![]() RELIABLE. ANSWERS. 2012 NAREIT San Diego, CA November 13 - 15 Exhibit 99.1 |
![]() 40 Years Timeline 2 RELIABLE. ANSWERS. 2012 Duke Realty Corporation |
![]() Focus on: Increasing cash flow Maximizing return on assets 3 Strategy for Success Focus on: Improving coverage ratios Improving ratings Focus on: Portfolio repositioning Strategic acquisitions & dispositions Development opportunities Strategies for delivering shareholder value RELIABLE. ANSWERS. 2012 Duke Realty Corporation |
![]() RELIABLE. ANSWERS. 2012 Duke Realty Corporation 2012 Goals and Objectives Q3 2012 Update • Lease-up portfolio, manage cap ex; reach positive same property income growth • Balance execution with capital strategy relative to level and quality of cash flow and same property NOI • Development starts of $150 to $250MM focus on medical office and build-to-suit • Total portfolio occupancy as of quarter end 91.9%, up 1.2% from year-end; industrial only portfolio at 93.2% • Approximately 7.4 million square feet of leases completed • Debt to EBITDA @ 7.3x; 2.0% Same Property NOI growth • $115MM development starts. Two 100% leased bulk industrial expansion projects (at 7.2% weighted yield), one spec industrial (8.0%), three 100% leased medical office projects (7.4%) and one office spec project (9.3% yield) • Continue strong momentum from 2011 on repositioning of portfolio • Pursue acquisitions of medical and industrial assets • Continue pruning suburban office primarily in Midwest • Closed on approximately $92MM of acquisitions during the quarter, all comprised of healthcare • $27MM in dispositions of non-core assets • Total suburban office portfolio 85.7% occupied, preparing non-strategic assets for sale • Opportunistically access capital markets . . push out maturity schedule further • Continue improving coverage ratios • Maintain minimal balance on line of credit • Fixed charge ratio of 1.81x unchanged from Q2 2012 • Issued $300MM of senior notes at 3.875% coupon maturing 2022 • Issued $87MM of equity through ATM program at a $14.92 share price . . . Additional $22MM executed through October 11th at $14.71 • Zero credit facility balance and $113MM of cash at qtr end Strategic Focus Asset Strategy Operations Strategy Capital Strategy 4 Solid Q3 performance across all three aspects of our strategy |
![]() 2012 Duke Realty Corporation OPERATIONS STRATEGY 5 |
![]() 6 Focus on Fundamentals LEASING OF PORTFOLIO STRATEGIC NEW DEVELOPMENT AND LAND DISPOSITION AFFO PAYOUT OPERATIONS STRATEGY Maximize return on assets 2012 Duke Realty Corporation |
![]() Consistent Operating Performance Stabilized Occupancy (%) Strong historical stabilized occupancy – fundamentals improving Lease Renewals (%) Strong lease renewal percentages Stabilized occupancy In-service occupancy Leasing Activity New Leases and Renewals – Consistent Execution (in millions of square feet) Lease Maturity Schedule Lease maturities are well balanced with no one year accounting for more than 12% Demonstrated ability to maintain consistency through economic cycles 95% 92% 92% 89% 88% 91% 91% 89% 89% 87% 7 OPERATIONS STRATEGY 93% 93% 72% 79% 77% 69% 82% 21.4 22.7 25.9 24.5 20.9 2012 Duke Realty Corporation 29.9 80% |
![]() 2012 Duke Realty Corporation Notes 1. Based on simple average of calendar year-over-year annual same-property cash NOI growth, includes 2007 - 2011 2. Suburban Office Peers include BDN, CLI, HIW, LRY and PKY; weighted by historical market cap 3. Industrial includes DCT, EGP, FR, FPO, PSB, AMB and PLD; weighted by historical market cap 1.5% (0.2%) (0.2%) 3.2% (0.6%) 0.2% (1.0%) 0.0% 1.0% 2.0% 3.0% 4.0% Suburban Office Peers Industrial Peers 5-Year Avg. 1-Year Avg. Annual Same-Store NOI Growth (1) %, y-y Sources SNL and company filings Duke Realty Suburban Office Peers (2) Industrial Peers (3) Consistent NOI Growth Outperformance Relative Performance vs. Peers OPERATIONS STRATEGY 8 |
