![]() RELIABLE. ANSWERS. 2012 UBS Industrial Real Estate Summit May 16 Exhibit 99.1 |
![]() RELIABLE. ANSWERS. 2012 Duke Realty Corporation 40 Years Timeline 2 |
![]() RELIABLE. ANSWERS. 2012 Duke Realty Corporation 3 2009 2010 and 2011 FOCUS: Liquidity More than $1.5 billion capital raised Strategy refined FOCUS: Strategy execution Operating fundamentals Balance sheet strength FOCUS: Asset quality Cash flow growth Shareholder return Where we’ve been and where we’re going… 2012 and beyond |
![]() RELIABLE. ANSWERS. 2012 Duke Realty Corporation Suburban Office Market Still Challenging Economic and federal budget uncertainty limiting business investment and expansion decisions Recovery is very slow, with Q1 overall vacancy declining to 12.7%, down 50 bps from prior year, with class A only space vacancy declining 90 bps from prior year Absorption for 2011 at 35 million SF, with Q1 about same pace with 10 million SF of absorption; supply ticking up, but at about one-third of peak 2007/2008 levels Re-leasing capital expenditures remain elevated Medical Office Traction Remains Operators now making expansion decisions after two year pause Relationships are a key driver of on campus MOB business Demographics and economics positive growth drivers Medical office development and acquisition activity continues 4 Market Outlook Still challenging, but trends improving in all product types Industrial Market Continues Slow Recovery Net absorption in U.S. for Q1 positive for the 8th consecutive quarter, class A vacancy at 10.7% Strong demand for large, modern product remains, class A vacancy down 240bps over prior year Rents beginning to improve, occupancy levels getting closer to equilibrium and limited new supply ISM index has been slowly climbing after a moderate trough in mid-2011 Manufacturing sector, wholesale trade and transportation realizing a majority of recent job growth Source: PPR and Duke Realty |
![]() RELIABLE. ANSWERS. 2012 Duke Realty Corporation Industrial Sector Peer Set Drill Down 5 • RMZ outperformed S&P 500 in 2011, but has lagged slightly below the S&P 500 in 2012 • Industrial Sector Comps have rallied recently . . . Improving key trading metrics and relative valuations • Duke Realty has outperformed, although still undervalued by most levered and NAV metrics to its Industrial Comps … but improving Better than comparative Peer set and Industrial Comps since 2010 Better than comparative Peer set, Industrial Comps and major indexes since Blackstone disposition • Most Industrial Comps AFFO Growth from 2010 to 2012 estimates, are flat to declining . . . Duke Realty steady to slightly positive although we are repositioning and de-levering • Duke Realty dividend yield higher than Industrial Comp set average … 4.8% versus 3.5% average Industrial Sector Outperforming Sector YTD | Duke Outperforming Peers |
![]() RELIABLE. ANSWERS. 2012 Duke Realty Corporation Focus on: Increasing cash flow Maximizing return on assets 6 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 Strategic Focus 2012 Goals and Objectives Q1 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 $250 million focus on medical office and build-to-suit • Total portfolio occupancy as of quarter end 92.1%, up 1.4% from year-end; industrial portfolio at 93.6%; medical office at 90.1% • Approximately 8.7 million square feet of leases completed • Debt to EBITDA @ 6.6x (7.38x excl. Blackstone); 4.7% Same Property NOI growth • $120.8MM development starts. Two 100% leased bulk industrial projects (at 6.9% stabilized yield) and one 100% leased medical office (at 7.4% stabilized 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 over $157MM of acquisitions during the quarter, weighted 45% in medical office and 55% in industrial • $63.7MM in dispositions of non-core assets • 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 • Issued $150MM of equity through ATM program • Redeemed Series M Preferred shares of $168MM • Zero credit facility balance and $15MM of cash at quarter end Asset Strategy Operations Strategy Capital Strategy 7 Solid Q1 start and executing across all three aspects of our strategy |
