10-K 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) {X} Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 (Fee Required) for the fiscal year ended December 31, 1994 or { } Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 (No Fee Required) for the transition period from ___________ to ___________ Commission file number 1-9044 --------------------------------------------------------- DUKE REALTY INVESTMENTS, INC. ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Indiana 35-1740409 ---------------------------------- ----------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 8888 Keystone Crossing, Suite 1200 Indianapolis, Indiana 46250 -------------------------------------------- ----------------------------- (Address of principal executive offices) (Zip Code) (317) 846-4700 --------------------------------------------------- (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class: which registered: Common Stock ($.01 par value) New York Stock Exchange ------------------------------------- -------------------------------------- Securities registered pursuant to Section 12(g) of the Act: ------------------------------------------------------------------------------- (Title of Class) ------------------------------------------------------------------------------- (Title of Class) 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 ____ The aggregate market value of the voting shares of the Registrant's outstanding shares held by non-affiliates of the Registrant is $540,385,853 based on the last reported sale price on March 8, 1995. The number of shares outstanding as of March 8, 1995 was 20,391,919. DOCUMENTS INCORPORATED BY REFERENCE Portions of the proxy statement dated March 17, 1995 of the Registrant, filed pursuant to Regulation 14A, are incorporated by reference in Part III of this Annual Report on Form 10-K. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ( ) TABLE OF CONTENTS FORM 10-K Item No. Page(s) -------- ------- PART I 1. Business . . . . . . . . . . . . . . . . . . . . . . . . 1 2. Properties . . . . . . . . . . . . . . . . . . . . . . . 1 - 7 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 7 4. Submission of Matters to a Vote of Security Holders. . . 7 PART II 5. Market for the Registrant's Common Stock and Related Security Holder Matters. . . . . . . . . . . . . . . . 7 - 8 6. Selected Financial Data. . . . . . . . . . . . . . . . . 8 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . 9 - 14 8. Financial Statements and Supplementary Data. . . . . . . 14 9. Changes in and Disagreements with Accountants and Financial Disclosure . . . . . . . . . . . . . . . . . 14 PART III 10. Directors and Executive Officers of the Registrant . . . 14 - 16 11. Executive Compensation . . . . . . . . . . . . . . . . . 16 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . . . . 6 13. Certain Relationships and Related Transactions . . . . . 17 PART IV 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . 17 - 37 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 - 39 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 - 41 PART I ITEM 1. BUSINESS Duke Realty Investments, Inc. (the "Company") is a self-administered, self- managed and fully integrated UPREIT ("Umbrella Partnership Real Estate Investment Trust") engaged in the long term ownership and operation of high quality real estate. It began operations through a predecessor in 1972. As of December 31, 1994, the Company owned a diversified portfolio of 128 income- producing industrial, office and retail properties (the "Properties"), encompassing approximately 12.9 million square feet leased to approximately 1,100 tenants located primarily in eight states, and 9 buildings encompassing approximately 2.4 million square feet currently under development. The Company also owns approximately 930 acres of unencumbered land for future development, of which approximately 80% is zoned for industrial use. The land is primarily located adjacent to the Properties. The Company provides leasing, management, construction, development and other tenant-related services for the Properties and certain properties owned by other third parties which total approximately 12.0 million square feet. The Company is one of the largest real estate companies in the midwest and has the largest commercial real estate operations in Indianapolis and Cincinnati. The Company's Midwest properties benefit from above-average economic growth in the region and high occupancy levels. The Company has developed almost 40 million square feet of commercial property since its founding. The Company is one of the most active developers of industrial properties in the United States, based on square footage under construction. During the last five years, the Company developed an average of approximately 2.0 million square feet per year. The Company was reorganized in October 1993 (the "Reorganization"). From the completion of its Reorganization through December 31, 1994, the Company completed development of 1.3 million square feet and acquired 900,000 square feet of commercial properties. Also, the Company has under development approximately 2.4 million square feet of commercial space that is 82% pre-leased which is expected to be completed in 1995. The Company manages approximately 27 million square feet of property, including 12 million square feet owned by third parties. In addition to providing services to approximately 1,100 tenants in the Properties, the Company provides such services to over 1,200 tenants in approximately 150 properties owned by others. For additional information regarding the Company's investments and operations, see Item 7, Management's Discussion and Analysis of Financial Condition and results of Operations and Item 8, Financial Statements and Supplementary Data. ITEM 2. PROPERTIES The Company owns a diversified portfolio of 137 commercial properties encompassing approximately 15.3 million net rentable square feet located primarily in eight states and approximately 930 acres of land for future development. (See Notes 4 and 5 to Financial Statements, Item 8 hereof.) The properties are described below. - 1 -
PERCENT LEASED AT NAME/ OWNERSHIP COMPANY'S YEAR LAND AREA NET RENTABLE DECEMBER 31, LOCATION INTEREST OWNERSHIP DEVELOPED (ACRES) AREA (SQ.FT.) 1994 (1) -------- --------- --------- --------- --------- ------------- ----------- INDUSTRIAL Indianapolis, Indiana PARK 100 BUSINESS PARK Building 38 Fee 100% 1978 1.11 6,000 100% Building 43 Fee 100% 1971 2.07 26,871 100% Building 74 Fee 10%-50% (2) 1988 12.41 257,400 100% Building 76 Fee 10%-50% (2) 1988 5.10 81,695 100% Building 77 Fee 100% 1988 7.96 193,400 100% Building 78 Fee 10%-50% (2) 1988 21.80 512,777 100% Building 79 Fee 100% 1988 4.47 66,000 94% Building 80 Fee 100% 1988 4.47 66,000 100% Building 83 Fee 100% 1989 5.34 96,000 100% Building 84 Fee 100% 1989 5.34 96,000 100% Building 85 Fee 10%-50% (2) 1989 9.70 180,100 100% Building 87 Fee 10%-50% (2) 1989 14.20 350,000 100% Building 89 Fee 10%-50% (2) 1990 11.28 311,600 100% Building 91 Fee 10%-50% (2) 1990 7.53 144,000 100% Building 92 Fee 10%-50% (2) 1991 4.38 45,917 100% Building 95 Fee 100% 1993 15.23 336,000 100% Building 96 Fee 100% 1994 27.25 553,900 100% Building 98 Fee 100% 1968 37.34 503,900 84% Building 109 Fee 100% 1985 4.80 46,000 100% Building 117 Fee 10%-50% (2) 1988 13.36 135,600 87% Building 120 Fee 10%-50% (2) 1989 4.54 54,982 100% Building 122 Fee 100% 1990 6.17 73,274 100% Building 125 Fee 100% 1994 7.80 98,000 100% Building 126 Fee 100% 1984 4.04 60,100 86% SHADELAND STATION Buildings 204 & 205 Fee 100% 1984 4.09 48,600 93% HUNTER CREEK BUSINESS PARK Building 1 Fee 10%-50% (2) 1989 5.97 86,500 100% Building 2 Fee 10%-50% (2) 1989 8.86 202,560 100% HILLSDALE TECHNECENTER Building 4 Fee 100% 1987 7.85 73,874 88% Building 5 Fee 100% 1987 5.44 67,500 100% Building 6 Fee 100% 1987 4.25 64,000 100% Carmel, Indiana HAMILTON CROSSING Building 1 Fee 100% 1989 4.70 51,825 93% Greenwood, Indiana SOUTH PARK BUSINESS CENTER Building 2 Fee 100% 1990 7.10 86,806 98% Cincinnati, Ohio PARK 50 TECHNECENTER Building 20 Fee 100% 1987 8.37 96,000 100% Building 25 Fee 100% 1989 12.20 78,328 89% GOVERNOR'S POINTE 4700 Building Fee 100% 1987 5.51 76,400 92% 4800 Building Fee 100% 1989 7.07 80,000 92% 4900 Building Fee 100% 1987 9.41 76,400 99%
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PERCENT LEASED AT NAME/ OWNERSHIP COMPANY'S YEAR LAND AREA NET RENTABLE DECEMBER 31, LOCATION INTEREST OWNERSHIP DEVELOPED (ACRES) AREA (SQ.FT.) 1994 (1) -------- --------- --------- --------- --------- ------------- ----------- WORLD PARK Building 5 Fee 100% 1987 5.00 57,900 75% Building 6 Fee 100% 1987 7.26 92,400 100% Building 7 Fee 100% 1987 8.63 96,000 100% Building 8 Fee 100% 1989 14.60 192,000 100% Building 9 Fee 100% 1989 4.47 58,800 93% Building 11 Fee 100% 1989 8.98 96,000 100% Building 14 Fee 100% 1989 8.91 166,400 100% Building 15 Fee 100% 1990 6.50 93,600 100% Building 16 Fee 100% 1989 7.00 93,600 100% ENTERPRISE BUSINESS PARK Building A Fee 100% 1990 7.52 87,400 95% Building B Fee 100% 1990 7.52 84,940 93% TRI-COUNTY BUSINESS PARK Xetron Fee 10% (3) 1994 29.00 100,193 100% OTHER INDUSTRIAL - CINCINNATI U.S. Post Office Building Fee 40% (4) 1992 2.60 57,886 100% Columbus, Ohio Pet Foods Distribution Building Fee 100% 1993 6.06 252,000 100% MBM Building Fee 100% 1978 3.98 83,000 100% Hebron, Kentucky SOUTHPARK BUSINESS CENTER Building 1 Fee 100% 1990 7.90 96,000 100% Building 3 Fee 100% 1991 10.79 192,000 73% CR Services Fee 100% 1994 22.50 214,840 100% Redken Laboratories Fee 100% 1994 19.00 166,400 100% Decatur, Illinois PARK 101 BUSINESS CENTER Building 3 Fee 100% 1979 5.76 75,600 77% Building 8 Fee 100% 1980 3.16 50,400 84% Nashville, Tennessee HAYWOOD OAKS TECHNECENTER Building 2 Fee 100% 1988 2.94 50,400 100% Building 3 Fee 100% 1988 2.94 52,800 100% Building 4 Fee 100% 1988 5.23 46,800 100% Building 5 Fee 100% 1988 5.23 60,300 96% Building 6 Fee 100% 1989 10.53 113,400 100% Greenbriar Business Park Fee 100% 1986 10.73 134,759 88% Milwaukee, Wisconsin Music Box Building Fee 33% (5) 1993 8.90 153,600 100%
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PERCENT LEASED AT NAME/ OWNERSHIP COMPANY'S YEAR LAND AREA NET RENTABLE DECEMBER 31, LOCATION INTEREST OWNERSHIP DEVELOPED (ACRES) AREA (SQ.FT.) 1994 (1) -------- --------- --------- --------- --------- ------------- ----------- OFFICE Indianapolis, Indiana PARK 100 BUSINESS PARK Building 34 Fee 100% 1979 2.00 22,272 89% Building 116 Fee 100% 1988 5.28 35,700 100% Building 118 Fee 100% 1988 6.50 35,700 100% Building 119 Fee 100% 1989 6.50 53,300 100% CopyRite Building Fee 50% (6) 1992 3.88 48,000 100% WOODFIELD AT THE CROSSING Two Woodfield Crossing Fee 100% 1987 7.50 117,818 92% Three Woodfield Crossing Fee 100% 1989 13.30 259,777 95% PARKWOOD CROSSING Parkwood I Fee 50% (7) 1990 5.93 108,281 97% SHADELAND STATION 7240 Shadeland Station Fee 67% (8) 1985 2.14 45,585 94% 7330 Shadeland Station Fee 100% 1988 4.50 42,619 100% 7340 Shadeland Station Fee 100% 1989 2.50 32,235 100% 7351 Shadeland Station Fee 100% 1983 2.14 27,740 100% 7369 Shadeland Station Fee 100% 1989 2.20 15,551 100% 7400 Shadeland Station Fee 100% 1990 2.80 49,544 98% KEYSTONE AT THE CROSSING F.C. Tucker Building (9) Fee/Ground Lease 100% 1978 N/A 4,840 100% 3520 Commerce Crossing (10) Ground/Bldg.Lease 100% 1976 N/A 30,000 100% Carmel, Indiana CARMEL MEDICAL CENTER Building I (11) Fee/Ground Lease 100% 1985 N/A 40,060 100% Building II (11) Fee/Ground Lease 100% 1989 N/A 39,973 100% Greenwood, Indiana SOUTH PARK BUSINESS CENTER Building 1 Fee 100% 1989 5.40 39,715 91% Building 3 Fee 100% 1990 3.25 35,900 100% Cincinnati, Ohio GOVERNOR'S HILL 8600 Governor's Hill Fee 100% 1986 10.79 200,584 88% 8700 Governor's Hill Fee 100% 1985 4.98 58,617 100% 8790 Governor's Hill Fee 100% 1985 5.00 58,177 63% 8800 Governor's Hill Fee 100% 1985 2.13 28,700 100% GOVERNOR'S POINTE 4605 Governor's Pointe Fee 100% 1990 8.00 175,485 100% 4705 Governor's Pointe Fee 100% 1988 7.50 140,984 19% 4770 Governor's Pointe Fee 100% 1986 4.50 76,037 79% PARK 50 TECHNECENTER SDRC Building Fee 100% 1991 13.00 221,215 100% 400 TechneCenter Drive Fee 100% 1985 8.19 70,644 90% DOWNTOWN CINCINNATI 311 Elm Street (12) Ground/Bldg. Lease 100% 1902/1986 (13) N/A 90,127 100% 312 Plum Street Fee 100% 1987 .69 230,000 82% 312 Elm Street (14) Fee/Ground Lease 100% 1992 1.10 378,000 87%