![]() 9 Positioned for NAV Growth KEY NAV GROWTH DRIVERS Lease up existing vacancy Increased management & service fees Accretive future development Accretive future acquisitions Portfolio occupancy of 92.0% Strong leasing pipeline Demonstrated track record of 69-80% renewal rate Should benefit from uptick in third party and JV partners development and construction activity Property management and leasing fees - should trend higher as occupancy improves Current pipeline 3.4MM SF of industrial, 0.8MM SF of medical office and 0.5MM SF of suburban office 2012 estimated development starts of $300 to $500 million Acquisitions focused on achieving asset repositioning goals Industrial and medical office assets Higher rental rate growth markets Increase Rents/ Reduced Capex Rent roll downs burning off and positive same property NOI performance Forecasts of industrial market wide average annual rent growth of 3.2% from 2013-16 Sources: Duke Realty. Rent forecasts per PPR and Green Street OPERATIONS STRATEGY 2012 Duke Realty Corporation |
![]() 10 Land and Development Capabilities OPERATIONS STRATEGY $498 million HELD FOR DEVELOPMENT Industrial Office Midwest 26.3 2.8 Indianapolis, Chicago, Cincinnati, Columbus, Minneapolis, and St. Louis major positions East 3.8 2.1 New Jersey, Baltimore, Washington D.C., and Raleigh Southeast 8.5 1.3 Atlanta, Central Florida, and, South Florida Southwest 5.8 0.7 Phoenix, Dallas, and Houston Total 44.4 million SF 6.9 million SF Attractive positions contribute to future development and value Development – Amounts in million SF 2012 Duke Realty Corporation |
![]() 11 Columbus - Industrial OPERATIONS STRATEGY • Restoration Hardware Expansion for Eastern U.S. Distribution Operations • West Jefferson submarket on 19 acres of our land • 418,000 square feet, as an addition to existing 805,000 square feet • $15.3 million project • 15-year projected average yield of 8.1% Industrial facility expansion and lease extension with growing high-end retailer on our land 2012 Duke Realty Corporation • 15 year lease term |
![]() 12 Chicago - Industrial OPERATIONS STRATEGY • Yusen Logistics build-to-suit • O’Hare submarket on 26 acre brownfield redevelopment • 230,000 square feet • 12 year lease term • $21.3 million project • 12-year projected average yield of 7.0% Expand industrial with global logistics provider in strategic market 2012 Duke Realty Corporation |
![]() 2012 Duke Realty Corporation 13 Atlanta - Industrial OPERATIONS STRATEGY Expand industrial on Duke Realty land in airport submarket • Kuehne & Nagel build-to-suit on Duke Realty land at Camp Creek • South Atlanta submarket near Hartsfield Airport • 211,000 square feet • 10 year lease term • $15 million project • 10-year projected average yield of 8.3% |
![]() 14 Southern California - Industrial • Speculative development on Duke Realty Land in Chino, CA • Inland Empire West submarket • 421,000 square feet • $26 million project • 5-year projected average yield of 7.0% Expand industrial with Southern California speculative development on Duke Realty land 2012 Duke Realty Corporation OPERATIONS STRATEGY |
![]() 2012 Duke Realty Corporation 15 Indianapolis – Industrial OPERATIONS STRATEGY Expand industrial with solid global manufacturer • Regal Beloit build-to-suit bulk distribution facility in Plainfield submarket • 376,000 square feet, 10 year lease term to growing global manufacturing company • Duke Realty won with strategic land position • $15 million project • 10-year projected average yield of 8.0% |
![]() OPERATIONS STRATEGY 16 Northeast U.S. – Bulk Industrial Build-to-Suit Repeat business new development with growing tenant • Regional distribution center build-to-suit in Delaware for Amazon • 1,015,000 square feet • 12 year lease term • $77 million project • 12-year projected average yield of 8.1% 2012 Duke Realty Corporation |
