Duke Realty CEO Jim Connor spoke about the company’s strengthened portfolio and accompanying industrial strategy for an article in the Indianapolis Business Journal earlier this month. The article describes how the strategy has paid off to the tune of third-quarter profits of $112 million and $700 million worth of projects in the development pipeline.
“We found ourselves at the peak of 2007 running all of these businesses and the bottom fell out of the real estate market in the U.S.,” Connor told the journal. “We started a strategic review of the business and said, ‘We’ve got to change this; we’ve got to simplify the model.’”
In response to the real estate collapse of 2007, Duke Realty began consolidating a portfolio that had covered a wide range of sectors, including office, industrial, medical, retail, and residential. Having shed billions of dollars in office assets over the past decade, Duke Realty’s holdings are now a more robust 80 percent industrial, 20 percent medical office.
Investors have responded to the industrial strategy with enthusiasm. Shares are 17 percent higher than at the beginning of 2016. According to the article, investment analysts believe there’s still room for significant growth: “We maintain our ‘buy’ rating as Duke is well-positioned to grow its development pipeline to take advantage of strong industrial fundamentals nationally while maintaining a very conservative balance sheet,” wrote an analyst for investment banking firm Stifel in an October report.
IBJ reports that, at a conference in Phoenix last month, Connor and other Duke Realty executives were asked to choose a song that best describes the company outlook for 2017. The group decided on Led Zeppelin’s “The Song Remains the Same.”
“It’s not really fun; it’s not sexy,” Connor reportedly said. “But we’re going to keep doing the same thing.”
You can read the full article here.