UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
------------------
OR
--- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
------- -------
---------------------------------------------------------------------
Commission File Number: 0-20625
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DUKE-WEEKS REALTY LIMITED PARTNERSHIP
State of Incorporation: IRS Employer ID Number:
Indiana 35-1898425
----------------------- ----------------------
Address of principal executive offices:
8888 Keystone Crossing, Suite 1200
---------------------------------
Indianapolis, Indiana 46240
----------------------------
Telephone: (317) 808-6000
--------------------------
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
--- ---
The number of Limited Partnership Units outstanding as of November 10,
2000 was 146,514,293.
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
INDEX
PART I - FINANCIAL INFORMATION PAGE
------------------------------ ----
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of
September 30, 2000 (Unaudited) and
December 31, 1999 2
Condensed Consolidated Statements of
Operations for the three months and
nine months ended September 30, 2000
and 1999 (Unaudited) 3
Condensed Consolidated Statements of
Cash Flows for the nine months ended
September 30, 2000 and 1999 (Unaudited) 4
Condensed Consolidated Statement of
Partners' Equity for the nine months
ended September 30, 2000 (Unaudited) 5
Notes to Condensed Consolidated Financial
Statements (Unaudited) 6-11
Independent Accountants' Review Report 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 13-21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 2. Changes in Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote
of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 22
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DUKE-WEEKS REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
------
Real estate investments
Land and improvements $ 628,439 $ 602,789
Buildings and tenant
improvements 4,326,808 4,124,117
Construction in progress 235,304 327,944
Investments in unconsolidated
companies 160,094 145,587
Land held for development 262,340 246,533
--------- ---------
5,612,985 5,446,970
Accumulated depreciation (340,950) (254,574)
--------- ---------
Net real estate investments 5,272,035 5,192,396
Cash and cash equivalents 41,119 18,514
Accounts receivable,
net of allowance
of $1,367 and $1,775 17,377 26,844
Straight-line rent receivable,
net of allowance of $841 38,027 29,770
Receivables on construction contracts 47,501 29,537
Deferred financing costs, net of
accumulated amortization of
$11,921 and $9,082 13,468 16,571
Deferred leasing and other costs,
net of accumulated amortization
of $32,255 and $21,287 106,418 83,153
Escrow deposits and other assets 91,381 90,499
--------- ---------
$5,627,326 $5,487,284
========= =========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Indebtedness:
Secured debt $ 448,105 $ 528,665
Unsecured notes 1,286,660 1,326,811
Unsecured lines of credit 466,000 258,000
--------- ---------
2,200,765 2,113,476
Construction payables and amounts
due subcontractors 89,607 89,985
Accounts payable 3,378 3,179
Accrued expenses:
Real estate taxes 66,922 47,604
Interest 19,562 20,658
Other 56,359 41,836
Other liabilities 31,334 30,541
Tenant security deposits and
prepaid rents 33,629 36,156
--------- ---------
Total liabilities 2,501,556 2,383,435
--------- ---------
Minority interest 2,180 1,860
--------- ---------
Partners' equity:
General Partner
Common equity 2,101,173 2,082,720
Preferred equity (liquidation
preference of $609,117) 586,504 587,385
--------- ---------
2,687,677 2,670,105
Limited partners' common equity 332,958 328,929
Limited partners' preferred
equity 102,955 102,955
--------- ---------
3,123,590 3,101,989
--------- ---------
$5,627,326 $5,487,284
========= =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
- 2 -
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
RENTAL OPERATIONS:
Revenues:
Rental income $182,525 $157,001 $528,617 $360,849
Equity in earnings of
unconsolidated companies 3,235 3,272 10,285 8,559
------- ------- ------- -------
185,760 160,273 538,902 369,408
------- ------- ------- -------
Operating expenses:
Rental expenses 30,322 25,095 87,428 61,222
Real estate taxes 18,833 16,408 56,417 38,899
Interest expense 36,376 25,960 105,310 59,080
Depreciation and
amortization 41,884 32,738 121,429 74,127
------- ------- ------- -------
127,415 100,201 370,584 233,328
------- ------- ------- -------
Earnings from rental
operations 58,345 60,072 168,318 136,080
------- ------- ------- -------
SERVICE OPERATIONS:
Revenues:
Property management,
maintenance
and leasing fees 5,937 7,255 18,202 14,676
Construction and
development
activity income 15,634 7,817 41,581 20,976
Other income 332 330 1,226 910
------- ------- ------- -------
21,903 15,402 61,009 36,562
Operating expenses 13,410 11,531 36,187 24,073
------- ------- ------- -------
Earnings from service
operations 8,493 3,871 24,822 12,489
------- ------- ------- -------
General and administrative
expense (5,825) (4,626) (15,499) (11,737)
------- ------- ------- -------
Operating income 61,013 59,317 177,641 136,832
OTHER INCOME (EXPENSE):
Interest income 1,630 699 5,533 1,844