![]() 2012 Duke Realty Corporation OPERATIONS STRATEGY 8 |
![]() 9 Focus on Fundamentals LEASING OF PORTFOLIO STRATEGIC NEW DEVELOPMENT AND LAND DISPOSITION AFFO PAYOUT OPERATIONS STRATEGY Maximize return on assets 2012 Duke Realty Corporation |
![]() 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% 10 OPERATIONS STRATEGY 92% 92% 72% 79% 77% 69% 84% 21.4 22.7 25.9 24.5 8.7 2007 2008 2009 2010 2011 2012 YTD 5% 13% 11% 11% 10% 10% 9% 32% 2012 2013 2014 2015 2016 2017 2018 2019+ 2007 2008 2009 2010 2011 2012 YTD 80% 2007 2008 2009 2010 2011 2012 YTD 29.9 |
![]() 2012 Duke Realty Corporation Notes 1. Based on simple average of 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 11 |
![]() RELIABLE. ANSWERS. 2012 Duke Realty Corporation 12 Positioned for NAV Growth KEY NAV GROWTH DRIVERS Source: PPR, Green Street and Duke Realty Lease up existing vacancy Increase Rents/ Reduced Capex Increased management & service fees Accretive future development Accretive future acquisitions Portfolio occupancy of 92.1% Strong leasing pipeline Demonstrated track record of 69-80% renewal rate Rent roll downs burning off and positive same property NOI performance Research forecasts market wide average annual rent growth of 3.2% from 2013-16 Will benefit from uptick in third party and JV partners development and construction activity Property management and leasing fees - will trend higher as occupancy improves Current pipeline of 686K SF of medical office, 344K SF of suburban office 2012 estimated development starts of $200 to $300 million Land for 44 million SF of new development, 70% industrial Acquisitions focused on asset strategy Industrial and medical office assets Higher rental rate growth markets |
![]() 2012 Duke Realty Corporation 13 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 Office 30% Industrial 70% |
![]() 2012 Duke Realty Corporation 14 Indianapolis – Industrial OPERATIONS STRATEGY Expand Industrial • Regal Beloit build-to-suit bulk distribution facility • 376,000 square feet, ten year lease term to growing global manufacturing company • 50/50 joint venture with Browning • Monetizes 26 acres of land at our 960 acre AllPoints Midwest bulk distribution park • $15 million project |
![]() 2012 Duke Realty Corporation 15 Northeast U.S. – Bulk Industrial Build-to-Suit OPERATIONS STRATEGY Repeat business new development with growing tenant • Regional distribution center build-to-suit in Delaware for Amazon • 1,015,000 square feet • Twelve year lease term • $82 million project • “A” rated credit |
![]() 2012 Duke Realty Corporation 16 Indianapolis – Medical Office OPERATIONS STRATEGY Grow Medical Office • Wishard Faculty Office Building • Aa2 rated system sponsored by Marion County • 275,000 square feet • Thirty year lease term • 50/50 Joint Venture with Hospital System • On campus of new hospital to open in 2013 • $90 million project |
![]() RELIABLE. ANSWERS. 2012 Duke Realty Corporation 17 Tampa – Medical Office • VA Primary Care Annex at Tampa • Leased to Department of Veterans Affairs • 120,000 square feet • 20 year lease term • $41 million project Grow Medical Office |
![]() 2012 Duke Realty Corporation 18 2011 PERFORMANCE Total portfolio occupancy of 90.7% Industrial at 91.9% occupancy Over 24.5 million SF leases 2012 PERFORMANCE YTD: Total occupancy of 92.1% Industrial at 93.6% occupancy Approximately 8.7 million SF leases Quality, well-positioned assets to drive performance OPERATIONS STRATEGY |
![]() 2012 Duke Realty Corporation ASSET STRATEGY 19 |
![]() 2012 Duke Realty Corporation $1 Billion 20 Repositioning Track Record $1 Billion 2005 2006 2007 2009 2010 2011 Proven ability to execute ASSET STRATEGY Flex disposition Washington DC Savannah Healthcare Asset Strategy Premier CBRERT Dugan Suburban Office Disposition |
