Exhibit 99.2
DUKE REALTY CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31, 2014
(unaudited and in thousands, except per share amounts)
Historical (A) | Suburban Office Disposition (B) | Use of Proceeds (C) | Pro Forma | ||||||||||||
ASSETS | |||||||||||||||
Real estate investments: | |||||||||||||||
Land and improvements | $ | 1,534,521 | $ | (121,654 | ) | (B1) | $ | 1,412,867 | |||||||
Buildings and tenant improvements | 5,696,931 | (710,541 | ) | (B1) | 4,986,390 | ||||||||||
Construction in progress | 248,993 | (2,931 | ) | (B1) | 246,062 | ||||||||||
Investments in and advances to unconsolidated companies | 293,650 | 293,650 | |||||||||||||
Undeveloped land | 499,960 | (13,783 | ) | (B1) | 486,177 | ||||||||||
8,274,055 | (848,909 | ) | — | 7,425,146 | |||||||||||
Accumulated depreciation | (1,481,125 | ) | 246,655 | (B1) | (1,234,470 | ) | |||||||||
Net real estate investments | 6,792,930 | (602,254 | ) | — | 6,190,676 | ||||||||||
Real estate investments and other assets held-for-sale | 71,525 | 71,525 | |||||||||||||
Cash and cash equivalents | 17,922 | 831,173 | (B2) | (106,000 | ) | (C1) | 743,095 | ||||||||
Accounts receivable, net of allowance of $2,742 | 26,906 | (737 | ) | (B1) | 26,169 | ||||||||||
Straight-line rent receivable, net of allowance of $8,405 | 130,654 | (20,997 | ) | (B1) | 109,657 | ||||||||||
Receivables on construction contracts, including retentions | 36,304 | 36,304 | |||||||||||||
Deferred financing costs, net of accumulated amortization of $38,863 | 38,734 | 38,734 | |||||||||||||
Deferred leasing and other costs, net of accumulated amortization of $259,883 | 428,314 | (40,678 | ) | (B1) | 387,636 | ||||||||||
Escrow deposits and other assets | 211,550 | 198,222 | (B3) | 409,772 | |||||||||||
$ | 7,754,839 | $ | 364,729 | $ | (106,000 | ) | $ | 8,013,568 | |||||||
LIABILITIES AND EQUITY | |||||||||||||||
Indebtedness: | |||||||||||||||
Secured debt | $ | 983,242 | $ | (40,764 | ) | (B4) | $ | 942,478 | |||||||
Unsecured debt | 3,364,161 | 3,364,161 | |||||||||||||
Unsecured line of credit | 106,000 | (106,000 | ) | (C1) | — | ||||||||||
4,453,403 | (40,764 | ) | (106,000 | ) | 4,306,639 | ||||||||||
Liabilities related to real estate investments held-for-sale | 1,003 | 1,003 | |||||||||||||
Construction payables and amounts due subcontractors, including retentions | 72,839 | 72,839 | |||||||||||||
Accrued real estate taxes | 78,092 | (1,784 | ) | (B1) | 76,308 | ||||||||||
Accrued interest | 56,157 | (1,047 | ) | (B1) | 55,110 | ||||||||||
Other accrued expenses | 64,646 | (2,014 | ) | (B1) | 62,632 | ||||||||||
Other liabilities | 96,866 | (2,060 | ) | (B1) | 94,806 | ||||||||||
Tenant security deposits and prepaid rents | 51,953 | (7,811 | ) | (B1) | 44,142 | ||||||||||
Total liabilities | 4,874,959 | (55,480 | ) | (106,000 | ) | 4,713,479 | |||||||||
Shareholders' equity: | |||||||||||||||
Preferred shares ($.01 par value); 5,000 shares authorized; no shares issued and outstanding | — | — | |||||||||||||
Common shares ($.01 par value); 600,000 shares authorized; 344,112 shares issued and outstanding | 3,441 | 3,441 | |||||||||||||
Additional paid-in capital | 4,944,800 | 4,944,800 | |||||||||||||
Accumulated other comprehensive income | 3,026 | 3,026 | |||||||||||||
Distributions in excess of net income | (2,090,942 | ) | 414,872 | (B5) | (1,676,070 | ) | |||||||||
Total shareholders' equity | 2,860,325 | 414,872 | — | 3,275,197 | |||||||||||
Noncontrolling interests | 19,555 | 5,337 | (B5) | 24,892 | |||||||||||
Total equity | 2,879,880 | 420,209 | — | 3,300,089 | |||||||||||
$ | 7,754,839 | $ | 364,729 | $ | (106,000 | ) | $ | 8,013,568 |
See accompanying Notes to Consolidated Financial Statements.