![]() 17 Southeast & Midwest – Medical Office • Three build-to-suit developments with existing relationships in Atlanta, Cincinnati and Indianapolis • Leased to Northside Hospital, Good Samaritan and Community Health • 181,000 total square feet, each with fifteen-year leases • $48 million in project costs, 15-year projected average yield of 8.6% Grow Medical Office 2011 Duke Realty Corporation |
![]() 18 Tampa – Medical Office • VA Primary Care Annex at Tampa • Leased to Department of Veterans Affairs • 120,000 square feet • 20 year lease • $39 million project • 20-year projected average yield of 8.2% Grow Medical Office OPERATIONS STRATEGY 2012 Duke Realty Corporation |
![]() RELIABLE. ANSWERS. 2012 Duke Realty Corporation Development Strategic Advantages Development platform creates value 19 Duke Realty forty years of experience in development Recognized as one of the leading commercial developers in each of our 18 markets Land bank in strategic locations that can support approximately 50 million square feet of development is a significant value advantage going forward Capital deployed in development can generate 75 to 150 basis points of premium yield over typical acquisition yields Risk management policies in place to govern maximum development pipeline size and speculative development starts |
![]() 2012 Duke Realty Corporation ASSET STRATEGY 20 |
![]() 21 Track Record Proven ability to execute and allocate investments in alignment with our strategy Flex Disposition $1 Billion 2005 2006 Savannah Washington DC 2007 Healthcare 2009 Asset Strategy 2010 Dugan CBRERT Premier Suburban Office disposition $1 Billion 2011 2012 MOB and Industrial acquisitions $300-500 Million Projected ASSET STRATEGY 2012 Duke Realty Corporation |
![]() 22 Asset Strategy BY PRODUCT 2009 2013 BY GEOGRAPHY ASSET STRATEGY 2009 2013 2012 Southeast 21% Southeast 24% Southeast 30% 2012 Note: 2012 figures as of September 30 th , 2012 2012 Duke Realty Corporation |
![]() 2012 Duke Realty Corporation 23 Asset Strategy: Road Map ($ in millions) Investment 12/31/10 Investment 9/30/12 ACTION PLAN Investment 2013 PRODUCT TYPE Amount % Amount % Acquisitions / Developments / Repositioning Amount % Industrial $3,645 45% $4,451 53% $469 $4,920 60% Office 3,770 46% 2,549 31% (499) 2,050 25% Medical Office 515 6% 1040 13% 190 1,230 15% Retail 280 3% 291 3% (291) 0 0% $8,210 100% $8,331 100% $(131) $8,200 100 % REGION Midwest $3,970 48% $3,797 46% ($517) $3,280 40% Southeast 2,270 28% 2,027 24% 433 2,460 30% East 955 11% 1,083 13% 147 1,230 15% South 950 12% 1,171 14% (351) 820 10% West 65 1% 253 3% 157 410 5% $8,210 100% $8,331 100% $(131) $8,200 100% Portfolio sale accelerates suburban office repositioning ASSET STRATEGY |
![]() 2012 Duke Realty Corporation 24 New, High Quality Portfolio with Long-term Leases ASSET STRATEGY Premier portfolio of assets Portfolio average Bulk Industrial Suburban Office Medical Office Property age 11.0 years 13.7 years 6.2 years Property size 224,000 SF 118,000 SF 77,000 SF Lease term 7.2 years 7.3 years 11.7 years Tenant size 75,000 SF 12,000 SF 10,000 SF |
![]() ![]() 2012 Duke Realty Corporation 25 Premier Quality Industrial Portfolio ASSET STRATEGY Industry leading focus on newer built, modern bulk warehouse type with strong performance characteristics <100,000 100,000-500,000 >500,000 % Total Square Feet 10% 54% 36% Building Square Footage (000's) 11,000 60,000 39,000 No. of Buildings 162 273 51 Average Tenant Size 20,202 86,385 477,676 9/30/12 Occupancy 89.1% 93.9% 95.5% Building Size Portfolio Metric |