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PERCENT LEASED AT NAME/ OWNERSHIP COMPANY'S YEAR LAND AREA NET RENTABLE DECEMBER 31, LOCATION INTEREST OWNERSHIP DEVELOPED (ACRES) AREA (SQ.FT.) 1994 (1) -------- --------- --------- --------- --------- ------------- ----------- KENWOOD COMMONS Building I Fee 50% (15) 1986 2.09 46,470 99% Building II Fee 50% (15) 1986 2.09 46,434 94% OTHER OFFICE - CINCINNATI Triangle Office Park Fee 100% 1965/1985 (16) 15.64 172,650 83% Fidelity Drive Building Fee 100% 1972 8.34 38,000 100% Tri-County Office Park Fee 100% 1971, 1973,1982 (17) 11.27 102,166 67% Columbus, Ohio THE CORPORATE PARK AT TUTTLE CROSSING 4600 Lakehurst Fee 100% 1990 7.66 106,300 100% 4650 Lakehurst Fee 100% 1990 13.00 164,639 100% 5555 Parkcenter Fee 100% 1992 6.09 83,971 100% 4700 Lakehurst Fee 100% 1994 3.86 49,600 98% Veterans Administration Clinic Fee 100% 1994 4.98 118,000 100% Livonia, Michigan SEVEN MILE CROSSING 38705 Seven Mile (18) Fee/Ground Lease 100% 1988 N/A 113,066 97% 38701 Seven Mile (18) Fee/Ground Lease 100% 1989 N/A 132,153 98% RETAIL Indianapolis, Indiana PARK 100 BUSINESS PARK Woodland Shoppes Building 121 Fee 100% 1989 2.27 19,716 70% Park 100 Retail Center Fee 100% 1978 .82 14,504 79% CASTLETON CORNER Michael's Plaza Fee 100% 1984 4.50 46,374 100% Cub Plaza Fee 100% 1986 6.83 60,136 96% Fort Wayne, Indiana Coldwater Crossing Fee 100% 1990 35.38 246,365 98% Greenwood, Indiana GREENWOOD CORNER First Indiana Bank Branch Fee 100% 1988 1.00 2,400 100% Greenwood Corner Shoppes Fee 100% 1986 7.45 50,840 100% Dayton, Ohio Sugarcreek Plaza Fee 100% 1988 17.46 77,940 98% Cincinnati, Ohio Governor's Plaza Fee 100% 1990 35.00 181,493 100% King's Mall Shopping Center I Fee 100% 1990 5.68 52,661 83% King's Mall Shopping Center II Fee 100% 1988 8.90 67,725 100% Steinberg's Fee 100% 1993 1.90 21,008 100% Park 50 Plaza Fee 100% 1989 2.20 18,000 42% Kohl's Fee 100% 1994 12.00 80,684 100% Sports Unlimited Fee 100% 1994 7.00 67,148 100% Ellisville, Missouri Ellisville, Plaza Fee 100% 1987 3.70 32,754 96%
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PERCENT LEASED AT NAME/ OWNERSHIP COMPANY'S YEAR LAND AREA NET RENTABLE DECEMBER 31, LOCATION INTEREST OWNERSHIP DEVELOPED (ACRES) AREA (SQ.FT.) 1994 (1) -------- --------- --------- --------- --------- ------------- ----------- Bloomington, Illinois Lakewood Plaza Shopping Center Fee 100% 1987 11.23 84,410 91% Champaign, Illinois Market View Fee 100% 1985 8.50 86,553 90% Livonia, Michigan Cooker Restaurant Ground Lease (19) 100% N/A N/A N/A 100% Columbus, Ohio Galyans Trading Company Fee 100% 1994 4.90 74,636 100% INDUSTRIAL - UNDER CONSTRUCTION Indianapolis, Indiana PARK 100 BUSINESS PARK Building 97 Fee 100% 1994 12.30 280,800 79% Building 99 Fee 50% 1994 18.00 364,800 42% Cincinnati, Ohio WORLD PARK MicroAge Fee 100% 1994 15.10 304,000 100% OFFICE - UNDER CONSTRUCTION Columbus, Ohio TUTTLE CROSSING Sterling Software Fee 100% 1994 3.33 57,660 100% John Alden Fee 100% 1994 6.51 101,200 100% Cardinal Health Fee 100% 1994 9.00 124,101 0% (20) Miami, Florida John Alden Fee 100% 1994 7.81 251,316 100% MEDICAL OFFICE - UNDER CONSTRUCTION Greenwood, Indiana St. Francis Medical Building Fee/Ground Lease(21) 100% 1994 N/A 95,579 56%
(1) Includes space leased, even if not occupied, as of December 31, 1994. (2) These buildings are owned by a partnership in which the Company is a joint venture partner. The Company owns a 10% capital interest in the partnership and will receive a 50% interest in the residual cash flow after payment of a preferred return to the other partner on its capital interest. (3) The Company owns a 10% interest in this building as a limited partner and shares in the cash flow from the building in accordance with such ownership interest. (4) This building is owned by a limited partnership in which the Company has a 1% general partnership interest and a 39% limited partnership interest. The Company shares in the cash flow from such building in accordance with the Company's ownership interest. (5) The Company owns a 33.33% interest in this building as a limited partner and shares in the cash flow from the building in accordance with such ownership interest. (6) The Company owns a 50% general partnership interest in this building with the other 50% being owned by the tenant in the building. The Company shares in the cash flow from the building in accordance with such partnership interest. (7) This building is owned by Parkwood Crossing Joint Venture, a partnership in which the Company is a joint venture partner. The Company has a 50% general partnership interest and shares in the cash flow from such building in accordance with such ownership interest after payment of a cumulative preferred return to the other partner. - 6 - (8) The Company owns a 66.67% general partnership interest in the partnership owning this building. The remaining interest is owned by a former tenant in the building. The Company shares in the cash flow of this building in accordance with the Company's partnership interest. (9) The Company has a leasehold interest in the land underlying this building with a lease term expiring October 31, 2067. (10) The Company has a leasehold interest in the land underlying this building with a lease term expiring May 9, 2006. (11) The Company owns these buildings and has a leasehold interest in the land underlying these buildings, with the lease term expiring November 16, 2043. (12) The Company has a leasehold interest in the building and the underlying land with a lease term expiring December 31, 2020. The Company has an option to purchase the fee interest in the property at any time. (13) This building was renovated in 1986. (14) A portion of the land underlying this building is held by the Company as a leasehold interest, with the lease term expiring March 31, 2021. (15) These buildings are owned by Kenwood Office Associates, a partnership in which the Company has a 50% general partnership interest. The Company shares in the cash flow from such buildings in accordance with the Company's ownership interest. (16) This building was renovated in 1985. (17) Tri-County Office Park has four buildings. One was built in 1971, two were built in 1973, and one was built in 1982. (18) The Company has a leasehold interest in the land underlying these buildings, with a lease term expiring May 31, 2057, and the Company owns the buildings. (19) The Company holds the land under this building under a long-term lease with the lease term expiring May 31, 2057 and subleases the land to the tenant with the sublease term expiring on August 31, 2009. In the event of a default by the tenant under the sublease, the Company would acquire title to the building upon termination of the sublease. (20) Subsequent to December 31, 1994, a lease to occupy 100% of the property was executed. (21) The Company will hold a leasehold interest in the land underlying this owned building upon completion for a term of 50 years commencing when the building is completed, with two 20-year options. ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the fourth quarter of the year ended December 31, 1994. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS The Company's Common Shares are listed for trading on the New York Stock Exchange, symbol DRE. Set forth below are the high and low reported sales prices on the New York Stock Exchange and the cash dividends per share declared during each quarter. Comparable cash dividends are expected in the future. As of March 7, 1995, there were 2,397 record holders of Common Shares. All such information prior to the quarter ended December 31, 1993 has been adjusted for the 1 for 4.2 reverse stock split effected prior to completion of the 1993 Common Stock offering (the "1993 Offering"). - 7 - On January 26, 1995, the Company declared a quarterly cash dividend of $0.47 per share payable on February 28, 1995 to shareholders of record on February 14, 1995.
1994 1993 -------------------------- -------------------------- QUARTER ENDED HIGH LOW DIVIDEND HIGH LOW DIVIDEND ------------- ---- --- -------- ---- --- -------- December 31 $28.25 $23.50 $ .47 $26.25 $22.00 $ .42 September 30 27.25 24.75 .47 24.68 19.43 .42 June 30 27.25 23.25 .45 21.53 17.85 .42 March 31 26.00 20.25 .45 22.05 15.75 .42
ITEM 6. SELECTED FINANCIAL DATA (in thousands, except per share amounts)
Actual Pro forma (1) Actual ------ ----------------- ---------------------------------------------------- 1994 1993 1992 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- ---- ---- ---- RESULTS OF OPERATIONS: Revenues: Rental Operations $ 89,358 $ 80,887 $ 75,526 $ 89,358 $ 33,515 $ 17,675 $ 16,789 $ 15,747 Service Operations 18,473 17,016 16,636 18,473 5,654 - - - -------- -------- --------- -------- -------- --------- -------- -------- TOTAL REVENUES $107,831 $ 97,903 $ 92,162 $107,831 $ 39,169 $ 17,675 $ 16,789 $ 15,747 -------- -------- --------- -------- -------- --------- -------- -------- -------- -------- --------- -------- -------- --------- -------- -------- NET INCOME (LOSS) $ 26,216 $ 19,076 $ 14,346 $ 26,216 $ 5,013 $( 653) $( 1,607) $( 571) -------- -------- --------- -------- -------- --------- -------- -------- -------- -------- --------- -------- -------- --------- -------- -------- FUNDS FROM OPERATIONS (2) $ 49,359 $ 42,166 $ 36,624 $ 49,359 $ 13,615 $ 3,764 $ 2,420 $ 2,192 -------- -------- --------- -------- -------- --------- -------- -------- -------- -------- --------- -------- -------- --------- -------- -------- PER SHARE DATA (3): Net Income (Loss) per Share (3) $ 1.53 $ 1.19 $ 0.89 $ 1.53 $ 0.92 $ (0.32) $ (0.79) $ (0.28) Funds From Operations per Share/Unit (4) 2.30 2.06 1.79 2.30 1.79 1.84 1.18 1.07 Dividends Declared per Share 1.84 1.84 1.68 1.68 1.68 2.56 WEIGHTED AVERAGE SHARES OUTSTANDING (3) 17,139 16,046 16,046 17,139 5,459 2,045 2,045 2,045 FINANCIAL POSITION: Total Assets $774,901 $632,885 $121,881 $126,917 $129,817 Total Property Debt $298,640 $248,433 $ 80,707 $ 80,808 $ 79,637 Total Shareholders' Equity $445,384 $347,038 $ 36,129 $ 40,220 $ 45,265 Total Shares Outstanding at end of year (3) 20,391 16,046 2,045 2,045 2,045 (1) Pro forma results give effect to the Company's acquisition of Duke Associates and the 1993 Offering as if they had occurred at the beginning of each period presented. (2) Funds From Operations, defined by the National Association of Real Estate Investment Trusts as net income or loss excluding gains or losses from debt restructuring and sales of property plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures (adjustments for unconsolidated partnerships and joint ventures are calculated to reflect Funds From Operations on the same basis), is presented without reduction for minority interest of unitholders. Funds From Operations does not represent cash flow from operations as defined by generally accepted accounting principles, should not be considered as an alternative to net income as an indicator of the Company's operating performance, and is not indicative of cash available to fund all cash flow needs. (3) All such information has been adjusted for the 1 for 4.2 reverse stock split effected prior to the completion of the 1993 Offering. The number of shares excludes the outstanding minority interest partnership units which are exchangeable on a one-for-one basis for shares of Common Stock. (4) Funds From Operations per share/unit includes the effect of the minority interest partnership units.
