Exhibit 99.2
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Pro Forma Consolidated Balance Sheet
June 30, 2005
(unaudited, in thousands)
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| FirstCal |
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| Pro |
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| Historical (A) |
| Transaction (B) |
| Proceeds (C) |
| Forma |
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ASSETS |
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Real estate investments: |
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Land and improvements |
| $764,069 |
| $(112,681 | )(B1) |
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| $651,388 |
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Buildings and tenant improvements |
| 4,873,739 |
| (778,703 | )(B1) |
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| 4,095,036 |
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Construction in progress |
| 119,667 |
| (2,692 | )(B1) |
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| 116,975 |
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Investments in unconsolidated companies |
| 301,955 |
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| 301,955 |
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Land held for development |
| 391,481 |
| (3,794 | )(B1) |
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| 387,687 |
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| 6,450,911 |
| (897,870 | ) | 0 |
| 5,553,041 |
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Accumulated depreciation |
| (856,038 | ) | 152,223 | (B1) |
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| (703,815 | ) |
Net real estate investments |
| 5,594,873 |
| (745,647 | ) | 0 |
| 4,849,226 |
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Cash and cash equivalents |
| 6,489 |
| 954,916 | (B2) | (553,710 | )(C) | 407,695 |
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Accounts receivable, net of allowance of $2,011 and $1,238 |
| 14,129 |
| (931 | )(B1) |
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| 13,198 |
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Straight line rent receivable, net of allowance of $1,565 and $1,646 |
| 97,091 |
| (10,154 | )(B1) |
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| 86,937 |
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Receivables on construction contracts, including retentions |
| 75,026 |
| (234 | )(B1) |
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| 74,792 |
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Deferred financing costs, net of accumulated amortization of $11,749 and $9,006 |
| 29,681 |
| (48 | )(B1) |
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| 29,633 |
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Deferred leasing and other costs, net of accumulated amortization of $106,817 and $88,888 |
| 259,782 |
| (17,391 | )(B1) |
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| 242,391 |
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Escrow deposits and other assets |
| 126,228 |
| (1,589 | )(B1) |
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| 124,639 |
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| $6,203,299 |
| $178,922 |
| ($553,710 | ) | $5,828,511 |
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LIABILITIES AND PARTNERS’ EQUITY |
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Indebtedness: |
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Secured debt |
| $204,999 |
| $(255 | )(B1) | ($33,710 | )(C1) | $171,034 |
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Unsecured notes |
| 2,550,509 |
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| (400,000 | )(C2) | 2,150,509 |
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Unsecured line of credit |
| 120,000 |
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| (120,000 | )(C3) | 0 |
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| 2,875,508 |
| (255 | ) | (553,710 | ) | 2,321,543 |
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Construction payables and amounts due subcontractors, including retentions |
| 75,762 |
| (547 | )(B1) |
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| 75,215 |
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Accounts payable |
| 1,272 |
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| 1,272 |
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Accrued expenses: |
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Real estate taxes |
| 67,365 |
| (9,181 | )(B1) |
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| 58,184 |
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Interest |
| 35,944 |
| (130 | )(B1) |
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| 35,814 |
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Other |
| 37,463 |
| (125 | )(B1) |
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| 37,338 |
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Other liabilities |
| 125,206 |
| (287 | )(B1) |
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| 124,919 |
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Tenant security deposits and prepaid rents |
| 37,059 |
| (6,599 | )(B1) |
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| 30,460 |
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Total liabilities |
| 3,255,579 |
| (17,124 | ) | (553,710 | ) | 2,684,745 |
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Partners’ equity: |
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General Partner |
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Common equity |
| 2,166,560 |
| 196,046 | (B3) |
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| 2,362,606 |
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Preferred equity (liquidation preference of $657,250) |
| 616,780 |
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| 616,780 |
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| 2,783,340 |
| 196,046 |
| 0 |
| 2,979,386 |