Earnings from land and
depreciated property
sales 4,459 3,095 22,550 7,380
Other expense (111) (133) (361) (471)
Other minority interest in
earnings of subsidiaries (697) (617) (1,669) (1,497)
------- ------- ------- -------
Net income 66,294 62,361 203,694 144,088
Dividends on preferred
units (14,345) (14,356) (43,050) (32,452)
------- ------- ------- -------
Net income available for
common unitholders $ 51,949 $ 48,005 $160,644 $111,636
======= ======= ======= =======
Net income per common unit:
Basic $ .36 $ .35 $ 1.10 $ 1.00
======= ======= ======= =======
Diluted $ .35 $ .35 $ 1.09 $ 1.00
======= ======= ======= =======
Weighted average number
of common units
outstanding 146,138 137,721 145,663 111,086
======= ======= ======= =======
Weighted average number of
common and dilutive
potential common units 147,916 138,923 147,218 112,106
======= ======= ======= =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
- 3 -
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $203,694 $144,088
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation of buildings and tenant improvements 107,906 66,993
Amortization of deferred financing costs 2,702 1,324
Amortization of deferred leasing and other costs 13,523 7,134
Minority interest in earnings 1,669 1,497
Straight-line rent adjustment (12,819) (7,462)
Earnings from land and depreciated
property sales (22,550) (7,380)
Construction contracts, net (18,342) 29,741
Other accrued revenues and expenses, net 25,718 23,766
Equity in earnings in excess of operating
distributions received from unconsolidated
companies (105) (942)
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 301,396 258,759
------- -------
Cash flows from investing activities:
Development of real estate investments (409,428) (306,031)
Acquisition of real estate investments (5,932) (124,968)
Acquisition of land held for development
and infrastructure costs (73,194) (82,995)
Recurring costs:
Tenant improvements (24,085) (14,003)
Leasing costs (14,175) (7,952)
Building improvements (4,924) (1,564)
Other deferred leasing costs (27,941) (17,126)
Other deferred costs and other assets (9,548) (39,103)
Escrow for property exchanges, net 5,235 -
Proceeds from land and depreciated
property sales, net 345,064 35,524
Capital distributions received from
unconsolidated companies - 16,802
Net investment in and advances to
unconsolidated companies (24,891) (30,048)
------- -------
NET CASH USED BY INVESTING ACTIVITIES (243,819) (571,464)
------- -------
Cash flows from financing activities:
Contributions from General Partner 21,842 299,978
Proceeds from indebtedness - 300,000
Borrowings on lines of credit, net 240,026 174,000
Repayments on indebtedness including
principal amortization (73,810) (264,711)
Distributions to partners (176,231) (119,382)
Distributions to preferred unitholders (43,050) (32,452)
Distributions to minority interest (1,349) (1,401)
Deferred financing costs (2,400) (5,141)
------- -------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES (34,972) 350,891
------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS 22,605 38,186
Cash and cash equivalents at beginning of period 18,514 6,626
------- -------
Cash and cash equivalents at end of period $ 41,119 $ 44,812
======= =======
Significant non-cash items:
Assumption of debt for real estate acquisitions $ - $ 26,186
======= =======
Acquisition of minority interest $ 6,806 $ 49,941
======= =======
Issuance of limited partner units for
real estate acquisitions $ 7,615 $ 2,017
======= =======
Transfer of mortgage debt in sale
of depreciated property $ 72,650 $ -
======= =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
- 4 -
DUKE-WEEKS REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
General Partner Limited Limited
---------------------- Partners' Partners'
Common Preferred Common Preferred
Equity Equity Equity Equity Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE AT
DECEMBER 31, 1999 $2,082,720 $ 587,385 $328,929 $102,955 $3,101,989
Net income 139,533 36,744 21,111 6,306 203,694
Capital contribution
from (repayments to)
General Partner 23,648 (881) - - 22,767
Acquisition of
partnership interest
for common stock
of General Partner 8,334 - (1,528) - 6,806
Acquisition of property
in exchange for
Limited Partner
Units - - 7,615 - 7,615
Distributions to
preferred unitholders - (36,744) - (6,306) (43,050)
Distributions to
partners ($1.21
per common unit) (153,062) - (23,169) - (176,231)
--------- ------- ------- ------- ---------
BALANCE AT
SEPTEMBER 30,
2000 $2,101,173 $586,504 $332,958 $102,955 $3,123,590
========= ======= ======= ======= =========
COMMON UNITS
OUTSTANDING
AT SEPTEMBER
30, 2000 127,509 18,980 146,489
========= ======= =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
- 5 -
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. FINANCIAL STATEMENTS
The interim condensed consolidated financial statements included
herein have been prepared by Duke-Weeks Realty Limited Partnership
(the "Partnership") without audit. The statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions
for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. These financial
statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the
Partnership's Annual Financial Statements.