DUKE REALTY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
For the Year Ended December 31, 2014
(unaudited, in thousands, except per share amounts)
Historical (a) | Suburban Office Disposition (b) | Pro Forma | ||||||||||
Revenues: | ||||||||||||
Rental and related revenue | $ | 940,204 | $ | (117,909 | ) | (b1) | $ | 822,295 | ||||
General contractor and service fee revenue | 224,500 | 224,500 | ||||||||||
1,164,704 | (117,909 | ) | 1,046,795 | |||||||||
Expenses: | ||||||||||||
Rental expenses | 168,638 | (31,042 | ) | (b1) | 137,596 | |||||||
Real estate taxes | 128,563 | (13,551 | ) | (b1) | 115,012 | |||||||
General contractor and other services expenses | 200,031 | 200,031 | ||||||||||
Depreciation and amortization | 384,412 | (38,137 | ) | (b1) | 346,275 | |||||||
881,644 | (82,730 | ) | 798,914 | |||||||||
Other operating activities: | ||||||||||||
Equity in earnings of unconsolidated companies | 94,317 | 94,317 | ||||||||||
Gain on sale of properties | 162,715 | 162,715 | ||||||||||
Gain on land sales | 10,441 | 10,441 | ||||||||||
Undeveloped land carrying costs | (6,962 | ) | (6,962 | ) | ||||||||
Impairment charges | (49,106 | ) | (49,106 | ) | ||||||||
Other operating income (expenses) | (229 | ) | (229 | ) | ||||||||
General and administrative expenses | (49,362 | ) | 77 | (b1) | (49,285 | ) | ||||||
161,814 | 77 | 161,891 | ||||||||||
Operating income | 444,874 | (35,102 | ) | 409,772 | ||||||||
Other income (expenses): | ||||||||||||
Interest and other income, net | 1,246 | 3,356 | (c) | 4,602 | ||||||||
Interest expense | (219,613 | ) | 4,125 | (b2) | (215,488 | ) | ||||||
Loss on debt extinguishment | (283 | ) | (283 | ) | ||||||||
Acquisition-related activity | (1,099 | ) | (1,099 | ) | ||||||||
Income (loss) from continuing operations before income taxes | 225,125 | (27,621 | ) | 197,504 | ||||||||
Income tax benefit | 844 | 844 | ||||||||||
Income (loss) from continuing operations | 225,969 | (27,621 | ) | 198,348 | ||||||||
Dividends on preferred shares | (24,943 | ) | (24,943 | ) | ||||||||
Adjustments for redemption/repurchase of preferred shares | (13,752 | ) | (13,752 | ) | ||||||||
Net (income) loss attributable to noncontrolling interests | (2,867 | ) | 351 | (b3) | (2,516 | ) | ||||||
Net income (loss) attributable to common shareholders - continuing operations | $ | 184,407 | $ | (27,270 | ) | $ | 157,137 | |||||
Basic net income (loss) per common share - continuing operations | $ | 0.54 | $ | 0.46 | (d) | |||||||
Diluted net income (loss) per common share - continuing operations | $ | 0.54 | $ | 0.46 | (d) | |||||||
Weighted average number of common shares outstanding | 335,777 | 335,777 | ||||||||||
Weighted average number of common shares and potential dilutive securities | 340,446 | 340,446 |
See accompanying Notes to Consolidated Financial Statements.
DUKE REALTY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
For the Year Ended December 31, 2013
(unaudited, in thousands, except per share amounts)
Historical (a) | Suburban Office Disposition (b) | Pro Forma | ||||||||||
Revenues: | ||||||||||||
Rental and related revenue | $ | 873,417 | $ | (111,253 | ) | (b1) | $ | 762,164 | ||||
General contractor and service fee revenue | 206,596 | 206,596 | ||||||||||
1,080,013 | (111,253 | ) | 968,760 | |||||||||
Expenses: | ||||||||||||
Rental expenses | 158,837 | (31,444 | ) | (b1) | 127,393 | |||||||
Real estate taxes | 117,681 | (12,881 | ) | (b1) | 104,800 | |||||||
General contractor and other services expenses | 183,833 | 183,833 | ||||||||||
Depreciation and amortization | 392,627 | (39,171 | ) | (b1) | 353,456 | |||||||
852,978 | (83,496 | ) | 769,482 | |||||||||
Other operating activities: | ||||||||||||
Equity in earnings of unconsolidated companies | 54,116 | 54,116 | ||||||||||
Gain on sale of properties | 59,179 | 59,179 | ||||||||||
Gain on land sales | 9,547 | 9,547 | ||||||||||
Undeveloped land carrying costs | (8,614 | ) | (8,614 | ) | ||||||||
Impairment charges | (3,777 | ) | (3,777 | ) | ||||||||
Other operating income (expenses) | 470 | 470 | ||||||||||
General and administrative expenses | (42,673 | ) | 79 | (b1) | (42,594 | ) | ||||||
68,248 | 79 | 68,327 | ||||||||||
Operating income | 295,283 | (27,678 | ) | 267,605 | ||||||||
Other income (expenses): | ||||||||||||
Interest and other income, net | 1,887 | 3,428 | (c) | 5,315 | ||||||||
Interest expense | (228,324 | ) | 4,160 | (b2) | (224,164 | ) | ||||||
Loss on debt extinguishment | (9,433 | ) | (9,433 | ) | ||||||||
Acquisition-related activity | (3,093 | ) | (3,093 | ) | ||||||||
Income (loss) from continuing operations before income taxes | 56,320 | (20,090 | ) | 36,230 | ||||||||
Income tax benefit | 5,080 | 5,080 | ||||||||||
Income (loss) from continuing operations | 61,400 | (20,090 | ) | 41,310 | ||||||||
Dividends on preferred shares | (31,616 | ) | (31,616 | ) | ||||||||
Adjustments for redemption/repurchase of preferred shares | (5,932 | ) | (5,932 | ) | ||||||||
Net (income) loss attributable to noncontrolling interests | (5,957 | ) | 271 | (b3) | (5,686 | ) | ||||||
Net income (loss) attributable to common shareholders - continuing operations | $ | 17,895 | $ | (19,819 | ) | $ | (1,924 | ) | ||||
Basic net income (loss) per common share - continuing operations | $ | 0.06 | $ | 0.00 | (d) | |||||||
Diluted net income (loss) per common share - continuing operations | $ | 0.06 | $ | 0.00 | (d) | |||||||
Weighted average number of common shares outstanding | 322,133 | 322,133 | ||||||||||
Weighted average number of common shares and potential dilutive securities | 326,712 | 322,133 |
See accompanying Notes to Consolidated Financial Statements.