- 8 - ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE COMPANY The Company was formed in 1985 and qualifies as a real estate investment trust ("REIT") under the provisions of the Internal Revenue Code. The Company is an open-ended, perpetual-life REIT which owns and operates a portfolio of commercial properties in the Midwest. REORGANIZATION AND OFFERINGS In October 1993, the Company acquired substantially all of the properties and businesses of Duke Associates, a full-service commercial real estate firm operating primarily in the Midwest (the "Reorganization"). In connection with the Reorganization, the Company effected a 1 for 4.2 reverse stock split relating to its existing shares and subsequently issued an additional 14,000,833 shares of Common Stock through an offering (the "Offering"). Substantially all of the approximately $309.3 million of net proceeds of the Offering were used to repay indebtedness of the reorganized company. As a result of the Reorganization, the Company's properties are owned through Duke Realty Limited Partnership, an Indiana limited partnership ("DRLP"), of which the Company is the sole general partner and was the owner of 78% of the partnership interests ("Units") as of October 1993. In 1994, the Company issued an additional 3,887,300 common shares through an additional offering ("1994 Offering") and received net proceeds of approximately $92.1 million. The proceeds of the 1994 Offering were contributed to DRLP in exchange for additional Units and were used by DRLP to fund current development and acquisition costs. In 1994, as a result of Unitholders exchanging their Units for shares of the Company pursuant to the DRLP Partnership Agreement, the Company also acquired an additional interest in DRLP through the issuance of 456,375 common shares for a like number of Units. The acquired additional interest in DRLP was recorded at the fair market value of the Company's common stock on the date of acquisition. The acquisition amount of $11.5 million was allocated to rental property, undeveloped land and investments in unconsolidated companies based on their estimated fair values. As a result of these transactions, the Company owns an 83.62% interest in DRLP as of December 31, 1994. RESULT OF OPERATIONS - HISTORICAL AND PRO FORMA The historical results of operations changed dramatically in all respects from 1992 to 1993 and 1994 as a result of the Reorganization and Offerings discussed above. All operating categories of revenues and expenses reflect significant increases because of the addition of properties and businesses purchased in connection with the Reorganization. Following is a summary of the Company's operating results for each of the years in the three-year period ended December 31, 1994: - 9 -
Actual Pro forma ------- ------------------- (in thousands, except per share amounts) 1994 1993 1992 ------ ------ ------ Rental revenues $89,358 $80,887 $75,526 Earnings from rental operations 24,494 20,353 15,678 Earnings from service operations 6,308 3,511 2,465 Operating income 30,802 23,864 18,143 Minority interest in earnings 7,840 5,903 4,020 Net income 26,216 19,076 14,346 Weighted average shares outstanding 17,139 16,046 16,046 Net income per share $ 1.53 $ 1.19 $ .89
Earnings from rental operations for the year ended December 31, 1994 were $24.5 million. This $4.1 million increase over pro forma earnings from rental operations for the year ended December 31, 1993 results from an $8.5 million increase in rental revenue related to the expansion of the property portfolio through acquisition and development of additional properties offset by a $2.8 million increase in operating expenses related to these additional properties. This increase was also offset by a $1.6 million increase in interest expense on borrowings used to fund the acquisition and development of the additional properties. The pro forma earnings from rental operations increased from $15.7 million for the year ended December 31, 1992 to $20.4 million for the year ended December 31, 1993. This $4.7 million increase is primarily attributed to a $5.4 million increase in rental revenue resulting from expansion of the property portfolio and growth in the average occupancy of the properties, offset by additional depreciation, amortization and operating expenses related to the portfolio expansion. The following table sets forth information regarding the Company's portfolio of rental properties as of December 31, 1994:
In-Service Properties Under Development ---------------------------- ---------------------------- (in thousands) Total Percent Total Percent Percent Square of Percent Square of Type Leased Feet Total Leased Feet Total ---- ------- ------ ------- ------- ------ ------ Industrial 96.4% 7,623 59.1% 84.5% 1,732 73.3% Office 89.9% 3,789 29.4 76.8% 534 22.6 Retail 95.8% 1,285 10.0 -- % -- -- Medical 99.9% 198 1.5 56.0% 96 4.1 ----- ------ ------ ----- ----- ------ Total 94.5% 12,895 100.0% 81.6% 2,362 100.0% ----- ------ ------ ----- ----- ------ ----- ------ ------ ----- ----- ------
Management expects occupancy to remain stable because (i) only 7.7% and 10.4% of the Company's occupied square footage is subject to leases expiring in 1995 and 1996, respectively and (ii) the Company's renewal percentage averaged 73% and 65% in 1994 and 1993, respectively. The following table reflects the Company's lease expiration schedule as of December 31, 1994, including properties under development, by product type indicating square footage and annualized base rents: - 10 -
(in thousands) Industrial Office Retail Total ------------------ ------------------ ------------------ ------------------- Year of Square Square Square Square Expiration Feet Dollar Feet Dollar Feet Dollar Feet Dollar ---------- ---- ------ ---- ----- ---- ------ ---- ------ 1995 703 $ 2,808 334 $ 4,340 55 $ 613 1,092 $ 7,761 1996 842 4,279 479 6,283 153 1,381 1,474 11,943 1997 698 3,154 428 5,659 119 1,299 1,245 10,112 1998 1,456 6,104 407 5,319 80 845 1,943 12,268 1999 1,353 6,092 332 4,154 95 984 1,780 11,230 2000 980 4,358 287 4,038 68 660 1,335 9,056 2001 1,047 3,994 228 3,045 33 307 1,308 7,346 2002 77 460 175 2,090 95 859 347 3,409 2003 35 428 118 1,780 37 325 190 2,533 2004 604 2,339 50 611 7 59 661 3,009 Thereafter 1,017 3,719 1,229 17,130 490 3,830 2,736 24,679 ----- ------- ----- ------- ----- ------- ------ -------- Total Occupied 8,812 $37,735 4,067 $54,449 1,232 $11,162 14,111 $103,346 ----- ------- ----- ------- ----- ------- ------ -------- ----- ------- ----- ------- ----- ------- ------ -------- Total Portfolio 9,355 4,617 1,285 15,257 ----- ----- ----- ------ ----- ----- ----- ------
This stable occupancy, along with firm rental rates in each of the Company's markets, will allow the in-service portfolio to continue to provide a comparable level of earnings from rental operations in the future. The Company expects to also realize growth in earnings from rental operations as the 2.4 million square feet of properties under development at December 31, 1994 are placed in service over the next four quarters. Earnings from service operations for the year ended December 31, 1994 were $6.3 million. This $2.8 million increase in earnings from service operations compared to pro forma earnings from service operations for the year ended 1993 is primarily the result of increased construction management fees related to a 20% increase in third party construction volume combined with increased margins on 38% of the 1994 construction volume. In addition, the significant growth and development of Company-owned properties resulted in an increased allocation of operating costs to such properties, thereby reducing the proportionate amount of such costs attributable to third party fee services. The pro forma earnings from service operations increased from $2.5 million for the year ended December 31, 1992 to $3.5 million for the year ended December 31, 1993. This $1.0 million increase resulted primarily from increased management and maintenance fees realized through expansion of the managed properties portfolio and lower operating expenses resulting from reduced payroll and overhead costs offset by a decrease in revenues from leasing fees resulting from the recognition of significant leasing fees on two large third-party projects in 1992. Net income for the year ended December 31, 1994 was $26.2 million compared to pro forma net income of $19.1 million for the year ended December 31, 1993 and $14.3 million for the year ended December 31, 1992. These increases are primarily due to the operating result fluctuations explained above. In September 1994, the Company exercised an option to purchase a mortgage loan to a consolidated subsidiary of the Company from an affiliate. As a result of the exercise of this option, the Company recognized an approximate $2 million gain. This gain is reflected as a component of earnings from property sales. - 11 - FUNDS FROM OPERATIONS Management believes that Funds From Operations ("FFO"), which is defined by the National Association of Real Estate Investment Trusts as net income or loss excluding gains or losses from debt restructuring and sales of property plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures (adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis), is the industry standard for reporting the operations of real estate investment trusts. The following table reflects the calculation of the Company's FFO for each of the years in the three-year period ended December 31, 1994:
ACTUAL PRO FORMA ------ --------------- 1994 1993 1992 (in thousands) ---- ---- ---- Net Income $ 26,216 $ 19,075 $ 14,346 Add back: Depreciation and amortization 16,785 17,602 17,573 Amortization of deferred financing costs 1,251 476 453 Depreciation and amortization of joint ventures 554 405 290 Gain on property sales ( 2,198) ( 517) -- Minority interest of unitholders 6,751 5,125 3,962 -------- -------- ------- FUNDS FROM OPERATIONS $ 49,359 $ 42,166 $ 36,624 -------- -------- ------- -------- -------- -------
Management anticipates continued growth in FFO. The following table indicates such growth for the three-year period ended December 31, 1994:
ACTUAL PRO FORMA ------ ---------------------- 1994 1993 1992 (in thousands, except per share amounts) ---- ---- ---- Rental operations: Original portfolio $58,201 $56,628 $51,681 Development 2,240 - - Acquisitions 2,463 - - Investments in unconsolidated companies 1,407 1,002 513 Interest expense (18,920) (17,280) (16,900) -------- -------- -------- Net rental operations 45,391 40,350 35,294 Service operations, net of minority interest 5,389 2,732 2,458 Other, net ( 1,421) ( 916) ( 1,128) -------- -------- -------- FUNDS FROM OPERATIONS $49,359 $42,166 $36,624 -------- -------- -------- -------- -------- -------- Weighted average shares/units 21,467 20,478 20,478 -------- -------- -------- -------- -------- -------- FFO per weighted average share/unit $ 2.30 $ 2.06 $ 1.79 -------- -------- -------- -------- -------- -------- Dividends paid per share/unit $ 1.84 -------- -------- FFO payout ratio 80.9% -------- --------
While management believes that FFO is the most relevant and widely used measure of the Company's operating performance, such amount does not represent cash flow from operations as defined by generally accepted accounting principles, should not be considered as an alternative to net income as an indicator of the Company's operating performance, and is not indicative of cash available to fund all cash flow needs. - 12 - LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities totaling $51.9 million for the year ended December 31, 1994, represents the primary source of liquidity to fund distributions to shareholders, unitholders and the minority interests and to fund recurring costs associated with the renovation and re-leasing of the Company's properties. The investing activities of the Company for the year ended December 31, 1994 of $116.2 million were primarily the result of costs incurred for the acquisition and development of 16 properties placed in service during the year and nine properties and two major building expansions under construction as of December 31, 1994. The estimated remaining development costs for these nine properties and two expansions as of December 31, 1994 total $68.7 million. The Company owns approximately 930 acres of unencumbered land for future development of which, approximately 80% is zoned for industrial use. This land is primarily located adjacent to the Company's existing properties. The Company intends to use this land to expand its build-to-suit business (development projects substantially pre-leased to a single tenant). The recurring capital needs of the Company are funded primarily through the undistributed net cash provided by operating activities. Following is an analysis of the Company's recurring capital expenditures:
(in thousands) 1994 1993 1992 ---- ---- ---- Tenant improvements $ 3,056 $ 2,015 $ 1,047 Deferred costs 2,407 636 432 Building improvements 474 136 121 ------ ------ ------ Total $ 5,937 $ 2,787 $ 1,600 ------ ------ ------ ------ ------ ------
New property development and acquisition costs are funded through a combination of debt and equity proceeds. In March 1994, the Company obtained a $60 million revolving credit facility which is available to fund existing and new development costs and to provide working capital as needed. In August 1994, the Company closed a seven-year, $60 million mortgage loan which bears interest at 8.72%. In September 1994, the Company received $92.1 million of net proceeds from the 1994 Offering. A portion of the proceeds of the mortgage loan and the 1994 Offering were used to retire the outstanding balance of the line of credit and to fund costs on projects under construction. The remaining proceeds will be used to fund additional costs on projects under construction, costs related to projects for which construction will commence subsequent to December 31, 1994 and costs of anticipated acquisitions. In the interim, the excess proceeds are invested in interest-bearing cash equivalents. During 1994, the Company obtained investment grade ratings from Standard & Poor's, Moody's and Duff & Phelps. The Company currently has on file a Form S-3 Registration Statement with the Securities and Exchange Commission which has remaining availability as of December 31, 1994 of approximately $222 million to issue additional common stock, preferred stock or unsecured debt securities as the Company requires additional capital. - 13 - The Company has obtained a commitment for a $100 million unsecured line of credit which will replace the existing $60 million secured line of credit. The facility is expected to be available in April 1995. The Company intends to limit its debt to no more than 50% of its total market capitalization (defined as the total market value of all shares and units outstanding plus the outstanding mortgage and construction indebtedness). The Company's debt to total market capitalization ratio at December 31, 1994 was 30.2% compared to 35.3% at December 31, 1993. The mortgage debt outstanding at December 31, 1994 consists of notes totaling $298.6 million with a weighted average interest rate of 7.30% maturing at various dates through 2018. Scheduled principal amortization of mortgage debt totaled $1.5 million for the year ended December 31, 1994. Following is a summary of the scheduled future amortization and maturities of the Company's mortgage debt:
(in thousands) Future Weighted Average Scheduled Future Interest Rate of Year Amortization Maturities Total Debt Reduction ---- ------------ ---------- -------- ---------------- 1995 $ 1,848 $ 1,401 $ 3,249 8.43% 1996 3,091 62,276 65,367 5.55% 1997 3,856 -- 3,856 7.10% 1998 2,223 81,179 83,402 6.67% 1999 2,423 -- 2,423 8.30% 2000 2,637 246 2,883 8.46% 2001 2,291 58,394 60,685 8.70% 2002 2,494 -- 2,494 8.18% 2003 251 69,389 69,640 8.48% Thereafter 4,641 -- 4,641 ------- ------- ------- Total $25,755 $272,885 $298,640 ------- ------- ------- ------- ------- -------
