UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
| SECURITIES EXCHANGE ACT OF 1934 |
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| For the fiscal year ended December 31, 2006 |
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OR | |
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o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
| SECURITIES EXCHANGE ACT OF 1934 |
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| For the transition period from to . |
Commission File Number: 0-20625
DUKE REALTY LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in Its Charter)
Indiana |
| 35-1898425 |
(State or Other Jurisdiction |
| (IRS Employer |
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600 East 96th Street, Suite 100 |
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Indianapolis, Indiana |
| 46240 |
(Address of Principal Executive Offices) |
| (Zip Code) |
Registrant’s telephone number, including area code: (317) 808-6000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o Accelerated filer o Non-accelerated filer x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
The aggregate market value of Limited Partner Units held by non-affiliates of the Registrant is $464.5 million based on the last reported sale price of the common shares of Duke Realty Corporation into which Limited Partner Units are exchangeable on June 30, 2006.
The aggregate number of Limited Partnership Units outstanding as of February 28, 2007 was 146,677,176.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant’s General Partner’s Definitive Proxy Statement for its 2007 Annual Meeting of Shareholders (the “Proxy Statement”) to be filed pursuant to Rule 14a-6 of the Securities Exchange Act of 1934, as amended, are incorporated by reference into this Form 10-K. Other than those portions of the Proxy Statement specifically incorporated by reference pursuant to Items 10 through 14 of Part III hereof, no other portions of the Proxy Statement shall be deemed so incorporated.
TABLE OF CONTENTS
Form 10-K
Cautionary Statement Regarding 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, and Section 21E of the Exchange Act. The words “believe”, “estimate”, “expect”, “anticipate”, “intend”, “plan”, “seek”, “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 or in the information incorporated by reference into 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 performance of financial markets;
· The General Partner’s continued qualification as a REIT;
· 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;
· Our continuing ability to favorably raise funds 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 successfully dispose of properties on terms that are favorable to us;
· Inherent risks in the real estate business including tenant defaults, potential liability relating to environmental matters and liquidity of real estate investments; and
· Other risks and uncertainties described or incorporated by reference herein, including, without limitation, those risks and uncertainties discussed from time to time in the Partnership’s and the General Partner’s other reports and other public filings with the 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 this Report, and is updated by us from time to time in Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings that we make with the SEC.
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 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 required by law.
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Background
The Partnership was formed on October 4, 1993, when Duke Realty Corporation (the “General Partner”) contributed all of its properties and related assets and liabilities, along with the net proceeds of $309.2 million from the issuance of an additional 14,000,833 shares to the Partnership. Simultaneously, the Partnership completed the acquisition of Duke Associates, a full-service commercial real estate firm operating in the Midwest. The General Partner was formed in 1985 and qualifies as a Real Estate Investment Trust (“REIT”) under provisions of the Internal Revenue Code. The General Partner is the sole general partner of the Partnership, owning 91.5% of the common Partnership interest as of December 31, 2006 (“General Partner Units”). The remaining 8.5% of the Partnership’s common interest is owned by limited partners (“Limited Partner Units” and, together with the General Partner Units, the “Common Units”). The Limited Partner Units are exchangeable for shares of the General Partner’s common stock on a one-for-one basis subject generally to a one-year holding period, or under certain circumstances, the General Partner may repurchase the Limited Partner Units for cash. The General Partner also owns preferred partnership interests in the Partnership (“Preferred Units”). As of December 31, 2006, our diversified portfolio of 721 rental properties (including 28 properties totaling approximately 4.5 million square feet under development) encompassed approximately 113.8 million rentable square feet and are leased by a diverse and stable base of more than 3,500 tenants whose businesses include manufacturing, retailing, wholesale trade, distribution and professional services. We also own or control more than 6,400 acres of unencumbered land ready for development.
Through our Service Operations, we provide, on a fee basis, leasing, property and asset management, development, construction, build-to-suit and other tenant-related services. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8, “Financial Statements and Supplementary Data” for financial information. Our Rental Operations are conducted through Duke Realty Limited Partnership (“DRLP”). In addition, we conduct our Service Operations through Duke Realty Services LLC, Duke Realty Services Limited Partnership and Duke Construction Limited Partnership. In this Form 10-K Report, the terms “we,” “us” and “our” refer to Duke Realty Limited Partnership and subsidiaries (the “ Partnership”) and those entities owned or controlled by the Partnership.
Our headquarters and executive offices are located in Indianapolis, Indiana. In addition, we have 16 regional offices located in Alexandria, Virginia; Atlanta, Georgia; Cincinnati, Ohio; Columbus, Ohio; Cleveland, Ohio; Chicago, Illinois; Dallas, Texas; Houston, Texas; Minneapolis, Minnesota; Nashville, Tennessee; Orlando, Florida; Phoenix, Arizona; Raleigh, North Carolina; St. Louis, Missouri; Tampa, Florida; and Weston, Florida. We had approximately 1,250 employees as of December 31, 2006.
Business Strategy
Our business objective is to increase Funds From Operations (“FFO”) by (i) maintaining and increasing property occupancy and rental rates through the management of our portfolio of existing properties; (ii) developing and acquiring new properties for rental operations in our existing markets; (iii) expanding geographically by acquiring and developing properties in new markets; (iv) using our construction expertise to act as a general contractor in our existing markets and other domestic markets on a fee basis; (v) developing properties in our existing markets and other markets which we will sell through our merchant building development program and (vi) providing a full line of real estate services to our tenants and to third parties. FFO is used by industry analysts and investors as a supplemental operating performance measure of an equity REIT like our General Partner. 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 United States generally
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accepted accounting principles (“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 investors and analysts 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 operating 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, has improved the understanding of operating results of REITs among the investing public and has made comparisons of REIT operating results more meaningful. Management considers FFO to be 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 operating real estate assets and excluding real estate asset depreciation and amortization, FFO assists in comparing the operating performance of our real estate between periods or as compared to different companies.
As a fully integrated commercial real estate firm, we provide in-house leasing, management, development and construction services which, coupled with our significant base of commercially zoned and unencumbered land in existing business parks, should give us a competitive advantage both as a real estate operator and in future development activities.
We believe that the management of real estate opportunities and risks can be done most effectively at regional or local levels. As a result, we intend to continue our emphasis on increasing our market share and effective rents in the primary markets where we own properties. We also expect to utilize approximately 6,400 acres of unencumbered land and our many business relationships with our 3,500 commercial tenants to expand our build-to-suit business (development projects substantially pre-leased to a single tenant) and to pursue other development and acquisition opportunities in our primary markets. We believe that this regional focus will allow us to assess market supply and demand for real estate more effectively as well as to capitalize on the strong relationships with our tenant base. In addition, we seek to further capitalize on strong customer relationships to provide third-party construction and build-for-sale services outside our primary markets and to expand into high growth and seaport markets across the United States.
Our strategy is to seek to develop and acquire primarily Class A commercial properties located in markets with high growth potential for large national and international companies and other quality regional and local firms. Our industrial and suburban office development focuses on business parks and mixed-use developments suitable for multiple projects on a single site where we can create and control the business environment. These business parks and mixed-use developments often include restaurants and other amenities, which we believe will create an atmosphere that is particularly efficient and desirable. Our retail development focuses on lifestyle, community and neighborhood centers in our existing markets and is developed primarily for held-for-sale opportunities. As a fully integrated real estate company, we are able to arrange for or provide to our industrial, office, medical and retail customers not only well located and well maintained facilities, but also additional services such as build-to-suit construction, tenant finish construction, and expansion flexibility.
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All of our properties are located in areas that include competitive properties. Institutional investors, other REITs or local real estate operators generally own such properties; however, no single competitor or small group of competitors is dominant in our current markets. The supply and demand of similar available rental properties may affect the rental rates we will receive on our properties.
Financing Strategy
We seek to maintain a well-balanced, conservative and flexible capital structure by: (i) extending and sequencing the maturity dates of debt; (ii) borrowing primarily at fixed rates by targeting a variable rate component of total debt less than 20%; (iii) pursuing current and future long-term debt financings and refinancing on an unsecured basis; (iv) maintaining conservative debt service and fixed charge coverage ratios; and (v) issuing attractively priced perpetual preferred equity for 5-10% of our total capital structure.
Management believes that these strategies have enabled and should continue to enable us to favorably access capital markets for our long-term requirements such as debt refinancing and financing development and acquisitions of additional rental properties. In addition, as discussed under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we have a $1.0 billion unsecured line of credit available for short-term fundings of development and acquisition of additional rental properties. Further, we pursue favorable opportunities to dispose of assets that no longer meet our long-term investment criteria and recycle the proceeds into new investments that we believe have excellent long-term growth prospects. Our debt to total market capitalization ratio (total market capitalization is defined as the total market value of all outstanding common units and preferred equity plus outstanding indebtedness) at December 31, 2006 was 37.4%. Our ratio of earnings to debt service and ratio of earnings to fixed charges for the year ended December 31, 2006 were 1.54x and 1.59x, respectively. In computing the ratio of earnings to debt service, earnings have been calculated by adding interest expense (excluding amortization of debt issuance costs) to income from continuing operations, less preferred distributions. Debt service consists of interest expense and recurring principal amortization (excluding maturities) and excludes amortization of debt issuance costs. In computing the ratio of earnings to fixed charges, earnings have been calculated by adding interest expense to income from continuing operations. Fixed charges consist of interest costs, whether expensed or capitalized, the interest component of rental expense and amortization of debt issuance costs.
Corporate Governance
As a limited partnership that has one general partner owning over 90% of the Partnership’s common interest, the governance of the Partnership is necessarily linked to the corporate governance of the General Partner. The General Partner has and continues to be a leader in issues important to investors such as disclosure and corporate governance initiatives. Summarized below are the highlights of the General Partner’s Corporate Governance initiatives.
Board Composition | · The General Partner’s Board is controlled by supermajority (91.7%) of Independent Directors as of January 25, 2006 and thereafter
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Board Committees | · The General Partner’s Board Committee members are all Independent Directors
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Lead Director | · The Chairman of the Corporate Governance Committee serves as Lead Director of the General Partner’s Independent Directors |
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Board Policies | · No Shareholder Rights Plan (Poison Pill) · Code of Conduct applies to all Directors of the General Partner and employees, including the Chief Executive Officer and senior financial officers; waivers require the vote of the General Partner’s Independent Directors · Effective orientation program for new Directors of the General Partner · Independence of Directors of the General Partner is reviewed annually · Independent Directors of the General Partner meet at least quarterly in executive session · Independent Directors of the General Partner receive no compensation from the General Partner or Partnership other than as Directors
· Equity-based compensation plans require the General Partner’s shareholder approval · Board effectiveness and performance is reviewed annually by the General Partner’s Corporate Governance Committee · The General Partner’s Corporate Governance Committee conducts an annual review of the General Partner’s Chief Executive Officer succession plan · Independent Directors of the General Partner and all Board Committees may retain outside advisors, as they deem appropriate · Policy governing retirement age for Directors of the General Partner · Outstanding stock options of the General Partner may not be repriced · Directors of the General Partner required to offer resignation upon job change · Majority voting for election of Directors of the General Partner
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Ownership | · Minimum Stock Ownership Guidelines apply to all Directors and Executive Officers of the General Partner |
The General Partner’s Code of Conduct (which applies to all Directors of the General Partner and employees, including the Chief Executive Officer and senior financial officers) and the Corporate Governance Guidelines are available in the investor information/corporate governance section of the General Partner’s website at www.dukerealty.com. A copy of these documents may also be obtained without charge by writing to Duke Realty Corporation, 600 East 96th Street, Suite 100, Indianapolis, Indiana 46240, Attention: Investor Relations.
Other
For additional information regarding our investments and operations, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Item 8, “Financial Statements and Supplementary Data.” For additional information about our business segments, see Item 8, “Financial Statements and Supplementary Data.”
Available Information and Exchange Certifications
In addition to this Annual Report, we file quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). All documents that are filed with the SEC are available free of charge on the General Partner’s corporate website at www.dukerealty.com. You may also read and copy any document filed at the public reference facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C. 25049. Please call the SEC at (800) SEC-0330 for further information about the public reference facilities. These documents also may be accessed through the
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SEC’s electronic data gathering, analysis and retrieval system (“EDGAR”) via electronic means, including the SEC’s home page on the Internet (http://www.sec.gov). In addition, since some of the General Partner’s securities are listed on the New York Stock Exchange (“NYSE”), you may read SEC filings at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
The NYSE requires that the Chief Executive Officer of each listed company certify annually to the NYSE that he or she is not aware of any violation by the company of NYSE corporate governance listing standards as of the date of such certification. The General Partner submitted the certification of its Chairman and Chief Executive Officer, Dennis D. Oklak, with its 2006 Annual Written Affirmation to the NYSE on May 8, 2006.
The General Partner included the certifications of its Chief Executive Officer and its Chief Financial Officer required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 and related rules, relating to the quality of the General Partner’s public disclosure, in this report as Exhibits 31.1, 31.2, 32.1 and 32.2.
Our operations involve various risks that could adversely affect our financial condition, results of operations, cash flows, ability to pay distribution on our common units and the market price of our common units. In addition to the other information contained in this Annual Report, you should carefully consider the following risk factors in evaluating an investment in our securities.
If the General Partner were to cease to qualify as a real estate investment trust, the General Partner and its shareholders would lose significant tax benefits.
The General Partner intends to continue to operate so as to qualify as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). Qualification as a REIT provides significant tax advantages to the General Partner and its shareholders. However, in order for the General Partner to continue to qualify as a REIT, it must satisfy numerous requirements established under highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. Satisfaction of these requirements also depends on various factual circumstances not entirely within the General Partner’s control. The fact that the General Partner holds its assets through us further complicates the application of the REIT requirements. Even a technical or inadvertent mistake could jeopardize the General Partner’s REIT status. Although the General Partner believes that it can continue to operate so as to qualify as a REIT, we cannot offer any assurance that it can continue to do so or that legislation, new regulations, administrative interpretations or court decisions will not significantly change the qualification requirements or the federal income tax consequences of qualification. If the General Partner were to fail to qualify as a REIT in any taxable year, it would have the following effects:
· The General Partner would not be allowed a deduction for distributions to its shareholders and would be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates;
· Unless the General Partner was entitled to relief under certain statutory provisions, it would be disqualified from treatment as a REIT for the four taxable years following the year during which it ceased to qualify as a REIT;
· The General Partner’s net earnings available for investment or distribution to its shareholders would decrease due to the additional tax liability for the year or years involved; and
· The General Partner would no longer be required to make any distributions to shareholders in order to qualify as a REIT.
As such, the General Partner’s failure to qualify as a REIT would likely have a significant adverse effect on the value of our securities.
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Real estate investment trust distribution requirements limit the amount of cash we will have available for other business purposes, including amounts that we need to fund our future growth.
To maintain its qualification as a REIT under the Code, the General Partner must annually distribute to its shareholders at least 90% of its ordinary taxable income, excluding net capital gains. The General Partner intends to continue to make distributions to its shareholders to comply with the 90% distribution requirement. However, this requirement limits the General Partner’s ability to accumulate capital for use for other business purposes. If the General Partner does not have sufficient cash or other liquid assets to meet the distribution requirements, it may have to borrow funds or sell properties on adverse terms in order to meet the distribution requirements. If the General Partner fails to make a required distribution, it would cease to qualify as a REIT.
U.S. federal income tax developments could affect the desirability of investing in the General Partner for individual taxpayers.
In May 2003, federal legislation was enacted that reduced the maximum tax rate for dividends payable to individual taxpayers generally from 38.6% to 15% (from January 1, 2003 through 2008). However, dividends payable by REITs are not eligible for this treatment, except in limited circumstances. Although this legislation did not have a direct adverse effect on the taxation of REITs or dividends paid by REITs, the more favorable treatment for non-REIT dividends could cause individual investors to consider investments in non-REIT corporations as more attractive relative to an investment in the General Partner as a REIT.
U.S. federal income tax treatment of REITs and investments in REITs may change, which may result in the loss of the General Partner’s tax benefits of operating as a REIT.
The present U.S. federal income tax treatment of a REIT and an investment in a REIT may be modified by legislative, judicial or administrative action at any time. Revisions in U.S. federal income tax laws and interpretations of these laws could adversely affect us and the General Partner and the tax consequences of an investment in the General Partner’s common shares.
Our net earnings available for investment or distribution to unitholders could decrease as a result of factors outside of our control.
Our business is subject to the risks incident to the ownership and operation of commercial real estate, many of which involve circumstances not within our control. Such risks include the following:
· Changes in the general economic climate;
· Increases in interest rates;
· Local conditions such as oversupply of property or a reduction in demand;
· Competition for tenants;
· Changes in market rental rates;
· Oversupply or reduced demand for space in the areas where our properties are located;
· Delay or inability to collect rent from tenants who are bankrupt, insolvent or otherwise unwilling or unable to pay;
· Difficulty in leasing or re-leasing space quickly or on favorable terms;
· Costs associated with periodically renovating, repairing and reletting rental space;
· Our ability to provide adequate maintenance and insurance on our properties;
· Our ability to control variable operating costs;
· Changes in government regulations;
· Changes in interest rate levels;
· The availability of financing on favorable terms; and
· Potential liability under, and changes in, environmental, zoning, tax and other laws.
Further, a significant portion of our costs, such as real estate taxes, insurance and maintenance costs and our debt service payments, are generally not reduced when circumstances cause a decrease in cash flow from our properties.
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Many real estate costs are fixed, even if income from properties decreases.
Our financial results depend on leasing space in our real estate to tenants on terms favorable to us. Our income and funds available for distribution to our unitholders will decrease if a significant number of our tenants cannot pay their rent or we are unable to lease properties on favorable terms. In addition, if a tenant does not pay its rent, we may not be able to enforce our rights as landlord without delays and we may incur substantial legal costs. Costs associated with real estate investment, such as real estate taxes and maintenance costs, generally are not reduced when circumstances cause a reduction in income from the investment.
Our real estate development activities are subject to risks particular to development.
We intend to continue to pursue development activities as opportunities arise. These development activities generally require various government and other approvals. We may not receive the necessary approvals. We are subject to the risks associated with development activities. These risks include:
· Unsuccessful development opportunities could result in direct expenses to us;
· Construction costs of a project may exceed original estimates, possibly making the project less profitable than originally estimated, or possibly unprofitable;
· Time required to complete the construction of a project or to lease up the completed project may be greater than originally anticipated, thereby adversely affecting our cash flow and liquidity;
· Occupancy rates and rents of a completed project may not be sufficient to make the project profitable; and
· Favorable sources to fund our development activities may not be available.
We are exposed to risks associated with entering new markets.
We consider entering new markets from time to time. The construction and/or acquisition of properties in new markets involves risks, including the risk that the property will not perform as anticipated and the risk that any actual costs for rehabilitation, repositioning, renovation and improvements identified in the pre-construction or pre-acquisition due diligence process will exceed estimates. There is, and it is expected that there will continue to be, significant competition for investment opportunities that meet our investment criteria as well as risks associated with obtaining financing for acquisition activities, if necessary.
We may be unsuccessful in operating completed real estate projects.
We face the risk that the real estate projects we develop or acquire will not perform in accordance with our expectations. This risk exists because of factors such as the following:
· Prices paid for acquired facilities are based upon a series of market judgments; and
· Costs of any improvements required to bring an acquired facility up to standards to establish the market position intended for that facility might exceed budgeted costs.
Further, we can give no assurance that acquisition targets meeting our guidelines for quality and yield will be available when we seek them.
We are exposed to the risks of defaults by tenants.
Any of our tenants may experience a downturn in their businesses that may weaken their financial condition. In the event of default or the insolvency of a significant number of our tenants, we may experience a substantial loss of rental revenue and/or delays in collecting rent and incur substantial costs in enforcing our rights as landlord. If a tenant files for bankruptcy protection, a court could allow the tenant to reject and terminate its lease with us. Our income and distributable cash flow would be adversely affected if a significant number of our tenants became unable to meet their obligations to us, became insolvent or declared bankruptcy.
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We may be unable to renew leases or relet space.
When our tenants decide not to renew their leases upon their expiration, we may not be able to relet the space. Even if our tenants do renew or we are able to relet the space, the terms of renewal or reletting (including the cost of renovations, if necessary) may be less favorable than current lease terms. If we are unable to promptly renew the leases or relet the space, or if the rental rates upon such renewal or reletting are significantly lower than current rates, then our income and distributable cash flow would be adversely affected, especially if we were unable to lease a significant amount of the space vacated by tenants in our properties.
Our insurance coverage on our properties may be inadequate.
We maintain comprehensive insurance on each of our facilities, including property, liability, fire, flood and extended coverage. We believe this coverage is of the type and amount customarily obtained for real property. However, there are certain types of losses, generally of a catastrophic nature, such as earthquakes, hurricanes and floods or acts of war or terrorism that may be uninsurable or not economically insurable. We use our discretion when determining amounts, coverage limits and deductibles for insurance. These terms are determined based on retaining an acceptable level of risk at a reasonable cost. This may result in insurance coverage that in the event of a substantial loss would not be sufficient to pay the full current market value or current replacement cost of our lost investment. Inflation, changes in building codes and ordinances, environmental considerations and other factors also may make it unfeasible to use insurance proceeds to replace a facility after it has been damaged or destroyed. Under such circumstances, the insurance proceeds we receive may not be adequate to restore our economic position in a property. If an insured loss occurred, we could lose both our investment in and anticipated profits and cash flow from a property, and we would continue to be obligated on any mortgage indebtedness or other obligations related to the property. Although we believe our insurance is with highly rated providers, we are also subject to the risk that such providers may be unwilling or unable to pay our claims when made.
Acquired properties may expose us to unknown liability.
From time to time, we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities. As a result, if a liability were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle or contest it, which could adversely affect our results of operations and cash flow. Unknown liabilities with respect to acquired properties might include:
· liabilities for clean-up of undisclosed environmental contamination;
· claims by tenants, vendors or other persons against the former owners of the properties;
· liabilities incurred in the ordinary course of business; and
· claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties.
We could be exposed to significant environmental liabilities as a result of conditions of which we currently are not aware.
As an owner and operator of real property, we may be liable under various federal, state and local laws for the costs of removal or remediation of certain hazardous substances released on or in our property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of the hazardous substances. In addition, we could have greater difficulty in selling real estate on which hazardous substances were present or in obtaining borrowings using such real estate as collateral. It is our general policy to have Phase I environmental audits performed for all of our properties and land by qualified environmental consultants. These Phase I environmental audits have not revealed any environmental liability that would have a material adverse effect on our business. However, a Phase I environmental audit does not involve invasive procedures such as soil sampling or ground water analysis,
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and we cannot be sure that the Phase I environmental audits did not fail to reveal a significant environmental liability or that a prior owner did not create a material environmental condition on our properties or land which has not yet been discovered. We could also incur environmental liability as a result of future uses or conditions of such real estate or changes in applicable environmental laws.
Certain of the General Partner’s officers hold units in the Partnership and may not have the same interests as the General Partner’s shareholders with regard to certain tax matters.
Certain of the General Partner’s officers own Limited Partnership Units in the Partnership. Owners of limited partnership units may suffer adverse tax consequences upon the sale of certain of our properties, the refinancing of debt related to those properties or in the event we are the subject of a tender offer or merger. As such, owners of Limited Partnership Units, including certain of the General Partner’s officers, may have different objectives regarding the appropriateness of the pricing and timing of these transactions. Though the General Partner is the sole general partner of the Partnership and has the exclusive authority to sell all of our wholly-owned properties or to refinance such properties, officers who hold Limited Partnership Units may influence us not to sell or refinance certain properties even if such sale may be financially advantageous to the General Partner’s shareholders. Adverse tax consequences may also influence the decisions of these officers in the event we are the subject of a tender offer or merger.
We do not have exclusive control over our joint venture investments.
We have interests in joint ventures and partnerships and may in the future conduct business through joint ventures and partnerships. These investments involve risks that are not present in our wholly-owned projects. For example, co-investors or partners may become bankrupt or have business interests or goals inconsistent with ours. Further, our co-investors or partners may be in a position to take action contrary to our instructions and our interests, including action that may jeopardize the General Partner’s qualification as a REIT.
Our use of debt financing could have a material adverse effect on our financial condition.
We are subject to the risks normally associated with debt financing, including the risk that our cash flow will be insufficient to meet required principal and interest payments and the risk that we will be unable to refinance our existing indebtedness, or that the terms of such refinancing will not be as favorable as the terms of our existing indebtedness. If our debt cannot be paid, refinanced or extended, we may not be able to make distributions to unitholders at expected levels or at all. Further, if prevailing interest rates or other factors at the time of a refinancing result in higher interest rates or other restrictive financial covenants upon the refinancing, then such refinancing would adversely affect our cash flow and funds available for operation, development and distribution. We are also subject to financial covenants under our existing debt instruments. Should we fail to comply with the covenants in our existing debt instruments, then we would not only be in breach under the applicable debt instruments but we would also likely be unable to borrow any further amounts under these instruments, which could adversely affect our ability to fund operations. We also have incurred and may incur in the future indebtedness that bears interest at variable rates. Thus, as market interest rates increase, so will our debt expense, affecting our cash flow and our ability to make distributions to unitholders.
We are subject to various financial covenants under existing credit agreements.
The terms of our various credit agreements and other indebtedness require that we comply with a number of customary financial and other covenants, such as maintaining debt service coverage and leverage ratios and maintaining insurance coverage. These covenants may limit our flexibility in our operations, and breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness even if we have satisfied our payment obligations. If we are unable to refinance our indebtedness at maturity or meet our payment obligations, the amount of our distributable cash flow would be adversely affected.
10
We are subject to certain provisions that could discourage change-of-control transactions, which may reduce the likelihood of the General Partner’s shareholders receiving a control premium for their shares.
Indiana anti-takeover legislation and certain provisions in our governing documents, as we discuss below, may discourage potential acquirers from pursuing a change-of-control transaction with us. As a result, the General Partner’s shareholders may be less likely to receive a control premium for their shares.
Unissued Preferred Stock. the General Partner’s charter permits its board of directors to classify unissued preferred stock by setting the rights and preferences of the shares at the time of issuance. This power enables the General Partner’s board to adopt a shareholder rights plan, also known as a poison pill. Although the General Partner has repealed its previously existing poison pill and its current board of directors has adopted a policy not to issue preferred stock as an anti-takeover measure, the General Partner’s board can change this policy at any time. The adoption of a poison pill would discourage a potential bidder from acquiring a significant position at the General Partner without the approval of its board.
Business-Combination Provisions of Indiana Law. We have not opted out of the business-combination provisions of the Indiana Business Corporation Law. As a result, potential bidders may have to negotiate with the General Partner’s board of directors before acquiring 10% of its stock. Without securing board approval of the proposed business combination before crossing the 10% ownership threshold, a bidder would not be permitted to complete a business combination for five years after becoming a 10% shareholder. Even after the five-year period, a business combination with the significant shareholder would require a “fair price” as defined in the Indiana Business Corporation Law or the approval of a majority of the disinterested shareholders.
Control-Share-Acquisition Provisions of Indiana Law. We have not opted out of the provisions of the Indiana Business Corporation Law regarding acquisitions of control shares. Therefore, those who acquire a significant block (at least 20%) of the General Partner’s shares may only vote a portion of their shares unless our other shareholders vote to accord full voting rights to the acquiring person. Moreover, if the other shareholders vote to give full voting rights with respect to the control shares and the acquiring person has acquired a majority of the General Partner’s outstanding shares, the other shareholders would be entitled to special dissenters’ rights.
Supermajority Voting Provisions. The General Partner’s charter prohibits business combinations or significant disposition transactions with a holder of 10% of its shares unless:
· The holders of 80% of the General Partner’s outstanding shares of capital stock approve the transaction;
· The transaction has been approved by three-fourths of those directors who served on the General Partner’s board before the shareholder became a 10% owner; or
· The significant shareholder complies with the “fair price” provisions of the General Partner’s charter.
Among the transactions with large shareholders requiring the supermajority shareholder approval are dispositions of assets with a value of $1,000,000 and business combinations.
Partnership Provisions. The limited partnership agreement of the Partnership contains provisions that could discourage change-of-control transactions, including a requirement that holders of at least 90% of the outstanding partnership units held by us and other unit holders approve:
· Any voluntary sale, exchange, merger, consolidation or other disposition of all or substantially all of the assets of the Partnership in one or more transactions other than a disposition occurring upon a financing or refinancing of the Partnership;
11
· The General Partner’s merger, consolidation or other business combination with another entity unless after the transaction substantially all of the assets of the surviving entity are contributed to the Partnership in exchange for units;
· The General Partner’s transfer of its interests in the Partnership other than to one of our wholly owned subsidiaries; and
· Any reclassification or recapitalization or change of outstanding shares of the General Partner’s common stock other than certain changes in par value, stock splits, stock dividends or combinations.
We are dependent on key personnel.
The General Partner’s executive officers and other senior officers have a significant role in the success of the Partnership. Our ability to retain our management group or to attract suitable replacements should any members of the management group leave the General Partner is dependent on the competitive nature of the employment market. The loss of services from key members of the management group or a limitation in their availability could adversely impact our financial condition and cash flow. Further, such a loss could be negatively perceived in the capital markets.
Item 1B. Unresolved Staff Comments
The Partnership has no unresolved comments with the SEC staff regarding its periodic or current reports under the Exchange Act.
Product Review
As of December 31, 2006, we own an interest in a diversified portfolio of 721 commercial properties encompassing approximately 113.8 million net rentable square feet (including 28 properties comprising 4.5 million square feet under development) and more than 6,400 acres of land for future development.
Industrial Properties: We own interests in 421 industrial properties encompassing approximately 79.2 million square feet (70% of total square feet) more specifically described as follows:
· Bulk Warehouses – Industrial warehouse/distribution buildings with clear ceiling heights of 20 feet or more. We own 344 buildings totaling more than 74.0 million square feet of such properties.
· Service Center/Other Properties – Also known as flex buildings or light industrial, this product type has 12-18 foot clear ceiling heights and a combination of drive-up and dock-height loading access. We own 77 buildings totaling approximately 5.2 million square feet of such properties.
Office Properties: We own interests in 300 office buildings totaling approximately 34.6 million square feet (30% of total square feet). These properties include primarily suburban office properties.
Land: We own or control approximately 6,400 acres of land located primarily in existing business parks. The land is ready for immediate use and is unencumbered. More than 93 million square feet of additional space can be developed on these sites and substantially all of the land is zoned for either office, industrial or retail development.
Service Operations: We provide property and asset management, development, leasing and construction services to third party owners in addition to our own properties.
Property Descriptions
The following schedule represents the geographic highlights of properties in our primary markets.
12
Duke Realty Limited Partnership
Geographic Highlights
In Service Properties as of December 31, 2006
|
| Square Feet (1) |
|
|
|
| Percent of |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annual Net |
| Annual Net |
| |
|
| Industrial |
|
|
|
|
|
|
| Percent of |
|
| Effective |
| Effective |
| |||
|
| Service Center |
| Bulk Distribution |
| Suburban Office |
| Other |
| Overall |
| Overall |
|
| Rent (2) |
| Rent |
| |
Primary Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Indianapolis |
| 1,400,105 |
| 16,976,763 |
| 3,178,369 |
| - |
| 21,555,237 |
| 19.73% |
| $ | 81,476,319 |
| 13.11 | % | |
Cincinnati |
| 239,200 |
| 9,600,072 |
| 4,701,576 |
| 566,316 |
| 15,107,164 |
| 13.82% |
|
| 77,335,808 |
| 12.45 | % | |
Atlanta |
| - |
| 8,314,475 |
| 4,000,580 |
| 25,881 |
| 12,340,936 |
| 11.29% |
|
| 64,206,858 |
| 10.33 | % | |
St. Louis |
| 1,223,194 |
| 2,907,640 |
| 3,467,455 |
| - |
| 7,598,289 |
| 6.95% |
|
| 61,552,354 |
| 9.91 | % | |
Chicago |
| 164,685 |
| 5,386,585 |
| 2,856,179 |
| 18,370 |
| 8,425,819 |
| 7.71% |
|
| 58,969,251 |
| 9.49 | % | |
Columbus |
| - |
| 3,561,480 |
| 3,390,451 |
| - |
| 6,951,931 |
| 6.36% |
|
| 49,488,027 |
| 7.96 | % | |
Raleigh |
| 575,008 |
| 1,531,214 |
| 2,293,857 |
| - |
| 4,400,079 |
| 4.03% |
|
| 39,214,220 |
| 6.31 | % | |
Washington DC |
| - |
| 654,918 |
| 2,265,040 |
| - |
| 2,919,958 |
| 2.67% |
|
| 30,789,972 |
| 4.95 | % | |
Minneapolis |
| 259,185 |
| 3,518,328 |
| 805,889 |
| - |
| 4,583,402 |
| 4.19% |
|
| 27,678,796 |
| 4.45 | % | |
Central Florida |
| - |
| 2,626,631 |
| 1,268,476 |
| - |
| 3,895,107 |
| 3.56% |
|
| 26,827,186 |
| 4.32 | % | |
Cleveland |
| - |
| - |
| 2,218,660 |
| - |
| 2,218,660 |
| 2.03% |
|
| 25,907,783 |
| 4.17 | % | |
Nashville |
| 230,523 |
| 2,959,887 |
| 1,004,263 |
| - |
| 4,194,673 |
| 3.84% |
|
| 25,620,898 |
| 4.12 | % | |
Dallas |
| 470,754 |
| 8,128,884 |
| 152,000 |
| - |
| 8,751,638 |
| 8.01% |
|
| 22,450,067 |
| 3.61 | % | |
Savannah |
| - |
| 5,140,388 |
| - |
| - |
| 5,140,388 |
| 4.70% |
|
| 16,998,379 |
| 2.74 | % | |
South Florida |
| - |
| - |
| 773,923 |
| - |
| 773,923 |
| 0.71% |
|
| 12,336,028 |
| 1.99 | % | |
Others (3) |
| - |
| 436,139 |
| - |
| - |
| 436,139 |
| 0.40% |
|
| 557,916 |
| 0.09 | % | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Total |
| 4,562,654 |
| 71,743,404 |
| 32,376,718 |
| 610,567 |
| 109,293,343 |
| 100.00% |
| $ | 621,409,862 |
| 100.00 | % | |
|
| 4.17% |
| 65.64% |
| 29.62% |
| 0.56% |
| 100.00% |
|
|
|
|
|
|
|
| |
| Occupancy % |
| |||||||||
|
| Industrial |
| Suburban |
|
|
|
|
| ||
|
| Service Center |
| Bulk Distribution |
| Office |
| Other |
| Overall |
|
Primary Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indianapolis |
| 89.72% |
| 94.48% |
| 92.79% |
| - |
| 93.92% |
|
Cincinnati |
| 89.02% |
| 93.07% |
| 91.49% |
| 99.29% |
| 92.75% |
|
Atlanta |
| - |
| 82.55% |
| 86.56% |
| 100.00% |
| 83.88% |
|
St. Louis |
| 94.30% |
| 91.45% |
| 93.15% |
| - |
| 92.69% |
|
Chicago |
| 100.00% |
| 96.36% |
| 95.43% |
| 91.04% |
| 96.10% |
|
Columbus |
| - |
| 100.00% |
| 94.96% |
| - |
| 97.54% |
|
Raleigh |
| 85.93% |
| 100.00% |
| 96.60% |
| - |
| 96.39% |
|
Washington DC |
| - |
| 100.00% |
| 95.53% |
| - |
| 96.53% |
|
Minneapolis |
| 82.63% |
| 96.26% |
| 89.30% |
| - |
| 94.27% |
|
Central Florida |
| - |
| 96.22% |
| 94.54% |
| - |
| 95.67% |
|
Cleveland |
| - |
| - |
| 85.11% |
| - |
| 85.11% |
|
Nashville |
| 96.48% |
| 67.60% |
| 85.93% |
| - |
| 73.57% |
|
Dallas |
| 98.34% |
| 97.73% |
| 100.00% |
| - |
| 97.80% |
|
Savannah |
| - |
| 100.00% |
| - |
| - |
| 100.00% |
|
South Florida |
| - |
| - |
| 96.41% |
| - |
| 96.41% |
|
Others (3) |
| - |
| 100.00% |
| - |
| - |
| 100.00% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
| 91.63% |
| 93.21% |
| 92.15% |
| 99.08% |
| 92.86% |
|
(1) Includes all wholly owned and joint venture projects shown at 100% as of report date.
(2) Represents the average annual rental property revenue due from tenants in occupancy as of the date of this report, excluding additional rent due as operating expense reimbursements, landlord allowances for operating expenses and percentage rents. Joint Venture properties are shown at the Partnership's ownership percentage.
(3) Represents properties not located in the Partnership's primary markets. These properties are located in similar midwest or southeast markets.
Note: Excludes buildings that are in the held for sale portfolio.
13
We are not subject to any material pending legal proceedings, other than ordinary routine litigation arising in the ordinary course of business. Our management expects that these ordinary routine legal proceedings will be covered by insurance and does not expect these legal proceedings to have a material adverse effect on our financial condition, results of operations, or liquidity.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders of the General Partner during the quarter ended December 31, 2006.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
There is no established trading market for the Common Units. The following table sets forth the cash distributions paid during each quarter. As of February 20, 2007, there were 172 record holders of Common Units.
| 2006 Distributions |
| 2005 Distributions |
| |
Quarter Ended |
| Per Common Unit |
| Per Common Unit |
|
|
|
|
|
|
|
December 31 |
| $.475 |
| $.470 |
|
September 30 |
| $.475 |
| $.470 |
|
June 30 |
| $.470 |
| $.465 |
|
March 31 |
| $.470 |
| $.465 |
|
On January 31, 2007, the General Partner declared a quarterly cash dividend of $0.475 per Common Unit, payable on February 28, 2007, to Common Unitholders of record on February 14, 2007.
Securities Authorized for Issuance Under Equity Compensation Plans
The information required by this Item concerning securities authorized for issuance under the General Partner’s equity compensation plans is set forth or incorporated herein by reference to Part III, Item 12 of this Annual Report.
Sales of Unregistered Securities
The General Partner did not sell any of its securities during the three months ended December 31, 2006 that were not registered under the Securities Act.
Issuer Purchases of Equity Securities
From time to time, the General Partner may repurchase its common shares under a $750 million share repurchase program that initially was approved by the General Partner’s board of directors and publicly announced in October 2001 (the “Repurchase Program”). In July 2005, the General Partner’s board of directors authorized management to purchase up to $750 million of common shares pursuant to this plan. Under the Repurchase Program, the General Partner also executes share repurchases on an ongoing basis associated with certain employee elections under its compensation and benefit programs.
14
The following table shows the share repurchase activity for each of the three months in the quarter ended December 31, 2006:
|
|
|
|
|
| Maximum Number | ||||
|
|
|
|
|
|
|
| (or Approximate | ||
|
|
|
|
|
| Total Number of |
| Dollar Value) of | ||
|
|
|
|
|
| Shares Purchased as |
| Shares that May | ||
|
| Total Number of |
|
|
| Part of Publicly |
| Yet be Purchased | ||
|
| Shares |
| Average Price |
| Announced Plans or |
| Under the Plans or | ||
Month |
| Purchased (1) |
| Paid per Share |
| Programs |
| Programs (2) | ||
|
|
|
|
|
|
|
|
| ||
October |
| 67,653 |
|
| $38.12 |
| 67,653 |
|
|
|
November |
| 2,274,639 |
|
| $40.82 |
| 2,274,639 |
|
|
|
December |
| 14,827 |
|
| $42.78 |
| 14,827 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
| 2,357,119 |
|
| $40.75 |
| 2,357,119 |
|
|
|
(1) Includes 16,499 common shares of the General Partner repurchased under its Employee Stock Purchase Plan, 148,935 shares of the General Partner swapped to pay the exercise price of stock options and 2,191,684 common shares of the General Partner repurchased under its Repurchase Program.
(2) The number of common shares of the General Partner that may yet be repurchased in the open market to fund shares purchased under its Employee Stock Purchase Plan, as amended, was 142,706 on December 31, 2006. The approximate dollar value of the General Partner’s common shares that may yet be purchased under the Repurchase Program was $361.0 million as of December 31, 2006.
Item 6. Selected Financial Data
The following sets forth selected financial and operating information on a historical basis for each of the years in the five-year period ended December 31, 2006. The following information should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8, “Financial Statements and Supplementary Data” included in this Form 10-K (in thousands, except per unit amounts):
| 2006 |
| 2005 |
| 2004 |
| 2003 |
| 2002 | |
Results of Operations: |
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
Rental Operations from Continuing Operations | $ | 818,670 | $ | 668,607 | $ | 603,817 | $ | 552,788 | $ | 523,235 |
Service Operations from Continuing Operations |
| 90,125 |
| 81,941 |
| 70,803 |
| 58,496 |
| 67,860 |
Total Revenues from Continuing Operations | $ | 908,795 | $ | 750,548 | $ | 674,620 | $ | 611,284 | $ | 591,095 |
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations | $ | 163,343 | $ | 144,422 | $ | 147,016 | $ | 158,028 | $ | 189,706 |
|
|
|
|
|
|
|
|
|
|
|
Net Income Available for common unitholders | $ | 159,799 | $ | 339,239 | $ | 167,212 | $ | 179,587 | $ | 171,601 |
|
|
|
|
|
|
|
|
|
|
|
Per Unit Data : |
|
|
|
|
|
|
|
|
|
|
Basic income per common unit: |
|
|
|
|
|
|
|
|
|
|
Continuing operations | $ | 0.70 | $ | 0.63 | $ | 0.71 | $ | 0.80 | $ | 0.87 |
Discontinued operations |
| 0.38 |
| 1.56 |
| 0.37 |
| 0.40 |
| 0.28 |
Diluted income per common unit: |
|
|
|
|
|
|
|
|
|
|
Continuing operations |
| 0.70 |
| 0.63 |
| 0.70 |
| 0.79 |
| 0.87 |
Discontinued operations |
| 0.37 |
| 1.55 |
| 0.37 |
| 0.40 |
| 0.27 |
Distributions paid per common unit |
| 1.89 |
| 1.87 |
| 1.85 |
| 1.83 |
| 1.81 |
Distributions paid per common unit – special |
| - |
| 1.05 |
| - |
| - |
| - |
Weighted average common units outstanding |
| 148,069 |
| 155,059 |
| 155,281 |
| 150,280 |
| 149,423 |
Weighted average common units and potential dilutive common equivalents |
| 149,393 |
| 155,877 |
| 157,062 |
| 151,141 |
| 150,839 |
Balance Sheet Data (at December 31): |
|
|
|
|
|
|
|
|
|
|
Total Assets | $ | 7,247,296 | $ | 5,646,687 | $ | 5,894,644 | $ | 5,558,711 | $ | 5,347,055 |
Total Debt (1) |
| 4,109,154 |
| 2,600,651 |
| 2,518,704 |
| 2,335,536 |
| 2,106,285 |
Total Preferred Equity |
| 825,774 |
| 616,780 |
| 616,780 |
| 511,785 |
| 415,466 |
Total Partners’ Equity |
| 2,659,243 |
| 2,635,244 |
| 3,021,128 |
| 2,878,320 |
| 2,919,843 |
Total Common Units Outstanding |
| 146,328 |
| 148,095 |
| 156,490 |
| 150,705 |
| 149,907 |
|
|
|
|
|
|
|
|
|
|
|
Other Data: |
|
|
|
|
|
|
|
|
|
|
Funds From Operations (2) | $ | 371,570 | $ | 374,310 | $ | 388,185 | $ | 372,519 | $ | 358,871 |
(1) Includes $147,309 of secured debt classified as liabilities of properties held for sale at December 31, 2006.
15
(2) FFO is used by industry analysts and investors as a supplemental operating performance measure of an equity REIT like our General Partner. FFO is calculated in accordance with the definition that was adopted by the Board of Governors of 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 investors and analysts have considered the 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 operating 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, has improved the understanding of operating results of REITs among the investing public and has made comparisons of REIT operating results more meaningful. Management considers FFO to be 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 operating real estate assets and excluding real estate asset depreciation and amortization, FFO assists in comparing the operating performance of our real estate between periods or as compared to different companies.
See reconciliation of FFO to GAAP net income under Year in Review section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Business Overview
As of December 31, 2006, we:
· Owned or jointly controlled 721 industrial, office and retail properties (including properties under development), consisting of approximately 113.8 million square feet; and
· Owned or jointly controlled more than 6,400 acres of unencumbered land with an estimated future development potential of more than 93 million square feet of industrial, office 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;
· Construction;
· Development; and
· Other tenant-related services.