DUKE REALTY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
For the Years Ended December 31, 2012
(unaudited, in thousands, except per share amounts)
Historical (a) | Suburban Office Disposition (b) | Pro Forma | ||||||||||
Revenues: | ||||||||||||
Rental and related revenue | $ | 770,008 | $ | (108,633 | ) | (b1) | $ | 661,375 | ||||
General contractor and service fee revenue | 275,071 | 275,071 | ||||||||||
1,045,079 | (108,633 | ) | 936,446 | |||||||||
Expenses: | ||||||||||||
Rental expenses | 137,629 | (30,051 | ) | (b1) | 107,578 | |||||||
Real estate taxes | 106,071 | (12,985 | ) | (b1) | 93,086 | |||||||
General contractor and other services expenses | 254,870 | 254,870 | ||||||||||
Depreciation and amortization | 348,268 | (42,618 | ) | (b1) | 305,650 | |||||||
846,838 | (85,654 | ) | 761,184 | |||||||||
Other operating activities: | ||||||||||||
Equity in earnings of unconsolidated companies | 4,674 | 4,674 | ||||||||||
Gain on sale of properties | 344 | 344 | ||||||||||
Gain on land sales | — | — | ||||||||||
Undeveloped land carrying costs | (8,829 | ) | (8,829 | ) | ||||||||
Impairment charges | — | — | ||||||||||
Other operating income (expenses) | (633 | ) | (633 | ) | ||||||||
General and administrative expenses | (46,424 | ) | 51 | (b1) | (46,373 | ) | ||||||
(50,868 | ) | 51 | (50,817 | ) | ||||||||
Operating income | 147,373 | (22,928 | ) | 124,445 | ||||||||
Other income (expenses): | ||||||||||||
Interest and other income, net | 514 | 3,539 | (c) | 4,053 | ||||||||
Interest expense | (229,417 | ) | 3,764 | (b2) | (225,653 | ) | ||||||
Loss on debt extinguishment | — | — | ||||||||||
Acquisition-related activity | (4,192 | ) | (4,192 | ) | ||||||||
Loss from continuing operations before income taxes | (85,722 | ) | (15,625 | ) | (101,347 | ) | ||||||
Income tax benefit | 103 | 103 | ||||||||||
Loss from continuing operations | (85,619 | ) | (15,625 | ) | (101,244 | ) | ||||||
Dividends on preferred shares | (46,438 | ) | (46,438 | ) | ||||||||
Adjustments for redemption/repurchase of preferred shares | (5,730 | ) | (5,730 | ) | ||||||||
Net loss attributable to noncontrolling interests | 1,891 | 277 | (b3) | 2,168 | ||||||||
Net loss attributable to common shareholders - continuing operations | $ | (135,896 | ) | $ | (15,348 | ) | $ | (151,244 | ) | |||
Basic net loss per common share - continuing operations | $ | (0.52 | ) | $ | (0.58 | ) | (d) | |||||
Diluted net loss per common share - continuing operations | $ | (0.52 | ) | $ | (0.58 | ) | (d) | |||||
Weighted average number of common shares outstanding | 267,900 | 267,900 | ||||||||||
Weighted average number of common shares and potential dilutive securities | 267,900 | 267,900 |
See accompanying Notes to Consolidated Financial Statements.