![]() 2012 Duke Realty Corporation 21 Asset Strategy March 31, 2012 BY PRODUCT 2009 2013 BY GEOGRAPHY ASSET STRATEGY 2009 2013 2012 Southeast 21% Southeast 24% Southeast 30% 2012 Office 55% Retail 4% Industrial 36% Medical Office 5% Office 32% Retail 4% Industrial 53% Medical Office 11% Office 25% Industrial 60% Medical Office 15% Midwest 53% East 13% South 12% West 1% Midwest 40% East 15% South 10% West 5% Midwest 46% East 14% South 14% West 2% |
![]() 2012 Duke Realty Corporation 22 Asset Strategy: Road Map ($ in millions) Investment 12/31/10 Investment 3/31/12 ACTION PLAN Investment 2013 PRODUCT TYPE Amount % Amount % Acquisitions / Developments / Repositioning Amount % Industrial $3,645 45% $4,264 53% $656 $4,920 60% Office 3,770 46% 2,529 32% (479) 2,050 25% Medical Office 515 6% 840 11% 390 1,230 15% Retail 280 3% 305 4% (305) 0 0% $8,210 100% $7,938 100% $262 $8,200 100 % REGION Midwest $3,970 48% $3,710 46% ($430) $3,280 40% Southeast 2,270 28% 1,884 24% 526 2,460 30% East 955 11% 1,089 14% 141 1,230 15% South 950 12% 1,092 14% (272) 820 10% West 65 1% 163 2% 247 410 5% $8,210 100% $7,938 100% $262 $8,200 100% Portfolio sale accelerates suburban office repositioning ASSET STRATEGY |
![]() 2012 Duke Realty Corporation 23 ASSET STRATEGY Asset Strategy: Progress To Date BUILDING ACQUISITIONS BUILDING DISPOSITIONS Q4 2009 15 Q4 2009 144 2010 919 2010 499 2011 747 2011 1,634 Q1 2012 157 64 Total $1,838 Total $2,341 NO DILUTION TO AFFO Matching acquisitions with dispositions . . . limiting earnings impact ($ in millions) PROGRESS TO DATE TOTAL VALUE ASSUMED DEBT NET Dispositions $2,341 ($0) $2,341 Acquisitions $1,838 ($669) $1,169 Excess Cash $1,172 |
![]() 2012 Duke Realty Corporation 24 New, High Quality Portfolio with Long-term Leases Premier portfolio of assets Portfolio average Bulk Industrial Suburban Office Medical Office Property age 10.4 years 13.1 years 4.2 years Property size 221,000 SF 117,000 SF 82,000 SF Lease term 7.1 years 7.3 years 11.7 years Tenant size 76,000 SF 12,000 SF 10,000 SF ASSET STRATEGY |
![]() RELIABLE. ANSWERS. U.S. Rail and Highway Logistics Routes & Corridors Duke Realty’s 17 Primary Markets Strategically Placed in Key Distribution Corridors Note: Duke Realty Primary Industrial Markets in Blue |
![]() RELIABLE. ANSWERS. Market Size (MM SF) (Dec. 2011) Population (MM People) (Dec. 2011) Fore. Pop. Growth (Fore. 2011-2016) Pop. w/in 500 miles (as of 2005) Fore. Demand Growth (Fore. 2011-2016) Fore. Vacancy Rates (Fore. Dec. 2016) Atlanta 489.7 5.4 1.8% 25.2% 2.2% 10.4% Baltimore 149.0 2.7 0.5% 36.7% 0.9% 9.1% Chicago 794.0 9.6 0.5% 27.8% 1.0% 10.6% Cincinnati 206.6 2.2 0.6% 39.0% 1.5% 7.4% Columbus OH 219.1 1.9 0.8% 45.0% 1.3% 10.1% Dallas - Fort Worth 546.5 6.6 2.1% 14.3% 2.0% 10.0% Fort Lauderdale 102.8 1.8 1.8% 6.5% 1.6% 5.4% Houston 396.6 6.2 1.9% 12.2% 1.5% 5.0% Indianapolis 179.6 1.8 1.3% 35.1% 2.2% 5.5% Inland Empire 390.4 4.3 1.0% 14.4% 2.8% 9.3% Los Angeles 682.8 10.0 1.0% 14.3% 0.9% 3.0% Miami 194.4 2.5 1.2% 6.2% 1.1% 5.6% Minneapolis 146.9 3.3 1.0% 14.6% 1.1% 6.3% Nashville 133.0 1.6 1.0% 34.4% 1.4% 8.9% Norfolk 67.8 1.7 0.7% 35.0% 1.6% 8.1% Orlando 107.2 2.2 2.6% 12.7% 1.6% 10.6% Phoenix 205.2 4.3 2.6% 11.4% 2.4% 10.6% Raleigh 42.4 1.2 3.6% 36.0% 1.8% 7.3% Saint Louis 203.1 2.9 0.4% 31.1% 0.6% 9.3% Tampa 128.5 2.8 1.4% 12.0% 1.6% 6.2% Washington - NoVA - MD 145.7 5.7 1.1% 37.7% 1.4% 8.3% Austin 52.3 1.8 2.6% 11.2% 1.2% 10.4% Boston 167.3 4.6 0.2% 23.0% 0.4% 8.6% Charlotte 152.4 1.8 2.3% 30.7% 1.4% 8.0% Cleveland 189.6 2.1 -0.3% 43.1% 0.4% 7.9% Denver 146.6 2.6 1.1% 5.3% 0.9% 7.0% Detroit 334.6 4.3 0.0% 38.8% 1.0% 9.7% East Bay 173.1 2.6 1.0% 13.4% 0.9% 5.6% Hartford 50.6 1.2 0.2% 25.4% 1.3% 9.1% Honolulu 37.1 1.0 0.5% 0.4% 1.0% 2.7% Jacksonville 96.7 1.4 1.6% 16.6% 2.2% 9.3% Kansas City 183.3 2.1 1.0% 21.1% 0.8% 7.0% Las Vegas 84.4 2.0 2.9% 15.7% 1.9% 11.1% Long Island 130.3 2.9 0.1% 27.4% 0.4% 3.8% Memphis 182.7 1.3 0.8% 28.7% 2.0% 10.8% Milwaukee 93.6 1.6 0.4% 25.0% 0.7% 9.3% New Orleans 55.5 1.2 0.3% 17.1% 0.5% 8.8% New York 393.4 11.6 0.2% 29.3% 0.0% 5.6% Northern New Jersey 150.6 2.2 0.3% 31.3% 0.8% 7.3% Oklahoma City 58.5 1.3 1.1% 