16
Management Philosophy and Priorities
Our key business and financial strategies for the future include the following:
· Our business objective is to increase FFO by (i) maintaining and increasing property occupancy and rental rates through the management of our portfolio of existing properties; (ii) developing and acquiring new properties for rental operations in our existing markets; (iii) expanding geographically by acquiring and developing properties in new markets; (iv) using our construction expertise to act as a general contractor in our existing markets and other domestic markets on a fee basis; (v) developing and repositioning properties in our existing markets and other markets which we will sell through our Service Operations property sale program; and (vi) providing a full line of real estate services to our tenants and to third parties.
See the Year in Review section below for further explanation and definition of FFO.
· Our financing strategy is to actively manage the components of our capital structure including common and preferred equity and debt to maintain a conservatively leveraged balance sheet and investment grade ratings from our credit rating agencies. This strategy provides us with the financial flexibility to fund both development and acquisition opportunities. We seek to maintain a well-balanced, conservative and flexible capital structure by: (i) extending and sequencing the maturity dates of debt; (ii) borrowing primarily at fixed rates by targeting a variable rate component of total debt less than 20%; (iii) pursuing current and future long-term debt financings and refinancing generally on an unsecured basis; (iv) maintaining conservative debt service and fixed charge coverage ratios; and (v) issuing attractively priced perpetual preferred equity for 5-10% of our total capital structure.
Year in Review
During 2006, we successfully executed on our strategy that we began in earnest in 2005 to improve our portfolio of held for investment buildings through our capital recycling program, increasing our development pipeline to over $1.2 billion, and initiating geographic expansion that we anticipate will provide future earnings growth. As a result of these accomplishments, we achieved steady operating results while maintaining a strong balance sheet.
Net income available for common unitholders for the year ended December 31, 2006, was $159.8 million, or $1.07 per unit (diluted), compared to net income of $339.2 million, or $2.18 per unit (diluted) for the year ended 2005. The decrease is primarily attributable to the $201.5 million gain from the sale of a portfolio of 212 real estate properties (the “Industrial Portfolio Sale”) that occurred in 2005 which was partially offset by income generated by current year building sales, acquired properties and organic growth. Through increased leasing activity, we achieved a growth in rental revenues from continuing operations in 2006 over 2005 as our in-service portfolio occupancy increased from 92.7% at the end of 2005 to 92.9% at the end of 2006.
As an important performance metric for us as a real estate company, FFO available to common unitholders totaled $371.6 million for the year ended December 31, 2006, compared to $374.3 million for the same period in 2005 which is the result of the time necessary to redeploy the proceeds from the Industrial Portfolio Sale noted above into FFO generating assets. Industry analysts and investors use FFO as a supplemental operating performance measure of an equity REIT. FFO is calculated in accordance with the definition that was adopted by the Board of Governors of the NAREIT. FFO, as defined by NAREIT, represents net income (loss) determined in accordance with GAAP, excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating 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.
17
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 investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Thus, NAREIT created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from GAAP net income. 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 considers FFO to be 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 operating real estate assets and excluding real estate asset depreciation and amortization, FFO assists in comparing the operating performance of a company’s real estate between periods or as compared to different companies.
The following table summarizes the calculation of FFO for the years ended December 31 (in thousands):
| 2006 |
| 2005 |
| 2004 |
| |
Net income available for common unitholders | $ | 159,799 | $ | 339,239 | $ | 167,212 |
|
Adjustments: |
|
|
|
|
|
|
|
Depreciation and amortization |
| 254,268 |
| 254,170 |
| 228,582 |
|
Partnership share of joint venture depreciation and amortization |
| 18,394 |
| 19,510 |
| 18,901 |
|
Earnings from depreciable property sales – wholly owned |
| (42,089) |
| (227,513) |
| (26,510) |
|
Earnings from depreciable property sales – share of joint venture |
| (18,802) |
| (11,096) |
| - |
|
Funds From Operations | $ | 371,570 | $ | 374,310 | $ | 388,185 |
|
Throughout 2006, we continued to maintain a conservative balance sheet and investment grade debt ratings from Moody’s (Baa1), Standard & Poors (BBB+) and Fitch (BBB+). Our debt to total market capitalization ratio (total market capitalization is defined as the total market value of all outstanding Common Units and Preferred equity plus outstanding indebtedness) of 37.4% at December 31, 2006 compared to 31.8% at December 31, 2005 continues to provide us financial flexibility to fund new investments.
Highlights of our debt financing activity in 2006 are as follows:
· In January 2006, we renewed our line of credit, including the extension of the maturity date to January 2010 and the increase of borrowing capacity by $500.0 million to $1.0 billion with interest rates ranging from LIBOR +. 17% to LIBOR +. 525% as of December 31, 2006.
· We had $317.0 million outstanding on our line of credit as of December 31, 2006.
· Through new issuances, as well as assumptions of debt in conjunction with our 2006 acquisitions, we added $540.6 million of new secured debt in 2006 at a weighted average interest rate of 6.09% and we retired $40.6 million of secured debt of which $25.0 million was variable rate.
· We issued $854.5 million of unsecured debt at a weighted average interest rate of 4.97% and retired $350.0 million of unsecured debt with a weighted average interest rate of 6.05%.
· We issued $575.0 million of 3.75% Exchangeable Senior Notes (“Exchangeable Notes”) in November 2006. The Exchangeable Notes can be exchanged for shares of the General Partner’s common stock upon certain events as well as at any time beginning on August 1, 2011 and ending on the second business day prior to the maturity date. The Exchangeable Notes will have an initial exchange rate of approximately 20.4298 common shares per $1,000 principal amount of the notes, representing an exchange price of approximately $48.95 per share of the General Partner’s common stock and an exchange premium of approximately 20.0% based on the last reported sale price of $40.79 per share of the General Partner’s common stock on the date of issuance. The initial exchange rate is subject to adjustment under certain circumstances, including increases in
18
the General Partner’s rate of dividends. Upon exchange, the holders of the Exchangeable Notes would receive cash equal to the principal amount of the note and, at the General Partner’s option, either cash or shares of its common stock for the remaining balance due.
In order to reduce potential dilution of the General Partner’s common stock, we purchased a capped call option with the proceeds of the Exchangeable Notes offering that allows us to buy the General Partner’s common shares, up to a maximum of approximately 11.7 million shares or the General Partner’s common stock, from the option counterparties at prescribed prices. The capped call option will terminate upon the earlier of the maturity date of the related Exchangeable Notes or the first day all of the related Exchangeable Notes are no longer outstanding due to exchange or otherwise. The capped call option, which cost $27.0 million, was recorded as a reduction of partners’ equity and effectively increased the exchange price to 40% above the General Partner’s stock price on the issuance date.
On the equity side of our balance sheet, the General Partner repurchased approximately 2.2 million of its common shares for approximately $89.4 million from the proceeds of our Exchangeable Notes issuance. Additionally, the General Partner issued two new series of preferred equity securities, 6.95% Series M Cumulative Redeemable Preferred Shares and 7.25% Series N Cumulative Redeemable Preferred Shares, for total gross proceeds of $294.0 million while the General Partner redeemed its 8.45% Series I Cumulative Redeemable Preferred Shares of $75.0 million.
We continued strategic initiatives to expand geographically and projects to leverage our development, construction and management capabilities as follows:
· We completed the acquisition of a Washington D.C. metropolitan area portfolio of 32 suburban in-service office and light industrial properties, the assets of a related real estate management company, as well as significant undeveloped land positions (all referred to as the “Mark Winkler Portfolio”) for a purchase price of approximately $867.6 million. In December 2006, we contributed 23 of the in-service properties to joint ventures in which we hold a 30% continuing interest. We will contribute eight in-service properties to the joint ventures in the first quarter of 2007.
· We completed the purchase of a portfolio of industrial real estate properties in Savannah, Georgia consisting of 18 buildings for a purchase price of approximately $196.2 million.
· We increased our investment in undeveloped land to provide greater opportunities to use our development and construction expertise in the improving economic cycle. Throughout 2006, we completed land acquisitions totaling $436.7 million. The new land positions include industrial, office and retail positions in several markets, including the Washington D.C., Baltimore, Houston, and Phoenix markets, which we entered during 2006.
· We disposed of 19 non-strategic wholly owned held for rental properties, most notably our entire Cleveland industrial portfolio, for $139.9 million of gross proceeds. Additionally, unconsolidated subsidiaries disposed of 22 non-strategic held for rental properties of which our share of the gross proceeds totaled $91.9 million. These transactions were a continuation of our long-term strategy of recycling assets into higher yielding new developments.
· Finally, we will continue to develop long-term investment assets to be held in our portfolio and develop assets to be sold upon completion. With over $1.2 billion in our development pipeline at December 31, 2006, we are encouraged about the long-term growth opportunities in our business.
19
Key Performance Indicators
Our operating results depend primarily upon rental income from our office and industrial 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: As discussed above, our ability to maintain occupancy rates is a principal driver of our results of operations. The following table sets forth occupancy information regarding our in-service portfolio of rental properties as of December 31 (in thousands, except percentage data):
| Total |
| Percent of |
|
|
| |||||||
|
| Square Feet |
| Total Square Feet |
| Percent Occupied | |||||||
Type |
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| 2006 |
| 2005 |
|
Industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
Service Centers |
| 4,562 |
| 4,724 |
| 4.2 | % | 4.8 | % | 91.6 | % | 91.7 | % |
Bulk |
| 71,743 |
| 62,377 |
| 65.6 | % | 63.8 | % | 93.2 | % | 94.3 | % |
Office |
| 32,377 |
| 30,123 |
| 29.6 | % | 30.8 | % | 92.2 | % | 89.3 | % |
Other |
| 611 |
| 611 |
| 0.6 | % | 0.6 | % | 99.1 | % | 96.0 | % |
Total |
| 109,293 |
| 97,835 |
| 100.0 | % | 100.0 | % | 92.9 | % | 92.7 | % |
We experienced continued strong occupancy in our in-service portfolio with the overall increase driven primarily by a 3.1% increase in the occupancy of our office portfolio.
Lease Expiration and Renewals: Our ability to maintain and grow 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 December 31, 2006. The table indicates square footage and annualized net effective rents (based on December 2006 rental revenue) under expiring leases (in thousands, except percentage data):
| Total Portfolio |
| Industrial |
| Office |
| Other | |||||||||||||||||||
|
| Square |
| Ann. Rent |
| % of |
| Square |
| Ann. Rent |
| Square |
| Ann. Rent |
| Square |
| Ann. Rent | ||||||||
Year of Expiration |
| Feet |
| Revenue |
| Revenue |
| Feet |
| Revenue |
| Feet |
| Revenue |
| Feet |
| Revenue | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
2007 |
| 10,107 |
| $ | 59,430 |
| 8 | % | 7,819 |
| $ | 29,949 |
| 2,279 |
| $ | 29,358 |
| 9 |
| $ | 123 | ||||
2008 |
| 14,050 |
|
| 83,872 |
| 12 | % | 10,665 |
|
| 41,892 |
| 3,366 |
|
| 41,645 |
| 19 |
|
| 335 | ||||
2009 |
| 12,649 |
|
| 80,767 |
| 12 | % | 9,190 |
|
| 36,105 |
| 3,455 |
|
| 44,584 |
| 4 |
|
| 78 | ||||
2010 |
| 12,131 |
|
| 95,888 |
| 14 | % | 7,714 |
|
| 33,852 |
| 4,410 |
|
| 61,931 |
| 7 |
|
| 105 | ||||
2011 |
| 13,516 |
|
| 86,772 |
| 12 | % | 9,911 |
|
| 38,246 |
| 3,565 |
|
| 47,803 |
| 40 |
|
| 723 | ||||
2012 |
| 8,898 |
|
| 61,373 |
| 9 | % | 5,928 |
|
| 21,701 |
| 2,963 |
|
| 39,339 |
| 7 |
|
| 333 | ||||
2013 |
| 6,809 |
|
| 62,422 |
| 9 | % | 3,568 |
|
| 15,043 |
| 3,207 |
|
| 46,800 |
| 34 |
|
| 579 | ||||
2014 |
| 5,301 |
|
| 30,841 |
| 4 | % | 4,011 |
|
| 13,815 |
| 1,290 |
|
| 17,026 |
| - |
|
| - | ||||
2015 |
| 6,890 |
|
| 53,697 |
| 8 | % | 4,736 |
|
| 18,778 |
| 2,154 |
|
| 34,919 |
| - |
|
| - | ||||
2016 |
| 3,743 |
|
| 25,029 |
| 4 | % | 2,690 |
|
| 9,562 |
| 879 |
|
| 13,795 |
| 174 |
|
| 1,672 | ||||
2017 and Thereafter |
| 7,399 |
|
| 56,894 |
| 8 | % | 4,821 |
|
| 20,336 |
| 2,268 |
|
| 34,931 |
| 310 |
|
| 1,627 | ||||
|
| 101,493 |
| $ | 696,985 |
| 100 | % | 71,053 |
| $ | 279,279 |
| 29,836 |
| $ | 412,131 |
| 604 |
| $ | 5,575 | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Total Portfolio Square Feet |
| 109,293 |
|
|
|
|
| 76,305 |
|
|
| 32,377 |
|
|
| 611 |
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Percent Occupied |
| 92.9 | % |
|
|
|
|
| 93.1 | % |
|
|
| 92.2 | % |
|
|
| 99.1 | % |
|
| ||||
We renewed 79.9% and 74.3% of our leases up for renewal totaling approximately 7.5 million and 10.0 million square feet in 2006 and 2005, respectively. Our lease renewal percentages over the past three years have remained relatively consistent at a 70-80% success rate. We do not presently expect this renewal percentage in 2007 to differ from that experienced in 2006.
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 growth as they are placed in service. We had 10.6 million square feet of property under development with total estimated costs of $1.1 billion at December 31, 2006, compared to 9.0 million square feet and total costs of $658.7 million at December 31, 2005. We have increased our development pipeline significantly through 2006 and will continue to focus on the development side of our business in 2007.
20
The following table summarizes our properties under development as of December 31, 2006 (in thousands, except percentage data):
Anticipated |
| Square |
| Percent |
| Project |
| Anticipated |
| ||||||
Held for Rental: |
|
|
|
|
|
|
|
|
| ||||||
1st Quarter 2007 |
|
| 1,064 |
|
| 19 | % |
| $ | 116,135 |
|
| 9.60 | % |
|
2nd Quarter 2007 |
|
| 559 |
|
| 12 | % |
|
| 60,286 |
|
| 9.13 | % |
|
3rd Quarter 2007 |
|
| 2,015 |
|
| 4 | % |
|
| 137,426 |
|
| 9.40 | % |
|
Thereafter |
|
| 846 |
|
| 4 | % |
|
| 120,789 |
|
| 9.38 | % |
|
|
|
| 4,484 |
|
| 9 | % |
|
| 434,636 |
|
| 9.41 | % |
|
Service Operations Buildings: |
|
|
|
|
|
|
|
|
|
| |||||
1st Quarter 2007 |
|
| 1,533 |
|
| 51 | % |
|
| 130,947 |
|
| 8.87 | % |
|
2nd Quarter 2007 |
|
| 2,684 |
|
| 37 | % |
|
| 122,038 |
|
| 8.72 | % |
|
3rd Quarter 2007 |
|
| 1,237 |
|
| 81 | % |
|
| 240,446 |
|
| 8.72 | % |
|
Thereafter |
|
| 647 |
|
| 63 | % |
|
| 173,954 |
|
| 8.07 | % |
|
|
|
| 6,101 |
|
| 52 | % |
|
| 667,385 |
|
| 8.57 | % |
|
Total |
|
| 10,585 |
|
| 34 | % |
| $ | 1,102,021 |
|
| 8.91 | % |
|
Acquisition and Disposition Activity: We continued to selectively dispose of non-strategic properties in 2006. Sales proceeds related to the dispositions of wholly owned held for rental properties were $139.9 million, which included the disposition of our entire portfolio of industrial properties in the Cleveland market. Our share of proceeds from sales of properties within unconsolidated joint ventures, of which we have a less than 100% interest, totaled $91.9 million. In 2005, proceeds from the disposition of non-strategic properties totaled $1.1 billion for wholly owned held for rental properties, as the result of the Industrial Portfolio Sale, and $31.8 million for our share of property sales from unconsolidated joint ventures. Dispositions of wholly owned properties developed for sale rather than rental resulted in $188.6 million in proceeds in 2006 compared to $121.4 million in 2005.
In 2006, we acquired $948.4 million of income producing properties and $436.7 million of undeveloped land compared to $295.6 million of income producing properties and $137.7 million of undeveloped land in 2005. We contributed 23 in service properties from the Mark Winkler portfolio, with a book value of $381.6 million, to two newly formed unconsolidated joint ventures in December 2006.
Results of Operations
A summary of our operating results and property statistics for each of the years in the three-year period ended December 31, 2006, is as follows (in thousands, except number of properties and per unit data):
| 2006 |
| 2005 |
| 2004 |
| ||||
|
|
|
|
|
|
|
| |||
Rental Operations revenues from Continuing Operations |
| $ | 818,670 |
| $ | 668,607 |
| $ | 603,817 |
|
Service Operations revenues from Continuing Operations |
|
| 90,125 |
|
| 81,941 |
|
| 70,803 |
|
Earnings from Continuing Rental Operations |
|
| 127,987 |
|
| 113,746 |
|
| 135,248 |
|
Earnings from Continuing Service Operations |
|
| 53,196 |
|
| 44,278 |
|
| 27,652 |
|
Operating income |
|
| 145,349 |
|
| 127,021 |
|
| 133,421 |
|
Net income available for common unitholders |
|
| 159,799 |
|
| 339,239 |
|
| 167,212 |
|
Weighted average common units outstanding |
|
| 148,069 |
|
| 155,059 |
|
| 155,281 |
|
Weighted average common units and potential dilutive common equivalents |
|
| 149,393 |
|
| 155,877 |
|
| 157,062 |
|
Basic income per common unit: |
|
|
|
|
|
|
|
|
|
|
Continuing operations |
| $ | .70 |
| $ | .63 |
| $ | .71 |
|
Discontinued operations |
| $ | .38 |
| $ | 1.56 |
| $ | .37 |
|
Diluted income per common unit: |
|
|
|
|
|
|
|
|
|
|
Continuing operation |
| $ | .70 |
| $ | .63 |
| $ | .70 |
|
Discontinued operations |
| $ | .37 |
| $ | 1.55 |
| $ | .37 |
|
Number of in-service properties at end of year |
|
| 693 |
|
| 660 |
|
| 874 |
|
In-service square footage at end of year |
|
| 109,293 |
|
| 97,835 |
|
| 109,635 |
|
21
Comparison of Year Ended December 31, 2006 to Year Ended December 31, 2005
Rental Income from Continuing Operations
Overall, rental income from continuing operations increased from $639.1 million in 2005 to $780.7 million in 2006. The following table reconciles rental income from continuing operations by reportable segment to total reported rental income from continuing operations for the years ended December 31 (in thousands):
| 2006 |
| 2005 |
| |||||
Office |
|
| $ | 562,903 |
|
| $ | 462,939 |
|
Industrial |
| 203,259 |
|
|
| 166,343 |
| ||
Non-segment |
|
| 14,504 |
|
|
| 9,776 |
| |
Total |
|
| $ | 780,666 |
|
| $ | 639,058 |
|
Both of our reportable segments that comprise Rental Operations (office and industrial) are within the real estate industry; however, the same economic and industry conditions do not affect each segment in the same manner. The primary causes of the increase in rental income from continuing operations, with specific references to a particular segment when applicable, are summarized below:
· In 2006, we acquired 50 new properties and placed 27 development projects in-service. These 2006 acquisitions and developments are the primary factor in the overall increase in rental revenue for the year ended 2006 compared to 2005 as they provided incremental revenues of $73.8 million and $9.3 million respectively. These acquisitions totaled $948.4 million on 8.6 million square feet and were 99% leased at December 31, 2006.
· Acquisitions and developments that were placed in service in 2005 provided $15.8 million and $11.2 million, respectively, of incremental revenue in 2006.
· Our in-service occupancy increased from 92.7% at December 31, 2005, to 92.9% at December 31, 2006.
· Rental income includes lease termination fees. Lease termination fees relate to specific tenants who pay a fee to terminate their lease obligations before the end of the contractual lease term. Lease termination fees increased from $7.3 million in 2005 to $16.1 million in 2006.
Equity in Earnings of Unconsolidated Companies
Equity in earnings represents our ownership share of net income from investments in unconsolidated companies. These joint ventures generally own and operate rental properties and hold land for development. These earnings increased from $29.5 million in 2005 to $38.0 million in 2006. During 2006, our joint ventures sold 22 non-strategic buildings, with our share of the net gain recorded through equity in earnings totaling $18.8 million. During the second quarter of 2005, one of our ventures sold three buildings, with our share of the net gain recorded through equity in earnings totaling $11.1 million.
22
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 years ended December 31, 2006 and 2005, respectively (in thousands):
| 2006 |
| 2005 |
| |||
Rental Expenses: |
|
|
|
|
| ||
Office |
| $ | 151,368 |
| $ | 125,093 |
|
Industrial |
| 23,745 |
| 21,622 |
| ||
Non-segment |
|
| 3,519 |
|
| 1,557 |
|
Total |
| $ | 178,632 |
| $ | 148,272 |
|
|
|
|
|
|
| ||
Real Estate Taxes: |
|
|
|
|
| ||
Office |
| $ | 59,717 |
| $ | 53,039 |
|
Industrial |
| 23,186 |
| 19,979 |
| ||
Non-segment |
|
| 6,012 |
|
| 5,104 |
|
Total |
| $ | 88,915 |
| $ | 78,122 |
|
Rental expenses and real estate taxes for 2006 have increased from 2005 by $30.4 million and $10.8 million, respectively, as the result of acquisition and development activity in 2005 and 2006 as well as from our increase in occupancy over the past two years.
Interest Expense
Interest expense increased from $113.1 million in 2005 to $179.0 million in 2006, as a result of the following:
· Interest expense on the unsecured line of credit increased by $29.2 million from 2005 as the result of increased borrowings throughout the year, as well as increased interest rates.
· Interest expense on unsecured notes increased by $10.2 million as the result of an overall increase in borrowings used mainly to fund acquisitions and development.
· Interest expense on secured debt increased by $27.8 million as the result of the increase in borrowings in 2006.
· Amortization of deferred financing fees increased by $2.4 million as the result of additional borrowings in 2006.
· Offsetting the above increases, capitalized interest increased by $26.8 million as the result of increased development activity.
Depreciation and Amortization Expense
Depreciation and amortization increased from $215.4 million in 2005 to $244.1 million in 2006 as the result of increases in our held-for-rental asset base from acquisitions and developments during 2005 and 2006.
Service Operations
Service Operations primarily consist of sales of 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. Service Operations earnings increased from $44.3 million in 2005 to $53.2 million in 2006. The following are the factors related to the increase in Service Operations earnings in 2006.
23
· Our Service Operations building development and sales program, whereby a building is developed or repositioned by us and then sold, is a significant component of earnings from service operations. During 2006, we generated pre-tax gains of $44.6 million from the sale of nine properties compared to $29.9 million from the sale of ten properties in 2005. Profit margins on these types of building sales fluctuate by sale depending on the type of property being sold, the strength of the underlying tenant and nature of the sale, such as a pre-contracted purchase price for a primary tenant versus a sale on the open market.
· Partially offsetting the increased 2006 gains from our Service Operations building development and sales program was the effect of a decreased focus on third-party construction services as well as the fact that in the first quarter of 2005, we recognized $2.7 million of a non-recurring deferred gain associated with the sale of our landscaping operations in 2001.
General and Administrative Expense
General and administrative expense increased from $31.0 million in 2005 to $35.8 million in 2006. 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, external audit fees, marketing costs, investor relations expenses and other corporate overhead. The second component is the unallocated overhead costs associated with the operation of our owned properties and Service Operations, including construction, leasing and maintenance operations. Overhead costs not allocated to these operations are charged to general and administrative expenses. The increase in general and administrative expenses from 2005 was largely attributable to an increase in our overall pool of overhead costs to support our current and anticipated future growth.
Discontinued Operations
The results of operations for properties sold during the year or designated as held-for-sale at the end of the period are required to be classified as discontinued operations. The property specific components of net 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.
We classified the operations of 308 buildings as discontinued operations as of December 31, 2006. These 308 buildings consist of 273 industrial, 32 office and three retail properties. As a result, we classified net income from operations of $9.3 million, $17.4 million and $31.4 million as net income from discontinued operations for the years ended December 31, 2006, 2005 and 2004, respectively.
Of these properties, 21 were sold during 2006, 234 properties were sold during 2005, 41 properties were sold during 2004, and 12 operating properties are classified as held-for-sale at December 31, 2006. The gains on disposal of these properties, net of impairment adjustment, of $46.3 million, $223.9 million and $26.2 million for the years ended December 31, 2006, 2005 and 2004, respectively, are also reported in discontinued operations.
24
Comparison of Year Ended December 31, 2005 to Year Ended December 31, 2004
Rental Income from Continuing Operations
Overall, rental income from continuing operations increased from $582.2 million in 2004 to $639.1 million in 2005. The following table reconciles rental income from continuing operations by reportable segment to total reported rental income from continuing operations for the years ended December 31, 2005 and 2004, respectively (in thousands):
| 2005 |
| 2004 |
| ||||
Office |
| $ | 462,939 |
|
| $ | 419,068 |
|
Industrial |
| 166,343 |
| 152,989 |
| |||
Non-segment |
|
| 9,776 |
|
| 10,174 |
| |
Total |
| $ | 639,058 |
|
| $ | 582,231 |
|
Both of our reportable segments that comprise Rental Operations (office and industrial) are within the real estate industry; however, the same economic and industry conditions do not affect each segment in the same manner. The primary causes of the increase in rental income from continuing operations, with specific references to a particular segment when applicable, are summarized below:
· In 2005, we acquired nine new properties and placed 17 development projects in-service. These acquisitions and developments are the primary factor in the $56.8 million overall increase in rental revenue for the year ended 2005, compared to 2004.
· The nine property acquisitions provided revenues of $21.0 million. These acquisitions totaled $307.5 million on 2.2 million square feet and were 86.5% leased at December 31, 2005. Revenues from acquisitions that occurred in 2004 totaled $31.8 million in 2005 compared to $13.4 million in 2004.
· Developments placed in service in 2005 provided revenues of $5.8 million. Revenues from developments placed in service in 2004 increased $9.9 million to $17.4 million in 2005.
· Our in-service occupancy increased from 90.9% at December 31, 2004, to 92.7% at December 31, 2005.
· Rental income includes lease termination fees. Lease termination fees relate to specific tenants who pay a fee to terminate their lease obligations before the end of the contractual lease term. Lease termination fees in 2005 continued to steadily decrease as a result of improving market conditions. Lease termination fees decreased from $14.7 million in 2004 to $7.3 million in 2005.
Equity in Earnings of Unconsolidated Companies
Equity in earnings represents our ownership share of net income from investments in unconsolidated companies. These joint ventures generally own and operate rental properties and hold land for development. These earnings increased from $21.6 million in 2004 to $29.5 million in 2005. During the second quarter of 2005, one of our ventures sold three buildings with our share of the net gain recorded through equity in earnings totaling $11.1 million.
25
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 years ended December 31, 2005 and 2004, respectively (in thousands):
| 2005 |
| 2004 |
| |
Rental Expenses: |
|
|
|
|
|
Office | $ | 125,093 | $ | 106,303 |
|
Industrial |
| 21,622 |
| 19,467 |
|
Non-segment |
| 1,557 |
| 1,213 |
|
Total | $ | 148,272 | $ | 126,983 |
|
|
|
|
|
|
|
Real Estate Taxes: |
|
|
|
|
|
Office | $ | 53,039 | $ | 44,245 |
|
Industrial |
| 19,979 |
| 16,922 |
|
Non-segment |
| 5,104 |
| 4,679 |
|
Total | $ | 78,122 | $ | 65,846 |
|
Rental and real estate tax expenses for 2005, as compared to 2004, have increased as a result of our 2004 and 2005 acquisitions as well as our increase in occupancy. This increase in rental and real estate taxes was in line with our expectations.
Interest Expense
Interest expense increased from $104.0 million in 2004 to $113.1 million in 2005 largely as the result of increased interest expense from additional unsecured borrowings.
Depreciation and Amortization Expense
Depreciation and amortization expense increased from $171.8 million in 2004 to $215.4 million in 2005 as the result of increases in our held-for-rental base from acquisitions and developments during 2004 and 2005.
Service Operations
Service Operations primarily consist of building sales 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. Service Operations earnings increased from $27.7 million in 2004 to $44.3 million in 2005. The increase reflects higher construction volumes partially offset by increased staffing costs in 2005. Other factors impacting service operations are discussed below.
· Our Service Operations development and sales program, whereby a building is developed or repositioned by us and then sold, is a significant component of construction and development income. During 2005, we generated pre-tax gains of $29.9 million from the sale of 10 properties compared to $24.2 million from the sale of six properties in 2004. Profit margins on these types of building sales fluctuate by sale depending on the type of property being sold, the strength of the underlying tenant and nature of the sale, such as a pre-contracted purchase price for a primary tenant versus a sale on the open market.
· In 2005, we experienced an increase in our third-party construction business as evidenced by the increase in general contractor revenues in 2005 over 2004. We achieved a slight increase in our profit margins during 2005, which reflected improved pricing in certain markets and our ability to select more profitable projects as resources are re-positioned to our increasing held-for-investment development pipeline.
· In the first quarter of 2005, we recognized $2.7 million of a non-recurring deferred gain associated with the sale of our landscaping operations in 2001. The gain was deferred as a result of future performance provisions contained in the original sales agreement. As a result of contract renegotiations effective in the first quarter of 2005, all future performance provisions were removed and the deferred gain was recognized.
26
General and Administrative Expense
General and administrative expense increased from $29.5 million in 2004 to $31.0 million in 2005. General and administrative expenses consist of two components. The first component is direct expenses not attributable to specific assets such as legal fees, external audit fees, marketing costs, investor relations expenses and other corporate overhead. The second component is the unallocated overhead costs associated with the operation of our owned properties and Service Operations, including construction, leasing and maintenance operations. Overhead costs not allocated to these operations are charged to general and administrative expenses. The increase in general and administrative expenses is primarily the result of an increase in payroll expenses associated with long-term compensation plans and an increase in the number of employees to support our overall growth.
Critical Accounting Policies
The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Our estimates, judgments and assumptions are inherently subjective and based on the existing business and market conditions, and are therefore continually evaluated based upon available information and experience. Note 2 to the Consolidated Financial Statements includes further discussion of our significant accounting policies.
Our management has assessed the accounting policies used in the preparation of our financial statements and discussed them with the General Partner’s Audit Committee and independent auditors. The following accounting policies are considered critical based upon materiality to the financial statements, degree of judgment involved in estimating reported amounts and sensitivity to changes in industry and economic conditions:
Accounting for Joint Ventures: We analyze our investments in joint ventures under Financial Accounting Standards Board (“FASB”) Interpretation No. 46(R), Consolidation of Variable Interest Entities, to determine if the joint venture is considered a variable interest entity and would require consolidation. To the extent that our joint ventures do not qualify as variable interest entities, we further assess under the guidelines of Emerging Issues Task Force (“EITF”) Issue 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 Statements and FASB No. 94, Consolidation of All Majority-Owned Subsidiaries, to determine if the venture should be consolidated. We have equity interests ranging from 10%-67% in joint ventures that own and operate rental properties and hold land for development. We consolidate those joint ventures that we control through majority ownership interests or substantial participating rights. Control is further demonstrated by the ability of the general partner to manage day-to-day operations, refinance debt and sell the assets of the joint venture without the consent of the limited partner and inability of the limited partner to replace the general partner. We use the equity method of accounting for those joint ventures where we do not have control over operating and financial polices. Under the equity method of accounting, our investment in each joint venture is included on our balance sheet; however, the assets and liabilities of the joint ventures for which we use the equity method are not included on our balance sheet.
Cost Capitalization: Direct and certain indirect costs, including interest, clearly associated with and incremental to the development, construction, leasing or expansion of real estate investments are capitalized as a cost of the property.
We capitalize interest and direct and indirect project costs associated with the initial construction of a property up to the time the property is substantially complete and ready for its intended use. We believe the completion of the building shell is the proper basis for determining substantial completion and that this basis is the most widely accepted standard in the real estate industry. The interest rate used to capitalize interest is based upon our average borrowing rate on existing debt.
27
We also capitalize direct and indirect costs, including interest costs, on vacant space during extended lease-up periods after construction of the building shell has been completed if costs are being incurred to ready the vacant space for its intended use. If costs and activities incurred to ready the vacant space cease, then cost capitalization is also discontinued until such activities are resumed. Once necessary work has been completed on a vacant space, project costs are no longer capitalized. We cease capitalization of all project costs on extended lease-up periods after the shorter of a one-year period after the completion of the building shell or when the property attains 90% occupancy. In addition, all leasing commissions paid to third parties for new leases or lease renewals are capitalized.
In assessing the amount of indirect costs to be capitalized, we first allocate payroll costs, on a department-by-department basis, among activities for which capitalization is warranted (i.e., construction, development and leasing) and those for which capitalization is not warranted (i.e., property management, maintenance, acquisitions and dispositions and general corporate functions). To the extent the employees of a department split their time between capitalizable and non-capitalizable activities, the allocations are made based on estimates of the actual amount of time spent in each activity. Once the payroll costs are allocated, the non-payroll costs of each department are allocated among the capitalizable and non-capitalizable activities in the same proportion as payroll costs.
To ensure that an appropriate amount of costs are capitalized, the amount of capitalized costs that are allocated to a specific project are limited to amounts using standards we developed. These standards consist of a percentage of the total development costs of a project and a percentage of the total gross lease amount payable under a specific lease. These standards are derived after considering the amounts that would be allocated if the personnel in the departments were working at full capacity. The use of these standards ensures that overhead costs attributable to downtime or to unsuccessful projects or leasing activities are not capitalized.
Impairment of Real Estate Investments: We evaluate our real estate investments upon occurrence of significant changes in the operations, but not less than annually, to assess whether any impairment indications are present that affect the recovery of the recorded value. If any real estate investment is considered to be impaired, a loss is provided to reduce the carrying value of the asset to its estimated fair value. We utilize the guidelines established under SFAS No. 144, Accounting for the Impairment or Disposal of Long Lived Assets (“SFAS 144”), to determine if impairment conditions exist. Under SFAS 144, we review the expected undiscounted cash flows of each property in our held for rental portfolio to determine if there are any indications of impairment of a property. The review of anticipated cash flows involves subjective assumptions of estimated occupancy and rental rates and ultimate residual value. In addition to reviewing anticipated cash flows, we assess other factors such as changes in business climate and legal factors that may affect the ultimate value of the property. These assumptions are subjective and the anticipated cash flows may not ultimately be achieved.
Real estate assets to be disposed of are reported at the lower of their carrying value amount or the fair value less estimated cost to sell.
Acquisition of Real Estate Property: In accordance with SFAS 141, Business Combinations, we allocate the purchase price of acquired properties to net tangible and identified intangible assets based on their respective fair values.
The allocation to tangible assets (buildings, tenant improvements and land) is based upon management’s determination of the value of the property as if it were vacant using discounted cash flow models similar to those used by independent appraisers. Factors considered by management include an estimate of carrying costs during the expected lease-up periods considering current market conditions, and costs to execute similar leases. The remaining purchase price is allocated among three categories of intangible assets consisting of the above or below market component of in-place leases, the value of in-place leases and the value of customer relationships.
28
· The value allocable to the above or below market component of an acquired in-place lease is determined based upon the present value (using an interest rate which reflects the risks associated with the lease) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term and (ii) management’s estimate of the amounts that would be paid using current fair market rates over the remaining term of the lease. The amounts allocated to above market leases are included in deferred leasing and other costs in the balance sheet and below market leases are included in other liabilities in the balance sheet; both are amortized to rental income over the remaining terms of the respective leases.
· The total amount of intangible assets is further allocated to in-place lease values and to customer relationship values, based upon management’s assessment of their respective values. These intangible assets are included in deferred leasing and other costs in the balance sheet and are depreciated over the remaining term of the existing lease, or the anticipated life of the customer relationship, as applicable.
Valuation of Receivables: We are subject to tenant defaults and bankruptcies that could affect the collection of outstanding receivables. In order to mitigate these risks, we perform in-house credit review and analysis on major existing tenants and all significant leases before they are executed. We have established the following procedures and policies to evaluate the collectibility of outstanding receivables and record allowances:
· We maintain a tenant “watch list” containing a list of significant tenants for which the payment of receivables and future rent may be at risk. Various factors such as late rent payments, lease or debt instrument defaults, and indications of a deteriorating financial position are considered when determining whether to include a tenant on the watch list.
· As a matter of policy, we reserve the entire receivable balance, including straight-line rent, of any tenant with an amount outstanding over 90 days.
· Straight-line rent receivables for any tenant on the watch list or any other tenant identified as a potential long-term risk, regardless of the status of rent receivables, are reviewed and reserved as necessary.
Revenue Recognition on Construction Contracts: We recognize income on construction contracts where we serve as a general contractor on the percentage of completion method. Using this method, profits are recorded on the basis of our estimates of the overall profit and percentage of completion of individual contracts. A portion of the estimated profits is accrued based upon our estimates of the percentage of completion of the construction contract. Cumulative revenues recognized may be less or greater than cumulative costs and profits billed at any point in time during a contract’s term. This revenue recognition method involves inherent risks relating to profit and cost estimates with those risks reduced through approval and monitoring processes.
With regard to critical accounting policies, management has discussed the following with the Audit Committee of the General Partner’s board of directors:
· Criteria for identifying and selecting;
· Methodology in applying; and
· Impact on the financial statements.
The Audit Committee of the General Partner has reviewed the critical accounting policies we identified.
Liquidity and Capital Resources
Sources of Liquidity
We expect to meet our short-term liquidity requirements over the next twelve months, including payments of dividends and distributions, as well as recurring capital expenditures relating to maintaining our current real estate assets, primarily through the following:
· working capital;
· net cash provided by operating activities; and
· proceeds received from real estate dispositions
29
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 or property disposition proceeds needed to fund such expenditures during periods of high leasing volume.
We expect to meet long-term liquidity requirements, such as scheduled mortgage debt maturities, refinancing of long-term debt, preferred equity redemptions, the retirement of unsecured notes and amounts outstanding under the unsecured credit facility, property acquisitions, financing of development activities and other non-recurring capital improvements, primarily from the following sources:
· issuance of additional equity, including General Partner common stock and preferred equity;
· issuance of additional debt securities;
· undistributed cash provided by operating activities, if any; and
· proceeds received from real estate dispositions.
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 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 in 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, which would result in reduced cash flow from operations. However, we believe that these risks are mitigated by our relatively strong market presence in most of our locations and the fact that we perform in-house credit review and analysis on major tenants and all significant leases before they are executed.
Credit Facility
We had one unsecured line of credit available at December 31, 2006, summarized as follows (in thousands):
| Borrowing |
| Maturity |
| Interest |
| Outstanding |
| |
Description |
| Capacity |
| Date |
| Rate |
| at December 31, 2006 |
|
Unsecured Line of Credit |
| $ 1,000,000 |
| January 2010 |
| LIBOR + .525 | % | $ 317,000 |
|
We use this line of credit to fund development activities, acquire additional rental properties and provide working capital. The line of credit provides us with an option to obtain borrowings from financial institutions that participate in the line, at rates lower than the stated interest rate, subject to certain restrictions. Interest rates on the amounts outstanding on the unsecured line of credit as of December 31, 2006, ranged from LIBOR +.17% to LIBOR +.525% (equal to 5.52% and 5.875% as of December 31, 2006.) The line of credit also contains financial covenants that require us to meet financial ratios and defined levels of performance, including those related to variable interest indebtedness, consolidated net worth and debt-to-market capitalization. As of December 31, 2006, we were in compliance with all financial covenants under our line of credit.
Debt and Equity Securities
On July 31, 2006, we filed 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 debt securities. From time to time, we and the General Partner expect to issue additional securities under this new automatic shelf registration statement to fund the development and acquisition of additional rental properties and to fund the repayment of the credit facility and other long-term debt upon maturity.
30
On February 18, 2007, the General Partner filed a resale shelf registration statement on Form S-3 with respect to 11,747,135 shares of its common stock issuable upon the exchange or redemption of the Exchangeable Notes. Recipients of such common stock, whom we refer to as the “selling shareholders,” may use the prospectus filed as part of the resale shelf registration statement to resell, from time to time, the shares of the General Partner’s common stock that it may issue to them upon the exchange or redemption of the Exchangeable Notes. Additional selling shareholders may be named by future prospectus supplements.
The General Partner registered the offering and resale of such shares to allow the selling shareholders to sell any or all of their shares of common stock on the New York Stock Exchange or in private transactions as described in the prospectus. The registration of the shares does not necessarily mean that the selling shareholders will exchange their Exchangeable Notes for the General Partner’s common stock, that upon any exchange or redemption of the Exchangeable Notes we will elect, in our sole and absolute discretion, to exchange or redeem some or all of the Exchangeable Notes for shares of the General Partner’s common stock rather than cash, or that any shares of the General Partner’s common stock received upon exchange or redemption of the Exchangeable Notes will be sold by the selling shareholders under the prospectus or otherwise.
The indenture governing our unsecured notes also requires us to comply with financial ratios and other covenants regarding our operations. We were in compliance with all such covenants as of December 31, 2006.
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 sale proceeds into new properties with greater value creation opportunities.
Uses of Liquidity
Our principal uses of liquidity include the following:
· Property investments;
· Recurring leasing/capital costs;
· Distributions to unitholders;
· Long-term debt maturities; and
· Other contractual obligations
Property Investments
We evaluate development and acquisition opportunities based upon market outlook, supply and long-term growth potential.
Recurring Expenditures
One of our principal uses of our liquidity is to fund the development, acquisition and recurring leasing/capital expenditures of our real estate investments. The following is a summary of our recurring capital expenditures for the year ended December 31 (in thousands):
| 2006 |
| 2005 |
| 2004 |
| ||
|
|
|
|
|
|
|
| |
Tenant improvements |
| $ | 41,895 | $ | 60,633 | $ | 58,847 |
|
Leasing costs |
|
| 17,106 |
| 33,175 |
| 27,777 |
|
Building improvements |
|
| 8,122 |
| 15,232 |
| 21,029 |
|
Totals |
| $ | 67,123 | $ | 109,040 | $ | 107,653 |
|
31
Distributions
In order to qualify as a REIT for federal income tax purposes, the General Partner must currently distribute at least 90% of its taxable income to its shareholders. We paid distributions per unit of $1.89, $1.87 and $1.85 for the years ended December 31, 2006, 2005 and 2004, respectively. We also paid a one-time special distribution of $1.05 per unit in 2005 as a result of the significant gain realized from the Industrial Portfolio Sale. We expect to continue to distribute taxable earnings to meet the requirements of the General Partner to maintain its REIT status. However, distributions are declared at the discretion of the General Partner’s board of directors and are subject to actual cash available for distribution, our financial condition, capital requirements and such other factors, as the General Partner’s board of directors deems relevant.
Debt Maturities
Debt outstanding at December 31, 2006, totaled $4.1 billion with a weighted average interest rate of 5.77% maturing at various dates through 2028. We had $3.1 billion of unsecured debt, $317.0 million outstanding on our unsecured line of credit, and $662.5 million of secured debt outstanding at December 31, 2006. Scheduled principal amortization and maturities of such debt totaled $1.1 billion for the year ended December 31, 2006.