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31, 2014
(unaudited and in thousands)
Historical (A) | Suburban Office Disposition (B) | Use of Proceeds (C) | Pro Forma | ||||||||||||
ASSETS | |||||||||||||||
Real estate investments: | |||||||||||||||
Land and improvements | $ | 1,534,521 | $ | (121,654 | ) | (B1) | $ | 1,412,867 | |||||||
Buildings and tenant improvements | 5,696,931 | (710,541 | ) | (B1) | 4,986,390 | ||||||||||
Construction in progress | 248,993 | (2,931 | ) | (B1) | 246,062 | ||||||||||
Investments in and advances to unconsolidated companies | 293,650 | 293,650 | |||||||||||||
Undeveloped land | 499,960 | (13,783 | ) | (B1) | 486,177 | ||||||||||
8,274,055 | (848,909 | ) | — | 7,425,146 | |||||||||||
Accumulated depreciation | (1,481,125 | ) | 246,655 | (B1) | (1,234,470 | ) | |||||||||
Net real estate investments | 6,792,930 | (602,254 | ) | — | 6,190,676 | ||||||||||
Real estate investments and other assets held-for-sale | 71,525 | 71,525 | |||||||||||||
Cash and cash equivalents | 17,922 | 831,173 | (B2) | (106,000 | ) | (C1) | 743,095 | ||||||||
Accounts receivable, net of allowance of $2,742 | 26,906 | (737 | ) | (B1) | 26,169 | ||||||||||
Straight-line rent receivable, net of allowance of $8,405 | 130,654 | (20,997 | ) | (B1) | 109,657 | ||||||||||
Receivables on construction contracts, including retentions | 36,304 | 36,304 | |||||||||||||
Deferred financing costs, net of accumulated amortization of $38,863 | 38,734 | 38,734 | |||||||||||||
Deferred leasing and other costs, net of accumulated amortization of $259,883 | 428,314 | (40,678 | ) | (B1) | 387,636 | ||||||||||
Escrow deposits and other assets | 211,550 | 198,222 | (B3) | 409,772 | |||||||||||
$ | 7,754,839 | $ | 364,729 | $ | (106,000 | ) | $ | 8,013,568 | |||||||
LIABILITIES AND EQUITY | |||||||||||||||
Indebtedness: | |||||||||||||||
Secured debt | $ | 983,242 | $ | (40,764 | ) | (B4) | $ | 942,478 | |||||||
Unsecured debt | 3,364,161 | 3,364,161 | |||||||||||||
Unsecured line of credit | 106,000 | (106,000 | ) | (C1) | — | ||||||||||
4,453,403 | (40,764 | ) | (106,000 | ) | 4,306,639 | ||||||||||
Liabilities related to real estate investments held-for-sale | 1,003 | 1,003 | |||||||||||||
Construction payables and amounts due subcontractors, including retentions | 72,839 | 72,839 | |||||||||||||
Accrued real estate taxes | 78,092 | (1,784 | ) | (B1) | 76,308 | ||||||||||
Accrued interest | 56,157 | (1,047 | ) | (B1) | 55,110 | ||||||||||
Other accrued expenses | 64,826 | (2,014 | ) | (B1) | 62,812 | ||||||||||
Other liabilities | 96,866 | (2,060 | ) | (B1) | 94,806 | ||||||||||
Tenant security deposits and prepaid rents | 51,953 | (7,811 | ) | (B1) | 44,142 | ||||||||||
Total liabilities | 4,875,139 | (55,480 | ) | (106,000 | ) | 4,713,659 | |||||||||
Partners’ equity: | |||||||||||||||
General Partner: | |||||||||||||||
Common equity (344,112 General Partner Units issued and outstanding) | 2,857,119 | 414,872 | (B5) | 3,271,991 | |||||||||||
Preferred equity (No Preferred Units issued and outstanding) | — | — | |||||||||||||
2,857,119 | 414,872 | — | 3,271,991 | ||||||||||||
Limited Partners' common equity (3,717 Limited Partner Units issued and outstanding) | 17,289 | 5,337 | (B5) | 22,626 | |||||||||||
Accumulated other comprehensive income | 3,026 | 3,026 | |||||||||||||
Total partners' equity | 2,877,434 | 420,209 | — | 3,297,643 | |||||||||||
Noncontrolling interests | 2,266 | 2,266 | |||||||||||||
Total equity | 2,879,700 | 420,209 | — | 3,299,909 | |||||||||||
$ | 7,754,839 | $ | 364,729 | $ | (106,000 | ) | $ | 8,013,568 |
See accompanying Notes to Consolidated Financial Statements.