15.4% 1.3% 5.4% Orange County 161.6 3.1 1.0% 14.3% 0.7% 3.7% Palm Beach County 41.7 1.4 2.7% 7.3% 1.3% 8.4% Philadelphia 360.2 6.0 0.4% 33.1% 0.8% 7.8% Pittsburgh 103.6 2.4 -0.1% 44.5% 0.5% 7.7% Portland, OR 148.2 2.3 1.8% 5.2% 2.0% 5.9% Richmond 71.9 1.3 1.0% 38.1% 1.8% 8.3% Sacramento 131.6 2.2 1.2% 14.2% 0.6% 12.1% Salt Lake City 82.2 1.2 1.5% 5.3% 1.3% 5.9% San Antonio 71.9 2.2 2.0% 9.9% 1.8% 8.4% San Diego 91.9 3.2 1.5% 13.9% 0.7% 7.6% San Francisco 62.7 1.8 0.8% 13.1% 0.1% 2.8% San Jose 74.5 1.9 0.8% 13.1% 0.3% 3.7% Seattle 194.7 3.5 1.1% 3.8% 1.7% 6.7% Stamford 26.1 0.9 0.3% 26.6% 1.9% 7.0% Duke Realty’s industrial portfolio is diversified across top ranked markets by square footage, population, population growth, population within 500 miles, forecast demand growth and forecast vacancy rates Rankings of “PPR 54” Top Industrial Markets = Top 50% Ranking per “PPR 54” Data Located in Strategic Distribution Markets Consistent with Asset Strategy = Crossover market with Duke portfolio Source: PPR, Q4 2011 |
![]() RELIABLE. ANSWERS. 2012 Duke Realty Corporation 27 Industrial Market Expansion in 2011 Century Distribution Center Los Angeles, CA 323,000 SF, 100% leased Pioneer 161 Solo Dallas, TX 603,000 SF, 100% leased Lakeside Ranch Industrial Dallas, TX 749,000 SF, 100% leased Premier Portfolio Industrial Pompano, FL 1,163,000 SF, 90% leased Premier Portfolio Office Pompano, FL 389,000 SF, 87%, leased Seefried Industrial Chicago, IL 353,000 SF, 100% leased Seefried Industrial Dallas, TX 324,000 SF, 100% leased |
![]() RELIABLE. ANSWERS. 2012 Duke Realty Corporation Strategy for Industrial Markets Focus industrial expansion in core markets: – South Florida $597 – Chicago 318 – Houston 83 – Dallas 78 – Southern California 68 Develop in markets where we have land and competitive positions Goal: Increase Shareholder Value Develop in markets where we have land and competitive positions $ Invested ($ in millions) |
![]() 2012 Duke Realty Corporation 29 $1.6 billion of dispositions $747 million of acquisitions Over $200 million of development starts Made significant progress on strategic plan 2012 PERFORMANCE YTD: $64 million of dispositions $157 million of acquisitions $121 million of development starts Continue making progress on strategic plan Quality portfolio further improving with asset strategy ASSET STRATEGY 2011 PERFORMANCE |
![]() 2012 Duke Realty Corporation CAPITAL STRATEGY AND 2012 GUIDANCE 30 |
![]() 2012 Duke Realty Corporation CAPITAL STRATEGY Capital Strategy Focus 31 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 1 1 2 2 3 3 4 4 |
![]() 2012 Duke Realty Corporation CAPITAL STRATEGY 32 Key Metrics & Goals 2009 Actual 2010 Actual 2011 Actual 2012 1Q Actual Goal Debt to Gross Assets 44.5% 46.3% 46.8% 47.3 45.0% Debt + Preferred to Gross Assets 54.9% 55.5% 55.6% 54.3 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* 6.56** < 6.00 Debt + Preferred/EBITDA 8.47 8.88 7.34* 7.64** < 7.75 Progressing toward strategic plan goals *Timing of Blackstone transaction. Including adjustments to TTM EBITDA for Blackstone transaction results in recast 2011 Debt to EBITDA of 7.03x and Debt+Preferred/EBITDA of 8.58x . ** For 1Q 2012, recast Debt to EBITDA of 7.38x and Debt+Preferred/EBITDA of 8.59x |
![]() 2012 Duke Realty Corporation CAPITAL STRATEGY 33 Continue to execute on capital strategy objectives CAPITAL SOURCE 2007 2008 2009 2010 2011 2012 YTD TOTAL Common Stock $230 - $575 $311 - $150 $1,216 Preferred Stock - $300 - - - - $300 Unsecured Debt $300 $325 $500 $250 - - $1,375 Secured Debt - - $270 - - - $270 Asset Dispositions $785 $475 $300 $533 $1,650 $65 $3,808 TOTAL $1,315 $1,100 $1,645 $1,094 $1,650 $215 $7,019 • 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) |
![]() RELIABLE. ANSWERS. Bond Market Indicative Pricing Credit Markets Responding favorably to Execution of Asset and Capital Strategies Source: Wells Fargo, 5/11/2012 Tenor 5 years 10 years Assumed Ratings Baa2/BBB- Baa2/BBB- Benchmark 5 year UST 10 year UST Benchmark Yield 0.78% 1.88% Reoffer Spread 220.0 bps 240.0 bps Reoffer Yield 2.98% area 4.28% area Underwriting Fee (%) 0.600% 0.650% All-In Cost (Yield) 3.11% area 4.36% area |
