Past, Present and Future with Duke Realty
I'm a long-term investor in Duke Realty (DRE). Up until recently the stock has performed, and the dividend has steadily increased. However, now, Duke is trading in the single-digits and many investors are frowning on their mixed-use developments which I believe will exhibit higher returns than single-use properties.
I actually own my Duke stock through their DRIP. It's an awesome DRIP because the company covers all of the fees. In addition, if you automatically reinvest your dividends you have the opportunity to receive the reinvested stock with a discount.
Needless to say Duke’s leadership has had to address their current troubles by taking some bold moves. They've reduced their dividend and are now using their DRIP investors to purchase reinvestment stock from the open market instead of issuing new stock at a discount. These moves are prudent and allow the DRIP to act as economic clutch for the company to shift into a lower gear.
Shona Bedwell, Duke's Assistant Vice President of Investor Relations penned a great letter documenting these changes for the participants in the Duke Dividend Reinvestment Plan. Because the letter so eloquently illustrates the past, present and future of Duke Realty's approach, I'm publishing the complete letter below. Enjoy this honest communication that I find very refreshing from a public company.
February 26, 2009
Dear Fellow Investors:
We wanted to take this opportunity to inform you of changes recently made to our Direct Stock Purchase and Dividend Reinvestment Plan.
The Company has decided to switch from issuing new shares through the Plan to purchasing shares on the open market. Accordingly, as your Plan prospectus indicates, when shares are purchased on the open market you will not receive a discount and your investment price will be the average for shares purchased for each investment date. Duke will pay the commissions for such purchases, however, and the Plan will continue allow participants to acquire and hold Duke shares absolutely free of any service charges, fees or commissions.
Additionally, on January 29th, we announced a reduction in our dividend to $1.00 per share annually. Duke Realty has increased its annual dividend every year since we went public in 1993. We did not take lightly the ramifications to our shareholders and potential long-term consequences of a dividend reduction. However, in light of the current economic environment, we made the difficult decision to reduce the dividend.
At Duke, we very much value the support of our individual investors and we appreciate your understanding of these changes. Furthermore, you should know that these changes are not necessarily permanent. As market conditions change, we will periodically evaluate a return to providing participants a discount on shares purchased through the Plan, as well as examine the level of our dividend.
Thank you again for your continuing support.
Sincerely,
Shona L. Bedwell
Assistant Vice President – Investor Relations
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Mar.10.2009. 23:44
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