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Operations
For the Year Ended December 31, 2014
(unaudited, in thousands, except per unit amounts)
Historical (a) | Suburban Office Disposition (b) | Pro Forma | ||||||||||
Revenues: | ||||||||||||
Rental and related revenue | $ | 940,204 | $ | (117,909 | ) | (b1) | $ | 822,295 | ||||
General contractor and service fee revenue | 224,500 | 224,500 | ||||||||||
1,164,704 | (117,909 | ) | 1,046,795 | |||||||||
Expenses: | ||||||||||||
Rental expenses | 168,638 | (31,042 | ) | (b1) | 137,596 | |||||||
Real estate taxes | 128,563 | (13,551 | ) | (b1) | 115,012 | |||||||
General contractor and other services expenses | 200,031 | 200,031 | ||||||||||
Depreciation and amortization | 384,412 | (38,137 | ) | (b1) | 346,275 | |||||||
881,644 | (82,730 | ) | 798,914 | |||||||||
Other operating activities: | ||||||||||||
Equity in earnings of unconsolidated companies | 94,317 | 94,317 | ||||||||||
Gain on sale of properties | 162,715 | 162,715 | ||||||||||
Gain on land sales | 10,441 | 10,441 | ||||||||||
Undeveloped land carrying costs | (6,962 | ) | (6,962 | ) | ||||||||
Impairment charges | (49,106 | ) | (49,106 | ) | ||||||||
Other operating income (expenses) | (229 | ) | (229 | ) | ||||||||
General and administrative expenses | (49,362 | ) | 77 | (b1) | (49,285 | ) | ||||||
161,814 | 77 | 161,891 | ||||||||||
Operating income | 444,874 | (35,102 | ) | 409,772 | ||||||||
Other income (expenses): | ||||||||||||
Interest and other income, net | 1,246 | 3,356 | (c) | 4,602 | ||||||||
Interest expense | (219,613 | ) | 4,125 | (b2) | (215,488 | ) | ||||||
Loss on debt extinguishment | (283 | ) | (283 | ) | ||||||||
Acquisition-related activity | (1,099 | ) | (1,099 | ) | ||||||||
Income (loss) from continuing operations before income taxes | 225,125 | (27,621 | ) | 197,504 | ||||||||
Income tax benefit | 844 | 844 | ||||||||||
Income (loss) from continuing operations | 225,969 | (27,621 | ) | 198,348 | ||||||||
Distributions on Preferred Units | (24,943 | ) | (24,943 | ) | ||||||||
Adjustments for redemption/repurchase of Preferred Units | (13,752 | ) | (13,752 | ) | ||||||||
Net (income) loss attributable to noncontrolling interests | (240 | ) | (240 | ) | ||||||||
Net income (loss) attributable to common unitholders - continuing operations | $ | 187,034 | $ | (27,621 | ) | $ | 159,413 | |||||
Basic net income (loss) per Common Unit - continuing operations | $ | 0.54 | $ | 0.46 | (d) | |||||||
Diluted net income (loss) per Common Unit - continuing operations | $ | 0.54 | $ | 0.46 | (d) | |||||||
Weighted average number of Common Units outstanding | 340,085 | 340,085 | ||||||||||
Weighted average number of Common Units and potential dilutive securities | 340,446 | 340,446 |
See accompanying Notes to Consolidated Financial Statements.
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Operations
For the Year Ended December 31, 2013
(unaudited, in thousands, except per unit amounts)
Historical (a) | Suburban Office Disposition (b) | Pro Forma | ||||||||||
Revenues: | ||||||||||||
Rental and related revenue | $ | 873,417 | $ | (111,253 | ) | (b1) | $ | 762,164 | ||||
General contractor and service fee revenue | 206,596 | 206,596 | ||||||||||
1,080,013 | (111,253 | ) | 968,760 | |||||||||
Expenses: | ||||||||||||
Rental expenses | 158,837 | (31,444 | ) | (b1) | 127,393 | |||||||
Real estate taxes | 117,681 | (12,881 | ) | (b1) | 104,800 | |||||||
General contractor and other services expenses | 183,833 | 183,833 | ||||||||||
Depreciation and amortization | 392,627 | (39,171 | ) | (b1) | 353,456 | |||||||
852,978 | (83,496 | ) | 769,482 | |||||||||
Other operating activities: | ||||||||||||
Equity in earnings of unconsolidated companies | 54,116 | 54,116 | ||||||||||
Gain on sale of properties | 59,179 | 59,179 | ||||||||||
Gain on land sales | 9,547 | 9,547 | ||||||||||
Undeveloped land carrying costs | (8,614 | ) | (8,614 | ) | ||||||||
Impairment charges | (3,777 | ) | (3,777 | ) | ||||||||
Other operating income (expenses) | 470 | 470 | ||||||||||
General and administrative expenses | (42,673 | ) | 79 | (b1) | (42,594 | ) | ||||||
68,248 | 79 | 68,327 | ||||||||||
Operating income | 295,283 | (27,678 | ) | 267,605 | ||||||||
Other income (expenses): | ||||||||||||
Interest and other income, net | 1,887 | 3,428 | (c) | 5,315 | ||||||||
Interest expense | (228,324 | ) | 4,160 | (b2) | (224,164 | ) | ||||||
Loss on debt extinguishment | (9,433 | ) | (9,433 | ) | ||||||||
Acquisition-related activity | (3,093 | ) | (3,093 | ) | ||||||||
Income (loss) from continuing operations before income taxes | 56,320 | (20,090 | ) | 36,230 | ||||||||
Income tax benefit | 5,080 | 5,080 | ||||||||||
Income (loss) from continuing operations | 61,400 | (20,090 | ) | 41,310 | ||||||||
Distributions on Preferred Units | (31,616 | ) | (31,616 | ) | ||||||||
Adjustments for redemption/repurchase of Preferred Units | (5,932 | ) | (5,932 | ) | ||||||||
Net (income) loss attributable to noncontrolling interests | (3,863 | ) | (3,863 | ) | ||||||||
Net income (loss) attributable to common unitholders - continuing operations | $ | 19,989 | $ | (20,090 | ) | $ | (101 | ) | ||||
Basic net income (loss) per Common Unit - continuing operations | $ | 0.06 | $ | 0.00 | (d) | |||||||
Diluted net income (loss) per Common Unit - continuing operations | $ | 0.06 | $ | 0.00 | (d) | |||||||
Weighted average number of Common Units outstanding | 326,525 | 326,525 | ||||||||||
Weighted average number of Common Units and potential dilutive securities | 326,712 | 326,525 |
See accompanying Notes to Consolidated Financial Statements.