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Limited partners’ common equity |
| 189,612 |
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| 189,612 |
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Accumulated other comprehensive income (loss) |
| (25,232 | ) |
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| (25,232 | ) |
Total partners’ equity |
| 2,947,720 |
| 196,046 |
| 0 |
| 3,143,766 |
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| $6,203,299 |
| $178,922 |
| ($553,710 | ) | $5,828,511 |
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See accompanying Notes to Pro Forma Consolidated Financial Statements
DUKE REALTY LIMITED PARTNERSHIPAND SUBSIDIARIES
Pro Forma Consolidated Statement of Operations
For the Six Months Ended June 30, 2005
(unaudited, in thousands, except per unit amounts)
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| FirstCal |
| Pro |
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| Historical (a) |
| Transaction (b) |
| Forma |
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RENTAL OPERATIONS: |
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Revenues: |
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Rental income from continuing operations |
| $378,698 |
| ($53,959 | )(b1) | $324,739 |
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Equity in earnings of unconsolidated companies |
| 20,890 |
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| 20,890 |
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| 399,588 |
| (53,959 | ) | 345,629 |
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Operating expenses: |
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Rental expenses |
| 86,112 |
| (8,959 | )(b1) | 77,153 |
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Real estate taxes |
| 45,705 |
| (6,804 | )(b1) | 38,901 |
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Interest expense |
| 70,835 |
| (5,233 | )(b2) | 65,602 |
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Depreciation and amortization |
| 126,103 |
| (17,073 | )(b1) | 109,030 |
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| 328,755 |
| (38,069 | ) | 290,686 |
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Earnings from continuing rental operations |
| 70,833 |
| (15,890 | ) | 54,943 |
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SERVICE OPERATIONS: |
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Revenues: |
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General contractor gross revenue |
| 188,424 |
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| 188,424 |
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General contractor costs |
| (174,156 | ) |
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| (174,156 | ) |
Net general contractor revenue |
| 14,268 |
| 0 |
| 14,268 |
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Property management, maintenance and leasing fees |
| 8,032 |
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| 8,032 |
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Construction management and development activity income |
| 20,032 |
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| 20,032 |
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Other income |
| 3,111 |
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| 3,111 |
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Total revenue |
| 45,443 |
| 0 |
| 45,443 |
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Operating expenses |
| 22,260 |
| 0 |
| 22,260 |
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Earnings from service operations |
| 23,183 |
| 0 |
| 23,183 |
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General and administrative expense |
| (13,858 | ) | 44 | (b1) | (13,814 | ) |
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Operating income |
| 80,158 |
| (15,846 | ) | 64,312 |
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OTHER INCOME (EXPENSE): |
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Interest income |
| 2,403 |
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| 2,403 |
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Earnings from sale of land and ownership interests in unconsolidated companies, net of impairment adjustments |
| 3,409 |
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| 3,409 |
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Other revenue (expense) |
| (244 | ) |
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| (244 | ) |
Other minority interest in earnings of subsidiaries |
| (66 | ) |
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| (66 | ) |
Income from continuing operations |
| 85,660 |
| (15,846 | ) | 69,814 |
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Dividends on preferred units |
| (23,240 | ) |
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| (23,240 | ) |
Adjustment for redemption of preferred units |
| 0 |
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| 0 |
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Net income available for common unitholders |
| $62,420 |
| ($15,846 | ) | $46,574 |
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Basic net income per common unit-continuing operations |
| $0.40 |
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| $0.30 |
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Diluted net income per common unit- continuing operations |
| $0.40 |
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| $0.30 |
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Weighted average number of common units outstanding |
| 156,967 |
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| 156,967 |
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Weighted average number of common and dilutive potential common units |
| 157,711 |
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| 157,711 |
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See accompanying Notes to Pro Forma Consolidated Financial Statements
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2004