The Company intends to pay regular quarterly dividends with a general policy of distributing no more than 90% of FFO. The dividend declared on January 26, 1995 represented 81.0% of fourth quarter FFO. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and supplementary data are included under Item 14 of this Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE None PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this Item for Directors and certain Executive Officers is incorporated by reference in the Company's Proxy Statement dated March 17, 1995, for its annual Meeting of Shareholders to be held on April 27, 1995, under the heading "Proposal No. 1: Election of Directors" on pages 3-5. - 14 - The following information is provided regarding the executive officers of the Company who do not serve as Directors of the Company: DAVID R. MENNEL Age 40, General Manager of Services Operations and President of Duke Services, Inc.- Mr. Mennel was with the accounting firm of Peat Marwick Mitchell and Company and the property development firm of Melvin Simon & Associates before joining the Company in 1978. He was previously the Treasurer of the Company. GARY A. BURK Age 43, President of Construction Services - Mr. Burk joined the Company in 1979, and has been responsible for the Company's construction management operations since 1986. JOHN NEMECEK Age 39, President of Asset and Property Management - Mr. Nemecek joined the Company in 1994. Prior to joining the Company, Mr. Nemecek was the Senior Vice President/Florida Division of Compass Real Estate. MICHAEL COLETTA Age 44, Vice President of Asset and Property Management - Mr. Coletta joined the Company in 1981 and was awarded the Certified Property Manager designation by the Institute of Real Estate Management in 1989. DAYLE M. EBY Age 43, Vice President, General Counsel and Secretary - Ms. Eby joined the Company in 1989. Prior to that time, Ms. Eby was with the law firm of Bose McKinney & Evans. DENNIS D. OKLAK Age 41, Vice President and Treasurer - Mr. Oklak joined the Company in 1986 and has served as the Tax Manager and Controller of Development. Prior to joining the Company, Mr. Oklak was a Senior Manager with the public accounting firm of Deloitte Haskins + Sells. STEVEN R. KENNEDY Age 38, Vice President of Construction Services - Mr. Kennedy joined the Company in 1986. Prior to that time, Mr. Kennedy was a Project Manager for Charles Pankow Builders, Inc. RICHARD HORN Age 37, Vice President of Acquisitions - Mr. Horn joined the Company in 1984. He has served in leasing and development for the Company and has overseen the Nashville and Michigan operations of the Company since 1988 and 1990, respectively. ROBERT FESSLER Age 37, Vice President, Ohio Industrial Group - Mr. Fessler joined the Company in 1987 and is responsible for the Cincinnati industrial development and leasing activities. Prior to joining the Company, Mr. Fessler was a leasing representative with Trammel Crow. - 15 - JIM GRAY Age 34, Assistant Vice President, Ohio Office Group - Mr. Gray joined the Company in 1989 and is responsible for the Cincinnati office development and leasing activities. Prior to joining the Company, Mr. Gray was Vice President and General Counsel for Brian Properties, Inc., a Chicago area commercial real estate developer. DONALD HUNTER Age 35, Vice President, Columbus Group - Mr. Hunter joined the Company in 1989 and is responsible for the Columbus development and management activities of the Company. Prior to joining the Company, Mr. Hunter was with Cushman and Wakefield, a national real estate firm. WAYNE LINGAFELTER Age 35, Vice President, Indiana Office Group - Mr. Lingafelter joined the Company in 1987 and is responsible for the Indiana office leasing and development activities. Prior to that time, Mr. Lingafelter was with the management consulting firm of DRI, Inc. WILLIAM E. LINVILLE Age 40, Vice President, Indiana Industrial Group - Mr. Linville joined the Company in 1987. Prior to that time, Mr. Linville was Vice President and Regional Manager of the CB Commercial Brokerage Office in Indianapolis. FRANCIS B. QUINN Age 40, Vice President, Retail Group - Mr. Quinn joined the Company in 1982. Prior to that time, Mr. Quinn was with F.C. Tucker, an Indiana real estate firm. Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's officers and directors, and persons who own more than 10% of the Company's Common Stock, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than 10% shareholders are required by Securities and Exchange Commission regulation to furnish the Company with copies of all Section 16(a) forms they file. Information regarding Section 16(a) filings is incorporated by reference in the Company's Proxy Statement dated March 17, 1995, for its Annual Meeting of shareholders to be held on April 27, 1995, under the headings "Compliance with Section 16(a) of the Securities Exchange Act of 1934" on page 11. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item is incorporated by reference in the Company's Proxy Statement dated March 17, 1995, for its Annual Meeting of shareholders to be held on April 27, 1995, under the heading "Executive Compensation" on pages 6-9. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item is incorporated by reference in the Company's Proxy Statement dated March 17, 1995, for its Annual Meeting of shareholders to be held on April 27, 1995, under the headings "Voting Securities and Beneficial Owners" on pages 1-3. - 16 - ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item is incorporated by reference in the Company's Proxy Statement dated March 17, 1995, for its Annual Meeting of shareholders to be held on April 27, 1995, under the heading "Certain Transactions" on pages 9-10. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (A) DOCUMENTS FILED AS PART OF THIS REPORT. 1. CONSOLIDATED FINANCIAL STATEMENTS: INDEX Independent Auditors' Report Consolidated Balance Sheets, December 31, 1994 and 1993 Consolidated Statements of Operations, Years Ended December 31, 1994, 1993 and 1992 Consolidated Statements of Cash Flows, Years Ended December 31, 1994, 1993 and 1992 Consolidated Statements of Shareholders' Equity, Years Ended December 31, 1994, 1993 and 1992 Notes to Consolidated Financial Statements 2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULES INDEX Schedule III - Real Estate and Accumulated Depreciation EDGAR FINANCIAL DATA SCHEDULE Exhibit 27 - Financial Data Schedule for year ended December 31, 1994 (EDGAR filing only) Other schedules are omitted for the reasons that they are not required, are not applicable, or the required information is set forth in the financial statements or notes thereto. - 17 - INDEPENDENT AUDITORS' REPORT The Shareholders and Directors Duke Realty Investments, Inc.: We have audited the consolidated financial statements of Duke Realty Investments, Inc. and Subsidiaries as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule as listed in the accompanying index. These consolidated financial statements and the financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statements and the financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Duke Realty Investments, Inc. and Subsidiaries as of December 31, 1994 and 1993 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1994, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG PEAT MARWICK LLP Indianapolis, Indiana January 25, 1995 - 18 - DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
December 31, ------------------------------ 1994 1993 --------- ---------- ASSETS ------ Real estate investments (Note 5): Land and improvements $ 72,758 $ 55,563 Buildings and tenant improvements 580,794 484,813 Construction in progress 22,967 9,726 Land held for development 47,194 42,741 --------- --------- 723,713 592,843 Accumulated depreciation ( 38,058) (23,725) --------- --------- Net real estate investments 685,655 569,118 Cash and cash equivalents 40,433 10,065 Accounts receivable from tenants, net of allowance of $450 and $397 4,257 4,558 Accrued straight-line rents, net of allowance of $841 and $93 5,030 3,499 Receivables on construction contracts 7,478 15,901 Investments in unconsolidated companies (Note 4) 8,418 14,270 Deferred financing costs, net of accumulated amortization of $1,755 and $1,125 6,390 5,917 Deferred leasing and other costs, net of accumulated amortization of $2,702 and $1,883 11,856 6,109 Escrow deposits and other assets 5,384 3,448 --------- --------- $ 774,901 $ 632,885 --------- --------- --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY Property indebtedness (Note 5): Mortgage loans $ 298,640 $ 240,135 Construction loans -- 4,728 Land contract payable -- 3,570 Notes payable -- 601 --------- --------- 298,640 249,034 Construction payables and amounts due subcontractors 9,464 15,482 Accounts payable 869 1,122 Accrued real estate taxes 8,983 8,214 Accrued expenses 3,191 3,363 Other liabilities 3,564 3,629 Tenant security deposits and prepaid rents 3,472 3,053 --------- --------- Total liabilities 328,183 283,897 --------- --------- Minority interest (Note 2) 1,334 1,950 --------- --------- Common shares ($.01 par value); 45,000 authorized; 20,391 and 16,046 shares issued and outstanding 204 160 Additional paid-in capital 481,101 377,450 Distributions in excess of net income ( 35,921) (30,572) --------- --------- Total shareholders' equity 445,384 347,038 --------- --------- $ 774,901 $ 632,885 --------- --------- --------- ---------
See accompanying Notes to Consolidated Financial Statements. - 19 - DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Year ended December 31, ------------------------------------------------ 1994 1993 1992 ------- ------- ------- RENTAL OPERATIONS: Revenues: Rental income (Note 6) $87,786 $33,228 $17,657 Interest and other income 1,572 287 18 ------- ------- ------- 89,358 33,515 17,675 ------- ------- ------- Operating expenses: Rental expenses 17,507 7,059 3,919 Real estate taxes 8,256 3,403 1,787 Interest expense (Note 5) 18,920 10,334 7,582 Depreciation and amortization 18,036 7,369 4,483 General and administrative 2,145 737 623 ------- ------- ------- 64,864 28,902 18,394 ------- ------- ------- Earnings (loss) from rental operations 24,494 4,613 (719) ------- ------- ------- SERVICE OPERATIONS: Revenues: Property management, maintenance and leasing fees 11,084 3,000 -- Construction management and development fees 6,107 2,501 -- Interest and other income 1,282 153 -- ------- ------- ------- 18,473 5,654 -- ------- ------- ------- Operating expenses: Payroll 8,723 2,688 -- Maintenance 1,069 473 -- Office and other 2,373 957 -- ------- ------- ------- 12,165 4,118 -- ------- ------- ------- Earnings from service operations 6,308 1,536 -- ------- ------- ------- Operating income (loss) 30,802 6,149 (719) ------- ------- ------- Earnings from property sales 2,198 517 66 Equity in earnings of unconsolidated companies (Note 4) 1,056 297 -- Minority interest in earnings of subsidiaries (Note 2) ( 7,840) (1,950) -- ------- ------- ------- Net income (loss) $26,216 $ 5,013 $ (653) ------- ------- ------- ------- ------- ------- Net income (loss) per share $ 1.53 $ .92 $ (.32) ------- ------- ------- ------- ------- ------- Weighted average number of shares outstanding 17,139 $ 5,459 $ 2,045 ------- ------- ------- ------- ------- -------
See accompanying Notes to Consolidated Financial Statements. - 20 - DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Year ended December 31, -------------------------------------------- 1994 1993 1992 -------- ------- ------- Cash flows from operating activities: Net income (loss) $ 26,216 $ 5,013 $ (653) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation of buildings and tenant improvements 15,068 6,459 3,989 Amortization of deferred financing costs 1,251 294 184 Amortization of deferred leasing and other costs 1,717 616 310 Minority interest in earnings of subsidiaries 7,840 1,950 -- Straight-line rent adjustment (2,307) (570) 522 Allowance for straight-line rent receivable 748 93 -- Earnings from property sales, net (2,198) (517) (66) Proceeds from lease terminations in excess of gains -- -- 1,172 Construction contracts, net 2,405 (919) -- Other accrued revenues and expenses, net 1,352 2,075 (5) Equity in earnings of unconsolidated companies (219) (131) -- -------- ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES 51,873 14,363 5,453 -------- ------- ------- Cash flows from investing activities: Proceeds from property sales, net 3,337 1,306 1,888 Building, development and acquisition costs (103,753) (6,613) -- Tenant improvements (6,721) (2,706) (1,342) Acquisition of properties and businesses -- (302,070) -- Deferred costs and other assets (9,378) (4,742) (1,256) Net repayment of advances to unconsolidated companies 277 (200) -- -------- ------- ------- NET CASH USED BY INVESTING ACTIVITIES (116,238) (315,025) (710) -------- ------- ------- Cash flows from financing activities: Proceeds from issuance of common shares, net 92,145 309,334 -- Proceeds from property indebtedness 125,004 88,945 7,250 Payments on property indebtedness (79,649) (78,496) (8,076) Distributions to shareholders and unitholders (39,514) (3,438) (3,438) Distributions to minority interest (1,191) -- -- Deferred financing costs (2,062) (5,628) (688) -------- ------- ------- NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 94,733 310,717 (4,952) -------- ------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 30,368 10,055 (209) Cash and cash equivalents at beginning of year 10,065 10 219 -------- ------- ------- Cash and cash equivalents at end of year $ 40,433 $ 10,065 $ 10 -------- ------- ------- -------- ------- -------
See accompanying Notes to Consolidated Financial Statements. - 21 - DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Additional Distributions Common Paid--in in Excess of Shares Capital Net Income ------ ---------- ------------- BALANCE AT DECEMBER 31, 1991 $ 86 $ 68,190 $(28,056) Net loss -- -- (653) Distributions to shareholders ($1.68 per share) -- -- (3,438) ------- -------- -------- BALANCE AT DECEMBER 31, 1992 86 68,190 (32,147) Reverse stock split (66) 66 -- Proceeds from issuance of common shares, net of underwriting discounts and offering costs of $23,394 140 309,194 -- Net income -- -- 5,013 Distributions to shareholders ($1.68 per share) -- -- (3,438) ------- -------- -------- BALANCE AT DECEMBER 31, 1993 160 377,450 (30,572) Proceeds from issuance of common shares, net of underwriting discounts and offering costs of $6,009 39 92,132 -- Acquisition of minority interest 5 11,519 -- Net income -- -- 26,216 Distributions to shareholders ($1.84 per share) -- -- (31,565) ------- --------- -------- BALANCE AT DECEMBER 31, 1994 $ 204 $ 481,101 $(35,921) ------- --------- -------- ------- --------- --------