![]() RELIABLE. ANSWERS. 2012 Duke Realty Corporation The RMZ outperformed S&P 500 in 2011, but has lagged slightly below the S&P 500 in 2012 35 Source: J.P. Morgan, Bloomberg, FactSet as of 05/10/12 1 Based upon 342 total trading days 85% 90% 95% 100% 105% 110% 115% 120% Jan-11 Jan-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Level # trading days above % above¹ 900 4 1% Current (896) 7 2% 850 60 17% 800 175 51% 750 303 89% Performance RMZ S&P 500 FY 2011 4.7% 0.0% YTD 2012 12.5% 8.0% $9 $10 $11 $12 $13 $14 $15 $16 Jan-11 Jan-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Level # trading days above % above¹ $15.00 9 3% Current ($14.76) 27 8% $14.50 45 13% $13.50 186 54% $13.00 221 65% Protests in Middle East turn violent and Japanese earthquake and tsunami result in crisis at nuclear plant Market expectations for a solution to the European debt crisis grow and DRE announces sale of over $1 billion office portfolio (10/20) Heightened fears over European debt crisis and S&P downgrade of U.S. AAA credit rating U.S. economic data consistently beats expectations and the European Central Bank takes aggressive action to relieve funding pressures on European banks DRE $14.76 Feb-11 RMZ price performance (2011 – 2012YTD) DRE price performance (2011 – 2012YTD) |
![]() RELIABLE. ANSWERS. 2012 Duke Realty Corporation 36 Relative Performance of Duke Realty versus Industrial Comps only Notes 1. 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 2. DRE stock price as of end of trading 5/11/12, @ $14.68 3. DRE performance since 10/20 announcement of $1.1Bn office divestiture. Based upon 10/20/11 close of $10.68 Strong Recent Performance Reflective of Executing Aligned Operating, Asset Repositioning and Capital Strategies % Total Return(1): Ind Comps -4.0% S&P 400 -1.7% FY 2011 YTD 2012 (2) Since - 10/20 (3) RMS +25.2% Ind Comps +34.7% DRE +2.1% Ind Comps +21.6% DRE +23.3% S&P 500 +8.4% RMS +14.1% S&P 400 +10.2% DRE +41.2% S&P 400 +15.4% S&P 500 +12.7% RMS +8.7% S&P 500 +2.1% |
![]() RELIABLE. ANSWERS. 2012 Duke Realty Corporation 37 Notes 1. As of April 30, 2012 2. Includes LRY, HIW, CLI, BDN, and OFC 3. DCT’s beta only available since its IPO. Barra began tracking DCT’s beta in Dec 2006 4. Includes PLD, FR, EGP, DCT, and LRY Duke Realty and Peers Barra Beta Analysis Beta Trends are Slowly Improving Consistent with Asset and Capital Strategy….Working on Further Lowering Beta Barra Beta Analysis 2002-2012 1 Year 5 Year 10 Year Avg Avg Avg DRE Office Comps (2) Industrial Comps (3)(4) 1.34 1.45 1.54 Current (1) 1.09 1.21 1.25 1.35 1.00 1.23 1.25 1.41 0.95 |
![]() 2012 Duke Realty Corporation 38 Liquidity Position CAPITAL STRATEGY Manageable debt maturities |
![]() RELIABLE. ANSWERS. 2012 Duke Realty Corporation 2012 Range of Estimates ($ in millions) Leasing Actions Combined with Modest Rental Rate Increases Drive Upside 39 Metrics 2011 Actual Q1 2012 Actual Pessimistic Optimistic Key 2012 Assumptions Core FFO per share $1.15 $0.24 $0.94 $1.06 - Blackstone/repositioning dilution $.10 - $.12 - Lower service operations income - Partially offset by improvement in occupancy of core portfolio AFFO Payout Ratio 87% 85% 96% 80% - Annual dividend maintained at $0.68 per share Avg Occupancy - In-Service 89.7% 91.3% 89.5% 92.5% - Positive momentum anticipated given Industrial and medical office performance - Lower expirations than 2011 (7% vs. 10%) - Upside to guidance driven by lease-up of portfolio Same Property NOI Growth 3.2% 3.6% (1.5%) 2.5% - Occupancy increase lower than 2011 - Rental rate pressure remains Building Acquisitions $747 $157 $300 $500 - Remain selective regarding property type and location in alignment with long-term strategy - Focus on industrial and medical office Building Dispositions $1,634 $64 $200 $300 - Continue to prune remaining non-core office portfolio Land Sale Proceeds $12 $2 $20 $30 - Selling 10% to 20% of identified non-strategic parcels - Demand still sluggish $489 $138 $300 $500 - Comprised of medical office and industrial starts - Development of $200 to $300 million - Third party of $100 to $200 million Construction Volume $727 $107 $400 $600 - Wind down of BRAC project partially offset by development volume Service Operations Income $46 $6 $20 $25 - Reduced fees from BRAC project General & Admin expense $40 $12 $43 $38 - In line with 2011 2012 Range of Estimates Construction and Development Starts |
