UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

~~Washington,~~WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

~~(Mark One)~~
x þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008


o
		~~For the quarterly period ended March 31, 2008~~

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		~~For the transition period from to .~~

For the transition period fromto.

Commission File Number:1-9044

DUKE REALTY CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

~~Indiana~~		~~35-1740409~~
Indiana		35-1740409
(State or Other Jurisdiction		(~~IRS~~I.R.S. Employer
of Incorporation or Organization)		Identification Number)



600 East 96^th Street, Suite 100
Indianapolis, Indiana		46240
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s ~~telephone number, including area code:~~Telephone Number, Including Area Code: (317) 808-6000

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.

Yesþ Noo

~~Yes~~

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

YES o NO þ

~~Yes~~

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

~~Class~~
Class		Outstanding at ~~May~~November 1, 2008

Common Stock, $.01 par value per share		~~146,686,438~~147,364,620 shares

DUKE REALTY CORPORATION

INDEX

		~~Page~~
	Page
Part I - — Financial Information

Item 1. Financial Statements

	Consolidated Balance Sheets as of ~~March 31,~~September 30, 2008 (Unaudited) and December 31, 2007		2

	Consolidated Statements of Operations (Unaudited) for the three and nine months ended ~~March 31,~~September 30, 2008 and 2007		3

	Consolidated Statements of Cash Flows (Unaudited) for the ~~three~~nine months ended ~~March 31,~~September 30, 2008 and 2007		4

	Consolidated Statement of Shareholders’ Equity (Unaudited) for the ~~three~~nine months ended ~~March 31,~~September 30, 2008		5

	Notes to Consolidated Financial Statements (Unaudited)		6-14

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~14-25~~	14-30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25	30

Item 4.	Controls and Procedures	26	31


Part II -— Other Information

Item 1.	Legal Proceedings		26	31
Item 1A.	Risk Factors		26	31-32
Item 2.	Unregistered Sales of Equity Securities and Use of ~~Proceed~~Proceedss		27	32-33
Item 3.	Defaults Upon Senior Securities		27	33
Item 4.	Submission of Matters to a Vote of Security Holders		27	33
Item 5.	5. Other Information		27	33
Item 6. Exhibits		33-35
EX-3.1(X)
					~~Exhibits~~EX-12.1
EX-31.1
~~28-29~~ EX-32.1

PART I ~~- -~~— FINANCIAL INFORMATION

Item 1. Financial Statements

DUKE REALTY CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except per share amounts)

March 31,

December 31,

2008

2007

(Unaudited)

ASSETS

Real estate investments:

Land and improvements

$
938,764

$
872,372

Buildings and tenant improvements

4,849,556

4,600,408

Construction in progress

444,691

412,729

Investments in and advances to unconsolidated companies

665,572

601,801

Land held for development

836,245

912,448

7,734,828

7,399,758

Accumulated depreciation

(1,029,862
)
(951,375
)
Net real estate investments

6,704,966

6,448,383

Real estate investments and other assets held for sale

144,077

273,591

Cash and cash equivalents

15,529

48,012

Accounts receivable, net of allowance of $1,812 and $1,359

26,672

29,009

Straight-line rent receivable, net of allowance of $2,095 and $2,886

116,682

110,737

Receivables on construction contracts, including retentions

70,684

66,925

Deferred financing costs, net of accumulated amortization of $30,337 and $29,170

53,480

55,987

Deferred leasing and other costs, net of accumulated amortization of $163,576 and $150,702

377,253

374,635

Escrow deposits and other assets

250,900

254,702

$
7,760,243

$
7,661,981

LIABILITIES AND SHAREHOLDERS’ EQUITY

Indebtedness:

Secured debt

$
506,071

$
524,393

Unsecured notes

3,121,000

3,246,000

Unsecured lines of credit

635,068

546,067

4,262,139

4,316,460

Liabilities of properties held for sale

3,813

8,954

Construction payables and amounts due subcontractors, including retentions

129,631

142,655

Accrued expenses:

Real estate taxes

72,559

63,796

Interest

38,490

54,631

Other

31,283

59,221

Other liabilities

127,971

148,013

Tenant security deposits and prepaid rents

38,085

34,535

Total liabilities

4,703,971

4,828,265

Minority interest

76,619

83,683

Shareholders’ equity:

Preferred shares ($.01 par value); 5,000 shares authorized; 4,176 and 2,976 shares issued and outstanding

1,044,000

744,000

Common shares ($.01 par value); 250,000 shares authorized; 146,670 and 146,175 shares issued and outstanding

1,467

1,462

Additional paid-in capital

2,637,099

2,632,615

Accumulated other comprehensive income (loss)

(9,719
)
(1,279
)
Distributions in excess of net income

(693,194
)
(626,765
)
Total shareholders’ equity

2,979,653

2,750,033

$
7,760,243

$
7,661,981


	September 30,			December 31,
	2008			2007
	(Unaudited)
ASSETS
Real estate investments:
Land and improvements	$	1,028,142		$	872,372
Buildings and tenant improvements		5,069,712			4,600,408
Construction in progress		193,206	��		412,729
Investments in and advances to unconsolidated companies		700,637			601,801
Land held for development		866,016			912,448

		7,857,713			7,399,758
Accumulated depreciation		(1,121,202	)		(951,375	)


Net real estate investments		6,736,511			6,448,383

Real estate investments and other assets held-for-sale		197,287			273,591

Cash and cash equivalents		3,470			48,012
Accounts receivable, net of allowance of $2,011 and $1,359		22,680			29,009
Straight-line rent receivable, net of allowance of $2,669 and $2,886		121,469			110,737
Receivables on construction contracts, including retentions		92,043			66,925
Deferred financing costs, net of accumulated amortization of $35,191 and $29,170		50,929			55,987
Deferred leasing and other costs, net of accumulated amortization of $182,017 and $150,702		370,610			374,635
Escrow deposits and other assets		247,865			254,702

	$	7,842,864		$	7,661,981


LIABILITIES AND SHAREHOLDERS’ EQUITY

Indebtedness:
Secured debt	$	520,034		$	524,393
Unsecured notes		3,346,000			3,246,000
Unsecured lines of credit		533,709			546,067

		4,399,743			4,316,460

Liabilities of properties held-for-sale		3,546			8,954

Construction payables and amounts due subcontractors, including retentions		125,157			142,655
Accrued expenses:
Real estate taxes		100,521			63,796
Interest		44,371			54,631
Other		39,154			59,221
Other liabilities		145,043			148,013
Tenant security deposits and prepaid rents		28,082			34,535

Total liabilities		4,885,617			4,828,265


Minority interest		71,817			83,683


Shareholders’ equity:
Preferred shares ($.01 par value); 5,000 shares authorized; 4,176 and 2,976 shares issued and outstanding		1,044,000			744,000
Common shares ($.01 par value); 250,000 shares authorized; 147,110 and 146,175 shares issued and outstanding		1,471			1,462
Additional paid-in capital		2,652,605			2,632,615
Accumulated other comprehensive income (loss)		(7,902	)		(1,279	)
Distributions in excess of net income		(804,744	)		(626,765	)

Total shareholders’ equity		2,885,430			2,750,033


	$	7,842,864		$	7,661,981

See accompanying Notes to Consolidated Financial Statements.

- 2 -

DUKE REALTY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

For the Three and Nine Months Ended ~~March 31,~~

September 30,
(in thousands, except per share amounts)
(Unaudited)

~~(Unaudited)~~

2008

2007

RENTAL OPERATIONS

Revenues:

Rental revenue from continuing operations

$
217,802

$
202,105

Equity in earnings of unconsolidated companies

10,099

7,691

227,901

209,796

Operating expenses:

Rental expenses

52,027

49,049

Real estate taxes

27,544

25,043

Interest expense

47,534

44,408

Depreciation and amortization

78,713

66,375

205,818

184,875

Earnings from continuing rental operations

22,083

24,921

SERVICE OPERATIONS

Revenues:

General contractor gross revenue

76,759

54,157

General contractor costs

(70,104
)
(48,688
)
Net general contractor revenue

6,655

5,469

Service fee revenue

7,524

6,397

Gain on sale of service operations properties

597

2,864

Total service operations revenue

14,776

14,730

Operating expenses

10,363

7,796

Earnings from service operations

4,413

6,934

General and administrative expense

(12,162
)
(13,460
)

Operating income

14,334

18,395

OTHER INCOME (EXPENSE)

Interest and other income, net

3,725

2,403

Earnings from sale of land, net

629

13,997

Minority interest in earnings of common unitholders

(214
)
(1,331
)
Income from continuing operations

18,474

33,464

Discontinued operations:

Income (loss) from discontinued operations, net of minority interest

(173
)
2,039

Gain on sale of depreciable property, net of minority interest

1,053

48,286

Income from discontinued operations

880

50,325

Net income

19,354

83,789

Dividends on preferred shares

(15,306
)
(15,226
)
Net income available for common shareholders

$
4,048

$
68,563

Basic net income per common share:

Continuing operations

$
.02

$
.13

Discontinued operations

.01

.37

Total

$
.03

$
.50

Diluted net income per common share:

Continuing operations

$
.02

$
.13

Discontinued operations

.01

.36

Total

$
.03

$
.49

Weighted average number of common shares outstanding

146,331

136,823

Weighted average number of common shares and potential dilutive securities

154,596

149,465

~~See accompanying Notes to Consolidated Financial Statements.~~


	Three Months Ended						Nine Months Ended
	2008			2007			2008			2007
RENTAL OPERATIONS
Revenues:
Rental revenue from continuing operations	$	216,665		$	205,003		$	641,795		$	598,878
Equity in earnings of unconsolidated companies		204			1,838			17,184			17,478

		216,869			206,841			658,979			616,356


Operating expenses:
Rental expenses		49,466			45,826			147,479			136,669
Real estate taxes		27,415			25,362			82,593			75,048
Interest expense		49,260			43,414			143,657			127,882
Depreciation and amortization		75,144			71,438			228,062			204,642

		201,285			186,040			601,791			544,241

Earnings from continuing rental operations		15,584			20,801			57,188			72,115

SERVICE OPERATIONS
Revenues:
General contractor gross revenue		86,524			77,996			248,918			195,714
General contractor costs		(84,588	)		(66,696	)		(231,526	)		(171,374	)

Net general contractor revenue		1,936			11,300			17,392			24,340
Service fee revenue		6,792			7,857			22,929			21,909
Gain on sale of Build-for-Sale properties		20,338			1,116			26,657			10,793

Total service operations revenue		29,066			20,273			66,978			57,042
Operating expenses		7,328			12,972			30,437			30,789

Earnings from service operations		21,738			7,301			36,541			26,253

General and administrative expense		(10,448	)		(3,856	)		(29,498	)		(27,923	)
Other operating expenses		(2,474	)		(501	)		(5,273	)		(1,359	)

Operating income		24,400			23,745			58,958			69,086
OTHER INCOME (EXPENSE)
Interest and other income, net		2,804			6,755			9,123			12,546
Earnings from sales of land, net		4,469			1,799			8,491			18,207
Minority interest in earnings of common unitholders		(823	)		(1,174	)		(1,640	)		(3,666	)

Income from continuing operations		30,850			31,125			74,932			96,173
Discontinued operations:
Income (loss) from discontinued operations, net of minority interest		(165	)		299			1,663			4,065
Gain on sale of depreciable properties, net of minority interest		1,235			37,190			11,342			104,467

Income from discontinued operations		1,070			37,489			13,005			108,532
Net income		31,920			68,614			87,937			204,705
Dividends on preferred shares		(18,866	)		(15,227	)		(53,038	)		(45,679	)

Net income available for common shareholders	$	13,054		$	53,387		$	34,899		$	159,026


Basic net income per common share:
Continuing operations	$	.08		$	.12		$	.15		$	.37
Discontinued operations		.01			.27			.09			.79

Total	$	.09		$	.39		$	.24		$	1.16

Diluted net income per common share:
Continuing operations	$	.08		$	.12		$	.15		$	.37
Discontinued operations		.01			.27			.09			.78

Total	$	.09		$	.39		$	.24		$	1.15

Weighted average number of common shares outstanding		146,966			137,576			146,680			137,110

Weighted average number of common shares and potential dilutive securities		155,344			147,651			155,105			147,986

~~DUKE REALTY CORPORATION AND SUBSIDIARIES~~

~~Consolidated Statements of Cash Flows~~

~~For the three months ended March 31,~~

~~(in thousands)~~

~~(Unaudited)~~

2008

2007

Cash flows from operating activities:

Net income

$
19,354

$
83,789

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation of buildings and tenant improvements

60,850

52,143

Amortization of deferred leasing and other costs

18,271

15,596

Amortization of deferred financing costs

3,399

2,865

Minority interest in earnings

261

4,910

Straight-line rent adjustment

(4,638
)
(5,773
)
Earnings from land and depreciated property sales

(1,739
)
(65,717
)
Build-for-sale operations, net

(41,775
)
(49,989
)
Construction contracts, net

(14,418
)
6,764

Other accrued revenues and expenses, net

(35,300
)
(32,590
)
Operating distributions received in excess of (less than) equity in earnings from unconsolidated companies

(2,042
)
137

Net cash provided by operating activities

2,223

12,135

Cash flows from investing activities:

Development of real estate investments

(151,872
)
(96,588
)
Acquisition of real estate investments and related intangible assets

(8,701
)
(33,628
)
Acquisition of land held for development

(14,741
)
(34,738
)
Recurring tenant improvements

(10,803
)
(10,333
)
Recurring leasing costs

(6,098
)
(7,732
)
Recurring building improvements

(967
)
(974
)
Other deferred leasing costs

(5,939
)
(3,664
)
Other deferred costs and other assets

(298
)
(1,053
)
Proceeds from land and depreciated property sales, net

26,684

176,726

Capital distributions from unconsolidated companies

38,753

53,500

Capital contributions and advances to unconsolidated companies, net

(20,296
)
(33,140
)
Net cash provided by (used for) investing activities

(154,278
)
8,376

Cash flows from financing activities:

Proceeds from issuance of common shares

5,801

—

Proceeds (disbursements) from exercise of stock options

112

(12
)
Proceeds from issuance of preferred shares, net

290,445

—

Proceeds from unsecured debt issuance

—

5,812

Payments on unsecured debt

(125,000
)
—

Payments on secured indebtedness including principal amortization

(36,532
)
(12,007
)
Borrowings on lines of credit, net

89,001

13,000

Distributions to common shareholders

(70,211
)
(65,004
)
Distributions to preferred shareholders

(15,306
)
(15,226
)
Distributions to minority interest, net

(3,828
)
(4,662
)
Cash settlement of interest rate swaps

(14,625
)
—

Deferred financing costs

(285
)
(1,403
)
Net cash provided by (used for) financing activities

119,572

(79,502
)
Net decrease in cash and cash equivalents

(32,483
)
(58,991
)
Cash and cash equivalents at beginning of period

48,012

68,483

Cash and cash equivalents at end of period

$
15,529

$
9,492

Other non-cash items:

Conversion of Limited Partner Units to common shares

$
4,376

$
117,245

Issuance of Limited Partner Units for acquisition

$
—

$
11,020

Assumption of secured debt for real estate acquisitions

$
18,465

$
—

Contribution of property to unconsolidated company

$
77,158

$
—

See accompanying Notes to Consolidated Financial Statements

- 3 -

DUKE REALTY CORPORATION AND SUBSIDIARIES

Consolidated ~~Statement~~Statements of ~~Shareholders’ Equity~~Cash Flows

For the ~~three~~nine months ended ~~March 31, 2008~~

September 30,
(in ~~thousands, except per share data)~~thousands)
(Unaudited)

~~(Unaudited)~~

Accumulated

Additional

Other

Distributions

Preferred

Common

Paid-in

Comprehensive

in Excess of

Shares

Shares

Capital

Income (Loss)

Net Income

Total

Balance at December 31, 2007

$
744,000

$
1,462

$
2,632,615

$
(1,279
)
$
(626,765
)
$
2,750,033

Comprehensive Income:

Net income

—

—

—

—

19,354

19,354

Losses on derivative instruments

—

—

—

(8,440
)
—

(8,440
)

Comprehensive income

—

—

—

—

—

10,914

Issuance of preferred shares

300,000

—

(10,000
)
—

—

290,000

Issuance of common shares

—

2

5,799

—

—

5,801

Stock based compensation plan activity

—

1

4,311

—

(266
)
4,046

Acquisition of minority interest

—

2

4,374

—

—

4,376

Distributions to preferred shareholders

—

—

—

—

(15,306
)
(15,306
)

Distributions to common shareholders ($.48 per share)

—

—

—

—

(70,211
)
(70,211
)

Balance at March 31, 2008

$
1,044,000

$
1,467

$
2,637,099

$
(9,719
)
$
(693,194
)
$
2,979,653


	2008			2007
Cash flows from operating activities:
Net income	$	87,937		$	204,705
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of buildings and tenant improvements		179,699			160,987
Amortization of deferred leasing and other costs		51,257			47,235
Amortization of deferred financing costs		10,134			8,518
Minority interest in earnings		2,326			11,233
Straight-line rent adjustment		(13,523	)		(13,643	)
Earnings from land and depreciated property sales		(20,431	)		(129,958	)
Build-for-sale operations, net		31,558			(167,640	)
Construction contracts, net		(12,748	)		720
Other accrued revenues and expenses, net		6,325			8,991
Operating distributions received in excess of equity in earnings from unconsolidated companies		6,730			4,166

Net cash provided by operating activities		329,264			135,314


Cash flows from investing activities:
Development of real estate investments		(365,781	)		(324,317	)
Acquisition of real estate investments and related intangible assets		(20,123	)		(80,954	)
Acquisition of land held for development		(35,564	)		(155,556	)
Recurring tenant improvements		(28,075	)		(32,987	)
Recurring leasing costs		(18,934	)		(22,771	)
Recurring building improvements		(5,387	)		(4,894	)
Other deferred leasing costs		(18,930	)		(20,562	)
Other deferred costs and other assets		(8,392	)		(11,301	)
Proceeds from land and depreciated property sales, net		85,717			405,094
Capital distributions from unconsolidated companies		65,553			207,545
Capital contributions and advances to unconsolidated companies, net		(78,760	)		(104,461	)