THE PARTNERSHIP
The Partnership was formed on October 4, 1993, when the General
Partner contributed all of its properties and related assets and
liabilities along with the net proceeds from the issuance of an
additional 14,000,833 units through a common stock 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
under provisions of the Internal Revenue Code. The General Partner
is the sole general partner of the Partnership and owns 86.9% of
the Partnership at September 30, 2000. The remaining limited
partnership interest ("Limited Partner Units") (together with the
units of General Gartner interests, the ("Common Units")) are
mainly owned by the previous partners of Duke Associates. 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. The General Partner periodically
acquires a portion of the minority interest in the Partnership
through the issuance of shares of common stock for a like number of
Common Units. The acquisition of the minority interest is accounted
for under the purchase method with assets acquired recorded at the
fair market value of the General Partner's common stock on the date
of acquisition.
The service operations are conducted through Duke Realty Services
Limited Partnership and Duke Construction Limited Partnership, in
which the Partnership has an 89% profits interest (after certain
preferred returns on partners' capital accounts) and effective
control of their operations. The consolidated financial statements
include the accounts of the Partnership and its majority-owned or
controlled subsidiaries. The equity interests in these majority-
owned or controlled subsidiaries not owned by the Partnership are
reflected as minority interests in the consolidated financial
statements.
2. LINES OF CREDIT
The Partnership has the following lines of credit available (in
thousands):
Outstanding
Borrowing Maturity Interest at September
Description Capacity Date Rate 30, 2000
------------------------ --------- -------- --------- ------------
Unsecured Line of Credit $450,000 April 2001 LIBOR + .70% $436,000
Unsecured Line of Credit $300,000 June 2001 LIBOR + .90% $ 30,000
Secured Line of Credit $150,000 January 2003 LIBOR + 1.05% $ 32,026
- 6 -
<PAGE>
The lines of credit are used to fund development and acquisition of
additional rental properties and to provide working capital.
The $450 million line of credit allows the Partnership an option to
obtain borrowings from the financial institutions that participate
in the line of credit at rates lower than the stated interest rate,
subject to certain restrictions. Amounts outstanding on the line of
credit at September 30, 2000, are at LIBOR + .51% to .70%.
3. RELATED PARTY TRANSACTIONS
The Partnership provides management, maintenance, leasing,
construction, and other tenant related services to properties in
which certain executive officers have continuing ownership
interests. The Partnership was paid fees totaling $1.7 million and
$2.0 million for such services for the nine months ended September
30, 2000 and 1999, respectively. Management believes the terms for
such services are equivalent to those available in the market. The
Partnership has an option to purchase the executive officers'
interest in each of these properties which expires October 2003.
The option price of each property was established at the date the
option was granted.
At September 30, 2000, other assets included outstanding loan
advances totaling $2.4 million due from a related party, under a
$5.7 million demand loan agreement. The loan bears interest at
LIBOR plus 2.10% and is secured by real estate assets held by the
related entity, which the Partnership has arrangements to acquire
in future periods. Interest earned under the agreement and included
in the accompanying condensed consolidated statements of operations
totaled $173,705 for the nine months ended September 30, 2000.
4. 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
unit is computed by dividing net income available for common
unitholders by the sum of the weighted average number of common units
units and dilutive potential common units outstanding for the period.