The following is a summary of the scheduled future amortization and maturities of our indebtedness at December 31, 2006 (in thousands, except percentage data):
| Future Repayments |
| Weighted Average |
| ||||||||
|
| Scheduled |
|
|
|
|
| Interest Rate of |
| |||
Year |
| Amortization |
| Maturities |
| Total |
| Future Repayments |
| |||
2007 |
| 13,045 |
| 214,615 |
| 227,660 |
| 5.75% |
| |||
2008 |
| 12,478 |
| 273,464 |
| 285,942 |
| 5.07% |
| |||
2009 |
| 12,185 |
| 275,000 |
| 287,185 |
| 7.36% |
| |||
2010 |
| 11,952 |
| 492,000 |
| 503,952 |
| 5.68% |
| |||
2011 |
| 11,985 |
| 1,012,139 |
| 1,024,124 |
| 5.10% |
| |||
2012 |
| 9,914 |
| 201,216 |
| 211,130 |
| 5.90% |
| |||
2013 |
| 9,905 |
| 150,000 |
| 159,905 |
| 4.74% |
| |||
2014 |
| 9,826 |
| 294,534 |
| 304,360 |
| 6.44% |
| |||
2015 |
| 7,593 |
| 5,807 |
| 13,400 |
| 7.13% |
| |||
2016 |
| 6,671 |
| 506,449 |
| 513,120 |
| 6.17% |
| |||
2017 |
| 4,976 |
| 450,000 |
| 454,976 |
| 5.95% |
| |||
Thereafter |
|
| 31,676 |
|
| 91,724 |
|
| 123,400 |
| 6.49% |
|
|
| $ | 142,206 |
| $ | 3,966,948 |
| $ | 4,109,154 |
| 5.77% |
|
Historical Cash Flows
Cash and cash equivalents were $68.2 million and $26.9 million at December 31, 2006 and 2005, respectively. The following highlights significant changes in net cash associated with our operating, investing and financing activities (in millions):
| Years Ended December 31, |
| |||||
|
| 2006 |
| 2005 |
| 2004 |
|
|
|
|
|
|
|
|
|
Net Cash Provided by | $ | 275.3 | $ | 405.4 | $ | 376.1 |
|
Net Cash Provided by (Used |
| (1,236.8) |
| 326.9 |
| (427.6) |
|
Net Cash Provided by (Used |
| 1,002.9 |
| (711.2) |
| 44.6 |
|
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.
32
· During the year ended December 31, 2006, we incurred Service Operations building development costs of $273.5 million, compared to $83.4 million and $43.1 million for the years ended December 31, 2005 and 2004, respectively. The difference is reflective of the increased activity in our held-for-sale pipeline. The pipeline of held-for-sale projects under construction as of December 31, 2006, has anticipated costs of $667.4 million.
· We sold nine Service Operations buildings in 2006 compared to ten in 2005 and six in 2004, receiving net proceeds of $181.8 million, $113.0 million and $72.7 million, respectively and recognized pre-tax gains of $49.0 million, $29.9 million and $24.2 million, 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 uses are as follows:
· Sales of land and depreciated property provided $180.8 million in net proceeds in 2006, compared to $1.1 billion in 2005 and $178.3 million in 2004. In addition, during 2006 we received distributions of $21.2 million for our share of proceeds on the sales of land and depreciable property within three of our joint ventures. The Industrial Portfolio Sale provided $955 million of the $1.1 billion of proceeds received in 2005. We continue to dispose of non-strategic and older properties as part of our capital recycling program to fund acquisitions and new developments while improving the overall quality of our investment portfolio.
· Development costs for our held for rental portfolio increased to $385.5 million for the year ended December 31, 2006, from $210.0 million and $145.6 million for the years ended December 31, 2005 and 2004, respectively. Management anticipated this continued increase, as a commitment to development activity was part of our strategic plan for 2006 and continues to be for 2007.
· During 2006, we paid cash of $735.3 million for real estate acquisitions, compared to $285.3 million in 2005 and $204.4 million in 2004. The most significant activity in 2006 consisted of the purchase of the Mark Winkler Portfolio of suburban office and light industrial properties and undeveloped land in the Washington, D.C. area for $867.6 million ($713.5 million paid in cash) and a portfolio of industrial properties in Savannah, Georgia for $196.2 million ($125.9 million paid in cash at closing).
· In 2006, we paid cash of $435.9 million for undeveloped land, compared to $136.3 million in 2005 and $113.4 million in 2004. These acquisitions provide us greater opportunities to use our development and construction expertise in the improving economic cycle.
Financing Activities
The following significant items highlight fluctuations in net cash provided by financing activities:
· In January 2006, we received approximately $177.7 million in net proceeds from the General Partner’s issuance of its Series M Cumulative Redeemable Preferred Shares. This preferred stock bears a dividend yield of 6.95%. We applied a portion of the net proceeds from the Series M preferred equity issuance to redeem $75.0 million of the General Partner’s Series I preferred shares in February, which had an 8.45% dividend rate.
· In February 2006, we obtained a $700.0 million secured term loan, which was priced at LIBOR +.525%. The proceeds were used to finance the acquisition of the Mark Winkler Portfolio in the Washington, D.C. metropolitan area, and the loan was secured by these properties. This term loan was paid in full in August 2006 with proceeds from the issuance of senior unsecured debt as described below.
· In February and March 2006, we issued $150.0 million of 5.50% senior unsecured notes due in 2016. A portion of the proceeds were used to retire our $100.0 million 6.72% puttable option reset securities. The remaining cash proceeds were used to fund costs associated with the issuance of debt and to repay amounts outstanding under our line of credit.
33
· In June 2006, we received approximately $106.3 million in net proceeds from the General Partner’s issuance of its Series N Cumulative Redeemable Preferred Shares. This preferred stock bears a dividend yield of 7.25%.
· In August 2006, we issued $450.0 million of 5.95% senior unsecured notes due in 2017 and $250.0 million of 5.625% senior unsecured notes due in 2011. The proceeds from these issuances were used to pay off the $700.0 million secured term loan as described above.
· In November 2006, we issued $319.0 million of 5.91% debt due in 2016 secured by certain of our in-service real estate properties.
· In November 2006, we issued $575.0 million of Exchangeable Notes, which will pay interest semiannually at a rate of 3.75% per annum and mature in December 2011.
· In December 2006, we repaid our $250 million LIBOR +.26% Senior Unsecured Notes.
Credit Ratings
The General Partner and we are currently assigned investment grade corporate credit ratings on our senior unsecured notes from Fitch Ratings, Moody’s Investor Service and Standard and Poor’s Ratings Group. Currently, Fitch and Standard and Poor’s have assigned a rating of BBB+ and Moody’s Investors has assigned a rating of Baa1 to our senior notes.
The General Partner and we also received investment grade credit ratings from the same rating agencies on the General Partner’s preferred stock. Fitch and Standard and Poor’s have assigned a preferred stock rating of BBB and Moody’s Investors has assigned a preferred stock rating of Baa2 to the General Partner’s preferred stock.
These senior notes and preferred stock ratings could change based upon, among other things, our results of operations and financial condition.
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.
In August 2005, we entered into $300.0 million of cash flow hedges through forward-starting interest rate swaps to hedge interest rates on $300.0 million of anticipated debt offerings in 2007. The swaps qualify for hedge accounting, with any changes in fair value recorded in accumulated Other Comprehensive Income (“OCI”). At December 31, 2006, the fair value of these swaps was approximately $9.9 million in an asset position as the effective rates of the swaps were lower than current interest rates at December 31, 2006.
In March 2005, we entered into $300.0 million of cash flow hedges through forward-starting interest rate swaps to hedge interest rates on $300.0 million of anticipated debt offerings in 2006. The swaps qualified for hedge accounting, with any changes in fair value recorded in OCI. In March 2006, we issued $150.0 million of 5.50% senior unsecured notes due 2016 and terminated a corresponding amount of the cash flow hedges designated for this transaction. The settlement amount paid of approximately $800,000 will be recognized to earnings through interest expense ratably over the life of the senior unsecured notes and the ineffective portion of the hedge was insignificant. In August 2006, we issued $450.0 million of 5.95% senior unsecured notes due 2017 and $250.0 million of 5.63% senior unsecured notes due 2011 and terminated the remaining $150.0 million of cash flow hedges. The settlement amount received of approximately $1.6 million will be recognized to earnings through a reduction of interest expense ratably over the lives of the senior unsecured notes. The ineffective portion of the hedge was insignificant.
34
In June 2004, we simultaneously entered into three forward-starting interest rate swaps aggregating $144.3 million, which effectively fixed the rate on financing expected in 2004 at 5.346%, plus our credit spread over the swap rate. The swaps qualified for hedge accounting; therefore, changes in the fair value were recorded in OCI. In August 2004, we settled these three swaps when we issued $250.0 million of senior unsecured notes with an effective interest rate of 6.33%, due in 2014. We paid $6.9 million to unwind the swaps, which is amortized from OCI into interest expense over the life of the new 6.33% senior unsecured notes.
The effectiveness of our forward-starting hedge instruments will be 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.
Off Balance Sheet Arrangements
Investments in Unconsolidated Companies
We have equity interests ranging from 10% — 67% in unconsolidated companies that own and operate rental properties and hold land for development. The equity method of accounting (see Critical Accounting Policies) 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 represents approximately 9% of our total assets as of December 31, 2006. These investments provide several benefits to us, including increased market share, tenant and property diversification and an additional source of capital to fund real estate projects.
The following table presents summarized financial information for unconsolidated companies for the years ended December 31, 2006 and 2005, respectively (in thousands, except percentage data):
| Dugan |
| Dugan |
| Eaton Vance |
| Other |
|
|
| |||||||||||||||||||||
|
| Realty, LLC |
| Texas, LLC |
| Joint Ventures |
| Joint Ventures |
| Total |
| ||||||||||||||||||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Land, buildings and tenant improvements, net |
| $ | 641,562 |
| $ | 677,377 |
| $ | 217,694 |
| $ | 211,818 |
| $ | 382,232 |
| $ | - |
| $ | 269,482 |
| $ | 232,059 |
| $ | 1,510,970 |
| $ | 1,121,254 |
|
Land held for development |
|
| 9,669 |
|
| 11,628 |
|
| 5,312 |
|
| 9,222 |
| — |
| - |
|
| 76,299 |
|
| 27,086 |
|
| 91,280 |
|
| 47,936 |
| ||
Other assets |
|
| 37,060 |
|
| 35,959 |
|
| 21,656 |
|
| 17,347 |
|
| 5,189 |
|
| - |
|
| 84,675 |
|
| 19,778 |
|
| 148,580 |
|
| 73,084 |
|
|
| $ | 688,291 |
| $ | 724,964 |
| $ | 244,662 |
| $ | 238,387 |
| $ | 387,421 |
| $ | - |
| $ | 430,456 |
| $ | 278,923 |
| $ | 1,750,830 |
| $ | 1,242,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property indebtedness |
| $ | 307,439 |
| $ | 360,290 |
| $ | 17,998 |
| $ | 17,999 |
| $ | — |
| $ | - |
| $ | 92,533 |
| $ | 136,903 |
| $ | 417,970 |
| $ | 515,192 |
|
Other liabilities |
|
| 22,391 |
|
| 23,903 |
|
| 9,803 |
|
| 10,436 |
|
| 5,285 |
|
| - |
|
| 132,689 |
|
| 23,886 |
|
| 170,168 |
|
| 58,225 |
|
|
|
| 329,830 |
|
| 384,193 |
|
| 27,801 |
|
| 28,435 |
|
| 5,285 |
| - |
|
| 225,222 |
|
| 160,789 |
|
| 588,138 |
|
| 573,417 |
| |
Owners’ equity |
|
| 358,461 |
|
| 340,771 |
|
| 216,861 |
|
| 209,952 |
|
| 382,136 |
|
| - |
|
| 205,234 |
|
| 118,134 |
|
| 1,162,692 |
|
| 668,857 |
|
|
| $ | 688,291 |
| $ | 724,964 |
| $ | 244,662 |
| $ | 238,387 |
| $ | 387,421 |
| $ | - |
| $ | 430,456 |
| $ | 278,923 |
| $ | 1,750,830 |
| $ | 1,242,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income |
| $ | 94,312 |
| $ | 94,045 |
| $ | 32,123 |
| $ | 30,481 |
| $ | 2,644 |
| $ | - |
| $ | 28,107 |
| $ | 38,921 |
| $ | 157,186 |
| $ | 163,447 |
|
Net income (loss) |
| $ | 34,483 |
| $ | 41,678 |
| $ | 12,822 |
| $ | 12,351 |
| $ | 1,069 |
| $ | - |
| $ | 17,611 |
| $ | 3,532 |
| $ | 65,985 |
| $ | 57,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Total square feet |
| 20,770 |
| 21,436 |
| 6,840 |
| 6,255 |
| 1,778 |
| - |
| 6,307 |
| 5,225 |
| 35,695 |
| 32,916 |
| ||||||||||
Percent leased |
| 93.06% |
| 95.9% |
| 89.24% |
| 90.7% |
| 96.43% |
| -% |
| 71.50% |
| 90.0% |
| 88.69% |
| 94.2% |
| ||||||||||
Company |
|
|
|
|
|
|
|
|
|
|
|
|
| 10%- |
| 10.0 %- |
|
|
|
|
| ||||||||||
ownership percentage |
| 50.0% |
| 50.0% |
| 50.0% |
| 50.0% |
| 30.0% |
| -% |
| 67% |
| 64.0% |
|
|
|
|
|
Off Balance Sheet Arrangements
We do not have any relationships with unconsolidated entities or financial partnerships (“special purpose entities”) that have been established solely for the purpose of facilitating off-balance sheet arrangements.
35
Contractual Obligations
At December 31, 2006, we are subject to certain contractual payment obligations as described in the table below:
| Payments due by Period |
| ||||||||||||||||||||
Contractual Obligations |
| Total |
| 2007 |
| 2008 |
| 2009 |
| 2010 |
| 2011 |
| Thereafter |
| |||||||
Long-term debt (1) |
| $ | 5,126,157 |
| $ | 432,672 |
| $ | 474,791 |
| $ | 464,387 |
| $ | 342,921 |
| $ | 1,168,423 |
| $ | 2,242,963 |
|
Line of credit (2) |
| 373,531 |
| 18,434 |
| 18,434 |
| 18,434 |
| 318,229 |
| — |
| — |
| |||||||
Share of mortgage debt of unconsolidated joint ventures (3) |
| 251,815 |
| 51,493 |
| 13,197 |
| 61,929 |
| 120,615 |
| 4,581 |
| — |
| |||||||
Ground leases |
| 27,298 |
| 1,186 |
| 1,048 |
| 1,240 |
| 1,362 |
| 1,395 |
| 21,067 |
| |||||||
Operating leases |
| 725 |
| 399 |
| 169 |
| 145 |
| 10 |
| 2 |
| — |
| |||||||
Development and construction backlog costs (4) |
| 590,807 |
| 549,169 |
| 41,638 |
| — |
| — |
| — |
| — |
| |||||||
Future land acquisitions (5) |
| 36,146 |
| 28,767 |
| 2,782 |
| — |
| 4,597 |
| — |
| — |
| |||||||
Service contracts (6) |
| 6,531 |
| 2,437 |
| 2,591 |
| 1,161 |
| 171 |
| 171 |
| — |
| |||||||
Other (7) |
|
| 3,549 |
|
| 353 |
|
| 355 |
|
| 356 |
|
| 358 |
|
| 359 |
|
| 1,768 |
|
Total Contractual Obligations |
| $ | 6,416,559 |
| $ | 1,084,910 |
| $ | 555,005 |
| $ | 547,652 |
| $ | 788,263 |
| $ | 1,174,931 |
| $ | 2,265,798 |
|
(1) Our long-term debt consists of both secured and unsecured debt and includes both principal and interest. Interest expense for variable rate debt was calculated using the interest rate at December 31, 2006.
(2) Our unsecured line of credit matures in January 2010.
(3) Our share of unconsolidated mortgage debt includes both principal and interest. Interest expense for variable rate debt was calculated using the interest rate at December 31, 2006.
(4) Represents estimated remaining costs on the completion of held-for-rental, held-for-sale and third-party construction projects.
(5) These land acquisitions are subject to the completion of due diligence requirements, resolution of certain contingencies and completion of customary closing conditions.
(6) Service contracts defined as those, which cover periods greater than one year and are not cancelable without cause by either party.
(7) Represents other contractual obligations.
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 years ended December 31, 2006, 2005 and 2004, respectively, we received from these unconsolidated companies management fees of $4.4 million, $4.8 million and $4.9 million, leasing fees of $2.9 million, $4.3 million and $2.6 million and construction and development fees of $19.1 million, $2.0 million and $1.5 million. We recorded these fees at market rates and eliminated our ownership percentages of these fees in the consolidated financial statements.
Commitments and Contingencies
We have guaranteed the repayment of $79.6 million of economic development bonds issued by various municipalities in connection with certain commercial developments. We will be required to make payments under our guarantees to the extent that incremental taxes from specified developments are not sufficient to pay the bond debt service. Management does not believe that it is probable that we will be required to make any significant payments in satisfaction of these guarantees.
We also have guaranteed the repayment of secured and unsecured loans of four of our unconsolidated subsidiaries. At December 31, 2006, the outstanding balance on these loans was approximately $129.0 million. Management believes that the value of the real estate exceeds the loan balance and that we will not be required to satisfy these guarantees.
We have entered into agreements, subject to the completion of due diligence requirements, resolution of certain contingencies and completion of customary closing conditions, for the future acquisition of land totaling $36.1 million.
36
In October 2000, we sold or contributed industrial properties and undeveloped land with a fair value of $487.0 million to a joint venture (Dugan Realty LLC) in which we have a 50% interest and recognized a net gain of $35.2 million. In connection with this transaction, the joint venture partners were given an option to put up to a $50.0 million interest in the joint venture to us in exchange for the General Partner’s common stock or cash (at our option), subject to certain timing and other restrictions. As a result of this put option, we deferred $10.2 million of gain on sale of depreciated property and recorded a $50.0 million liability.
We renewed all of our major insurance policies in 2006. These policies include coverage for acts of terrorism for our properties. We believe that this insurance provides adequate coverage against normal insurance risks and that any loss experienced would not have a significant impact on our liquidity, financial position, or results of operations.
We are subject to various legal proceedings and claims that arise in the ordinary course of business. In the opinion of management, the amount of any ultimate liability with respect to these actions will not materially affect our consolidated financial statements or results of operations.
Recent Accounting Pronouncements
In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation also provides guidance on description, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 becomes effective on January 1, 2007 and is not anticipated to have a material effect on our 2007 financial position, results of operations, or liquidity.
In September 2006, the SEC issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB 108 provides guidance regarding the process of quantifying the materiality of financial statement misstatements. We adopted SAB 108 in the fourth quarter of 2006 with no effect to our financial statements.
Item 7A. Quantitative and Qualitative Disclosure About Market Risks
We are exposed to interest rate changes primarily as a result of our line of credit and long-term debt borrowings. Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower 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.
37
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 and other terms required to evaluate the expected cash flows and sensitivity to interest rate changes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fair |
| |
|
| 2007 |
| 2008 |
| 2009 |
| 2010 |
| 2011 |
| Thereafter |
| Total |
| Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate secured debt |
| $ 26,859 |
| $ 55,766 |
| $ 11,475 |
| $ 11,202 |
| $ 23,339 |
| $ 524,245 |
| $ 652,886 |
| $ 655,809 |
|
Weighted average interest rate |
| 7.31% |
| 5.80% |
| 6.91% |
| 6.86% |
| 7.14% |
| 6.12% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable rate secured debt |
| $ 645 |
| $ 680 |
| $ 710 |
| $ 750 |
| $ 785 |
| $ 6,045 |
| $ 9,615 |
| $ 9,615 |
|
Weighted average interest rate |
| 3.79% |
| 3.79% |
| 3.79% |
| 3.79% |
| 3.79% |
| 3.79% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate unsecured notes |
| $ 200,156 |
| $ 225,000 |
| $ 275,000 |
| $ 175,000 |
| $ 1,000,000 |
| $ 1,250,000 |
| $ 3,125,156 |
| $ 3,167,834 |
|
Weighted average interest rate |
| 5.55% |
| 4.77% |
| 7.39% |
| 5.37% |
| 5.05% |
| 6.00% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable rate unsecured notes |
| $ - |
| $ 4,497 |
| $ - |
| $ - |
| $ - |
| $ - |
| $ 4,497 |
| $ 4,497 |
|
Weighted average interest rate |
| N/A |
| 6.20% |
| N/A |
| N/A |
| N/A |
| N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured line of credit |
| $ - |
| $ - |
| $ - |
| $ 317,000 |
| $ - |
| $ - |
| $ 317,000 |
| $ 317,000 |
|
Rate at December 31, 2006 |
| N/A |
| N/A |
| N/A |
| 5.82% |
| N/A |
| N/A |
|
|
|
|
|
As the table incorporates only those exposures that exist as of December 31, 2006, 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, and interest rates.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data are included under Item 15 of this Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There was no change or disagreement with our accountants related to our accounting and financial disclosures.
Item 9A. Controls and Procedures
We conducted an evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” as of the end of the period covered by this Annual Report. The controls evaluation was done under the supervision and with the participation of management, including the General Partner’s Chief Executive Officer and Chief Financial Officer.
Attached as exhibits to this Annual Report are certifications of the General Partner’s Chief Executive Officer and Chief Financial Officer, which are required in accordance with Rule 13a-14 of the Securities Exchange Act of 1934. This Controls and Procedures section includes the information concerning the controls evaluation referred to in the certifications and it should be read in conjunction with the certifications for a more complete understanding of the topics presented.
Disclosure controls and procedures (as defined in Rule 13a-15 and 15d-15f under the Securities Exchange Act of 1934 (the “Exchange Act”) are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including the General Partner’s principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.
38
Based on the disclosure controls and procedures evaluation referenced above, the General Partner’s Chief Executive Officer and Chief Financial Officer have concluded that as of the end of the period covered by this Annual Report, our disclosure controls and procedures were effective.
Management’s annual report on internal control over financial reporting and the attestation report of our registered public accounting firm are included in Item 15 of Part IV under the headings “Management’s Report on Internal Control” and “Report of Independent Registered Public Accounting Firm,” respectively, and are incorporated herein by reference.
There were no changes in our internal controls over financial reporting during the quarter ended December 31, 2006, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
There was no information required to be disclosed in a report on Form 8-K during the fourth quarter of 2006 for which no Form 8-K was filed.
Item 10. Directors and Executive Officers of the Registrant
The Partnership does not have any directors or officers. The information required by Item 10 for Directors and Certain Executive Officers is contained in the General Partner’s Proxy Statement and is herein incorporated by this reference.
Item 11. Executive Compensation
The information required by Item 11 is contained in the Proxy Statement and is incorporated herein by this reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following is a summary of the executive officers of the General Partner as of January 1, 2007:
Dennis D. Oklak, age 53. Mr. Oklak was named Chairman and Chief Executive Officer of the General Partner in April 2005. He served as President and Chief Executive Officer from April 2004 to April 2005. He was Co-Chief Operating Officer from April 2002 through January 2003, at which time he was named President and Chief Operating Officer. Mr. Oklak assumed the position of Executive Vice President and Chief Administrative Officer in 1997. From 1986 through 1997, Mr. Oklak served in various financial positions of the General Partner.
Matthew A. Cohoat, age 47. Mr. Cohoat was named Executive Vice President and Chief Financial Officer of the General Partner on January 1, 2004. From 1990 through 2003, Mr. Cohoat held various positions in financial areas of the General Partner.
Robert M. Chapman, age 53. Mr. Chapman has served as the General Partner’s Senior Executive Vice President, Real Estate Operations, since November 2003. From 1999 through November 2003, Mr. Chapman served in various real estate investment and operating positions of the General Partner.
Howard L. Feinsand, age 59. Mr. Feinsand has served as the General Partner’s Executive Vice President and General Counsel since 1999 and, since 2003, also has served as the General Partner’s Corporate Secretary. Mr. Feinsand served on the General Partner’s board of directors from 1988 to January 2003.
39
Steven R. Kennedy, age 50. Mr. Kennedy was named as the General Partner’s Executive Vice President, Construction on January 1, 2004. From 1986 until 2004, he served in various capacities in the construction group, most recently as Senior Vice President.
All other information required by Item 12 is contained in the Proxy Statement and is incorporated herein by this reference.
Item 13. Certain Relationships and Related Transactions
The information required by Item 13 is contained in the Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
The information required by Item 14 is contained the Proxy Statement and is incorporated herein by reference.
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this Annual Report:
1. Consolidated Financial Statements
The following Consolidated Financial Statements, together with the Management’s Report on Internal Control, the Report of Independent Registered Public Accounting Firm-Financial Statements and Financial Statement Schedule III and Report of Independent Registered Public Accounting Firm-Management’s Assessment of the Effectiveness of Internal Control over Financial Reporting and the Effectiveness of Internal Control over Financial Reporting, are listed below:
Management’s Report on Internal Control
Report of Independent Registered Public Accounting Firm-Management’s
Assessment of the Effectiveness of Internal Control over Financial
Reporting and the Effectiveness of Internal Control over Financial Reporting
Report of Independent Registered Public Accounting
Firm-Financial Statements and Financial Statement Schedule III
Consolidated Balance Sheets, December 31, 2006 and 2005
Consolidated Statements of Operations, Years Ended December 31,
2006, 2005 and 2004
Consolidated Statements of Cash Flows, Years Ended December 31, 2006, 2005
and 2004
Consolidated Statements of Partners’ Equity, Years Ended December 31,
2006, 2005 and 2004
Notes to Consolidated Financial Statements
2. Consolidated Financial Statement Schedules
Schedule III — Real Estate and Accumulated Depreciation
40
3. Exhibits
The following exhibits are filed with this Form 10-K or incorporated herein by reference to the listed document previously filed with the SEC. Previously unfiled documents are noted with an asterisk (*).
Number |
| Description |
|
|
|
3.1(i) |
| Certificate of Limited Partnership of Duke Realty Limited Partnership, dated September 17, 1993.* |
|
|
|
3.2(i) |
| Second Amended and Restated Agreement of Limited Partnership of Duke Realty Limited Partnership.* |
|
|
|
3.2(ii) |
| Second Amendment to Second Amended and Restated Agreement of Limited Partnership of Duke Realty Limited Partnership (filed as Exhibit 10.3 to the General Partner’s Annual Report on Form 10-K405 for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated herein by this reference). |
|
|
|
3.2(iii) |
| Third Amendment to Second Amended and Restated Agreement of Limited Partnership of Duke Realty Limited Partnership (filed as Exhibit 10.4 to the General Partner’s Annual Report on Form 10-K405 for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated herein by this reference). |
|
|
|
3.2(iv) |
| Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership of Duke Realty Limited Partnership (filed as Exhibit 10.5 to the General Partner’s Annual Report on Form 10-K405 for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated herein by this reference). |
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3.2(v) |
| Fifth Amendment to Second Amended and Restated Agreement of Limited Partnership of Duke Realty Limited Partnership, dated August 25, 2003, establishing the amount, terms and rights of Duke Realty Limited Partnership’s 6.625% Series J Cumulative Redeemable Preferred Units (filed as Exhibit 10.6 to the General Partner’s Annual Report on Form 10-K for the year ended December 31, 2005, as filed with the SEC on March 7, 2006, File No. 001-09044, and incorporated herein by this reference). |
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3.2(vi) |
| Sixth Amendment to Second Amended and Restated Agreement of Limited Partnership of Duke Realty Limited Partnership, dated February 13, 2004, establishing the amount, terms and rights of Duke Realty Limited Partnership’s 6.5% Series K Cumulative Redeemable Preferred Units (filed as Exhibit 10.7 to the General Partner’s Annual Report on Form 10-K for the year ended December 31, 2005, as filed with the SEC on March 7, 2006, File No. 001-09044, and incorporated herein by this reference). |
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3.2(vii) |
| Seventh Amendment to Second Amended and Restated Agreement of Limited Partnership of Duke Realty Limited Partnership, dated November 30, 2004, establishing the amount, terms and rights of Duke Realty Limited Partnership’s 6.6% Series L Cumulative Redeemable Preferred Units (filed as Exhibit 10.8 to the General Partner’s Annual Report on Form 10-K for the year ended December 31, 2005, as filed with the SEC on March 7, 2006, File No. 001-09044, and incorporated herein by this reference). |
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3.2(viii) |
| Eighth Amendment to Second Amended and Restated Agreement of Limited Partnership of Duke Realty Limited Partnership, dated January 31, 2006, establishing the amount, terms and rights of Duke Realty Limited Partnership’s 6.95% Series M Cumulative Redeemable Preferred Units (filed as Exhibit 3.1 to the Current Report on Form 8-K, as filed with the SEC on February 6, 2006, File No. 000-20625, and incorporated herein by this reference). |
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3.2(ix) |
| Ninth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Duke Realty Limited Partnership, dated June 30, 2006, establishing the amount, terms and rights of Duke Realty Limited Partnership’s 7.25% Series N Cumulative Redeemable Preferred Units (filed as Exhibit 3.1 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on July 5, 2006, File No. 000-20625, and incorporated herein by this reference). |
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4.1(i) |
| Third Restated Articles of Incorporation of Duke Realty Corporation (filed as Exhibit 3.1 to the General Partner’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). |
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4.1(ii) |
| Amendment to the Third Restated Articles of Incorporation of Duke Realty Corporation, establishing the amount, terms and rights of the General Partner’s 6.625% Series J Cumulative Redeemable Preferred Shares (filed as Exhibit 3 to the General Partner’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). |
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4.1(iii) |
| Amendment to the Third Restated Articles of Incorporation of Duke Realty Corporation, establishing the amount, terms and rights of the General Partner’s 6.5% Series K Cumulative Redeemable Preferred Shares (filed as Exhibit 3 to the General Partner’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). |
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4.1(iv) |
| Amendment to the Third Restated Articles of Incorporation of Duke Realty Corporation, establishing the amount, terms and rights of the General Partner’s 6.6% Series L Cumulative Redeemable Preferred Shares (filed as Exhibit 3.1 of the General Partner’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). |
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4.1(v) |
| Amendment to the Third Restated Articles of Incorporation of Duke Realty Corporation, establishing the amount, terms and rights of the General Partner’s 7.99% Series B Cumulative Step-Up Premium Rate Preferred Shares (filed as Exhibit 3.6 to the General Partner’s Annual Report on Form 10-K for the year ended December 31, 2005, as filed with the SEC on March 7, 2006, File No. 001-09044, and incorporated herein by this reference). |
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4.1(vi) |
| Amendment to the Third Restated Articles of Incorporation of Duke Realty Corporation, establishing the amount, terms and rights of the General Partner’s 7.25% Series N Cumulative Redeemable Preferred Shares (filed as Exhibit 3.1 to the General Partner’s Current Report on Form 8-K, as filed with the SEC on July 6, 2006, and incorporated herein by this reference). |
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4.1(vii) |
| 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 General Partner’s 6.95% Series M Cumulative Redeemable Preferred Shares (filed as Exhibit 3.2 to the General Partner’s Current Report on Form 8-K, as filed with the SEC on July 6, 2006, and incorporated herein by this reference). |
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4.2(i) |
| Third Amended and Restated Bylaws of Duke Realty Corporation (filed as Exhibit 3.2 to the General Partner’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). |
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4.3(i) |
| Indenture, dated September 19, 1995, between Duke Realty Limited Partnership and The First National Bank of Chicago, Trustee (filed as Exhibit 4.1 to the General Partner’s Current Report on Form 8-K, as filed with the SEC on September 22, 1995, File No. 001-09044, and incorporated herein by this reference). |
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4.3(ii) |
| First Supplemental Indenture, dated September 19, 1995, between Duke Realty Limited Partnership and The First National Bank of Chicago, Trustee (filed as Exhibit 4.2 to the General Partner’s Current Report on Form 8-K, as filed with the SEC on September 22, 1995, File No. 001-09044, and incorporated herein by this reference). |
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4.3(iii) |
| Second Supplemental Indenture, dated April 29, 1996, between Duke Realty Limited Partnership and The First National Bank of Chicago, Trustee (filed as Exhibit 4 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on July 12, 1996, File No. 000-20625, and incorporated herein by this reference). |
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4.3(iv) |
| Third Supplemental Indenture, dated May 13, 1997, between Duke Realty Limited Partnership and The First National Bank of Chicago, Trustee (filed as Exhibit 4 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on May 20, 1997, File No. 000-20625, and incorporated herein by this reference). |
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4.3(v) |
| Fourth Supplemental Indenture, dated August 21, 1997, between Duke Realty Limited Partnership and The First National Bank of Chicago, Trustee (filed as Exhibit 4.8 to the General Partner’s Registration Statement on Form S-4, as filed with the SEC on May 4, 1999, File No. 333-77645, and incorporated herein by this reference). |
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4.3(vi) |
| Fifth Supplemental Indenture, dated May 27, 1998, between Duke Realty Limited Partnership and The First National Bank of Chicago, Trustee (filed as Exhibit 4 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on June 1, 1998, File No. 000-20625, and incorporated herein by this reference). |
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4.3(vii) |
| Sixth Supplemental Indenture, dated February 12, 1999, between Duke Realty Limited Partnership and The First National Bank of Chicago, Trustee (filed as Exhibit 4 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on February 12, 1999, File No. 000-20625, and incorporated herein by this reference). |
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4.3(viii) |
| Seventh Supplemental Indenture, dated June 18, 1999, between Duke Realty Limited Partnership and The First National Bank of Chicago, Trustee (filed as Exhibit 4 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on June 29, 1999, File No. 000-20625, and incorporated herein by this reference). |
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4.3(ix) |
| Eighth Supplemental Indenture, dated November 16, 1999, between Duke Realty Limited Partnership and Bank One Trust Company, N.A., Trustee (filed as Exhibit 4 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on November 15, 1999, File No. 000-20625, and incorporated herein by this reference). |
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4.3(x) |
| Ninth Supplemental Indenture, dated March 5, 2001, between Duke Realty Limited Partnership and Bank One Trust Company, N.A., Trustee (filed as Exhibit 4 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on March 2, 2001, File No. 000-20625, and incorporated herein by this reference). |
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4.3(xi) |
| Tenth Supplemental Indenture, dated June 8, 2001, between Duke Realty Limited Partnership and Bank One Trust Company, N.A., Trustee (filed as Exhibit 4 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on August 13, 2001, File No. 000-20625, and incorporated herein by this reference). |
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4.3(xii) |
| Eleventh Supplemental Indenture, dated August 26, 2002, between Duke Realty Limited Partnership and Bank One Trust Company, N.A., Trustee (filed as Exhibit 4 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on August 26, 2002, File No. 000-20625, and incorporated herein by this reference). |
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4.3(xiii) |
| Twelfth Supplemental Indenture, dated January 16, 2003, between Duke Realty Limited Partnership and Bank One Trust Company, N.A., Trustee (filed as Exhibit 4 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on January 16, 2003, File No. 000-20625, and incorporated herein by this reference). |
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4.3(xiv) |
| Thirteenth Supplemental Indenture, dated May 22, 2003, between Duke Realty Limited Partnership and Bank One Trust Company, N.A., Trustee (filed as Exhibit 4 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on May 22, 2003, File No. 000-20625, and incorporated herein by this reference). |
43
4.3(xv) |
| Fourteenth Supplemental Indenture, dated October 24, 2003, between Duke Realty Limited Partnership and Bank One Trust Company, N.A., Trustee (filed as Exhibit 4 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on October 24, 2003, File No. 000-20625, and incorporated herein by this reference). |
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4.3(xvi) |
| Fifteenth Supplemental Indenture, dated January 7, 2004, between Duke Realty Limited Partnership and J.P. Morgan Trust Company, National Association, Trustee (filed as Exhibit 4 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on January 9, 2004, File No. 000-20625, and incorporated herein by this reference). |
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4.3(xvii) |
| Sixteenth Supplemental Indenture, dated January 16, 2004, between Duke Realty Limited Partnership and J.P. Morgan Trust Company, National Association, Trustee (filed as Exhibit 4 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on January 23, 2004, File No. 000-20625, and incorporated herein by this reference). |
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4.3(xviii) |
| Seventeenth Supplemental Indenture, dated August 16, 2004, between Duke Realty Limited Partnership and J.P. Morgan Trust Company, National Association, Trustee (filed as Exhibit 4 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on August 18, 2004, File No. 000-20625, and incorporated herein by this reference). |
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4.3(xix) |
| Eighteenth Supplemental Indenture, dated December 22, 2004, between Duke Realty Limited Partnership and J.P. Morgan Trust Company, National Association, Trustee (filed as Exhibit 4 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on December 23, 2004, File No. 000-20625, and incorporated herein by this reference). |
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4.3(xx) |
| Nineteenth Supplemental Indenture, dated as of March 1, 2006, by and between Duke Realty Limited Partnership and J.P. Morgan Trust Company, National Association (successor in interest to Bank One Trust Company, N.A.), including the form of global note evidencing the 5.5% Senior Notes Due 2016 (filed as Exhibit 4.1 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on March 3, 2006, File No. 000-20625, and incorporated herein by this reference). |
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4.3(xxi) |
| Twentieth Supplemental Indenture, dated as of July 24, 2006, by and between Duke Realty Limited Partnership and J.P. Morgan Trust Company, National Association (successor in interest to The First National Bank of Chicago), modifying certain financial covenants contained in Sections 1004 and 1005 of the Indenture, dated September 19, 1995, between Duke Realty Limited Partnership and The First National Bank of Chicago, Trustee (filed as Exhibit 4.1 to the Partnership’s Current Report on Form 8-K, filed with the SEC on July 28, 2006, and incorporated herein by this reference). |
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4.4(i) |
| Indenture, dated as of July 28, 2006, by and between Duke Realty Limited Partnership and J.P. Morgan Trust Company, National Association (filed as Exhibit 4.1 to the General Partner’s automatic shelf registration statement on Form S-3, filed with the SEC on July 31, 2006, and incorporated herein by this reference). |
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4.4(ii) |
| First Supplemental Indenture, dated as of August 24, 2006, by and between Duke Realty Limited Partnership and J.P. Morgan Trust Company, National Association, including the form of global note evidencing the 5.625% Senior Notes Due 2011 (filed as Exhibit 4.1 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on August 30, 2006, and incorporated herein by this reference). |
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4.4(iii) |
| Second Supplemental Indenture, dated as of August 24, 2006, by and between Duke Realty Limited Partnership and J.P. Morgan Trust Company, National Association, including the form of global note evidencing the 5.95% Senior Notes Due 2017 (filed as Exhibit 4.2 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on August 30, 2006, and incorporated herein by this reference). |
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4.5 |
| Indenture, dated November 22, 2006, by and among Duke Realty Limited Partnership, the General Partner and The Bank of New York Trust Company, N.A., as trustee, including the form of 3.75% Exchangeable Senior Note due 2011 (filed as Exhibit 4.1 to the Partnership’s Current Report on Form 8-K, as filed with the Commission on November 29, 2006, File No. 000-20625, and incorporated herein by this reference). |
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4.6 |
| Deposit Agreement, dated as of January 31, 2006, by and among the General Partner, American Stock Transfer & Trust Company, as depositary, and the holders from time to time of the Depositary Receipts (which includes as an exhibit the form of Depositary Receipts filed as Exhibit 4.1 to the General Partner’s Current Report on Form 8-K, as filed with the SEC January 31, 2006, File No. 001-09044, and incorporated herein by this reference). |
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10.1(i) |
| Second Amended and Restated Agreement of Limited Partnership of Duke Realty Services Limited Partnership (the “Services Partnership”), dated as of September 30, 1994 (filed as Exhibit 10.3 to the General Partner’s Annual Report on Form 10-K for the year ended December 31, 1994, as filed with the SEC on February 21, 1996, File No. 001-09044, and incorporated herein by this reference). |
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10.1(ii) |
| First Amendment to Second Amended and Restated Agreement of Limited Partnership of the Services Partnership, dated July 23, 1998 (filed as Exhibit 10.7 to the General Partner’s Annual Report on Form 10-K for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated by this reference). |
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10.1(iii) |
| Second Amendment to Second Amended and Restated Agreement of Limited Partnership of the Services Partnership, dated October 26, 1995 (filed as Exhibit 10.8 to the General Partner’s Annual Report on Form 10-K for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated by this reference). |
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10.1(iv) |
| Third Amendment to Second Amended and Restated Agreement of Limited Partnership of the Services Partnership, effective as of January 1, 2002 (filed as Exhibit 10.9 to the General Partner’s Annual Report on Form 10-K for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated by this reference). |
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10.2 |
| Promissory Note of the Services Partnership (filed as Exhibit 10.3 to the General Partner’s Registration Statement on Form S-2, as filed with the SEC on June 8, 1993, File No. 33-64038, and incorporated herein by this reference). |
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10.3(i) |
| 1995 Key Employee Stock Option Plan of the General Partner (filed as Exhibit 10.13 to the General Partner’s Annual Report on Form 10-K for the year ended December 31, 1995, as filed with the SEC on March 30, 1995, File No. 001-09044, and incorporated herein by this reference).# |
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10.3(ii) |
| Amendment One to the 1995 Key Employees’ Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.19 to the General Partner’s Annual Report on Form 10-K405 for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.3(iii) |
| Amendment Two to the 1995 Key Employees’ Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.20 to the General Partner’s Annual Report on Form 10-K405 for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.3(iv) |
| Amendment Three to the 1995 Key Employees’ Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.21 to the General Partner’s Annual Report on Form 10-K405 for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.3(v) |
| Amendment Four to the 1995 Key Employees’ Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.22 to the General Partner’s Annual Report on Form 10-K405 for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.3(vi) |
| Amendment Five to the 1995 Key Employees’ Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.23 to the General Partner’s Annual Report on Form 10-K405 for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.3(vii) |
| Amendment Six to the 1995 Key Employees’ Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.24 to the General Partner’s Annual Report on Form 10-K405 for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.3(viii) |
| Amendment Seven to the 1995 Key Employees’ Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.1 to the General Partner’s Quarterly Report on Form 10-Q, as filed with the SEC on November 13, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.3(ix) |
| Amendment Nine to the 1995 Key Employees’ Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.3 to the General Partner’s Quarterly Report on Form 10-Q, as filed with the SEC on October 9, 2005, File No. 001-09044, and incorporated herein by this reference).# |
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10.3(x) |
| Amendment Ten to the 1995 Key Employees’ Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.4 to the General Partner’s Quarterly Report on Form 10-Q, as filed with the SEC on November 8, 2006, File No. 001-09044, and incorporated herein by this reference).# |
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10.4(i) |
| 1995 Shareholder Value Plan of the Services Partnership (filed as Exhibit 10.15 to the General Partner’s Annual Report on Form 10-K for the year ended December 31, 1995, as filed with the SEC on March 30, 1995, File No. 001-09044, and incorporated herein by this reference).# |
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10.4(ii) |
| Amendment One to the 1995 Shareholder Value Plan of the Services Partnership (filed as Exhibit 10.29 to the General Partner’s Annual Report on Form 10-K405 for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.4(iii) |
| Amendment Two to the 1995 Shareholder Value Plan of the Services Partnership (filed as Exhibit 10.30 to the General Partner’s Annual Report on Form 10-K405 for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.4(iv) |
| Amendment Three to the 1995 Shareholder Value Plan of the Services Partnership (filed as Exhibit 10.31 to the General Partner’s Annual Report on Form 10-K405 for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.4(v) |
| Amendment Four to the 1995 Shareholder Value Plan of the Services Partnership (filed as Exhibit 10.2 to the General Partner’s Quarterly Report on Form 10-Q, as filed with the SEC on November 13, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.4(vi) |
| Amendment Five to the 1995 Shareholder Value Plan of the Services Partnership (filed as Exhibit 10.2 to the General Partner’s Quarterly Report on Form 10-Q, as filed with the SEC on October 9, 2005, File No. 001-09044, and incorporated herein by this reference).# |
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10.5(i) |
| 1999 Directors’ Stock Option and Dividend Increase Unit Plan of Duke Realty Investments, Inc. (filed as Annex F to the prospectus in the General Partner’s Registration Statement on Form S-4, as filed with the SEC on May 4, 1999, File No. 333-77645, and incorporated herein by this reference).# |
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10.5(ii) |
| Amendment One to the 1999 Directors’ Stock Option and Dividend Increase Unit Plan of Duke Realty Investments, Inc. (filed as Appendix B of the Registrant’s Definitive Proxy Statement on Schedule 14A, as filed with the SEC on March 15, 2005, File No. 001-09044, and incorporated herein by this reference).# |
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10.6(i) |
| 1999 Salary Replacement Stock Option and Dividend Increase Unit Plan (filed as Annex G to the prospectus in the General Partner’s Registration Statement on Form S-4, as filed with the SEC on May 4, 1999, File No. 333-77645, and incorporated herein by this reference).# |
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10.6(ii) |
| Amendment One to the 1999 Salary Replacement Stock Option and Dividend Increase Unit Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.3 to the General Partner’s Quarterly Report on Form 10-Q, as filed with the SEC on November 13, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.6(iii) |
| Amendment Two to the 1999 Salary Replacement Stock Option and Dividend Increase Unit Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.4 to the General Partner’s Quarterly Report on Form 10-Q, as filed with the SEC on November 13, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.7(i) |
| 2000 Performance Share Plan of Duke-Weeks Realty Corporation (filed as Exhibit A of the Registrant’s Definitive Proxy Statement on Schedule 14A, as filed with the SEC on March 15, 2001, File No. 001-09044, and incorporated herein by this reference).# |
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10.7(ii) |
| Amendment One to the 2000 Performance Share Plan of Duke-Weeks Realty Corporation (filed as Exhibit 10.6 to the General Partner’s Quarterly Report on Form 10-Q, as filed with the SEC on November 13, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.7(iii) |
| Amendment Two to the 2000 Performance Share Plan of Duke-Weeks Realty Corporation (filed as Exhibit 10.42 to the General Partner’s Annual Report on Form 10-K for the year ended December 31, 2003, as filed with the SEC on March 5, 2004, File No. 001-09044, and incorporated herein by this reference).# |
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10.7(iv) |
| Amendment Three to the 2000 Performance Share Plan of Duke-Weeks Realty Corporation (filed as Exhibit 99.1 to the General Partner’s Current Report on Form 8-K, as filed with the SEC on May 2, 2006, File No. 001-09044, and incorporated herein by this reference).# |
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10.8(i) |
| Dividend Increase Unit Plan of the Services Partnership (filed as Exhibit 10.25 to the General Partner’s Annual Report on Form 10-K405 for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.8(ii) |
| Amendment One to the Dividend Increase Unit Plan of the Services Partnership (filed as Exhibit 10.26 to the General Partner’s Annual Report on Form 10-K405 for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.8(iii) |
| Amendment Two to the Dividend Increase Unit Plan of the Services Partnership (filed as Exhibit 10.27 to the General Partner’s Annual Report on Form 10-K405 for the year ended December 31, 2001, as filed with the SEC on March 15, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.8(iv) |
| Amendment Three to the Dividend Increase Unit Plan of the Services Partnership (filed as Exhibit 10.5 to the General Partner’s Quarterly Report on Form 10-Q, as filed with the SEC on November 13, 2002, File No. 001-09044, and incorporated herein by this reference).# |
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10.8(v) |
| Amendment Four to the Dividend Increase Unit Plan of the Services Partnership (filed as Exhibit 10.30 to the General Partner’s Annual Report on Form 10-K for the year ended December 31, 2004, as filed with the SEC on March 4, 2005, File No. 001-09044, and incorporated herein by this reference).# |
47
10.9(i) |
| Directors’ Deferred Compensation Plan of Duke-Weeks Realty Corporation (filed as Exhibit 10.5 to the General Partner’s Quarterly Report on Form 10-Q, as filed with the SEC on November 8, 2006, File No. 001-09044, and incorporated herein by this reference).# |
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10.9(ii) |
| Amendment One to the Directors’ Deferred Compensation Plan of Duke-Weeks Realty Corporation (filed as Exhibit 10.21(ii) to the General Partner’s Annual Report on Form 10-K, as filed with the SEC on March 31, 2007, File No. 001-09044, and incorporated herein by this reference).# |
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10.9(iii) |
| Amendment Two to the Directors’ Deferred Compensation Plan of Duke-Weeks Realty Corporation (filed as Exhibit 10.4 to the General Partner’s Quarterly Report on Form 10-Q, as filed with the SEC on October 9, 2005, File No. 001-09044, and incorporated herein by this reference).# |
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10.9(iv) |
| Amendment Three to the Directors’ Deferred Compensation Plan of Duke-Weeks Realty Corporation (filed as Exhibit 99.2 to the General Partner’s Registration Statement on Form S-8, as filed with the SEC on March 24, 2004, File No. 333-113907, and incorporated herein by this reference).# |
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10.10(i) |
| Duke Realty Corporation 2005 Long-Term Incentive Plan (filed as Appendix A to the General Partner’s Definitive Proxy Statement on Schedule 14A, dated March 16, 2005, as filed with the SEC on March 16, 2005, File No. 001-09044, and incorporated herein by this reference).# |
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10.10(ii) |
| Form of 2005 Long-Term Incentive Plan Stock Option Award Certificate (filed as Exhibit 99.4 to the General Partner’s Current Report on Form 8-K, as filed with the SEC on May 3, 2005, File No. 001-09044, and incorporated herein by this reference).# |
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10.10(iii) |
| Form of 2005 Long-Term Incentive Plan Award Certificate for Restricted Stock Units and Shareholder Value Plan Awards (filed as Exhibit 99.5 to the General Partner’s Current Report on Form 8-K, as filed with the SEC on May 3, 2005, File No. 001-09044, and incorporated herein by this reference).# |
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|
10.10(iv) |
| Form of 2005 Long-Term Incentive Plan Restricted Stock Unit Award Certificate for Non-Employee Directors (filed as Exhibit 99.6 to the General Partner’s Current Report on Form 8-K, as filed with the SEC on May 3, 2005, File No. 001-09044, and incorporated herein by this reference).# |
|
|
|
10.10(v) |
| Duke Realty Corporation 2005 Shareholder Value Plan, a sub-plan of the 2005 Long-Term Incentive Plan (filed as Exhibit 99.2 to the General Partner’s Current Report on Form 8-K, as filed with the SEC on May 3, 2005, File No. 001-09044, and incorporated herein by this reference).# |
|
|
|
10.11(i) |
| Duke Realty Corporation Non-Employee Directors Compensation Plan, a sub-plan of the 2005 Long-Term Incentive Plan (filed as Exhibit 99.3 to the General Partner’s Current Report on Form 8-K as filed with the SEC on May 3, 2005, File No. 001-09044, and incorporated herein by this reference).# |
|
|
|
10.11(ii) |
| Amendment One to the Duke Realty Corporation 2005 Non-Employee Directors Compensation Plan (filed as Exhibit 99.1 to the General Partner’s Current Report on Form 8-K, as filed with the SEC on October 31, 2005, File No. 001-09044, and incorporated by this reference).# |
|
|
|
10.11(iii) |
| Amendment Two to the Duke Realty Corporation 2005 Non-Employee Directors Compensation Plan (filed as Exhibit 99.1 to the General Partner’s Current Report on Form 8-K, as filed with the SEC on February 7, 2006, File No. 001-09044, and incorporated by this reference).# |
|
|
|
10.11(iv) |
| Amendment Three to the Duke Realty Corporation 2005 Non-Employee Directors Compensation Plan (filed as Exhibit 10.5 to the General Partner’s Quarterly Report on Form 10-Q, as filed with the SEC on November 8, 2006, File No. 001-09044, and incorporated by this reference).# |
48
10.12 |
| Duke Realty Corporation 2005 Dividend Increase Unit Replacement Plan (filed as Exhibit 99.1 to the General Partner’s Current Report on Form 8-K, as filed with the SEC on December 9, 2005, File No. 001-09044, and incorporated herein by this reference).# |
|
|
|
10.13 |
| Form of Forfeiture Agreement/Performance Unit Award Agreement (filed as Exhibit 99.2 to the General Partner’s Current Report on Form 8-K, as filed with the SEC on December 9, 2005, File No. 001-09044, and incorporated herein by this reference).# |
|
|
|
10.14 |
| Form of Letter Agreement Regarding Executive Severance, dated December 13, 2005, between the General Partner, as the General Partner of Duke Realty Limited Partnership, and the following executive officers; Dennis D. Oklak, Robert M. Chapman, Matthew A. Cohoat, James B. Connor, Denise K. Dank, Howard L. Feinsand, Robert D. Fessler, Donald Hunter, Steven R. Kennedy, Paul R. Quinn, and Christopher Seger (filed as Exhibit 10.1 to the General Partner’s Current Report on Form 8-K, as filed with the SEC on December 19, 2005, File No. 001-09044, and incorporated herein by this reference).# |
|
|
|
10.15 |
| Term Loan Agreement, Dated May 31, 2005, by and between Duke Realty Limited Partnership, the General Partner, J.P. Morgan Securities, Inc., JP Morgan Chase Bank, N.A. and the several banks, financial institutions and other entities from time to time parties thereto as lenders (filed as Exhibit 99.1 to the General Partner’s Current Report on Form 8-K, as filed with the SEC on June 6, 2005, File No. 001-09044, and incorporated herein by this reference). |
|
|
|
10.16 |
| Commercial Multi-Property Agreement of Purchase and Sale, dated January 24, 2006, by and among Duke Realty Limited Partnership, The Mark Winkler Company, and each of the other entities controlled by or affiliated with The Mark Winkler Company named therein, as amended by the First Amendment to Commercial Multi-Property Agreement of Purchase and Sale dated February 28, 2006, the Second Amendment to Commercial Multi-Property Agreement of Purchase and Sale dated March 10, 2006, and the Third Amendment to Commercial Multi-Property Agreement of Purchase and Sale dated April 21, 2006 (filed as Exhibit 10.1 to the General Partner’s Quarterly Report on Form 10-Q, as filed with the SEC on May 10, 2006, File No. 001-09044, and incorporated herein by this reference). |
|
|
|
10.17 |
| Fifth Amended and Restated Revolving Credit Agreement dated January 25, 2006, among Duke Realty Limited Partnership, as borrower, the General Partner, as Guarantor, and Bank One as Administrative Agent and Lender (filed as Exhibit 10.56 to the General Partner’s Annual Report on Form 10-K for the year ended December 31, 2005, as filed with the SEC on March 7, 2006, File No. 001-09044, and incorporated herein by this reference). |
|
|
|
10.18 |
| Term Loan Agreement, dated as of February 28, 2006, by and among Duke Realty Limited Partnership, as borrower, the General Partner, as Guarantor, certain of their respective subsidiaries, as guarantors, Bank of America, N.A., individually and as Administrative Agent, Banc of America Securities LLC, as Lead Arranger and Sole Book Runner, and each of the other lenders named therein (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K, as filed with the SEC on March 3, 2006, File No. 000-20625, and incorporated herein by this reference). |
|
|
|
10.19 |
| Registration Rights Agreement, dated November 22, 2006, by and among Duke Realty Limited Partnership, the General Partner, Morgan Stanley & Co. Incorporated, Citigroup Global Markets Inc. and UBS Securities LLC, as representatives of the initial purchasers of the Notes (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K, as filed with the Commission on November 29, 2006, File No. 000-20625, and incorporated herein by this reference). |
|
|
|
10.20 |
| Common Stock Delivery Agreement, dated November 22, 2006, by and between Duke Realty Limited Partnership and the General Partner (filed as Exhibit 10.2 to the Partnership’s Current Report on Form 8-K, as filed with the Commission on November 29, 2006, File No. 000-20625, and incorporated herein by this reference). |
49
10.21 |
| Contribution Agreement, dated December 5, 2006, by and between Duke Realty Limited Partnership and Quantico and Belbrook Realty Corporation, an affiliate of an investment fund managed by Eaton Vance (filed as Exhibit 10.30 to the General Partner’s Annual Report on Form 10-K, as filed with the SEC on March 31, 2007, File No. 001-09044, and incorporated herein by this reference). |
|
|
|
10.22 |
| Contribution Agreement, dated December 5, 2006, by and between Duke Realty Limited Partnership and Lafayette and Belcrest Realty Corporation, an affiliate of an investment fund managed by Eaton Vance (filed as Exhibit 10.31 to the General Partner’s Annual Report on Form 10-K, as filed with the SEC on March 31, 2007, File No. 001-09044, and incorporated herein by this reference. |