Net cash used for investing activities		(428,676	)		(145,164	)


Cash flows from financing activities:
Proceeds from issuance of common shares		14,020			2,889
Proceeds from issuance of preferred shares, net		290,014			—
Proceeds from unsecured debt issuance		325,000			339,424
Payments on unsecured debt		(225,000	)		(100,000	)
Payments on secured indebtedness including principal amortization		(43,103	)		(22,617	)
Borrowings (payments) on lines of credit, net		(12,358	)		(12,776	)
Distributions to common shareholders		(211,898	)		(195,799	)
Distributions to preferred shareholders		(53,038	)		(45,679	)
Distributions to minority interest, net		(10,481	)		(11,637	)
Cash settlement of interest rate swaps		(14,625	)		10,746
Deferred financing costs		(3,661	)		(4,760	)

Net cash provided by (used for) financing activities		54,870			(40,209	)

Net decrease in cash and cash equivalents		(44,542	)		(50,059	)

Cash and cash equivalents at beginning of period		48,012			68,483

Cash and cash equivalents at end of period	$	3,470		$	18,424

Other non-cash items:
Conversion of Limited Partner Units to common shares	$	5,499		$	168,671

Issuance of Limited Partner Units for acquisition	$	—		$	11,020

Assumption of secured debt for real estate acquisitions	$	39,480		$	—

Contribution of property to, net of debt assumed by, unconsolidated companies	$	113,688		$	125,353

Distribution of property from partner in unconsolidated company	$	28,577		$	—

See accompanying Notes to Consolidated Financial Statements

- 4 -

DUKE REALTY CORPORATION AND SUBSIDIARIES

Consolidated Statement of Shareholders’ Equity

For the nine months ended September 30, 2008
(in thousands, except per share data)
(Unaudited)


								Accumulated
					Additional			Other			Distributions
	Preferred		Common		Paid-in			Comprehensive			in Excess of
	Stock		Stock		Capital			Income (Loss)			Net Income			Total
Balance at December 31, 2007	$	744,000	$	1,462	$	2,632,615		$	(1,279	)	$	(626,765	)	$	2,750,033

Comprehensive Income:

Net income		—		—		—			—			87,937			87,937

Losses on derivative instruments		—		—		—			(6,623	)		—			(6,623	)


Comprehensive income														$	81,314

Issuance of preferred shares		300,000		—		(10,000	)		—			—			290,000

Issuance of common shares		—		5		12,093			—			—			12,098

Stock based compensation plan activity		—		2		12,400			—			(980	)		11,422

Conversion of Limited Partner Units		—		2		5,497			—			—			5,499

Distributions to preferred shareholders		—		—		—			—			(53,038	)		(53,038	)

Distributions to common shareholders ($1.445 per share)		—		—		—			—			(211,898	)		(211,898	)


Balance at September 30, 2008	$	1,044,000	$	1,471	$	2,652,605		$	(7,902	)	$	(804,744	)	$	2,885,430

See accompanying Notes to Consolidated Financial Statements

- 5 -

DUKE REALTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.		General Basis of Presentation

		The interim consolidated financial statements included herein have been prepared by Duke Realty Corporation (the “Company”) without audit. The 2007 year-end consolidated balance sheet data included in this Quarterly Report on Form 10-Q (this “Report”) was derived from the audited financial statements in our Annual Report on Form 10-K for the year ended December 31, 2007, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The financial statements have been prepared in accordance with GAAP for interim financial information and in accordance with Rule 10-01 of Regulation S-X of the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenue and expenses during the reporting period. Our actual results could differ from those estimates and assumptions. These financial statements should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included herein and the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2007.

		We believe we qualify as a real estate investment trust (“REIT”) under the provisions of the Internal Revenue Code of 1986, as amended. Substantially all of our Rental Operations (see Note 6) are conducted through Duke Realty Limited Partnership (“DRLP”). We owned approximately 95.1% of the common partnership interests of DRLP (“Units”) at September 30, 2008. The remaining Units are redeemable for shares of our common stock on a one-to-one basis and earn dividends at the same rates as shares of our common stock. We conduct our Service Operations (see Note 6) through Duke Realty Services LLC, Duke Realty Services Limited Partnership and Duke Construction Limited Partnership. The consolidated financial statements include our accounts and the accounts of our majority-owned or controlled subsidiaries. In this Report, unless the context indicates otherwise, the terms “we,” “us” and “our” refer to the Company and those entities owned or controlled by the Company.

2.		Reclassifications

		Certain amounts in the accompanying consolidated financial statements for 2007 have been reclassified to conform to the 2008 consolidated financial statement presentation.

3.		Indebtedness

		Our unsecured lines of credit as of September 30, 2008 are described as follows (in thousands):


	Borrowing		Maturity	Outstanding Balance
Description	Capacity		Date	at September 30, 2008
Unsecured Line of Credit — DRLP	$	1,300,000	January 2010	$	525,000
Unsecured Line of Credit — Consolidated Subsidiary	$	30,000	July 2011	$	8,709

We use the DRLP unsecured line of credit to fund development activities, acquire additional rental properties and provide working capital. This line of credit provides us with an option to obtain borrowings from financial institutions that participate in the line, at rates that may be lower than the stated interest rate, subject to certain restrictions. Interest rates on the amounts outstanding on the DRLP unsecured line of credit as of September 30, 2008 ranged from LIBOR plus ..48% to LIBOR plus .525% (ranging from 2.97% to 4.235% as of September 30, 2008). This line of credit also contains financial covenants that require us to meet financial ratios and defined levels of performance, including those related to variable rate indebtedness, consolidated net worth and debt-to-market capitalization. As of September 30, 2008, we were in compliance with all covenants under this line of credit.

- 6 -

~~(Unaudited)~~

1.~~General Basis of Presentation~~

		The consolidated subsidiary’s unsecured line of credit allows for borrowings up to $30.0 million at a rate of LIBOR plus .85% (equal to 4.279% for outstanding borrowings as of September 30, 2008). This unsecured line of credit is used to fund development activities within the consolidated subsidiary and matures in July 2011 with a 12-month extension option.

		In January 2008, we repaid $125.0 million of senior unsecured notes with an effective interest rate of 3.36% on their scheduled maturity date.

		In May 2008, we repaid $100.0 million of senior unsecured notes with an effective interest rate of 6.76% on their scheduled maturity date.

		In May 2008, we issued $325.0 million of 6.25% senior unsecured notes due in May 2013. After including the effect of forward starting swaps (see Note 9), which were designated as cash flow hedges for this offering, the effective interest rate is 7.36%.

4.		Related Party Transactions

		We provide property management, leasing, construction and other tenant related services to unconsolidated companies in which we have equity interests. For the nine months ended September 30, 2008 and 2007, respectively, we earned management fees of $5.6 million and $5.1 million, leasing fees of $1.9 million and $2.7 million and construction and development fees of $9.6 million and $9.0 million from these companies. We recorded these fees based on contractual terms that approximate market rates for these types of services and we have eliminated our ownership percentage of these fees in the consolidated financial statements.

5.		Net Income Per Common Share

		Basic net income per common share is computed by dividing net income available for common shareholders by the weighted average number of common shares outstanding for the period. Diluted net income per common share is computed by dividing the sum of net income available for common shareholders and the minority interest in earnings allocable to Units not owned by us, by the sum of the weighted average number of common shares outstanding and minority Units outstanding, including any potential dilutive securities for the period.

		The following table reconciles the components of basic and diluted net income per common share for the three and nine months ended September 30, 2008 and 2007, respectively (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2008		2007		2008		2007
Basic net income available for common shareholders	$	13,054	$	53,387	$	34,899	$	159,026
Minority interest in earnings of common unitholders		687		3,573		1,861		11,101

Diluted net income available for common shareholders	$	13,741	$	56,960	$	36,760	$	170,127


Weighted average number of common shares outstanding		146,966		137,576		146,680		137,110
Weighted average partnership Units outstanding		7,638		9,176		7,727		9,560
Dilutive shares for stock-based compensation plans (1)		740		899		698		1,316

Weighted average number of common shares and potential dilutive securities		155,344		147,651		155,105		147,986


(1)		Excludes (in thousands of shares) 6,772 and 1,633 of anti-dilutive shares for the three months ended September 30, 2008 and 2007, respectively, and 7,166 and 646 of anti-dilutive shares for the nine months ended September 30, 2008 and 2007, respectively. Also excludes the 3.75% Exchangeable Senior Notes due November 2011 (“Exchangeable Notes”) issued in 2006, that have an anti-dilutive effect on earnings per share for the three and nine-month periods ended September 30, 2008 and 2007.

- 7 -

The interim consolidated financial statements included herein have been prepared by Duke Realty Corporation (the “Company”) without audit. The 2007 year-end consolidated balance sheet data included in this Form 10-Q was derived from the audited financial statements referenced above, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The financial statements have been prepared in accordance with GAAP for interim financial information and in accordance with Rule 10-01 of Regulation S-X of the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenue and expenses during the reporting period. Our actual results could differ from those estimates and assumptions. These financial statements should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included herein and the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2007.

We believe we qualify as a real estate investment trust (“REIT”) under the provisions of the internal revenue code. Substantially all of our Rental Operations (see Note 7) are conducted through Duke Realty Limited Partnership (“DRLP”). We owned approximately 95.0% of the common partnership interests of DRLP (“Units”) at March 31, 2008. The remaining Units are redeemable for shares of our common stock on a one-to-one basis and earn dividends at the same rates as shares of our common stock. We conduct our Service Operations (see Note 7) through Duke Realty Services LLC, Duke Realty Services Limited Partnership and Duke Construction Limited Partnership. The consolidated financial statements include our accounts and our majority-owned or controlled subsidiaries. In this Quarterly Report on Form 10-Q (this “Report”), unless the context indicates otherwise, the terms “we,” “us” and “our” refer to the Company and those entities owned or controlled by the Company.

2. ~~New Accounting Pronouncement~~

~~Statement of Financial Accounting Standard (“SFAS”) No.157,~~ ~~Fair Value Measurements~~ (“SFAS 157”) was effective for us on January 1, 2008. SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances. Based on the guidance provided by FASB Staff Position No. 157-2, ~~Effective Date of FASB Statement No. 157~~ (“FSP No. 157-2”), we have only partially implemented the guidance promulgated under SFAS 157 as of January 1, 2008, which in our circumstances only affects financial instruments. SFAS 157 will not be applied during 2008 to nonfinancial long lived asset groups that may be measured for an impairment assessment, reporting units measured at fair value in the first step of the goodwill impairment test, and nonfinancial assets and nonfinancial liabilities initially measured at fair value in a business combination. We will fully apply the provisions of SFAS 157 beginning January 1, 2009 and do not expect there to be a material impact to the financial statements.

SFAS 157 emphasized that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, SFAS 157 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities to which we have access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

3. ~~Reclassifications~~

~~Certain 2007 balances have been reclassified to conform to the 2008 presentation.~~

4. ~~Indebtedness~~

~~Our unsecured lines of credit as of March 31, 2008 are described as follows (in thousands):~~

Borrowing

Maturity

Outstanding Balance

Description

Capacity

Date

at March 31, 2008

Unsecured Line of Credit - DRLP

$
1,300,000

January 2010

$
631,000

Unsecured Line of Credit - Consolidated Subsidiary

$
30,000

July 2011

$
4,068

We use the DRLP unsecured line of credit to fund development activities, acquire additional rental properties and provide working capital. This line of credit provides us with an option to obtain borrowings from financial institutions that participate in the line, at rates that may be lower than the stated interest rate, subject to certain restrictions. Interest rates on the amounts outstanding on the unsecured line of credit as of March 31, 2008 ranged from LIBOR plus .45% to LIBOR plus .525% (ranging from 3.135% to 3.61% as of March 31, 2008). Our line of credit also contains financial covenants that require us to meet financial ratios and defined levels of performance, including those related to variable rate indebtedness, consolidated net worth and debt-to-market capitalization. As of March 31, 2008, we were in compliance with all covenants under this line of credit.

The consolidated subsidiary’s unsecured line of credit allows for borrowings up to $30.0 million at a rate of LIBOR plus .85% (equal to 3.456% for outstanding borrowings as of March 31, 2008). The unsecured line of credit is used to fund development activities within the consolidated subsidiary. The consolidated subsidiary’s unsecured line of credit matures in July 2011 with a 12-month extension option.

~~In January 2008, we repaid $125.0 million of senior unsecured notes with an effective interest rate of 3.36% on their scheduled maturity date.~~

5. ~~Related Party Transactions~~

We provide property management, leasing, construction and other tenant related services to unconsolidated companies in which we have equity interests. For the three months ended March 31, 2008 and 2007, respectively, we earned from these companies management fees of $1.6 million and $1.3 million, leasing fees of $657,000 and $505,000 and construction and development fees of $2.8 million and $3.6 million. We recorded these fees based on contractual terms that approximate market rates for these types of services and we have eliminated our ownership percentage of these fees in the consolidated financial statements.

6.~~Net Income~~ ~~Per~~ ~~Common Share~~

~~Basic net income~~ ~~per~~ common share is computed by dividing net income available for common shareholders by the weighted average number of common shares outstanding for the period. Diluted net income per common share is computed by dividing the sum of net income available for common shareholders and the minority interest in earnings allocable to Units not owned by us, by the sum of the weighted average number of common shares outstanding and minority Units outstanding, including any potential dilutive securities for the period.

~~The following table~~ ~~reconciles~~ ~~the components of basic and diluted net income per common share for the three months ended March 31, 2008 and 2007, respectively (in thousands):~~

2008

2007

Basic net income available for common shareholders

$
4,048

$
68,563

Joint venture partner convertible ownership net income (1)

—

452

Minority interest in earnings of common unitholders

220

4,910

Diluted net income available for common shareholders

$
4,268

$
73,925

Weighted average number of common shares outstanding

146,331

136,823

Weighted average partnership Units outstanding

7,858

9,729

Joint venture partner convertible ownership interest (1)

—

1,138

Dilutive shares for stock-based compensation plans (2)

407

1,775

Weighted average number of common shares and potential dilutive securities

154,596

149,465

~~(1)~~One of our joint venture partners in one of our unconsolidated companies has the option to convert a portion of its ownership in the joint venture to our common shares. The effect of this option on earnings per share was dilutive for the first quarter of 2007; therefore, conversion to common shares is included in weighted average potential dilutive securities for that quarter. This option was anti-dilutive for the first quarter of 2008.

~~(2)~~Excludes (in thousands of shares) 6,575 and 420 of anti-dilutive shares as of March 31, 2008 and 2007, respectively. Also excludes the Exchangeable Senior Notes (“Exchangeable Notes”) issued in 2006, that have an anti-dilutive effect on earnings per share for the three-month periods ended March 31, 2008 and 2007.

7. ~~Segment Reporting~~

We are engaged in three reportable operating segments, the first two of which consist of the ownership and rental of office and industrial real estate investments. The operations of our office and industrial properties, along with our healthcare properties (our healthcare properties, and other property types which are not significant, are not separately presented as a reportable segment), are collectively referred to as “Rental Operations”. The third reportable segment consists of our build for sale operations and providing various real estate services such as property management, maintenance, leasing, development and construction management to third-party property owners and joint ventures (and is collectively referred to as “Service Operations”). Our reportable segments offer different products or services and are managed separately because each segment requires different operating strategies and management expertise.

During the period between the completion of development, rehabilitation or repositioning of a Service Operations property and the date the property is contributed to a property fund or sold to a third party, the property and its associated rental revenues and rental expenses are included in the applicable Rental Operations segment because the primary activity associated with the Service Operations property during that period is rental activities. Upon contribution or sale, the resulting gain or loss is part of the income of the Service Operations business segment.

Other revenue consists mainly of equity in earnings of unconsolidated companies. Segment FFO information (FFO is defined below) is calculated by subtracting operating expenses attributable to the applicable segment from segment revenues. Non-segment assets consist of corporate assets including cash, deferred financing costs and investments in unconsolidated companies. Interest expense and other non-property specific revenues and expenses are not allocated to individual segments in determining our performance measure.

We assess and measure segment operating results based upon an industry performance measure referred to as Funds From Operations (“FFO”), which management believes is a useful indicator of our operating performance. ~~FFO is used by industry analysts and investors as a supplemental operating performance measure of a REIT like Duke.~~
6. Segment Reporting
We have three reportable operating segments, the first two of which consist of the ownership and rental of office and industrial real estate investments. The operations of our office and industrial properties, along with our healthcare and retail properties (our healthcare and retail properties, which do not meet the quantitative thresholds defined in Statement of Financial Accounting Standard (“SFAS”) No. 131,Disclosures about Segments of an Enterprise and Related Information, are not separately presented as a reportable segment), are collectively referred to as “Rental Operations”. The third reportable segment consists of our Build-for-Sale operations (defined below) and providing of various real estate services such as property management, maintenance, leasing, development and construction management to third-party property owners and joint ventures (and is collectively referred to as “Service Operations”). Our reportable segments offer different products or services and are managed separately because each segment requires different operating strategies and management expertise.
During the period between the completion of development, rehabilitation or repositioning of a property developed or acquired with the intent to sell (“Build-for-Sale” property) and the date the property is contributed to an unconsolidated company or sold to a third party, the property and its associated rental revenue and rental expenses are included in the applicable Rental Operations segment because the primary activity associated with the Build-for-Sale property during that period is rental activities. Upon contribution or sale, the resulting gain or loss is part of the income of the Service Operations business segment.
Other revenue consists mainly of equity in earnings of unconsolidated companies. Segment FFO information (FFO is defined below) is calculated by subtracting operating expenses attributable to the applicable segment from segment revenues. Non-segment assets consist of corporate assets including cash, deferred financing costs and investments in unconsolidated companies. Interest expense and other non-property specific revenues and expenses are not allocated to individual segments in determining our performance measure.
We assess and measure segment operating results based upon an industry performance measure referred to as Funds From Operations (“FFO”), which management believes is a useful indicator of our operating performance. FFO is used by industry analysts and investors as a supplemental operating performance measure of a REIT. FFO is calculated in accordance with the definition that was adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from net income determined in accordance with GAAP. FFO is a non-GAAP financial measure developed by NAREIT to compare the operating performance of REITs. The most comparable GAAP measure is net income (loss). FFO should not be considered as a substitute for net income or any other measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other companies.
Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry analysts and investors have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. FFO, as defined by NAREIT, represents GAAP net income (loss), excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated real estate assets, plus certain non-cash items such as real estate asset depreciation and amortization, and after similar adjustments for unconsolidated partnerships and joint ventures.