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Operations
For the Year Ended December 31, 2012
(unaudited, in thousands, except per unit amounts)
Historical (a) | Suburban Office Disposition (b) | Pro Forma | ||||||||||
Revenues: | ||||||||||||
Rental and related revenue | $ | 770,008 | $ | (108,633 | ) | (b1) | $ | 661,375 | ||||
General contractor and service fee revenue | 275,071 | 275,071 | ||||||||||
1,045,079 | (108,633 | ) | 936,446 | |||||||||
Expenses: | ||||||||||||
Rental expenses | 137,629 | (30,051 | ) | (b1) | 107,578 | |||||||
Real estate taxes | 106,071 | (12,985 | ) | (b1) | 93,086 | |||||||
General contractor and other services expenses | 254,870 | 254,870 | ||||||||||
Depreciation and amortization | 348,268 | (42,618 | ) | (b1) | 305,650 | |||||||
846,838 | (85,654 | ) | 761,184 | |||||||||
Other operating activities: | ||||||||||||
Equity in earnings of unconsolidated companies | 4,674 | 4,674 | ||||||||||
Gain on sale of properties | 344 | 344 | ||||||||||
Gain on land sales | — | — | ||||||||||
Undeveloped land carrying costs | (8,829 | ) | (8,829 | ) | ||||||||
Impairment charges | — | — | ||||||||||
Other operating income (expenses) | (633 | ) | (633 | ) | ||||||||
General and administrative expenses | (46,424 | ) | 51 | (b1) | (46,373 | ) | ||||||
(50,868 | ) | 51 | (50,817 | ) | ||||||||
Operating income | 147,373 | (22,928 | ) | 124,445 | ||||||||
Other income (expenses): | ||||||||||||
Interest and other income, net | 514 | 3,539 | (c) | 4,053 | ||||||||
Interest expense | (229,417 | ) | 3,764 | (b2) | (225,653 | ) | ||||||
Loss on debt extinguishment | — | — | ||||||||||
Acquisition-related activity | (4,192 | ) | (4,192 | ) | ||||||||
Income (loss) from continuing operations before income taxes | (85,722 | ) | (15,625 | ) | (101,347 | ) | ||||||
Income tax benefit | 103 | 103 | ||||||||||
Loss from continuing operations | (85,619 | ) | (15,625 | ) | (101,244 | ) | ||||||
Distributions on Preferred Units | (46,438 | ) | (46,438 | ) | ||||||||
Adjustments for redemption/repurchase of Preferred Units | (5,730 | ) | (5,730 | ) | ||||||||
Net loss attributable to noncontrolling interests | (382 | ) | (382 | ) | ||||||||
Net loss attributable to common unitholders - continuing operations | $ | (138,169 | ) | $ | (15,625 | ) | $ | (153,794 | ) | |||
Basic net loss per Common Unit - continuing operations | $ | (0.52 | ) | $ | (0.58 | ) | (d) | |||||
Diluted net loss per Common Unit - continuing operations | $ | (0.52 | ) | $ | (0.58 | ) | (d) | |||||
Weighted average number of Common Units outstanding | 272,729 | 272,729 | ||||||||||
Weighted average number of Common Units and potential dilutive securities | 272,729 | 272,729 |
See accompanying Notes to Consolidated Financial Statements.
Duke Realty Corporation and Duke Realty Limited Partnership
Notes to Pro Forma Consolidated Financial Statements
(unaudited)
Note 1: Presentation
On April 1, 2015, Duke Realty Limited Partnership (the "Partnership"), of which Duke Realty Corporation (the "General Partner") is the sole general partner, and certain of the Partnership's subsidiaries and affiliates completed the sale of a portfolio of 61 real estate properties, consisting of 6.7 million square feet of primarily suburban office properties, and 57 acres of undeveloped land to SOF-X U.S. Acquisitions, L.L.C., a Delaware limited liability company (the “Buyer”), a joint venture between an affiliate of Starwood Capital Group and affiliates of Vanderbilt Partners and Trinity Capital Advisors (herein after, the collective transaction is referred to as the “Suburban Office Transaction”). As used herein, “we,” “us” and “our” refers collectively to Duke Realty Corporation, Duke Realty Limited Partnership and their subsidiaries and affiliated entities.