![]() 26 Southern California Industrial Trojan Way 497,620 SF, 100% leased Atlanta Industrial Hartman Business Center V 569,674 SF, 100% leased Columbus Industrial Creekside XIV & XXII 1,076,625 SF, 86% leased Chicago Industrial Crate & Barrel Distribution Center 827,268 SF, 100% leased Chicago Industrial 940 North Enterprise 257,542 SF, 100% leased Century Distribution Center Los Angeles, CA 323,000 SF, 100% leased Lakeside Ranch Industrial Dallas, TX 749,000 SF, 100% leased Seefried Industrial Dallas, TX 324,000 SF, 100% leased Premier Portfolio Industrial Pompano, FL 1,163,000 SF, 90% leased Note: % leased figures represent status at time of acquisition ASSET STRATEGY Select Industrial Acquisitions in 2011 & 2012 © 2012 Duke Realty Corporation |
![]() 27 MEDICAL OFFICE STRATEGY & Performance Update © 2012 Duke Realty Corporation |
![]() 28 © 2012 Duke Realty Corporation Healthcare Data Points The nation’s largest industry • More than 17% of GDP, predicted to exceed 23% by 2020 • More than 5% of pre-tax income spent on healthcare • People insured expected to increase by 30 to 50 million – increased demand for care • Number of physicians will probably increase – growing space demand • Hospitals expect margin largely due to Medicare reimbursement risks . . . incentive to increase market share (M&A), accelerate IT and equipment investments and seek capital partners for “non-core assets” • May reduce reimbursements – real estate efficiency a priority – larger deals and floor plates Reform Healthcare systems growing and physician employment changing MEDICAL OFFICE STRATEGY |
![]() 29 Source: AHA Trendwatch Chartbook, 2011 Trends in Inpatient Days and Outpatient Visits Outpatient demand drives occupancy in MOB’s © 2012 Duke Realty Corporation MEDICAL OFFICE STRATEGY |
![]() Trends in Medical Practice Ownership Hospitals are increasing physician employment to create efficiencies and to position themselves to become Accountable Care Organizations Physicians are seeking employment in the declining reimbursement environment 30 Source: MGMA Physician Compensation and Production Survey Report; Wall Street Journal, 10/8/10 Hospital-owned practices creating access to better credit generally MEDICAL OFFICE STRATEGY 2002 2003 2004 2005 2006 2007 2008 2009 0% 25% 50% 75% 100% Physician-owned Hospital-owned 2012 Duke Realty Corporation |
![]() Local 19% Regional 45% National 36% Portfolio investment by product type Portfolio investment by hospital system MOB On-Campus 76% MOB Off-Campus 19% Specialty Hospital 5% Medical Office Portfolio at September 30, 2012 MEDICAL OFFICE STRATEGY In-Service Under Development Total Properties Investment $ Square Feet Occupancy 69 $1.2 B 5.4 M 91% 7 $190 M 760 K 100% 76 $1.4 B 6.1 M 92% 2012 Duke Realty Corporation 31 Note: Figures as of September 30 th , 2012 including proforma 1.2 million square foot Seavest acquisition (Seavest closed October 2012) |
![]() Strategic Benefits to Duke Realty Medical office should provide solid NOI growth and lower volatility 32 Operational and Diversification Strategic Benefits • One of the newest portfolios in REIT sector among the highest credit tenants lease rosters • Medical office development starts solid during recession with nearly $400 million of starts between 2008 and 2010 • Leasing, construction and market location synergies with existing multi- tenant industrial and office portfolio • NOI stream should reduce company beta with longer term leases, 2-3% rent escalators with very high tenant retention and strong credit tenant base MEDICAL OFFICE STRATEGY © 2012 Duke Realty Corporation |