|
|
|
12.1 |
| Statement of Computation of Ratios of Earnings to Fixed Charges.* |
|
|
|
12.2 |
| Statement of Computation of Ratios of Earnings to Debt Service.* |
|
|
|
21.1 |
| List of the Duke Realty Limited Partnership’s Subsidiaries.* |
|
|
|
23.1 |
| Consent of KPMG LLP.* |
|
|
|
24.1 |
| Executed Powers of Attorney of certain directors.* |
|
|
|
31.1 |
| Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* |
|
|
|
31.2 |
| Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* |
|
|
|
32.1 |
| Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* ** |
|
|
|
32.2 |
| Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* ** |
|
|
|
99.1 |
| Selected Quarterly Financial Information.* |
# Represents management contract or compensatory plan or arrangement.
* Filed herewith.
** The certifications attached as Exhibits 32.1 and 32.2 accompany this Annual Report on Form 10-K and are “furnished” to the Securities and Exchange Commission pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” by us for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
We will furnish to any security holder, upon written request, copies of any exhibit incorporated by reference, for a fee of 15 cents per page, to cover the costs of furnishing the exhibits. Written requests should include a representation that the person making the request was the beneficial owner of securities entitled to vote at the Annual Meeting of Shareholders.
(b) Exhibits
The exhibits required to be filed with this Form 10-K pursuant to Item 601 of Regulation S-K are listed under “Exhibits” in Part IV, Item 14(a)(3) of Form 10-K and are incorporated herein by reference.
(c) Financial Statement Schedule
The Financial Statement Schedule required to be filed with this Form 10-K is listed under “Consolidated Financial Statement Schedules” in Part IV, Item 14(a)(2) of this Form 10-K, and is incorporated herein by reference.
50
Management’s Report on Internal Control
We, as management of Duke Realty Limited Partnership and its subsidiaries (the “Partnership”), are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Pursuant to the rules and regulations of the Securities and Exchange Commission, internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the General Partner’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
· Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets of the company;
· Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Partnership; and
· Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Management has evaluated the effectiveness of its internal control over financial reporting as of December 31, 2006 based on the control criteria established in a report entitled Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on such evaluation, we have concluded that, as of December 31, 2006, our internal control over financial reporting is effective based on these criteria.
The independent registered public accounting firm of KPMG LLP, as auditors of the Partnership’s consolidated financial statements, has issued an attestation report on management’s assessment of the Partnership’s internal control over financial reporting.
/s/ Dennis D. Oklak |
| /s/ Matthew A. Cohoat |
Dennis D. Oklak |
| Matthew A. Cohoat |
Chairman and Chief Executive Officer |
| Executive Vice President and |
of the General Partner |
| Chief Financial Officer of the |
(Principal Executive Officer) |
| General Partner |
|
| (Principal Financial Officer) |
51
Report of Independent Registered Public Accounting Firm
The Partners of
Duke Realty Limited Partnership:
We have audited the accompanying consolidated balance sheets of Duke Realty Limited Partnership and Subsidiaries (the “Partnership”) as of December 31, 2006 and 2005, and the related consolidated statements of operations, cash flows and partners’ equity for each of the years in the three-year period ended December 31, 2006. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule III. These consolidated financial statements and financial statement schedule are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Duke Realty Limited Partnership and Subsidiaries as of December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule III, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Duke Realty Limited Partnership and Subsidiaries’ internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 12, 2007, expressed an unqualified opinion on management’s assessment of, and the effective operation of, internal control over financial reporting.
/s/ KPMG LLP |
|
| |
Indianapolis, Indiana | |
March 12, 2007 |
52
Report of Independent Registered Public Accounting Firm
The Partners of
Duke Realty Limited Partnership:
We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control, that Duke Realty Limited Partnership and Subsidiaries (the “Partnership”) maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Duke Realty Limited Partnership and Subsidiaries’ management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Partnership’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, management’s assessment that Duke Realty Limited Partnership and Subsidiaries maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on criteria established in Internal Control-Integrated Framework issued by COSO. Also, in our opinion, Duke Realty Limited Partnership and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control-Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Duke Realty Limited Partnership and Subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of operations, cash flows and partners’ equity for each of the years in the three-year period ended December 31, 2006 and related financial statement schedule III, and our report dated March 12, 2007, expressed an unqualified opinion on those consolidated financial statements and related financial statement schedule III.
/s/ KPMG LLP |
|
| |
| |
Indianapolis, Indiana | |
March 12, 2007 |
53
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31,
(in thousands)
| 2006 |
| 2005 |
| |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Real estate investments: |
|
|
|
|
|
Land and improvements | $ | 844,091 | $ | 675,050 |
|
Buildings and tenant improvements |
| 4,211,602 |
| 4,156,456 |
|
Construction in progress |
| 359,765 |
| 227,066 |
|
Investments in and advances to unconsolidated companies |
| 628,323 |
| 301,322 |
|
Land held for development |
| 737,752 |
| 429,270 |
|
|
| 6,781,533 |
| 5,789,164 |
|
Accumulated depreciation |
| (867,079) |
| (754,742) |
|
|
|
|
|
|
|
Net real estate investments |
| 5,914,454 |
| 5,034,422 |
|
|
|
|
|
|
|
Real estate investments and other assets held-for-sale |
| 512,925 |
| - |
|
|
|
|
|
|
|
Cash and cash equivalents |
| 68,154 |
| 26,858 |
|
Accounts receivable, net of allowance of $1,088 and $1,093 |
| 24,118 |
| 31,342 |
|
Straight-line rent receivable, net of allowance of $1,915 and $1,538 |
| 105,319 |
| 95,948 |
|
Receivables on construction contracts, including retentions |
| 64,768 |
| 50,035 |
|
Deferred financing costs, net of accumulated amortization of $19,492 and $14,113 |
| 62,277 |
| 27,118 |
|
Deferred leasing and other costs, net of accumulated amortization of $127,155 and $112,245 |
| 311,553 |
| 227,648 |
|
Escrow deposits and other assets |
| 183,728 |
| 153,316 |
|
| $ | 7,247,296 | $ | 5,646,687 |
|
|
|
|
|
|
|
LIABILITIES AND PARTNERS’ EQUITY |
|
|
|
|
|
Indebtedness: |
|
|
|
|
|
Secured debt |
| $515,192 | $ | 167,255 |
|
Unsecured notes |
| 3,129,653 |
| 2,050,396 |
|
Unsecured line of credit |
| 317,000 |
| 383,000 |
|
|
| 3,961,845 |
| 2,600,651 |
|
|
|
|
|
|
|
Liabilities of properties held for sale |
| 155,185 |
| - |
|
|
|
|
|
|
|
Construction payables and amounts due subcontractors, including retentions |
| 136,508 |
| 93,137 |
|
|
|
|
|
|
|
Accrued expenses: |
|
|
|
|
|
Real estate taxes |
| 59,273 |
| 60,883 |
|
Interest |
| 52,106 |
| 33,022 |
|
Other |
| 62,078 |
| 52,649 |
|
Other liabilities |
| 128,857 |
| 136,104 |
|
Tenant security deposits and prepaid rents |
| 31,121 |
| 34,924 |
|
Total liabilities |
| 4,586,973 |
| 3,011,370 |
|
|
|
|
|
|
|
Minority interest |
| 1,080 |
| 73 |
|
|
|
|
|
|
|
Partners’ equity: |
|
|
|
|
|
General Partner |
|
|
|
|
|
Common equity |
| 1,671,104 |
| 1,841,932 |
|
Preferred equity (liquidation preferences of $876,250 and $657,250) |
| 825,774 |
| 616,780 |
|
|
| 2,496,878 |
| 2,458,712 |
|
Limited Partners’ common equity |
| 156,930 |
| 183,650 |
|
Accumulated other comprehensive income (loss) |
| 5,435 |
| (7,118) |
|
Total partners’ equity |
| 2,659,243 |
| 2,635,244 |
|
|
|
|
|
|
|
| $ | 7,247,296 | $ | 5,646,687 |
|
See accompanying Notes to Consolidated Financial Statements.
54
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Operations
For the Years Ended December 31
(in thousands, except per unit amounts)
| 2006 |
| 2005 |
| 2004 |
| |
RENTAL OPERATIONS |
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
Rental income from continuing operations | $ | 780,666 | $ | 639,058 | $ | 582,231 |
|
Equity in earnings of unconsolidated companies |
| 38,004 |
| 29,549 |
| 21,586 |
|
|
| 818,670 |
| 668,607 |
| 603,817 |
|
Operating expenses: |
|
|
|
|
|
|
|
Rental expenses |
| 178,632 |
| 148,272 |
| 126,983 |
|
Real estate taxes |
| 88,915 |
| 78,122 |
| 65,846 |
|
Interest expense |
| 179,007 |
| 113,067 |
| 103,976 |
|
Depreciation and amortization |
| 244,129 |
| 215,400 |
| 171,764 |
|
|
| 690,683 |
| 554,861 |
| 468,569 |
|
Earnings from continuing rental operations |
| 127,987 |
| 113,746 |
| 135,248 |
|
|
|
|
|
|
|
|
|
SERVICE OPERATIONS |
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
General contractor gross revenue |
| 308,562 |
| 380,173 |
| 357,133 |
|
General contractor costs |
| (284,633) |
| (348,263) |
| (329,545) |
|
Net general contractor revenue |
| 23,929 |
| 31,910 |
| 27,588 |
|
Service fee revenue |
| 21,633 |
| 20,149 |
| 18,995 |
|
Gain on sale of service operations properties |
| 44,563 |
| 29,882 |
| 24,220 |
|
|
|
|
|
|
|
|
|
Total revenue |
| 90,125 |
| 81,941 |
| 70,803 |
|
|
|
|
|
|
|
|
|
Operating expenses |
| 36,929 |
| 37,663 |
| 43,151 |
|
|
|
|
|
|
|
|
|
Earnings from service operations |
| 53,196 |
| 44,278 |
| 27,652 |
|
|
|
|
|
|
|
|
|
General and administrative expense |
| (35,834) |
| (31,003) |
| (29,479) |
|
|
|
|
|
|
|
|
|
Operating income |
| 145,349 |
| 127,021 |
| 133,421 |
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
Interest and other income, net |
| 10,450 |
| 4,637 |
| 4,646 |
|
Earnings from sale of land, net of impairment adjustments |
| 7,791 |
| 14,202 |
| 10,202 |
|
Minority interest in earnings of subsidiaries |
| (247) |
| (1,438) |
| (1,253) |
|
|
|
|
|
|
|
|
|
Income from continuing operations |
| 163,343 |
| 144,422 |
| 147,016 |
|
|
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
Net income from discontinued operations |
| 9,254 |
| 17,438 |
| 31,371 |
|
Gain on sale of property, net of impairment adjustments |
| 46,254 |
| 223,858 |
| 26,247 |
|
|
|
|
|
|
|
|
|
Income from discontinued operations |
| 55,508 |
| 241,296 |
| 57,618 |
|
|
|
|
|
|
|
|
|
Net income |
| 218,851 |
| 385,718 |
| 204,634 |
|
Distributions on preferred units |
| (56,419) |
| (46,479) |
| (33,777) |
|
Adjustments for redemption of preferred units |
| (2,633) |
| - |
| (3,645) |
|
Net income available for common unitholders | $ | 159,799 | $ | 339,239 | $ | 167,212 |
|
|
|
|
|
|
|
|
|
Basic net income per common unit: |
|
|
|
|
|
|
|
Continuing operations | $ | .70 | $ | .63 | $ | .71 |
|
Discontinued operations |
| .38 |
| 1.56 |
| .37 |
|
Total | $ | 1.08 | $ | 2.19 | $ | 1.08 |
|
Diluted net income per common unit: |
|
|
|
|
|
|
|
Continuing operations | $ | .70 | $ | .63 | $ | .70 |
|
Discontinued operations |
| .37 |
| 1.55 |
| .37 |
|
Total | $ | 1.07 | $ | 2.18 | $ | 1.07 |
|
|
|
|
|
|
|
|
|
Weighted average number of common units outstanding |
| 148,069 |
| 155,059 |
| 155,281 |
|
|
|
|
|
|
|
|
|
Weighted average number of common units and potential dilutive common equivalents |
| 149,393 |
| 155,877 |
| 157,062 |
|
See accompanying Notes to Consolidated Financial Statements.
55
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended December 31
(in thousands)
| 2006 |
| 2005 |
| 2004 |
| |
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net income | $ | 218,851 | $ | 385,718 | $ | 204,634 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
Depreciation of buildings and tenant improvements |
| 206,999 |
| 204,377 |
| 189,119 |
|
Amortization of deferred leasing and other costs |
| 47,269 |
| 49,793 |
| 39,463 |
|
Amortization of deferred financing costs |
| 8,617 |
| 6,154 |
| 4,904 |
|
Minority interest in earnings |
| 247 |
| 1,438 |
| 1,253 |
|
Straight-line rent adjustment |
| (20,795) |
| (22,519) |
| (22,436) |
|
Earnings from land and depreciated property sales |
| (49,614) |
| (238,060) |
| (36,449) |
|
Build-for-sale operations, net |
| (140,692) |
| (6,295) |
| (41) |
|
Construction contracts, net |
| 1,749 |
| 16,196 |
| (11,047) |
|
Other accrued revenues and expenses, net |
| 20,976 |
| 11,680 |
| (3,787) |
|
Operating distributions received in excess of (less than) |
|
|
|
|
|
|
|
equity in earnings from unconsolidated companies |
| (18,339) |
| (3,055) |
| 10,447 |
|
Net cash provided by operating activities |
| 275,268 |
| 405,427 |
| 376,060 |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Development of real estate investments |
| (385,516) |
| (209,990) |
| (145,629) |
|
Acquisition of in-service real estate investments |
| (735,294) |
| (285,342) |
| (204,361) |
|
Acquisition of land held for development |
| (435,917) |
| (136,321) |
| (113,433) |
|
Recurring tenant improvements |
| (41,895) |
| (60,633) |
| (58,847) |
|
Recurring leasing costs |
| (17,106) |
| (33,175) |
| (27,777) |
|
Recurring building improvements |
| (8,122) |
| (15,232) |
| (21,029) |
|
Other deferred leasing costs |
| (46,463) |
| (19,425) |
| (16,386) |
|
Other deferred costs and other assets |
| 6,267 |
| (16,070) |
| (15,413) |
|
Proceeds from land and depreciated property sales, net |
| 180,825 |
| 1,134,667 |
| 178,301 |
|
Distributions received from unconsolidated companies for land and depreciated property sales |
| 21,238 |
| - |
| - |
|
Capital distributions from unconsolidated companies |
| 275,335 |
| - |
| - |
|
Advances to unconsolidated companies, net |
| (50,182) |
| (31,599) |
| (3,033) |
|
Net cash provided by (used for) investing activities |
| (1,236,830) |
| 326,880 |
| (427,607) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Payments for repurchases of common units |
| (101,282) |
| (287,703) |
| - |
|
Proceeds from exercise of the General Partner’s stock options |
| 6,672 |
| 3,945 |
| 12,259 |
|
Proceeds from issuance of preferred units, net |
| 283,994 |
| - |
| 338,360 |
|
Payments for redemption of preferred units |
| (75,000) |
| - |
| (102,652) |
|
Redemption of warrants |
| - |
| - |
| (2,881) |
|
Redemption of limited partner units |
| - |
| (2,129) |
| - |
|
Proceeds from unsecured debt issuance |
| 1,429,497 |
| 400,000 |
| 690,000 |
|
Payments on unsecured debt |
| (350,000) |
| (665,000) |
| (150,000) |
|
Proceeds from issuance of secured debt |
| 1,029,426 |
| - |
| - |
|
Payments on secured indebtedness including principal amortization |
| (750,354) |
| (46,675) |
| (39,430) |
|
Borrowings (payments) on lines of credit, net |
| (66,000) |
| 383,000 |
| (351,000) |
|
Distributions to common unitholders |
| (280,713) |
| (290,463) |
| (286,913) |
|
Distributions to common unitholders – special dividends |
| - |
| (157,904) |
| - |
|
Distributions to preferred unitholders |
| (56,419) |
| (46,479) |
| (31,828) |
|
Contributions from (distributions to) minority interest |
| 930 |
| (1,212) |
| (1,134) |
|
Payment for capped call option |
| (26,967) |
| - |
| - |
|
Deferred financing costs |
| (40,926) |
| (599) |
| (30,159) |
|
Net cash provided by (used for) financing activities |
| 1,002,858 |
| (711,219) |
| 44,622 |
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
| 41,296 |
| 21,088 |
| (6,925) |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year |
| 26,858 |
| 5,770 |
| 12,695 |
|
Cash and cash equivalents at end of year | $ | 68,154 | $ | 26,858 | $ | 5,770 |
|
Other non-cash items: |
|
|
|
|
|
|
|
Assumption of debt for real estate acquisitions | $ | 217,520 | $ | 11,743 | $ | 29,854 |
|
Contributions of property to unconsolidated companies | $ | 505,440 | $ | - | $ | - |
|
Conversion of Limited Partner units to common shares of General Partner | $ | 23,629 | $ | 1,828 | $ | 11,408 |
|
Conversion of Series D preferred units to common shares of General Partner | $ | - | $ | - | $ | 130,665 |
|
Issuance of Limited Partner Units for real estate acquisitions | $ | - | $ | - | $ | 7,575 |
|
Common shares of the General Partner repurchased and retired, not settled | $ | - | $ | 9,357 | $ | - |
|
Issuance of Limited Partner Units for acquisition of minority interest | $ | - | $ | 15,000 | $ | - |
|
See accompanying Notes to Consolidated Financial Statements.
56
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Partners’ Equity
(in thousands, except per unit data)
|
|
|
|
| Limited |
| Accumulated |
|
|
| ||
|
| General Partner |
| Partners’ |
| Other |
|
|
| |||
|
| Common |
| Preferred |
| Common |
| Comprehensive |
|
|
| |
|
| Equity |
| Equity |
| Equity |
| Income |
| Total |
| |
Balance at December 31, 2003 | $ | 2,153,844 | $ | 511,785 | $ | 212,691 | $ | - | $ | 2,878,320 |
| |
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
| |
Net income |
| 154,926 |
| 33,777 |
| 15,931 |
| - |
| 204,634 |
| |
Losses on derivative instruments |
| - |
| - |
| - |
| (6,547) |
| (6,547) |
| |
Comprehensive income |
|
|
|
|
|
|
|
|
| 198,087 |
| |
Capital contribution from General Partner |
| 12,367 |
| 338,312 |
| - |
| - |
| 350,679 |
| |
Acquisition of Partnership interest for common stock of |
|
|
|
|
|
|
|
|
|
|
| |
General Partner |
| 25,376 |
| - |
| (13,968) |
| - |
| 11,408 |
| |
Acquisition of property in exchange for Limited Partner Units |
| - |
| - |
| 7,575 |
| - |
| 7,575 |
| |
Redemption of Series E Preferred Units |
| - |
| (100,029) |
| - |
| - |
| (100,029) |
| |
General Partner’s redemption of Series D Preferred Units |
| - |
| (2,623) |
| - |
| - |
| (2,623) |
| |
General Partner’s conversion of Series D Preferred Units |
| 130,665 |
| (130,665) |
| - |
| - |
| - |
| |
Exercise of General Partner warrants |
| (2,881) |
| - |
| - |
| - |
| (2,881) |
| |
Tax benefits from employee stock plans |
| 770 |
| - |
| - |
| - |
| 770 |
| |
Stock based compensation expense |
| 512 |
| - |
| - |
| - |
| 512 |
| |
Distributions to preferred unitholders |
| - |
| (33,777) |
| - |
| - |
| (33,777) |
| |
Distribution to General Partner |
| (45) |
| - |
| - |
| - |
| (45) |
| |
Distributions to partners ($1.85 per Common Unit) |
| (261,061) |
| - |
| (25,807) |
| - |
| (286,868) |
| |
Balance at December 31, 2004 | $ | 2,214,473 | $ | 616,780 | $ | 196,422 | $ | (6,547) | $ | 3,021,128 |
| |
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
| |
Net income |
| 309,184 |
| 46,479 |
| 30,055 |
| - |
| 385,718 |
| |
Losses on derivative instruments |
| - |
| - |
| - |
| (571) |
| (571) |
| |
Comprehensive income |
|
|
|
|
|
|
|
|
| 385,147 |
| |
Capital contribution from General Partner |
| 4,143 |
| - |
| - |
| - |
| 4,143 |
| |
Acquisition of Partnership interest for common stock of |
|
|
|
|
|
|
|
|
|
|
| |
General Partner |
| 18,085 |
| - |
| (16,257) |
| - |
| 1,828 |
| |
Acquisition of property in exchange for Limited Partner Units |
| - |
| - |
| 15,000 |
| - |
| 15,000 |
| |
Redemption of Limited Partner Units |
| - |
| - |
| (2,061) |
| - |
| (2,061) |
| |
Tax benefits from employee stock plans |
| 245 |
| - |
| - |
| - |
| 245 |
| |
Stock based compensation expense |
| 2,032 |
| - |
| - |
| - |
| 2,032 |
| |
Retirement of common units |
| (297,060) |
| - |
| - |
| - |
| (297,060) |
| |
Distributions to preferred unitholders |
| - |
| (46,479) |
| - |
| - |
| (46,479) |
| |
Distribution to General Partner |
| (42) |
| - |
| - |
| - |
| (42) |
| |
Distributions to partners ($1.87 per Common Unit) |
| (265,076) |
| - |
| (25,441) |
| - |
| (290,517) |
| |
Distributins to partners ($1.05 per Common Unit) - Special |
| (144,052) |
| - |
| (14,068) |
| - |
| (158,120) |
| |
Balance at December 31, 2005 | $ | 1,841,932 | $ | 616,780 | $ | 183,650 | $ | (7,118) | $ | 2,635,244 |
| |
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
| |
Net income |
| 147,726 |
| 56,419 |
| 14,706 |
| - |
| 218,851 |
| |
Gains on derivative instruments |
| - |
| - |
| - |
| 12,553 |
| 12,553 |
| |
Comprehensive income |
|
|
|
|
|
|
|
|
| 231,404 |
| |
Capital contribution from General Partner |
| 6,186 |
| 283,994 |
| - |
| - |
| 290,180 |
| |
Acquisition of partnership interest for common stock of |
|
|
|
|
|
|
|
|
|
|
| |
General Partner |
| 39,918 |
| - |
| (16,289) |
| - |
| 23,629 |
| |
Redemption of Series I Preferred units |
| - |
| (75,000) |
| - |
| - |
| (75,000) |
| |
Capped call option |
| (26,967) |
| - |
| - |
| - |
| (26,967) |
| |
Tax benefits from Employee Stock Plans |
| 606 |
| - |
| - |
| - |
| 606 |
| |
Stock based compensation expense |
| 8,892 |
| - |
| - |
| - |
| 8,892 |
| |
Retirement of common units |
| (91,925) |
| - |
| - |
| - |
| (91,925) |
| |
Distributions to preferred unitholders |
| - |
| (56,419) |
| - |
| - |
| (56,419) |
| |
Distribution to General Partner |
| (74) |
| - |
| - |
| - |
| (74) |
| |
Distributions to partners ($1.89 per Common Unit) |
| (255,190) |
| - |
| (25,137) |
| - |
| (280,327) |
| |
Balance at December 31, 2006 | $ | 1,671,104 | $ | 825,774 | $ | 156,930 | $ | 5,435 | $ | 2,659,243 |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
Common Units outstanding at December 31, 2006 |
| 133,921 |
|
|
| 12,407 |
|
|
| 146,328 |
| |
See accompanying Notes to Consolidated Financial Statements.
57
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) The Partnership
Duke Realty Limited Partnership (the “Partnership”) was formed on October 4, 1993, when Duke Realty Corporation (the “General Partner”) contributed all of its properties and related assets and liabilities, along with the net proceeds from the issuance of additional shares of the General Partner, through an offering to the Partnership. Simultaneously, the Partnership completed the acquisition of Duke Associates, a full-service commercial real estate firm operating in the Midwest. The General Partner was formed in 1985 and qualifies as a Real Estate Investment Trust (“REIT”) under provisions of the Internal Revenue Code. The General Partner is the sole general partner of the Partnership, owning 91.5% of the common partnership interests as of December 31, 2005 (“General Partner Units”). The remaining 8.5% of the Partnership’s common interest is owned by limited partners (“Limited Partner Units” and, together with the General Partner Units, the “Common Units”). The Limited Partner Units are exchangeable for shares of the General Partner’s common stock on a one-for-one basis subject generally to a one-year holding period, or under certain circumstances, the General Partner may repurchase the Limited Partnership Units for cash. The General Partner also owns preferred partnership interests in the Partnership (“Preferred Units”).
We own and operate a portfolio primarily consisting of industrial and office properties in the Midwest, Southeast, Mid-Atlantic and Southwest United States and provide real estate services to third-party owners. We conduct service operations 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, and the terms “we”, “us”, and “our” refer to Duke Realty Limited Partnership and subsidiaries (the “Partnership”) and those entities owned or controlled by the Partnership.
(2) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include our accounts and our controlled subsidiaries. The equity interests in these controlled subsidiaries not owned by us are reflected as minority interests in the consolidated financial statements. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements. Investments in entities that we do not control through majority voting interest or where the other owner has substantial participating rights are not consolidated and are reflected as investments in unconsolidated companies under the equity method of reporting.
Reclassifications
Certain 2005 and 2004 balances have been reclassified to conform to the 2006 presentation.
Real Estate Investments
Rental real property, including land, land improvements, buildings and building improvements, are included in real estate investments and are generally stated at cost. Buildings and land improvements are depreciated on the straight-line method over their estimated life not to exceed 40 and 15 years, respectively, and tenant improvement costs are depreciated using the straight-line method over the term of the related lease.
Direct and certain indirect costs clearly associated with and incremental to the development, construction, leasing or expansion of real estate investments are capitalized as a cost of the property. In addition, all leasing commissions paid to third parties for new leases or lease renewals are capitalized. We capitalize a portion of our indirect costs associated with our construction, development and leasing efforts. In assessing the amount of direct and indirect costs to be capitalized, allocations are made based on estimates of the actual amount of time spent in each activity. We do not capitalize any costs attributable to downtime or to unsuccessful projects.
58
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
We capitalize direct and indirect project costs associated with the initial construction of a property up to the time the property is substantially complete and ready for its intended use. In addition, we capitalize costs, including real estate taxes, insurance, and utilities, that have been allocated to vacant space based on the square footage of the portion of the building not held available for immediate occupancy during the extended lease-up periods after construction of the building shell has been completed if costs are being incurred to ready the vacant space for its intended use. If costs and activities incurred to ready the vacant space cease, then cost capitalization is also discontinued until such activities are resumed. Once necessary work has been completed on a vacant space, project costs are no longer capitalized.
We cease capitalization of all project costs on extended lease-up periods after the shorter of a one-year period after the completion of the building shell or when the property attains 90% occupancy.
Construction in process and land held for development are included in real estate investments and are stated at cost. Real estate investments also include our equity interests in unconsolidated joint ventures that own and operate rental properties and hold land for development. We first analyze our investments in joint ventures under Financial Accounting Standards Board (“FASB”) Interpretation No. 46(R), Consolidation of Variable Interest Entities (“FIN 46(R)”), to determine if the joint venture is a variable interest entity and would require consolidation. To the extent that our joint ventures do not qualify as variable interest entities, we further assess under the guidelines of Emerging Issues Task Force (“EITF”) Issue 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 Statements, and FASB No. 94, Consolidation of All Majority-Owned Subsidiaries, to determine if the venture should be consolidated. The equity method of accounting is used for those investments in which we have the ability to exercise significant influence, but not control, over operating and financial policies. Any difference between the carrying amount of these investments and the underlying equity in net assets is amortized to equity in earnings of unconsolidated companies over the depreciable life of the property, generally 40 years. Distributions received from unconsolidated joint ventures related to the operations of the properties in the joint ventures are reflected as an operating activity in our Consolidated Statement of Cash Flows. Distributions received from unconsolidated joint ventures related to property sales or other capital transactions are reflected as an investing activity in our Consolidated Statement of Cash Flows.
Properties held for rental are individually evaluated for impairment when conditions exist which may indicate that it is probable that the sum of expected future cash flows (on an undiscounted basis) from a rental property over its anticipated holding period is less than its historical net cost basis. Upon determination that a permanent impairment has occurred, a loss is recorded to reduce the net book value of that property to its fair market value. Properties to be disposed of are reported at the lower of net historical cost basis or the estimated fair market value, less the estimated costs to sell. Once a property is designated as held for disposal, no further depreciation expense is recorded.
59
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
We allocate the purchase price of acquired properties to net tangible and identified intangible assets based on their respective fair values, based on all pertinent information available and adjusted based on changes in that information in no event to exceed one year from the date of acquisition. The allocation to tangible assets (buildings, tenant improvements and land) is based upon management’s determination of the value of the property as if it were vacant using discounted cash flow models similar to those used by independent appraisers. Factors considered by management include an estimate of carrying costs during the expected lease-up periods considering current market conditions, and costs to execute similar leases. The remaining purchase price is allocated among three categories of intangible assets consisting of the above or below market component of in-place leases, the value of in-place leases and the value of customer relationships.
The value allocable to the above or below market component of an acquired in-place lease is determined based upon the present value (using a discount rate which reflects the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term and (ii) management’s estimate of the amounts that would be paid using fair market rates over the remaining term of the lease. The amounts allocated to above market leases are included in deferred leasing and other costs in the balance sheet and below market leases are included in other liabilities in the balance sheet; both are amortized to rental income over the remaining terms of the respective leases.
The total amount of intangible assets is further allocated to in-place lease values and to customer relationship values based upon management’s assessment of their respective values. These intangible assets are included in deferred leasing and other costs in the balance sheet and are depreciated over the remaining term of the existing lease, or the anticipated life of the customer relationship, as applicable.
Cash Equivalents
Investments with a maturity of three months or less when purchased are classified as cash equivalents.
Valuation of Receivables
We reserve the entire receivable balance, including straight-line rent, of any tenant with an amount outstanding over 90 days. Straight-line rent receivables for any tenant with long-term risk, regardless of the status of rent receivables, are reviewed and reserved as necessary.
Deferred Costs
Costs incurred in connection with obtaining financing are amortized to interest expense on the straight-line method, which approximates a constant spread over the term of the related loan. All direct and indirect costs, including estimated internal costs, associated with the leasing of real estate investments owned by us are capitalized and amortized over the term of the related lease. We include lease incentive costs, which are payments made on behalf of a tenant to sign a lease, in deferred leasing costs and amortize them on a straight-line basis over the respective lease terms as a reduction of rental revenues. We include as lease incentives amounts funded to construct tenant improvements owned by the tenant. Unamortized costs are charged to expense upon the early termination of the lease or upon early payment of the financing.
Revenues
Rental Operations
The timing of revenue recognition under an operating lease is determined based upon ownership of the tenant improvements. If we are the owner of the tenant improvements, revenue recognition commences after the improvements are completed and the tenant takes possession or control of the space. In contrast, if we determine that the tenant allowances we are funding are lease incentives, then we commence revenue recognition when possession or control of the space is turned over to the tenant. Rental income from leases with scheduled rental increases during their terms is recognized on a straight-line basis.
60
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Revenue is recognized on payments received from tenants for early lease terminations after all necessary criteria have been met in accordance with SFAS No. 13, Accounting for Leases.
Service Operations
Management fees are based on a percentage of rental receipts of properties managed and are recognized as the rental receipts are collected. Maintenance fees are based upon established hourly rates and are recognized as the services are performed. Construction management and development fees represent fee based third-party contracts and are recognized as earned based on the terms of the contract, which approximates the percentage of completion method.
We recognize income on construction contracts where we serve as a general contractor on the percentage of completion method. Using this method, profits are recorded based on our estimates of the percentage of completion of individual contracts, commencing when the work performed under the contracts reach a point where the final costs can be estimated with reasonable accuracy. The percentage of completion estimates are based on a comparison of the contract expenditures incurred to the estimated final costs. Changes in job performance, job conditions and estimated profitability may result in revisions to costs and income and are recognized in the period in which the revisions are determined.
Unbilled receivables on construction contracts totaled $32.4 million and $10.7 million at December 31, 2006 and 2005, respectively.
Property Sales
Gains on sales of all properties are recognized in accordance with SFAS No. 66, Accounting for Sales of Real Estate.
Gains from sales of depreciated property are included in discontinued operations and the proceeds from the sale of these held-for-rental properties are classified in the investing activities section of the Consolidated Statements of Cash Flows.
Gains or losses from our sale of properties that were developed or repositioned with the intent to sell and not for long-term rental are classified as gain on sale of Service Operation properties in the Consolidated Statements of Operations. All activities and proceeds received from the development and sale of these buildings are classified in the operating activities section of the Consolidated Statements of Cash Flows.
Net Income Per Common Unit
Basic net income per common unit is computed by dividing net income available for common unitholders by the weighted average number of common units outstanding for the period. Diluted net income per common unit is computed by dividing net income available for common unitholders by the weighted average number of common units outstanding, including any potential dilutive common equivalents for the period.