- 8 -

		Management believes that the use of FFO, combined with the required primary GAAP presentations, improves the understanding of operating results of REITs among the investing public and makes comparisons of REIT operating results more meaningful. Management believes FFO is a useful measure for reviewing comparative operating and financial performance (although FFO should be reviewed in conjunction with net income, which remains the primary measure of performance) because by excluding gains or losses related to sales of previously depreciated real estate assets and excluding real estate asset depreciation and amortization, FFO provides a useful comparison of the operating performance of our real estate between periods or as compared to different companies.

		The following table shows (i) the revenues and FFO for each of the reportable segments and (ii) a reconciliation of net income available for common shareholders to the calculation of FFO for the three and nine months ended September 30, 2008 and 2007, respectively (in thousands):


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
Revenues
Rental Operations:
Office	$	144,026		$	144,729		$	427,393		$	420,930
Industrial		62,856			52,497			184,691			160,031
Non-reportable Rental Operations segments		8,014			6,212			22,374			12,963
Service Operations		29,066			20,273			66,978			57,042

Total Segment Revenues		243,962			223,711			701,436			650,966
Other Revenue		1,973			3,403			24,521			22,432

Consolidated Revenue from continuing operations	$	245,935		$	227,114		$	725,957		$	673,398
Discontinued Operations		91			3,461			6,707			22,635

Consolidated Revenue	$	246,026		$	230,575		$	732,664		$	696,033

Funds From Operations
Rental Operations:
Office	$	87,037		$	89,966		$	258,136		$	257,702
Industrial		49,283			40,444			141,471			122,925
Non-reportable Rental Operations segment		5,174			4,222			14,029			8,887
Service Operations		21,738			7,301			36,541			26,253

Total Segment FFO		163,232			141,933			450,177			415,767
Non-Segment FFO:
Interest expense		(49,260	)		(43,414	)		(143,657	)		(127,882	)
Interest and other income, net		330			6,254			3,850			11,187
General and administrative expense		(10,448	)		(3,856	)		(29,498	)		(27,923	)
Gain on land sales, net		4,469			1,799			8,491			18,207
Other non-segment income (expense)		(1,710	)		(816	)		(1,913	)		(2,352	)
Minority interest		(823	)		(1,174	)		(1,640	)		(3,666	)
Minority interest share of FFO adjustments		(4,363	)		(2,697	)		(12,351	)		(7,539	)
Joint venture FFO		14,654			12,414			45,458			36,801
Dividends on preferred shares		(18,866	)		(15,227	)		(53,038	)		(45,679	)
Discontinued operations, net of minority interest		(113	)		(1,543	)		3,959			361

Consolidated basic FFO	$	97,102		$	93,673		$	269,838		$	267,282

Depreciation and amortization on continuing operations		(75,144	)		(71,438	)		(228,062	)		(204,642	)
Depreciation and amortization on discontinued operations		(116	)		(638	)		(2,894	)		(3,580	)
Company’s share of joint venture adjustments		(14,450	)		(10,574	)		(28,769	)		(21,152	)
Earnings from depreciated property sales on discontinued operations		1,299			39,670			11,940			111,751
Earnings from depreciated property sales- share of joint venture		—			(3	)		495			1,828
Minority interest share of FFO adjustments		4,363			2,697			12,351			7,539

Net income available for common shareholders	$	13,054		$	53,387		$	34,899		$	159,026

- 9 -

7.		Discontinued Operations and Assets Held-for-Sale

		The operations of 39 buildings are currently classified as discontinued operations for the nine-month periods ended September 30, 2008 and September 30, 2007. These 39 buildings consist of 20 industrial and 19 office properties. Of these properties, seven were sold during the first nine months of 2008 and 32 were sold during 2007.

		The following table illustrates the operations of the buildings reflected in discontinued operations for the three and nine months ended September 30, 2008 and 2007, respectively (in thousands):


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
Revenues	$	91		$	3,461		$	6,707		$	22,635
Expenses:
Operating		62			1,475			1,239			8,945
Interest		86			1,021			821			5,732
Depreciation and amortization		116			638			2,894			3,580
General and administrative		—			8			2			30

Operating income (loss)		(173	)		319			1,751			4,348
Minority interest income (expense)		8			(20	)		(88	)		(283	)

Income (loss) from discontinued operations, before gain on sales		(165	)		299			1,663			4,065
Gain on sale of properties		1,299			39,670			11,940			111,751
Minority interest expense – gain on sales		(64	)		(2,480	)		(598	)		(7,284	)

Gain on sale of properties, net of minority interest		1,235			37,190			11,342			104,467

Income from discontinued operations	$	1,070		$	37,489		$	13,005		$	108,532

At September 30, 2008, we have classified 10 in-service properties as held-for-sale, but have included the results of operations of these properties in continuing operations. The following table illustrates the aggregate balance sheet information of these 10 held-for-sale properties at September 30, 2008 (in thousands):


	Total
	Held-for-Sale
	Properties
Balance Sheet:
Real estate investments, net	$	185,399
Other assets		11,888

Total assets held-for-sale	$	197,287


Accrued expenses	$	1,296
Other liabilities		2,250

Total liabilities held-for-sale	$	3,546

We had entered into a preliminary agreement to sell a portfolio of 14 buildings in our Cleveland Office market and had accordingly ceased depreciation on those buildings in July 2007, as they met the criteria for held-for-sale accounting. As a result, we had also included the 14 buildings in discontinued operations. However, because the potential buyer was not able to secure financing on acceptable terms, the sale agreement was cancelled and we have determined that this portfolio no longer meets the criteria for held-for-sale classification. As a result of this determination, the portfolio was reclassified from discontinued operations to continuing operations in the first quarter of 2008, resulting in an additional $5.3 million of depreciation expense in the first quarter of 2008.

- 10 -

		We allocate interest expense to discontinued operations and have included such interest expense in computing income from discontinued operations. Interest expense allocable to discontinued operations includes interest on any secured debt for properties included in discontinued operations and an allocable share of our consolidated unsecured interest expense for unencumbered properties. The allocation of unsecured interest expense to discontinued operations was based upon the gross book value of the unencumbered real estate assets included in discontinued operations as it related to the total gross book value of our unencumbered real estate assets.

8.		Shareholders’ Equity

		We periodically use the public equity markets to fund the development and acquisition of additional rental properties or to pay down debt. The proceeds of these offerings are contributed to DRLP in exchange for an additional interest in DRLP. In February 2008, we issued $300.0 million of 8.375% Series O Cumulative Redeemable Preferred Stock from which the net proceeds were used to reduce the outstanding balance on DRLP’s unsecured line of credit. Shares of our Series O Cumulative Redeemable Preferred Stock have no stated maturity date although they may be redeemed, at our option, in February 2013.

		We also issued new shares of common stock under employee and non-employee stock purchase plans, as well as for dividend reinvestment plans. We received $12.1 million and $2.2 million of proceeds from share issuances during the nine-month periods ended September 30, 2008 and 2007, respectively.

9.		Financial Instruments

		We are exposed to capital market risk, such as changes in interest rates. In order to manage the volatility relating to interest rate risk, we may enter into interest rate hedging arrangements from time to time. We do not utilize derivative financial instruments for trading or speculative purposes.

		The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

		To comply with the provisions of SFAS 157, to the extent it has been adopted for the period ending September 30, 2008 (see Note 10), we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.

		Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparties. However, as of September 30, 2008, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuations of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. We do not have any fair value measurements using significant unobservable inputs (Level 3) as of September 30, 2008.

- 11 -

		In November 2007, we entered into forward-starting interest rate swaps with notional amounts appropriate to hedge interest rates on $300.0 million of anticipated debt offerings in 2008. The forward-starting swaps were appropriately designated and tested for effectiveness as cash flow hedges. In March 2008, we settled the forward-starting swaps and made a cash payment of $14.6 million to the counterparties. An effectiveness test was performed as of the settlement date and it was concluded that a highly effective cash flow hedge was still in place for the expected debt offering. Of the amount paid in settlement, approximately $700,000 was immediately reclassified to interest expense, as the result of partial ineffectiveness calculated at the settlement date. The net amount of $13.9 million was recorded in Other Comprehensive Income (“OCI”) and is being recognized through interest expense over the life of the hedged debt offering, which took place in May 2008. The remaining unamortized amount included in OCI as of September 30, 2008 is $12.7 million.

		The effectiveness of our hedges is evaluated throughout their lives using the hypothetical derivative method under which the change in fair value of the actual swap designated as the hedging instrument is compared to the change in fair value of a hypothetical swap. We had no material interest rate derivatives, when considering both fair value and notional amount, at September 30, 2008.

10.		Recent Accounting Pronouncements

		SFAS No.157,Fair Value Measurements(“SFAS 157”) was effective for us on January 1, 2008. SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances. Based on the guidance provided by Financial Accounting Standards Board (“FASB”) Staff Position No. 157-2,Effective Date of FASB Statement No. 157(“FSP No. 157-2”), we have only partially implemented the guidance promulgated under SFAS 157 as of January 1, 2008, which in our circumstances only affects financial instruments. SFAS 157 will not be applied during 2008 to nonfinancial long-lived asset groups that may be measured for an impairment assessment, reporting units measured at fair value in the first step of the goodwill impairment test, and nonfinancial assets and nonfinancial liabilities initially measured at fair value in a business combination. We will fully apply the provisions of SFAS 157 beginning January 1, 2009 and do not expect there to be a material impact to the financial statements.

		SFAS 157 emphasized that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, SFAS 157 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

		Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities to which we have access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair

- 12 -

		value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

		In October 2008, FASB Staff Position No. 157-3,Determining the Fair Value of a Financial Asset in a Market That Is Not Active(“FSP 157-3”), was approved and became immediately effective. FSP 157-3 provides additional guidance for applying fair value measurements in markets that are not active. Beginning January 1, 2009, the date in which we will fully apply the provisions of SFAS 157, FSP 157-3 will apply to fair value measurements of nonfinancial long-lived asset groups, specifically real estate assets, which will be performed in the context of impairment testing or in applying acquisition accounting. We are currently evaluating the impact of adopting FSP 157-3.

		In December 2007, the FASB issued SFAS No. 141R,Business Combinations(“SFAS 141R”) and SFAS No. 160,Noncontrolling Interests in Consolidated Financial Statements – an amendment to ARB No. 51 (“SFAS 160”). SFAS 141R and SFAS 160 require most identifiable assets, liabilities, noncontrolling interests and goodwill acquired in a business combination to be recorded at “full fair value” and require noncontrolling interests (previously referred to as minority interests) to be reported as a component of equity, which changes the accounting for transactions with noncontrolling interest holders. Both Statements are effective for periods beginning on or after December 15, 2008, and earlier adoption is prohibited. SFAS 141R will be applied to business combinations after the effective date. SFAS 160 will be applied prospectively to all noncontrolling interests, including any that arose before the effective date. We are currently evaluating the impact of adopting SFAS 141R and SFAS 160 on our results of operations and financial position.

		In March 2008, the FASB issued SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133(“SFAS 161”). SFAS 161 requires enhanced disclosures for derivative instruments and hedging activities, specifically in regard to the purpose of the derivative and how the derivative and hedging activities affect an entity’s financial position, financial performance and cash flows. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008 and early application is allowed. We will apply SFAS 161 beginning in 2009.

		In May 2008, the FASB ratified FASB Staff Position No. APB 14-1,Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)(“FSP APB 14-1”) that will require separate accounting for the debt and equity components of convertible instruments. FSP APB 14-1 will require that the value assigned to the debt component would be the estimated fair value of a similar bond without the conversion feature, which would result in the debt being recorded at a discount. The resulting debt discount will be amortized over the period during which the debt is expected to be outstanding (i.e., through the first optional redemption date) as additional non-cash interest expense. FSP APB 14-1 is effective January 1, 2009 and will be applied retrospectively to the Exchangeable Notes that we issued in November 2006, which we currently estimate will result in us recognizing additional non-cash interest expense of between $5.5 million and $7.5 million per annum.

- 13 -

11. Subsequent Events

Declaration of Dividends

The Company’s Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from net income determined in accordance with GAAP. FFO is a non-GAAP financial measure developed by NAREIT to compare the operating performance of REITs. The most comparable GAAP measure is net income (loss). FFO should not be considered as a substitute for net income or any other measures derived in accordance with GAAP and may not be comparable to other similarly titled measure of other companies.

Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry analysts and investors have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. FFO, as defined by NAREIT, represents GAAP net income (loss), excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated real estate assets, plus certain non-cash items such as real estate asset depreciation and amortization, and after similar adjustments for unconsolidated partnerships and joint ventures.

Management believes that the use of FFO, combined with the required primary GAAP presentations, improves the understanding of operating results of REITs among the investing public and makes comparisons of REIT operating results more meaningful. Management believes FFO is a useful measure for reviewing comparative operating and financial performance (although FFO should be reviewed in conjunction with net income which remains the primary measure of performance) because by excluding gains or losses related to sales of previously depreciated real estate assets and excluding real estate asset depreciation and amortization, FFO provides a useful comparison of the operating performance of our real estate between periods or as compared to different companies.

The following table shows (i) the revenues and FFO for each of the reportable segments and (ii) a reconciliation of net income available for common shareholders to the calculation of FFO for the three months ended March 31, 2008, and 2007, respectively (in thousands):

Three Months Ended March 31,

2008

2007

Revenues

Rental Operations:

Office

$
148,245

$
143,826

Industrial

61,316

54,214

Non-reportable Rental Operations segments

6,229

1,838

Service Operations

14,776

14,730

Total Segment Revenues

230,566

214,608

Other Revenue

12,111

9,918

Consolidated Revenue from continuing operations

242,677

224,526

Discontinued Operations

974

11,087

Consolidated Revenue

$
243,651

$
235,613

Funds From Operations

Rental Operations:

Office

$
89,833

$
86,100

Industrial

45,392

40,667

Non-reportable Rental Operations segments

3,683

1,353

Service Operations

4,413

6,934

Total Segment FFO

143,321

135,054

Non-Segment FFO:

Interest expense

(47,534
)
(44,408
)
Interest and other income, net

3,725

2,403

General and administrative expense

(12,162
)
(13,460
)
Gain on land sales, net

629

13,997

Other non-segment income (expense)

(677
)
(106
)
Minority interest

(214
)
(1,331
)
Minority interest share of FFO adjustments

(4,326
)
(1,263
)
Joint venture FFO

17,008

10,698

Dividends on preferred shares

(15,306
)
(15,226
)
Discontinued operations, net of minority interest

178

(31
)
Consolidated basic FFO

84,642

86,327

Depreciation and amortization on continuing operations

(78,713
)
(66,375
)
Depreciation and amortization on discontinued operations

(408
)
(1,364
)
Company’s share of joint venture adjustments

(6,928
)
(4,968
)
Earnings from depreciated property sales on discontinued operations

1,110

51,720

Earnings from depreciated property sales – share of joint venture

19

1,960

Minority interest share of FFO adjustments

4,326

1,263

Net income available for common shareholders

$
4,048

$
68,563

8. ~~Discontinued Operations and Assets Held for Sale~~

~~The~~ ~~operations~~ of 34 buildings are currently classified as discontinued operations for the three-month periods ended March 31, 2008 and March 31, 2007. These 34 buildings consist of 17 industrial and 17 office properties. Of these properties, one was sold during the first quarter of 2008, 32 were sold during 2007 and one operating property is classified as held-for-sale at March 31, 2008.

~~The following table illustrates the operations of the buildings reflected in discontinued operations for the three months ended March 31, 2008 and 2007, respectively (in thousands):~~

Three Months Ended March 31,

2008

2007

Revenues

$
974

$
11,087

Expenses:

Operating

441

4,718

Interest

307

2,810

Depreciation and Amortization

408

1,364

General and Administrative

1

11

Operating Income (Loss)

(183
)
2,184

Minority interest expense

10

(145
)
Income (loss) from discontinued operations, before gain on sales

(173
)
2,039

Gain on sale of property

1,110

51,720

Minority interest expense – gain on sales

(57
)
(3,434
)
Gain on sale of property, net of minority interest

1,053

48,286

Income from discontinued operations

$
880

$
50,325

At March 31, 2008, we classified one property as held-for-sale and included in discontinued operations. Additionally, we have classified seven in-service properties as held-for-sale, but have included the results of operations of these properties in continuing operations. The following table illustrates the aggregate balance sheet information of the aforementioned property included in discontinued operations, as well as the seven held-for-sale properties whose results are included in continuing operations, at March 31, 2008 (in thousands):

Property

Properties

Included in

Included in

Total

Discontinued

Continuing

Held-for-Sale

Operations

Operations

Properties

Balance Sheet:

Real estate investments, net

$
11,693

$
122,344

$
134,037

Other assets

1,287

8,753

10,040

Total assets held-for-sale

$
12,980

$
131,097

$
144,077

Accrued expenses

$
462

$
577

$
1,039

Other liabilities

—

2,774

2,774

Total liabilities held-for-sale

$
462

$
3,351

$
3,813

We had entered into a preliminary agreement to sell a portfolio of 14 buildings in our Cleveland Office market and had accordingly ceased depreciation on those buildings in July 2007, as they met the criteria for held for sale accounting. As a result, we had also included the 14 buildings in discontinued operations. However, due to the potential buyer not being able to secure financing on acceptable terms, the sale agreement was cancelled and we have determined that this portfolio no longer meets the criteria for held for sale classification. As the result of this determination, the portfolio was reclassified from discontinued to continuing operations in the first quarter of 2008, resulting in an additional $5.3 million of depreciation expense.