![]() © 2012 Duke Realty Corporation 33 1% 1% 1% 1% 1% 2% 0% 2% 4% 6% 8% 10% 2012 2013 2014 2015 2016 2017 Lease Maturity (% of Total Sq. Ft.) High credit tenants and limited lease maturity result in stable and growing cash flow Top Health System Relationships Health System Credit Rating (Moody's) Rentable SF Baylor Health Care System Aa2 456,000 Ascension Health Aa1 367,000 Franciscan Alliance, Inc. Aa3 274,000 Health & Hospital Corp Marion County Aa1 274,000 Trinity Health Aa2 259,000 Northside Hospital Unrated 208,000 Scott & White Healthcare A1 195,000 Carolinas Medical Center Aa3 190,000 US Oncology, Inc. (McKesson) Baa2 182,000 Catholic Health Initiatives Aa2 179,000 MEDICAL OFFICE STRATEGY |
![]() © 2012 Duke Realty Corporation 34 34 NOI in $millions Annual NOI In-Service Portfolio Occupancy * As of 9/30/2012 *Projected for lease up of unstabilized and completed development assets Medical Office NOI and Portfolio Occupancy MEDICAL OFFICE STRATEGY 70 60 50 40 30 20 10 0 2008 2009 2010 2011 2012 14 20 28 37 61 2008 2009 2010 2011 2012 95% 90% 85% 80% 75% 70% 86.6% 78.4% 85.8% 90.1% 91.9% Medical office business projected to reach or exceed 15% of total asset base by 2013 |
![]() Seavest Portfolio Overview Class A, On-campus portfolio 35 Geographic Footprint (Hospital System) Representative Asset Snapshots 1,202,285 square feet (14 assets) 13 of the 14 assets are on-campus or adjacent to campus Fair Oaks MOB (INOVA Health) Fairfax, VA Celebration Health Plaza Kissimmee Medical Plaza East Orlando Med Surg. Sebring Med. Pavilion (Adventist Health) Orlando, FL VA Clinic Ft. Lauderdale, FL Seton Prof. Building Water Tower Commons (Ascension Health) Milwaukee, WI The Green Clinic (Green Surgical Hospital) Ruston, LA Mountainview MOB (Community Health) Las Cruces, NM Medical Mall of Abilene (Abilene Reg. Med. Cen.) Abilene, TX Hillcrest Baptist I Hillcrest Baptist II (Scott & White) Waco, TX Longview MOB (Community Health) Longview, TX MEDICAL OFFICE STRATEGY © 2012 Duke Realty Corporation Kissimmee Medical Plaza Orlando, FL Seton Professional Bldg. Milwaukee, WI Longview MOB Longview, TX Mountainview Med. Plaza Las Cruces, NM VA Clinic Sunrise, FL (Ft. Lauderdale) Celebration Health Orlando, FL Sebring Medical Pavilion Sebring, FL East Orl. Med. Surg. Plaza Orlando, FL Water Tower Commons Milwaukee, WI |
![]() Harbin Portfolio Overview Off-market, relationship driven opportunity 36 Geographic Footprint Representative Asset Snapshots 334,000 square feet (7 assets) 6 of the 7 assets are 100% leased to Harbin Clinic LLC for 15 years Self managed portfolio will require no additional overhead Harbin Cancer Center On-Campus. Class A MOB. 55K sf. Harbin Specialty Center On-Campus. Class A MOB. 75K sf. 1825 Martha Berry MOB Off-Campus. Class B MOB. 122K sf. Rome, GA 7 buildings MEDICAL OFFICE STRATEGY © 2012 Duke Realty Corporation |
![]() 37 Baylor McKinney MOB I McKinney, TX 115,000 SF, 89% preleased North Fulton MOB Atlanta, GA 52,000 SF, 52% preleased MEDICAL OFFICE STRATEGY VA Tampa Tampa, FL 117,000 SF, 100% preleased Scott and White MOB Marble Falls, TX 67,000 SF, 100% preleased Select Healthcare Developments 2011-2012 Scott & White MOB College Station, TX 119,000 SF, 100% preleased Wishard Health FOB Indianapolis, IN 275,000 SF, 100% preleased Tri Health Cardiology Cincinnati, OH 21,000 SF, 100% preleased Centerre Community Rehab Indianapolis, IN 60,000 SF, 100% preleased NSH Cherokee Towne Lake MOB Atlanta, GA 101,000 SF, 100% preleased |
![]() Our Plan Existing healthcare assets $1.4 Billion New developments $150+ Million in 2012 Opportunistic new development starts in 2013 Our Focus On-campus assets Major hospital system relationships ~ ~ Goal: Grow Medical Office Primarily through Development 38 ~ ~ MEDICAL OFFICE STRATEGY © 2012 Duke Realty Corporation |
![]() CAPITAL STRATEGY AND 2012 GUIDANCE 39 © 2012 Duke Realty Corporation |
![]() Capital Strategy Focus 40 Reducing leverage Increasing coverage ratios Maintaining size and quality of unencumbered asset base Executing portfolio repositioning in alignment with capital strategy objectives Further improve balance sheet strength and ratings © 2012 Duke Realty Corporation 1 2 3 4 CAPITAL STRATEGY |