61
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table reconciles the components of basic and diluted net income per common unit (in thousands):
| 2006 |
| 2005 |
| 2004 |
| |
Basic and diluted net income available for common unitholders | $ | 159,799 | $ | 339,239 | $ | 167,212 |
|
|
|
|
|
|
|
|
|
Weighted average number of common units outstanding |
| 148,069 |
| 155,059 |
| 155,281 |
|
Weighted average conversion of Series D preferred units (1) |
| - |
| - |
| 877 |
|
Dilutive units for stock-based compensation plans (2) |
| 1,324 |
| 818 |
| 904 |
|
Weighted average number of common units and potential dilutive |
|
|
|
|
|
|
|
common equivalents |
| 149,393 |
| 155,877 |
| 157,062 |
|
(1) We called for the redemption of the Series D preferred units as of March 16, 2004. Prior to the redemption date, nearly 5.3 million Series D preferred units were converted to 4.9 million common units. These units represent the weighted effect, assuming the Series D preferred units had been converted on January 1, 2004.
(2) Excludes (in thousands of units) 719; 1,158; and 456 of anti-dilutive units as of December 31, 2006, 2005 and 2004, respectively.
A joint venture partner in one of our unconsolidated companies has the option to convert a portion of its ownership to the General Partner’s common shares, which would require the issuance of additional Common units to the General Partner. The effect of this option on earnings per unit was anti-dilutive for the years ended December 31, 2006, 2005 and 2004.
We issued Exchangeable Senior Notes (“Exchangeable Notes”) in 2006. These Exchangeable Notes had no effect on diluted earnings per unit, as the conversion option was not in the money.
Federal Income Taxes
We recorded federal and state income taxes of $6.8 million, $5.6 million and $5.2 million for 2006, 2005 and 2004, respectively, which were primarily attributable to the earnings of our taxable REIT subsidiaries. We paid federal and state income taxes of $4.3 million, $8.7 million and $6.2 million for 2006, 2005 and 2004, respectively. The taxable REIT subsidiaries have no significant deferred income tax items.
As a partnership, the allocated share of income and loss other than the operations of the taxable REIT subsidiaries is included in the income tax returns of the partners; accordingly, no accounting for federal income taxes is required in the accompanying consolidated financial statements.
Stock Based Compensation
Under the limited partnership agreement of the Partnership, we are required to issue one Common Unit to the General Partner for each share of common stock issued by the General Partner. Accordingly, the issuance of common shares by the General Partner under its stock based compensation plans requires the issuance of a corresponding number of Common Units by us to the General Partner.
For all issuances of stock-based awards by the General Partner prior to 2002, we applied the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), and related interpretations, in accounting for our stock-based compensation.
Accordingly, for stock options granted prior to 2002, no compensation expense is reflected in net income as all options granted had an exercise price equal to the market value of the General Partner’s underlying common shares on the date of the grant.
Effective January 1, 2002, we prospectively adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“SFAS 123”), and applied SFAS 123 to all awards granted after January 1, 2002.
62
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table illustrates the effect on net income and earnings per unit if we had applied the fair value recognition provisions of SFAS 123 to all stock-based employee compensation for the years ended December 31, 2005 and 2004, respectively (in thousands, except per unit data):
| 2005 |
| 2004 |
| |
Net income available for common unitholders, as reported | $ | 339,239 | $ | 167,212 |
|
|
|
|
|
|
|
Add: Stock-based employee compensation expense included in net income determined under fair value method |
| 1,116 |
| 455 |
|
|
|
|
|
|
|
Deduct: Total stock-based compensation expense determined under fair value method for all awards |
| (1,285) |
| (923) |
|
Pro forma net income available for common unitholders | $ | 339,070 | $ | 166,744 |
|
|
|
|
|
|
|
Basic net income per common unit |
|
|
|
|
|
As reported | $ | 2.19 | $ | 1.08 |
|
Pro forma | $ | 2.19 | $ | 1.07 |
|
|
|
|
|
|
|
Diluted net income per common unit |
|
|
|
|
|
As reported | $ | 2.18 | $ | 1.07 |
|
Pro forma | $ | 2.18 | $ | 1.06 |
|
Effective January 1, 2006, we adopted Statement of Financial Accounting Standards No. 123(R), Share Based Payment, (“SFAS 123(R)”), using the modified prospective application method. Under this method, as of January 1, 2006, we applied the provisions of SFAS 123(R) to new and modified awards, as well as to the nonvested portion of awards granted before the required effective date and outstanding at such time.
Derivative Financial Instruments
We periodically enter into certain interest rate protection agreements to effectively convert or cap floating rate debt to a fixed rate, and to hedge anticipated future financing transactions, both of which qualify for cash flow hedge accounting treatment. Net amounts paid or received under these agreements are recognized as an adjustment to the interest expense of the corresponding debt. We do not utilize derivative financial instruments for trading or speculative purposes.
If a derivative qualifies as a cash flow hedge, the change in fair value of the derivative is recognized in other comprehensive income to the extent the hedge is effective, while the ineffective portion of the derivative’s change in fair value is recognized in earnings. We estimate the fair value of derivative instruments using standard market conventions and techniques such as discounted cash flow analysis, option pricing models and termination cost at each balance sheet date. For all hedging relationships, we formally document the hedging relationship and its risk-management objective and strategy for undertaking the hedge, the hedging instrument, the hedged item, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method of measuring ineffectiveness.
Use of Estimates
The preparation of the financial statements requires management to make a number of estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
63
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(3) Significant Acquisitions and Dispositions
In February 2006, we acquired the majority of a Washington, D.C. metropolitan area portfolio of suburban office and light industrial properties (the “Mark Winkler Portfolio”). The assets acquired for a purchase price of approximately $867.6 million are comprised of 32 in-service properties with approximately 2.9 million square feet for rental, 166 acres of undeveloped land, as well as certain related assets of the Mark Winkler Company, a real estate management company. The acquisition was financed primarily through assumed mortgage loans and new borrowings.
The assets acquired and liabilities assumed were recorded at their estimated fair value at the date of acquisition, as summarized below:
Operating rental properties | $ | 602,011 |
|
Land held for development |
| 154,300 |
|
Total real estate investments |
| 756,311 |
|
|
|
|
|
Other assets |
| 10,478 |
|
Lease related intangible assets |
| 86,047 |
|
Goodwill |
| 14,722 |
|
Total assets acquired |
| 867,558 |
|
|
|
|
|
Debt assumed |
| (148,527) |
|
Other liabilities assumed |
| (5,829) |
|
Purchase price, net of assumed liabilities | $ | 713,202 |
|
In December 2006, we contributed 23 of these in-service properties acquired from the Mark Winkler Portfolio with a basis of $381.6 million representing real estate investments and acquired lease related intangible assets to two new unconsolidated subsidiaries. The remaining nine in-service properties are classified and accounted for as held-for-sale. The results of operations of the acquired properties since the date of acquisition have been included in continuing operations, rather than discontinued operations, based on our intention to sell the majority of our ownership interest in the properties to entities in which we will retain a minority equity ownership interest.
In the third quarter of 2006, we finalized the purchase of a portfolio of industrial real estate properties in Savannah, Georgia. We completed a majority of the purchase in January 2006. The assets acquired for a purchase price of approximately $196.2 million are comprised of 18 buildings with approximately 5.1 million square feet for rental as well as over 60 acres of undeveloped land. The acquisition was financed in part through assumed mortgage loans. The results of operations for the acquired properties since the date of acquisition have been included in continuing rental operations in our consolidated financial statements.
We acquired total income producing real estate related assets of $948.4 million, $295.6 million, and $246.2 million in 2006, 2005, and 2004, respectively.
64
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
On September 29, 2005, we completed the sale of a portfolio of 212 real estate properties, consisting of approximately 14.1 million square feet of primarily light distribution and service center properties and approximately 50 acres of undeveloped land (the “Industrial Portfolio Sale”). The purchase price totaled $983 million, of which we received net proceeds of $955.0 million after the settlement of certain liabilities and transaction costs. Portions of the proceeds were used to pay down $423.0 million of outstanding debt on our $500.0 million unsecured line of credit and the entire outstanding balance on our $400.0 million term loan. The operations for 2005 and 2004 and the gain for 2005 associated with the properties in the Industrial Portfolio Sale have been reclassified to discontinued operations. As a result of the taxable income generated by the sale, a one-time special cash dividend of $1.05 per share was paid to our common shareholders in the fourth quarter of 2005.
(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 years ended December 31, 2006, 2005 and 2004, we received management fees of $4.4 million, $4.8 million and $4.9 million, leasing fees of $2.9 million, $4.3 million and $2.6 million and construction and development fees of $19.1 million, $2.0 million and $1.5 million, respectively, from these companies. These fees approximate market rates and we eliminated our ownership percentages of these fees in the consolidated financial statements.
(5) Investments in Unconsolidated Companies
We have equity interests ranging from 10%–67% in unconsolidated joint ventures that own and operate rental properties and hold land for development.
Combined summarized financial information for the unconsolidated companies as of December 31, 2006 and 2005, and for the years ended December 31, 2006 and 2005, and 2004, are as follows (in thousands):
| 2006 |
| 2005 |
| 2004 |
| |
Rental revenue | $ | 157,186 | $ | 163,447 | $ | 167,803 |
|
Net income | $ | 65,985 | $ | 57,561 | $ | 40,138 |
|
Cash distributions received | $ | 36,096 | $ | 25,446 | $ | 30,309 |
|
|
|
|
|
|
|
|
|
Land, buildings and tenant improvements, net | $ | 1,510,970 | $ | 1,121,254 |
|
|
|
Land held for development |
| 91,280 |
| 47,936 |
|
|
|
Other assets |
| 148,580 |
| 73,084 |
|
|
|
| $ | 1,750,830 | $ | 1,242,274 |
|
|
|
|
|
|
|
|
|
|
|
Property indebtedness | $ | 417,970 | $ | 515,192 |
|
|
|
Other liabilities |
| 170,168 |
| 58,225 |
|
|
|
|
| 588,138 |
| 573,417 |
|
|
|
Owners’ equity |
| 1,162,692 |
| 668,857 |
|
|
|
| $ | 1,750,830 | $ | 1,242,274 |
|
|
|
65
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Our share of the scheduled payments of long term debt for the unconsolidated joint ventures for each of the next five years and thereafter as of December 31, 2006, are as follows (in thousands):
Year |
| Future Repayments |
| ||
2007 |
| $ | 38,639 |
|
|
2008 |
|
| 1,765 |
|
|
2009 |
|
| 40,499 |
|
|
2010 |
|
| 113,439 |
|
|
2011 |
|
| 4,411 |
|
|
|
| $ | 198,753 |
|
|
(6) Discontinued Operations and Assets Held for Sale
We classified the operations of 308 buildings as discontinued operations as of December 31, 2006. These 308 buildings consist of 273 industrial, 32 office and three retail properties. Of these properties, 21 were sold during 2006, 234 properties were sold during 2005, 41 properties were sold during 2004 and 12 operating properties are classified as held-for-sale at December 31, 2006.
The following table illustrates operations of the buildings reflected in discontinued operations for the years ended December 31 (in thousands):
| 2006 |
| 2005 |
| 2004 |
| |
Revenues | $ | 40,852 | $ | 129,239 | $ | 173,746 |
|
Expenses: |
|
|
|
|
|
|
|
Operating |
| 13,878 |
| 42,612 |
| 51,742 |
|
Interest |
| 7,499 |
| 30,203 |
| 33,633 |
|
Depreciation and Amortization |
| 10,139 |
| 38,770 |
| 56,818 |
|
General and Administrative |
| 82 |
| 216 |
| 182 |
|
Income from discontinued operations, before gain on sales |
| 9,254 |
| 17,438 |
| 31,371 |
|
Gain on sale of property, net of impairment adjustments |
| 46,254 |
| 223,858 |
| 26,247 |
|
Income from discontinued operations | $ | 55,508 | $ | 241,296 | $ | 57,618 |
|
At December 31, 2006, we classified 12 properties as held-for-sale and included in discontinued operations. Additionally, we have classified nine of the remaining in-service properties from the Mark Winkler Portfolio, as well as six additional properties, as held-for-sale. However, the results of these 15 properties are included in continuing operations, either based on our present intention to sell the majority of our ownership interest in the properties to entities in which we will retain a minority equity ownership interest or because the results of operations for the properties are immaterial. The following table illustrates the aggregate balance sheet of the aforementioned 12 properties included in discontinued operations, as well as the 15 held-for-sale properties whose results are included in continuing operations at December 31, 2006 (in thousands):
| Held- for-Sale and Included in |
| Held-for-Sale and Included |
| Total |
| |||||
Real estate investments, net |
| $ | 113,705 |
|
| $ | 381,435 |
| $ | 495,140 |
|
Other assets |
|
| 10,818 |
|
|
| 6,967 |
|
| 17,785 |
|
Assets held-for-sale |
| $ | 124,523 |
|
| $ | 388,402 |
| $ | 512,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses |
| $ | 3,742 |
|
| $ | 664 |
| $ | 4,406 |
|
Other liabilities |
|
| 1,352 |
|
|
| 2,118 |
|
| 3,470 |
|
Secured debt |
|
| — |
|
|
| 147,309 |
|
| 147,309 |
|
Liabilities held-for-sale |
| $ | 5,094 |
|
| $ | 150,091 |
| $ | 155,185 |
|
66
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
We allocate interest expense to discontinued operations and have included such interest expense in computing net income from discontinued operations. Interest expense allocable to discontinued operations includes interest on any debt on secured 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 discontinued operations unencumbered population as it related to our entire unencumbered population.
We recorded impairment adjustments on depreciable properties of $266,000, $3.7 million and $180,000 in 2006, 2005 and 2004, respectively.
(7) Indebtedness
Indebtedness at December 31 consists of the following (in thousands):
| 2006 |
| 2005 |
| |
|
|
|
|
|
|
Fixed rate secured debt, weighted average interest rate of 6.21% at December 31, 2006, and 6.13% at December 31, 2005, maturity dates ranging from 2007 to 2026 | $ | 652,886 | $ | 131,732 |
|
|
|
|
|
|
|
Variable rate secured debt, weighted average interest rate of 3.79% at December 31, 2006, and 5.75% at December 31, 2005, maturity dates ranging from 2014 to 2025 |
| 9,615 |
| 35,523 |
|
|
|
|
|
|
|
Fixed rate unsecured notes, weighted average interest rate of 5.67% at December 31, 2006, and 6.02% at December 31, 2005, maturity dates ranging from 2007 to 2028 |
| 3,125,157 |
| 1,800,396 |
|
|
|
|
|
|
|
Unsecured line of credit, interest rate of 5.82% at December 31, 2006, and 4.83% at December 31, 2005 maturity date of 2010 |
| 317,000 |
| 383,000 |
|
|
|
|
|
|
|
Variable rate unsecured debt, market rate of 6.2% at December 31, 2006, and 4.76% at December 31, 2005, maturity date of 2008 |
| 4,496 |
| 250,000 |
|
|
|
|
|
|
|
| $ | 4,109,154 | $ | 2,600,651 |
|
The fair value of our indebtedness as of December 31, 2006, was $4.2 billion. This fair value amount was calculated using current market rates and spreads available to us on debt instruments with similar terms and maturities.
As of December 31, 2006, the $662.5 million of secured debt was collateralized by rental properties with a carrying value of $1.0 billion and by letters of credit in the amount of $9.8 million.
We had one unsecured line of credit available at December 31, 2006, described as follows (dollars in thousands):
Description |
| Borrowing |
| Maturity |
| Interest |
| Outstanding |
| ||
Unsecured Line of Credit | $ | 1,000,000 |
| January 2010 |
| LIBOR + .525% |
|
| $317,000 |
|
|
The line of credit provides us with an option to obtain borrowings from financial institutions that participate in the line, at rates lower than the stated interest rate, subject to certain restrictions. Interest rates on the amounts outstanding on the unsecured line of credit as of December 31, 2006 ranged from LIBOR+.17% to LIBOR+.525% (equal to 5.52% and 5.875% as of December 31, 2006).
The line of credit also contains various 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 December 31, 2006, we were in compliance with all financial covenants under our line of credit.
67
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
We took the following actions during the year ended December 31, 2006, relevant to our indebtedness:
· In January 2006, we renewed our unsecured line of credit. The new facility provides borrowing capacity up to $1.0 billion and, subject to certain conditions, may be increased to $1.3 billion. Under the new facility, which replaced the previous unsecured line of credit agreement, the interest rate was reduced, the borrowing capacity was increased by $500.0 million and the maturity date was extended to January 25, 2010.
· To finance the acquisition of the Mark Winkler Portfolio, we obtained a $700.0 million term loan with an interest rate of LIBOR + .525%, secured by certain of the acquired real estate properties. This term loan was paid in full in August 2006 with proceeds from the issuance of senior unsecured debt as described below.
· In conjunction with our real estate acquisitions, we assumed $221.6 million of mortgage loans, of which we received $10.5 million of proceeds directly. The assumed mortgage loans bear interest at rates ranging between 5.55% and 8.50% and have maturities ranging between 2011 and 2026. An adjustment of $6.3 million was recorded to increase the assumed loans to fair value.
· In February and March 2006, we issued $150.0 million of 5.50% senior unsecured notes due in 2016. A portion of the proceeds were used to retire our $100.0 million of 6.72% unsecured notes. The remaining cash proceeds were used to fund costs associated with the issuance of the debt and to repay amounts outstanding under our line of credit.
· In August 2006, we issued $450.0 million of 5.95% senior unsecured notes due in 2017 and $250.0 million of 5.625% senior unsecured notes due in 2011. The proceeds from these issuances were used to pay off the $700.0 million secured term loan that was obtained to finance the purchase of the Mark Winkler Portfolio.
· In November 2006, we issued $319.0 million of 5.91% debt due in 2016 secured by certain of our in-service real estate properties.
· In November 2006, we issued $575.0 million of 3.75% Exchangeable Senior Notes (“Exchangeable Notes”), which will pay interest semiannually at a rate of 3.75% per annum and mature in December 2011.
The Exchangeable Notes can be exchanged for shares of the General Partner’s common stock upon the occurrence of certain events as well as at any time beginning on August 1, 2011 and ending on the second business day prior to the maturity date. The Exchangeable Notes will have an initial exchange rate of approximately 20.4298 common shares per $1,000 principal amount of the notes, representing an exchange price of approximately $48.95 per share of the General Partner’s common stock and an initial exchange premium of approximately 20.0% based on the price of $40.79 per share of the General Partner’s common stock on the date of the original issuance. The initial exchange rate is subject to adjustment under certain circumstances including increases in the General Partner’s rate of dividends. Upon exchange the holders of the notes would receive (i) cash equal to the principal amount of the note and (ii) to the extent the conversion value exceeds the principal amount of the note, either cash or shares of the General Partner’s common stock at our option.
68
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Concurrent with the issuance of the Exchangeable Notes, we purchased a capped call option on the General Partner’s common stock in a private transaction. This capped call option allows us to buy the General Partner’s common shares, up to a maximum of approximately 11.7 million shares, from counter parties equal to the amounts of common stock and/or cash related to the excess conversion value we would pay to the holders of the Exchangeable Notes upon conversion. The capped call option will terminate upon the earlier of the maturity date of the related Exchangeable Notes or the first day all of the related Exchangeable Notes are no longer outstanding due to conversion or otherwise. The capped call option, which cost $27.0 million, was recorded as a reduction of partners’ equity and effectively increased the conversion price to 40% above the General Partner’s stock price on the issuance date. The fair value of the capped call option was $27.9 million at December 31, 2006.
· In December 2006, we repaid $250.0 million of LIBOR +.26% Senior Unsecured Notes upon their maturity.
At December 31, 2006, the scheduled amortization and maturities of all indebtedness for the next five years and thereafter were as follows (in thousands):
Year |
| Amount |
|
2007 | $ | 227,660 |
|
2008 |
| 285,942 |
|
2009 |
| 287,185 |
|
2010 |
| 503,952 |
|
2011 |
| 1,024,124 |
|
Thereafter |
| 1,780,291 |
|
| $ | 4,109,154 |
|
The amount of interest paid in 2006, 2005 and 2004 was $198.1 million, $151.3 million and $136.2 million, respectively. The amount of interest capitalized in 2006, 2005 and 2004 was $36.3 million, $9.5 million and $6.0 million, respectively.
(8) 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 third segment consists of our build-to-suit 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 (“Service Operations”). Our reportable segments offer different products or services and are managed separately because each segment requires different operating strategies and management expertise.
The assets of the Service Operations business segment generally include properties under development. 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 income and rental expenses are included in the applicable property 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.
69
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Non-segment revenue consists mainly of equity in earnings of unconsolidated companies and other insignificant rental operations such as retail properties. 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 an equity real estate investment trust (“REIT”) like our General Partner. 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 investors and analysts 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 operating 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 considers FFO to be 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 operating 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.
70
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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 unitholders to the calculation of FFO for the years ended December 31 (in thousands):
| 2006 |
| 2005 |
| 2004 |
| |
Revenues |
|
|
|
|
|
|
|
Rental Operations: |
|
|
|
|
|
|
|
Office | $ | 562,903 | $ | 462,939 | $ | 419,068 |
|
Industrial |
| 203,259 |
| 166,343 |
| 152,989 |
|
Service Operations |
| 90,125 |
| 81,941 |
| 70,803 |
|
Total Segment Revenues |
| 856,287 |
| 711,223 |
| 642,860 |
|
Non-Segment Revenue |
| 52,508 |
| 39,325 |
| 31,760 |
|
Consolidated Revenue from continuing operations |
| 908,795 |
| 750,548 |
| 674,620 |
|
Discontinued Operations |
| 40,852 |
| 129,239 |
| 173,746 |
|
Consolidated Revenue | $ | 949,647 | $ | 879,787 | $ | 848,366 |
|
|
|
|
|
|
|
|
|
Funds From Operations |
|
|
|
|
|
|
|
Rental Operations: |
|
|
|
|
|
|
|
Office | $ | 351,818 | $ | 284,807 | $ | 268,520 |
|
Industrial |
| 156,328 |
| 124,742 |
| 116,782 |
|
Services Operations |
| 53,196 |
| 44,278 |
| 27,652 |
|
Total Segment FFO |
| 561,342 |
| 453,827 |
| 412,954 |
|
Non-Segment FFO: |
|
|
|
|
|
|
|
Interest expense |
| (179,007) |
| (113,067) |
| (103,976) |
|
Interest and other income, net |
| 10,450 |
| 4,637 |
| 4,646 |
|
General and administrative expense |
| (35,834) |
| (31,003) |
| (29,479) |
|
Gain on land sales, net of impairment |
| 7,791 |
| 14,201 |
| 10,119 |
|
Other non-segment income (expense) |
| 4,529 |
| (540) |
| 3,919 |
|
Minority interest |
| (247) |
| (1,438) |
| (1,253) |
|
Joint venture FFO |
| 37,774 |
| 37,964 |
| 40,488 |
|
Distributions on preferred units |
| (56,419) |
| (46,479) |
| (33,777) |
|
Adjustment for redemption of preferred units |
| (2,633) |
| — |
| (3,645) |
|
Discontinued operations |
| 23,824 |
| 56,208 |
| 88,189 |
|
Consolidated basic FFO |
| 371,570 |
| 374,310 |
| 388,185 |
|
|
|
|
|
|
|
|
|
Depreciation and amortization on continuing operations |
| (244,129) |
| (215,400) |
| (171,764) |
|
Depreciation and amortization on discontinued operations |
| (10,139) |
| (38,770) |
| (56,818) |
|
Partnership’s share of joint venture adjustments |
| (18,394) |
| (19,510) |
| (18,901) |
|
Earnings from depreciated property sales on discontinued operations |
| 42,089 |
| 227,513 |
| 26,510 |
|
Earnings from depreciated property sales - share of joint venture |
| 18,802 |
| 11,096 |
| — |
|
|
|
|
|
|
|
|
|
Net income available for common unitholders | $ | 159,799 | $ | 339,239 | $ | 167,212 |
|
The assets for each of the reportable segments as of December 31 are as follows (in thousands):
| December 31 |
| December 31, |
|
|
| |||
|
| 2006 |
| 2005 |
|
|
| ||
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Rental Operations: |
|
|
|
|
|
|
|
|
|
Office | $ | 4,081,917 |
| $ | 3,396,985 |
|
|
|
|
Industrial |
| 1,951,916 |
|
| 1,577,631 |
|
|
|
|
Service Operations |
| 270,652 |
|
| 177,463 |
|
|
|
|
Total Segment Assets |
| 6,304,485 |
|
| 5,152,079 |
|
|
|
|
Non-Segment Assets |
| 942,811 |
|
| 494,608 |
|
|
|
|
Consolidated Assets | $ | 7,247,296 |
| $ | 5,646,687 |
|
|
|
|
71
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
In addition to revenues and FFO, we also review our recurring capital expenditures in measuring the performance of our individual Rental Operations segments. These recurring capital expenditures consist of tenant improvements, leasing commissions and building improvements. We review these expenditures to determine the costs associated with re-leasing vacant space and maintaining the condition of our properties. Our recurring capital expenditures by segment are summarized as follows for the years ended December 31 (in thousands):
| 2006 |
| 2005 |
| 2004 |
| ||||||
Recurring Capital Expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
Office | $ | 53,048 |
|
| $ | 66,890 |
|
| $ | 68,535 |
|
|
Industrial |
| 13,734 |
|
|
| 42,083 |
|
|
| 39,096 |
|
|
Non-segment |
| 341 |
|
|
| 67 |
|
|
| 22 |
|
|
Total | $ | 67,123 |
|
| $ | 109,040 |
|
| $ | 107,653 |
|
|
(9) Leasing Activity
Future minimum rents due to us under non-cancelable operating leases at December 31, 2006, are as follows (in thousands):
Year |
| Amount |
|
2007 | $ | 622,631 |
|
2008 |
| 592,653 |
|
2009 |
| 529,424 |
|
2010 |
| 456,919 |
|
2011 |
| 365,683 |
|
Thereafter |
| 1,097,812 |
|
| $ | 3,665,122 |
|
In addition to minimum rents, certain leases require reimbursements of specified operating expenses that amounted to $161.7 million, $151.4 million, and $137.9 million for the years ended December 31, 2006, 2005 and 2004, respectively.
(10) Employee Benefit Plans
We maintain a 401(k) plan for full-time employees. We make matching contributions up to an amount equal to three percent of the employee’s salary and may also make annual discretionary contributions. The total expense recognized for this plan was $3.9 million, $3.3 million and $2.2 million for the years ended December 31, 2006, 2005 and 2004, respectively.
We make contributions to a contributory health and welfare plan as necessary to fund claims not covered by employee contributions. The total expense we recognized related to this plan was $9.4 million, $8.1 million and $7.2 million for 2006, 2005 and 2004, respectively. These expense amounts include estimates based upon the historical experience of claims incurred but not reported as of year-end.
(11) Partners’ Equity
The General Partner periodically accesses 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 us in exchange for an additional interest in the Partnership. In January 2006, the General Partner issued $184.0 million of 6.95% Series M Cumulative Redeemable Preferred Shares, from which a portion of the net proceeds were used to redeem its $75.0 million of outstanding 8.45% Series I Cumulative Redeemable Preferred Shares. Offering costs of $2.6 million were charged against net income available to common unitholders in conjunction with the redemption of the Series I Cumulative Redeemable Preferred Shares. In June 2006, the General Partner issued $110.0 million of 7.25% Series N Cumulative Redeemable Preferred Shares.
72
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following series of preferred units were outstanding as of December 31, 2006 (in thousands, except percentage data):
Description |
| Shares |
|
| Dividend |
|
| Redemption |
| Liquidation |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Series B Preferred |
|
| 265 |
|
|
| 7.990 | % |
| September 30, 2007 |
|
| $132,250 |
|
| ||
Series J Preferred |
|
| 400 |
|
|
| 6.625 | % |
| August 29, 2008 |
|
| 100,000 |
|
| ||
Series K Preferred |
|
| 600 |
|
|
| 6.500 | % |
| February 13, 2009 |
|
| 150,000 |
|
| ||
Series L Preferred |
|
| 800 |
|
|
| 6.600 | % |
| November 30, 2009 |
|
| 200,000 |
|
| ||
Series M Preferred |
|
| 736 |
|
|
| 6.950 | % |
| January 31, 2011 |
|
| 184,000 |
|
| ||
Series N Preferred |
|
| 440 |
|
|
| 7.250 | % |
| June 30, 2011 |
|
| 110,000 |
|
| ||
The dividend rate on the Series B preferred units increases to 9.99% after September 12, 2012.
All series of preferred equity require cumulative distributions and have no stated maturity date (although the General Partner may redeem all such preferred units on or following their optional redemption dates at the General Partner’s option, in whole or in part).
Pursuant to the General Partner’s $750 million share repurchase plan that was approved by its board of directors, we paid approximately $91.9 million and $297.1 million for the redemption of 2,266,684 and 8,995,775 of the General Partner’s common shares at an average price of $40.55 and $33.02 per share during the years ended December 31, 2006 and 2005, respectively. From time to time, the General Partner’s management may repurchase additional common shares of the General Partner pursuant to its share repurchase plan.
(12) Stock Based Compensation
The General Partner is authorized to issue up to 10,462,147 shares of its common stock under our stock based employee and non-employee compensation plans.
Some of the General Partner’s stock-based compensation awards, including both stock options and restricted stock units, have a retirement eligible provision, whereby awards granted to an employee who has reached certain age and service criteria, automatically vest upon such employee’s retirement. We have previously accounted for this type of arrangement by recognizing compensation cost (for both pro forma and expense recognition purposes) over the full stated vesting period of the award and, if the employee retired before the end of the vesting period, recognizing any remaining unrecognized compensation cost at the date of retirement. Upon adoption of SFAS 123(R), expense on new awards is recognized over a period up until when the awards are no longer contingent upon future service. Had we applied this method of vesting to all existing unvested awards issued to retirement eligible employees prior to January 1, 2006, we would have recognized an additional $1.0 million in stock-based employee compensation expense for the year ended December 31, 2006.
An additional requirement of SFAS 123(R) is that estimated forfeitures be considered in determining compensation expense. As previously permitted, we recorded forfeitures when they occurred. The effect of this accounting change on existing nonvested stock compensation was insignificant.
The effect of adopting SFAS 123(R) was not significant to earnings or cash flows.
Cash flows resulting from tax deductions in excess of recognized compensation cost from the exercise of stock options (excess tax benefits) were not significant in any period presented.
73
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Fixed Stock Option Plans
The General Partner had options outstanding under six fixed stock option plans as of December 31, 2006. Additional grants may be made under one of those plans. Stock option awards granted under the General Partner’s stock based employee and non-employee compensation plans generally vest over five years at 20% per year and have contractual lives of ten years. The exercise price for stock option grants is set at the fair value of the General Partner’s common stock on the day of grant.
The following table summarizes transactions under the General Partner’s stock option plans as of December 31, 2006:
|
|
| 2006 |
|
|
| ||||
|
|
|
| Weighted |
| Weighted |
| Aggregate |
| |
|
|
|
| Average |
| Average |
| Intrinsic |
| |
|
|
|
| Exercise |
| Remaining |
| Value (1) |
| |
|
| Shares |
| Price |
| Life |
| (in Millions) |
| |
Outstanding, beginning of year |
| 3,828,157 |
| $25.50 |
|
|
|
|
| |
Granted |
| 861,591 |
| $34.19 |
|
|
|
|
| |
Exercised |
| (714,524) |
| $22.40 |
|
|
|
|
| |
Forfeited |
| (126,299) |
| $30.71 |
|
|
|
|
| |
Outstanding, end of year |
| 3,848,925 |
| $27.85 |
| 6.3 |
|
| $50.2 |
|
Options exercisable, |
| 1,985,742 |
| $24.26 |
| 4.6 |
|
| $33.0 |
|
(1) The aggregate intrinsic value represents the total pre-tax intrinsic value, based on the closing stock price of $40.90 at December 31, 2006, which would have been received by the option holders had all option holders exercised their options as of that date. This amount changes continuously based on the market prices of the General Partner’s stock.
Options granted in the years ended December 31, 2006, 2005, and 2004, respectively, had a weighted average fair value per option of $3.60, $3.04, and $2.84. As of December 31, 2006, there was $3.4 million of total unrecognized compensation expense related to stock options granted under the plans, which is expected to be recognized over a weighted average remaining period of 2.97 years. The total intrinsic value of options exercised during the years ended December 31, 2006, 2005, and 2004 respectively, was $11.3 million, $3.4 million, and $8.5 million. Compensation expense recognized for fixed stock option plans was $1.7 million, $1.1 million, and $853,000 for the years ended December 31, 2006, 2005, and 2004, respectively. The fair value of options vested during the years ended December 31, 2006, 2005, and 2004 was $1.6 million, $1.2 million, and $1.1 million, respectively.
The fair values of the options were determined using the Black-Scholes option-pricing model with the following assumptions:
| 2006 |
| 2005 |
| 2004 |
| |
Dividend yield |
| 6.25 % |
| 6.25 % |
| 6.50 % |
|
Volatility |
| 20.0 % |
| 20.0 % |
| 20.0 % |
|
Risk-free interest rate |
| 4.5 % |
| 3.8 % |
| 3.6 % |
|
Expected life |
| 6 years |
| 6 years |
| 6 years |
|
The risk free interest rate assumption is based upon observed interest rates appropriate for the term of the General Partner’s employee stock options. The dividend yield assumption is based on the history of and our present expectation of future dividend payouts. Our computation of expected volatility for the valuation of stock options granted in the years ended December 31, 2006, 2005, and 2004 is based on historic volatility over a period of time equal to the expected term. The expected life of employee stock options represents the weighted average period the stock options are expected to remain outstanding.
74
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Performance Share Plan
Performance shares were granted under the 2000 Performance Share Plan, with each performance share economically equivalent to one share of the General Partner’s common stock.
The performance shares vest over a five-year period with the vesting percentage for a year dependent upon the General Partner’s attainment of certain predefined levels of earnings growth for such year. The performance shares have a contractual life of five years.
In April 2006, the 2000 Performance Share Plan was amended to provide that awards would be settled in shares of the General Partner’s common stock rather than cash. The fair value of existing awards was fixed at the date of the amendment and the fair value of subsequent awards will be fixed at the fair value of the General Partner’s common stock at the date of grant.
The following table summarizes transactions for the General Partner’s performance shares for the year ended December 31, 2006:
2000 Performance Share Plan |
| Vested |
| Unvested |
| Total | |
|
|
|
|
|
|
| |
Performance Share Plan units at |
| 84,466 |
| 99,001 |
|
| 183,467 |
Granted |
| - |
| - |
|
| - |
Vested |
| 25,487 |
| (25,487) |
|
| - |
Forfeited |
| - |
| (3,746) |
|
| (3,746) |
Dividend reinvestments |
| 8,378 |
| - |
|
| 8,378 |
Disbursements |
| (15,076) |
| - |
|
| (15,076) |
Total Performance Share Plan units |
| 103,255 |
| 69,768 |
|
| 173,023 |
Compensation expense recognized for Performance Share Plan units was $1.2 million, $1.3 million, and $1.7 million for 2006, 2005, and 2004, respectively. The total vest date fair value of shares vesting during the year ended December 31, 2006 was $918,000.
Shareholder Value Plan Awards
The General Partner’s 2005 Shareholder Value Plan (“2005 SVP Plan”), a sub-plan of its 2005 Long-Term Incentive Plan, was approved by the General Partner’s shareholders in April 2005. Upon vesting, payout of the 2005 Shareholder Value Plan awards will be made in shares of the General Partner’s common stock. Under the 2005 SVP Plan, shareholder value awards fully vest three years after the date of grant. The number of common shares to be issued may range from 0%-300% of the target shares awarded and will be based upon the General Partner’s total shareholder return for such three-year period as compared to the S&P 500 Index and the NAREIT Real Estate 50 Index. Each index is weighted at 50%.
Awards made under the 2005 SVP Plan are measured at fair value, which is determined using a Monte Carlo simulation model that was developed to accommodate the unique features of the 2005 SVP Plan. Compensation cost recognized under the 2005 SVP Plan was $879,000 and $438,000 for the years ended December 31, 2006 and 2005, respectively.
75
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table summarizes transactions for the General Partner’s awards under the 2005 SVP Plan for 2006:
|
|
| Weighted | ||
|
| Number of |
| Average | |
|
| SVP |
| Grant Date | |
2005 Shareholder Value Plan Awards |
| Units |
| Fair Value | |
SVP awards at December 31, 2005 |
| 75,678 |
|
| $30.64 |
Granted |
| 90,844 |
|
| $34.13 |
Forfeited |
| (5,169 | ) |
| $31.54 |
SVP awards at December 31, 2006 |
| 161,353 |
|
| $32.58 |
As of December 31, 2006, there was $1.7 million of total unrecognized compensation expense related to nonvested SVP Plan awards granted under the 2005 SVP Plan, which will be recognized over a weighted average period of 1.75 years. All 2005 SVP Plan awards have a contractual life of three years.
Restricted Stock Units
Under the General Partner’s 2005 Long-Term Incentive Plan and its 2005 Non-Employee Directors Compensation Plan approved by the General Partner’s shareholders in April 2005, restricted stock units (“RSUs”) may be granted to non-employee directors, executive officers and selected management employees. An RSU is economically equivalent to one share of the General Partner’s common stock. RSUs granted prior to January 1, 2006 vest 20% per year over five years, have contractual lives of five years and are payable in shares of the General Partner’s common stock. RSUs granted to existing non-employee directors subsequent to January 1, 2006 vest 100% over one year, and have contractual lives of one year. We recognize the value of the granted RSUs over this vesting period as expense.
The following table summarizes transactions for the General Partner’s RSUs, excluding dividend equivalents, for 2006:
|
|
| Weighted | |||||
|
|
|
| Average | ||||
|
| Number of |
| Grant Date | ||||
Restricted Stock Units |
|
| RSUs |
| Fair Value | |||
RSUs at December 31, 2005 |
| 172,095 |
|
| $32.19 | |||
Granted |
| 108,452 |
|
| $34.18 | |||
Vested |
| (33,084) |
|
| $33.83 | |||
Forfeited |
| (11,859) |
|
| $32.51 | |||
RSUs at December 31, 2006 |
| 235,604 |
|
| $33.98 | |||
Compensation cost recognized for RSUs totaled $2.1 million and $478,000 for the years ended December 31, 2006 and 2005, respectively.
As of December 31, 2006, there was $5.5 million of total unrecognized compensation expense related to nonvested RSUs granted under the Plan, which is expected to be recognized over a weighted average period of 4 years.
(13) 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.
In August 2005, we entered into $300.0 million of cash flow hedges through forward-starting interest rate swaps to hedge interest rates on $300.0 million of anticipated debt offerings in 2007. The swaps qualify for hedge accounting, with any changes in fair value recorded in Accumulated Other Comprehensive Income (“OCI”). At December 31, 2006, the fair value of these swaps was approximately $9.9 million in an asset position as the effective rates of the swaps were lower than current interest rates at December 31, 2006.
76
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
In March 2005, we entered into $300.0 million of cash flow hedges through forward-starting interest rate swaps to hedge interest rates on $300.0 million of anticipated debt offerings in 2006. The swaps qualified for hedge accounting, with any changes in fair value recorded in OCI. In March 2006, we issued $150.0 million of 5.5% senior unsecured notes due 2016 and terminated a corresponding amount of the cash flow hedges designated for this transaction. The settlement amount paid of approximately $800,000 will be recognized to earnings through interest expense ratably over the life of the senior unsecured notes and the ineffective portion of the hedge was insignificant. In August 2006, we issued $450.0 million of 5.95% senior unsecured notes due 2017 and $250.0 million of 5.63% senior unsecured notes due 2011 and terminated the remaining $150 million of cash flow hedges. The settlement amount received of approximately $1.6 million will be recognized to earnings through a reduction of interest expense ratably over the lives of the senior unsecured notes. The ineffective portion of the hedge was insignificant.
In June 2004, we simultaneously entered into three forward-starting interest rate swaps aggregating $144.3 million, which effectively fixed the rate on financing expected in 2004 at 5.346%, plus our credit spread over the swap rate. The swaps qualified for hedge accounting; therefore, changes in the fair value were recorded in OCI. In August 2004, we settled these three swaps when we issued $250.0 million of senior unsecured notes with an effective interest rate of 6.33%, due in 2014. We paid $6.9 million to unwind the swaps, which is amortized from OCI into interest expense over the life of the new 6.33% senior unsecured notes.
The effectiveness of our hedges will be 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.
(14) Recent Accounting Pronouncements
In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation also provides guidance on description, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 becomes effective on January 1, 2007 and is not anticipated to have a material effect on our 2007 financial position, results of operations, or liquidity.
In September 2006, the Securities Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB 108 provides guidance regarding the process of quantifying the materiality of financial statement misstatements. We adopted SAB 108 in the fourth quarter of 2006 with no effect to our financial statements.
(15) Commitments and Contingencies
We have guaranteed the repayment of $79.6 million of economic development bonds issued by various municipalities in connection with certain commercial developments. We will be required to make payments under our guarantees to the extent that incremental taxes from specified developments are not sufficient to pay the bond debt service. Management does not believe that it is probable that we will be required to make any significant payments in satisfaction of these guarantees.
77
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
We also have guaranteed the repayment of secured and unsecured loans of four of our unconsolidated subsidiaries. At December 31, 2006, the outstanding balance on these loans was approximately $129.0 million. Management believes that the value of the real estate exceeds the loan balance and that we will not be required to satisfy these guarantees.
We have entered into agreements, subject to the completion of due diligence requirements, resolution of certain contingencies and completion of customary closing conditions, for the future acquisition of land totaling $36.1 million.
In October 2000, we sold or contributed industrial properties and undeveloped land with a fair value of $487 million to a joint venture (Dugan Realty LLC) in which we have a 50% interest and recognized a net gain of $35.2 million. In connection with this transaction, the joint venture partners were given an option to put up to a $50 million interest in the joint venture to us in exchange for the General Partner’s common stock or cash (at our option), subject to certain timing and other restrictions. As a result of this put option, we deferred $10.2 million of gain on sale of depreciated property and recorded a $50 million liability.
We renewed all of our major insurance policies in 2006. These policies include coverage for acts of terrorism for our properties. We believe that this insurance provides adequate coverage against normal insurance risks and that any loss experienced would not have a significant impact on our liquidity, financial position, or results of operations.
We are subject to various legal proceedings and claims that arise in the ordinary course of business. In the opinion of management, the amount of any ultimate liability with respect to these actions will not materially affect our consolidated financial statements or results of operations.