The following table reconciles the components of basic and diluted
net income per common unit for the three and nine months ended
September 30 (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
2000 1999 2000 1999
---- ---- ---- ----
Net income available
for common unitholders $ 51,949 $ 48,005 $160,644 111,636
======= ======= ======= =======
Weighted average number
of common units
outstanding 146,138 137,721 145,663 111,086
Dilutive units for
long-term compensation
plans 1,778 1,202 1,555 1,020
------- ------- ------- -------
Weighted average number of
common units and dilutive
potential common units 147,916 138,923 147,218 112,106
======= ======= ======= =======
The Preferred D Series Convertible equity and the Series G
preferred limited partner units were anti-dilutive at September 30,
2000; therefore, no conversion to common units is included in
weighted dilutive potential common units outstanding.
- 7 -
<PAGE>
5. SEGMENT REPORTING
The Partnership is engaged in four operating segments; the
ownership and rental of office, industrial and retail real estate
investments and the providing of various real estate services such
as property management, maintenance, leasing and construction
management to third-party property owners ("Service Operations").
The Partnership's reportable segments offer different products or
services and are managed separately because each requires different
operating strategies and management expertise. There are no
material intersegment sales or transfers.
Non-segment revenue to reconcile to total revenue consists mainly
of equity in earnings of unconsolidated companies. Non-segment
assets to reconcile to total assets consist of corporate assets
including cash, deferred financing costs and investments in
unconsolidated companies.
The Partnership assesses and measures segment operating results
based on an industry performance measure referred to as Funds From
Operations ("FFO"). The National Association of Real Estate
Investment Trusts defines FFO as net income or loss, excluding
gains or losses from debt restructuring and sales of depreciated
operating property, plus operating property depreciation and
amortization and adjustments for minority interest and
unconsolidated companies on the same basis. FFO is not a measure of
operating results or cash flows from operating activities as
measured by generally accepted accounting principles, is not
necessarily indicative of cash available to fund cash needs and
should not be considered an alternative to cash flows as a measure
of liquidity. Interest expense and other non-property specific
revenues and expenses are not allocated to individual segments in
determining the Partnership's performance measure.
The revenues and FFO for each of the reportable segments for the
three and nine months ended September 30, 2000 and 1999, and the
assets for each of the reportable segments as of September 30, 2000
and December 31, 1999, are summarized as follows (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
2000 1999 2000 1999
---- ---- ---- ----
Revenues
Rental Operations:
Office $ 87,811 $ 75,628 $251,785 $198,025
Industrial 87,513 74,877 256,032 143,267
Retail 7,434 7,248 22,325 19,326
Service Operations 21,903 15,402 61,009 36,562
-------- ------- ------- -------
Total Segment FFO 204,661 173,155 591,151 397,180
Non-Segment Revenue 3,002 2,520 8,760 8,790
------- ------- ------- -------
Consolidated Revenue $207,663 $175,675 $599,911 $405,970
======= ======= ======= =======
- 8 -
<PAGE>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
2000 1999 2000 1999
---- ---- ---- ----
Funds From Operations
Rental Operations:
Office $ 59,091 $ 51,981 $171,817 $135,764
Industrial 68,536 59,296 200,182 111,578
Retail 5,801 5,874 17,833 15,659
Services Operations 8,493 3,871 24,822 12,489
------- ------- ------- -------
Total Segment FFO 141,921 121,022 414,654 275,490
Non-Segment FFO:
Interest expense (36,376) (25,960) (105,310) (59,080)
Interest income 1,630 699 5,533 1,844
General and
administrative
expenses (5,825) (4,626) (15,499) (11,737)
Gain on land sales 2,612 690 6,525 1,577
Other revenues and
expenses, net (250) (1,798) (5,855) (2,792)
Other minority
interest in earnings
of subsidiaries (697) (617) (1,669) (1,497)
Joint venture FFO 5,298 4,553 15,751 12,632
Dividends on preferred
units (14,345) (14,356) (43,050) (32,452)
------- ------- ------- -------
Consolidated FFO 93,968 79,607 271,080 183,985
Depreciation and
amortization (41,884) (32,738) (121,429) (74,127)
Share of joint
venture adjustments (1,982) (1,270) (5,032) (4,026)