![]() © 2012 Duke Realty Corporation 41 Key Metrics & Goals 2009 Actual 2010 Actual 2011 Actual 2012 3Q Actual Goal Debt to Gross Assets 44.5% 46.3% 46.8% 48.7% 45.0% Debt + Preferred to Gross Assets 54.9% 55.5% 55.6% 55.4% 50.0% Fixed Charge Coverage Ratio 1.79 : 1 1.79 : 1 1.82 : 1 1.81:1 2.00 : 1 Debt/EBITDA 6.65 7.31 6.02* 7.29** < 6.00 Debt + Preferred/EBITDA 8.47 8.88 7.34* 8.42** < 7.75 Progressing toward strategic plan goals *Excluding 2011 Blackstone sale figures are 7.0x and 8.6x, respectively. ** Excluding Blackstone sale figures are 7.5x and 8.7x, respectively. CAPITAL STRATEGY |
![]() © 2012 Duke Realty Corporation Relative Performance of Duke Realty vs. All Comps Notes 1. Comparables include BDN, CLI, DCT, EGP, FR, HIW, LRY, OFC, and PLD; PLD and AMB are included historically; figures shown on a market cap weighted basis 2. Industrial comparables include DCT, EGP, FR, and PLD; PLD and AMB are included historically, total return for comparable companies figures are calculated on a market cap weighted basis 3. DRE stock price as of end of trading 10/31/12, @ $14.48 4. DRE performance since announcement of $1.1Bn office divestiture. Based upon 10/20/11 close of $10.68 Industrial and Suburban Office Comps (1) Industrial Comps (2) % Total Shareholder Return Ind Comps -4.0% S&P 400 -1.7% FY 2011 YTD 2012 (3) FY 2010 DRE +2.1% Ind Comps +21.6% Ind Comps +24.4% RMS +8.7% S&P 500 +2.1% RMS +28.5% S&P 500 +15.1% DRE +8.4% S&P 400 +26.6% FY 2009 Ind Comps +24.4% S&P 400 +37.4% S&P 500 +26.5% DRE +19.8% RMS +28.6% Since - 10/20/2011 (4) Ind Comps +37.8% DRE +24.6% S&P 400 +12.9% S&P 500 +14.3% RMS +13.9% RMS +25.1% DRE +42.6% S&P 500 +18.8% S&P 400 +18.2% Comps -6.0% S&P 400 -1.7% DRE +2.1% S&P 500 +15.1% Comps +21.8% DRE +24.6% S&P 400 +12.9% S&P 500 +14.3% RMS +13.9% RMS +8.7% S&P 500 +2.1% RMS +28.5% DRE +8.4% Comps +7.4% S&P 400 +26.6% Comps +24.8% S&P 400 +37.4% S&P 500 +26.5% DRE +19.8% RMS +28.6% FY 2011 YTD 2012 (3) FY 2010 FY 2009 RMS +25.1% Comps +32.1% DRE +42.6% S&P 500 +18.8% S&P 400 +18.2% Since - 10/20/2011 (4) CAPITAL STRATEGY 42 |
![]() RELIABLE. ANSWERS. 87.9% 92.7% 94.1% 90.7% 86.9% 92.2% 89.6% 89.6% 87.6% 89.3% 80% 83% 86% 89% 92% 95% LRY HIW OFC CLI BDN DRE EGP PLD DCT FR 43 Office Average: $5,093 58.2% 49.2% 50.2% 46.4% 33.9% 44.8% 51.2% 38.3% 42.8% 42.7% 0% 20% 40% 60% 80% BDN OFC HIW CLI LRY DRE FR PLD DCT EGP 8.3x 7.7x 7.3x 10.2x 7.7x 7.2x 6.4x 6.1x 5.1x 5.9x 0.0x 3.0x 6.0x 9.0x 12.0x OFC BDN HIW LRY CLI DRE PLD FR DCT EGP Duke Realty Benchmarking Statistics Source: SNL Financial, 8/29/12 and Duke latest quarterly supplemental Industrial Average: 7.9x Industrial Average: 91.1% $30,672 $32,000 Industrial Average: $9,778 Office Average: 88.8% Office Average: 6.6x Office Average: 46.6% Industrial Average: 43.8% Total Market Cap ($ in millions) Total Debt / Total Market Cap In Service Portfolio Occupancy Total Debt / 2012E EBITDA 93.6% = DRE industrial in service portfolio Duke Realty benchmarks as the second largest by total market capitalization among its comps, with above average leverage and improving occupancy Key: Office: LRY=Liberty; CLI=Mack-Cali; HIW=Highwoods; BDN=Brandywine Industrial: PLD=Prologis; FR=First Industrial; DCT=DCT Industrial Trust; EGP= Eastgroup; FPO= First Potomic (DRE = 93.6%) (DRE = 85.9%) $7,202 $3,099 $2,982 $2,360 $4,671 $4,310 $4,690 $4,593 $9,031 $0 $2,000 $4,000 $6,000 $8,000 $10,000 LRY CLI HIW BDN OFC DRE PLD DCT FR EGP © 2012 Duke Realty Corporation RELIABLE. ANSWERS. |