(16) Subsequent Events
Declaration of Distributions
The General Partner’s board of directors declared the following distributions at its January 31, 2007, regularly scheduled Board meeting:
| Quarterly |
|
|
|
| |||
Class |
|
| Amount/Unit |
| Record Date |
| Payment Date | |
Common |
| $ | 0.4750 |
| February 14, 2007 |
| February 28, 2007 | |
Preferred (per depositary unit): |
|
|
|
|
|
|
| |
Series B |
| $ | 0.998750 |
| March 16, 2007 |
| March 30, 2007 | |
Series J |
| $ | 0.414063 |
| February 14, 2007 |
| February 28, 2007 | |
Series K |
| $ | 0.406250 |
| February 14, 2007 |
| February 28, 2007 | |
Series L |
| $ | 0.412500 |
| February 14, 2007 |
| February 28, 2007 | |
Series M |
| $ | 0.434375 |
| March 16, 2007 |
| March 30, 2007 | |
Series N |
| $ | 0.453125 |
| March 16, 2007 |
| March 30, 2007 | |
78
DUKE REALTY LIMITED PARTNERSHIP DECEMBER 31, 2006 (in thousands) |
| Schedule 3 |
79
DUKE REALTY LIMITED PARTNERSHIP DECEMBER 31, 2006 (in thousands) |
| Schedule 3 |
|
|
|
|
|
|
|
|
|
|
| Cost Capitalized |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Subsequent to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Building |
|
|
| Initial Cost |
| Development |
| Gross Book Value 12/31/06 |
| Accumulated |
| Year |
| Year |
| ||||||
Development |
| Name |
| Type |
| Encumbrances |
| Land |
| Buildings |
| or Acquisition |
| Land/Land Imp |
| Bldgs/TI |
| Total |
| Depreciation (1) |
| Constructed |
| Acquired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BLOOMINGTON, MINNESOTA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alpha Business Center |
| Alpha Business Ctr I&II |
| Office |
| - |
| 280 |
| 1,513 |
| 367 |
| 280 |
| 1,879 |
| 2,160 |
| 451 |
| 1980 |
| 1999 |
|
Alpha Business Center |
| Alpha Business Ctr III&IV |
| Industrial |
| - |
| 341 |
| 1,835 |
| 366 |
| 341 |
| 2,201 |
| 2,542 |
| 490 |
| 1980 |
| 1999 |
|
Alpha Business Center |
| Alpha Business Ctr V |
| Industrial |
| - |
| 537 |
| 2,977 |
| 361 |
| 538 |
| 3,338 |
| 3,875 |
| 690 |
| 1980 |
| 1999 |
|
Hampshire Dist. Center |
| Hampshire Dist Center North |
| Industrial |
| 1,473 |
| 779 |
| 4,500 |
| 279 |
| 779 |
| 4,779 |
| 5,558 |
| 1,107 |
| 1979 |
| 1997 |
|
Hampshire Dist. Center |
| Hampshire Dist Center South |
| Industrial |
| 1,670 |
| 901 |
| 5,068 |
| 314 |
| 901 |
| 5,382 |
| 6,283 |
| 1,256 |
| 1979 |
| 1997 |
|
Norman Pointe Office Park |
| Norman Pointe I |
| Office |
| - |
| 3,650 |
| 27,994 |
| 2,145 |
| 3,650 |
| 30,139 |
| 33,789 |
| 5,799 |
| 2000 |
| 2000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BLUE ASH, OHIO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McAuley Place |
| McAuley Place |
| Office |
| - |
| 2,331 |
| 18,596 |
| 1,724 |
| 2,331 |
| 20,320 |
| 22,650 |
| 3,792 |
| 2000 |
| 2001 |
|
Huntington Bank Building |
| Huntington Bank Building |
| Office |
| - |
| 175 |
| 241 |
| - |
| 175 |
| 241 |
| 416 |
| 64 |
| 1986 |
| 1996 |
|
Lake Forest/Westlake |
| Lake Forest Place |
| Office |
| - |
| 1,953 |
| 19,055 |
| 2,814 |
| 1,953 |
| 21,870 |
| 23,823 |
| 5,912 |
| 1985 |
| 1996 |
|
Northmark Office Park |
| Northmark Building 1 |
| Office |
| - |
| 1,452 |
| 5,272 |
| 254 |
| 1,452 |
| 5,526 |
| 6,978 |
| 1,395 |
| 1987 |
| 2004 |
|
Northmark Office Park |
| Northmark Building 2 |
| Office |
| - |
| 1,386 |
| 5,136 |
| 47 |
| 1,386 |
| 5,183 |
| 6,568 |
| 916 |
| 1984 |
| 2004 |
|
Lake Forest/Westlake |
| Westlake Center |
| Office |
| - |
| 2,459 |
| 16,091 |
| 3,207 |
| 2,459 |
| 19,299 |
| 21,758 |
| 5,336 |
| 1981 |
| 1996 |
|
Landings |
| Landings Building I |
| Office |
| - |
| 4,302 |
| 17,512 |
| - |
| 4,302 |
| 17,512 |
| 21,814 |
| 305 |
| 2006 |
| 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
BOLINGBROOK, ILLINOIS |
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
Joliet Road Business Park |
| 555 Joliet Road, Bolingbrook |
| Industrial |
| - |
| 2,184 |
| 9,284 |
| 378 |
| 2,332 |
| 9,514 |
| 11,846 |
| 1,221 |
| 1967 |
| 2002 |
|
Joliet Road Business Park |
| Dawes Transportation |
| Industrial |
| - |
| 3,050 |
| 4,453 |
| - |
| 3,050 |
| 4,453 |
| 7,502 |
| 378 |
| 2005 |
| 2005 |
|
|
|
|
|
|
|
|
|
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|
BRASELTON, GEORGIA |
|
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|
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|
Braselton Business Park |
| Braselton II |
| Industrial |
| - |
| 1,365 |
| 9,505 |
| 1,622 |
| 1,884 |
| 10,608 |
| 12,493 |
| 1,707 |
| 2001 |
| 2001 |
|
Park 85 at Braselton |
| Park 85 @ Braselton Bldg 625 |
| Industrial |
| - |
| 9,855 |
| 25,690 |
| - |
| 9,855 |
| 25,690 |
| 35,545 |
| 665 |
| 2004 |
| 2005 |
|
|
|
|
|
|
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|
BRENTOOD, TENNESSEE |
|
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|
Brentwood South Bus. Center |
| Brentwood South Bus Ctr I |
| Industrial |
| - |
| 1,065 |
| 5,775 |
| 758 |
| 1,065 |
| 6,533 |
| 7,599 |
| 1,342 |
| 1987 |
| 1999 |
|
Brentwood South Bus. Center |
| Brentwood South Bus Ctr II |
| Industrial |
| - |
| 1,065 |
| 2,786 |
| 1,105 |
| 1,065 |
| 3,891 |
| 4,956 |
| 735 |
| 1987 |
| 1999 |
|
Brentwood South Bus. Center |
| Brentwood South Bus Ctr III |
| Industrial |
| - |
| 848 |
| 4,130 |
| 583 |
| 848 |
| 4,712 |
| 5,561 |
| 1,094 |
| 1989 |
| 1999 |
|
Creekside Crossing |
| Creekside Crossing I |
| Office |
| - |
| 1,900 |
| 7,993 |
| 302 |
| 1,901 |
| 8,295 |
| 10,195 |
| 2,279 |
| 1997 |
| 1998 |
|
Creekside Crossing |
| Creekside Crossing II |
| Office |
| - |
| 2,087 |
| 8,224 |
| 1,129 |
| 2,087 |
| 9,353 |
| 11,440 |
| 2,466 |
| 1999 |
| 2000 |
|
Creekside Crossing |
| Creekside Crossing III |
| Office |
| - |
| 2,969 |
| 9,899 |
| - |
| 2,969 |
| 9,899 |
| 12,868 |
| 153 |
| 2006 |
| 2006 |
|
|
|
|
|
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|
BROOKLYN PARK, MINNESOTA |
|
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|
7300 Northland Drive |
| 7300 Northland Drive |
| Industrial |
| - |
| 700 |
| 6,607 |
| 197 |
| 703 |
| 6,801 |
| 7,504 |
| 1,536 |
| 1980 |
| 1998 |
|
Crosstown North Bus. Ctr. |
| Crosstown North Bus. Ctr. 1 |
| Industrial |
| - |
| 835 |
| 5,459 |
| 1,113 |
| 1,286 |
| 6,121 |
| 7,407 |
| 1,628 |
| 1998 |
| 1999 |
|
Crosstown North Bus. Ctr. |
| Crosstown North Bus. Ctr. 2 |
| Industrial |
| - |
| 449 |
| 2,837 |
| 670 |
| 599 |
| 3,357 |
| 3,956 |
| 731 |
| 1998 |
| 1999 |
|
Crosstown North Bus. Ctr. |
| Crosstown North Bus. Ctr. 3 |
| Industrial |
| - |
| 758 |
| 2,032 |
| 234 |
| 837 |
| 2,186 |
| 3,024 |
| 544 |
| 1999 |
| 1999 |
|
Crosstown North Bus. Ctr. |
| Crosstown North Bus. Ctr. 4 |
| Industrial |
| - |
| 2,079 |
| 7,622 |
| 1,184 |
| 2,397 |
| 8,487 |
| 10,884 |
| 2,464 |
| 1999 |
| 1999 |
|
Crosstown North Bus. Ctr. |
| Crosstown North Bus. Ctr. 5 |
| Industrial |
| - |
| 1,079 |
| 5,335 |
| 420 |
| 1,354 |
| 5,479 |
| 6,833 |
| 1,669 |
| 1999 |
| 2000 |
|
Crosstown North Bus. Ctr. |
| Crosstown North Bus. Ctr. 6 |
| Industrial |
| - |
| 788 |
| 3,100 |
| 1,882 |
| 1,031 |
| 4,738 |
| 5,769 |
| 1,228 |
| 2000 |
| 2000 |
|
Crosstown North Bus. Ctr. |
| Crosstown North Bus. Ctr. 10 |
| Industrial |
| - |
| 2,757 |
| 4,642 |
| 548 |
| 2,723 |
| 5,225 |
| 7,948 |
| 442 |
| 2004 |
| 2004 |
|
Crosstown North Bus. Ctr. |
| Crosstown North Bus. Ctr. 12 |
| Industrial |
| - |
| 4,564 |
| 9,014 |
| - |
| 4,564 |
| 9,014 |
| 13,578 |
| 493 |
| 2005 |
| 2005 |
|
|
|
|
|
|
|
|
|
|
|
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|
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|
CARMEL, INDIANA |
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
Hamilton Crossing |
| Hamilton Crossing I |
| Industrial |
| - |
| 835 |
| 4,550 |
| 2,469 |
| 847 |
| 7,007 |
| 7,855 |
| 2,588 |
| 1989 |
| 1993 |
|
Hamilton Crossing |
| Hamilton Crossing II |
| Office |
| - |
| 313 |
| 1,410 |
| 1,173 |
| 384 |
| 2,512 |
| 2,896 |
| 1,030 |
| 1997 |
| 1997 |
|
Hamilton Crossing |
| Hamilton Crossing III |
| Office |
| - |
| 890 |
| 9,581 |
| 1,531 |
| 890 |
| 11,112 |
| 12,001 |
| 2,714 |
| 2000 |
| 2000 |
|
Hamilton Crossing |
| Hamilton Crossing IV |
| Office |
| - |
| 515 |
| 5,377 |
| 98 |
| 598 |
| 5,392 |
| 5,990 |
| 1,277 |
| 1999 |
| 1999 |
|
Hamilton Crossing |
| Hamilton Crossing VI |
| Office |
| - |
| 1,044 |
| 13,743 |
| 840 |
| 1,068 |
| 14,559 |
| 15,627 |
| 1,720 |
| 2003 |
| 2003 |
|
Meridian Technology Center |
| Meridian Tech Center |
| Office |
| - |
| 376 |
| 2,695 |
| 1,035 |
| 376 |
| 3,730 |
| 4,106 |
| 627 |
| 1986 |
| 2002 |
|
West Carmel Marketplace |
| West Carmel Mktplc (Marshalls) |
| Retail |
| - |
| 1,427 |
| 2,383 |
| - |
| 1,427 |
| 2,383 |
| 3,811 |
| - |
| 2005 |
| 2005 |
|
West Carmel Marketplace |
| West Carmel (Best Buy, Petco) |
| Retail |
| - |
| 2,578 |
| 4,088 |
| - |
| 2,578 |
| 4,088 |
| 6,666 |
| - |
| 2006 |
| 2006 |
|
West Carmel Marketplace |
| West Carmel Mktplc B-Shops |
| Retail |
| - |
| 4,687 |
| 2,688 |
| - |
| 4,687 |
| 2,689 |
| 7,375 |
| - |
| 2006 |
| 2006 |
|
West Carmel Marketplace |
| West Carmel Mktplc-OfficeMax |
| Retail |
| - |
| 1,274 |
| 1,757 |
| - |
| 1,274 |
| 1,757 |
| 3,031 |
| - |
| 2006 |
| 2006 |
|
80
DUKE REALTY LIMITED PARTNERSHIP DECEMBER 31, 2006 (in thousands) |
| Schedule 3 |
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| Cost Capitalized |
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| |
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| Subsequent to |
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|
| Building |
|
|
| Initial Cost |
| Development |
| Gross Book Value 12/31/06 |
| Accumulated |
| Year |
| Year |
| ||||||
Development |
| Name |
| Type |
| Encumbrances |
| Land |
| Buildings |
| or Acquisition |
| Land/Land Imp |
| Bldgs/TI |
| Total |
| Depreciation (1) |
| Constructed |
| Acquired |
|
CAROL STREAM, ILLINOIS |
|
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|
|
Carol Stream Business Park |
| Carol Stream IV |
| Industrial |
| - |
| 3,204 |
| 14,986 |
| 471 |
| 3,204 |
| 15,457 |
| 18,661 |
| 1,610 |
| 1994 |
| 2003 |
|
Carol Stream Business Park |
| Carol Stream V |
| Industrial |
| - |
| 4,553 |
| 7,605 |
| 195 |
| 4,553 |
| 7,800 |
| 12,353 |
| 707 |
| 1986 |
| 2003 |
|
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|
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|
CARY, NORTH CAROLINA |
|
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|
|
|
|
|
Regency Forest |
| 200 Regency Forest Dr. |
| Office |
| - |
| 1,230 |
| 13,398 |
| 1,833 |
| 1,230 |
| 15,231 |
| 16,461 |
| 3,035 |
| 1999 |
| 1999 |
|
Regency Forest |
| 100 Regency Forest Dr. |
| Office |
| - |
| 1,538 |
| 9,852 |
| 1,732 |
| 1,618 |
| 11,503 |
| 13,122 |
| 2,359 |
| 1997 |
| 1999 |
|
Weston Parkway |
| 6501 Weston Parkway |
| Office |
| - |
| 1,775 |
| 10,668 |
| 992 |
| 1,775 |
| 11,660 |
| 13,435 |
| 2,392 |
| 1996 |
| 1999 |
|
|
|
|
|
|
|
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|
|
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|
CELEBRATION, FLORIDA |
|
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|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Celebration Business Center |
| Celebration Business Center I |
| Office |
| - |
| 1,102 |
| 4,791 |
| 423 |
| 1,308 |
| 5,008 |
| 6,316 |
| 996 |
| 1997 |
| 1999 |
|
Celebration Business Center |
| Celebration Business Center II |
| Office |
| - |
| 771 |
| 3,587 |
| 187 |
| 961 |
| 3,585 |
| 4,545 |
| 735 |
| 1997 |
| 1999 |
|
Celebration Office Center |
| Celebration Office Center I |
| Office |
| - |
| 1,382 |
| 6,462 |
| 303 |
| 1,382 |
| 6,765 |
| 8,147 |
| 1,237 |
| 2000 |
| 2000 |
|
Celebration Office Center |
| Celebration Office Center II |
| Office |
| - |
| 1,382 |
| 6,254 |
| 2,412 |
| 1,382 |
| 8,666 |
| 10,048 |
| 1,948 |
| 2001 |
| 2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
CHANTILLY, VIRGINIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liberty Center |
| Liberty Center III |
| Office |
| 31,120 |
| 11,302 |
| 27,065 |
| - |
| 11,302 |
| 27,065 |
| 38,367 |
| - |
| 2006 |
| 2006 |
|
Liberty Center |
| Liberty Center I |
| Office |
| 10,621 |
| 6,692 |
| 17,656 |
| - |
| 6,692 |
| 17,656 |
| 24,348 |
| - |
| 1998 |
| 2006 |
|
Liberty Center |
| Liberty Center II |
| Office |
| 26,038 |
| 13,424 |
| 33,601 |
| - |
| 13,424 |
| 33,601 |
| 47,025 |
| - |
| 2002 |
| 2006 |
|
TASC Campus |
| 4803 Stonecroft |
| Office |
| 14,474 |
| 6,532 |
| 15,986 |
| - |
| 6,532 |
| 15,986 |
| 22,518 |
| - |
| 2005 |
| 2006 |
|
TASC Campus |
| 4805 Stonecroft |
| Office |
| 9,460 |
| 5,496 |
| 14,604 |
| - |
| 5,496 |
| 14,604 |
| 20,100 |
| - |
| 2000 |
| 2006 |
|
|
|
|
|
|
|
|
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|
CINCINNATI, OHIO |
|
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|
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|
|
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|
|
|
|
|
|
311 Elm |
| 311 Elm |
| Office |
| - |
| 339 |
| 5,749 |
| 1,303 |
| 346 |
| 7,045 |
| 7,391 |
| 3,618 |
| 1986 |
| 1993 |
|
312 Elm |
| 312 Elm |
| Office |
| 35,226 |
| 4,750 |
| 46,921 |
| 4,969 |
| 5,428 |
| 51,211 |
| 56,639 |
| 17,207 |
| 1992 |
| 1993 |
|
312 Plum |
| 312 Plum |
| Office |
| - |
| 2,539 |
| 24,348 |
| 3,037 |
| 2,590 |
| 27,334 |
| 29,924 |
| 9,346 |
| 1987 |
| 1993 |
|
One Ashview Place |
| One Ashview Place |
| Office |
| - |
| 1,204 |
| 12,612 |
| 2,827 |
| 1,204 |
| 15,439 |
| 16,643 |
| 4,423 |
| 1989 |
| 1997 |
|
Blue Ash Office Center |
| Blue Ash Office Center VI |
| Office |
| - |
| 518 |
| 2,783 |
| 608 |
| 518 |
| 3,392 |
| 3,910 |
| 850 |
| 1989 |
| 1997 |
|
Towers of Kenwood |
| Towers of Kenwood |
| Office |
| - |
| 4,891 |
| 42,412 |
| 1,305 |
| 4,891 |
| 43,717 |
| 48,609 |
| 4,347 |
| 1989 |
| 2003 |
|
Governors Hill |
| 8790 Governor's Hill |
| Office |
| - |
| 400 |
| 4,564 |
| 992 |
| 408 |
| 5,549 |
| 5,957 |
| 1,824 |
| 1985 |
| 1993 |
|
Governors Hill |
| 8800 Governor's Hill |
| Office |
| - |
| 225 |
| 2,293 |
| 587 |
| 231 |
| 2,874 |
| 3,105 |
| 1,271 |
| 1985 |
| 1986 |
|
Governors Hill |
| 8600/8650 Governor's Hill Dr. |
| Office |
| - |
| 1,220 |
| 18,338 |
| 5,640 |
| 1,245 |
| 23,953 |
| 25,198 |
| 7,550 |
| 1986 |
| 1993 |
|
Kenwood Executive Center |
| Kenwood Executive Center |
| Office |
| - |
| 606 |
| 4,021 |
| 931 |
| 664 |
| 4,895 |
| 5,559 |
| 1,224 |
| 1981 |
| 1997 |
|
Kenwood Commons |
| 8230 Kenwood Commons |
| Office |
| 3,554 |
| 638 |
| 2,970 |
| 861 |
| 638 |
| 3,831 |
| 4,468 |
| 2,243 |
| 1986 |
| 1986 |
|
Kenwood Commons |
| 8280 Kenwood Commons |
| Office |
| 2,246 |
| 638 |
| 1,773 |
| 477 |
| 638 |
| 2,250 |
| 2,888 |
| 1,169 |
| 1986 |
| 1986 |
|
Kenwood Medical Office Bldg. |
| Kenwood Medical Office Bldg. |
| Office |
| - |
| - |
| 7,798 |
| 100 |
| - |
| 7,899 |
| 7,899 |
| 1,609 |
| 1994 |
| 1999 |
|
Pfeiffer Place |
| Pfeiffer Place |
| Office |
| - |
| 3,608 |
| 14,290 |
| 1,353 |
| 3,608 |
| 15,643 |
| 19,252 |
| 3,355 |
| 2001 |
| 2001 |
|
Pfeiffer Woods |
| Pfeiffer Woods |
| Office |
| - |
| 1,450 |
| 12,322 |
| 1,640 |
| 2,128 |
| 13,284 |
| 15,412 |
| 2,548 |
| 1998 |
| 1999 |
|
Remington Office Park |
| Remington Park Building A |
| Office |
| - |
| 560 |
| 1,469 |
| 587 |
| 560 |
| 2,056 |
| 2,616 |
| 491 |
| 1982 |
| 1997 |
|
Remington Office Park |
| Remington Park Building B |
| Office |
| - |
| 560 |
| 1,473 |
| 508 |
| 560 |
| 1,981 |
| 2,541 |
| 664 |
| 1982 |
| 1997 |
|
Triangle Office Park |
| Triangle Office Park |
| Office |
| 3,815 |
| 1,018 |
| 11,059 |
| 1,166 |
| 1,018 |
| 12,226 |
| 13,244 |
| 5,976 |
| 1965 |
| 1986 |
|
|
|
|
|
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|
|
|
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|
|
CLAYTON, MISSOURI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interco Corporate Tower |
| Interco Corporate Tower |
| Office |
| - |
| 6,150 |
| 43,275 |
| 1,751 |
| 6,150 |
| 45,026 |
| 51,176 |
| 6,060 |
| 1986 |
| 2002 |
|
|
|
|
|
|
|
|
|
|
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|
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|
COLUMBUS, OHIO |
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Easton |
| One Easton Oval |
| Office |
| - |
| 2,789 |
| 10,577 |
| 444 |
| 2,789 |
| 11,022 |
| 13,810 |
| 2,642 |
| 1998 |
| 1999 |
|
Easton |
| Two Easton Oval |
| Office |
| - |
| 2,489 |
| 16,683 |
| 1,541 |
| 2,489 |
| 18,224 |
| 20,713 |
| 4,170 |
| 1996 |
| 1998 |
|
Easton |
| Easton Way One |
| Office |
| - |
| 1,874 |
| 9,994 |
| 577 |
| 1,874 |
| 10,571 |
| 12,445 |
| 3,024 |
| 2000 |
| 2000 |
|
Easton |
| Easton Way Two |
| Office |
| - |
| 2,005 |
| 10,287 |
| 792 |
| 2,005 |
| 11,078 |
| 13,083 |
| 3,122 |
| 2001 |
| 2001 |
|
Easton |
| Easton Way Three |
| Office |
| - |
| 2,768 |
| 11,530 |
| 68 |
| 2,768 |
| 11,598 |
| 14,366 |
| 2,138 |
| 2002 |
| 2003 |
|
Easton |
| Lane Bryant |
| Office |
| - |
| 4,346 |
| 11,395 |
| - |
| 4,346 |
| 11,396 |
| 15,742 |
| 668 |
| 2006 |
| 2006 |
|
Easton |
| 4400 Easton Commons |
| Office |
| - |
| 1,886 |
| 7,779 |
| - |
| 1,886 |
| 7,779 |
| 9,665 |
| 126 |
| 2006 |
| 2006 |
|
Polaris |
| 1000 Polaris Parkway |
| Office |
| - |
| 1,200 |
| 6,636 |
| 1,502 |
| 1,293 |
| 8,045 |
| 9,338 |
| 2,291 |
| 1992 |
| 1999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COPPELL, TEXAS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freeport North |
| Freeport X |
| Industrial |
| - |
| 8,198 |
| 18,852 |
| 3,033 |
| 8,198 |
| 21,885 |
| 30,083 |
| 3,750 |
| 2003 |
| 2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DAVENPORT, FLORIDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Park 27 Distribution Center |
| Park 27 Distribution Center I |
| Industrial |
| - |
| 2,449 |
| 6,107 |
| 8 |
| 2,449 |
| 6,116 |
| 8,564 |
| 1,084 |
| 2002 |
| 2002 |
|
81
DUKE REALTY LIMITED PARTNERSHIP DECEMBER 31, 2006 (in thousands) |
| Schedule 3 |
|
|
|
|
|
|
|
|
|
|
| Cost Capitalized |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Subsequent to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Building |
|
|
| Initial Cost |
| Development |
| Gross Book Value 12/31/06 |
| Accumulated |
| Year |
| Year |
| ||||||
Development |
| Name |
| Type |
| Encumbrances |
| Land |
| Buildings |
| or Acquisition |
| Land/Land Imp |
| Bldgs/TI |
| Total |
| Depreciation (1) |
| Constructed |
| Acquired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DES PLAINES, ILLINOIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2180 South Wolf Road |
| 2180 South Wolf Road |
| Industrial |
| - |
| 179 |
| 1,632 |
| 476 |
| 179 |
| 2,108 |
| 2,288 |
| 515 |
| 1966 |
| 1998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DOWNERS GROVE, ILLINOIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Towers |
| Executive Towers I |
| Office |
| - |
| 2,652 |
| 23,964 |
| 6,016 |
| 2,652 |
| 29,980 |
| 32,632 |
| 7,365 |
| 1983 |
| 1997 |
|
Executive Towers |
| Executive Towers II |
| Office |
| - |
| 3,386 |
| 31,815 |
| 8,361 |
| 3,386 |
| 40,176 |
| 43,562 |
| 12,399 |
| 1984 |
| 1997 |
|
Executive Towers |
| Executive Towers III |
| Office |
| - |
| 3,512 |
| 32,513 |
| 6,815 |
| 3,512 |
| 39,328 |
| 42,840 |
| 9,962 |
| 1987 |
| 1997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DUBLIN, OHIO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scioto Corporate Center |
| Scioto Corporate Center |
| Office |
| - |
| 1,100 |
| 3,227 |
| 1,310 |
| 1,100 |
| 4,537 |
| 5,637 |
| 1,433 |
| 1987 |
| 1996 |
|
Tuttle Crossing |
| Qwest |
| Office |
| - |
| 2,618 |
| 18,730 |
| 1,800 |
| 2,670 |
| 20,478 |
| 23,148 |
| 6,772 |
| 1990 |
| 1993 |
|
Tuttle Crossing |
| 4600 Lakehurst |
| Office |
| - |
| 1,494 |
| 12,858 |
| 552 |
| 1,524 |
| 13,380 |
| 14,904 |
| 4,497 |
| 1990 |
| 1993 |
|
Tuttle Crossing |
| 4700 Lakehurst Court |
| Office |
| - |
| 717 |
| 2,439 |
| 465 |
| 717 |
| 2,904 |
| 3,621 |
| 913 |
| 1994 |
| 1994 |
|
Tuttle Crossing |
| 4675 Lakehurst |
| Office |
| - |
| 605 |
| 5,873 |
| 176 |
| 605 |
| 6,049 |
| 6,654 |
| 1,819 |
| 1995 |
| 1995 |
|
Tuttle Crossing |
| 5500 Glendon Court |
| Office |
| - |
| 1,066 |
| 7,613 |
| 1,097 |
| 1,066 |
| 8,710 |
| 9,775 |
| 2,719 |
| 1995 |
| 1995 |
|
Tuttle Crossing |
| 5555 Glendon Court |
| Office |
| - |
| 1,600 |
| 7,196 |
| 1,275 |
| 1,767 |
| 8,305 |
| 10,071 |
| 2,611 |
| 1995 |
| 1995 |
|
Britton Central |
| 6060 Britton Parkway |
| Office |
| - |
| 1,601 |
| 8,725 |
| 182 |
| 1,601 |
| 8,907 |
| 10,508 |
| 3,779 |
| 1996 |
| 1996 |
|
Tuttle Crossing |
| Compmanagement |
| Office |
| - |
| 867 |
| 4,408 |
| 646 |
| 867 |
| 5,054 |
| 5,921 |
| 1,569 |
| 1997 |
| 1997 |
|
Tuttle Crossing |
| 4725 Lakehurst |
| Office |
| - |
| 483 |
| 9,349 |
| 998 |
| 483 |
| 10,348 |
| 10,831 |
| 3,158 |
| 1998 |
| 1998 |
|
Tuttle Crossing |
| 5515 Parkcenter Circle |
| Office |
| - |
| 1,283 |
| 6,739 |
| 376 |
| 1,283 |
| 7,114 |
| 8,397 |
| - |
| 1996 |
| 2005 |
|
Tuttle Crossing |
| 5555 Parkcenter Circle |
| Office |
| - |
| 1,580 |
| 9,096 |
| 901 |
| 1,580 |
| 9,997 |
| 11,577 |
| 3,224 |
| 1992 |
| 1994 |
|
Tuttle Crossing |
| Parkwood Place |
| Office |
| - |
| 1,690 |
| 11,563 |
| 1,037 |
| 1,690 |
| 12,600 |
| 14,290 |
| 4,290 |
| 1997 |
| 1997 |
|
Tuttle Crossing |
| Nationwide |
| Office |
| - |
| 4,815 |
| 15,444 |
| 823 |
| 4,815 |
| 16,268 |
| 21,083 |
| 4,344 |
| 1996 |
| 1996 |
|
Tuttle Crossing |
| Emerald II |
| Office |
| - |
| 495 |
| 2,836 |
| 31 |
| 495 |
| 2,868 |
| 3,363 |
| 645 |
| 1998 |
| 1998 |
|
Tuttle Crossing |
| Atrium II, Phase I |
| Office |
| - |
| 1,649 |
| 9,885 |
| 516 |
| 1,649 |
| 10,401 |
| 12,050 |
| 2,919 |
| 1997 |
| 1998 |
|
Tuttle Crossing |
| Atrium II, Phase II |
| Office |
| - |
| 1,597 |
| 7,993 |
| 1,109 |
| 1,597 |
| 9,102 |
| 10,699 |
| 2,072 |
| 1998 |
| 1999 |
|
Tuttle Crossing |
| Blazer I |
| Office |
| - |
| 904 |
| 4,517 |
| 583 |
| 904 |
| 5,100 |
| 6,004 |
| 1,262 |
| 1999 |
| 1999 |
|
Tuttle Crossing |
| Parkwood II |
| Office |
| - |
| 1,848 |
| 14,030 |
| 256 |
| 1,848 |
| 14,286 |
| 16,134 |
| 4,220 |
| 2000 |
| 2000 |
|
Tuttle Crossing |
| Blazer II |
| Office |
| - |
| 1,016 |
| 6,658 |
| 508 |
| 1,016 |
| 7,167 |
| 8,183 |
| 1,938 |
| 2000 |
| 2000 |
|
Tuttle Crossing |
| Emerald III |
| Office |
| - |
| 1,685 |
| 9,862 |
| 1,292 |
| 1,694 |
| 11,146 |
| 12,839 |
| 2,663 |
| 2001 |
| 2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DULUTH, GEORGIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crestwood Pointe |
| 3805 Crestwood Parkway |
| Office |
| - |
| 877 |
| 15,107 |
| 1,385 |
| 877 |
| 16,492 |
| 17,369 |
| 3,571 |
| 1997 |
| 1999 |
|
Crestwood Pointe |
| 3885 Crestwood Parkway |
| Office |
| - |
| 878 |
| 14,057 |
| 804 |
| 878 |
| 14,861 |
| 15,739 |
| 2,955 |
| 1998 |
| 1999 |
|
Hampton Green |
| Hampton Green Office I |
| Office |
| - |
| 1,388 |
| 12,188 |
| 691 |
| 1,388 |
| 12,879 |
| 14,266 |
| 2,767 |
| 2000 |
| 2000 |
|
River Green |
| 3450 River Green Court |
| Industrial |
| - |
| 194 |
| 2,001 |
| 274 |
| 194 |
| 2,274 |
| 2,468 |
| 421 |
| 1989 |
| 1999 |
|
Business Park At Sugarloaf |
| 2775 Premiere Parkway |
| Industrial |
| 6,857 |
| 560 |
| 4,672 |
| 276 |
| 565 |
| 4,943 |
| 5,508 |
| 898 |
| 1997 |
| 1999 |
|
Business Park At Sugarloaf |
| 3079 Premiere Parkway |
| Industrial |
| 11,454 |
| 776 |
| 6,403 |
| 1,822 |
| 783 |
| 8,219 |
| 9,001 |
| 1,854 |
| 1998 |
| 1999 |
|
Business Park At Sugarloaf |
| Sugarloaf Office I |
| Office |
| - |
| 1,042 |
| 8,681 |
| 709 |
| 1,042 |
| 9,389 |
| 10,432 |
| 1,975 |
| 1998 |
| 1999 |
|
Business Park At Sugarloaf |
| 2850 Premiere Parkway |
| Office |
| 6,827 |
| 621 |
| 4,631 |
| 6 |
| 627 |
| 4,631 |
| 5,258 |
| 491 |
| 1997 |
| 2002 |
|
Business Park At Sugarloaf |
| Sugarloaf Office II (3039) |
| Office |
| - |
| 972 |
| 3,791 |
| 420 |
| 1,006 |
| 4,178 |
| 5,184 |
| 450 |
| 1999 |
| 2002 |
|
Business Park At Sugarloaf |
| Sugarloaf Office III (2810) |
| Office |
| - |
| 696 |
| 3,896 |
| 413 |
| 696 |
| 4,308 |
| 5,004 |
| 565 |
| 1999 |
| 2002 |
|
Business Park At Sugarloaf |
| 2855 Premiere Parkway |
| Industrial |
| 6,155 |
| 765 |
| 3,633 |
| 443 |
| 770 |
| 4,070 |
| 4,841 |
| 926 |
| 1999 |
| 1999 |
|
Business Park At Sugarloaf |
| 6655 Sugarloaf |
| Industrial |
| 9,958 |
| 1,651 |
| 6,449 |
| 75 |
| 1,659 |
| 6,516 |
| 8,175 |
| 832 |
| 1998 |
| 2001 |
|
Business Park At Sugarloaf |
| Sugarloaf Office IV |
| Office |
| - |
| 623 |
| 2,988 |
| 304 |
| 623 |
| 3,292 |
| 3,915 |
| 528 |
| 2000 |
| 2000 |
|
Business Park At Sugarloaf |
| Sugarloaf Office V |
| Office |
| - |
| 744 |
| 3,816 |
| 463 |
| 744 |
| 4,278 |
| 5,022 |
| 1,652 |
| 2001 |
| 2001 |
|
Business Park At Sugarloaf |
| Sugarloaf VI |
| Office |
| - |
| 1,659 |
| 6,027 |
| 818 |
| 1,659 |
| 6,846 |
| 8,504 |
| 579 |
| 2004 |
| 2004 |
|
Business Park At Sugarloaf |
| Sugarloaf VII |
| Office |
| - |
| 1,796 |
| 5,163 |
| - |
| 1,796 |
| 5,163 |
| 6,959 |
| 65 |
| 2006 |
| 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EAGAN, MINNESOTA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apollo Industrial Center |
| Apollo Industrial Ctr I |
| Industrial |
| - |
| 866 |
| 4,976 |
| 1,472 |
| 882 |
| 6,432 |
| 7,314 |
| 1,815 |
| 1997 |
| 1997 |
|
Apollo Industrial Center |
| Apollo Industrial Ctr II |
| Industrial |
| - |
| 474 |
| 2,581 |
| 145 |
| 474 |
| 2,727 |
| 3,200 |
| 560 |
| 2000 |
| 2000 |
|
Apollo Industrial Center |
| Apollo Industrial Ctr III |
| Industrial |
| - |
| 1,432 |
| 6,688 |
| 50 |
| 1,432 |
| 6,739 |
| 8,170 |
| 1,197 |
| 2000 |
| 2000 |
|
Silverbell Commons |
| Silverbell Commons |
| Industrial |
| - |
| 1,807 |
| 6,657 |
| 1,692 |
| 1,908 |
| 8,248 |
| 10,156 |
| 2,068 |
| 1999 |
| 1999 |
|
Trapp Road Commerce Center |
| Trapp Road Commerce Center I |
| Industrial |
| - |
| 671 |
| 3,886 |
| 446 |
| 700 |
| 4,303 |
| 5,003 |
| 949 |
| 1996 |
| 1998 |
|
Trapp Road Commerce Center |
| Trapp Road Commerce Center II |
| Industrial |
| - |
| 1,250 |
| 6,738 |
| 1,094 |
| 1,266 |
| 7,816 |
| 9,082 |
| 1,687 |
| 1998 |
| 1998 |
|
82
DUKE REALTY LIMITED PARTNERSHIP DECEMBER 31, 2006 (in thousands) |
| Schedule 3 |
|
|
|
|
|
|
|
|
|
|
| Cost Capitalized |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Subsequent to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Building |
|
|
| Initial Cost |
| Development |
| Gross Book Value 12/31/06 |
| Accumulated |
| Year |
| Year |
| ||||||
Development |
| Name |
| Type |
| Encumbrances |
| Land |
| Buildings |
| or Acquisition |
| Land/Land Imp |
| Bldgs/TI |
| Total |
| Depreciation (1) |
| Constructed |
| Acquired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARTH CITY, MISSOURI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earth City |
| Rider Trail |
| Office |
| 5,464 |
| 2,615 |
| 10,877 |
| 2,149 |
| 2,615 |
| 13,026 |
| 15,642 |
| 3,025 |
| 1987 |
| 1997 |
|
Earth City |
| 3300 Pointe 70 |
| Office |
| 3,907 |
| 1,186 |
| 7,515 |
| 2,489 |
| 1,186 |
| 10,003 |
| 11,189 |
| 2,920 |
| 1989 |
| 1997 |
|
Earth City |
| Corporate Center, Earth City |
| Industrial |
| - |
| 783 |
| 3,838 |
| 1,501 |
| 783 |
| 5,339 |
| 6,122 |
| 1,606 |
| 2000 |
| 2000 |
|
Earth City |
| Corporate Trail Distribution |
| Industrial |
| - |
| 2,850 |
| 6,163 |
| - |
| 2,850 |
| 6,163 |
| 9,012 |
| 220 |
| 2006 |
| 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EAST POINTE, GEORGIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camp Creek |
| Camp Creek Bldg 1400 |
| Office |
| 5,560 |
| 561 |
| 3,042 |
| 821 |
| 563 |
| 3,861 |
| 4,424 |
| 785 |
| 1988 |
| 2001 |
|
Camp Creek |
| Camp Creek Bldg 1800 |
| Office |
| 4,111 |
| 462 |
| 2,657 |
| 168 |
| 464 |
| 2,823 |
| 3,287 |
| 462 |
| 1989 |
| 2001 |
|
Camp Creek |
| Camp Creek Bldg 2000 |
| Office |
| 3,319 |
| 395 |
| 2,292 |
| 37 |
| 397 |
| 2,328 |
| 2,725 |
| 360 |
| 1989 |
| 2001 |
|
Camp Creek |
| Camp Creek Bldg 2400 |
| Industrial |
| 2,906 |
| 296 |
| 1,675 |
| 324 |
| 298 |
| 1,997 |
| 2,294 |
| 329 |
| 1988 |
| 2001 |
|
Camp Creek |
| Camp Creek Bldg 2600 |
| Industrial |
| 3,691 |
| 364 |
| 2,346 |
| 136 |
| 366 |
| 2,481 |
| 2,846 |
| 585 |
| 1990 |
| 2001 |
|
Camp Creek |
| Clorox Company |
| Industrial |
| 19,369 |
| 4,406 |
| 9,512 |
| 602 |
| 4,841 |
| 9,678 |
| 14,520 |
| 1,061 |
| 2003 |
| 2003 |
|
Camp Creek |
| Camp Creek Building 1200 |
| Office |
| - |
| 1,334 |
| 2,673 |
| 928 |
| 1,334 |
| 3,600 |
| 4,934 |
| 545 |
| 2004 |
| 2004 |
|
Camp Creek |
| 3900 North Commerce |
| Industrial |
| 5,342 |
| 1,059 |
| 2,974 |
| - |
| 1,059 |
| 2,973 |
| 4,032 |
| 204 |
| 2005 |
| 2005 |
|
Camp Creek |
| Camp Creek Building M |
| Industrial |
| - |
| 5,687 |
| 10,192 |
| - |
| 5,687 |
| 10,192 |
| 15,879 |
| 351 |
| 2006 |
| 2006 |
|
Camp Creek |
| Hartsfield Warehouse BTS |
| Industrial |
| 11,881 |
| 2,065 |
| 7,076 |
| - |
| 2,065 |
| 7,076 |
| 9,141 |
| 193 |
| 2006 |
| 2006 |
|
Camp Creek |
| Camp Creek Building 1000 |
| Office |
| - |
| 1,537 |
| 2,459 |
| - |
| 1,537 |
| 2,459 |
| 3,996 |
| 71 |
| 2006 |
| 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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FAIRFIELD, OHIO |
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Thunderbird Building 1 |
| Thunderbird Building 1 |
| Industrial |
| - |
| 248 |
| 1,740 |
| 156 |
| 248 |
| 1,896 |
| 2,144 |
| 635 |
| 1991 |
| 1995 |
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FENTON, MISSOURI |
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Fenton Interstate Buildings |
| Fenton Interstate Building C |
| Industrial |
| - |
| 519 |
| 1,978 |
| 322 |
| 519 |
| 2,300 |
| 2,819 |
| 593 |
| 1986 |
| 1999 |
|
Fenton Interstate Buildings |
| Fenton Interstate Building D |
| Industrial |
| - |
| 1,286 |
| 5,050 |
| 700 |
| 1,286 |
| 5,750 |
| 7,036 |
| 1,234 |
| 1987 |
| 1999 |
|
Fenton Interstate Buildings |
| Fenton Interstate Building A |
| Industrial |
| - |
| 603 |
| 2,593 |
| 40 |
| 603 |
| 2,633 |
| 3,236 |
| 544 |
| 1987 |
| 2000 |
|
Fenton Interstate Buildings |
| Fenton Interstate Building B |
| Industrial |
| - |
| 702 |
| 2,299 |
| 134 |
| 702 |
| 2,433 |
| 3,135 |
| 449 |
| 1986 |
| 2000 |
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FISHERS, INDIANA |
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Exit 5 |
| Exit 5 Building 1 |
| Industrial |
| - |
| 822 |
| 2,695 |
| 153 |
| 822 |
| 2,848 |
| 3,669 |
| 697 |
| 1999 |
| 1999 |
|
Exit 5 |
| Exit 5 Building 2 |
| Industrial |
| - |
| 749 |
| 4,361 |
| 264 |
| 749 |
| 4,625 |
| 5,373 |
| 1,580 |
| 1999 |
| 2000 |
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FRANKLIN, TENNESSEE |
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Aspen Grove Business Center |
| Aspen Grove Business Ctr I |
| Industrial |
| - |
| 936 |
| 6,446 |
| 2,633 |
| 936 |
| 9,079 |
| 10,015 |
| 1,969 |
| 1996 |
| 1999 |
|
Aspen Grove Business Center |
| Aspen Grove Business Ctr II |
| Industrial |
| - |
| 1,151 |
| 6,482 |
| 540 |
| 1,151 |
| 7,022 |
| 8,173 |
| 1,346 |
| 1996 |
| 1999 |
|
Aspen Grove Business Center |
| Aspen Grove Business Ctr III |
| Industrial |
| - |
| 970 |
| 6,163 |
| 66 |
| 970 |
| 6,230 |
| 7,199 |
| 1,655 |
| 1998 |
| 1999 |
|
Aspen Grove Business Center |
| Aspen Grove Business Center IV |
| Industrial |
| - |
| 492 |
| 2,416 |
| 23 |
| 492 |
| 2,439 |
| 2,931 |
| 360 |
| 2002 |
| 2002 |
|
Aspen Grove Business Center |
| Aspen Grove Business Ctr V |
| Industrial |
| - |
| 943 |
| 5,171 |
| 1,188 |
| 943 |
| 6,360 |
| 7,303 |
| 1,343 |
| 1996 |
| 1999 |
|
Aspen Grove Business Center |
| Aspen Grove Flex Center II |
| Industrial |
| - |
| 240 |
| 1,289 |
| 368 |
| 240 |
| 1,657 |
| 1,897 |
| 96 |
| 1999 |
| 1999 |
|
Aspen Grove Business Center |
| Aspen Grove Office Center I |
| Office |
| - |
| 950 |
| 6,323 |
| 2,137 |
| 950 |
| 8,461 |
| 9,410 |
| 1,717 |
| 1999 |
| 1999 |
|
Aspen Grove Business Center |
| Aspen Grove Flex Center I |
| Industrial |
| - |
| 301 |
| 1,233 |
| 631 |
| 301 |
| 1,863 |
| 2,165 |
| 366 |
| 1999 |
| 1999 |
|
Aspen Grove Business Center |
| Aspen Grove Flex Center III |
| Industrial |
| - |
| 327 |