We allocate interest expense to discontinued operations and have included such interest expense in computing income from discontinued operations. Interest expense allocable to discontinued operations includes interest on any secured debt on properties included in discontinued operations and an allocable share of our consolidated unsecured interest expense for unencumbered properties. The allocation of unsecured interest expense to discontinued operations was based upon the gross book value of the unencumbered real estate assets included in discontinued operations as it related to the total gross book value of our unencumbered real estate assets.

9.~~Shareholders’ Equity~~

We periodically access the public equity markets to fund the development and acquisition of additional rental properties or to pay down debt. The proceeds of these offerings are contributed to DRLP in exchange for an additional interest in DRLP. In February 2008, we issued $300.0 million of 8.375% Series O Cumulative Redeemable Preferred Shares from which the net proceeds were used to reduce the outstanding balance on DRLP’s unsecured line of credit. The Series O Cumulative Redeemable Preferred Shares have no stated maturity date although they may be redeemed, at our option, in February 2013.

~~10.~~~~Financial Instruments~~

We are exposed to capital market risk, such as changes in interest rates. In order to manage the volatility relating to interest rate risk, we may enter into interest rate hedging arrangements from time to time. We do not utilize derivative financial instruments for trading or speculative purposes.

The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

To comply with the provisions of SFAS 157, to the extent it has been adopted for the period ending March 31, 2008 (see Note 2), we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of March 31, 2008, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuations of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. We do not have any fair value measurements using significant unobservable inputs (Level 3) as of March 31, 2008.

In November 2007, we entered into forward-starting interest rate swaps with notional amounts appropriate to hedge interest rates on $300.0 million of anticipated debt offerings in 2008. The forward-starting swaps were appropriately designated and tested for effectiveness as cash flow hedges. In March 2008, we settled the forward-starting swaps and made a cash payment of $14.6 million to the counterparties. An effectiveness test was performed as of the settlement date and it was concluded that a highly effective cash flow hedge is still in place for the expected debt offering. Of the amount paid in settlement, approximately $700,000 was immediately reclassified to interest expense, as the result of partial ineffectiveness calculated at the settlement date, while $13.9 million remains in Other Comprehensive income (“OCI”) and will be recognized through interest expense over the life of the hedged debt offering, which took place in May 2008 (Note 12).

In August 2005, we entered into forward-starting interest rate swaps with notional amounts appropriate to hedge interest rates on $300.0 million of anticipated debt offerings in 2007. The forward-starting swaps were appropriately designated and tested for effectiveness as cash flow hedges. In conjunction with the September 2007 issuance of $300.0 million of senior unsecured notes, we terminated these cash flow hedges as designated. The settlement amount received of $10.7 million is being recognized to earnings through a reduction of interest expense over the term of the hedged cash flows. The ineffective portion of the hedge was insignificant.

The effectiveness of our hedges is evaluated throughout their lives using the hypothetical derivative method under which the change in fair value of the actual swap designated as the hedging instrument is compared to the change in fair value of a hypothetical swap.

~~11.~~~~Recent Accounting Pronouncements~~

~~In December 2007, the FASB issued SFAS No. 141R,~~ ~~Business Combinations~~ ~~(“SFAS 141R”) and SFAS No. 160,~~ ~~Noncontrolling Interests in Consolidated Financial Statements~~ – ~~an amendment to ARB No. 51~~ (“SFAS 160”). SFAS 141R and SFAS 160 require most identifiable assets, liabilities, noncontrolling interests and goodwill acquired in a business combination to be recorded at “full fair value” and require noncontrolling interests (previously referred to as minority interests) to be reported as a component of equity, which changes the accounting for transactions with noncontrolling interest holders. Both Statements are effective for periods beginning on or after December 15, 2008, and earlier adoption is prohibited. SFAS 141R will be applied to business combinations after the effective date. SFAS 160 will be applied prospectively to all noncontrolling interests, including any that arose before the effective date. We are currently evaluating the impact of adopting SFAS 141R and SFAS 160 on our results of operations and financial position.

~~In March 2008, the FASB issued SFAS No. 161,~~ ~~Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133~~ (“SFAS 161”). SFAS 161 requires enhanced disclosures for derivative instruments and hedging activities, specifically in regard to the purpose of the derivative and how the derivative and hedging activities affect an entity’s financial position, financial performance and cash flows. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008 and early application is allowed. We will apply SFAS 161 beginning in 2009.

~~12.~~~~Subsequent Events~~

~~Declaration of Dividends~~

~~The Company’s board of directors~~Directors declared the following dividends at its ~~April 30,~~October 29, 2008, regularly scheduled board meeting:

Quarterly

Class

Amount/Share

Record Date

Payment Date

Common

$
0.48

May 14, 2008

May 30, 2008

Preferred (per depositary share):

Series J

$
0.414063

May 16, 2008

May 30, 2008

Series K

$
0.406250

May 16, 2008

May 30, 2008

Series L

$
0.412500

May 16, 2008

May 30, 2008

Series M

$
0.434375

June 16, 2008

June 30, 2008

Series N

$
0.453125

June 16, 2008

June 30, 2008

Series O

$
0.523438

June 16, 2008

June 30, 2008

~~Issuance of Unsecured Notes~~

~~In May 2008, we issued $325.0 million of 6.25% senior unsecured notes due in May 2013.~~

Quarterly

Class

Amount/Share

Record Date

Payment Date

Common

0.485

November 14, 2008

November 29, 2008

Preferred (per depositary share):

Series J

0.414063

November 14, 2008

November 28, 2008

Series K

0.406250

November 14, 2008

November 28, 2008

Series L

0.412500

November 14, 2008

November 28, 2008

Series M

0.434375

December 17, 2008

December 31, 2008

Series N

0.453125

December 17, 2008

December 31, 2008

Series O

0.523438

December 17, 2008

December 31, 2008

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding ~~Forward Looking~~Forward-Looking Statements

Certain statements contained in or incorporated by reference into this Report, including, without limitation, those related to our future operations, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “believe,” “estimate,” “expect,” “anticipate,” “intend,” “plan,” “seek,” ~~“may”~~“may,” and similar expressions or statements regarding future periods are intended to identify forward-looking statements.

These forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any predictions of future results, performance or achievements that we express or imply in this Report. Some of the risks, uncertainties and other important factors that may affect future results include, among others:

	•		Changes in general economic and business conditions, including the performance of financial markets;

	•		Our continued qualification as a real estate investment trust, or “REIT”, for U.S. federal income tax purposes;

	•		Heightened competition for tenants and potential decreases in property occupancy;

	•		Potential increases in real estate construction costs;

	•		Potential changes in the financial markets and interest rates;

	•		Volatility in our stock price and trading volume;

	•		Our continuing ability to raise funds on favorable terms through the issuance of debt and equity in the capital markets;

	•		Our ability to successfully identify, acquire, develop and/or manage properties on terms that are favorable to us;

	•		Our ability to be flexible in the development and operations of joint venture properties;

	•		Our ability to successfully dispose of properties on terms that are favorable to us;

	•		Inherent risks in the real estate business including, but not limited to, tenant defaults, potential liability relating to environmental matters and liquidity of real estate investments; and

	•		Other risks and uncertainties described herein, as well as those risks and uncertainties discussed from time to time in our other reports and other public filings with the Securities and Exchange Commission (“SEC”).

- 14 -

·~~Changes in general economic and business conditions, including performance of financial markets;~~

·~~Our continued qualification as a real estate investment trust, or “REIT”, for U.S. federal income tax purposes;~~

·~~Heightened competition for tenants and potential decreases in property occupancy;~~

·~~Potential increases in real estate construction costs;~~

·~~Potential changes in the financial markets and interest rates;~~

·~~Volatility in our stock price and trading volume;~~

·~~Our continuing ability to raise funds on favorable terms through the issuance of debt and equity in the capital markets;~~

·~~Our ability to successfully identify, acquire, develop and/or manage properties on terms that are favorable to us;~~

·~~Our ability to be flexible in the development and operation of joint venture properties;~~

·~~Our ability to successfully dispose of properties on terms that are favorable to us;~~

·~~Inherent risks in the real estate business including, but not limited to, tenant defaults, potential liability relating to environmental matters and liquidity of real estate investments; and~~

·Other risks and uncertainties described herein, as well as those risks and uncertainties discussed from time to time in our other reports and other public filings with the Securities and Exchange Commission (“SEC”).

This list of risks and uncertainties, however, is only a summary of some of the most important factors and is not intended to be exhaustive. Additional information regarding risk factors that may affect us is included under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007, which we filed with the SEC on February 29, 2008, and is updated by us from time to time in Quarterly Reports on Form 10-Q and other public filings.

Although we presently believe that the plans, expectations and results expressed in or suggested by the forward-looking statements are reasonable, all forward-looking statements are inherently subjective, uncertain and subject to change, as they involve substantial risks and uncertainties beyond our control. New factors emerge from time to time, and it is not possible for us to predict the nature, or assess the potential impact, of each new factor on our business. Given these uncertainties, we caution you not to place undue reliance on these forward-looking statements. We undertake no obligation to update or revise any of our forward-looking statements for events or circumstances that arise after the statement is made, except as otherwise may be required by law.

This list of risks and uncertainties, however, is only a summary of some of the most important factors and is not intended to be exhaustive. Additional information regarding risk factors that may affect us is included under the caption “Risk Factors” in Part II, Item 1A of this Report, and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007, which we filed with the SEC on February 29, 2008. The risk factors contained in our Annual Report are updated by us from time to time in Quarterly Reports on Form 10-Q and other public filings.

Business Overview

We are a self-administered and self-managed REIT that began operations through a related entity in 1972. A more complete description of our business, and of management’s philosophy and priorities, is included in our Annual Report on Form 10-K.

As of ~~March 31,~~September 30, 2008, we:

·~~Owned or jointly controlled 730 industrial, office, healthcare and retail properties (including properties under development), consisting of more than 122 million square feet; and~~

·Owned or jointly controlled approximately 7,600 acres of land with an estimated future development potential of more than 111 million square feet of industrial, office, healthcare and retail properties.

	•		Owned or jointly controlled 734 industrial, office, healthcare and retail properties (including properties under development), consisting of more than 126.0 million square feet; and

	•		Owned or jointly controlled more than 7,100 acres of land with an estimated future development potential of more than 107 million square feet of industrial, office, healthcare and retail properties.

We provide the following services for our properties and for certain properties owned by third parties and joint ventures:

	•		Property leasing;

	•		Property management;

	•		Asset management;

	•		Construction;

	•		Development; and

	•		Other tenant-related services.

We also develop or acquire properties with the intent to sell (hereafter referred to as “Build-for-Sale” properties). Build-for-Sale properties represent properties where our investment strategy results in a decision to sell the property within a relatively short time after it is placed in service. Build-for-Sale properties are generally identified as such prior to construction commencement and may either be sold or contributed to an unconsolidated entity in which we have an ownership interest or sold outright to third parties. The state of the capital markets has limited the access to financing for potential purchasers of our properties and, therefore, made it more difficult for us to execute our capital recycling program. Additionally, with the potential limits that the current state of the economy may place on our own ability to access debt financing at acceptable rates, management’s priorities with regard to uses of capital for development of new properties have been re-evaluated and, thus, new development commitments have been significantly curtailed.

- 15 -

·~~Property leasing;~~

·~~Property management;~~

·~~Asset management;~~

·~~Construction;~~

·~~Development; and~~

·~~Other tenant-related services.~~

Key Performance Indicators

Our operating results depend primarily upon rental income from our industrial, office, healthcare and ~~healthcare~~retail properties (“Rental Operations”). The following highlights the areas of Rental Operations that we consider critical for future revenue growth. All square footage totals and occupancy percentages reflect both wholly owned properties and properties in joint ventures.

Occupancy Analysis:Our ability to maintain favorable occupancy rates is a principal driver of ~~our results of~~maintaining and increasing rental revenues from continuing operations. The following table sets forth occupancy information regarding our in-service portfolio of rental properties ~~(excluding~~(including rental properties of unconsolidated joint ventures but excluding all in-service ~~properties developed or acquired with the intent to sell, which are referred to as “Build for Sale Properties”)~~Build-for-Sale properties) as of ~~March 31,~~September 30, 2008 and 2007, respectively (in thousands, except percentage data):

Total

Percent of

Square Feet

Total Square Feet

Percent Occupied

Type

2008

2007

2008

2007

2008

2007

Industrial

80,779

75,628

70.2
%
69.8
%
89.4
%
92.6
%
Office

32,757

31,862

28.4
%
29.4
%
88.6
%
91.9
%
Other

1,613

916

1.4
%
0.8
%
91.8
%
95.0
%
Total

115,149

108,406

100.0
%
100.0
%
89.2
%
92.4
%


	Total				Percent of
	Square Feet				Total Square Feet						Percent Occupied
Type	2008		2007		2008			2007			2008			2007
Industrial		88,764		76,539		71.5	%		69.8	%		89.3	%		93.8	%
Office		33,723		31,787		27.1	%		29.0	%		88.3	%		90.7	%
Other		1,691		1,306		1.4	%		1.2	%		90.0	%		92.8	%

Total		124,178		109,632		100.0	%		100.0	%		89.1	%		92.9	%

The decrease in occupancy ~~in the first quarter of~~at September 30, 2008, as compared to ~~the first quarter of~~September 30, 2007, is the result of ~~a significant~~an increase in developments which were not fully leased being placed in service between the two ~~periods, with certain of the rental properties placed in service not yet being stabilized.~~periods. There are ~~not~~no significant differences in occupancy between wholly owned properties and properties held by unconsolidated subsidiaries.

Lease Expiration and Renewal:Our ability to maintain and improve occupancy rates primarily depends upon our continuing ability to re-lease expiring space.The following table reflects our in-service portfolio lease expiration schedule by property type as of ~~March 31,~~September 30, 2008. The table indicates square footage and annualized net effective rents (based on ~~March~~September 2008 rental revenue) under expiring leases (in thousands, except percentage data):

- 16 -

Total

Portfolio

Industrial

Office

Other

Year of

Square

Ann. Rent

% of

Square

Ann. Rent

Square

Ann. Rent

Square

Ann. Rent

Expiration

Feet

Revenue

Revenue

Feet

Revenue

Feet

Revenue

Feet

Revenue

2008

7,157

$
39,518

5
%
5,502

$
20,741

1,622

$
18,238

33

$
539

2009

12,633

83,423

11
%
9,087

36,268

3,480

46,499

66

656

2010

13,645

99,750

14
%
9,427

40,614

4,205

58,949

13

187

2011

14,881

90,935

13
%
11,282

42,171

3,532

47,757

67

1,007

2012

10,840

75,951

11
%
7,390

29,285

3,404

45,777

46

889

2013

11,016

92,592

13
%
6,560

27,610

4,398

64,104

58

878

2014

6,476

39,609

6
%
4,890

18,226

1,558

20,918

28

465

2015

8,423

61,996

9
%
6,147

24,452

2,276

37,544

—

—

2016

4,170

28,310

4
%
3,000

10,836

959

15,031

211

2,443

2017

6,518

45,682

6
%
4,572

18,166

1,539

21,995

407

5,521

2018 and Thereafter

6,949

60,937

8
%
4,349

21,592

2,046

31,664

554

7,681

102,708

$
718,703

100
%
72,206

$
289,961

29,019

$
408,476

1,483

$
20,266

Total Portfolio Square Feet

115,149

80,779

32,757

1,613

Percent Occupied

89.2
%

89.4
%

88.6
%

91.8
%

Note: Excludes Build for Sale Properties.


	Total
	Portfolio								Industrial					Office					Other
Year of	Square			Ann. Rent		%of			Square			Ann. Rent		Square			Ann. Rent		Square			Ann. Rent
Expiration	Feet			Revenue		Revenue			Feet			Revenue		Feet			Revenue		Feet			Revenue
2008		2,613		$	13,453		3	%		2,037		$	7,441		561		$	5,801		15		$	211
2009		12,023			80,091		10	%		8,742			36,271		3,235			43,373		46			447
2010		14,190			100,269		13	%		10,090			42,687		4,087			57,395		13			187
2011		16,016			95,965		12	%		12,337			46,064		3,609			48,726		70			1,175
2012		11,315			79,127		10	%		7,771			30,408		3,501			47,908		43			811
2013		12,939			105,260		14	%		7,867			32,037		5,015			72,329		57			894
2014		8,787			55,054		7	%		6,749			24,469		2,004			30,021		34			564
2015		8,643			64,550		8	%		6,276			24,854		2,366			39,667		1			29
2016		4,904			32,249		4	%		3,527			11,947		1,166			17,859		211			2,443
2017		6,389			43,454		6	%		4,598			18,146		1,528			21,935		263			3,373
2018 and Thereafter		12,774			99,161		13	%		9,295			43,805		2,710			41,877		769			13,479

Total Leased		110,593		$	768,633		100	%		79,289		$	318,129		29,782		$	426,891		1,522		$	23,613


Total Portfolio Square Feet		124,178								88,764					33,723					1,691


Percent Occupied		89.1	%							89.3	%				88.3	%				90.0	%


Note:		Includes 100% of properties in unconsolidated joint ventures and excludes Build-for-Sale properties.