Earnings from depreciated
property sales 1,847 2,406 16,025 5,804
------- ------- ------- -------
Net Income
Available for
Common Unitholders $ 51,949 $ 48,005 $160,644 $111,636
======= ======= ======= =======
September 30, December 31,
2000 1999
---- ----
Assets
Rental Operations:
Office $2,405,913 $2,252,795
Industrial 2,689,542 2,707,028
Retail 186,628 205,993
Service Operations 93,460 62,335
--------- ---------
Total Segment Assets 5,375,543 5,228,151
Non-Segment Assets 251,783 259,133
--------- ---------
Consolidated Assets $5,627,326 $5,487,284
========= =========
6. REAL ESTATE ASSETS HELD FOR SALE
In order to redeploy capital, the Partnership has an active sales
program through which it is continually pursuing favorable
opportunities to dispose of real estate assets that do not meet
long-term investment objectives of the Partnership. At September
30, 2000, the Partnership had 15 industrial, 17 office and three
retail properties comprising approximately 3.9 million square feet
held for sale. Of these properties, six build-to-suit industrial,
four build-to-suit office and two build-to-suit retail properties
were under development at September 30, 2000. Net operating income
(defined as total property revenues, less property expenses, which
include real estate taxes, repairs and maintenance, property
management, utilities, insurance and other expenses) of the
properties held for sale for the nine months ended September 30,
2000, was approximately $9.8 million. Net book value of the
properties held for sale at September 30, 2000, was $130.3 million.
There can be no assurances that such properties will be sold.
7. PARTNERS' EQUITY
The following series of preferred equity are outstanding as of
September 30, 2000 (in thousands, except percentages):
- 9 -
<PAGE>
Units Dividend Redemption Liquidation
Description Outstanding Rate Date Preference Convertible
------------------ ----------- -------- ---------- ----------- -----------
Preferred A Series 300 9.100% 08/31/01 $ 75,000 No
Preferred B Series 300 7.990% 09/30/07 150,000 No
Preferred D Series 536 7.375% 12/31/03 134,117 Yes
Preferred E Series 400 8.250% 01/20/04 100,000 No
Preferred F Series 600 8.000% 10/10/02 150,000 No
All series of preferred equity require cumulative distributions,
have no stated maturity date, and the redemption price of each
series may only be paid from the proceeds of other capital
contributions from the General Partner, which may include other
classes or series of preferred equity.
The Preferred Series D equity is convertible at a conversion rate
of 9.3677 common units for each preferred unit outstanding.
The dividend rate on the Preferred B Series equity increases to
9.99% after September 12, 2012.
8. MERGER WITH WEEKS CORPORATION
In July 1999, the General Partner and Weeks Corporation ("Weeks"),
approved a merger transaction whereby Weeks, a self-administered,
self-managed geographically focused Real Estate Investment Trust
("REIT") which operated primarily in the southeastern United States
and its consolidated subsidiary, Weeks Realty L.P. ("Weeks
Operating Partnership"), were merged with and into the General
Partner and its consolidated subsidiary, Duke Realty Limited
Partnership ("Duke Operating Partnership"). The total purchase
price of Weeks and Weeks Operating Partnership aggregated
approximately $1.9 billion, which included the assumption of the
outstanding debt and liabilities of Weeks Operating Partnership of
approximately $775 million.
The following summarized pro forma unaudited information represents
the combined historical operating results of Weeks Operating
Partnership and Duke Operating Partnership with the appropriate
purchase accounting adjustments, assuming the merger had occurred
on January 1, 1999. The pro forma financial information presented
is not necessarily indicative of what the Partnership's actual
operating results would have been had Weeks Operating Partnership
and Duke Operating Partnership constituted a single entity during
such periods (in thousands, except per unit amounts):
Nine Months Ended
September 30,
------------------
2000 1999
---- ----
(ACTUAL) (Pro Forma)
Rental income $528,617 $451,932
======= =======
Net income available for
common unitholders $160,644 $136,623
======= =======
Weighted average common
units outstanding:
Basic 145,663 136,350
======= =======
Diluted 147,218 137,540
======= =======
Net income per common unit:
Basic $ 1.10 $ 1.00
======= =======
Diluted $ 1.09 $ 0.99
======= =======
9. RECLASSIFICATIONS
Certain 1999 balances have been reclassified to conform to 2000
presentation.