| 1,888 |
| 847 |
| 327 |
| 2,734 |
| 3,062 |
| 624 |
| 2001 |
| 2001 |
|
Aspen Grove Business Center |
| Aspen Grove Flex Center IV |
| Industrial |
| - |
| 205 |
| 973 |
| 204 |
| 205 |
| 1,177 |
| 1,382 |
| 140 |
| 2001 |
| 2001 |
|
Aspen Grove Business Center |
| Aspen Corporate Center 100 |
| Office |
| - |
| 723 |
| 3,451 |
| 84 |
| 723 |
| 3,535 |
| 4,258 |
| 455 |
| 2004 |
| 2004 |
|
Aspen Grove Business Center |
| Aspen Corporate Center 200 |
| Office |
| - |
| 1,306 |
| 1,866 |
| 944 |
| 1,306 |
| 2,810 |
| 4,116 |
| 113 |
| 2006 |
| 2006 |
|
Brentwood South Bus. Center |
| Brentwood South Bus Ctr IV |
| Industrial |
| - |
| 569 |
| 2,435 |
| 603 |
| 569 |
| 3,038 |
| 3,607 |
| 533 |
| 1990 |
| 1999 |
|
Brentwood South Bus. Center |
| Brentwood South Bus Ctr V |
| Industrial |
| - |
| 445 |
| 1,932 |
| 72 |
| 445 |
| 2,003 |
| 2,449 |
| 378 |
| 1990 |
| 1999 |
|
Brentwood South Bus. Center |
| Brentwood South Bus Ctr VI |
| Industrial |
| - |
| 489 |
| 1,243 |
| 573 |
| 489 |
| 1,816 |
| 2,305 |
| 339 |
| 1990 |
| 1999 |
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GARDEN CITY, GEORGIA |
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Aviation Court |
| Aviation Court Land |
| Grounds |
| - |
| 1,509 |
| - |
| - |
| 1,509 |
| - |
| 1,509 |
| 18 |
| N/A |
| 2006 |
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GRAND PRAIRIE, TEXAS |
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Grand Lakes |
| Grand Lakes I |
| Industrial |
| - |
| 8,106 |
| 13,069 |
| - |
| 8,106 |
| 13,069 |
| 21,175 |
| 121 |
| 2006 |
| 2006 |
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GREENWOOD, INDIANA |
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South Park-Indiana |
| Brylane Parking Lot |
| Grounds |
| - |
| 54 |
| - |
| 3 |
| 57 |
| - |
| 57 |
| 40 |
| N/A |
| 1994 |
|
83
DUKE REALTY LIMITED PARTNERSHIP DECEMBER 31, 2006 (in thousands) |
| Schedule 3 |
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| Cost Capitalized |
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| Subsequent to |
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| Building |
|
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| Initial Cost |
| Development |
| Gross Book Value 12/31/06 |
| Accumulated |
| Year |
| Year |
| ||||||
Development |
| Name |
| Type |
| Encumbrances |
| Land |
| Buildings |
| or Acquisition |
| Land/Land Imp |
| Bldgs/TI |
| Total |
| Depreciation (1) |
| Constructed |
| Acquired |
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GROVEPORT, OHIO |
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6600 Port Road |
| 6600 Port Road |
| Industrial |
| - |
| 2,725 |
| 23,287 |
| 1,389 |
| 2,850 |
| 24,551 |
| 27,401 |
| 6,028 |
| 1995 |
| 1997 |
|
Groveport Commerce Center |
| Groveport Commerce Center #437 |
| Industrial |
| - |
| 1,049 |
| 7,609 |
| 1,244 |
| 1,065 |
| 8,837 |
| 9,902 |
| 2,295 |
| 1999 |
| 1999 |
|
Groveport Commerce Center |
| Groveport Commerce Center #168 |
| Industrial |
| - |
| 510 |
| 3,759 |
| 1,059 |
| 510 |
| 4,818 |
| 5,328 |
| 1,127 |
| 1999 |
| 2000 |
|
Groveport Commerce Center |
| Groveport Commerce Center #345 |
| Industrial |
| - |
| 1,045 |
| 7,349 |
| 938 |
| 1,045 |
| 8,287 |
| 9,332 |
| 1,958 |
| 2000 |
| 2000 |
|
Groveport Commerce Center |
| Groveport Commerce Center #667 |
| Industrial |
| - |
| 4,420 |
| 14,439 |
| - |
| 4,420 |
| 14,440 |
| 18,859 |
| 1,419 |
| 2005 |
| 2005 |
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HANAHAN, SOUTH CAROLINA |
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Charleston |
| 916 Commerce Circle |
| Industrial |
| 1,186 |
| 286 |
| 1,781 |
| - |
| 286 |
| 1,782 |
| 2,068 |
| - |
| 1999 |
| 2006 |
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HEBRON, KENTUCKY |
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Southpark, KY |
| Southpark Building 4 |
| Industrial |
| - |
| 779 |
| 3,353 |
| 123 |
| 779 |
| 3,476 |
| 4,255 |
| 1,104 |
| 1994 |
| 1994 |
|
Southpark, KY |
| CR Services |
| Industrial |
| - |
| 1,085 |
| 4,214 |
| 1,410 |
| 1,085 |
| 5,624 |
| 6,709 |
| 1,739 |
| 1994 |
| 1994 |
|
Hebron Industrial Park |
| Hebron Building 1 |
| Industrial |
| - |
| 8,855 |
| 11,527 |
| - |
| 8,855 |
| 11,527 |
| 20,382 |
| 456 |
| 2006 |
| 2006 |
|
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HIGHLAND HILLS, OHIO |
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Harvard Crossing Bus. Campus |
| One Harvard Crossing |
| Office |
| - |
| 660 |
| 7,685 |
| 139 |
| 660 |
| 7,824 |
| 8,484 |
| 629 |
| 1999 |
| 2004 |
|
Metropolitan Plaza |
| Metropolitan Plaza |
| Office |
| - |
| 2,310 |
| 13,847 |
| 263 |
| 2,310 |
| 14,110 |
| 16,420 |
| 1,458 |
| 2000 |
| 2003 |
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HOPKINS, MINNESOTA |
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Cornerstone Business Center |
| Cornerstone Business Center |
| Industrial |
| 4,887 |
| 1,469 |
| 8,437 |
| 491 |
| 1,543 |
| 8,855 |
| 10,398 |
| 2,139 |
| 1996 |
| 1997 |
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HUTCHINS, TEXAS |
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Duke Intermodal Park |
| Duke Intermodal I |
| Industrial |
| - |
| 5,290 |
| 9,641 |
| - |
| 5,290 |
| 9,641 |
| 14,931 |
| 73 |
| 2006 |
| 2006 |
|
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INDEPENDENCE, OHIO |
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Corporate Plaza |
| Corporate Plaza I |
| Office |
| - |
| 2,116 |
| 14,072 |
| 1,707 |
| 2,116 |
| 15,779 |
| 17,894 |
| 4,272 |
| 1989 |
| 1996 |
|
Corporate Plaza |
| Corporate Plaza II |
| Office |
| - |
| 1,841 |
| 11,996 |
| 1,731 |
| 1,841 |
| 13,727 |
| 15,568 |
| 3,764 |
| 1991 |
| 1996 |
|
Freedom Square |
| Freedom Square I |
| Office |
| - |
| 595 |
| 3,961 |
| 754 |
| 600 |
| 4,711 |
| 5,310 |
| 1,296 |
| 1980 |
| 1996 |
|
Freedom Square |
| Freedom Square II |
| Office |
| - |
| 1,746 |
| 11,584 |
| 1,150 |
| 1,746 |
| 12,735 |
| 14,481 |
| 3,518 |
| 1987 |
| 1996 |
|
Freedom Square |
| Freedom Square III |
| Office |
| - |
| 701 |
| 6,290 |
| 39 |
| 701 |
| 6,328 |
| 7,029 |
| 1,917 |
| 1997 |
| 1997 |
|
Oak Tree Place |
| Oak Tree Place |
| Office |
| - |
| 703 |
| 4,632 |
| 843 |
| 703 |
| 5,475 |
| 6,178 |
| 1,297 |
| 1979 |
| 1997 |
|
Park Center Plaza |
| Park Center Plaza I |
| Office |
| - |
| 2,193 |
| 13,155 |
| 399 |
| 2,193 |
| 13,554 |
| 15,747 |
| 4,058 |
| 1998 |
| 1998 |
|
Park Center Plaza |
| Park Center Plaza II |
| Office |
| - |
| 2,190 |
| 13,353 |
| 24 |
| 2,190 |
| 13,376 |
| 15,566 |
| 3,878 |
| 1999 |
| 1999 |
|
Park Center Plaza |
| Park Center Plaza III |
| Office |
| - |
| 2,190 |
| 11,975 |
| 2,545 |
| 2,190 |
| 14,519 |
| 16,710 |
| 3,411 |
| 2000 |
| 2000 |
|
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INDIANAPOLIS, INDIANA |
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Park 100 |
| Park 465 |
| Industrial |
| - |
| 124 |
| 759 |
| - |
| 124 |
| 759 |
| 883 |
| 34 |
| 1983 |
| 2005 |
|
Franklin Road Business Park |
| Franklin Road Business Center |
| Industrial |
| - |
| 594 |
| 10,384 |
| 1,328 |
| 594 |
| 11,712 |
| 12,306 |
| 4,023 |
| 1962 |
| 1995 |
|
6061 Guion Road |
| 6061 Guion Rd |
| Industrial |
| - |
| 274 |
| 1,798 |
| 194 |
| 274 |
| 1,992 |
| 2,266 |
| 593 |
| 1974 |
| 1995 |
|
Hillsdale |
| Hillsdale Technecenter 4 |
| Industrial |
| - |
| 366 |
| 5,049 |
| 860 |
| 366 |
| 5,910 |
| 6,276 |
| 2,003 |
| 1987 |
| 1993 |
|
Hillsdale |
| Hillsdale Technecenter 5 |
| Industrial |
| - |
| 251 |
| 2,927 |
| 769 |
| 251 |
| 3,696 |
| 3,947 |
| 1,207 |
| 1987 |
| 1993 |
|
Hillsdale |
| Hillsdale Technecenter 6 |
| Industrial |
| - |
| 315 |
| 4,334 |
| 1,743 |
| 315 |
| 6,078 |
| 6,393 |
| 2,444 |
| 1987 |
| 1993 |
|
Keystone Crossing |
| 8555 N. River Road |
| Office |
| - |
| - |
| 5,998 |
| 1,199 |
| - |
| 7,197 |
| 7,197 |
| 1,775 |
| 1985 |
| 1997 |
|
One North Capitol |
| One North Capitol |
| Office |
| - |
| 1,439 |
| 9,313 |
| 776 |
| 1,439 |
| 10,088 |
| 11,528 |
| 2,235 |
| 1980 |
| 1998 |
|
Park 100 |
| Park 100 Bldg 31 |
| Industrial |
| - |
| 64 |
| 384 |
| - |
| 64 |
| 383 |
| 447 |
| 18 |
| 1978 |
| 2005 |
|
Park 100 |
| Park 100 Building 96 |
| Industrial |
| - |
| 1,414 |
| 13,804 |
| 113 |
| 1,667 |
| 13,664 |
| 15,331 |
| 4,077 |
| 1994 |
| 1995 |
|
Park 100 |
| Park 100 Building 98 |
| Industrial |
| - |
| 273 |
| 8,217 |
| 2,059 |
| 273 |
| 10,275 |
| 10,549 |
| 3,338 |
| 1968 |
| 1994 |
|
Park 100 |
| Park 100 Building 100 |
| Industrial |
| - |
| 103 |
| 2,072 |
| 629 |
| 103 |
| 2,701 |
| 2,804 |
| 797 |
| 1995 |
| 1995 |
|
Park 100 |
| Park 100 Building 102 |
| Office |
| - |
| 182 |
| 1,118 |
| - |
| 182 |
| 1,118 |
| 1,300 |
| 51 |
| 1982 |
| 2005 |
|
Park 100 |
| Park 100 Building 107 |
| Industrial |
| - |
| 99 |
| 1,698 |
| 321 |
| 99 |
| 2,019 |
| 2,118 |
| 572 |
| 1984 |
| 1995 |
|
Park 100 |
| Park 100 Building 109 |
| Industrial |
| - |
| 240 |
| 1,802 |
| 350 |
| 246 |
| 2,146 |
| 2,392 |
| 993 |
| 1985 |
| 1986 |
|
Park 100 |
| Park 100 Building 116 |
| Office |
| - |
| 341 |
| 3,207 |
| 333 |
| 348 |
| 3,533 |
| 3,881 |
| 1,597 |
| 1988 |
| 1988 |
|
Park 100 |
| Park 100 Building 118 |
| Office |
| - |
| 226 |
| 2,252 |
| 750 |
| 230 |
| 2,998 |
| 3,228 |
| 959 |
| 1988 |
| 1993 |
|
Park 100 |
| Park 100 Building 119 |
| Office |
| - |
| 388 |
| 3,719 |
| 1,393 |
| 500 |
| 5,000 |
| 5,500 |
| 2,012 |
| 1989 |
| 1993 |
|
Park 100 |
| Park 100 Building 122 |
| Industrial |
| - |
| 284 |
| 3,695 |
| 956 |
| 290 |
| 4,645 |
| 4,935 |
| 1,498 |
| 1990 |
| 1993 |
|
Park 100 |
| Park 100 Building 124 |
| Office |
| - |
| 227 |
| 2,771 |
| 8 |
| 227 |
| 2,779 |
| 3,006 |
| 521 |
| 1992 |
| 2002 |
|
Park 100 |
| Park 100 Building 127 |
| Industrial |
| - |
| 96 |
| 1,654 |
| 453 |
| 96 |
| 2,106 |
| 2,203 |
| 594 |
| 1995 |
| 1995 |
|
Park 100 |
| Park 100 Building 141 |
| Industrial |
| - |
| 1,120 |
| 3,305 |
| - |
| 1,120 |
| 3,305 |
| 4,425 |
| 228 |
| 2005 |
| 2005 |
|
84
DUKE REALTY LIMITED PARTNERSHIP | Schedule 3 |
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2006
(in thousands)
|
|
|
|
|
|
|
|
|
|
| Cost Capitalized |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Subsequent to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Building |
|
|
| Initial Cost |
| Development |
| Gross Book Value 12/31/06 |
| Accumulated |
| Year |
| Year |
| ||||||
Development |
| Name |
| Type |
| Encumbrances |
| Land |
| Buildings |
| or Acquisition |
| Land/Land Imp |
| Bldgs/TI |
| Total |
| Depreciation (1) |
| Constructed |
| Acquired |
|
Park 100 |
| UPS Parking |
| Grounds |
| - |
| 270 |
| - |
| - |
| 270 |
| - |
| 270 |
| 82 |
| N/A |
| 1997 |
|
Park 100 |
| Norgate Ground Lease |
| Grounds |
| - |
| 51 |
| - |
| - |
| 51 |
| - |
| 51 |
| - |
| N/A |
| 1995 |
|
Park 100 |
| Zollman Ground Lease |
| Grounds |
| - |
| 115 |
| - |
| - |
| 115 |
| - |
| 115 |
| - |
| N/A |
| 1994 |
|
Park 100 |
| Bldg 111 Parking Lot |
| Grounds |
| - |
| 196 |
| - |
| - |
| 196 |
| - |
| 196 |
| 42 |
| N/A |
| 1994 |
|
Park 100 |
| Becton Dickinson Lot |
| Grounds |
| - |
| - |
| - |
| 13 |
| 13 |
| - |
| 13 |
| 10 |
| N/A |
| 1993 |
|
Park 100 |
| 3.58 acres on Allison Avenue |
| Grounds |
| - |
| 242 |
| - |
| - |
| 242 |
| - |
| 242 |
| 21 |
| N/A |
| 2000 |
|
Park 100 |
| Hewlett-Packard Land Lease |
| Grounds |
| - |
| 252 |
| - |
| - |
| 252 |
| - |
| 252 |
| 17 |
| N/A |
| 2003 |
|
Park 100 |
| Park 100 Bldg 121 Land Lease |
| Grounds |
| - |
| 5 |
| - |
| - |
| 5 |
| - |
| 5 |
| - |
| N/A |
| 2003 |
|
Park 100 |
| Hewlett Packard Land Lse-62 |
| Grounds |
| - |
| 45 |
| - |
| - |
| 45 |
| - |
| 45 |
| 3 |
| N/A |
| 2003 |
|
Park 100 |
| West 79th St. Parking Lot LL |
| Grounds |
| - |
| 350 |
| - |
| - |
| 350 |
| - |
| 350 |
| 3 |
| N/A |
| 2006 |
|
Park Fletcher |
| Park Fletcher Building 33 |
| Industrial |
| - |
| 1,237 |
| 5,264 |
| - |
| 1,237 |
| 5,264 |
| 6,501 |
| 75 |
| 1997 |
| 2006 |
|
Park Fletcher |
| Park Fletcher Building 34 |
| Industrial |
| - |
| 1,331 |
| 5,640 |
| - |
| 1,331 |
| 5,640 |
| 6,971 |
| 82 |
| 1997 |
| 2006 |
|
Park Fletcher |
| Park Fletcher Building 35 |
| Industrial |
| - |
| 380 |
| 1,503 |
| - |
| 380 |
| 1,503 |
| 1,883 |
| 25 |
| 1997 |
| 2006 |
|
Park Fletcher |
| Park Fletcher Building 36 |
| Industrial |
| - |
| 476 |
| 2,355 |
| - |
| 476 |
| 2,355 |
| 2,831 |
| 30 |
| 1997 |
| 2006 |
|
Park Fletcher |
| Park Fletcher Building 37 |
| Industrial |
| - |
| 286 |
| 653 |
| - |
| 286 |
| 653 |
| 939 |
| 17 |
| 1998 |
| 2006 |
|
Park Fletcher |
| Park Fletcher Building 38 |
| Industrial |
| - |
| 1,428 |
| 5,957 |
| - |
| 1,428 |
| 5,957 |
| 7,385 |
| 80 |
| 1999 |
| 2006 |
|
Park Fletcher |
| Park Fletcher Building 39 |
| Industrial |
| - |
| 570 |
| 2,160 |
| - |
| 570 |
| 2,160 |
| 2,730 |
| 32 |
| 1999 |
| 2006 |
|
Park Fletcher |
| Park Fletcher Building 40 |
| Industrial |
| - |
| 761 |
| 3,363 |
| - |
| 761 |
| 3,362 |
| 4,124 |
| 43 |
| 1999 |
| 2006 |
|
Park Fletcher |
| Park Fletcher Building 41 |
| Industrial |
| - |
| 952 |
| 4,310 |
| - |
| 952 |
| 4,310 |
| 5,262 |
| 40 |
| 2001 |
| 2006 |
|
Park Fletcher |
| Park Fletcher Building 42 |
| Industrial |
| - |
| 2,095 |
| 8,301 |
| - |
| 2,095 |
| 8,301 |
| 10,396 |
| - |
| 2001 |
| 2006 |
|
Parkwood Crossing |
| One Parkwood Crossing |
| Office |
| - |
| 1,018 |
| 10,089 |
| 948 |
| 1,028 |
| 11,027 |
| 12,055 |
| 3,241 |
| 1989 |
| 1995 |
|
Parkwood Crossing |
| Two Parkwood Crossing |
| Office |
| - |
| 861 |
| 6,421 |
| 1,024 |
| 871 |
| 7,435 |
| 8,306 |
| 1,955 |
| 1996 |
| 1996 |
|
Parkwood Crossing |
| Three Parkwood Crossing |
| Office |
| - |
| 1,377 |
| 9,462 |
| 707 |
| 1,387 |
| 10,159 |
| 11,546 |
| 3,298 |
| 1997 |
| 1997 |
|
Parkwood Crossing |
| Four Parkwood Crossing |
| Office |
| - |
| 1,489 |
| 11,714 |
| 560 |
| 1,537 |
| 12,225 |
| 13,762 |
| 2,959 |
| 1998 |
| 1998 |
|
Parkwood Crossing |
| Five Parkwood Crossing |
| Office |
| - |
| 1,485 |
| 12,229 |
| 689 |
| 1,528 |
| 12,875 |
| 14,403 |
| 2,970 |
| 1999 |
| 1999 |
|
Parkwood Crossing |
| Six Parkwood Crossing |
| Office |
| - |
| 1,960 |
| 15,410 |
| 792 |
| 1,960 |
| 16,201 |
| 18,162 |
| 3,946 |
| 2000 |
| 2000 |
|
Parkwood Crossing |
| Eight Parkwood Crossing |
| Office |
| - |
| 6,435 |
| 16,419 |
| 137 |
| 6,435 |
| 16,555 |
| 22,990 |
| 2,665 |
| 2002 |
| 2002 |
|
Parkwood Crossing |
| Nine Parkwood Crossing |
| Office |
| - |
| 6,046 |
| 15,991 |
| - |
| 6,047 |
| 15,991 |
| 22,038 |
| 813 |
| 2005 |
| 2005 |
|
River Road - Indianapolis |
| River Road Building I |
| Office |
| - |
| 856 |
| 7,725 |
| 1,735 |
| 856 |
| 9,460 |
| 10,315 |
| 3,024 |
| 1997 |
| 1998 |
|
Woodfield |
| Two Woodfield Crossing |
| Office |
| - |
| 719 |
| 9,345 |
| 2,216 |
| 733 |
| 11,548 |
| 12,281 |
| 3,995 |
| 1987 |
| 1993 |
|
Woodfield |
| Three Woodfield Crossing |
| Office |
| - |
| 3,767 |
| 19,999 |
| 5,067 |
| 3,843 |
| 24,990 |
| 28,833 |
| 8,243 |
| 1989 |
| 1993 |
|
Woodland Corporate Park |
| Woodland Corporate Park I |
| Office |
| - |
| 290 |
| 4,597 |
| 700 |
| 320 |
| 5,267 |
| 5,587 |
| 1,973 |
| 1998 |
| 1998 |
|
Woodland Corporate Park |
| Woodland Corporate Park II |
| Office |
| - |
| 271 |
| 3,583 |
| 840 |
| 297 |
| 4,398 |
| 4,695 |
| 1,186 |
| 1999 |
| 1999 |
|
Woodland Corporate Park |
| Woodland Corporate Park III |
| Office |
| - |
| 1,227 |
| 4,135 |
| 198 |
| 1,227 |
| 4,333 |
| 5,559 |
| 1,018 |
| 1999 |
| 2000 |
|
Woodland Corporate Park |
| Woodland Corporate Park IV |
| Office |
| - |
| 715 |
| 7,245 |
| 528 |
| 715 |
| 7,773 |
| 8,488 |
| 2,041 |
| 2000 |
| 2000 |
|
Woodland Corporate Park |
| Woodland Corporate Park V |
| Office |
| - |
| 768 |
| 10,015 |
| 5 |
| 768 |
| 10,021 |
| 10,788 |
| 1,420 |
| 2002 |
| 2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LAKE FOREST, ILLINOIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradley Business Center |
| 28188 N. Ballard Drive |
| Industrial |
| - |
| 186 |
| 1,751 |
| 346 |
| 186 |
| 2,098 |
| 2,284 |
| 507 |
| 1985 |
| 1998 |
|
Bradley Business Center |
| 13777 West Laurel Drive |
| Industrial |
| - |
| 98 |
| 913 |
| 53 |
| 98 |
| 965 |
| 1,064 |
| 219 |
| 1981 |
| 1998 |
|
Bradley Business Center |
| 13825 West Laurel Drive |
| Industrial |
| - |
| 750 |
| 1,874 |
| 906 |
| 750 |
| 2,780 |
| 3,530 |
| 946 |
| 1978 |
| 1999 |
|
Conway Park |
| One Conway Park |
| Office |
| - |
| 1,901 |
| 17,617 |
| 2,591 |
| 1,901 |
| 20,208 |
| 22,109 |
| 4,526 |
| 1989 |
| 1998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LAKE MARY, FLORIDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northpoint |
| Northpoint Center I |
| Office |
| - |
| 1,087 |
| 11,520 |
| 1,426 |
| 1,087 |
| 12,946 |
| 14,033 |
| 2,141 |
| 1998 |
| 1999 |
|
Northpoint |
| Northpoint Center II |
| Office |
| - |
| 1,202 |
| 9,632 |
| 537 |
| 1,202 |
| 10,168 |
| 11,370 |
| 1,688 |
| 1999 |
| 2000 |
|
Northpoint |
| Northpoint III |
| Office |
| - |
| 1,552 |
| 10,987 |
| 183 |
| 1,552 |
| 11,170 |
| 12,722 |
| 2,401 |
| 2001 |
| 2001 |
|
Northpoint |
| Northpoint IV |
| Office |
| - |
| 1,605 |
| 8,583 |
| 4,294 |
| 1,605 |
| 12,876 |
| 14,481 |
| 1,366 |
| 2002 |
| 2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LAWRENCEVILLE, GEORGIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hillside at Huntcrest |
| Huntcrest I |
| Office |
| - |
| 1,193 |
| 11,061 |
| 28 |
| 1,193 |
| 11,088 |
| 12,281 |
| 2,216 |
| 2000 |
| 2001 |
|
Hillside at Huntcrest |
| Huntcrest II |
| Office |
| - |
| 927 |
| 10,599 |
| 43 |
| 927 |
| 10,642 |
| 11,569 |
| 1,860 |
| 2000 |
| 2001 |
|
Hillside at Huntcrest |
| Huntcrest III |
| Office |
| - |
| 1,358 |
| 12,937 |
| 241 |
| 1,358 |
| 13,178 |
| 14,536 |
| 2,252 |
| 2001 |
| 2002 |
|
Hillside at Huntcrest |
| Huntcrest IV |
| Office |
| - |
| 1,295 |
| 5,742 |
| 331 |
| 1,306 |
| 6,062 |
| 7,368 |
| 551 |
| 2003 |
| 2003 |
|
Other Northeast I85 Properties |
| Weyerhaeuser BTS |
| Industrial |
| 9,312 |
| 3,974 |
| 3,101 |
| 21 |
| 3,982 |
| 3,114 |
| 7,096 |
| 529 |
| 2004 |
| 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LEBANON, INDIANA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lebanon Business Park |
| Lebanon Building 4 |
| Industrial |
| 13,206 |
| 305 |
| 9,672 |
| 184 |
| 305 |
| 9,856 |
| 10,162 |
| 2,599 |
| 1997 |
| 1997 |
|
Lebanon Business Park |
| Lebanon Building 9 |
| Industrial |
| 10,640 |
| 554 |
| 6,872 |
| 769 |
| 554 |
| 7,641 |
| 8,195 |
| 1,573 |
| 1999 |
| 1999 |
|
Lebanon Business Park |
| Lebanon Building 12 |
| Industrial |
| 24,670 |
| 5,163 |
| 13,207 |
| 394 |
| 5,163 |
| 13,601 |
| 18,764 |
| 2,042 |
| 2002 |
| 2002 |
|
Lebanon Business Park |
| Lebanon Building 13 |
| Industrial |
| 9,388 |
| 561 |
| 6,579 |
| 83 |
| 1,901 |
| 5,322 |
| 7,223 |
| 950 |
| 2003 |
| 2003 |
|
Lebanon Business Park |
| Lebanon Building 14 |
| Industrial |
| 19,693 |
| 2,813 |
| 12,196 |
| 597 |
| 2,813 |
| 12,793 |
| 15,605 |
| 1,033 |
| 2004 |
| 2004 |
|
85
DUKE REALTY LIMITED PARTNERSHIP | Schedule 3 |
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2006
(in thousands)
|
|
|
|
|
|
|
|
|
|
| Cost Capitalized |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Subsequent to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Building |
|
|
| Initial Cost |
| Development |
| Gross Book Value 12/31/06 |
| Accumulated |
| Year |
| Year |
| ||||||
Development |
| Name |
| Type |
| Encumbrances |
| Land |
| Buildings |
| or Acquisition |
| Land/Land Imp |
| Bldgs/TI |
| Total |
| Depreciation (1) |
| Constructed |
| Acquired |
|
LEBANON, TENNESSEE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Park 840 Logistics Center |
| Pk 840 Logistics Cnt. Bldg 653 |
| Industrial |
| - |
| 6,776 |
| 11,125 |
| - |
| 6,776 |
| 11,125 |
| 17,901 |
| 142 |
| 2006 |
| 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LISLE, ILLINOIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Lakes Business Park |
| 2275 Cabot Drive |
| Office |
| - |
| 3,355 |
| 7,008 |
| 6 |
| 3,355 |
| 7,014 |
| 10,369 |
| 632 |
| 1996 |
| 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARYLAND HEIGHTS, MISSOURI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Riverport Business Park |
| Riverport Tower |
| Office |
| - |
| 3,549 |
| 30,135 |
| 8,186 |
| 3,954 |
| 37,915 |
| 41,869 |
| 10,017 |
| 1991 |
| 1997 |
|
Riverport Business Park |
| Riverport Distribution |
| Industrial |
| - |
| 242 |
| 2,238 |
| 680 |
| 242 |
| 2,918 |
| 3,159 |
| 622 |
| 1990 |
| 1997 |
|
Riverport Business Park |
| Express Scripts Service Center |
| Industrial |
| - |
| 1,197 |
| 8,755 |
| 427 |
| 1,197 |
| 9,182 |
| 10,379 |
| 2,269 |
| 1992 |
| 1997 |
|
Riverport Business Park |
| Express Scripts HQ |
| Office |
| - |
| 2,285 |
| 8,988 |
| 295 |
| 2,285 |
| 9,283 |
| 11,568 |
| 1,785 |
| 1999 |
| 1999 |
|
Riverport Business Park |
| Riverport 1 |
| Industrial |
| - |
| 900 |
| 3,463 |
| 256 |
| 900 |
| 3,719 |
| 4,619 |
| 1,387 |
| 1999 |
| 1999 |
|
Riverport Business Park |
| Riverport 2 |
| Industrial |
| - |
| 1,238 |
| 4,644 |
| 79 |
| 1,238 |
| 4,724 |
| 5,962 |
| 989 |
| 2000 |
| 2000 |
|
Riverport Business Park |
| Riverport 3 |
| Industrial |
| - |
| 1,269 |
| 4,514 |
| 2,168 |
| 1,269 |
| 6,682 |
| 7,951 |
| 2,115 |
| 2001 |
| 2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MASON, OHIO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deerfield Crossing |
| Deerfield Crossing Building 1 |
| Office |
| - |
| 1,493 |
| 12,285 |
| 687 |
| 1,493 |
| 12,972 |
| 14,465 |
| 2,992 |
| 1999 |
| 1999 |
|
Deerfield Crossing |
| Deerfield Crossing Building 2 |
| Office |
| - |
| 1,069 |
| 13,987 |
| 478 |
| 1,069 |
| 14,465 |
| 15,534 |
| 4,084 |
| 2001 |
| 2001 |
|
Governor's Pointe |
| Governor's Pointe 4770 |
| Office |
| - |
| 586 |
| 7,896 |
| 496 |
| 596 |
| 8,382 |
| 8,978 |
| 3,669 |
| 1986 |
| 1988 |
|
Governor's Pointe |
| Governor's Pointe 4705 |
| Office |
| - |
| 719 |
| 6,540 |
| 3,594 |
| 987 |
| 9,866 |
| 10,852 |
| 3,274 |
| 1988 |
| 1993 |
|
Governor's Pointe |
| Governor's Pointe 4605 |
| Office |
| - |
| 630 |
| 17,668 |
| 2,765 |
| 909 |
| 20,153 |
| 21,062 |
| 6,358 |
| 1990 |
| 1993 |
|
Governor's Pointe |
| Governor's Pointe 4660 |
| Office |
| - |
| 385 |
| 4,726 |
| 164 |
| 529 |
| 4,746 |
| 5,275 |
| 1,576 |
| 1997 |
| 1997 |
|
Governor's Pointe |
| Governor's Pointe 4680 |
| Office |
| - |
| 1,115 |
| 7,368 |
| 827 |
| 1,115 |
| 8,195 |
| 9,310 |
| 2,086 |
| 1998 |
| 1998 |
|
Governors Pointe Retail |
| Bigg's Supercenter |
| Retail |
| - |
| 2,107 |
| 9,927 |
| 137 |
| 4,227 |
| 7,943 |
| 12,170 |
| 3,076 |
| 1996 |
| 1996 |
|
Governors Pointe Retail |
| Lowes |
| Retail |
| - |
| 3,750 |
| 6,507 |
| 304 |
| 3,750 |
| 6,811 |
| 10,561 |
| 2,832 |
| 1997 |
| 1997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MAYFIELD HEIGHTS, OHIO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Landerbrook Corporate Center |
| Landerbrook Corp. Center One |
| Office |
| - |
| 1,807 |
| 10,680 |
| 72 |
| 1,808 |
| 10,750 |
| 12,558 |
| 3,200 |
| 1997 |
| 1997 |
|
Landerbrook Corporate Center |
| Landerbrook Corp. Center Two |
| Office |
| - |
| 1,382 |
| 9,793 |
| 2,279 |
| 1,382 |
| 12,071 |
| 13,453 |
| 3,749 |
| 1998 |
| 1998 |
|
Landerbrook Corporate Center |
| Landerbrook Corp. Center Three |
| Office |
| - |
| 1,528 |
| 8,505 |
| 4,717 |
| 1,684 |
| 13,066 |
| 14,750 |
| 2,659 |
| 2000 |
| 2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
MCDONOUGH, GEORGIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liberty Distribution Center |
| 120 Declaration Drive |
| Industrial |
| - |
| 615 |
| 8,550 |
| 137 |
| 615 |
| 8,687 |
| 9,302 |
| 1,647 |
| 1997 |
| 1999 |
|
Liberty Distribution Center |
| 250 Declaration Drive |
| Industrial |
| 22,268 |
| 2,273 |
| 13,225 |
| 2,191 |
| 2,312 |
| 15,377 |
| 17,689 |
| 2,074 |
| 2001 |
| 2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MENDOTA HEIGHTS, MINNESOTA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise Industrial Center |
| Enterprise Industrial Center |
| Industrial |
| 1,367 |
| 864 |
| 5,039 |
| 550 |
| 864 |
| 5,589 |
| 6,453 |
| 1,320 |
| 1979 |
| 1997 |
|
|
|
|
|
|
|
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|
MINNETONKA, MINNESOTA |
|
|
|
|
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|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
10801 Red Circle Drive |
| 10801 Red Circle Dr. |
| Office |
| - |
| 527 |
| 2,459 |
| 701 |
| 527 |
| 3,160 |
| 3,687 |
| 739 |
| 1977 |
| 1997 |
|
|
|
|
|
|
|
|
|
|
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|
|
MONROE, OHIO |
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
Monroe Business Center |
| Monroe Business Center Bldg. 1 |
| Industrial |
| - |
| 660 |
| 5,435 |
| 354 |
| 660 |
| 5,789 |
| 6,449 |
| 1,361 |
| 1992 |
| 1999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
MORRISVILLE, NORTH CAROLINA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perimeter Park |
| 507 Airport Blvd |
| Industrial |
| - |
| 1,327 |
| 8,373 |
| 1,165 |
| 1,351 |
| 9,515 |
| 10,866 |
| 2,063 |
| 1993 |
| 1999 |
|
Perimeter Park |
| 5151 McCrimmon Pkwy |
| Office |
| - |
| 1,318 |
| 7,832 |
| 983 |
| 1,342 |
| 8,791 |
| 10,133 |
| 1,604 |
| 1995 |
| 1999 |
|
Perimeter Park |
| 2600 Perimeter Park Dr |
| Industrial |
| - |
| 975 |
| 5,392 |
| 384 |
| 991 |
| 5,760 |
| 6,751 |
| 1,213 |
| 1997 |
| 1999 |
|
Perimeter Park |
| 5150 McCrimmon Pkwy |
| Industrial |
| - |
| 1,739 |
| 12,249 |
| 647 |
| 1,773 |
| 12,862 |
| 14,635 |
| 2,413 |
| 1998 |
| 1999 |
|
Perimeter Park |
| 2400 Perimeter Park Dr. |
| Office |
| - |
| 760 |
| 5,775 |
| 1,160 |
| 778 |
| 6,917 |
| 7,695 |
| 1,439 |
| 1999 |
| 1999 |
|
Perimeter Park |
| 3000 Perimeter Park Dr (Met 1) |
| Industrial |
| 638 |
| 482 |
| 2,891 |
| 1,136 |
| 491 |
| 4,018 |
| 4,509 |
| 835 |
| 1989 |
| 1999 |
|
Perimeter Park |
| 2900 Perimeter Park Dr (Met 2) |
| Industrial |
| 502 |
| 235 |
| 1,991 |
| 1,128 |
| 264 |
| 3,090 |
| 3,354 |
| 581 |
| 1990 |
| 1999 |
|
Perimeter Park |
| 2800 Perimeter Park Dr (Met 3) |
| Industrial |
| 881 |
| 777 |
| 4,825 |
| 593 |
| 811 |
| 5,385 |
| 6,196 |
| 1,035 |
| 1992 |
| 1999 |
|
Perimeter Park |
| 1100 Perimeter Park Drive |
| Industrial |
| - |
| 777 |
| 5,948 |
| 799 |
| 794 |
| 6,730 |
| 7,525 |
| 1,374 |
| 1990 |
| 1999 |
|
Perimeter Park |
| 1400 Perimeter Park Drive |
| Office |
| - |
| 666 |
| 4,561 |
| 1,214 |
| 900 |
| 5,541 |
| 6,441 |
| 1,242 |
| 1991 |
| 1999 |
|
Perimeter Park |
| 1500 Perimeter Park Drive |
| Office |
| - |
| 1,148 |
| 10,302 |
| 395 |
| 1,177 |
| 10,669 |
| 11,846 |
| 2,058 |
| 1996 |
| 1999 |
|
Perimeter Park |
| 1600 Perimeter Park Drive |
| Office |
| - |
| 1,463 |
| 10,021 |
| 2,021 |
| 1,513 |
| 11,992 |
| 13,505 |
| 2,392 |
| 1994 |
| 1999 |
|
Perimeter Park |
| 1800 Perimeter Park Drive |
| Office |
| - |
| 907 |
| 5,678 |
| 901 |
| 993 |
| 6,493 |
| 7,486 |
| 1,316 |
| 1994 |
| 1999 |
|
Perimeter Park |
| 2000 Perimeter Park Drive |
| Office |
| - |
| 788 |
| 5,807 |
| 891 |
| 842 |
| 6,644 |
| 7,485 |
| 1,701 |
| 1997 |
| 1999 |
|
86
DUKE REALTY LIMITED PARTNERSHIP | Schedule 3 |
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2006
(in thousands)
|
|
|
|
|
|
|
|
|
|
| Cost Capitalized |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Subsequent to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Building |
|
|
| Initial Cost |
| Development |
| Gross Book Value 12/31/06 |
| Accumulated |
| Year |
| Year |
| ||||||
Development |
| Name |
| Type |
| Encumbrances |
| Land |
| Buildings |
| or Acquisition |
| Land/Land Imp |
| Bldgs/TI |
| Total |
| Depreciation (1) |
| Constructed |
| Acquired |
|
Perimeter Park |
| 1700 Perimeter Center West |
| Office |
| - |
| 1,230 |
| 10,765 |
| 2,779 |
| 1,260 |
| 13,514 |
| 14,774 |
| 2,473 |
| 1997 |
| 1999 |
|
Perimeter Park |
| 3900 N. Paramount Parkway |
| Office |
| - |
| 540 |
| 13,269 |
| 256 |
| 574 |
| 13,491 |
| 14,065 |
| 2,549 |
| 1998 |
| 1999 |
|
Perimeter Park |
| 3900 S.Paramount Pkwy |
| Office |
| - |
| 1,575 |
| 12,212 |
| 1,486 |
| 1,612 |
| 13,661 |
| 15,273 |
| 3,409 |
| 2000 |
| 1999 |
|
Perimeter Park |
| 5200 East Paramount |
| Office |
| - |
| 1,748 |
| 17,388 |
| 1,011 |
| 1,797 |
| 18,349 |
| 20,146 |
| 4,943 |
| 1999 |
| 1999 |
|
Perimeter Park |
| 3500 Paramount Pkwy |
| Office |
| - |
| 755 |
| 12,948 |
| 137 |
| 755 |
| 13,085 |
| 13,840 |
| 3,704 |
| 1999 |
| 2000 |
|
Perimeter Park |
| 2700 Perimeter Park |
| Industrial |
| - |
| 662 |
| 3,209 |
| 1,685 |
| 662 |
| 4,894 |
| 5,556 |
| 1,184 |
| 2001 |
| 2001 |
|
Perimeter Park |
| 5200 West Paramount |
| Office |
| - |
| 1,831 |
| 13,288 |
| 1,007 |
| 1,831 |
| 14,295 |
| 16,126 |
| 2,421 |
| 2000 |
| 2001 |
|
Perimeter Park |
| 2450 Perimeter Park |
| Office |
| - |
| 669 |
| 4,003 |
| 25 |
| 669 |
| 4,028 |
| 4,697 |
| 1,479 |
| 2001 |
| 2001 |
|
Perimeter Park |
| 3800 Paramount Parkway |
| Office |
| - |
| 2,657 |
| 7,329 |
| - |
| 2,657 |
| 7,328 |
| 9,985 |
| 52 |
| 2006 |
| 2006 |
|
Perimeter Park |
| Lenovo BTS I |
| Office |
| - |
| 1,439 |
| 16,961 |
| - |
| 1,439 |
| 16,961 |
| 18,400 |
| - |
| 2006 |
| 2006 |
|
Woodlake Center |
| 100 Innovation Avenue (Woodlk) |
| Industrial |
| - |
| 633 |
| 4,003 |
| 282 |
| 633 |
| 4,285 |
| 4,918 |
| 999 |
| 1994 |
| 1999 |
|
Woodlake Center |
| 101 Innovation Ave(Woodlk III) |
| Industrial |
| - |
| 615 |
| 4,095 |
| 135 |
| 615 |
| 4,230 |
| 4,845 |
| 837 |
| 1997 |
| 1999 |
|
Woodlake Center |
| 200 Innovation Drive |
| Industrial |
| - |
| 357 |
| 4,494 |
| 28 |
| 357 |
| 4,522 |
| 4,879 |
| 1,074 |
| 1999 |
| 1999 |
|
Woodlake Center |
| 501 Innovation Ave. |
| Industrial |
| - |
| 640 |
| 5,632 |
| 158 |
| 640 |
| 5,790 |
| 6,430 |
| 985 |
| 1999 |
| 1999 |
|
Woodlake Center |
| 1000 Innovation (Woodlk 6) |
| Industrial |
| - |
| 514 |
| 2,927 |
| 59 |
| 514 |
| 2,987 |
| 3,501 |
| 360 |
| 1996 |
| 2002 |
|
Woodlake Center |
| 1200 Innovation (Woodlk 7) |
| Industrial |
| - |
| 740 |
| 5,936 |
| 59 |
| 740 |
| 5,995 |
| 6,735 |
| 1,529 |
| 1996 |
| 2002 |
|
Woodlake Center |
| Woodlake VIII |
| Industrial |
| - |
| 908 |
| 1,517 |
| 339 |
| 908 |
| 1,856 |
| 2,764 |
| 313 |
| 2003 |
| 2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NAPERVILLE, ILLINOIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Meridian Business Campus |
| 1835 Jefferson |
| Industrial |
| - |
| 3,180 |
| 7,959 |
| 1 |
| 3,180 |
| 7,960 |
| 11,140 |
| 677 |
| 2003 |
| 2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NASHVILLE, TENNESSEE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Airpark East |
| Airpark East-800 Commerce Dr. |
| Industrial |
| - |
| 1,564 |
| 3,341 |
| 699 |
| 1,564 |
| 4,040 |
| 5,604 |
| 836 |
| 2001 |
| 2002 |
|
Haywood Oaks |
| Haywood Oaks Building 8 |
| Industrial |
| - |
| 617 |
| 3,514 |
| 230 |
| 751 |
| 3,610 |
| 4,360 |
| 1,467 |
| 1997 |
| 1997 |
|
Lakeview Place |
| Three Lakeview |
| Office |
| - |
| 2,126 |
| 13,055 |
| 2,121 |
| 2,126 |
| 15,176 |
| 17,302 |
| 3,773 |
| 1999 |
| 1999 |
|
Lakeview Place |
| One Lakeview Place |
| Office |
| - |
| 2,046 |
| 11,486 |
| 1,361 |
| 2,123 |
| 12,770 |
| 14,893 |
| 2,995 |
| 1986 |
| 1998 |
|
Lakeview Place |
| Two Lakeview Place |
| Office |
| - |
| 2,046 |
| 11,856 |
| 1,871 |
| 2,046 |
| 13,727 |
| 15,773 |
| 2,893 |
| 1988 |
| 1998 |
|
Riverview Business Center |
| Riverview Office Building |
| Office |
| - |
| 847 |
| 6,133 |
| 1,254 |
| 847 |
| 7,387 |
| 8,234 |
| 1,626 |
| 1983 |
| 1999 |
|
Nashville Business Center |
| Nashville Business Center I |
| Industrial |
| - |
| 936 |
| 6,033 |
| 110 |
| 936 |
| 6,143 |
| 7,079 |
| 1,226 |
| 1997 |
| 1999 |
|
Nashville Business Center |
| Nashville Business Center II |
| Industrial |
| - |
| 5,659 |
| 10,206 |
| - |
| 5,659 |
| 10,206 |
| 15,866 |
| 510 |
| 2005 |
| 2005 |
|
Not Applicable |
| Powertel Pk Lot at Grassmere |
| Grounds |
| - |
| 1,050 |
| - |
| 39 |
| 1,089 |
| - |
| 1,089 |
| 204 |
| 2003 |
| 2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEW ALBANY, OHIO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Albany |