![]() RELIABLE. ANSWERS. © 2012 Duke Realty Corporation Industrial Average: 16.2x Office Average: 11.1x 9.2% 7.6% 8.1% 7.5% 6.6% 6.0% 6.2% 7.7% 7.8% 7.6% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0% 9.5% 10.0% CLI HIW BDN OFC LRY DRE FR DCT PLD EGP 18.0x 17.8x 17.7x 26.6x 23.7x 13.2x 22.6x 22.3x 16.0x 15.0x 10.0x 14.0x 18.0x 22.0x 26.0x 30.0x LRY HIW BDN OFC CLI DRE PLD DCT FR EGP 13.5x 11.9x 8.5x 13.8x 19.1x 11.8x 15.2x 9.7x 16.9x 13.6x 6.0x 10.0x 14.0x 18.0x 22.0x LRY HIW OFC CLI BDN DRE PLD EGP DCT FR Industrial Average: 23.8x Industrial Average: 3.4% Industrial Average: 6.7% Office Average: 16.0x Office Average: 5.5% Office Average: 8.0% Price / 2012E FFO Implied Cap Rate (1) Dividend Yield Price / 2012E AFFO Key: Office: LRY=Liberty; CLI=Mack-Cali; HIW=Highwoods; BDN=Brandywine; OFC=Corporate Office Industrial: PLD=Prologis; FR=First Industrial; DCT=DCT Industrial Trust; EGP=Eastgroup Source: SNL Financial, 11/8/12 (1) Per Wall Street research as of 10/26/12 Duke Realty Valuation Statistics Duke Realty still undervalued by most levered and NAV metrics 7.1% 0.0% 4.1% 4.5% 4.9% 4.5% 3.3% 5.2% 5.3% 5.4% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% CLI LRY HIW BDN OFC DRE DCT EGP PLD FR 44 |
![]() © 2012 Duke Realty Corporation Barra Beta Summary Historical Barra Beta Analysis 2002-2012 45 Notes 1. As of most recent Barra Beta published on October 31, 2012 2. Includes BDN, CLI, HIW, LRY, and OFC 3. Includes DCT, EGP, FR, LRY, and PLD 4. DCT’s beta only available since its IPO. Barra began tracking DCT’s beta in December 2006 5. Includes HCN, HCP, HR, HTA, and VTR Beta trends are slowly improving consistent with asset and capital strategy…. working on further lowering beta Current (1) 12/31/11 1 Year Avg 5 Year Avg 10 Year Avg DRE 1.22 1.49 1.34 1.56 1.14 Office Comps (2) 1.09 1.29 1.19 1.35 1.02 Industrial Comps (3)(4) 1.08 1.28 1.19 1.41 0.98 Healthcare Comps (5) 0.94 1.07 1.01 1.21 0.97 CAPITAL STRATEGY |
![]() 46 CAPITAL STRATEGY Executing on capital strategy objectives CAPITAL SOURCE 2008 2009 2010 2011 2012 YTD TOTAL Common Stock - $575 $311 - $241 $1,127 Preferred Stock $300 - - - - $300 Unsecured Debt $325 $500 $250 - $600 $1,675 Secured Debt - $270 - - - $270 Asset Dispositions $475 $300 $533 $1,650 $126 $3,084 TOTAL $1,100 $1,645 $1,094 $1,650 $967 $6,456 • Investment grade rated debt for over 15 years • Proven access to multiple capital sources • Available line of credit - $850 million capacity • Dividend covered by AFFO Continue to strengthen balance sheet ($ in millions) © 2012 Duke Realty Corporation |
![]() Duke Realty Recent Bond Transactions Lowering Cost of Capital with Highly Efficient Bond Offering Executions 47 CAPITAL STRATEGY Source: Barclay’s June & September Transaction Details Issuer: Duke Realty Limited Partnership Ratings: Baa2 / BBB - Outlook: Stable / Stable Offering Format: SEC Registered Issue Date: June 6, 2012 September 14, 2012 Amount: $300m $300mm Final Maturity: June 15, 2022 October 15, 2022 Treasury Yield: 10 yr UST: 1.666% 10yr UST: 1.875% Reoffer Spread: T + 280 bps T + 205bps Reoffer Yield: 4.466% 3.925% Coupon: 4.375% 3.875% Reoffer Price: 99.271% 99.584% 120 170 220 270 320 370 420 470 6/1/2012 6/22/2012 7/14/2012 8/4/2012 8/26/2012 9/17/2012 (bps) UST 10yr DRE 10yr Indicative Pricing DRE Spread Compression Analysis June 6: 4.466% UST: 1.666% T+280 DRE was able to achieve 75 bps in spread compression between the June and September transactions Sept 14: 3.925% UST: 1.875% T+205 © 2012 Duke Realty Corporation |
![]() 48 Liquidity Position ($ in millions) CAPITAL STRATEGY Manageable debt maturities $57 $658 $440 $3,026 Debt Maturity and Amortization Schedule September 30, 2012 Unsecured Debt Secured Debt JV Debt 2012 2013 2014 2015 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 2016 © 2012 Duke Realty Corporation and beyond $363 |