See accompanying Notes to Consolidated Financial Statements. - 22 - DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (1) THE COMPANY Duke Realty Investments, Inc. (the "Company") was formed in 1985 and qualifies as a real estate investment trust ("REIT") under the provisions of the Internal Revenue Code. The Company is an open-ended, perpetual-life REIT which owns and operates a portfolio of commercial properties in the Midwest. On October 4, 1993, the Company completed the acquisition of substantially all of the properties and businesses of Duke Associates, a full-service commercial real estate firm operating primarily in the Midwest. In connection with the acquisition, the Company effected a 1 for 4.2 reverse stock split of its existing common shares and issued an additional 14,000,833 shares through an offering ("the Offering"). All of the share and per share amounts have been restated to reflect the reverse split. The acquisition was accounted for under the purchase method. The value of $466.0 million assigned to the acquired properties and businesses was equal to the property debt and other net liabilities assumed, of which $302.0 million was repaid with the proceeds of the Offering. The operating results of the acquired properties and businesses have been included in the consolidated operating results subsequent to the date of acquisition. The Company contributed all of its properties and related assets and liabilities along with the net proceeds from the Offering to Duke Realty Limited Partnership ("DRLP") in exchange for a 78.36% general partnership interest represented by 16,046,144 partnership units in DRLP ("Units"). Duke Associates contributed its properties to DRLP subject to their existing liabilities in exchange for a 21.64% limited partnership minority interest represented by 4,432,109 Units in DRLP. Limited partnership Units are exchangeable for shares of the Company's common stock on a one-for-one basis commencing October 4, 1994. In 1994, the Company issued an additional 3,887,300 common shares through an additional offering ("1994 Offering") and received net proceeds of approximately $92.1 million. The proceeds of the 1994 Offering were contributed to DRLP in exchange for additional Units and were used by DRLP to fund current development and acquisition costs. In 1994, the Company also acquired an additional interest in DRLP through the issuance of 456,375 common shares for a like number of Units. The acquired additional interest in DRLP was recorded at the fair market value of the Company's common stock on the date of acquisition. The acquisition amount of $11.5 million was allocated to rental property, undeveloped land and investments in unconsolidated companies based on their estimated fair values. As a result of these transactions, the Company owns an 83.62% interest in DRLP as of December 31, 1994. The related service businesses are conducted through Duke Realty Services Limited Partnership ("DRSLP") and Duke Construction Limited Partnership ("DCLP"), in which the Company's wholly-owned subsidiary, Duke Services, Inc., is the sole general partner. The following unaudited pro forma information has been prepared assuming the Offering and the acquisition of the Duke Associates' properties and businesses had occurred at the beginning of the periods presented: - 23 - DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements
Year ended December 31, ----------------------- 1993 1992 ---- ---- (in thousands, except per share amounts) Rental revenues $ 80,887 $ 75,526 Earnings from rental operations 20,353 15,678 Earnings from service operations 3,511 2,465 Operating income 23,864 18,143 Minority interest in earnings 5,903 4,020 Net income 19,076 14,346 Net income per share $ 1.19 $ .89
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its majority-owned or controlled subsidiaries. The equity interests in these majority-owned or controlled subsidiaries not owned by the Company are reflected as minority interests in the consolidated financial statements. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements. REAL ESTATE INVESTMENTS Real estate investments are recorded at cost and are depreciated on the straight-line method over 40 years. Properties constructed by the Company are recorded at cost which includes all fees, interest and related costs incurred during the development of properties. These costs are classified as construction in progress until the property is placed in service. Maintenance and repairs are charged to expense as incurred. Tenant improvement costs are depreciated on the straight-line method over the term of the related leases. INVESTMENTS IN UNCONSOLIDATED COMPANIES The equity method of accounting is used for investments in non-majority owned partnerships and joint ventures in which the Company has the ability to exercise significant influence over operating and financial policies. The cost method of accounting is used for non-majority owned joint ventures over which the Company does not have the ability to exercise significant influence. Management believes that the difference between the cost method and the equity method does not significantly affect the financial position or results of operations of the Company. CASH EQUIVALENTS Highly liquid investments with a maturity of three months or less when purchased are classified as cash equivalents. - 24 - DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements DEFERRED COSTS Costs incurred in connection with financing or leasing are amortized on the straight-line method over the term of the related loan or lease. Unamortized costs are charged to expense upon the early termination of the lease or upon early payment of the financing. Prepaid interest is amortized to interest expense using the effective interest method over the term of the related loan. REVENUES Rental income from leases with scheduled rental increases during their terms is recognized for financial reporting purposes on a straight-line basis. Management fees are based on a percentage of rental receipts of properties managed and are recognized as the rental receipts are collected. Maintenance fees are based upon established hourly rates and are recognized as the services are performed. Leasing fees are based on the gross value of leases signed and are generally recognized upon lease execution. Construction management and development fees are generally based on a percentage of costs and are recognized as the project costs are incurred. Fees earned on construction contracts are recognized on the percentage of completion method based upon the ratio of costs incurred to total estimated costs. Earnings from property sales are recorded upon closing using the full accrual method. Cost of land sales is generally determined based on the percentage of land sold within a particular development. PROJECT COSTS All direct and indirect costs clearly associated with the acquisition, development, construction and rental of real estate projects owned by the Company are capitalized. Capitalized costs associated with acquisition, development and construction of real estate projects are included in real estate investments and costs associated with the rental of real estate projects are included in deferred costs. NET INCOME (LOSS) PER SHARE Net income (loss) per share is calculated using the weighted average number of shares outstanding during the year. Common stock equivalents (consisting entirely of stock options) that in the aggregate dilute income per share by less than 3% are not considered in computing average shares outstanding. Exchanges of the DRLP partnership units for the Company's common shares do not affect net income per share. - 25 - DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements FEDERAL INCOME TAXES The Company qualifies and intends to continue to qualify as a REIT under the Internal Revenue Code. As a REIT, the Company is allowed to reduce taxable income by all or a portion of its distributions to shareholders. As distributions have exceeded taxable income, no provision for federal income taxes has been made in the accompanying consolidated financial statements. Earnings and profits, which determine the taxability of dividends to shareholders, differ from net income reported for financial reporting purposes primarily because of different depreciable lives and bases of rental properties and differences in the timing of recognition of earnings upon disposition of properties. Of the total distributions for 1994 of $1.84 per share, 78.18% was taxable to shareholders as ordinary income and 21.82% was a return of capital to shareholders. Distributions for 1993 of $1.68 per share were 100% taxable to the shareholders as ordinary income. Of the total distributions for 1992 of $1.68 per share, 33.93% was taxable to the shareholders as ordinary income and 66.07% was a return of capital to shareholders. (3) RELATED PARTY TRANSACTIONS The Company provides management, leasing, construction and other tenant related services to partnerships in which certain executive officers have continuing ownership interests. The Company was paid fees totaling $2,271,000 and $885,000 for such services in 1994 and 1993, respectively. Management believes the terms for such services are equivalent to those available in the market. The Company has an option to purchase the executive officers' interest in each of these properties. (4) INVESTMENTS IN UNCONSOLIDATED COMPANIES The Company has equity interests ranging from 10% to 50% in unconsolidated partnerships and joint ventures which own and operate commercial properties and hold land for development. The Company acquired the equity interests of two of its unaffiliated joint venture partners in 1994. As part of the purchase of one of the joint venture interests, the Company assumed a $4.5 million mortgage loan. In addition, a joint venture which owned undeveloped land was dissolved with the Company obtaining direct ownership of undeveloped land. The Company recorded the land at the balance of its investments in and advances to the joint venture prior to dissolution, approximately $4.4 million. The operating results of the acquired properties have been included in the consolidated operating results subsequent to the date of acquisition. - 26 - DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Combined summarized financial information of the companies which are accounted for by the equity method as of December 31, 1994 and December 31, 1993 and for the year ended December 31, 1994 and the three months ended December 31, 1993 are as follows:
December 31, ------------------------- 1994 1993 -------- -------- (in thousands) Land, buildings and tenant improvements $14,530 24,702 Land held for development 1,377 4,667 Other assets 1,978 3,751 ------- ------ 17,885 33,120 ------- ------ ------- ------ Property indebtedness 17,719 29,486 Other liabilities 591 4,262 ------- ------ 18,310 33,748 Owners' deficit (425) (628) ------- ------ $17,885 33,120 ------- ------ ------- ------
YEAR ENDED Three months ended DECEMBER 31, 1994 December 31, 1993 ----------------- ------------------ (in thousands) Rental income $ 3,419 950 ----- --- ----- --- Net income $ 224 211 ----- ---
Investments in unconsolidated companies include $6.4 million and $6.2 million at December 31, 1994 and 1993, respectively, related to joint ventures on the cost method. Included in equity in earnings of unconsolidated companies are distributions from a joint venture accounted for on the cost method totaling $837,000 and $166,000 in 1994 and 1993, respectively. - 27 - DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (5) PROPERTY INDEBTEDNESS Property indebtedness at December 31 consists of the following:
1994 1993 ---- ---- (in thousands) Mortgage note with monthly payments of $668,000 including principal and interest at 8.50% due in 2003 $ 80,621 81,736 Mortgage note with monthly payments of interest of $436,000 through August 1997. Thereafter, monthly payments of $471,000 including principal and interest at 8.72% due in 2001 60,000 -- Mortgage note with monthly payments of interest at 7.25% due in 1998 25,500 25,500 Three mortgage notes with monthly payments of interest at rates ranging from 5.29% to 5.44% due in 1996 59,568 58,110 Mortgage note with monthly payments of interest at 5.81% due in 1998 22,000 22,000 Mortgage note with monthly payments of $104,000 including principal and interest at 6.80% due in 1998 15,802 15,973 Mortgage notes with monthly payments in varying amounts including interest at rates ranging from 5.20% to 10.75% due in varying amounts through 2018 35,149 36,816 Two construction loans drawn under commitments aggregating $6,342,000 with monthly payments of interest at an effective rate of 6.70% due in 1994 -- 4,728 Land contract with monthly payments of interest at 4.00% due in 1994 -- 3,570 Notes payable with monthly payments in varying amounts including interest at rates ranging from 6.50% to 12.00% due in varying amounts through 1995 -- 601 -------- -------- $298,640 $249,034 -------- -------- -------- --------
The Company has entered into an interest rate swap agreement on $35.2 million of the Company's outstanding mortgage debt to effectively fix the interest rate on the majority of its floating rate debt. Under the interest rate swap, the Company pays or receives the difference between a fixed rate of 4.38% and a floating rate of LIBOR + .75% based on the notional principal amount of $35.2 million. The amount paid or received on the swap agreement is included in interest expense on a monthly basis. The swap matures along with the related mortgage loan in October 1996. The fair value of the interest rate swap agreement at December 31, 1994 was $1.9 million. The fair value was estimated by discounting the expected cash flows to be received under the swap agreement using rates currently available for interest rate swaps of similar terms and maturities. - 28 - DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The Company has a $6.4 million letter of credit which secures $6.3 million of mortgage notes. The letter of credit requires a 2% annual fee and matures in September 1999. The Company has guaranteed fifty percent of an $8.2 million letter of credit obligation of one of its unconsolidated companies which matures in September 1997. At December 31, 1994, scheduled amortization and maturities of all property indebtedness for the next five years are as follows: 1995, $3.2 million; 1996, $65.4 million; 1997, $3.9 million; 1998, $83.4 million; and 1999, $2.4 million. Cash paid for interest in 1994, 1993, and 1992 was $20.3 million, $10.5 million, and $7.6 million, respectively. Total interest capitalized in 1994 was $1.7 million. In 1994, the Company obtained a $60 million revolving line of credit which is available to fund development costs and provide working capital. The revolving line of credit matures on March 31, 1996, and bears interest payable monthly at LIBOR + 2% (an average effective rate of 6.45% for 1994). The maximum and average amounts outstanding during 1994 were $60,000,000 and $17,980,000, respectively. The Company had no borrowings under the line at December 31, 1994. (6) LEASING ACTIVITY Future minimum rents due to the Company under non-cancelable operating leases at December 31, 1994 are scheduled as follows:
Year Amount ---- ------ (in thousands) 1995 $ 81,712 1996 75,281 1997 65,919 1998 56,421 1999 47,317 Thereafter 239,967 ------- $ 566,617 ------- -------
Rental income for 1992 includes $921,000 of non-recurring income from lease terminations, which represents the excess of the cash received from three termination agreements over the carrying value of the assets relating specifically to the terminating tenants. In addition to minimum rents, certain leases require reimbursements of specified operating expenses which amounted to $10.0 million, $3.6 million, and $1.8 million for the years ended December 31, 1994, 1993 and 1992, respectively. Certain of the leases also provide for the payment of additional rent based on a percentage of the tenant's revenues. - 29 - DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (7) EMPLOYEE BENEFIT PLANS In October 1993, the Company established a profit sharing and salary deferral plan. The Company matches the employees' contributions up to two percent of the employees' salary and may also make annual discretionary contributions to the plan. Total expense recognized by the Company was $370,000 and $74,000 for 1994 and 1993, respectively. In October 1993, the Company also established a contributory health and welfare plan. The Company makes contributions to the plan throughout the year as necessary to fund claims not covered by employee contributions. Total expense recognized by the Company related to this plan was $766,000 and $204,000 for 1994 and 1993, respectively. (8) STOCK OPTION PLAN In October 1993, the Company established a stock option plan under which 1,315,000 shares of common stock were reserved for the exercise of options which may be issued to the executive officers and certain key employees. The term of these options is ten years from the date of grant. The options vest 20% per year over a five-year period with initial vesting one year from the date of grant.