| 6525 West Campus Oval |
| Office |
| - |
| 842 |
| 3,608 |
| 2,224 |
| 881 |
| 5,793 |
| 6,674 |
| 812 |
| 1993 |
| 1999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NILES, ILLINOIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Niles Distribution Center |
| Niles Distribution Center |
| Industrial |
| - |
| 4,920 |
| 3,669 |
| 8 |
| 4,920 |
| 3,677 |
| 8,597 |
| 306 |
| 1950 |
| 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NORCROSS, GEORGIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gwinnett Park |
| 4436 Park Drive |
| Industrial |
| - |
| 18 |
| 1,536 |
| 36 |
| 26 |
| 1,563 |
| 1,590 |
| 377 |
| 1968 |
| 1999 |
|
Gwinnett Park |
| 1835 Shackleford Court |
| Office |
| - |
| 29 |
| 6,150 |
| 1,009 |
| 29 |
| 7,159 |
| 7,188 |
| 1,532 |
| 1990 |
| 1999 |
|
Gwinnett Park |
| 1854 Shackelford Court |
| Office |
| - |
| 52 |
| 9,842 |
| 1,322 |
| 52 |
| 11,165 |
| 11,216 |
| 2,216 |
| 1985 |
| 1999 |
|
Gwinnett Park |
| 4275 Shackleford Road |
| Office |
| - |
| 8 |
| 2,101 |
| 545 |
| 12 |
| 2,643 |
| 2,655 |
| 642 |
| 1985 |
| 1999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NORTHLAKE, ILLINOIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northlake 1 Park |
| Northlake I |
| Industrial |
| - |
| 5,721 |
| 10,859 |
| - |
| 5,721 |
| 10,859 |
| 16,580 |
| 1,644 |
| 2002 |
| 2002 |
|
Northlake Distribution Park |
| Northlake III - Grand Whse. |
| Industrial |
| - |
| 5,382 |
| 5,708 |
| - |
| 5,382 |
| 5,708 |
| 11,090 |
| 51 |
| 2006 |
| 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NORTH OLMSTED, OHIO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Northern Corporate Ctr. |
| Great Northern Corp Center I |
| Office |
| - |
| 1,048 |
| 6,913 |
| 1,465 |
| 1,040 |
| 8,387 |
| 9,426 |
| 2,308 |
| 1985 |
| 1996 |
|
Great Northern Corporate Ctr. |
| Great Northern Corp Center II |
| Office |
| - |
| 1,048 |
| 7,149 |
| 1,337 |
| 1,048 |
| 8,486 |
| 9,534 |
| 2,416 |
| 1987 |
| 1996 |
|
Great Northern Corporate Ctr. |
| Great Northern Corp Center III |
| Office |
| - |
| 604 |
| 5,660 |
| 430 |
| 604 |
| 6,091 |
| 6,694 |
| 1,804 |
| 1999 |
| 1999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OAK BROOK, ILLINOIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2000 York Road |
| 2000 York Road |
| Office |
| 10,959 |
| 2,625 |
| 15,831 |
| - |
| 2,625 |
| 15,831 |
| 18,456 |
| 3,320 |
| 1960 |
| 2005 |
|
87
DUKE REALTY LIMITED PARTNERSHIP | Schedule 3 |
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2006
(in thousands)
|
|
|
|
|
|
|
|
|
|
| Cost Capitalized |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Subsequent to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Building |
|
|
| Initial Cost |
| Development |
| Gross Book Value 12/31/06 |
| Accumulated |
| Year |
| Year |
| ||||||
Development |
| Name |
| Type |
| Encumbrances |
| Land |
| Buildings |
| or Acquisition |
| Land/Land Imp |
| Bldgs/TI |
| Total |
| Depreciation (1) |
| Constructed |
| Acquired |
|
OLIVETTE, MISSOURI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warson Commerce Center |
| Warson Commerce Center |
| Industrial |
| - |
| 749 |
| 5,267 |
| 826 |
| 749 |
| 6,093 |
| 6,842 |
| 1,401 |
| 1987 |
| 1998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORLANDO, FLORIDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liberty Park at Southcenter |
| outhcenter I–Brede/Allied BTS | S | Industrial |
| - |
| 3,094 |
| 3,867 |
| - |
| 3,094 |
| 3,867 |
| 6,961 |
| 684 |
| 2002 |
| 2002 |
|
Parksouth Distribution Center |
| Parksouth Dist. Ctr–Bldg B |
| Industrial |
| - |
| 565 |
| 4,893 |
| 431 |
| 570 |
| 5,319 |
| 5,889 |
| 1,078 |
| 1996 |
| 1999 |
|
Parksouth Distribution Center |
| Parksouth Dist. Ctr–Bldg A |
| Industrial |
| - |
| 493 |
| 4,545 |
| 222 |
| 498 |
| 4,762 |
| 5,260 |
| 915 |
| 1997 |
| 1999 |
|
Parksouth Distribution Center |
| Parksouth Dist. Ctr–Bldg D |
| Industrial |
| - |
| 593 |
| 4,131 |
| 72 |
| 597 |
| 4,199 |
| 4,796 |
| 802 |
| 1998 |
| 1999 |
|
Parksouth Distribution Center |
| Parksouth Dist. Ctr–Bldg E |
| Industrial |
| - |
| 649 |
| 4,549 |
| 344 |
| 653 |
| 4,889 |
| 5,542 |
| 947 |
| 1997 |
| 1999 |
|
Parksouth Distribution Center |
| Parksouth Dist. Ctr–Bldg F |
| Industrial |
| - |
| 1,030 |
| 5,232 |
| 1,089 |
| 1,035 |
| 6,317 |
| 7,351 |
| 1,406 |
| 1999 |
| 1999 |
|
Parksouth Distribution Center |
| Parksouth Dist. Ctr–Bldg H |
| Industrial |
| - |
| 725 |
| 3,833 |
| 37 |
| 730 |
| 3,865 |
| 4,595 |
| 859 |
| 2000 |
| 2000 |
|
Parksouth Distribution Center |
| Chase BTS–Orlando |
| Industrial |
| - |
| 598 |
| 2,032 |
| 1,274 |
| 674 |
| 3,229 |
| 3,904 |
| 421 |
| 2000 |
| 2001 |
|
Parksouth Distribution Center |
| Parksouth–Benjamin Moore BTS |
| Industrial |
| - |
| 708 |
| 2,070 |
| 9 |
| 1,115 |
| 1,673 |
| 2,787 |
| 271 |
| 2003 |
| 2003 |
|
Crossroads Business Park |
| Crossroads Business Center VII |
| Industrial |
| - |
| 2,803 |
| 5,891 |
| - |
| 2,803 |
| 5,891 |
| 8,694 |
| 109 |
| 2006 |
| 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PARK RIDGE, ILLINOIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
O'Hare Corporate Centre |
| O'Hare Corporate Centre |
| Office |
| - |
| 1,476 |
| 8,819 |
| 632 |
| 1,476 |
| 9,451 |
| 10,926 |
| 935 |
| 1985 |
| 2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
PEPPER PIKE, OHIO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Circle |
| Corporate Circle |
| Office |
| - |
| 1,696 |
| 11,262 |
| 3,133 |
| 1,698 |
| 14,393 |
| 16,090 |
| 3,948 |
| 1983 |
| 1996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PLAINFIELD, INDIANA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plainfield Business Park |
| Plainfield Building 1 |
| Industrial |
| 16,372 |
| 1,104 |
| 11,151 |
| 415 |
| 1,104 |
| 11,567 |
| 12,671 |
| 2,012 |
| 2000 |
| 2000 |
|
Plainfield Business Park |
| Plainfield Building 2 |
| Industrial |
| 17,230 |
| 1,387 |
| 9,437 |
| 2,475 |
| 2,492 |
| 10,807 |
| 13,299 |
| 2,073 |
| 2000 |
| 2000 |
|
Plainfield Business Park |
| Plainfield Building 3 |
| Industrial |
| 17,368 |
| 2,016 |
| 9,238 |
| 2,250 |
| 2,016 |
| 11,488 |
| 13,504 |
| 998 |
| 2002 |
| 2002 |
|
Plainfield Business Park |
| Plainfield Building 5 |
| Industrial |
| 13,077 |
| 2,726 |
| 7,284 |
| 140 |
| 2,726 |
| 7,424 |
| 10,150 |
| 710 |
| 2004 |
| 2004 |
|
Plainfield Business Park |
| Plainfield Building 8 |
| Industrial |
| 20,556 |
| 4,527 |
| 11,928 |
| - |
| 4,527 |
| 11,928 |
| 16,456 |
| 209 |
| 2006 |
| 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PLANO, TEXAS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5556 & 5560 Tennyson Parkway |
| 5560 Tennyson Parkway |
| Office |
| - |
| 1,527 |
| 5,831 |
| 724 |
| 1,527 |
| 6,555 |
| 8,082 |
| 1,419 |
| 1997 |
| 1999 |
|
5556 & 5560 Tennyson Parkway |
| 5556 Tennyson Parkway |
| Office |
| - |
| 1,181 |
| 11,154 |
| 206 |
| 1,181 |
| 11,359 |
| 12,540 |
| 2,714 |
| 1999 |
| 1999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PLYMOUTH, MINNESOTA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medicine Lake Indust Ctr |
| Medicine Lake Indus. Center |
| Industrial |
| 2,354 |
| 1,145 |
| 6,512 |
| 861 |
| 1,145 |
| 7,373 |
| 8,518 |
| 2,087 |
| 1970 |
| 1997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PORT WENTWORTH, GEORGIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grange Road |
| 318 Grange Road |
| Industrial |
| 3,051 |
| 957 |
| 4,816 |
| - |
| 957 |
| 4,817 |
| 5,774 |
| 183 |
| 2001 |
| 2006 |
|
Grange Road |
| 246 Grange Road |
| Industrial |
| 6,382 |
| 1,191 |
| 8,294 |
| - |
| 1,191 |
| 8,293 |
| 9,485 |
| 246 |
| 2006 |
| 2006 |
|
Crossroads (Savannah) |
| 100 Ocean Link Way–Godley Rd |
| Industrial |
| 11,423 |
| 2,306 |
| 13,389 |
| - |
| 2,306 |
| 13,389 |
| 15,695 |
| 192 |
| 2006 |
| 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RALEIGH, NORTH CAROLINA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brook Forest |
| Brook Forest I |
| Office |
| - |
| 1,242 |
| 5,948 |
| 541 |
| 1,242 |
| 6,489 |
| 7,731 |
| 1,798 |
| 2000 |
| 2000 |
|
Centerview |
| Centerview 5540 |
| Office |
| - |
| 773 |
| 6,306 |
| 1,408 |
| 773 |
| 7,714 |
| 8,487 |
| 882 |
| 1986 |
| 2003 |
|
Centerview |
| Centerview 5565 |
| Office |
| - |
| 513 |
| 4,831 |
| 613 |
| 513 |
| 5,444 |
| 5,957 |
| 533 |
| 1999 |
| 2003 |
|
Centerview |
| Centerview 5580 |
| Office |
| - |
| 768 |
| 5,675 |
| 324 |
| 768 |
| 6,000 |
| 6,767 |
| 538 |
| 1987 |
| 2003 |
|
Crabtree Overlook |
| Crabtree Overlook |
| Office |
| - |
| 2,164 |
| 21,050 |
| 135 |
| 2,164 |
| 21,185 |
| 23,349 |
| 5,012 |
| 2000 |
| 2001 |
|
Interchange Plaza |
| 801 Jones Franklin Rd |
| Office |
| - |
| 1,351 |
| 7,766 |
| 764 |
| 1,351 |
| 8,530 |
| 9,881 |
| 1,712 |
| 1995 |
| 1999 |
|
Interchange Plaza |
| 5520 Capital Ctr Dr (Intrch I) |
| Office |
| - |
| 842 |
| 4,395 |
| 530 |
| 842 |
| 4,926 |
| 5,767 |
| 1,217 |
| 1993 |
| 1999 |
|
Walnut Creek |
| Walnut Creek Business Park #1 |
| Industrial |
| - |
| 419 |
| 3,100 |
| 532 |
| 419 |
| 3,631 |
| 4,050 |
| 1,122 |
| 2001 |
| 2001 |
|
Walnut Creek |
| Walnut Creek Business Park #2 |
| Industrial |
| - |
| 456 |
| 3,774 |
| 256 |
| 456 |
| 4,030 |
| 4,486 |
| 923 |
| 2001 |
| 2001 |
|
Walnut Creek |
| Walnut Creek Business Park #3 |
| Industrial |
| - |
| 679 |
| 4,169 |
| 1,210 |
| 679 |
| 5,380 |
| 6,059 |
| 932 |
| 2001 |
| 2001 |
|
Walnut Creek |
| Walnut Creek IV |
| Industrial |
| - |
| 2,038 |
| 2,977 |
| 418 |
| 2,038 |
| 3,395 |
| 5,433 |
| 613 |
| 2004 |
| 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RINCON, GEORGIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RINCON |
| 400 Ft. Howard Road |
| Industrial |
| - |
| 5,299 |
| 10,119 |
| - |
| 5,299 |
| 10,119 |
| 15,418 |
| - |
| 2002 |
| 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROMEOVILLE, ILLINOIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crossroads Business Park |
| Chapco Carton Company |
| Industrial |
| - |
| 917 |
| 5,217 |
| 49 |
| 917 |
| 5,266 |
| 6,183 |
| 660 |
| 1999 |
| 2002 |
|
Park 55 |
| Park 55 Bldg. 1 |
| Industrial |
| - |
| 6,433 |
| 8,997 |
| 917 |
| 6,433 |
| 9,913 |
| 16,346 |
| 973 |
| 2004 |
| 2004 |
|
88
DUKE REALTY LIMITED PARTNERSHIP | Schedule 3 |
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2006
(in thousands)
|
|
|
|
|
|
|
|
|
|
| Cost Capitalized |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Subsequent to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Building |
|
|
| Initial Cost |
| Development |
| Gross Book Value 12/31/06 |
| Accumulated |
| Year |
| Year |
| ||||||
Development |
| Name |
| Type |
| Encumbrances |
| Land |
| Buildings |
| or Acquisition |
| Land/Land Imp |
| Bldgs/TI |
| Total |
| Depreciation (1) |
| Constructed |
| Acquired |
|
Office Development |
| GSA BTS |
| Office |
| - |
| 5,625 |
| 7,711 |
| - |
| 5,625 |
| 7,710 |
| 13,335 |
| - |
| 2006 |
| 2006 |
|
O'Hare International Ctr |
| O'Hare International Ctr I |
| Office |
| - |
| 7,700 |
| 33,354 |
| - |
| 7,700 |
| 33,353 |
| 41,054 |
| 3,765 |
| 1984 |
| 2005 |
|
O'Hare International Ctr |
| O'Hare International Ctr II |
| Office |
| - |
| 8,103 |
| 31,999 |
| - |
| 8,103 |
| 31,999 |
| 40,102 |
| 3,188 |
| 1987 |
| 2005 |
|
Riverway |
| Riverway East |
| Office |
| - |
| 13,664 |
| 34,570 |
| - |
| 13,664 |
| 34,569 |
| 48,233 |
| 4,238 |
| 1987 |
| 2005 |
|
Riverway |
| Riverway West |
| Office |
| - |
| 3,294 |
| 39,676 |
| - |
| 3,294 |
| 39,676 |
| 42,971 |
| 3,154 |
| 1989 |
| 2005 |
|
Riverway |
| Riverway Central |
| Office |
| - |
| 4,229 |
| 68,293 |
| - |
| 4,229 |
| 68,293 |
| 72,522 |
| 5,125 |
| 1989 |
| 2005 |
|
Riverway |
| Riverway Retail |
| Retail |
| - |
| 189 |
| - |
| - |
| 189 |
| - |
| 189 |
| 45 |
| 1987 |
| 2005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SAVANNAH, GEORGIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gulfstream Road |
| 198 Gulfstream |
| Industrial |
| 6,296 |
| 549 |
| 4,255 |
| - |
| 549 |
| 4,255 |
| 4,804 |
| 157 |
| 1997 |
| 2006 |
|
Gulfstream Road |
| 194 Gulfstream |
| Industrial |
| 1,114 |
| 412 |
| 2,816 |
| - |
| 412 |
| 2,817 |
| 3,229 |
| 105 |
| 1998 |
| 2006 |
|
Gulfstream Road |
| 190 Gulfstream |
| Industrial |
| 2,415 |
| 689 |
| 4,916 |
| - |
| 689 |
| 4,916 |
| 5,606 |
| 180 |
| 1999 |
| 2006 |
|
Grange Road |
| 250 Grange Road |
| Industrial |
| 4,975 |
| 928 |
| 8,648 |
| - |
| 928 |
| 8,647 |
| 9,575 |
| 279 |
| 2002 |
| 2006 |
|
Grange Road |
| 248 Grange Road |
| Industrial |
| 2,119 |
| 664 |
| 3,496 |
| - |
| 664 |
| 3,496 |
| 4,160 |
| 118 |
| 2002 |
| 2006 |
|
SPA Park |
| 80 Coleman Blvd. |
| Industrial |
| 2,238 |
| 782 |
| 3,349 |
| - |
| 782 |
| 3,349 |
| 4,131 |
| 114 |
| 2002 |
| 2006 |
|
Crossroads (Savannah) |
| 163 Portside Court |
| Industrial |
| 21,469 |
| 8,433 |
| 8,366 |
| - |
| 8,433 |
| 8,367 |
| 16,800 |
| 468 |
| 2004 |
| 2006 |
|
Crossroads (Savannah) |
| 151 Portside Court |
| Industrial |
| 4,018 |
| 966 |
| 7,155 |
| - |
| 966 |
| 7,155 |
| 8,121 |
| 150 |
| 2003 |
| 2006 |
|
Crossroads (Savannah) |
| 175 Portside Court |
| Industrial |
| 14,319 |
| 4,300 |
| 15,696 |
| - |
| 4,300 |
| 15,695 |
| 19,995 |
| 609 |
| 2005 |
| 2006 |
|
Crossroads (Savannah) |
| 150 Portside Court |
| Industrial |
| 11,462 |
| 3,071 |
| 23,914 |
| - |
| 3,071 |
| 23,914 |
| 26,986 |
| 739 |
| 2001 |
| 2006 |
|
Crossroads (Savannah) |
| 235 Jimmy Deloach Parkway |
| Industrial |
| 4,144 |
| 1,074 |
| 8,442 |
| - |
| 1,074 |
| 8,441 |
| 9,515 |
| 237 |
| 2001 |
| 2006 |
|
Crossroads (Savannah) |
| 239 Jimmy Deloach Parkway |
| Industrial |
| 3,581 |
| 1,074 |
| 7,141 |
| - |
| 1,074 |
| 7,141 |
| 8,214 |
| 202 |
| 2001 |
| 2006 |
|
Crossroads (Savannah) |
| 246 Jimmy Deloach Parkway |
| Industrial |
| 3,878 |
| 992 |
| 5,383 |
| - |
| 992 |
| 5,383 |
| 6,375 |
| 152 |
| 2006 |
| 2006 |
|
Crossroads (Savannah) |
| 276 Jimmy Deloach Parkway |
| Grounds |
| - |
| 2,266 |
| - |
| - |
| 2,267 |
| - |
| 2,267 |
| 38 |
| N/A |
| 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEVEN HILLS, OHIO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rock Run Business Campus |
| Rock Run North |
| Office |
| - |
| 837 |
| 5,462 |
| 665 |
| 960 |
| 6,004 |
| 6,964 |
| 1,767 |
| 1984 |
| 1996 |
|
Rock Run Business Campus |
| Rock Run Center |
| Office |
| - |
| 1,046 |
| 6,924 |
| 720 |
| 1,169 |
| 7,521 |
| 8,690 |
| 2,289 |
| 1985 |
| 1996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARONVILLE, OHIO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mosteller Distribution Center |
| Mosteller Distribution Ctr. I |
| Industrial |
| - |
| 1,275 |
| 6,193 |
| 3,433 |
| 1,275 |
| 9,626 |
| 10,901 |
| 2,953 |
| 1957 |
| 1996 |
|
Mosteller Distribution Center |
| Mosteller Distribution Ctr. II |
| Industrial |
| - |
| 828 |
| 4,744 |
| 1,324 |
| 828 |
| 6,068 |
| 6,896 |
| 2,118 |
| 1997 |
| 1997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ST. LOUIS PARK, MINNESOTA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The West End |
| 1600 Tower |
| Office |
| - |
| 2,321 |
| 31,239 |
| 4,608 |
| 2,321 |
| 35,848 |
| 38,168 |
| 8,850 |
| 2000 |
| 2000 |
|
The West End |
| MoneyGram Tower |
| Office |
| - |
| 3,039 |
| 35,636 |
| 3,613 |
| 3,091 |
| 39,197 |
| 42,288 |
| 7,582 |
| 1987 |
| 1999 |
|
The West End |
| Novartis Warehouse |
| Industrial |
| - |
| 2,005 |
| 10,948 |
| 459 |
| 2,005 |
| 11,407 |
| 13,411 |
| 7,652 |
| 1960 |
| 1998 |
|
Minneapolis-West |
| 5219 Building (Redeveloped) |
| Office |
| - |
| 102 |
| 19 |
| - |
| 102 |
| 19 |
| 121 |
| 19 |
| 1965 |
| 1998 |
|
Minneapolis-West |
| North Plaza (Redeveloped) |
| Office |
| - |
| 347 |
| 24 |
| - |
| 347 |
| 24 |
| 371 |
| 67 |
| 1966 |
| 1998 |
|
Minneapolis-West |
| South Plaza (Redeveloped) |
| Office |
| - |
| 397 |
| 76 |
| - |
| 397 |
| 76 |
| 473 |
| 76 |
| 1966 |
| 1998 |
|
Minneapolis |
| Chilies Ground Lease |
| Grounds |
| - |
| 921 |
| - |
| 69 |
| 990 |
| - |
| 990 |
| 4 |
| N/A |
| 1998 |
|
Minneapolis |
| Olive Garden Ground Lease |
| Grounds |
| - |
| 921 |
| - |
| - |
| 921 |
| - |
| 921 |
| - |
| N/A |
| 1998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ST. LOUIS, MISSOURI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig Park Center |
| Craig Park Center |
| Industrial |
| - |
| 254 |
| 2,260 |
| 467 |
| 254 |
| 2,727 |
| 2,981 |
| 677 |
| 1984 |
| 1998 |
|
Hawthorn Office |
| Hawthorn Office#1 (Savvis) |
| Office |
| - |
| 2,600 |
| 15,239 |
| 241 |
| 2,600 |
| 15,480 |
| 18,080 |
| 2,099 |
| 1997 |
| 2002 |
|
Lakeside Crossing |
| Lakeside Crossing Buliding I |
| Industrial |
| - |
| 574 |
| 2,272 |
| 637 |
| 574 |
| 2,909 |
| 3,483 |
| 592 |
| 2001 |
| 2002 |
|
Lakeside Crossing |
| Lakeside Crossing Building II |
| Industrial |
| - |
| 1,118 |
| 2,227 |
| - |
| 1,118 |
| 2,228 |
| 3,345 |
| 772 |
| 2002 |
| 2002 |
|
Lakeside Crossing |
| Lakeside Crossing Building III |
| Industrial |
| - |
| 1,851 |
| 4,881 |
| 651 |
| 1,851 |
| 5,532 |
| 7,383 |
| 1,092 |
| 2001 |
| 2002 |
|
Lakeside Crossing |
| Lakeside Crossing V |
| Office |
| - |
| 883 |
| 1,928 |
| - |
| 883 |
| 1,928 |
| 2,811 |
| 557 |
| 2003 |
| 2003 |
|
Lakeside Crossing |
| Lakeside Crossing Building VI |
| Industrial |
| - |
| 1,074 |
| 2,125 |
| 2,348 |
| 1,507 |
| 4,040 |
| 5,547 |
| 694 |
| 2002 |
| 2002 |
|
Laumeier Office Park |
| Laumeier I |
| Office |
| - |
| 1,384 |
| 9,936 |
| 1,983 |
| 1,384 |
| 11,920 |
| 13,303 |
| 4,417 |
| 1987 |
| 1995 |
|
Laumeier Office Park |
| Laumeier II |
| Office |
| - |
| 1,421 |
| 9,990 |
| 1,486 |
| 1,421 |
| 11,476 |
| 12,897 |
| 3,896 |
| 1988 |
| 1995 |
|
Laumeier Office Park |
| Laumeier IV |
| Office |
| - |
| 1,029 |
| 6,963 |
| 1,089 |
| 1,029 |
| 8,052 |
| 9,081 |
| 2,006 |
| 1987 |
| 1998 |
|
Maryville Center |
| 500–510 Maryville Centre |
| Office |
| - |
| 3,402 |
| 24,768 |
| 3,887 |
| 3,402 |
| 28,655 |
| 32,057 |
| 6,704 |
| 1984 |
| 1997 |
|
Maryville Center |
| 530 Maryville Centre |
| Office |
| 5,631 |
| 2,219 |
| 15,292 |
| 2,166 |
| 2,219 |
| 17,458 |
| 19,677 |
| 4,372 |
| 1990 |
| 1997 |
|
Maryville Center |
| 550 Maryville Centre |
| Office |
| - |
| 1,996 |
| 12,532 |
| 2,074 |
| 1,996 |
| 14,607 |
| 16,602 |
| 3,093 |
| 1988 |
| 1997 |
|
Maryville Center |
| 635–645 Maryville Centre |
| Office |
| - |
| 3,048 |
| 18,193 |
| 1,694 |
| 3,048 |
| 19,887 |
| 22,935 |
| 4,725 |
| 1987 |
| 1997 |
|
Maryville Center |
| 655 Maryville Centre |
| Office |
| - |
| 1,860 |
| 13,258 |
| 1,925 |
| 1,860 |
| 15,183 |
| 17,043 |
| 3,323 |
| 1994 |
| 1997 |
|
Maryville Center |
| 540 Maryville Centre |
| Office |
| - |
| 2,219 |
| 14,746 |
| 1,371 |
| 2,219 |
| 16,117 |
| 18,336 |
| 4,177 |
| 1990 |
| 1997 |
|
89
DUKE REALTY LIMITED PARTNERSHIP | Schedule 3 |
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2006
(in thousands)
|
|
|
|
|
|
|
|
|
|
| Cost Capitalized |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Subsequent to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Building |
|
|
| Initial Cost |
| Development |
| Gross Book Value 12/31/06 |
| Accumulated |
| Year |
| Year |
| ||||||
Development |
| Name |
| Type |
| Encumbrances |
| Land |
| Buildings |
| or Acquisition |
| Land/Land Imp |
| Bldgs/TI |
| Total |
| Depreciation (1) |
| Constructed |
| Acquired |
|
Maryville Center |
| 520 Maryville Centre |
| Office |
| - |
| 2,404 |
| 14,521 |
| 1,037 |
| 2,404 |
| 15,557 |
| 17,962 |
| 3,197 |
| 1998 |
| 1999 |
|
Maryville Center |
| 700 Maryville Centre |
| Office |
| - |
| 4,556 |
| 28,599 |
| 360 |
| 4,556 |
| 28,960 |
| 33,515 |
| 6,700 |
| 1999 |
| 2000 |
|
Maryville Center |
| 533 Maryville Centre |
| Office |
| - |
| 3,230 |
| 17,921 |
| 275 |
| 3,230 |
| 18,196 |
| 21,426 |
| 3,821 |
| 2000 |
| 2000 |
|
Maryville Center |
| 555 Maryville Centre |
| Office |
| - |
| 3,226 |
| 15,799 |
| 1,648 |
| 3,226 |
| 17,447 |
| 20,672 |
| 3,271 |
| 2000 |
| 2001 |
|
Maryville Center |
| 625 Maryville Centre |
| Office |
| 3,193 |
| 2,509 |
| 11,229 |
| 262 |
| 2,509 |
| 11,490 |
| 13,999 |
| 1,935 |
| 1996 |
| 2002 |
|
St. Louis Business Center |
| St. Louis Business Center A |
| Industrial |
| - |
| 194 |
| 1,768 |
| 508 |
| 194 |
| 2,276 |
| 2,470 |
| 654 |
| 1987 |
| 1998 |
|
St. Louis Business Center |
| St. Louis Business Center B |
| Industrial |
| - |
| 250 |
| 2,114 |
| 1,151 |
| 250 |
| 3,265 |
| 3,515 |
| 755 |
| 1986 |
| 1998 |
|
St. Louis Business Center |
| St. Louis Business Center C |
| Industrial |
| - |
| 166 |
| 1,271 |
| 406 |
| 166 |
| 1,677 |
| 1,842 |
| 348 |
| 1986 |
| 1998 |
|
St. Louis Business Center |
| St. Louis Business Center D |
| Industrial |
| - |
| 168 |
| 1,454 |
| 314 |
| 168 |
| 1,768 |
| 1,936 |
| 375 |
| 1987 |
| 1998 |
|
Southridge |
| Southridge Business Center |
| Industrial |
| - |
| 1,158 |
| 4,234 |
| 1,751 |
| 1,158 |
| 5,984 |
| 7,142 |
| 907 |
| 2002 |
| 2002 |
|
West Port Place |
| Westport Center I |
| Industrial |
| - |
| 1,707 |
| 5,329 |
| 886 |
| 1,707 |
| 6,216 |
| 7,923 |
| 1,625 |
| 1998 |
| 1998 |
|
West Port Place |
| Westport Center II |
| Industrial |
| - |
| 914 |
| 1,999 |
| 257 |
| 914 |
| 2,257 |
| 3,170 |
| 654 |
| 1998 |
| 1998 |
|
West Port Place |
| Westport Center III |
| Industrial |
| - |
| 1,206 |
| 2,650 |
| 524 |
| 1,206 |
| 3,174 |
| 4,381 |
| 795 |
| 1998 |
| 1999 |
|
West Port Place |
| Westport Center IV |
| Industrial |
| - |
| 1,440 |
| 4,860 |
| 58 |
| 1,440 |
| 4,918 |
| 6,358 |
| 990 |
| 2000 |
| 2000 |
|
West Port Place |
| Westport Center V |
| Industrial |
| - |
| 493 |
| 1,591 |
| 23 |
| 493 |
| 1,614 |
| 2,107 |
| 566 |
| 1999 |
| 2000 |
|
West Port Place |
| Westport Place |
| Office |
| - |
| 1,990 |
| 6,340 |
| 2,068 |
| 1,990 |
| 8,408 |
| 10,398 |
| 1,871 |
| 1999 |
| 2000 |
|
Westmark |
| Westmark |
| Office |
| - |
| 1,497 |
| 10,423 |
| 2,181 |
| 1,684 |
| 12,417 |
| 14,101 |
| 4,171 |
| 1987 |
| 1995 |
|
Westview Place |
| Westview Place |
| Office |
| - |
| 669 |
| 8,799 |
| 2,494 |
| 669 |
| 11,292 |
| 11,961 |
| 3,675 |
| 1988 |
| 1995 |
|
Woodsmill Commons |
| Woodsmill Commons II (400) |
| Office |
| - |
| 1,718 |
| 7,896 |
| 5 |
| 1,718 |
| 7,902 |
| 9,620 |
| 855 |
| 1985 |
| 2003 |
|
Woodsmill Commons |
| Woodsmill Commons I (424) |
| Office |
| - |
| 1,836 |
| 7,783 |
| 147 |
| 1,836 |
| 7,930 |
| 9,767 |
| 902 |
| 1985 |
| 2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ST. PETERS, MISSOURI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horizon Business Ctr |
| Horizon Business Center |
| Industrial |
| - |
| 344 |
| 2,475 |
| 276 |
| 344 |
| 2,751 |
| 3,095 |
| 650 |
| 1985 |
| 1998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STERLING, VIRGINIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TransDulles Centre |
| 22800 Davis Drive |
| Office |
| - |
| 2,550 |
| 7,755 |
| - |
| 2,550 |
| 7,755 |
| 10,305 |
| - |
| 1989 |
| 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUNRISE, FLORIDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sawgrass |
| Sawgrass – Building B |
| Office |
| - |
| 1,211 |
| 6,424 |
| 1,242 |
| 1,211 |
| 7,666 |
| 8,877 |
| 1,973 |
| 1999 |
| 2000 |
|
Sawgrass |
| Sawgrass – Building A |
| Office |
| - |
| 1,147 |
| 4,530 |
| 37 |
| 1,147 |
| 4,568 |
| 5,715 |
| 963 |
| 2000 |
| 2001 |
|
Sawgrass |
| Sawgrass Pointe |
| Office |
| - |
| 3,484 |
| 21,827 |
| 5,043 |
| 3,484 |
| 26,870 |
| 30,354 |
| 4,195 |
| 2001 |
| 2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TAMPA, FLORIDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fairfield Distribution Center |
| Fairfield Distribution Ctr I |
| Industrial |
| - |
| 483 |
| 2,658 |
| 94 |
| 487 |
| 2,748 |
| 3,235 |
| 536 |
| 1998 |
| 1999 |
|
Fairfield Distribution Center |
| Fairfield Distribution Ctr II |
| Industrial |
| - |
| 530 |
| 4,901 |
| 69 |
| 534 |
| 4,966 |
| 5,500 |
| 933 |
| 1998 |
| 1999 |
|
Fairfield Distribution Center |
| Fairfield Distribution Ctr III |
| Industrial |
| - |
| 334 |
| 2,771 |
| 98 |
| 338 |
| 2,865 |
| 3,203 |
| 533 |
| 1999 |
| 1999 |
|
Fairfield Distribution Center |
| Fairfield Distribution Ctr IV |
| Industrial |
| - |
| 600 |
| 1,958 |
| 1,007 |
| 604 |
| 2,961 |
| 3,565 |
| 627 |
| 1999 |
| 1999 |
|
Fairfield Distribution Center |
| Fairfield Distribution Ctr V |
| Industrial |
| - |
| 488 |
| 3,538 |
| 108 |
| 488 |
| 3,646 |
| 4,134 |
| 1,071 |
| 2000 |
| 2000 |
|
Fairfield Distribution Center |
| Fairfield Distribution Ctr VI |
| Industrial |
| - |
| 555 |
| 4,517 |
| 487 |
| 555 |
| 5,004 |
| 5,559 |
| 1,017 |
| 2001 |
| 2001 |
|
Fairfield Distribution Center |
| Fairfield Distribution Ctr VII |
| Industrial |
| - |
| 394 |
| 3,906 |
| 779 |
| 394 |
| 4,685 |
| 5,079 |
| 1,749 |
| 2001 |
| 2001 |
|
Fairfield Distribution Center |
| Fairfield VIII |
| Industrial |
| - |
| 1,082 |
| 3,326 |
| 1 |
| 1,082 |
| 3,327 |
| 4,409 |
| 653 |
| 2004 |
| 2004 |
|
Eagle Creek Business Center |
| Eagle Creek Business Ctr. I |
| Industrial |
| - |
| 3,705 |
| 3,187 |
| 703 |
| 3,705 |
| 3,889 |
| 7,594 |
| 77 |
| 2006 |
| 2006 |
|
Highland Oaks |
| Highland Oaks I |
| Office |
| - |
| 1,525 |
| 13,488 |
| 789 |
| 1,525 |
| 14,277 |
| 15,802 |
| 3,338 |
| 1999 |
| 1999 |
|
Highland Oaks |
| Highland Oaks II |
| Office |
| - |
| 1,605 |
| 11,354 |
| 2,936 |
| 1,605 |
| 14,290 |
| 15,895 |
| 3,185 |
| 1999 |
| 2000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEST CHESTER, OHIO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Centre Pointe Office Park |
| Centre Pointe I |
| Office |
| - |
| 2,501 |
| 9,574 |
| 300 |
| 2,501 |
| 9,873 |
| 12,374 |
| 1,459 |
| 2000 |
| 2004 |
|
Centre Pointe Office Park |
| Centre Pointe II |
| Office |
| - |
| 2,056 |
| 10,063 |
| 52 |
| 2,056 |
| 10,115 |
| 12,171 |
| 1,458 |
| 2001 |
| 2004 |
|
Centre Pointe Office Park |
| Centre Pointe III |
| Office |
| - |
| 2,048 |
| 10,309 |
| 432 |
| 2,048 |
| 10,740 |
| 12,788 |
| 1,600 |
| 2002 |
| 2004 |
|
Centre Pointe Office Park |
| Centre Pointe IV |
| Office |
| - |
| 2,013 |
| 9,017 |
| - |
| 2,932 |
| 8,098 |
| 11,030 |
| 421 |
| 2005 |
| 2005 |
|
World Park at Union Centre |
| World Park at Union Centre 10 |
| Industrial |
| - |
| 2,150 |
| 7,885 |
| - |
| 2,151 |
| 7,884 |
| 10,034 |
| 217 |
| 2006 |
| 2006 |
|
World Park at Union Centre |
| World Park at Union Centre 11 |
| Industrial |
| - |
| 2,592 |
| 6,936 |
| 14 |
| 2,592 |
| 6,949 |
| 9,541 |
| 871 |
| 2004 |
| 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WESTERVILLE, OHIO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Westerville |
| Liebert |
| Office |
| - |
| 755 |
| 3,144 |
| 909 |
| 755 |
| 4,053 |
| 4,808 |
| 752 |
| 1999 |
| 1999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WESTMONT, ILLINOIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oakmont Corporate Center |
| Oakmont Tech Center |
| Office |
| - |
| 1,501 |
| 8,590 |
| 2,414 |
| 1,703 |
| 10,801 |
| 12,505 |
| 2,208 |
| 1989 |
| 1998 |
|
Oakmont Corporate Center |
| Oakmont Circle Office |
| Office |
| - |
| 3,177 |
| 13,874 |
| 2,063 |
| 3,521 |
| 15,593 |
| 19,114 |
| 3,497 |
| 1990 |
| 1998 |
|
90
DUKE REALTY LIMITED PARTNERSHIP | Schedule 3 |
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2006
(in thousands)
|
|
|
|
|
|
|
|
|
|
| Cost Capitalized |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Subsequent to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Building |
|
|
| Initial Cost |
| Development |
| Gross Book Value 12/31/06 |
| Accumulated |
| Year |
| Year |
| ||||||
Development |
| Name |
| Type |
| Encumbrances |
| Land |
| Buildings |
| or Acquisition |
| Land/Land Imp |
| Bldgs/TI |
| Total |
| Depreciation (1) |
| Constructed |
| Acquired |
|
WESTON, FLORIDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weston Pointe |
| Weston Pointe I |
| Office |
| - |
| 2,580 |
| 10,020 |
| 624 |
| 2,580 |
| 10,644 |
| 13,224 |
| 1,117 |
| 1999 |
| 2003 |
|
Weston Pointe |
| Weston Pointe II |
| Office |
| - |
| 2,183 |
| 10,791 |
| 13 |
| 2,183 |
| 10,804 |
| 12,987 |
| 1,234 |
| 2000 |
| 2003 |
|
Weston Pointe |
| Weston Pointe III |
| Office |
| - |
| 2,183 |
| 11,531 |
| 698 |
| 2,183 |
| 12,228 |
| 14,411 |
| 1,161 |
| 2001 |
| 2003 |
|
Weston Pointe |
| Weston Pointe IV |
| Office |
| - |
| 3,349 |
| 10,695 |
| - |
| 3,349 |
| 10,695 |
| 14,044 |
| 398 |
| 2006 |
| 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Eliminations |
|
|
|
|
|
|
|
|
| (18,866 | ) | (174 | ) | (18,692 | ) | (18,866 | ) | (6,074 | ) |
|
|
|
|
|
|
|
|
|
| 662,501 |
| 860,656 |
| 4,331,817 |
| 390,715 |
| 876,462 |
| 4,706,726 |
| 5,583,188 |
| 900,898 |
|
|
|
|
|
(1) Depreciation of real estate is computed using the straight-line method over 40 years for buildings, 15 years for land improvements and shorter periods based on lease terms (generally 3 to 10 years) for tenant improvements.
| Real Estate Assets |
| Accumulated Depreciation |
| |||||||||||||||
|
| 2006 |
| 2005 |
| 2004 |
| 2006 |
| 2005 |
| 2004 |
| ||||||
Balance at beginning of year | $ | 4,831,506 |
| $ | 5,377,094 |
| $ | 5,094,168 |
| $ | 754,742 |
| $ | 788,900 |
| $ | 677,357 |
|
|
Acquisitions |
| 836,146 |
|
| 272,141 |
|
| 213,500 |
|
| - |
|
| - |
|
| - |
|
|
Construction costs and tenant improvements |
| 540,442 |
|
| 321,786 |
|
| 291,850 |
|
| - |
|
| - |
|
| - |
|
|
Depreciation expense |
| - |
|
| - |
|
| - |
|
| 199,148 |
|
| 200,102 |
|
| 185,091 |
|
|
Acquisition of minority interest |
| - |
|
| - |
|
| 11,408 |
|
| - |
|
| - |
|
| - |
|
|
|
| 6,208,094 |
|
| 5,971,021 |
|
| 5,610,926 |
|
| 953,890 |
|
| 989,002 |
|
| 862,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deductions during year: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of real estate sold or contributed |
| (590,308 | ) |
| (1,081,447 | ) |
| (180,982 | ) |
| (18,660 | ) |
| (179,848 | ) |
| (20,878 | ) |
|
Impairment Allowance |
| (266 | ) |
| (3,656 | ) |
| (180 | ) |
|
|
|
|
|
|
|
|
|
|
Write-off of fully amortized assets |
| (34,332 | ) |
| (54,412 | ) |
| (52,670 | ) |
| (34,332 | ) |
| (54,412 | ) |
| (52,670 | ) |
|
Balance at end of year | $ | 5,583,188 |
| $ | 4,831,506 |
| $ | 5,377,094 |
| $ | 900,898 |
| $ | 754,742 |
| $ | 788,900 |
|
|
91
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| DUKE REALTY LIMITED PARTNERSHIP |
| ||||
|
|
| ||||
|
|
| ||||
March 12, 2007 | By: | /s/ Dennis D. Oklak |
| |||
|
| Dennis D. Oklak | ||||
|
| Chairman and Chief Executive | ||||
|
| Officer of the General Partner | ||||
|
|
| ||||
| By: | /s/ Matthew A. Cohoat |
| |||
|
| Matthew A. Cohoat | ||||
|
| Executive Vice President and | ||||
|
| Chief Financial Officer of the General Partner | ||||
|
| (Principal Financial Officer) | ||||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature |
| Date |
| Title |
|
|
|
|
|
|
|
|
|
|
/s/ Barrington H. Branch* |
| 2/25/07 |
| Director of the General Partner |
Barrington H. Branch |
|
|
|
|
|
|
|
|
|
/s/ Geoffrey Button * |
| 2/22/07 |
| Director of the General Partner |
Geoffrey Button |
|
|
|
|
|
|
|
|
|
/s/ William Cavanaugh, III* |
| 2/23/07 |
| Director of the General Partner |
William Cavanaugh, III |
|
|
|
|
|
|
|
|
|
/s/ Ngaire E. Cuneo * |
| 2/22/07 |
| Director of the General Partner |
Ngaire E. Cuneo |
|
|
|
|
|
|
|
|
|
/s/ Charles R. Eitel* |
| 2/23/07 |
| Director of the General Partner |
Charles R. Eitel |
|
|
|
|
|
|
|
|
|
/s/ Dr. R. Glenn Hubbard* |
| 2/21/07 |
| Director of the General Partner |
Dr. R. Glenn Hubbard |
|
|
|
|
|
|
|
|
|
/s/ Dr. Martin C. Jischke* |
| 2/22/07 |
| Director of the General Partner |
Dr. Martin C. Jischke |
|
|
|
|
|
|
|
|
|
/s/ L. Ben Lytle * |
| 2/22/07 |
| Director of the General Partner |
L. Ben Lytle |
|
|
|
|
92
/s/ William O. McCoy * |
| 2/22/07 |
| Director of the General Partner |
William O. McCoy |
|
|
|
|
|
|
|
|
|
/s/ Jack R. Shaw * |
| 2/22/07 |
| Director of the General Partner |
Jack R. Shaw |
|
|
|
|
|
|
|
|
|
/s/ Robert J. Woodward * |
| 2/22/07 |
| Director of the General Partner |
Robert J. Woodward |
|
|
|
|
* By Dennis D. Oklak, Attorney-in-Fact | /s/ Dennis D. Oklak |
|
|
93