- 10 -
<PAGE>
10. SUBSEQUENT EVENTS
DECLARATION OF DIVIDENDS BY GENERAL PARTNER
The Board of Directors of the General Partner declared the
following distributions on October 25, 2000:
Quarterly
Class Amount/Unit Record Date Payment Date
------------ ----------- ----------------- -----------------
Common $ 0.43 November 14, 2000 November 30, 2000
Preferred:
Series A $0.56875 November 16, 2000 November 30, 2000
Series B $0.99875 December 15, 2000 December 29, 2000
Series D $0.46094 December 15, 2000 December 29, 2000
Series E $0.51563 December 15, 2000 December 29, 2000
Series F $0.50000 January 17, 2000 January 31, 2000
INVESTMENT IN JOINT VENTURE
On October 4, 2000, the Partnership sold or contributed $469 million of
industrial properties and $18 million of undeveloped land to a joint
venture in which the Partnership will have a 50% interest. This trans-
action expands an existing venture which, upon completion of this
transaction, will own 129 buildings totaling more than 21 million square
feet with a value of $789 million. The venture properties are secured
by $383 million of first mortgage debt. The Partnership will provide
real estate related services to the venture through its Service Operations.
- 11 -
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Partners
DUKE-WEEKS REALTY LIMITED PARTNERSHIP:
We have reviewed the condensed consolidated balance sheet of Duke-
Weeks Realty Limited Partnership and subsidiaries as of September
30, 2000, the related condensed consolidated statements of
operations for the three months and nine months ended September 30,
2000 and 1999, the related condensed consolidated statements of cash
flows for the nine months ended September 30, 2000 and 1999, and the
related condensed consolidated statement of partners' equity for the
nine months ended September 30, 2000. These condensed consolidated
financial statements are the responsibility of the Partnership's
management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the condensed consolidated financial
statements referred to above for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Duke-Weeks
Realty Limited Partnership and subsidiaries as of December 31, 1999,
and the related consolidated statements of operations, partners'
equity and cash flows for the year then ended (not presented
herein); and in our report dated January 25, 2000, we expressed an
unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1999 is fairly
presented, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
KPMG LLP
Indianapolis, Indiana
October 25, 2000
- 12 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
--------
The Partnership's operating results depend primarily upon income
from the rental operations of its industrial, office and retail
properties located in its primary markets. This income from rental
operations is substantially influenced by the supply and demand for
the Partnership's rental space in its primary markets. In addition,
the Partnership's continued growth is dependent upon its ability to
maintain occupancy rates and increase rental rates of its in-
service portfolio and to continue development and acquisition of
additional rental properties.
The Partnership's primary markets have continued to offer strong
and stable local economies and have provided attractive new
development opportunities because of their established
manufacturing base, skilled work force and moderate labor costs.
The Partnership expects to continue to maintain its overall
occupancy levels and also expects to be able to increase rental
rates as leases are renewed or new leases are executed. This
combination should improve the Partnership's results of operations
from its in-service properties. The Partnership's strategy for
continued growth also includes developing and acquiring additional
rental properties in its primary markets.
The Partnership tracks same property performance which compares
those properties that were in-service for all of a calendar two-
year period. The net operating income from the same property
portfolio increased 4.75% for the nine months ended September 30,
2000, compared to the nine months ended September 30, 1999.