Option Number price per of shares share -------- --------- Granted in 1993 681,500 $ 23.75 Granted in 1994 -- -- ------- Outstanding at December 31, 1994 681,500 23.75 ------- -------
- 30 - DUKE REALTY INVESTMENTS, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION SCHEDULE III DECEMBER 31, 1994
(IN THOUSANDS) INITIAL COST TO COMPANY COSTS (1) ------------------------- CAPITALIZED BUILDING ENCUMBER- BUILDINGS/ SUBSEQUENT TO LOCATION / DEVELOPMENT BUILDING TYPE ANCES LAND IMPROVEMENTS ACQUISITION ------------------------------- -------------------- ---------- --------- ------------------------- ------------- INDIANAPOLIS, INDIANA ------------------------------- PARK 100 BUSINESS PARK BUILDING #32 RETAIL $519 64 740 79 PARK 100 BUSINESS PARK BUILDING #34 OFFICE 1,008 131 1,455 200 PARK 100 BUSINESS PARK BUILDING #38 INDUSTRIAL 0 25 241 11 PARK 100 BUSINESS PARK BUILDING #43 INDUSTRIAL 565 60 590 29 PARK 100 BUSINESS PARK BUILDING #77 INDUSTRIAL 3,331 383 3,779 778 PARK 100 BUSINESS PARK BUILDING #79 INDUSTRIAL 1,077 184 1,764 180 PARK 100 BUSINESS PARK BUILDING #80 INDUSTRIAL 1,473 251 2,412 102 PARK 100 BUSINESS PARK BUILDING #83 INDUSTRIAL 1,500 247 2,572 85 PARK 100 BUSINESS PARK BUILDING #84 INDUSTRIAL 1,500 347 2,604 59 PARK 100 BUSINESS PARK BUILDING #95 INDUSTRIAL 3,429 642 4,747 0 PARK 100 BUSINESS PARK BUILDING #96 INDUSTRIAL 6,437 1,414 8,704 0 PARK 100 BUSINESS PARK BUILDING #97 T.I. INDUSTRIAL 0 0 536 0 PARK 100 BUSINESS PARK BUILDING #98 INDUSTRIAL 0 473 3,888 421 PARK 100 BUSINESS PARK BUILDING #109 INDUSTRIAL 1,473 240 1,865 (190) PARK 100 BUSINESS PARK BUILDING #116 OFFICE 2,199 341 3,144 (179) PARK 100 BUSINESS PARK BUILDING #118 OFFICE 1,358 226 2,229 115 PARK 100 BUSINESS PARK BUILDING #119 OFFICE 2,250 388 3,386 143 PARK 100 BUSINESS PARK BUILDING #121 RETAIL 0 592 960 31 PARK 100 BUSINESS PARK BUILDING #122 INDUSTRIAL 0 284 3,359 159 PARK 100 BUSINESS PARK BUILDING #125 INDUSTRIAL 1,683 358 2,287 0 PARK 100 BUSINESS PARK BUILDING #126 INDUSTRIAL 0 165 1,365 49 PARK 100 BUSINESS PARK ZOLLMAN LAND LEASE INDUSTRIAL 0 115 0 0 SHADELAND STATION 7351 SHADELAND OFFICE 1,401 101 1,359 51 SHADELAND STATION BUILDING #204/205 INDUSTRIAL 2,068 260 2,595 156 SHADELAND STATION 7240 SHADELAND OFFICE 2,730 152 3,113 752 SHADELAND STATION 7330 SHADELAND OFFICE 2,712 255 4,045 (363) SHADELAND STATION 7369 SHADELAND OFFICE 0 100 1,129 28 SHADELAND STATION 7340 SHADELAND OFFICE 1,500 165 2,458 59 SHADELAND STATION 7400 SHADELAND OFFICE 2,000 570 2,959 188 CASTLETON CORNER CUB PLAZA RETAIL 3,376 540 4,850 114 CASTLETON SHOPPING CENTER MICHAEL'S PLAZA RETAIL 2,485 749 3,400 156 SOUTH PARK, INDIANA BUILDING #1 OFFICE 1,500 287 2,328 297 SOUTH PARK, INDIANA BUILDING #2 INDUSTRIAL 2,000 334 3,081 252 SOUTH PARK, INDIANA BUILDING #3 OFFICE 0 208 2,150 318 SOUTH PARK, INDIANA BRYLANE PARKING LOT OFFICE 0 0 54 0 GREENWOOD CORNER GREENWOOD CORNER RETAIL 2,918 390 3,435 (250) GREENWOOD CORNER 1st INDIANA BANK BRANCH RETAIL 259 46 245 7 CARMEL MEDICAL I CARMEL MEDICAL I OFFICE 2,977 0 3,710 (437) CARMEL MEDICAL II CARMEL MEDICAL II OFFICE 3,008 0 4,000 136 HILLSDALE TECHNECENTER BUILDING #4 INDUSTRIAL 2,483 366 4,711 36 HILLSDALE TECHNECENTER BUILDING #5 INDUSTRIAL 1,706 251 3,235 23 HILLSDALE TECHNECENTER BUILDING #6 INDUSTRIAL 2,138 315 4,054 17 WOODFIELD AT THE CROSSING WOODFIELD II OFFICE 0 719 9,106 367 WOODFIELD AT THE CROSSING WOODFIELD III OFFICE 0 3,767 19,817 788 KEYSTONE AT THE CROSSING 3520 COMMERCE CRSG OFFICE 0 19 560 12 HAMILTON CROSSING BUILDING #1 OFFICE 1,750 526 2,424 186 KEYSTONE AT THE CROSSING F.C. TUCKER BUILDING OFFICE 0 0 264 5 FORT WAYNE, INDIANA ------------------------------- COLDWATER CROSSING COLDWATER SHOPPES RETAIL 11,596 2,310 15,827 89 NASHVILLE, TENNESSEE ------------------------------- HAYWOOD OAKS TECHNECENTER BUILDING #2 INDUSTRIAL 1,059 395 1,767 31 HAYWOOD OAKS TECHNECENTER BUILDING #3 INDUSTRIAL 928 346 1,575 159 HAYWOOD OAKS TECHNECENTER BUILDING #4 INDUSTRIAL 1,166 435 1,948 9 HAYWOOD OAKS TECHNECENTER BUILDING #5 INDUSTRIAL 1,684 629 2,816 104 HAYWOOD OAKS TECHNECENTER BUILDING #6 INDUSTRIAL 3,500 924 5,730 247 GREENBRIAR BUSINESS PARK GREENBRIAR INDUSTRIAL 0 1,445 4,488 98 (IN THOUSANDS) TOTAL COST ---------------------------------------- LAND & BUILDINGS/ ACCUMULATED DATE OF DATE DEPRECIABLE LOCATION / DEVELOPMENT IMPROVEMENTS IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED LIFE ---------------------- ---------------------------------------- ------------ ------------ -------- ----------- INDIANAPOLIS, INDIANA ------------------------- PARK 100 BUSINESS PARK 65 818 883 188 1978 1986 (6) PARK 100 BUSINESS PARK 133 1,653 1,786 369 1979 1986 (6) PARK 100 BUSINESS PARK 26 251 277 8 1978 1993 (6) PARK 100 BUSINESS PARK 62 618 679 134 1971 1986 (6) PARK 100 BUSINESS PARK 392 4,548 4,940 929 1988 1989 (6) PARK 100 BUSINESS PARK 187 1,941 2,128 62 1988 1993 (6) PARK 100 BUSINESS PARK 256 2,509 2,765 84 1988 1993 (6) PARK 100 BUSINESS PARK 252 2,652 2,904 90 1989 1993 (6) PARK 100 BUSINESS PARK 354 2,657 3,010 81 1989 1993 (6) PARK 100 BUSINESS PARK 642 4,747 5,390 116 1993 1994 (6) PARK 100 BUSINESS PARK 1,414 8,704 10,118 0 1994 1994 (6) PARK 100 BUSINESS PARK 0 536 536 0 1994 1994 (6) PARK 100 BUSINESS PARK 473 4,309 4,782 56 1968 1994 (6) PARK 100 BUSINESS PARK 246 1,669 1,915 403 1985 1986 (6) PARK 100 BUSINESS PARK 348 2,958 3,306 455 1988 1988 (6) PARK 100 BUSINESS PARK 230 2,340 2,570 84 1988 1993 (6) PARK 100 BUSINESS PARK 395 3,522 3,917 112 1989 1993 (6) PARK 100 BUSINESS PARK 604 979 1,583 30 1989 1993 (6) PARK 100 BUSINESS PARK 290 3,513 3,802 127 1990 1993 (6) PARK 100 BUSINESS PARK 358 2,287 2,645 37 1994 1994 (6) PARK 100 BUSINESS PARK 165 1,414 1,579 24 1984 1994 (6) PARK 100 BUSINESS PARK 115 0 115 0 N/A 1994 (6) SHADELAND STATION 103 1,408 1,511 45 1983 1993 (6) SHADELAND STATION 266 2,746 3,011 596 1984 1986 (6) SHADELAND STATION 152 3,864 4,017 833 1985 1993 (6) SHADELAND STATION 260 3,676 3,937 548 1988 1988 (6) SHADELAND STATION 102 1,155 1,257 36 1989 1993 (6) SHADELAND STATION 169 2,514 2,682 78 1989 1993 (6) SHADELAND STATION 581 3,135 3,717 115 1990 1993 (6) CASTLETON CORNER 550 4,954 5,504 1,091 1986 1986 (6) CASTLETON SHOPPING CENTER 764 3,541 4,305 115 1984 1993 (6) SOUTH PARK, INDIANA 292 2,620 2,912 111 1989 1993 (6) SOUTH PARK, INDIANA 341 3,326 3,667 117 1990 1993 (6) SOUTH PARK, INDIANA 212 2,464 2,676 122 1990 1993 (6) SOUTH PARK, INDIANA 0 54 54 2 N/A 1994 (6) GREENWOOD CORNER 400 3,175 3,575 686 1986 1993 (6) GREENWOOD CORNER 47 250 298 8 1986 1986 (6) CARMEL MEDICAL I 0 3,273 3,273 769 1985 1986 (6) CARMEL MEDICAL II 0 4,136 4,136 413 1989 1990 (6) HILLSDALE TECHNECENTER 366 4,747 5,113 153 1987 1993 (6) HILLSDALE TECHNECENTER 252 3,258 3,509 102 1987 1993 (6) HILLSDALE TECHNECENTER 315 4,071 4,386 127 1987 1993 (6) WOODFIELD AT THE CROSSING 733 9,459 10,192 315 1987 1993 (6) WOODFIELD AT THE CROSSING 3,843 20,529 24,372 651 1989 1993 (6) KEYSTONE AT THE CROSSING 0 591 591 20 1976 1993 (6) HAMILTON CROSSING 536 2,600 3,136 82 1989 1993 (6) KEYSTONE AT THE CROSSING 0 269 269 12 1978 1993 (6) FORT WAYNE, INDIANA ------------------------- COLDWATER CROSSING 2,310 15,916 18,226 198 1990 1994 (6) NASHVILLE, TENNESSEE ------------------------- HAYWOOD OAKS TECHNECENTER 395 1,798 2,193 58 1988 1993 (6) HAYWOOD OAKS TECHNECENTER 346 1,734 2,080 81 1988 1993 (6) HAYWOOD OAKS TECHNECENTER 435 1,957 2,392 61 1988 1993 (6) HAYWOOD OAKS TECHNECENTER 629 2,921 3,549 109 1988 1993 (6) HAYWOOD OAKS TECHNECENTER 946 5,955 6,901 200 1989 1993 (6) GREENBRIAR BUSINESS PARK 1,445 4,586 6,031 18 1986 1993 (6)
- 31 - DUKE REALTY INVESTMENTS, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION SCHEDULE III DECEMBER 31, 1994