(unaudited, in thousands, except per unit amounts)
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| FirstCal |
| Pro |
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| Historical (a) |
| Transaction (b) |
| Forma |
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RENTAL OPERATIONS: |
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Revenues: |
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Rental income from continuing operations |
| $744,061 |
| ($107,438 | )(b1) | $636,623 |
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Equity in earnings of unconsolidated companies |
| 21,586 |
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| 21,586 |
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| 765,647 |
| (107,438 | ) | 658,209 |
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Operating expenses: |
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Rental expenses |
| 156,069 |
| (16,915 | )(b1) | 139,154 |
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Real estate taxes |
| 84,799 |
| (12,842 | )(b1) | 71,957 |
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Interest expense |
| 135,130 |
| (8,545 | )(b3) | 126,585 |
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Depreciation and amortization |
| 224,649 |
| (34,235 | )(b1) | 190,414 |
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| 600,647 |
| (72,537 | ) | 528,110 |
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Earnings from continuing rental operations |
| 165,000 |
| (34,901 | ) | 130,099 |
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SERVICE OPERATIONS: |
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Revenues: |
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General contractor gross revenue |
| 357,133 |
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| 357,133 |
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General contractor costs |
| (329,545 | ) |
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| (329,545 | ) |
Net general contractor revenue |
| 27,588 |
| 0 |
| 27,588 |
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Property management, maintenance and leasing fees |
| 15,000 |
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| 15,000 |
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Construction management and development activity income |
| 25,002 |
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| 25,002 |
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Other income |
| 3,213 |
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| 3,213 |
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Total revenue |
| 70,803 |
| 0 |
| 70,803 |
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Operating expenses |
| 46,382 |
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| 46,382 |
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Earnings from service operations |
| 24,421 |
| 0 |
| 24,421 |
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General and administrative expense |
| (26,388 | ) | 111 | (b1) | (26,277 | ) |
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Operating income |
| 163,033 |
| (34,790 | ) | 128,243 |
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OTHER INCOME (EXPENSE): |
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Interest income |
| 5,213 |
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| 5,213 |
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Earnings from sale of land and ownership interests in unconsolidated companies, net of impairment adjustments |
| 10,202 |
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| 10,202 |
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Other revenue (expense) |
| (567 | ) |
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| (567 | ) |
Other minority interest in earnings of subsidiaries |
| (1,253 | ) |
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| (1,253 | ) |
Income from continuing operations |
| 176,628 |
| (34,790 | ) | 141,838 |
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Dividends on preferred units |
| (33,777 | ) |
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| (33,777 | ) |
Adjustment for redemption of preferred units |
| (3,645 | ) |
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| (3,645 | ) |
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Net income available for common shareholders |
| $139,206 |
| ($34,790 | ) | $104,416 |
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Basic net income per common unit-continuing operations |
| $0.90 |
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| $0.67 |
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Diluted net income per common unit- continuing operations |
| $0.89 |
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| $0.66 |
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Weighted average number of common units outstanding |
| 155,281 |
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| 155,281 |
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Weighted average number of common and dilutive potential common units |
| 157,062 |
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| 157,062 |
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See accompanying Notes to Pro Forma Consolidated Financial Statements
Duke Realty Limited Partnership and Subsidiaries
Notes to Pro Forma Consolidated Financial Statements
(unaudited)
Note 1: Presentation
On September 29, 2005, Duke Realty Limited Partnership (the “Partnership”) and certain of its affiliated entities completed the sale of a portfolio of 212 real estate properties, consisting of 14.1 million square feet of primarily light distribution and service center properties and approximately 50 acres of undeveloped land, to FirstCal Industrial 2 Acquisitions, LLC (herein after the collective transaction referred to as the “FirstCal Transaction”). As used herein, “we,” “us” and “our” refers collectively to Duke Realty Limited Partnership and its subsidiaries and affiliated entities.