![]() 2012 Duke Realty Corporation 40 $1.6 billion of capital raised through asset dispositions Retired $333 million of unsecured bonds Redeemed $109 million of preferred equity Fixed charge ratio of 1.82x and debt to EBITDA of 6.02x* Opportunistically tapped ATM raising $147 million Continue improving coverage ratios Maintaining minimal balance on line of credit CAPITAL STRATEGY Strong balance sheet … executing according to strategy * Timing of Blackstone transaction; Including adjustments to EBITDA for Blackstone transaction results in recast Debt to EBITDA of 7.03x 2011 PERFORMANCE 2012 PERFORMANCE YTD: |
![]() 2012 Duke Realty Corporation MIDWEST OVERVIEW Performance Update 41 |
![]() 2012 Duke Realty Corporation RECENT TRANSACTIONS 42 Midwest New Lease - Industrial World Park Union Center Cincinnati 191,000 SF Tenant: Ashland Term 6 years Renewal - Industrial Park 100 Bldg 131 Indianapolis 419,000 SF Tenant: Hewlett Packard Term: 1.25 years Strong distribution base: Over 30% of U.S. population within one day’s drive 74 Fortune 500 headquarters High growth and return opportunities, particularly in Chicago, Columbus, and Indianapolis Duke Realty’s roots and a position of strength Original location – since 1972 Low basis product Dominant market position 46% of our total investment Acquisition - Industrial 1860 W. Jefferson Chicago 827,000 SF, 100% leased Tenant: Crate & Barrel MIDWEST OVERVIEW Development Industrial Regal Beloit BTS Allpoints Midwest Bldg 4 Indianapolis 376,000 SF 100% leased Committed to Midwest because we perform… Midwest remains a key component to our strategy MARKET OVERVIEW & KEY POINTS |
![]() 2012 Duke Realty Corporation 43 Midwest Overview Location Product Type Industrial Office Average Age 11.8 years 16.2 years Average Building Size 248,000 SF 125,000 SF Total Square Footage 57 million 12.4 million Current Occupancy 94.8% 83.8% Indianapolis 96.4% 92.6% Chicago 98.0% 88.4% Cincinnati 93.1% 83.4% St. Louis 88.1% 76.8% Columbus 96.5% 84.0% Minneapolis 84.5% 100% MIDWEST OVERVIEW |
![]() 2012 Duke Realty Corporation 44 Midwest Focus DOMINANT POSITION BULK INDUSTRIAL REDUCE OFFICE CONCENTRATION MIDWEST OVERVIEW Enhancing dominant industrial position in Midwest |
![]() 2012 Duke Realty Corporation EAST & SOUTHEAST OVERVIEW Performance Update 45 |
![]() 2012 Duke Realty Corporation 46 East & Southeast Overview New Deal – Industrial 625 Braselton Atlanta William Carter Co. 1,061,663 SF Term:11.5 years New/Renewal - Office Liberty Center II Washington, D.C. Scitor Corp 159,000 SF Term: 10 years EAST & SOUTHEAST OVERVIEW Disposition – Office Raleigh – 6 Bldgs 427,000 SF 87% leased New Lease/Dev Start – Industrial Delaware 560 Merrimac Ave Tenant: Amazon 1,015,000 SF Term: 12 years RECENT TRANSACTIONS Strong presence: entered Southeast in 1999 (Weeks merger) and East in 2006 (acquisition of Winkler portfolio) 15 Fortune 500 headquarters East and Southeast cities among top growth markets in country… strong in-migration Diversified economies; Government, healthcare, finance and education Eastern cities maintained highest employment rate through downturn Atlanta and Northeast corridor strong in bulk industrial 38% of our total investment MARKET OVERVIEW & KEY POINTS |