(IN THOUSANDS) INITIAL COST TO COMPANY COSTS (1) ------------------------- CAPITALIZED BUILDING ENCUMBER- BUILDINGS/ SUBSEQUENT TO LOCATION / DEVELOPMENT BUILDING TYPE ANCES LAND IMPROVEMENTS ACQUISITION ------------------------------- -------------------- ---------- --------- ------------------------- ------------- HEBRON, KENTUCKY ------------------------------- SOUTHPARK, KENTUCKY CR SERVICES INDUSTRIAL 3,273 1,085 4,060 0 SOUTHPARK, KENTUCKY BUILDING #1 INDUSTRIAL 0 682 3,725 89 SOUTHPARK, KENTUCKY BUILDING #3 INDUSTRIAL 0 841 3,382 93 SOUTHPARK, KENTUCKY REDKEN INDUSTRIAL 2,454 779 3,078 0 CINCINNATI, OHIO ------------------------------- PARK 50 TECHNECENTER BUILDING #17 OFFICE 3,682 500 6,200 (757) PARK 50 TECHNECENTER BUILDING #20 INDUSTRIAL 4,093 461 7,450 (782) PARK 50 TECHNECENTER BUILDING #24 (PLAZA) RETAIL 0 151 809 69 PARK 50 TECHNECENTER BUILDING #25 INDUSTRIAL 0 1,161 3,755 122 PARK 50 TECHNECENTER SDRC BUILDING OFFICE 14,448 911 19,004 371 FIDELTY DRIVE DUN & BRADSTREET OFFICE 2,360 270 2,510 231 WORLD PARK BUILDING #5 INDUSTRIAL 2,243 270 3,260 57 WORLD PARK BUILDING #6 INDUSTRIAL 2,302 378 4,488 (818) WORLD PARK BUILDING #7 INDUSTRIAL 3,527 525 4,150 17 WORLD PARK BUILDING #8 INDUSTRIAL 2,872 561 5,309 22 WORLD PARK BUILDING #9 INDUSTRIAL 1,619 317 2,993 26 WORLD PARK BUILDING #11 INDUSTRIAL 2,353 460 4,701 158 WORLD PARK BUILDING #14 INDUSTRIAL 1,943 380 3,592 37 WORLD PARK BUILDING #15 INDUSTRIAL 0 373 2,274 201 WORLD PARK BUILDING #16 INDUSTRIAL 1,641 321 3,033 10 TRI-COUNTY OFFICE PARK BUILDINGS #1 - #4 OFFICE(3) 0 217 5,214 306 GOVERNOR'S PLAZA GOVERNOR'S PLAZA RETAIL 7,357 2,012 8,452 203 GOVERNOR'S PLAZA KING'S MALL II RETAIL 3,960 1,928 3,636 110 GOVERNOR'S PLAZA KOHLS RETAIL 0 1,345 3,561 0 312 ELM BUILDING 312 ELM OFFICE 33,802 4,750 43,823 2,005 311 ELM STREET ZUSSMAN OFFICE 339 6,226 133 ENTERPRISE BUSINESS PARK BUILDING A INDUSTRIAL 4,288 1,030 5,482 228 ENTERPRISE BUSINESS PARK BUILDING B INDUSTRIAL 2,941 733 3,443 446 312 PLUM STREET S & L DATA OFFICE 0 2,539 24,312 641 TRIANGLE OFFICE PARK BUILDINGS #1-#38 OFFICE 6,275 1,000 10,440 1,084 GOVERNOR'S HILL 8790 GOVERNOR'S HILL OFFICE 0 400 4,581 106 GOVERNOR'S HILL 8700 GOVERNOR'S HILL OFFICE 0 459 5,705 125 GOVERNOR'S HILL 8800 GOVERNOR'S HILL OFFICE 2,104 225 2,305 340 GOVERNOR'S HILL 8600 GOVERNOR'S HILL OFFICE 15,802 1,220 17,689 630 GOVERNOR'S POINTE 4770 GOVERNOR'S POINTE OFFICE 4,376 586 7,609 (393) GOVERNOR'S POINTE 4700 BUILDING INDUSTRIAL 3,486 584 5,465 (115) GOVERNOR'S POINTE 4900 BUILDING INDUSTRIAL 4,232 654 4,017 313 GOVERNOR'S POINTE 4705 GOVERNOR'S POINTE OFFICE 0 719 6,910 154 GOVERNOR'S POINTE 4800 GOVERNOR'S POINTE OFFICE 0 978 4,742 536 GOVERNOR'S POINTE 4605 GOVERNOR'S POINTE OFFICE 10,978 630 16,236 389 MONTGOMERY CROSSING STEINBERG'S RETAIL 0 260 851 79 MONTGOMERY CROSSING II SPORTS UNLIMITED RETAIL 2,822 778 3,657 0 GOVERNOR'S PLAZA KING'S AUTO MALL I RETAIL 3,792 1,085 3,859 597 SUGARCREEK PLAZA SUGARCREEK PLAZA RETAIL 4,408 898 6,492 (580) COLUMBUS, OHIO ------------------------------- CORP. PARK AT TUTTLE CRSG LITEL OFFICE 12,500 2,618 17,428 403 CORP. PARK AT TUTTLE CRSG ORDERNET SERVICES OFFICE 9,500 1,494 11,856 269 CORP. PARK AT TUTTLE CRSG INDIANA INSURANCE OFFICE 0 717 2,035 693 PET FOODS BUILD-TO-SUIT PET FOODS DISTRIBUTION INDUSTRIAL 0 268 2,462 163 GALYAN'S BUILDING #136 RETAIL 3,215 1,925 3,128 0 MBM BUILDING MBM BUILDING OFFICE 0 170 1,916 0 V. A. HOSPITAL V. A. HOSPITAL OFFICE 6,884 703 9,016 0 CORP. PARK AT TUTTLE CRSG XEROX OFFICE 4,500 1,580 8,630 0 (IN THOUSANDS) TOTAL COST ---------------------------------------- LAND & BUILDINGS/ ACCUMULATED DATE OF DATE DEPRECIABLE LOCATION / DEVELOPMENT IMPROVEMENTS IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED LIFE ---------------------- ---------------------------------------- ------------ ------------ -------- ----------- HEBRON, KENTUCKY ------------------------- SOUTHPARK, KENTUCKY 1,085 4,060 5,145 54 1994 1994 (6) SOUTHPARK, KENTUCKY 696 3,800 4,496 116 1990 1993 (6) SOUTHPARK, KENTUCKY 858 3,458 4,316 106 1991 1993 (6) SOUTHPARK, KENTUCKY 779 3,078 3,857 46 1994 1994 (6) CINCINNATI, OHIO ------------------------- PARK 50 TECHNECENTER 510 5,433 5,943 1,322 1985 1986 (6) PARK 50 TECHNECENTER 469 6,660 7,129 1,048 1987 1988 (6) PARK 50 TECHNECENTER 154 875 1,029 27 1989 1993 (6) PARK 50 TECHNECENTER 1,184 3,854 5,038 117 1989 1993 (6) PARK 50 TECHNECENTER 929 19,356 20,286 594 1991 1993 (6) FIDELTY DRIVE 277 2,734 3,011 663 1972 1986 (6) WORLD PARK 276 3,311 3,587 684 1987 1990 (6) WORLD PARK 385 3,663 4,048 614 1987 1990 (6) WORLD PARK 537 4,156 4,692 618 1987 1990 (6) WORLD PARK 561 5,331 5,892 166 1989 1993 (6) WORLD PARK 317 3,020 3,336 97 1989 1993 (6) WORLD PARK 460 4,859 5,319 163 1989 1993 (6) WORLD PARK 380 3,629 4,009 118 1989 1993 (6) WORLD PARK 381 2,467 2,848 78 1990 1993 (6) WORLD PARK 321 3,043 3,364 95 1989 1993 (6) TRI-COUNTY OFFICE PARK 221 5,516 5,737 172 1971 1993 (6) GOVERNOR'S PLAZA 2,053 8,614 10,667 266 1990 1993 (6) GOVERNOR'S PLAZA 1,952 3,722 5,674 114 1988 1989 (6) GOVERNOR'S PLAZA 1,345 3,561 4,906 15 1994 1994 (6) 312 ELM BUILDING 4,845 45,732 50,578 1,402 1992 1993 (6) 311 ELM STREET 346 6,352 6,698 195 1902 (4) 1993 (6) ENTERPRISE BUSINESS PARK 1,051 5,690 6,740 174 1990 1993 (6) ENTERPRISE BUSINESS PARK 747 3,875 4,622 172 1990 1993 (6) 312 PLUM STREET 2,590 24,903 27,492 773 1987 1993 (6) TRIANGLE OFFICE PARK 1,018 11,506 12,524 3,439 1965 (5) 1986 (6) GOVERNOR'S HILL 408 4,679 5,087 144 1985 1993 (6) GOVERNOR'S HILL 468 5,820 6,289 178 1985 1993 (6) GOVERNOR'S HILL 231 2,639 2,870 738 1985 1986 (6) GOVERNOR'S HILL 1,245 18,295 19,539 609 1986 1993 (6) GOVERNOR'S POINTE 596 7,205 7,802 1,142 1986 1988 (6) GOVERNOR'S POINTE 595 5,339 5,934 901 1987 1988 (6) GOVERNOR'S POINTE 673 4,311 4,984 812 1987 1989 (6) GOVERNOR'S POINTE 733 7,050 7,783 216 1988 1993 (6) GOVERNOR'S POINTE 998 5,258 6,256 192 1989 1993 (6) GOVERNOR'S POINTE 643 16,612 17,255 518 1990 1993 (6) MONTGOMERY CROSSING 260 930 1,190 2 1993 1993 (6) MONTGOMERY CROSSING II 778 3,657 4,435 37 1994 1994 (6) GOVERNOR'S PLAZA 1,124 4,417 5,541 649 1990 1993 (6) SUGARCREEK PLAZA 916 5,894 6,810 919 1988 1988 (6) COLUMBUS, OHIO ------------------------- CORP. PARK AT TUTTLE CRSG 2,670 17,779 20,449 545 1990 1993 (6) CORP. PARK AT TUTTLE CRSG 1,524 12,095 13,619 371 1990 1993 (6) CORP. PARK AT TUTTLE CRSG 717 2,728 3,445 41 1994 1994 (6) PET FOODS BUILD-TO-SUIT 273 2,620 2,893 80 1993 1993 (6) GALYAN'S 1,925 3,128 5,053 19 1994 1994 (6) MBM BUILDING 170 1,916 2,086 0 1978 1994 (6) V. A. HOSPITAL 703 9,016 9,719 67 1994 1994 (6) CORP. PARK AT TUTTLE CRSG 1,580 8,630 10,209 143 1992 1994 (6)
- 32 - DUKE REALTY INVESTMENTS, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION SCHEDULE III DECEMBER 31, 1994
(IN THOUSANDS) INITIAL COST TO COMPANY COSTS (1) ------------------------- CAPITALIZED BUILDING ENCUMBER- BUILDINGS/ SUBSEQUENT TO LOCATION / DEVELOPMENT BUILDING TYPE ANCES LAND IMPROVEMENTS ACQUISITION ------------------------------- -------------------- ---------- --------- ------------------------- ------------- LIVONIA, MICHIGAN ------------------------------- LIVONIA BUILDING A OFFICE 0 0 9,474 526 LIVONIA BUILDING B OFFICE 0 0 11,930 423 ELLISVILLE, MISSOURI ------------------------------- ELLISVILLE PLAZA ELLISVILLE PLAZA RETAIL 1,289 802 3,143 (324) DECATUR, ILLINOIS ------------------------------- PARK 101 BUILDING #3 INDUSTRIAL 1,640 275 2,405 599 PARK 101 BUILDING #8 INDUSTRIAL 1,193 80 1,660 (24) PARK 101 ILL POWER LAND LEASE INDUSTRIAL 0 198 0 0 BLOOMINGTON, ILLINOIS ------------------------------- LAKEWOOD PLAZA LAKEWOOD PLAZA RETAIL 5,201 766 7,199 256 CHAMPAIGN, ILLINOIS ------------------------------- MARKET VIEW SHOPPING CTR MARKET VIEW CENTER RETAIL 4,539 740 6,830 (752) VARIOUS LOCATIONS ------------------------------- LAND HELD FOR DEVELOPMENT N/A N/A 0 44,656 0 2,538 CONSTRUCTION IN PROGRESS N/A N/A 0 0 1,165 21,802 ELIMINATIONS -------- -------- -------- -------- TOTALS $298,640 116,321 568,617 38,760 -------- -------- -------- -------- -------- -------- -------- -------- (IN THOUSANDS) TOTAL COST ---------------------------------------- LAND & BUILDINGS/ ACCUMULATED DATE OF DATE DEPRECIABLE LOCATION / DEVELOPMENT IMPROVEMENTS IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED LIFE ---------------------- ---------------------------------------- ------------ ------------ -------- ----------- LIVONIA, MICHIGAN ------------------------- LIVONIA 0 10,000 10,000 357 1988 1993 (6) LIVONIA 0 12,353 12,353 416 1989 1993 (6) ELLISVILLE, MISSOURI ------------------------- ELLISVILLE PLAZA 802 2,819 3,621 420 1987 1988 (6) DECATUR, ILLINOIS ------------------------- PARK 101 280 3,000 3,279 820 1979 1986 (6) PARK 101 184 1,532 1,716 351 1980 1986 (6) PARK 101 198 0 198 0 N/A 1994 (6) BLOOMINGTON, ILLINOIS ------------------------- LAKEWOOD PLAZA 786 7,435 8,221 1,133 1987 1988 (6) CHAMPAIGN, ILLINOIS ------------------------- MARKET VIEW SHOPPING CTR 755 6,063 6,818 1,353 1985 1986 (6) VARIOUS LOCATIONS ------------------------- LAND HELD FOR DEVELOPMENT 47,194 0 47,194 174 CONSTRUCTION IN PROGRESS 0 22,967 22,967 ELIMINATIONS 15 15 -------- -------- -------- -------- 119,952 603,761 723,713 38,058 -------- -------- -------- -------- -------- -------- -------- -------- - 33 - (1) Costs capitalized subsequent to acquisition include decreases for purchase price reduction payments received and land sales or takedowns. (2) The Company owns a 66.67% interest in the partnership owning this building. The Company shares in the cash flow of this building in accordance with the Company's partnership interests. (3) The four buildings comprising Tri-County Office Park were constrtucted in 1971, 1973, and 1982. (4) This building was renovated in 1986. (5) This building was renovated in 1985. (6) Depreciation of real estate is computed using the straight-line method over 40 years for building and shorter periods based on lease terms (generally 3 to 10 years) for tenant improvements.