One property, which is still under construction, is under agreement with the Buyer to be sold when complete. The closing of that property is expected to occur later in the year and is not included in the Pro Forma Consolidated Financial Statements.
The purchase price for the Suburban Office Transaction totaled $1.09 billion, of which we received net cash proceeds of $831.2 million after considering (1) $200.0 million of seller-financing provided to the Buyer, (2) the prepayment of two mortgage loans, and associated prepayment penalties, totaling $44.6 million, (3) the settlement of certain working capital items and (4) general transaction costs. Outstanding borrowings of $130.0 million on our unsecured line of credit were repaid using a portion of the total proceeds.
In March 2015, the General Partner announced that the Partnership commenced a tender offer (the "Tender Offer") to purchase for a combined aggregate purchase price (exclusive of accrued and unpaid interest) of up to $500.0 million of its 8.25% Senior Notes due 2019, its 5.95% Senior Notes due 2017, its 6.75% Senior Notes due 2020, its 6.50% Senior Notes due 2018 and its 4.375% Senior Notes due 2022. A portion of the proceeds from the Suburban Office Transaction were used to fund this Tender Offer, which resulted in the repurchase of approximately $425.0 million of the aforementioned series of notes for approximately $500.0 million.
The accompanying Pro Forma Consolidated Balance Sheets as of December 31, 2014 present our historical amounts, adjusted for the effects of the Suburban Office Transaction, as if such transaction had occurred on December 31, 2014. The accompanying Pro Forma Consolidated Balance Sheets are unaudited and are not necessarily indicative of what our actual financial position would have been had the Suburban Office Transaction actually occurred on December 31, 2014, nor does it purport to represent our future financial position. The Pro Forma Consolidated Balance Sheets as of December 31, 2014 do not include the use of proceeds for the Tender Offer.
The accompanying Pro Forma Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012 present our historical amounts, adjusted for the effects of the Suburban Office Transaction as if it had occurred at January 1, 2012. The accompanying Pro Forma Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012 are unaudited and are not necessarily indicative of what our actual results of operations would have been had the Suburban Office Transaction actually occurred at January 1, 2012, nor do they purport to represent our future results of operations. The Pro Forma Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012 are not adjusted as if the Tender Offer took place on January 1, 2012.
Note 2: Pro Forma Consolidated Balance Sheet Notes
(A) | Reflects the consolidated balance sheet as of December 31, 2014, as contained in the historical consolidated financial statements and notes thereto presented in our Annual Report on Form 10-K for the year ended December 31, 2014. |
(B) | Represents adjustments to reflect the Suburban Office Transaction as follows: |
(B1) | Represents the de-recognition of carrying amounts as of December 31, 2014 for the assets, the related accumulated depreciation and working capital assets and liabilities related to the 61 properties and 57 acres of undeveloped land that were subsequently sold in the Suburban Office Transaction. |
(B2) | Represents actual net cash received from the Suburban Office Transaction after considering $200.0 million of seller financing, the early repayment of two mortgage loans, including the applicable prepayment penalties, as well as the settlement of net working capital and transaction costs. |
(B3) | Includes (i) the de-recognition of $1.8 million of working capital assets related to the 61 properties sold in the Suburban Office Transaction as well as (ii) the recognition of $200.0 million of seller-financing provided to the buyer that bears interest at LIBOR plus 1.50%, is secured by a first mortgage interest in certain of the sold properties and is due December 31, 2016. The seller-financing requires monthly interest-only payments through maturity. |
Duke Realty Corporation and Duke Realty Limited Partnership
Notes to Pro Forma Consolidated Financial Statements
(unaudited)
(B4) | Represents the early repayment of two mortgage loans. These mortgage loans bore interest at a weighted average effective rate of 5.7%. The $3.7 million prepayment penalty incurred from the early repayment of these loans is reflected on the Pro Forma Consolidated Balance Sheets as a reduction to cash proceeds. |
(B5) | Represents the controlling and non-controlling interests’ share (or general partner and limiter partners' share for the Partnership) of the gain, calculated as the difference between the actual net proceeds and seller financing received on April 1, 2015 from the Suburban Office Transaction and the net carrying amount of the assets and liabilities assumed to be de-recognized at December 31, 2014, to reflect the effects of the sale of properties in the Suburban Office Transaction. |
(C) | Represents use of proceeds as follows: |
(C1) | Represents the application of a portion of net proceeds to repay the amount outstanding under our unsecured line of credit at December 31, 2014. The use of proceeds for the Tender Offer is not included in the Pro Forma Consolidated Balance Sheets. |