We renewed ~~70.6%~~74.3% and ~~81.6%~~73.1% of our leases up for renewal in the three and nine months ended ~~March 31,~~September 30, 2008, totaling approximately 1.9 million and 6.4 million square feet, respectively. This compares to renewals of 80.8% and 81.9% for the three and nine months ended September 30, 2007, totaling approximately ~~2.7~~2.9 million and ~~1.9~~8.5 million square feet, ~~respectively,~~respectively. The reduced overall renewal percentage is primarily due to a decline in the percentage of leases renewed in our bulk industrial portfolio. When bulk industrial leases are not renewed, it generally results in a greater impact on ~~which we~~the overall lease renewal percentage since the average square footage of our bulk industrial leases is significantly higher than that of our average office leases. We attained 7%4.0% and 5%4.9% growth in net effective ~~rents.~~

rents on these renewals in the three and nine months ended September 30, 2008, respectively.

The average term of renewals ~~decreased from 3.6 years in~~for the three and nine months ended ~~March 31, 2007~~September 30, 2008 was 4.3 and 3.7 years, respectively, compared to ~~3.2~~an average term of 3.0 and 3.9 years infor the three and nine months ended ~~March 31, 2008.~~

September 30, 2007, respectively.

Future Development:Another source of growth in earnings is the development of additional properties. These properties should provide future earnings through income upon sale or from Rental Operations income as they are placed in ~~service.~~ service and are leased. Considering the current state of the economy and the risks of significant constraints on access to capital, we have reduced the level of our wholly owned new development activities pending improvements in the economy and capital markets.

We had ~~13.6~~7.0 million square feet of property under development with total estimated costs upon completion of ~~$1.1 billion~~$832.1 million at ~~March 31,~~September 30, 2008 compared to ~~9.1~~16.6 million square feet with total costs of ~~$1.0~~$1.3 billion at ~~March 31,~~September 30, 2007. The square footage and estimated costs include both wholly owned and joint venture development activity at 100%.

- 17 -

The following table summarizes our properties under development as of ~~March 31,~~September 30, 2008 (in thousands, except percentage data):

Total

Anticipated

Estimated

Anticipated

In-Service

Square

Percent

Project

Stabilized

Date

Feet

Leased

Costs

Return (1)

Held for Rental Buildings:

2nd Quarter 2008

4,265

23
%
$
234,422

8.65
%
3rd Quarter 2008

2,010

32
%
166,759

9.10
%
4th Quarter 2008

248

34
%
48,875

9.24
%
Thereafter

758

68
%
164,401

8.73
%

7,281

31
%
$
614,457

8.84
%
Build for Sale Properties:

2nd Quarter 2008

1,044

100
%
86,654

8.30
%
3rd Quarter 2008

1,252

100
%
78,858

8.43
%
4th Quarter 2008

2,313

60
%
87,950

7.88
%
Thereafter

1,758

76
%
197,708

8.37
%

6,367

79
%
451,170

8.27
%
Total

13,648

53
%
$
1,065,627

8.60
%


						Total
Anticipated						Estimated		Anticipated
In-Service	Square		Percent			Project		Stabilized
Date	Feet		Leased			Costs		Return (1)
Held-for-Rental Buildings:
4^th Quarter 2008		569		40	%	$	64,235		9.57	%
1^st Quarter 2009		503		0	%		18,474		7.97	%
2^nd Quarter 2009		—		—			—		—
Thereafter		772		49	%		186,510		8.35	%

		1,844		33	%	$	269,219		8.62	%


Build-for-Sale Properties:
4^th Quarter 2008		1,532		38	%	$	61,358		8.84	%
1^st Quarter 2009		1,786		70	%		77,974		8.18	%
2^nd Quarter 2009		101		100	%		17,339		9.05	%
Thereafter		1,694		57	%		406,246		8.08	%

		5,113		57	%	$	562,917		8.21	%

Total		6,957		50	%	$	832,136		8.34	%

~~(1) Anticipated yield upon leasing 95% of the property.~~


(1)		Anticipated yield upon leasing 95% of the property.

Acquisition and Disposition Activity:Gross sales proceeds related to the dispositions of wholly owned ~~held for rental~~held-for-rental properties were ~~$18.6~~$62.6 million and $317.4 million for the ~~three~~nine months ended ~~March 31, 2008.~~September 30, 2008 and 2007, respectively. Dispositions of wholly owned Build-for-Sale properties resulted in $222.8 million in proceeds for the nine months ended September 30, 2008, compared to $85.0 million for such dispositions in the same period in 2007. Additionally, our share of proceeds from sales of properties within unconsolidated joint ventures, in which we have less than a 100% interest, totaled ~~$25.5~~$35.1 million and $9.3 million for the ~~three~~nine months ended ~~March 31, 2008. For the three months ended March 31,~~September 30, 2008 and 2007, ~~proceeds totaled $144.9 million for~~respectively. The decrease in wholly owned ~~held for rental properties and $5.1 million for our share of property sales~~held-for-rental dispositions is partially attributable to the current credit environment impacting potential buyers’ ability to finance acquisitions. Proceeds from ~~unconsolidated joint ventures. We had no~~ dispositions of wholly owned Build-for-Sale properties ~~developed for sale rather than rental for~~increased largely as the result of $146.2 million in current year proceeds from five buildings sold to a 20% owned unconsolidated joint venture with whom we have an agreement to sell up to $800.0 million in Build-for-Sale properties over the next three years.

For the nine months ended March 31, 2008, but recognized gross proceeds of $25.9 million for such dispositions in the same period in 2007. Although the current credit environment has affected certain buyers’ ability to finance acquisitions, the timing of major transactions is the main reason for the decrease in disposition activity.

~~For the three months ended March 31,~~September 30, 2008, we acquired ~~$27.3~~$60.5 million of income producing properties comprised of ~~two~~five industrial real estate properties in Savannah, ~~Georgia.~~Georgia, compared to acquisitions of $47.4 million of income producing properties for the same period in 2007. In addition, in the first ~~quarter~~nine months of 2007, we continued our expansion into the healthcare real estate market by completing the acquisition of Bremner Healthcare Real Estate, a national health care development and management firm. The initial consideration paid to the sellers totaled $47.1 million, and the sellers may be eligible for further contingent payments over three years following the acquisition date. We also acquired ~~$15.4~~$37.4 million of undeveloped land in the ~~three~~nine months ended ~~March 31,~~September 30, 2008, compared to ~~$34.0~~$156.8 million in the same period in 2007.

Funds From Operations

Funds From Operations (“FFO”) is used by industry analysts and investors as a supplemental operating performance measure of an equity ~~REIT like Duke.~~REIT. FFO is calculated in accordance with the definition that was adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from net income determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”). FFO is a non-GAAP financial measure developed by NAREIT to compare the operating performance of REITs. The most comparable GAAP measure is net income (loss). FFO should not be considered as a substitute for net income or any other measures derived in accordance with GAAP and may not be comparable to other similarly titled measure of other companies.

- 18 -

Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry analysts and investors have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. FFO, as defined by NAREIT, represents GAAP net income (loss), excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated real estate assets, plus certain non-cash items such as real estate depreciation and amortization, and after similar adjustments for unconsolidated partnerships and joint ventures.

Management believes that the use of FFO, combined with the required primary GAAP presentations, improves the understanding of operating results of REITs among the investing public and makes comparisons of REIT operating results more meaningful. Management believes FFO is a useful measure for reviewing comparative operating and financial performance (although FFO should be reviewed in conjunction with net income, which remains the primary measure of performance) because by excluding gains or losses related to sales of previously depreciated real estate assets and excluding real estate asset depreciation and amortization, FFO provides a useful comparison of the operating performance of our real estate between periods or as compared to different companies.

The following table shows a reconciliation of net income available for common shareholders to the calculation of FFO for the three and nine months ended ~~March 31,~~September 30, 2008 and 2007, respectively (in thousands):


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
Net income available for common shareholders	$	13,054		$	53,387		$	34,899		$	159,026
Adjustments:
Depreciation and amortization		75,260			72,076			230,956			208,222
Company share of joint venture depreciation and amortization		14,450			10,574			28,769			21,152
Earnings from depreciable property sales — wholly owned		(1,299	)		(39,670	)		(11,940	)		(111,751	)
Earnings from depreciable property sales — share of joint venture		—			3			(495	)		(1,828	)
Minority interest share of adjustments		(4,363	)		(2,697	)		(12,351	)		(7,539	)

Funds From Operations	$	97,102		$	93,673		$	269,838		$	267,282

- 19 -

2008

2007

Net income available for common shareholders

$
4,048

$
68,563

Adjustments:

Depreciation and amortization

79,121

67,739

Company share of joint venture depreciation and amortization

6,928

4,968

Earnings from depreciable property sales – wholly owned

(1,110
)
(51,720
)
Earnings from depreciable property sales – share of joint venture

(19
)
(1,960
)
Minority interest share of adjustments

(4,326
)
(1,263
)
Funds From Operations

$
84,642

$
86,327

Results of Operations

A summary of our operating results and property statistics for the three and nine months ended ~~March 31,~~September 30, 2008 and 2007, respectively, is as follows (in thousands, except number of properties and per share data):

2008

2007

Rental Operations revenues from Continuing Operations

$
227,901

$
209,796

Service Operations revenues from Continuing Operations

14,776

14,730

Earnings from Continuing Rental Operations

22,083

24,921

Earnings from Continuing Service Operations

4,413

6,934

Operating income

14,334

18,395

Net income available for common shareholders

$
4,048

$
68,563

Weighted average common shares outstanding

146,331

136,823

Weighted average common shares and potential dilutive securities

154,596

149,465

Basic income per common share:

Continuing operations

$
.02

$
.13

Discontinued operations

$
.01

$
.37

Diluted income per common share:

Continuing operations

$
.02

$
.13

Discontinued operations

$
.01

$
.36

Number of in-service properties at end of period

698

691

In-service square footage at end of period

115,149

108,406


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2008		2007		2008		2007
Rental Operations revenues from Continuing Operations	$	216,869	$	206,841	$	658,979	$	616,356
Service Operations revenues from Continuing Operations		29,066		20,273		66,978		57,042
Earnings from Continuing Rental Operations		15,584		20,801		57,188		72,115
Earnings from Continuing Service Operations		21,738		7,301		36,541		26,253
Operating income		24,400		23,745		58,958		69,086
Net income available for common shareholders		13,054		53,387		34,899		159,026
Weighted average common shares outstanding		146,966		137,576		146,680		137,110
Weighted average common shares and potential dilutive securities		155,344		147,651		155,105		147,986
Basic income per common share:
Continuing operations	$	.08	$	.12	$	.15	$	.37
Discontinued operations	$	.01	$	.27	$	.09	$	.79
Diluted income per common share:
Continuing operations	$	.08	$	.12	$	.15	$	.37
Discontinued operations	$	.01	$	.27	$	.09	$	.78

Number of in-service properties at end of period		724		687		724		687
In-service square footage at end of period		124,178		109,632		124,178		109,632

Comparison of Three Months Ended ~~March 31,~~September 30, 2008 to Three Months Ended ~~March 31,~~September 30, 2007

Rental ~~Income~~Revenue From Continuing Operations

Overall, rental revenue from continuing operations increased from ~~$202.1~~$205.0 million for the ~~three months~~quarter ended ~~March 31,~~September 30, 2007 to ~~$217.8~~$216.7 million for the same period in 2008. The following table reconciles rental revenue from continuing operations by reportable segment to our total reported rental revenue from continuing operations for the three months ended ~~March 31,~~September 30, 2008 and 2007, respectively (in thousands):

2008

2007

Rental Revenue:

Office

$
148,245

$
143,826

Industrial

61,316

54,214

Non-reportable segments

8,241

4,065

Total

$
217,802

$
202,105


	2008		2007
Rental Revenue:
Office	$	144,026	$	144,729
Industrial		62,856		52,497
Non-reportable segments		9,783		7,777

Total	$	216,665	$	205,003

The following factors contributed to these results:

·	•	We acquired ~~nine~~12 properties and placed 4071 developments in service from ~~April~~January 1, 2007 to ~~March 31,~~September 30, 2008 that provided incremental revenues of ~~$12.6~~$18.6 million in the ~~first~~third quarter of 2008, as compared to the same period in 2007. The slight decrease in overall occupancy in our wholly owned in-service properties from 92.3% to 87.6% was the result of some of these newly developed speculative properties not yet being fully leased, rather than from occupancy decreases in our existing base of rental properties.
·
	•	Lease termination fees, ~~increased~~which are included in rental revenue from ~~$3.4~~continuing operations, decreased from $9.5 million in the ~~first~~third quarter of 2007 to ~~$7.6~~$1.6 million in the ~~first~~third quarter of 2008.

- 20 -

Rental Expenses and Real Estate Taxes

The following table reconciles rental expenses and real estate taxes by reportable segment to our total reported amounts in the statements of operations for the three months ended ~~March 31,~~September 30, 2008 and 2007, respectively (in thousands):

2008

2007

Rental Expenses:

Office

$
40,969

$
40,488

Industrial

8,186

7,309

Non-reportable segments

2,872

1,252

Total

$
52,027

$
49,049

Real Estate Taxes:

Office

$
17,443

$
17,237

Industrial

7,738

6,239

Non-reportable segments

2,363

1,567

Total

$
27,544

$
25,043


	2008		2007
Rental Expenses:
Office	$	39,151	$	37,815
Industrial		5,988		5,360
Non-reportable segments		4,327		2,651

Total	$	49,466	$	45,826


Real Estate Taxes:
Office	$	17,838	$	16,948
Industrial		7,585		6,693
Non-reportable segments		1,992		1,721

Total	$	27,415	$	25,362

Of the overall ~~$3.0~~$3.6 million increase in rental expenses in the ~~first~~third quarter of 2008, compared to the same period in 2007, $2.7 million was attributable to properties acquired and developments placed in service from January 1, 2007 to September 30, 2008.

Of the overall $2.1 million increase in real estate taxes in the third quarter of 2008, compared to the same period in 2007, $1.5 million was attributable to properties acquired and developments placed in service from ~~April~~January 1, 2007 to ~~March 31, 2008.~~

Of the overall $2.5 million increase in real estate taxes in the first quarter of 2008, compared to the same period in 2007, $1.2 million was attributable to properties acquired and developments placed in service from April 1, 2007 to March 31,September 30, 2008. The remaining increase in real estate taxes was driven by tax increases in ~~assessments by municipal authorities in~~our existing base of properties throughout our different markets.

Interest Expense

Interest expense increased from ~~$44.4~~$43.4 million in the ~~first~~third quarter of 2007 to ~~$47.5~~$49.3 million in the ~~first~~third quarter of 2008 primarily due to ~~carrying~~a net increase in average unsecured debt outstanding during the third quarter of 2008 compared to the third quarter of 2007 and new debt being issued at higher levels of borrowings under DRLP’s unsecured line of credit. The outstanding balance increased from $330.0 million at March 31, 2007 to $631.0 million at March 31, 2008. This was somewhat offset by a reduction in interestoverall borrowing rates ~~between~~than the ~~two periods.~~

debt maturing over the last twelve months.

Depreciation and Amortization

Depreciation and amortization expense increased from ~~$66.4~~$71.4 million during the ~~three months ended March 31,~~third quarter of 2007 to ~~$78.7~~$75.1 million for the same period in 2008 ~~primarily~~ due to ~~the following:~~

·		~~We recorded $5.8 million of additional depreciation expense for a portfolio of properties that no longer meets the criteria for being classified as held for sale.~~

·		~~Our held-for-rental asset base increased from acquisitions and developments during 2007.~~

·		~~We accelerated depreciation for certain assets related to terminated leases.~~

increases in our held-for-rental asset base from acquisitions and developments during 2007 and 2008.

Service Operations

Service Operations ~~consists~~consist primarily of sales of Build-for-Sale properties ~~developed or acquired with the intent to sell within a short period of time~~ and the leasing, management, construction and development services for joint venture properties and properties owned by third parties. These operations are heavily influenced by the current state of the economy, as leasing and management fees are dependent upon occupancy while construction and development services rely on the expansion of business operations of ~~third party~~third-party property owners. Earnings from Service Operations ~~decreased~~increased from ~~$6.9~~$7.3 million for the three months ended ~~March 31,~~September 30, 2007 to ~~$4.4~~$21.7 million for the three months ended ~~March 31, 2008,~~September 30, 2008. The increase was primarily ~~as a~~the result of ~~gains~~the gain on the sale of ~~two~~seven Build-for-Sale properties totaling ~~$2.9~~$20.3 million in the three months ended ~~March 31, 2007~~September 30, 2008, compared to ~~no such sales~~gains on the sale of one property totaling $1.1 million during the ~~three months ended March 31, 2008.~~same period in 2007. Partially offsetting the aforementioned increase in gains on Build-for-Sale properties was an increase in our total cost estimate for a third-party fixed price construction contract, which reduced the margin on the contract and, therefore, reduced earnings from Service Operations.

- 21 -

General and Administrative Expense

General and administrative expenses ~~decreased~~increased from ~~$13.5~~$3.9 million for the three months ended ~~March 31,~~September 30, 2007 to ~~$12.2~~$10.4 million for the same period in 2008. General and administrative expenses consist of two components. The first component is direct expenses that are not attributable to specific assets such as legal fees, audit fees, marketing costs, investor relations expenses and other corporate overhead. The second component is the unallocated indirect costs determined to be unrelated to the operation of our owned properties and Service Operations. Those indirect costs not allocated to these operations are charged to general and administrative expenses. ~~While there~~The increase in general and administrative expenses was ~~an increase~~due to a decrease in the amount of indirect costs allocated to ~~construction~~leasing due to a decrease in both wholly owned and third-party leasing activity in the three months ended September 30, 2008 compared to the same period in 2007, ~~due to increases in wholly-owned and third-party activity in these areas, this~~as the third quarter of 2007 was a record leasing period for us. This was partially offset by ~~an increase~~a decrease in the overall pool of overhead costs in the third quarter of 2008, ~~necessitated by our overall growth.~~

compared to the same period in 2007.