![]() RELIABLE. ANSWERS. 2012 Range of Estimates Leasing actions and development execution drive upside 49 2012 Range Metrics 2011 Actual 9/30/12 YTD Actual Pessimistic Optimistic Key 2012 Assumptions Core FFO Per Share $1.15 $0.75 $1.00 $1.04 • Better than expected leasing early in year; Low end of guidance raised $0.06, top end reduced $0.02 AFFO Payout Ratio 87% 84% 96% 80% • Annual dividend maintained at $0.68 per share Average Occupancy- In Service 89.7% 92.0% 89.5% 92.5% • Better than expected industrial leasing early in the year • Low expirations exposure Same Property NOI 3.2% 3.5% (1.5%) 2.5% • Occupancy higher than budget • Rental rate pressure remains on office product Building Acquisitions $747 $353 $300 $500 • Focus on industrial and medical office portfolios Building Dispositions $1,634 $116 $200 $300 • Continue to prune remaining non-core office portfolio Land Dispositions $12 $10 $20 $30 • Demand still sluggish Construction and Development Starts $489 $432 $300 $500 • Comprised of medical office and industrial starts • Development starts YTD of $373 MM (highest since 2008) with a good pipeline Construction Volume $727 $421 $400 $600 • Third Party construction volume is lower than budget Service Operations Income $46 $19 $20 $25 • Normal run rate post BRAC General and Administrative Expenses $40 $32 $43 $38 • Consistent level $ in millions |
![]() RELIABLE. ANSWERS. © 2012 Duke Realty Corporation 50 WHY DUKE REALTY? ¦ Quality portfolio improving with asset strategy ¦ Solid balance sheet improving with capital strategy ¦ Unmatched ability to execute on daily operations ¦ Development capabilities in place with existing land bank ¦ Talent and leadership depth to execute Delivering on what we say we will do |
![]() RELIABLE. ANSWERS. © 2012 Duke Realty Corporation Forward-Looking Statement 51 This slide presentation contains statements that constitute “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 as amended by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, our statements regarding (1) strategic initiatives with respect to our assets, operations and capital and (2) the assumptions underlying our expectations. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. A number of important factors could cause actual results to differ materially from those contemplated by forward-looking statements in this slide presentation. Many of these factors are beyond our ability to control or predict. Factors that could cause actual results to differ materially from those contemplated in this slide presentation include the factors set forth in our filings with the Securities and Exchange Commission, including our annual report on Form10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. We believe these forward-looking statements are reasonable, however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. We do not assume any obligation to update any forward-looking statements as a result of new information or future developments or otherwise. Certain of the financial measures appearing in this slide presentation are or may be considered to be non- GAAP financial measures. Management believes that these non-GAAP financial measures provide additional appropriate measures of our operating results. While we believe these non-GAAP financial measures are useful in evaluating our company, the information should be considered supplemental in nature and not a substitute for the information prepared in accordance with GAAP. We have provided for your reference supplemental financial disclosure for these measures, including the most directly comparable GAAP measure and an associated reconciliation in our most recent quarter supplemental report, which is available on our website at www.dukerealty.com. Our most recent quarter supplemental report also includes the information necessary to recalculate certain operational ratios and ratios of financial position. The calculation of these non-GAAP measures may differ from the methodology used by other REITs, and therefore, may not be comparable. |