![]() 2012 Duke Realty Corporation 47 East & Southeast Overview Industrial Office Average Age 9.5 years 9.9 years Average Building Size 161,000 SF 110,000 SF Total Square Footage 29.3 million 9.5 million Current Occupancy 91.6% 86.6% Atlanta 90.1% 81.7% South Florida 84.3% 85.7% Raleigh 98.9% 89.4% Washington D.C./Baltimore 94.1% 87.1% Central Florida 93.6% 84.4% Savannah 93.2% NA EAST & SOUTHEAST OVERVIEW Location Product Type Office 37% Industrial 48% Medical Office 7% Retail 8% Atlanta 18% D.C./ Baltimore 16% Central 9% Raleigh 21% South 27% Savannah 9% Florida Florida |
![]() 2012 Duke Realty Corporation 48 East & Southeast Focus BULK INDUSTRIAL/PORTS LEASE UP AND RENT GROWTH ACQUISITIONS & DEVELOPMENT EAST & SOUTHEAST OVERVIEW Maximize assets and market position |
![]() 2012 Duke Realty Corporation 49 SOUTHWEST OVERVIEW Performance Update |
![]() 2012 Duke Realty Corporation RECENT TRANSACTIONS 50 Southwest New Lease- Industrial Kingsley Dist. Center Service Lighting & Electrical 132, 000 SF Term: 5.5 years New Lease- Industrial Freeport VI VMP Nutrition 114,000 SF Term: 5 years Duke Realty one of top 3 owner/developers in Dallas/Ft.Worth Duke Realty presence since 1999 (Weeks merger) 52 Fortune 500 headquarters Demographic drivers: modern transportation and infrastructure, population and job growth Strong industrial demand expected post-recovery Port, inland port and logistics key for bulk distribution markets 16% of our total investment Expand industrial presence by pursuing select acquisition opportunities in Houston, Phoenix and Southern California Renewal- Office Aspen Grove Office Center II Mars Petcare 122,000 SF Term: 5 years MARKET OVERVIEW & KEY POINTS SOUTHWEST OVERVIEW |
![]() 2012 Duke Realty Corporation 51 Southwest Overview Location Product Type SOUTHWEST OVERVIEW Seattle 2% Austin 3% Southern CA 5% Dallas 43% Phoenix 6% Houston 12% Nashville 25% San Antonio 4% Office 11% Industrial 68% Medical Office 21% Industrial Office Average Age 8.3 years 7.3 years Average Building Size 272,000 SF 106,700 SF Total Square Footage 23.4 million 1.6 million Current Occupancy 93.2% 95.5% Dallas 92.2% 100% Nashville 95.6% 93.9% Houston 92.6% 100% Phoenix 94.4% N/A Southern California 100% N/A |
![]() 2012 Duke Realty Corporation 52 Southwest Focus DALLAS LEASE-UP HOUSTON INDUSTRIAL PORT DALLAS INLAND PORT SOUTHERN CALIFORNIA EXPANSION SOUTHWEST OVERVIEW Grow |
![]() 2012 Duke Realty Corporation 53 MEDICAL OFFICE STRATEGY & Performance Update |
![]() 2012 Duke Realty Corporation Medical Office Portfolio at March 31, 2012 54 In-Service Under Development Total Properties 44 6 50 Investment $ $695 M $145 M $840 M Square Feet 3.59 M 685 K 4.28 M Occupancy 91% 86% 90% Local 15% Regional 55% National 30% Specialty Hospital 7% MOB On- Campus 86% MOB Off-Campus 7% Portfolio investment by product type Portfolio investment by hospital system MEDICAL OFFICE STRATEGY |
![]() major cities that produce more than $100 billion in goods and services. Mega-regions will drive need for healthcare, transportation infrastructure and jobs through 2050 Duke Realty Markets: Demographic Focus * Duke Realty market Map Source: ATLANTA REGIONAL COMMISSION MEGAREGIONS REPORT MEDICAL OFFICE STRATEGY 55 CASCADIA NORTHERN CALIFORNIA SOUTHERN CALIFORNIA ARIZONA SUN CORRIDOR TEXAS TRIANGLE GULF COAST FLORIDA Jacksonville Miami Orlando* Tampa* PIEDMONT ATLANTIC Atlanta* Birmingham Charlotte Nashville* Raleigh* NORTHEAST Baltimore* Boston Philadelphia Richmond Washington, D.C.* GREAT LAKES Chicago* Columbus* Indianapolis* Louisville Minneapolis* St. Louis* Austin* Dallas* Houston* San Antonio Megaregions by 2050: Populations in contiguous regions with |
![]() 2012 Duke Realty Corporation 56 Healthcare Data Points The nation’s largest industry • Represents more than 17% of GDP, predicted to exceed 23% by 2020 • Americans spend more than 5% of pre-tax income on healthcare. Lower income brackets pay 15% or more ($7,800 per capita health expenditures in 2008/2009) Reform • Increased number of people insured expected to increase by 30 to 50 million – increased demand for care • Number of physicians will increase – more space demand • Hospitals expect margin pressure and need to increase market share – Hospitals seeking capital partners for “non-core assets” • May reduce reimbursements – real estate efficiency a priority – larger deals and floor plates Healthcare systems growing and physician employment changing MEDICAL OFFICE STRATEGY |