Real Estate Assets Accumulated Depreciation -------------------------------- ------------------------------- 1994 1993 1992 1994 1993 1992 -------------------------------- ------------------------------- Balance at beginning of year $592,843 132,459 134,129 $23,725 17,508 14,118 Additions during year: Acquisitions 57,218 452,665 0 0 (242) 0 Construction costs and tenant improvements 58,819 8,881 1,555 0 0 0 Depreciation expense 0 0 0 15,068 6,459 3,989 Acquisition of minority interest and joint venture interest 15,742 0 0 0 0 0 -------------------------------- ------------------------------- 724,622 594,005 135,684 38,793 23,725 18,107 Deductions during year: Costs of real estate sold (909) (1,162) (2,291) 0 0 (489) Other 0 0 (934) (735) 0 (110) -------------------------------- ------------------------------- Balance at end of year $723,713 592,843 132,459 $38,058 23,725 17,508 -------------------------------- ------------------------------- -------------------------------- -------------------------------
- 34 - 3. EXHIBITS EXHIBIT NUMBER DESCRIPTION ------- ----------- 3.1 Articles of Incorporation of Registrant are incorporated herein by reference to Exhibit 3.3 to the registration statement on Form S-2, as amended, filed on June 8, 1993, as File No. 33-64038 (the "Registration Statement"). 3.2 By-Laws of Registrant are incorporated herein by reference to Exhibit 3.4 to the Registration Statement. 4. Instruments Defining Rights of Security Holders, including Indentures, are incorporated herein by reference to Articles V, VI, VIII, IX and X of Registrant's Articles of Incorporation. 10.1 Agreement of Limited Partnership of Duke Realty Limited Partnership (the "Operating Partnership") is incorporated herein by reference to Exhibit 10.1 to the Registration Statement. 10.2 Agreement of Limited Partnership of Duke Realty Services Limited Partnership (the "Services Partnership") is incorporated herein by reference to Exhibit 10.2 to the Registration Statement. 10.3 Promissory Note of the Services Partnership is incorporated herein by reference to Exhibit 10.3 to the Registration Statement. 10.4 Duke Realty Services Partnership 1993 Stock Option Plan is incorporated herein by reference to Exhibit 10.4 to the Registration Statement. 10.5 Acquisition Option Agreement relating to certain properties not contributed to the Operating Partnership by Duke Associates (the "Excluded Properties") is incorporated herein by reference to Exhibit 10.5 to the Registration Statement. 10.6 Management Agreement relating to the Excluded Properties is incorporated herein by reference to Exhibit 10.6 to the Registration Statement. 10.7 Contribution Agreement for certain properties and land contributed by Duke Associates and Registrant to the Operating Partnership is incorporated herein by reference to Exhibit 10.7 to the Registration Statement. 10.8 Contribution Agreement for certain assets and contracts contributed by Duke Associates to the Service Partnership is incorporated herein by reference to Exhibit 10.8 to the Registration Statement. 10.9 Contribution Agreement for certain contracts contributed by Duke Associates to the Operating Partnership is incorporated herein by reference to Exhibit 10.9 to the Registration Statement. - 35 - 10.10 Stock Purchase Agreement is incorporated herein by reference to Exhibit 10.10 to the Registration Statement. 10.11 Indemnification Agreement is incorporated herein by reference to Exhibit 10.11 to the Registration Statement. 21. List of Subsidiaries of Registrant. 24. Executed powers of attorney of certain directors. 27. Financial Data Schedule 99.1 Selected Quarterly Financial Information - 36 - The Company will furnish to any security holder, upon written request, copies of any exhibit incorporated by reference, for a fee of 15 cents per page, to cover the costs of furnishing the exhibits. Written request should include a representation that the person making the request was the beneficial owner of securities entitled to vote at the 1995 Annual Meeting of Shareholders. (b) REPORTS ON FORM 8-K A report on Form 8-K dated August 26, 1994 was filed to report under Item 5 the unaudited financial statements of Duke Associates for the nine months ended September 30, 1993. A report on Form 8-K dated October 13, 1994 was filed to report under Item 5 the exercise of a favorable option to purchase an asset of an affiliated company. - 37 - SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. DUKE REALTY INVESTMENTS, INC. March 28 , 1995 By: /s/ Thomas L. Hefner ------------------------- -------------------------------------- Thomas L. Hefner President and Chief Executive Officer By: /s/ Darell E. Zink, Jr. -------------------------------------- Darell E. Zink, Jr. Executive Vice President and Chief Financial Officer By: /s/ Dennis D. Oklak -------------------------------------- Dennis D. Oklak Vice President and Treasurer (Chief Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Date Title --------- ---- ----- /s/ John W. Wynne 3/28/95 Chairman of the Board ------------------------- ---------- John W. Wynne /s/ Thomas L. Hefner 3/28/95 President and Chief Executive ------------------------- ---------- Officer and Director Thomas L. Hefner /s/ Daniel C. Staton 3/28/95 Executive Vice President and Chief ------------------------- ---------- Operating Officer and Director Daniel C. Staton /s/ Darell E. Zink, Jr. 3/28/95 Executive Vice President and Chief ------------------------- ---------- Financial Officer and Director Darell E. Zink, Jr. - 38 - /s/ Geoffrey Button 3/28/95 Director ------------------------- ---------- Geoffrey Button /s/ John D. Peterson 3/28/95 Director ------------------------- ---------- John D. Peterson /s/ Dr. Sydney C. Reagan 3/28/95 Director ------------------------- ---------- Dr. Sydney C. Reagan /s/ Lee Stanfield 3/28/95 Director ------------------------- ---------- Lee Stanfield /s/ Jay J. Strauss 3/28/95 Director ------------------------- ---------- Jay J. Strauss /s/ Howard L. Feinsand 3/28/95 Director ------------------------- ---------- Howard L. Feinsand /s/ James E. Rogers 3/28/95 Director ------------------------- ---------- James E. Rogers - 39 - EX-21 2 EXHIBIT 21 EXHIBIT 21 SUBSIDIARIES OF DUKE REALTY INVESTMENTS, INC.
Names Under Which State of Incorporation Subsidiary Does Subsidiary or Organization Business ------------------------- ---------------------- ------------------------------- Duke Realty Limited Partnership Indiana Duke Realty Limited Partnership Duke Services, Inc. Indiana Duke Services, Inc. Duke Realty Services Limited Indiana Duke Realty Services Limited Partnership Partnership Duke Realty Construction, Inc. Indiana Duke Realty Construction, Inc. Duke Construction Limited Indiana Duke Construction Limited Partnership Partnership B/D Limited Partnership Indiana B/D Limited Partnership Lamida Partners Limited Ohio Lamida Partners Limited Partnership Partnership Duna Developers Ohio Duna Developers Kenwood Office Associates Ohio Kenwood Office Associates Park Creek Venture Indiana Park Creek Venture Parkrite Limited Partnership Indiana Parkrite Limited Partnership Parkwood Joint Venture Indiana Parkwood Joint Venture Post Road Limited Partnership Indiana Post Road Limited Partnership Shadeland Station Office Indiana Shadeland Station Office Associates II Limited Partnership Associates II Limited Partnership Brisben/Duke Partnership Ohio Brisben/Duke Partnership SCRED Ohio Limited Partnership Ohio SCRED Ohio
- 40 - EX-27 3 EXHIBIT 27
5 1,000 12-MOS DEC-31-1994 JAN-01-1994 DEC-31-1994 40,433 0 18,056 (1,291) 0 57,552 723,713 (38,058) 774,901 29,543 298,640 204 0 0 445,180 774,901 0 111,085 58,109 0 7,840 0 18,920 26,216 0 26,216 0 0 0 26,216 1.53 0
EX-99.1 4 EXHIBIT 99.1 EXHIBIT 99.1 SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Selected quarterly information for the years ended December 31, 1994 and 1993 is as follows (in thousands, except per share amounts):
Quarter Ended ------------------------------------------------------------- 1994 DECEMBER 31 SEPTEMBER 30 JUNE 30 MARCH 31 ------------------------------------- ----------- ------------ ------- --------- Revenues $ 28,738 $ 27,826 $ 26,295 $ 24,972 Net income $ 7,111 $ 7,685 $ 5,821 $ 5,599 Net income per share (1) $ 0.35 $ 0.48 $ 0.36 $ 0.35 Weighted average shares 20,304 16,072 16,046 16,046 Funds From Operations (2) $ 13,992 $ 12,129 $ 11,828 $ 11,410 Funds From Operations per share/unit (2) $ 0.58 $ 0.59 $ 0.58 $ 0.56 Weighted average shares/units outstanding (2) 24,312 20,566 20,478 20,478 1993 ------------------------------------- Revenues $ 26,188 $ 4,301 $ 4,437 $ 4,243 Net income (loss) $ 6,003 $ (383) $ (257) $ (350) Net income (loss) per share (1) $ 0.37 $ (0.19) $ (0.13) $ ( 0.17) Weighted average shares 16,046 2,045 2,045 2,045 Funds From Operations (2) $ 11,231 $ 10,433 $ 10,499 $ 10,003 Funds From Operations per share/unit (2) $ 0.55 $ 0.53 $ 0.51 $ 0.49 Weighted average shares/units outstanding (2) 20,478 20,478 20,478 20,478 (1) Quarterly net income (loss) per share prior to the fourth quarter of 1993 has been adjusted for the 1 for 4.2 reverse stock split effected prior to the completion of the 1993 Offering. Net income per share for all quarters subsequent to the 1993 Offering is based on the weighted average number of shares outstanding during each quarter. (2) Funds From Operations is presented without reduction for minority interest of unitholders. Funds From Operations per share/unit includes the effect of minority interest partnership units. Funds From Operations and Funds From Operations per share/unit prior to the fourth quarter of 1993 are presented on a pro forma basis.
- 41 -