The following table sets forth information regarding the
Partnership's in-service portfolio of rental properties as of
September 30, 2000 and 1999 (in thousands, except percentages):
Total Percent of
Square Feet Total Square Feet Percent Occupied
---------------- ----------------- ----------------
Type 2000 1999 2000 1999 2000 1999
---- ---- ---- ---- ---- ---- ----
INDUSTRIAL
Service Centers 13,359 11,313 13.9% 12.8% 92.3% 93.9%
Bulk 59,431 56,527 62.0 64.0 94.2% 92.4%
OFFICE
Suburban 19,663 16,751 20.5 19.0 92.0% 92.7%
CBD 861 861 1.0 1.0 97.1% 92.2%
RETAIL 2,535 2,836 2.6 3.2 97.0% 93.7%
------ ------ ----- -----
Total 95,849 88,288 100.0% 100.0% 93.6% 92.7%
====== ====== ===== =====
The following table reflects the Partnership's in-service portfolio
lease expiration schedule as of September 30, 2000, by product
type, indicating square footage and annualized net effective rents
under expiring leases (in thousands, except per square foot
amounts):
- 13 -
<PAGE>
<TABLE>
<CAPTION>
Total Industrial Office Retail
----- ---------- ------ ------
Yr of Square Square Square Square
Exp Feet Revenue Feet Revenue Feet Revenue Feet Revenue
----- ------ ------- ------- ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000 2,463 $ 14,857 1,967 $ 8,668 425 $ 5,526 71 $ 663
2001 9,252 57,766 7,147 31,960 2,034 24,913 71 893
2002 9,373 60,402 7,451 36,922 1,848 22,444 74 1,036
2003 10,212 67,927 8,073 40,017 2,021 26,486 118 1,424
2004 9,588 66,870 7,271 35,050 2,227 30,574 90 1,246
2005 12,673 91,363 9,425 45,687 2,921 42,393 327 3,283
2006 7,134 41,480 5,836 23,124 1,276 18,073 22 283
2007 5,704 35,281 4,764 22,006 868 12,563 72 712
2008 5,433 33,114 4,460 19,940 910 12,460 63 714
2009 6,416 39,930 5,218 22,530 1,092 15,951 106 1,449
2010
and
There-
after 11,436 92,994 6,686 29,830 3,306 49,751 1,444 13,413
------ ------- ------ ------- ------ ------- ----- ------
Total
Leased 89,684 $601,984 68,298 $315,734 18,928 $261,134 2,458 $25,116
====== ======= ====== ======= ====== ======= ===== ======
Total
Portfolio
Sq Ft 95,849 72,790 20,524 2,535
====== ====== ====== =====
Annualized
net effective
rent per
sq ft $ 6.71 $ 4.62 $ 13.80 $ 10.22
====== ====== ======= ======
</TABLE>
The Partnership also expects to realize growth in earnings from
rental operations through the development and acquisition of
additional rental properties in its primary markets and the
completion of the 7.9 million square feet of properties under
development by the Partnership at September 30, 2000, over the next
three quarters and thereafter. These properties under development
should provide future earnings through Service Operations income
upon sale or from rental operations growth as they are placed in
service as follows (in thousands, except percent leased and
stabilized returns):
Anticipated
In-Service Square Percent Project Stabilized
Date Feet Leased Costs Return
------------ ------- ------- -------- --------
Held for Rental:
4th Quarter 2000 2,516 45% $180,844 11.4%
1st Quarter 2001 2,287 39% 115,400 11.5%
2nd Quarter 2001 1,043 0% 69,822 11.9%
Thereafter 128 0% 13,148 12.0%
----- -------
5,974 34% $379,214 11.6%
===== =======
Build-to-Suit for Sale:
4th Quarter 2000 - 0% $ -
1st Quarter 2001 291 54% 24,747
2nd Quarter 2001 488 68% 34,642
Thereafter 1,157 100% 97,996
----- -------
1,936 85% $157,385
===== =======
Total 7,910 46% $536,599
===== =======
MERGER WITH WEEKS CORPORATION
-----------------------------
In July 1999, the General Partner and Weeks Corporation ("Weeks"),
approved a merger transaction whereby Weeks, a self-administered,
self-managed geographically focused Real Estate Investment Trust
("REIT") which operated primarily in the southeastern United States
and its consolidated subsidiary, Weeks Realty L.P. ("Weeks
Operating Partnership"), were merged with and into the General
Partner and its consolidated subsidiary, Duke Realty Limited
Partnership ("Duke Operating Partnership"). The total purchase
price of Weeks and Weeks Operating Partnership aggregated
approximately $1.9 billion, which included the assumption of the
outstanding debt and liabilities of Weeks Operating Partnership of
approximately $775 million.