Discontinued Operations

The results of operations for properties sold during the year to unrelated parties or classified as held-for-sale ~~to unrelated parties~~ at the end of the period are required to be classified as discontinued operations. The property specific components of earnings that are classified as discontinued operations include rental revenues, rental expenses, real estate taxes, allocated interest expense, depreciation expense and minority interest, as well as the net gain or loss on the disposition of properties.

The operations of 3424 buildings are currently classified as discontinued operations for the three months ended ~~March 31,~~September 30, 2008 and ~~March 31,~~September 30, 2007. These 3424 buildings consist of 1718 industrial and 176 office properties. As a result, we classified net income (loss) from operations, net of minority interest, of ~~$(173,000)~~$(165,000) and ~~$2.0 million~~$299,000 in discontinued operations for each of the three months ended ~~March 31,~~September 30, 2008 and 2007, respectively.

Of these properties, ~~one was~~two were sold during the ~~first~~third quarter of 2008 and ~~10 properties~~15 were sold during the ~~first~~third quarter of 2007. The gains on disposal of these properties, net of minority interest, of ~~$1.1~~$1.2 million and ~~$48.3~~$37.2 million for the three months ended ~~March 31,~~September 30, 2008 and 2007, respectively, are also reported in discontinued operations.

Comparison of Nine Months Ended September 30, 2008 to Nine Months Ended September 30, 2007

Rental Revenue From Continuing Operations

Overall, rental revenue from continuing operations increased from $598.9 million for the nine months ended September 30, 2007 to $641.8 million for the same period in 2008. The following table reconciles rental revenue from continuing operations by reportable segment to our total reported rental revenue from continuing operations for the nine months ended September 30, 2008 and 2007, respectively (in thousands):


	2008		2007
Rental Revenue:
Office	$	427,393	$	420,930
Industrial		184,691		160,031
Non-reportable segments		29,711		17,917

Total	$	641,795	$	598,878

- 22 -

The following factors contributed to these results:

	•		We acquired 12 properties and placed 71 developments in service from January 1, 2007 to September 30, 2008 that provided incremental revenues of $53.4 million for the first nine months of 2008, as compared to the same period in 2007. The slight decrease in overall occupancy in our wholly owned in-service properties from 92.3% to 87.6% was the result of some of these newly developed speculative properties not yet being fully leased, rather than from occupancy decreases in our existing base of rental properties.

	•		Lease termination fees, which are included in rental revenue from continuing operations, decreased from $14.7 million in the first nine months of 2007 to $6.6 million in the same period of 2008.

	•		We contributed eight properties to an unconsolidated joint venture in 2007, resulting in an $11.0 million reduction in revenues for the nine months ended September 30, 2008, as compared to the same period in 2007. Of these properties, seven were contributed in the second quarter of 2007 and one was contributed in the fourth quarter of 2007.

	•		The remaining increase in rental revenues is primarily the result of a $6.5 million increase in revenues from reimbursable rental expenses.

Rental Expenses and Real Estate Taxes

The following table reconciles rental expenses and real estate taxes by reportable segment to our total reported amounts in the statement of operations for the nine months ended September 30, 2008 and 2007, respectively (in thousands):


	2008		2007
Rental Expenses:
Office	$	116,298	$	112,643
Industrial		20,416		17,858
Non-reportable segments		10,765		6,168

Total	$	147,479	$	136,669


Real Estate Taxes:
Office	$	52,959	$	50,585
Industrial		22,804		19,248
Non-reportable segments		6,830		5,215

Total	$	82,593	$	75,048

Of the overall $10.8 million increase in rental expenses in the first nine months of 2008, compared to the same period in 2007, $7.9 million was attributable to properties acquired and developments placed in service from January 1, 2007 to September 30, 2008. Increases in utility costs and snow removal in our existing base of properties compared to the nine months ended September 30, 2007 also contributed to the increase in rental expenses.

Of the overall $7.5 million increase in real estate taxes in the first nine months of 2008, compared to the same period in 2007, $4.6 million was attributable to properties acquired and developments placed in service from January 1, 2007 to September 30, 2008. The remaining increase in real estate taxes was driven by tax increases in our existing base of properties throughout our different markets.

Interest Expense

Interest expense increased from $127.9 million for the nine months ended September 30, 2007 to $143.7 million for the same period in 2008 primarily due to a net increase in average unsecured debt borrowings during the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007 and new debt being issued at higher overall borrowing rates than the debt maturing over the last twelve months.

- 23 -

Depreciation and Amortization

Depreciation and amortization expense increased from $204.6 million for the first nine months of 2007 to $228.1 million for the same period in 2008 primarily due to the following:

	•		We recorded $5.8 million of additional depreciation expense in the first quarter of 2008 for a portfolio of properties that no longer met the criteria for being classified as held-for-sale.

	•		Our held-for-rental asset base increased from acquisitions and developments during 2007 and 2008.

Service Operations

Earnings from Service Operations increased from $26.3 million for the nine months ended September 30, 2007 to $36.5 million for the nine months ended September 30, 2008. The increase was primarily a result of gains on the sale of nine Build-for-Sale properties totaling $26.7 million in the nine months ended September 30, 2008 compared to gains on the sale of six properties totaling $10.8 million for the nine months ended September 30, 2007. Partially offsetting the aforementioned increase in gains on Build-for-Sale properties was an increase in our total cost estimate for a third-party fixed price construction contract, which reduced the margin on the contract and, therefore, reduced earnings from Service Operations.

General and Administrative Expense

General and administrative expenses increased from $27.9 million for the nine months ended September 30, 2007 to $29.5 million for the same period in 2008. The increase in general and administrative expenses from the nine months ended September 30, 2007 is the result of a decrease in the allocation of costs to leasing activities due to a decrease in wholly owned leasing activity, in addition to an increase in the overall pool of indirect costs, partially offset by an increase in the allocation of costs to construction activities due to an increase in third-party construction volume.

Discontinued Operations

The operations of 39 buildings are currently classified as discontinued operations for the nine months ended September 30, 2008 and September 30, 2007. These 39 buildings consist of 20 industrial and 19 office properties. As a result, we classified net income from operations, net of minority interest, of $1.7 million and $4.1 million in discontinued operations for the nine months ended September 30, 2008 and 2007, respectively.

Of these properties, seven were sold during the first nine months of 2008 and 30 were sold during the first nine months of 2007. The gains on disposal of these properties, net of minority interest, of $11.3 million and $104.5 million for the nine months ended September 30, 2008 and 2007, respectively, are also reported in discontinued operations.

Liquidity and Capital Resources

Sources of Liquidity

We expect to meet our short-term liquidity requirements over the next ~~twelve~~12 months, including payments of dividends and distributions, as well as recurring capital expenditures relating to maintaining our current real estate assets, primarily through working capital and proceeds received from real estate dispositions.

Although we historically have not used any other sources of funds to pay for recurring capital expenditures on our current real estate investments, we may rely on the temporary use of borrowings needed to fund such expenditures during periods of high leasing volume.

- 24 -

We expect to meet long-term liquidity requirements, such as scheduled mortgage and unsecured debt maturities, property acquisitions, financing of development activities and other non-recurring capital improvements, primarily through the following sources:

·	•	undistributed cash provided by operating activities;

	•	issuance of additional equity, including common and preferred shares;
·
	•	issuance of additional debt securities;
·	~~undistributed cash provided by operating activities; and~~
·	•	proceeds received from real estate ~~dispositions.~~ dispositions; and

	•	transactions with unconsolidated entities.

In recognition of current economic conditions, we are constantly monitoring the state of the capital markets and accordingly managing our capital needs, ~~specifically~~such as development expenditures and commitments. We will continue to utilize ~~DRLP’s~~Duke Realty Limited Partnership’s (“DRLP”) $1.3 billion unsecured revolving line of credit to provide initial funding of new development expenditures and anticipate using multiple sources of capital including unsecured public debt, secured debt, preferred stock and private equity, as available, to meet our ~~long term~~long-term capital needs.

Rental Operations

We believe our principal source of liquidity, cash flows from Rental Operations, provides a stable source of cash to fund operational expenses. We believe that this cash-based revenue stream is substantially aligned with revenue recognition (except for periodic straight-line rental income accruals and amortization of above or below market rents) as cash receipts from the leasing of rental properties are generally received in advance of or a short time following the actual revenue recognition.

We are subject to risks of decreased occupancy through market conditions, as well as tenant defaults and bankruptcies, and potential reduction in rental rates upon renewal or re-letting of properties, each of which would result in reduced cash flow from operations. These risks may be heightened as a result of the current state of the economy. However, we believe that these risks may be mitigated by our relatively strong market presence in most of our markets and the fact that we perform in-house credit reviews and analyses on major tenants and all significant leases before they are executed.

Debt and Equity Securities

We use DRLP’s line of credit to fund development activities, acquire additional rental properties and provide working capital.

At ~~March 31,~~September 30, 2008, we had on file with the SEC an automatic shelf registration statement on Form S-3, relating to the offer and sale, from time to time, of an indeterminate amount of DRLP’s debt securities (including guarantees thereof), and the Company’s common shares, preferred shares, ~~depositary~~depository shares, warrants, stock purchase contracts and ~~Units~~units comprised of one or more of ~~the securities described therein.~~these securities. From time to time, we expect to issue additional securities under this automatic shelf registration statement to fund development and acquisition of additional rental properties and to fund the repayment of the credit facility and other long-term debt upon maturity.

In May 2008, we issued $325.0 million of 6.25% senior unsecured notes due in May 2013.

After taking into account the effect of forward starting swaps, which were designated as cash flow hedges for this offering, the notes had an effective interest rate of 7.36%.

The indentures (and related supplemental indentures) governing our outstanding series of notes ~~also~~ require us to comply with financial ratios and other covenants regarding our operations. We were in compliance with all such covenants as well as applicable covenants under our unsecured line of ~~March 31,~~credit, as of September 30, 2008.

- 25 -

Sale of Real Estate Assets

We utilize sales of real estate assets as an additional source of liquidity. We pursue opportunities to sell real estate assets at favorable prices to capture value created by us, as well as to improve the overall quality of our portfolio by recycling sales proceeds into new properties with greater value creation opportunities.

We had entered into a preliminary agreement to sell a portfolio of 14 buildings in our Cleveland Office market in mid-2007. In the first quarter of 2008, the preliminary agreement was cancelled due to the potential buyer ~~not~~ being ~~able~~unable to secure financing on acceptable terms. ItOur strategy is ~~our strategy~~ to operate ~~the~~these buildings through our Rental Operations until we are able to sell the buildings at a favorable price.

The state of the current credit markets has made it more difficult for prospective buyers of our properties to obtain financing.

Transactions with Unconsolidated Entities

Transactions with unconsolidated partnerships and joint ventures also provide a source of liquidity. From time to time we will sell properties to an unconsolidated entity, while retaining a continuing interest in that entity, and receive proceeds commensurate to the interest that we do not own. Additionally, unconsolidated entities will from time to time obtain debt financing and will distribute to us, and our partners, all or a portion of the proceeds.

In May 2008, we entered into an unconsolidated joint venture that will acquire up to $800.0 million of our newly developed bulk industrial build-to-suit projects over the next three years. Properties will be sold to the joint venture upon completion, lease commencement and satisfaction of other customary conditions. We will retain a 20% equity interest in the joint venture. As of September 30, 2008, the joint venture has acquired five properties from us and we received year-to-date net sale proceeds and financing distributions of approximately $164.7 million.

In January 2008, we sold a tract of land to an unconsolidated joint venture in which we hold a 50% equity interest and received a distribution, commensurate to our partner’s 50% ownership interest, of approximately $38.3 million.

Uses of Liquidity

Our principal uses of liquidity include the following:

· ~~property investments;~~

· ~~recurring leasing/capital costs;~~

· ~~dividends and distributions to shareholders and unitholders;~~

· ~~long-term debt maturities; and~~

· ~~other contractual obligations.~~

	•		property investment;

	•		recurring leasing/capital costs;

	•		dividends and distributions to shareholders and unitholders;

	•		long-term debt maturities; and

	•		other contractual obligations.

Property Investment

We evaluate development and acquisition opportunities based upon market outlook, supply and long-term growth potential. Our ability to make future property investments is dependent upon our continued access to our longer-term sources of liquidity including the issuances of debt or equity securities as well as disposing of selected properties. In light of current economic conditions, management continues to evaluate our investment priorities and we are limiting new development expenditures.

- 26 -

Recurring Expenditures

One of our principal uses of our liquidity is to fund the recurring leasing/capital expenditures of our real estate investments. The following is a summary of our recurring capital expenditures for the ~~three~~nine months ended ~~March 31,~~September 30, 2008 and 2007, respectively (in thousands):


	2008		2007		2008		2007
Recurring tenant improvements	$	10,803	$	10,333	$	28,075	$	32,987
Recurring leasing costs	6,098		7,732			18,934		22,771
Building improvements	967		974			5,387		4,894

Totals	$	17,868	$	19,039	$	52,396	$	60,652

Dividend and Distribution Requirements

We are required to meet the distribution requirements of the Internal Revenue Code of 1986, as amended, in order to maintain our REIT status. Because depreciation is a non-cash expense, cash flow will typically be greater than operating income. We paid distributions of $0.480 per common share in the first and second quarters of 2008, $0.485 per common share in the third quarter of 2008, and our Board of Directors declared dividends of $0.485 per share for the fourth quarter of 2008. Our future distributions will be declared at the discretion of our Board of Directors and will be subject to our future capital needs and availability.

At September 30, 2008, we had six series of preferred stock outstanding. The annual dividends on our preferred stock range between $1.63 and $2.09 per share and are paid in arrears quarterly.

Debt Maturities

Debt outstanding at ~~March 31,~~September 30, 2008 totaled ~~$4.3~~$4.4 billion with a weighted average interest rate of ~~5.48%,~~5.66% maturing at various dates through 2028. We had ~~$3.1~~$3.3 billion of unsecured ~~debt, $635.1~~notes, $533.7 million outstanding on our unsecured lines of credit and ~~$506.1~~$520.0 million of secured debt outstanding at ~~March 31,~~September 30, 2008. Scheduled principal amortization and maturities of such debt totaled ~~$161.8~~$268.1 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2008.

The following is a summary of the scheduled future amortization and maturities of our indebtedness at ~~March 31,~~September 30, 2008 (in thousands, except percentage data):


	Future Repayments						Weighted Average
	Scheduled						Interest Rate of
Year	Amortization		Maturities		Total		Future Repayments
2008	$	2,557	$	9,940	$	12,497		7.29	%
2009		10,957		275,000		285,957		7.38	%
2010		10,717		700,000		710,717		3.91	%
2011		10,823		1,041,849		1,052,672		5.12	%
2012		8,906		201,216		210,122		5.92	%
2013		8,889		475,000		483,889		6.51	%
2014		9,109		272,112		281,221		6.46	%
2015		7,700		—		7,700		6.39	%
2016		6,822		490,900		497,722		6.16	%
2017		5,242		469,324		474,566		5.95	%
2018		3,304		300,000		303,304		6.09	%
Thereafter		27,500		50,000		77,500		7.03	%

	$	112,526	$	4,285,341	$	4,397,867		5.66	%

- 27 -

Future Repayments

Weighted Average

Scheduled

Interest Rate of

Year

Amortization

Maturities

Total

Future Repayments

2008

$
8,610

$
109,940

$
118,550

6.79
%
2009

11,099

275,000

286,099

7.36
%
2010

10,809

806,000

816,809

3.78
%
2011

10,781

1,037,207

1,047,988

5.11
%
2012

8,649

201,216

209,865

5.89
%
2013

8,571

150,000

158,571

4.71
%
2014

8,661

272,112

280,773

6.44
%
2015

6,774

—

6,774

6.05
%
2016

5,763

490,900

496,663

6.16
%
2017

4,517

457,761

462,278

5.94
%
2018

3,055

300,000

303,055

6.16
%
Thereafter

24,714

50,000

74,714

6.76
%

$
112,003

$
4,150,136

$
4,262,139

5.48
%

Historical Cash Flows

Cash and cash equivalents were ~~$15.5~~$3.5 million and ~~$9.5~~$18.4 million at ~~March 31,~~September 30, 2008 and 2007, respectively. The following highlights significant changes in net cash associated with our operating, investing and financing activities (in millions):

Three Months Ended March 31,

2008

2007

Net Cash Provided by

Operating Activities

$
2.2

$
12.1

Net Cash Provided by (Used for)

Investing Activities

$
(154.3
)
$
8.4

Net Cash Provided by (Used for)

Financing Activities

$
119.6

$
(79.5
)


	Nine Months Ended
	September 30,
	2008			2007
Net Cash Provided by Operating Activities	$	329.3		$	135.3

Net Cash Provided by (Used for) Investing Activities	$	(428.7	)	$	(145.2	)

Net Cash Provided by (Used for) Financing Activities	$	54.9		$	(40.2	)

Operating Activities

Cash flows from operating activities provide the cash necessary to meet normal operational requirements of our Rental Operations and Service Operations activities. The receipt of rental income from Rental Operations continues to provide the primary source of our revenues and operating cash flows. In addition, we develop buildings with the intent to sell them at or soon after completion, which provides another significant source of operating cash flow activity. Highlights of such ~~activity~~activities are as follows:

·~~During the three-month period ended March 31, 2008, we incurred Build for Sale Property development~~ costs of $41.2 million, compared to $70.5 million for the period ended March 31, 2007. The difference is reflective of the decreased activity in our held-for-sale pipeline. The pipeline of held-for-sale projects under construction as of March 31, 2008, has anticipated costs upon completion of $451.2 million.

