding debt has fixed interest rates, which minimizes the risk of fluctuating interest rates.

Interest Rate Risk

Our exposure to market risk includes interest rate fluctuations in connection with our senior unsecured revolving credit facility and other variable rate borrowings and forecasted fixed rate debt issuances, including refinancing of existing fixed rate debt. Interest rate risk may result from many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control. To manage interest rate risk for variable rate debt and issuances of fixed rate debt, in the past we have primarily used treasury locks and forward-starting swaps as part of our cash flow hedging strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. We do not use derivatives for trading or speculative purposes and only enter into contracts with major financial institutions based on their credit rating and other factors. As of March 31, 2013, we did not have any derivates in place.

Our variable rate debt is subject to risk based upon prevailing market interest rates. As of March 31, 2013, we had approximately $450.0 million of variable rate debt outstanding indexed to LIBOR rates. If the LIBOR rates relevant to our variable rate debt were to increase 10%, we estimate that our quarterly interest expense would increase by approximately $169,000 based on our outstanding floating-rate debt as of March 31, 2013. Additionally, if weighted average interest rates on our fixed rate debt were to have increased by 100 basis points due to refinancing, interest expense would have increased by approximately $2.9 million during the three months ended March 31, 2013.

As of March 31, 2013, the estimated fair value of our debt was approximately $1.6 billion based on our estimate of the then-current market interest rates.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures; as such term is defined under Rule 13a-15(e) under the Exchange Act, as of March 31, 2013, the end of the period covered by this report. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that our disclosure controls and procedures will detect or uncover every situation involving the failure of persons within DCT Industrial Trust Inc. or its affiliates to disclose material information otherwise required to be set forth in our periodic reports. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of March 31, 2013 in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in Internal Control over Financial Reporting

None.

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

None.

ITEM 1A.

RISK FACTORS

There have been no material changes to the risk factors set forth in Item 1A. to Part I of our Form 10-K, as filed on February 21, 2013, except to the extent factual information disclosed elsewhere in this Form 10-Q relates to such risk factors.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS


*3.1		DCT Industrial Trust Inc. Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K filed on December 19, 2006)

*3.2		First Amendment to DCT Industrial Trust Inc. Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to Form 8-K filed on February 9, 2011)

*3.3		Second Amendment to DCT Industrial Trust Inc. Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to Form 8-K filed on October 27, 2011)

*3.4		Third Amendment to DCT Industrial Trust Inc. Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to Form 8-K filed on May 1, 2013)

+10.1		Amended and Restated Credit and Term Loan Agreement, dated as of February 20, 2013, among DCT Industrial Operating Partnership LP and the lenders identified therein and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, National Association and PNC Bank, National Association, as Syndication Agents, Citibank, N.A., JPMorgan Chase Bank, N.A., Regions Bank and U.S. Bank National Association, as Documentation Agents and Capital One, N.A. and Union Bank, N.A., as Managing Agents.

+31.1		Rule 13a-14(a) Certification of Principal Executive Officer

+31.2		Rule 13a-14(a) Certification of Principal Financial Officer

+32.1		Section 1350 Certification of Principal Executive Officer

+32.2		Section 1350 Certification of Principal Financial Officer

101		The following materials from DCT Industrial Trust Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income (iv) the Consolidated Statement of Changes in Equity, (v) the Consolidated Statements of Cash Flows, and (vi) related notes to these financial statements.

+	Filed herewith.

*	Filed previously.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


				DCT INDUSTRIAL TRUST INC.

Date: May 3, 2013				/s/ Philip L. Hawkins
				Philip L. Hawkins
				Chief Executive Officer

Date: May 3, 2013				/s/ Matthew T. Murphy
				Matthew T. Murphy
				Chief Financial Officer and Treasurer

Date: May 3, 2013				/s/ Mark E. Skomal
				Mark E. Skomal
				Chief Accounting Officer

EXHIBIT INDEX

Exhibits


*3.1		DCT Industrial Trust Inc. Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K filed on December 19, 2006)

*3.2		First Amendment to DCT Industrial Trust Inc. Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to Form 8-K filed on February 9, 2011)

*3.3		Second Amendment to DCT Industrial Trust Inc. Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to Form 8-K filed on October 27, 2011)

*3.4		Third Amendment to DCT Industrial Trust Inc. Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to Form 8-K filed on May 1, 2013)

+10.1		Amended and Restated Credit and Term Loan Agreement, dated as of February 20, 2013, among DCT Industrial Operating Partnership LP and the lenders identified therein and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, National Association and PNC Bank, National Association, as Syndication Agents, Citibank, N.A., JPMorgan Chase Bank, N.A., Regions Bank and U.S. Bank National Association, as Documentation Agents and Capital One, N.A. and Union Bank, N.A., as Managing Agents.

+31.1		Rule 13a-14(a) Certification of Principal Executive Officer

+31.2		Rule 13a-14(a) Certification of Principal Financial Officer

+32.1		Section 1350 Certification of Principal Executive Officer

+32.2		Section 1350 Certification of Principal Financial Officer

101		The following materials from DCT Industrial Trust Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income (iv) the Consolidated Statement of Changes in Equity, (v) the Consolidated Statements of Cash Flows, and (vi) related notes to these financial statements.

+	Filed herewith.

*	Filed previously.