The purchase price totaled $983 million, of which we received net proceeds of $955 million after the settlement of certain liabilities and transaction costs. Portions of the proceeds were used to pay down $423 million of outstanding debt on our $500 million unsecured line of credit and $400 million term loan. In addition, we presently expect to pay a special cash dividend to our common unitholders of $.90 to $1.20 per unit in the fourth quarter of 2005. However, as of the date of this filing, the amount and timing of the dividend have not been determined. Accordingly, the effects of the special cash dividend are excluded from the accompanying Pro Forma Consolidated Financial Statements.
The accompanying Pro Forma Consolidated Balance Sheet as of June 30, 2005 presents our historical amounts, adjusted for the effects of the FirstCal Transaction, as if such transaction had occurred on June 30, 2005.
The accompanying Pro Forma Consolidated Balance Sheet is unaudited and is not necessarily indicative of what our actual financial position would have been had the FirstCal Transaction actually occurred on June 30, 2005, nor does it purport to represent our future financial position.
The accompanying Pro Forma Consolidated Statements of Operations for the six months ended June 30, 2005 and the year ended December 31, 2004 present our historical amounts, adjusted for the effects of the FirstCal Transaction, as if it had occurred at January 1, 2004.
The accompanying Pro Forma Consolidated Statements of Operations for the six months ended June 30, 2005 and the year ended December 31, 2004 are unaudited and are not necessarily indicative of what our actual results of operations would have been had the FirstCal Transaction actually occurred at January 1, 2004, nor does it purport to represent our future results of operations.
Duke Realty Limited Partnership and Subsidiaries
Notes to Pro Forma Consolidated Financial Statements
(unaudited)
Note 2: Pro Forma Consolidated Balance Sheet Notes
(A) Reflects the consolidated historical balance sheet as of June 30, 2005, as contained in the historical consolidated financial statements and notes thereto presented in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.
(B) Represents adjustments to reflect the FirstCal Transaction as follows:
(B1) Represents the sale of assets and the related accumulated depreciation.
(B2) Represents net cash received from the FirstCal Transaction, after the settlement of certain liabilities and transaction costs.
(B3) Represents adjustments to reflect the effects of the sale of properties and undeveloped land in the FirstCal Transaction of approximately $196 million.
(C) Represents use of proceeds as follows:
(C1) Represents the application of a portion of net proceeds to repay secured debt associated with properties sold in the FirstCal Transaction.
(C2) Represents the application of a portion of net proceeds to repay the entire balance on our $400 million term loan.
(C3) Represents the application of a portion of net proceeds to repay the amount outstanding under our $500 million unsecured line of credit.
Duke Realty Limited Partnership and Subsidiaries
Notes to Pro Forma Consolidated Financial Statements
(unaudited)
Note 3: Pro Forma Consolidated Statements of Operations Notes
(a) Reflects the consolidated results of operations for the six months ended June 30, 2005 and the year ended December 31, 2004, as contained in the historical consolidated financial statements and notes thereto presented in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 and our Annual Report on Form 10-K for the year ended December 31, 2004, respectively.
(b) Represents adjustments to reflect the FirstCal Transaction as follows:
(b1) Reflects the revenues and expenses of the properties and land sold in connection with the FirstCal Transaction for the six months ended June 30, 2005 and the year ended December 31, 2004.
(b2) Reflects adjustments to interest expense to reflect the following: (i) $1.1 million associated with indebtedness secured by the properties that would not have been incurred had the properties been sold at the beginning of the period; (ii) $1.2 million associated with interest expense on a $400 million unsecured term loan that would not have been incurred had the properties been sold at the beginning of the period; and (iii) $2.9 million associated with the interest incurred on our $500 million unsecured credit facility that would not have been incurred had the properties been sold at the beginning of the period.
(b3) Reflects adjustments to interest expense to reflect the following: (i) $2.4 million associated with indebtedness secured by the properties that would not have been incurred had the properties been sold at the beginning of the period; and (ii) $6.1 million associated with the interest incurred on our $500 million unsecured credit facility that would not have been incurred had the properties been sold at the beginning of the period.