·We had no sales of Build for Sale Properties in the first quarter of 2008, compared to sales of two Build for Sale Properties for the same period in 2007. We received net proceeds of $25.4 million and recognized pre-tax gains of $2.9 million on the sales in the first quarter of 2007.

	•		During the nine-month period ended September 30, 2008, we incurred Build-for-Sale property development costs of $159.2 million, compared to $238.6 million for the same period ended September 30, 2007. The difference is reflective of the decreased activity in our Build-for-Sale pipeline as there were certain large projects under development during the first half of 2007 that were placed in service in the third quarter of 2007. The pipeline of Build-for-Sale projects under construction as of September 30, 2008 has anticipated total costs upon completion of $562.9 million.

	•		We sold nine Build-for-Sale properties in the first nine months of 2008, compared to six such properties sold in the same period in 2007, receiving net proceeds of $220.6 million and $83.1 million, respectively. We recognized pre-tax gains of $26.7 million and $10.8 million on these sales for the nine-month periods ended September 30, 2008 and 2007, respectively.

Investing Activities

Investing activities are one of the primary uses of our liquidity. Development and acquisition activities typically generate additional rental revenues and provide cash flows for operational requirements. Highlights of significant cash sources and uses are as follows:

	•		Held-for-rental development costs increased to $365.8 million for the nine-month period ended September 30, 2008 from $324.3 million for the same period in 2007 largely as the result of the completion of several projects that we started in 2007.

	•		During the first nine months of 2008, we paid cash of $20.1 million for real estate acquisitions and $35.6 million for undeveloped land acquisitions, compared to $82.4 million for real estate acquisitions and $155.6 million for acquisitions of undeveloped land in the same period in 2007.

	•		Sales of land and depreciated property provided $85.7 million in net proceeds for the nine-month period ended September 30, 2008, compared to $405.1 million for the same period in 2007. Dispositions in the first nine months of 2007 included a portfolio of eight office properties in the Cleveland market for net proceeds of $139.3 million and a portfolio of twelve industrial properties in the St. Louis market for net proceeds of $64.2 million.

	•		We received capital distributions (as a result of the sale of properties or refinancing) of $65.6 million from unconsolidated companies for the nine-month period ended September 30, 2008, compared to $207.5 million for the same period in 2007.

- 28 -

·Development costs increased to $151.9 million for the three-month period ended March 31, 2008 from $96.6 million for the same period in 2007 as the result of an increase in development activity in 2008.

·During the first quarter of 2008, we paid cash of $8.7 million for real estate acquisitions and $14.7 million for undeveloped land acquisitions, compared to $36.1 million in real estate acquisitions and $34.7 million in acquisitions of undeveloped land in the same period in 2007.

·Sales of land and depreciated property provided $26.7 million in net cash proceeds for the three- month period ended March 31, 2008, compared to $176.7 million for the same period in 2007. The first quarter of 2007 included the sale of an eight building portfolio of office properties in the Cleveland market for net proceeds of $139.3 million. We continue to dispose of non-strategic and older properties as part of our capital recycling program to fund acquisitions and new development while improving the overall quality of our investment portfolio.

·We received financing distributions (as the result of the sale of properties or refinancing) of $38.8 million from unconsolidated companies in the three-month period ended March 31, 2008, compared to $53.5 million for the same period in 2007.

Financing Activities

The following items highlight major ~~fluctuation~~fluctuations in net cash flow related to financing activities in the first ~~quarter~~nine months of 2008 compared to the same period in 2007:

	•		In January 2008, we repaid $125.0 million of senior unsecured notes with an effective interest rate of 3.36% on their scheduled maturity date.

	•		In February 2008, we received net proceeds of approximately $290.0 million from the issuance of shares of our Series O Cumulative Redeemable Preferred Stock; we had no new preferred equity issuances in the same period in 2007.

	•		We decreased net borrowings on DRLP’s $1.3 billion line of credit by $18.0 million for the nine months ended September 30, 2008, compared to a decrease of $15.0 million for the same period in 2007.

	•		In March 2008, we settled three forward-starting swaps and made a cash payment of $14.6 million to the counterparties.

	•		In May 2008, we repaid $100.0 million of senior unsecured notes with an effective interest rate of 6.76% on their scheduled maturity date.

	•		In May 2008, we issued $325.0 million of senior unsecured notes due in May 2013 with an effective interest rate of 7.36%.

Contractual Obligations

Aside from changes in long-term debt, there have not been material changes in our outstanding commitments since December 31, 2007 as previously discussed in our 2007 Annual Report on Form 10-K. In ~~January 2008,~~most cases we ~~repaid $125.0 million of senior unsecured notes~~may withdraw from land purchase contracts with ~~an effective interest rate of 3.36% on their scheduled maturity date.~~

·~~In February 2008, we received net proceeds of approximately $290.4 million from~~ the ~~issuance of our Series O Cumulative Redeemable Preferred Shares; we had no new preferred equity issuances in the same period in 2007.~~

·~~We increased net borrowings on DRLP’s $1.3 billion line of credit by $88.0 million and $13.0 million for the three months ended March 31, 2008 and 2007, respectively.~~

·~~In March 2008, we settled three forward-starting swaps and made a cash payment of $14.6 million to the counterparties.~~

~~Recent Accounting Pronouncements~~

~~In September 2006, the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 157,~~ ~~Fair Value Measurements~~ (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosure about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. Based on the guidance provided by FASB Staff Position No. 157-2, ~~Effective Date of FASB Statement No. 157~~ ~~(“FSP No. 157-2”), we have~~sellers’ only partially implemented the guidance promulgated under SFAS 157 as of January 1, 2008. SFAS 157 will not be applied during 2008 to nonfinancial long lived asset groups that may be measured for an impairment assessment, reporting units measured at fair value in the first step of the goodwill impairment test, and nonfinancial assets and nonfinancial liabilities initially measured at fair value in a business combination. We will fully apply the provisions of SFAS 157 beginning January 1, 2009 and do not expect there to be a material impact to the financial statements.

recourse being earnest money deposits already made.

Off Balance Sheet Arrangements — Investments in Unconsolidated Companies

We analyze our investments in joint ventures under FASB Interpretation No. 46(R),Consolidation of Variable Interest Entities (“(“FIN 46(R)”),to determine if the joint venture is a variable interest entity (a “VIE”, as defined by FIN 46(R)) and would require consolidation. To the extent that our joint ventures do not qualify as VIEs, we further assess under the guidelines of Emerging Issues Task Force (“EITF”) No. 04-5,Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity when the Limited Partners Have Certain Rights (“(“EITF 04-5”); Statement of Position 78-9,Accounting for Investments in Real Estate Ventures;Accounting Research Bulletin No. 51,Consolidated Financial Statementsand SFAS No. 94,Consolidation of All Majority-Owned Subsidiaries,to determine if the venture should be consolidated.

We have equity interests in unconsolidated partnerships and joint ventures that own and operate rental properties and hold land for development. Our unconsolidated subsidiaries are primarily engaged in the operation and development of Industrial, Office and Retail real estate properties. These investments provide us with increased market share and tenant and property diversification. The equity method of accounting is used for these investments in which we have the ability to exercise significant influence, but not control, over operating and financial policies. As a result, the assets and liabilities of these joint ventures are not included on our balance sheet.

Our investments in and advances to unconsolidated companies represented approximately 9% and 8% of our total assets at September 30, 2008 and December 31, 2007, respectively. Total assets of our unconsolidated subsidiaries were $2.5 billion and $2.2 billion as of September 30, 2008 and December 31, 2007, respectively.

- 29 -

The combined revenues of our unconsolidated subsidiaries totaled approximately $182.9 million and $156.7 million for the nine-month periods ended September 30, 2008 and September 30, 2007, respectively.

We have guaranteed the repayment of certain secured and unsecured loans of our unconsolidated subsidiaries and the outstanding balances on the guaranteed portion of these loans was approximately $263.5 million at September 30, 2008.

Recent Accounting Pronouncements

See Note 10 in our Financial Statements in Item 1.

Item 3. Quantitative and Qualitative ~~Disclosures~~Disclosure About Market Risk

We are exposed to interest rate changes primarily as a result of our line of credit ~~preferred shares and long-term debt~~ used to maintain liquidity and fund capital expenditures and expansion of our real estate investment portfolio and operations. We will face additional interest rate risk in the future as we refinance existing issues of unsecured notes. Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve our objectives, we borrow primarily at fixed rates and may enter into derivative financial instruments such as interest rate swaps, caps and treasury locks in order to mitigate our interest rate risk on a related financial instrument. We do not enter into derivative or interest rate transactions for speculative purposes. Our two outstanding swaps were not significant to the Financial Statements in terms of notional amount or fair value at September 30, 2008.

Our interest rate risk is monitored using a variety of techniques. The table below presents the principal amounts (in thousands) of the expected annual maturities, weighted average interest rates for the average debt outstanding in the specified period, fair values (in thousands) and other terms required to evaluate the expected cash flows and sensitivity to interest rate changes.


	Remainder of																				Fair
	2008			2009			2010			2011			2012			Thereafter			Total		Value
Fixed rate secured debt	$	12,497		$	10,247		$	9,967		$	22,177		$	9,292		$	445,687		$	509,868	$	472,750
Weighted average interest rate		7.29	%		6.92	%		6.85	%		7.14	%		6.67	%		6.04	%

Variable rate secured debt	$	—		$	710		$	750		$	785		$	830		$	5,215		$	8,290	$	8,290
Weighted average interest rate		N/A			10.85	%		10.80	%		10.76	%		10.72	%		11.53	%

Fixed rate unsecured notes	$	—		$	275,000		$	175,000		$	1,021,000		$	200,000		$	1,675,000		$	3,346,000	$	2,934,012
Weighted average interest rate		N/A			7.39	%		5.37	%		5.08	%		5.87	%		6.29	%

Unsecured lines of credit	$	—		$	—		$	525,000		$	8,709		$	—		$	—		$	533,709	$	525,034
Rate at September 30, 2008		N/A			N/A			3.36	%		4.28	%		N/A			N/A

As the table incorporates only those exposures that exist as of September 30, 2008, it does not consider those exposures or positions that could arise after that date. As a result, our ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during the period, our hedging strategies at that time to the extent we are party to interest rate derivatives, and interest rates. Interest expense on our unsecured lines of credit will be affected by fluctuations in the LIBOR indices. The interest rate at such point in the future as we may renew, extend or replace our unsecured lines of credit will be heavily dependent upon the state of the credit environment.

- 30 -

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities ~~and~~ Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. These disclosure controls and procedures are further designed to ensure that such information is accumulated and communicated to management, including the Chief Executive Officer and the Principal Financial Officer, to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act ~~Rule~~Rules 13a-15 and 15d-15. Based upon the foregoing, the Chief Executive Officer and Principal Financial Officer concluded that, as of the end of the period covered by this Report, our disclosure controls and procedures are effective in all material respects.

(b)Changes in Internal Control ~~Over~~over Financial Reporting

~~During the three months ended March 31, 2008, there~~

There have been no changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II -— Other Information

Item 1. Legal Proceedings

From time to time, we are parties to a variety of legal proceedings and claims arising in the ordinary course of our businesses. While these matters generally are covered by insurance, there is no assurance that our insurance will cover any particular proceeding or claim. We presently believe that all of these proceedings to which we were subject as of ~~March 31,~~September 30, 2008, taken as a whole, will not have a material adverse effect on our liquidity, business, financial condition or results of operations.

Item 1A. Risk Factors

In addition to the ~~other~~ information set forth in this Report, you also should carefully review and consider the information contained in our other reports and periodic filings that we make with the SEC, including, without limitation the information contained under the caption “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2007.~~2007, and in our Quarterly Reports on Form 10-Q filed after the date of such Annual Report. Those risk factors could materially affect our business, financial condition and results of operations.

The risks that we describe in our public filings are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we ~~currently~~presently deem to be immaterial, also may materially adversely affect our business, financial ~~conditions~~condition and results of operations.

Other than the risk factors set forth below, there were no material changes during the period covered by this Report to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2007, or subsequent Quarterly Reports on
Form 10-Q.

- 31 -

The solvency of financial institutions may limit our access to liquidity.

Approximately 47% of our outstanding debt will mature between now and December 31, 2011. The majority of these debt maturities are comprised of $750.0 million of unsecured notes, $575.0 million of exchangeable unsecured notes, $125.0 million of corporate unsecured debt and our $1.3 billion unsecured line of credit, which has a principal balance of $525.0 million outstanding as of September 30, 2008. The unsecured line of credit matures in January 2010 with a one-year extension available at our option. Given current economic conditions including, but not limited to, the credit crisis and related turmoil in the global financial system, we may be unable to refinance these obligations and could also potentially lose access to our current available liquidity under our unsecured line of credit if one or more participating lenders default on their commitments.

The SEC has proposed changes to the eligibility requirements forForm S-3 that could prevent us from issuing debt securities on our automatic shelf registration statement.

From time to time, DRLP issues debt securities pursuant to an automatic shelf registration statement on Form S-3. On July 1, 2008, the SEC issued a proposed rule that would revise the transaction eligibility criteria for registering primary offerings of non-convertible securities (like DRLP’s debt securities) on Forms S-3. As proposed, the instructions to these forms would no longer refer to security ratings by a nationally recognized statistical rating organization as a transaction requirement to permit issuers to register primary offerings of non-convertible securities for cash. Instead, Form S-3 would be available to register primary offerings of non-convertible securities if the issuer has issued (as of a date within 60 days prior to the filing of the registration statement) for cash more than $1 billion in non-convertible securities, other than common equity, through registered primary offerings over the prior three years.

Currently, DRLP relies on the eligibility standard for offerings of investment grade rated non-convertible debt securities in order to offer securities pursuant to an automatic shelf registration statement on Form S-3. The SEC’s proposal would effectively eliminate this eligibility standard. Although we currently satisfy the SEC’s proposed eligibility criteria (namely, having issued more than $1 billion of non-convertible debt in registered offerings over the most recent three years), it is possible that we may not meet this test in the future, in which case DRLP would not be eligible to issue securities on Form S-3. As a result, we would be unable to launch and price public offerings of debt securities on short notice using Form S-3 with the speed and efficiency necessary to take advantage of favorable market conditions.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Unregistered Sales of Equity Securities

None

(b) Use of Proceeds

None

(c) Issuer Purchases of Equity Securities

From time to time, we repurchase our common shares under a $750 million repurchase program that initially was approved by the ~~board~~Board of ~~directors~~Directors and publicly announced in October 2001 (the “Repurchase Program”). In ~~July 2005,~~October 2008, the ~~board~~Board of ~~directors authorized management~~Directors adopted a resolution that reaffirmed management’s authority to ~~purchase up~~repurchase common shares and amended the Repurchase Program to ~~$750~~include the repurchase of outstanding series of preferred shares, as well as any outstanding series of debt securities. The October 2008 resolution also limited management’s authority to repurchase a maximum of $75.0 million of common shares, ~~pursuant~~$75.0 million of debt securities and $25.0 million of preferred shares. The authority to ~~this plan.~~repurchase such securities expires in October 2009. Under the Repurchase Program, we also execute share repurchases on an ongoing basis associated with certain employee elections under our compensation and benefit programs.

- 32 -

The following table shows the share repurchase activity for each of the three months in the quarter ended ~~March 31,~~September 30, 2008:

Total Number of

Shares Purchased as

Total Number of

Part of Publicly

Shares

Average Price

Announced Plans or

Month

Purchased (1)

Paid per Share

Programs

January

11,159

$
24.98

11,159

February

—

$
—

—

March

—

$
—

—

Total

11,159

$
24.98

11,159


					Total Number of
					Shares Purchased as
	Total Number of				Part of Publicly
	Shares		Average Price		Announced Plans or
Month	Purchased (1)		Paid per Share		Programs

July		—	$	—		—
August		68,150	$	26.40		68,150
September		4,270	$	26.94		4,270

Total		72,420	$	26.43		72,420

~~(1) All 11,159 shares repurchased represent shares swapped to pay the exercise price of stock options.~~


(1)		All 72,420 shares repurchased represent shares swapped to pay the exercise price of stock options.

The number of common shares that may yet be repurchased in the open market to fund shares purchased under our Employee Stock Purchase Plan, as amended, was 81,840 as of ~~March 31,~~September 30, 2008. ~~The approximate dollar value of common shares that may yet be repurchased under the Repurchase Program was $361.0 million as of March 31, 2008.~~

Item 3. Defaults upon Senior Securities

During the period covered by this Report, we did not default under the terms of any of our material indebtedness, nor has there been any material arrearage of dividends or other material uncured delinquency with respect to any class of our preferred shares.

Item 4. Submission of Matters to a Vote of Security Holders

None.

~~None~~

Item 5. Other Information

During the period covered by this Report, there was no information required to be disclosed by us in a Current Report on Form 8-K that was not so reported, nor were there any material changes to the procedures by which our security holders may recommend nominees to our board of directors.

Item 6. Exhibits

(a)

Exhibits

~~(a)~~~~Exhibits~~

~~3.1(i)~~	3.1(i)	Third Restated Articles of Incorporation of Duke Realty Corporation (filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, as filed with the SEC on May 13, 2003, File No. 001-09044, and incorporated herein by this reference).

~~3.1(ii)~~	3.1(ii)	Amendment to the Third Restated Articles of Incorporation of Duke Realty Corporation, establishing the amount, terms and rights of the Company’s 6.625% Series J Cumulative Redeemable Preferred Shares (filed as Exhibit 3 to the Company’s Current Report on Form 8-K, as filed with the SEC on August 27, 2003, File No. 001-09044, and incorporated herein by this reference).

- 33 -

	3.1(iii)
~~3.1(iii)~~		Amendment to the Third Restated Articles of Incorporation of Duke Realty Corporation, establishing the amount, terms and rights of the Company’s 6.5% Series K Cumulative Redeemable Preferred Shares (filed as Exhibit 3 to the Company’s Current Report on Form 8-K, as filed with the SEC on February 26, 2004, File No. 001-09044, and incorporated herein by this reference).