![]() 2012 Duke Realty Corporation 57 Healthcare Systems Consolidation of hospitals into systems continues Hospitals need capital and must grow market share Healthcare systems are drivers for more strategically located outpatient facilities Employment of Physicians More physicians are being employed by hospitals Hospitals and physicians are forming multi-specialty practices to prepare for improved quality and reduced reimbursement Hospitals are driving more medical office space needs for physicians Fewer Independent Community Hospitals More Physician’s Aligning with Hospitals Demand Drivers # Hospitals 5,000 MEDICAL OFFICE STRATEGY Source: Robert Kocher, MD and Nikhil R. Sahni, B.S., “Hospitals’ Race to Employ Physicians – The Logic behind a Money-Losing Proposition.”The New England Journal of Medicine.;364:1790-1793. 12 May 2011. Physician Compensation and Production Survey, Medical Group Mgt Assoc, 2003-2009. |
![]() 2012 Duke Realty Corporation 58 Development Focus ACTION PLAN National brand awareness Be “Experts” – Speak at national conferences (ASHE, BOMA) – Third party references National system relationships – Ascension – Tenet – HCA – Adventist Regional system relationships – Baylor Health – Rex Healthcare – Carolina Healthcare Systems – Advocate System Focus MEDICAL OFFICE STRATEGY Local 10% National 30% Regional 60% |
![]() 59 Healthcare Projects Delivered/Acquired in 2011/2012 Rex Holly Springs MOB Raleigh, NC 30,000 SF, 100% leased Christus St. Catherine Houston, TX 169,000 SF, 96% leased WakeMed Brier Creek Healthplex Raleigh, NC 48,000 SF, 79% leased Butler County Medical Cincinnati, OH 109, 000 SF, 100% leased Christus Santa Rosa San Antonio, TX 111,000 SF, 100% leased Max Simon MOB Indianapolis, IN 85,000 SF, 100% leased Franciscan Alliance Chicago area (Hammond, IN) 195,000 SF, 100% leased MEDICAL OFFICE STRATEGY Burr Ridge Medical Chicago, IL 105,000 SF, 100% leased 2012 Duke Realty Corporation New Hampton Place Snellville, GA 40,000 SF, 66% leased |
![]() 60 Healthcare Projects Under Development at March 31, 2012 Baylor McKinney MOB I McKinney, TX 114,000 SF, 69% preleased WakeMed Raleigh Medical Park Raleigh, NC 86,000 SF, 58% preleased Marquette General Hospital MOB Escanaba, MI 43,000 SF, 100% preleased North Fulton MOB Atlanta, GA 52,000 SF, 52% preleased Wishard Faculty Office Building Indianapolis, IN 275,000 SF, 100% preleased MEDICAL OFFICE STRATEGY VA Tampa Tampa, FL 117,000 SF, 100% preleased Scott and White Marble Falls, TX 67,000 SF, 100% preleased |
![]() 2012 Duke Realty Corporation Our Plan Existing healthcare assets $840 Million by 3/31/12 New developments $200 Million in 2012 and 2013 Acquire $200-$250 Million in 2012 and 2013 Our Focus Goal: Grow Medical Office to $1.23 Billion by 2013 61 MEDICAL OFFICE STRATEGY Growth regions (Southeast, South) Health system relationships On-campus assets Class A product (50,000 – 400,000 + square feet) National industry expert |
![]() 2012 Duke Realty Corporation 62 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 MEDICAL OFFICE STRATEGY |
![]() 2012 Duke Realty Corporation Vision Road Map – Future Duke Realty Low leverage industrial and office REIT in high growth markets and product segments 63 MEDICAL OFFICE STRATEGY What We Will Be • Low leveraged • Move from 54% to 45% leverage • Product focused • Become bulk industrial focused Industrial: Increase from 35% to > 60% Office: Decrease from 55% to < 25% Medical: Grow from 5% to 15%+ • Concentrated in high growth markets • Align investment and resources to high growth markets; dispose/exit non- strategic areas Differentiated asset strategy within tighter geographic focus Action Plan Non-Strategic property and land sales |
![]() RELIABLE. ANSWERS. 2012 Duke Realty Corporation Forward-Looking Statement 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. 64 |