Note 3: Pro Forma Consolidated Statements of Operations Notes
(a) | Reflects the consolidated results of operations for the years ended December 31, 2014, 2013, and 2012, as contained in the historical consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2014. |
(b) | Represents adjustments to reflect the Suburban Office Transaction as follows: |
(b1) | Reflects the revenues and expenses of the properties sold in connection with the Suburban Office Transaction for the the years ended December 31, 2014, 2013, and 2012. |
(b2) | Reflects adjustments to interest expense to reflect the following: (i) $2.3 million of annual interest expense for each of the years ended December 31, 2014, 2013 and 2012, respectively, associated with indebtedness secured by the properties that would not have been incurred had the properties been sold at January 1, 2012 and (ii) $1.8 million, $1.8 million, and $1.3 million for the years ended December 31, 2014, 2013 and 2012, respectively, associated with the interest incurred on our unsecured credit facility that would not have been incurred had we not had any outstanding borrowings during the years ended December 31, 2014, 2003, and 2012. At no time during the years ended December 31, 2014, 2013, and 2012 did the outstanding borrowings on our unsecured credit facility exceed the net proceeds received from the Suburban Office Transaction. Assuming the Suburban Office Transaction Closed on January 1, 2012, and a portion of the cash proceeds would have been utilized to execute a Tender Offer at that time, our outstanding debt and interest expense would be lower during the years ended December 31, 2014, 2013 and 2012, respectively. However, no assumed interest savings from the Tender Offer are included in the Pro Forma Consolidated Statements of Operations. |
(b3) | Reflects adjustments to net (income) loss attributable to noncontrolling interests for the adjustments to net income noted above. |
(c) | Assuming the Suburban Office Transaction closed on January 1, 2012, and that the cash proceeds from the disposition would have been utilized such that we had no outstanding borrowings on our unsecured credit facility, we would have carried a daily average of $707.2 million, $713.9 million and $747.6 million of additional cash through the years ended December 31, 2014, 2013 and 2012, respectively. We did not include any estimated earnings from re-investing these cash proceeds in our Pro Forma Consolidated Statements of Operations. Interest income is included for the years ended December 31, 2014, 2013 and 2012, respectively, related to the $200.0 million of seller-financing as if the Suburban Office Transaction occurred on January 1, 2012. |
(d) | Calculation of basic and diluted income (loss) per common share or unit includes an adjustment of $2.6 million, $2.7 million, and $3.1 million for dividends on participating securities for the years ended December 31, 2014, 2013, and 2012, respectively, as reflected in our historical financial statements. |
Duke Realty Corporation and Duke Realty Limited Partnership
Notes to Pro Forma Consolidated Financial Statements
(unaudited)
Note 4: Pro Forma Revenues by Operating Segment
The following tables present revenues for each reportable segment for the years ended December 31, 2014, 2013 and 2012, respectively, as if the Suburban Office Transaction closed on January 1, 2012 (in thousands):
2014 | Suburban Office Transaction | Pro Forma | ||||||||||
Revenues | ||||||||||||
Rental Operations: | ||||||||||||
Industrial | $ | 532,025 | $ | (2,872 | ) | $ | 529,153 | |||||
Office | 246,694 | (115,037 | ) | 131,657 | ||||||||
Medical Office | 146,530 | 146,530 | ||||||||||
Non-reportable Rental Operations | 8,814 | 8,814 | ||||||||||
Service Operations | 224,500 | 224,500 | ||||||||||
Total segment revenues | 1,158,563 | (117,909 | ) | 1,040,654 | ||||||||
Other revenue | 6,141 | 6,141 | ||||||||||
Consolidated revenue from continuing operations | $ | 1,164,704 | $ | (117,909 | ) | $ | 1,046,795 |
2013 | Suburban Office Transaction | Pro Forma | ||||||||||
Revenues | ||||||||||||
Rental Operations: | ||||||||||||
Industrial | $ | 481,903 | $ | (2,756 | ) | $ | 479,147 | |||||
Office | 251,269 | (108,497 | ) | 142,772 | ||||||||
Medical Office | 127,475 | 127,475 | ||||||||||
Non-reportable Rental Operations | 7,206 | 7,206 | ||||||||||
Service Operations | 206,596 | 206,596 | ||||||||||
Total segment revenues | 1,074,449 | (111,253 | ) | 963,196 | ||||||||
Other revenue | 5,564 | 5,564 | ||||||||||
Consolidated revenue from continuing operations | $ | 1,080,013 | $ | (111,253 | ) | $ | 968,760 |
2012 | Suburban Office Transaction | Pro Forma | ||||||||||
Revenues | ||||||||||||
Rental Operations: | ||||||||||||
Industrial | $ | 429,660 | $ | (2,674 | ) | $ | 426,986 | |||||
Office | 242,719 | (105,959 | ) | 136,760 | ||||||||
Medical Office | 82,962 | 82,962 | ||||||||||
Non-reportable Rental Operations | 7,246 | 7,246 | ||||||||||
Service Operations | 275,071 | 275,071 | ||||||||||
Total segment revenues | 1,037,658 | (108,633 | ) | 929,025 | ||||||||
Other revenue | 7,421 | 7,421 | ||||||||||
Consolidated revenue from continuing operations | $ | 1,045,079 | $ | (108,633 | ) | $ | 936,446 |