~~3.1(iv)~~	3.1(iv)		Amendment to the Third Restated Articles of Incorporation of Duke Realty Corporation, establishing the amount, terms and rights of the Company’s 6.6% Series L Cumulative Redeemable Preferred Shares (filed as Exhibit 3.1 of the Company’s Current Report on Form 8-K, as filed with the SEC on November 29, 2004, File No. 001-09044, and incorporated herein by reference).

~~3.1(v)~~	3.1(v)		Amendment to the Third Restated Articles of Incorporation of Duke Realty Corporation, amending the Designating Amendment to the Third Restated Articles of Incorporation of Duke Realty Corporation, establishing the amount, terms and rights of the Company’s 6.95% Series M Cumulative Redeemable Preferred Shares (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K, as filed with the SEC on July 6, 2006, and incorporated herein by this reference).

~~3.1(vi)~~	3.1(vi)		Amendment to the Third Restated Articles of Incorporation of Duke Realty Corporation, establishing the amount, terms and rights of the Company’s 7.25% Series N Cumulative Redeemable Preferred Shares (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, as filed with the SEC on July 6, 2006, and incorporated herein by this reference).

~~3.1(vii)~~	3.1(vii)		Amendment to the Third Restated Articles of Incorporation of Duke Realty Corporation, deleting Exhibits A, D, E, F, H and I and de-designating the related series of preferred shares (filed as Exhibit 3.1(viii) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, as filed with the SEC on August 7, 2007, File No. 001-09044, and incorporated herein by this reference).

~~3.1(viii)~~
	3.1(viii)	Amendment to the Third Restated Articles of Incorporation of Duke Realty Corporation, deleting Exhibit B and de-designating the related series of preferred shares (filed as Exhibit 3.1(viii) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, as filed with the SEC on February 29, 2008, File No. 001-09044, and incorporated herein by this reference).

~~3.1(ix)~~	3.1(ix)	Amendment to the Third Restated Articles of Incorporation of Duke Realty Corporation, establishing the amount, terms and rights of Duke Realty Corporation’s 8.375% Series O Cumulative Redeemable Preferred Shares (filed as Exhibit 3.1 to the Company’s Registration Statement on Form 8-A, as filed with the SEC on February 22, 2008, File No. 001-09044, and incorporated herein by this reference).

~~3.2(i)~~	3.1(x)	Amendment to the Third Restated Articles of Incorporation of Duke Realty Corporation, deleting Exhibits C and de-designating the related Series C Junior Preferred Shares.*

	3.2 (i)	Third Amended and Restated Bylaws of Duke Realty Corporation (filed as Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, as filed with the SEC on May 13, 2003, File No. 001-09044, and incorporated herein by this reference).

- 34 -

	3.2(ii)
~~3.2(ii)~~		Amendment No. 1 to the Third Amended and Restated By-Laws of Duke Realty Corporation (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, as filed with the SEC on February 7, 2008, File No. 001-09044, and incorporated herein by this reference).

~~4.1~~	11.1	Deposit Agreement, dated as of February 22, 2008, by and among Duke Realty Corporation, American Stock Transfer & Trust Company, as depositary, and the holders from time to time of the Depositary Receipts (which includes as an exhibit thereto the form of Depositary Receipt) (filed as Exhibit 4.1 to the Company’s Registration Statement on Form 8-A, as filed with the SEC on February 22, 2008, File No. 001-09044, and incorporated herein by this reference).

~~11.1~~		Statement Regarding Computation of Earnings.

~~12.1~~	12.1		Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.*

~~12.2~~	31.1	Ratio of Earnings to Debt Service.*

~~31.1~~		Rule 13a-14(a) Certification of the Principal Executive Officer and Principal Financial Officer.*

~~32.1~~	32.1		Section 1350 Certification of the Principal Executive Officer and Principal Financial Officer.*


*		Filed herewith.

**		Data required by Statement of Financial Accounting Standard No.128,Earnings per Share, is provided in Note 5 to the Consolidated Financial Statements included in this report.

- 35 -

* Filed herewith.

** Data required by Statement of Financial Accounting Standard No. 128, ~~Earnings per Share~~~~, is provided in Note 6 to the consolidated financial statements included in this report.~~

SIGNATURES

~~SIGNATURES~~

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


		DUKE REALTY CORPORATION

Date: November 7, 2008
~~Date: May 12, 2008~~		/s/ Dennis D. Oklak
		Dennis D. Oklak
		Chairman and Chief Executive Officer
		(Principal Executive Officer and
		Principal Financial Officer)

		/s/ Mark Denien Mark Denien
		~~Mark Denien~~
		Senior Vice President, Corporate Controller
		(Principal Accounting Officer)

	March 31,			December 31,
	2008			2007
	(Unaudited)
ASSETS
Real estate investments:
Land and improvements	$	938,764		$	872,372
Buildings and tenant improvements	4,849,556			4,600,408
Construction in progress	444,691			412,729
Investments in and advances to unconsolidated companies	665,572			601,801
Land held for development	836,245			912,448
	7,734,828			7,399,758
Accumulated depreciation	(1,029,862		)	(951,375		)
Net real estate investments	6,704,966			6,448,383
Real estate investments and other assets held for sale	144,077			273,591

Cash and cash equivalents	15,529			48,012
Accounts receivable, net of allowance of $1,812 and $1,359	26,672			29,009
Straight-line rent receivable, net of allowance of $2,095 and $2,886	116,682			110,737
Receivables on construction contracts, including retentions	70,684			66,925
Deferred financing costs, net of accumulated amortization of $30,337 and $29,170	53,480			55,987
Deferred leasing and other costs, net of accumulated amortization of $163,576 and $150,702	377,253			374,635
Escrow deposits and other assets	250,900			254,702
	$	7,760,243		$	7,661,981

LIABILITIES AND SHAREHOLDERS’ EQUITY

Indebtedness:
Secured debt	$	506,071		$	524,393
Unsecured notes	3,121,000			3,246,000
Unsecured lines of credit	635,068			546,067
	4,262,139			4,316,460

Liabilities of properties held for sale	3,813			8,954

Construction payables and amounts due subcontractors, including retentions	129,631			142,655
Accrued expenses:
Real estate taxes	72,559			63,796
Interest	38,490			54,631
Other	31,283			59,221
Other liabilities	127,971			148,013
Tenant security deposits and prepaid rents	38,085			34,535
Total liabilities	4,703,971			4,828,265

Minority interest	76,619			83,683

Shareholders’ equity:
Preferred shares ($.01 par value); 5,000 shares authorized; 4,176 and 2,976 shares issued and outstanding	1,044,000			744,000
Common shares ($.01 par value); 250,000 shares authorized; 146,670 and 146,175 shares issued and outstanding	1,467			1,462
Additional paid-in capital	2,637,099			2,632,615
Accumulated other comprehensive income (loss)	(9,719		)	(1,279		)
Distributions in excess of net income	(693,194		)	(626,765		)
Total shareholders’ equity	2,979,653			2,750,033
	$	7,760,243		$	7,661,981

								Accumulated
					Additional			Other			Distributions
	Preferred		Common		Paid-in			Comprehensive			in Excess of
	Shares		Shares		Capital			Income (Loss)			Net Income			Total

Balance at December 31, 2007	$	744,000	$	1,462	$	2,632,615		$	(1,279	)	$	(626,765	)	$	2,750,033

Comprehensive Income:

Net income	—		—		—			—			19,354			19,354

Losses on derivative instruments	—		—		—			(8,440		)	—			(8,440		)

Comprehensive income	—		—		—			—			—			10,914

Issuance of preferred shares	300,000		—		(10,000		)	—			—			290,000

Issuance of common shares	—		2		5,799			—			—			5,801

Stock based compensation plan activity	—		1		4,311			—			(266		)	4,046

Acquisition of minority interest	—		2		4,374			—			—			4,376

Distributions to preferred shareholders	—		—		—			—			(15,306		)	(15,306		)

Distributions to common shareholders ($.48 per share)	—		—		—			—			(70,211		)	(70,211		)

Balance at March 31, 2008	$	1,044,000	$	1,467	$	2,637,099		$	(9,719	)	$	(693,194	)	$	2,979,653

	Borrowing		Maturity	Outstanding Balance
Description	Capacity		Date	at March 31, 2008
Unsecured Line of Credit - DRLP	$	1,300,000	January 2010	$	631,000
Unsecured Line of Credit - Consolidated Subsidiary	$	30,000	July 2011	$	4,068

6.		Segment Reporting

		We have three reportable operating segments, the first two of which consist of the ownership and rental of office and industrial real estate investments. The operations of our office and industrial properties, along with our healthcare and retail properties (our healthcare and retail properties, which do not meet the quantitative thresholds defined in Statement of Financial Accounting Standard (“SFAS”) No. 131,Disclosures about Segments of an Enterprise and Related Information, are not separately presented as a reportable segment), are collectively referred to as “Rental Operations”. The third reportable segment consists of our Build-for-Sale operations (defined below) and providing of various real estate services such as property management, maintenance, leasing, development and construction management to third-party property owners and joint ventures (and is collectively referred to as “Service Operations”). Our reportable segments offer different products or services and are managed separately because each segment requires different operating strategies and management expertise.

		During the period between the completion of development, rehabilitation or repositioning of a property developed or acquired with the intent to sell (“Build-for-Sale” property) and the date the property is contributed to an unconsolidated company or sold to a third party, the property and its associated rental revenue and rental expenses are included in the applicable Rental Operations segment because the primary activity associated with the Build-for-Sale property during that period is rental activities. Upon contribution or sale, the resulting gain or loss is part of the income of the Service Operations business segment.

		Other revenue consists mainly of equity in earnings of unconsolidated companies. Segment FFO information (FFO is defined below) is calculated by subtracting operating expenses attributable to the applicable segment from segment revenues. Non-segment assets consist of corporate assets including cash, deferred financing costs and investments in unconsolidated companies. Interest expense and other non-property specific revenues and expenses are not allocated to individual segments in determining our performance measure.

		We assess and measure segment operating results based upon an industry performance measure referred to as Funds From Operations (“FFO”), which management believes is a useful indicator of our operating performance. FFO is used by industry analysts and investors as a supplemental operating performance measure of a REIT. FFO is calculated in accordance with the definition that was adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from net income determined in accordance with GAAP. FFO is a non-GAAP financial measure developed by NAREIT to compare the operating performance of REITs. The most comparable GAAP measure is net income (loss). FFO should not be considered as a substitute for net income or any other measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other companies.

		Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry analysts and investors have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. FFO, as defined by NAREIT, represents GAAP net income (loss), excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated real estate assets, plus certain non-cash items such as real estate asset depreciation and amortization, and after similar adjustments for unconsolidated partnerships and joint ventures.

	Three Months Ended March 31,
	2008			2007
Revenues
Rental Operations:
Office	$	148,245		$	143,826
Industrial	61,316			54,214
Non-reportable Rental Operations segments	6,229			1,838
Service Operations	14,776			14,730
Total Segment Revenues	230,566			214,608
Other Revenue	12,111			9,918
Consolidated Revenue from continuing operations	242,677			224,526
Discontinued Operations	974			11,087
Consolidated Revenue	$	243,651		$	235,613
Funds From Operations
Rental Operations:
Office	$	89,833		$	86,100
Industrial	45,392			40,667
Non-reportable Rental Operations segments	3,683			1,353
Service Operations	4,413			6,934
Total Segment FFO	143,321			135,054
Non-Segment FFO:
Interest expense	(47,534		)	(44,408		)
Interest and other income, net	3,725			2,403
General and administrative expense	(12,162		)	(13,460		)
Gain on land sales, net	629			13,997
Other non-segment income (expense)	(677		)	(106		)
Minority interest	(214		)	(1,331		)
Minority interest share of FFO adjustments	(4,326		)	(1,263		)
Joint venture FFO	17,008			10,698
Dividends on preferred shares	(15,306		)	(15,226		)
Discontinued operations, net of minority interest	178			(31		)
Consolidated basic FFO	84,642			86,327
Depreciation and amortization on continuing operations	(78,713		)	(66,375		)
Depreciation and amortization on discontinued operations	(408		)	(1,364		)
Company’s share of joint venture adjustments	(6,928		)	(4,968		)
Earnings from depreciated property sales on discontinued operations	1,110			51,720
Earnings from depreciated property sales – share of joint venture	19			1,960
Minority interest share of FFO adjustments	4,326			1,263
Net income available for common shareholders	$	4,048		$	68,563

	Property		Properties
	Included in		Included in		Total
	Discontinued		Continuing		Held-for-Sale
	Operations		Operations		Properties

Balance Sheet:
Real estate investments, net	$	11,693	$	122,344	$	134,037
Other assets	1,287		8,753		10,040
Total assets held-for-sale	$	12,980	$	131,097	$	144,077

Accrued expenses	$	462	$	577	$	1,039
Other liabilities	—		2,774		2,774
Total liabilities held-for-sale	$	462	$	3,351	$	3,813

	Quarterly
Class	Amount/Share		Record Date	Payment Date
Common	$	0.48	May 14, 2008	May 30, 2008
Preferred (per depositary share):
Series J	$	0.414063	May 16, 2008	May 30, 2008
Series K	$	0.406250	May 16, 2008	May 30, 2008
Series L	$	0.412500	May 16, 2008	May 30, 2008
Series M	$	0.434375	June 16, 2008	June 30, 2008
Series N	$	0.453125	June 16, 2008	June 30, 2008
Series O	$	0.523438	June 16, 2008	June 30, 2008

	Total		Percent of
	Square Feet		Total Square Feet				Percent Occupied
Type	2008	2007	2008		2007		2008		2007
Industrial	80,779	75,628	70.2	%	69.8	%	89.4	%	92.6	%
Office	32,757	31,862	28.4	%	29.4	%	88.6	%	91.9	%
Other	1,613	916	1.4	%	0.8	%	91.8	%	95.0	%
Total	115,149	108,406	100.0	%	100.0	%	89.2	%	92.4	%

	Total
	Portfolio						Industrial				Office				Other
Year of	Square		Ann. Rent		% of		Square		Ann. Rent		Square		Ann. Rent		Square		Ann. Rent
Expiration	Feet		Revenue		Revenue		Feet		Revenue		Feet		Revenue		Feet		Revenue
2008	7,157		$	39,518	5	%	5,502		$	20,741	1,622		$	18,238	33		$	539
2009	12,633		83,423		11	%	9,087		36,268		3,480		46,499		66		656
2010	13,645		99,750		14	%	9,427		40,614		4,205		58,949		13		187
2011	14,881		90,935		13	%	11,282		42,171		3,532		47,757		67		1,007
2012	10,840		75,951		11	%	7,390		29,285		3,404		45,777		46		889
2013	11,016		92,592		13	%	6,560		27,610		4,398		64,104		58		878
2014	6,476		39,609		6	%	4,890		18,226		1,558		20,918		28		465
2015	8,423		61,996		9	%	6,147		24,452		2,276		37,544		—		—
2016	4,170		28,310		4	%	3,000		10,836		959		15,031		211		2,443
2017	6,518		45,682		6	%	4,572		18,166		1,539		21,995		407		5,521
2018 and Thereafter	6,949		60,937		8	%	4,349		21,592		2,046		31,664		554		7,681
	102,708		$	718,703	100	%	72,206		$	289,961	29,019		$	408,476	1,483		$	20,266

Total Portfolio Square Feet	115,149						80,779				32,757				1,613

Percent Occupied	89.2	%					89.4	%			88.6	%			91.8	%

Note: Excludes Build for Sale Properties.

				Total
Anticipated				Estimated		Anticipated
In-Service	Square	Percent		Project		Stabilized
Date	Feet	Leased		Costs		Return (1)
Held for Rental Buildings:
2nd Quarter 2008	4,265	23	%	$	234,422	8.65	%
3rd Quarter 2008	2,010	32	%	166,759		9.10	%
4th Quarter 2008	248	34	%	48,875		9.24	%
Thereafter	758	68	%	164,401		8.73	%
	7,281	31	%	$	614,457	8.84	%
Build for Sale Properties:
2nd Quarter 2008	1,044	100	%	86,654		8.30	%
3rd Quarter 2008	1,252	100	%	78,858		8.43	%
4th Quarter 2008	2,313	60	%	87,950		7.88	%
Thereafter	1,758	76	%	197,708		8.37	%
	6,367	79	%	451,170		8.27	%
Total	13,648	53	%	$	1,065,627	8.60	%

	Future Repayments						Weighted Average
	Scheduled						Interest Rate of
Year	Amortization		Maturities		Total		Future Repayments

2008	$	8,610	$	109,940	$	118,550	6.79	%
2009	11,099		275,000		286,099		7.36	%
2010	10,809		806,000		816,809		3.78	%
2011	10,781		1,037,207		1,047,988		5.11	%
2012	8,649		201,216		209,865		5.89	%
2013	8,571		150,000		158,571		4.71	%
2014	8,661		272,112		280,773		6.44	%
2015	6,774		—		6,774		6.05	%
2016	5,763		490,900		496,663		6.16	%
2017	4,517		457,761		462,278		5.94	%
2018	3,055		300,000		303,055		6.16	%
Thereafter	24,714		50,000		74,714		6.76	%
	$	112,003	$	4,150,136	$	4,262,139	5.48	%

				Total Number of
				Shares Purchased as
	Total Number of			Part of Publicly
	Shares	Average Price		Announced Plans or
Month	Purchased (1)	Paid per Share		Programs

January	11,159	$	24.98	11,159
February	—	$	—	—
March	—	$	—	—

Total	11,159	$	24.98	11,159

Large accelerated filerþx

Accelerated filero

Non-accelerated filer o

~~Smaller reporting company~~ o

(Do not check if a smaller reporting company)

Smaller reporting companyo