- 14 -
<PAGE>
The following summarized pro forma unaudited information represents
the combined historical operating results of Weeks Operating
Partnership and Duke Operating Partnership with the appropriate
purchase accounting adjustments, assuming the merger had occurred
on January 1, 1999. The pro forma financial information presented
is not necessarily indicative of what the Partnership's actual
operating results would have been had Weeks Operating Partnership
and Duke Operating Partnership constituted a single entity during
such periods (in thousands, except per unit amounts):
Nine Months Ended
September 30,
------------------
2000 1999
---- ----
(Actual) (Pro Forma)
Rental income $528,617 $451,932
======= =======
Net income available
for common shareholders $160,644 $136,623
======= =======
Weighted average common
shares outstanding:
Basic 145,663 136,350
======= =======
Diluted 147,218 137,540
======= =======
Net income per common share:
Basic $ 1.10 $ 1.00
======= =======
Diluted $ 1.09 $ 0.99
======= =======
RESULTS OF OPERATIONS
---------------------
Following is a summary of the Partnership's operating results and
property statistics for the three and nine months ended September
30, 2000 and 1999 (in thousands, except number of properties and
per unit amounts):
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
2000 1999 2000 1999
---- ---- ---- ----
Rental Operations revenue $185,760 $160,273 $538,902 $369,408
Service Operations revenue 21,903 15,402 61,009 36,562
Earnings from Rental
Operations 58,345 60,072 168,318 136,080
Earnings from Service
Operations 8,493 3,871 24,822 12,489
Operating income 61,013 59,317 177,641 136,832
Net income available for
common unitholders $ 51,949 $ 48,005 $160,644 $111,636
Weighted average common
units outstanding 146,138 137,721 145,663 111,086
Weighted average common
and dilutive potential
common units 147,916 138,923 147,218 112,106
Basic income per
common unit $ .36 $ .35 $ 1.10 $ 1.00
Diluted income per
common unit $ .35 $ .35 $ 1.09 $ 1.00
Number of in-service properties
at end of period 878 841 878 841
In-service square footage
at end of period 95,849 88,288 95,849 88,288
Under development square
footage at end of period 7,910 12,479 7,910 12,479
Rental Operations
-----------------
Rental Operations revenue increased to $185.8 million from $160.3
million for the three months ended September 30, 2000, compared to
the same period in 1999. This increase is primarily due to the
increase in the number of in-service properties during the
respective periods. As of September 30, 2000, the Partnership had
878 properties in service compared to 841 properties at September
30, 1999. The following is a summary of the Partnership's
acquisition and development activity since January 1, 1999:
- 15 -
<PAGE>
Square
Buildings Feet
--------- ------
Properties owned as of:
January 1, 1999 453 52,028
Weeks merger 335 28,569
Acquisitions 30 2,867
Developments placed in service 68 10,903
Dispositions (21) (1,890)
Building remeasurements - 25
--- ------
December 31, 1999 865 92,502
Acquisitions 2 169
Developments placed in service 57 9,561
Dispositions (46) (6,390)
Building remeasurements - 7
--- ------
September 30, 2000 878 95,849
=== ======
Rental property, real estate tax and depreciation and amortization
expenses increased for the three months ended September 30, 2000,
compared to the same period in 1999, due to the increase in the
number of in-service properties during the respective periods.
The $10.4 million increase in interest expense is primarily
attributable to higher outstanding debt balances associated with
the financing of the Partnership's investment activities. The
increased balances include $150 million of unsecured debt issued in
the fourth quarter of 1999, and increased borrowings on the
Partnership's lines of credit. These higher borrowing costs were
partially offset by the capitalization of interest on increased
property development activities.
As a result of the above-mentioned items, earnings from Rental
Operations decreased $1.8 million from $60.1 million for the three
months ended September 30, 1999, to $58.3 million for the three
months ended September 30, 2000.
Service Operations
------------------
Service Operations revenues increased by $6.5 million from $15.4
million for the three months ended September 30, 1999, to $21.9
million for the three months ended September 30, 2000, primarily as
a result of increases in construction and development income from
increased third-party construction.
Service Operations operating expenses increased from $11.5 million
for the three months ended September 30, 1999, to $13.4 million for
the three months ended September 30, 2000, primarily due to
increases in payroll and maintenance expenses due to the overall
growth of the Partnership and the increased portfolio of buildings
associated with this growth.
As a result, earnings from Service Operations increased from $3.9
million for the three months ended September 30, 1999, to $8.5
million for the three months ended September 30, 2000.
- 16 -
<PAGE>
Other Income and Expenses
-------------------------
Interest income increased from $699,000 for the three months ended
September 30, 1999, to $1.6 million for the same period in 2000
primarily through earnings on funds deposited in tax deferred
exchange escrows of $794,000.
The Partnership has a disposition strategy to pursue favorable
opportunities to dispose of real estate assets that no longer meet
long-term investment objectives of the Partnership, which resulted
in net sales proceeds of $130.8 million and a net gain of $4.5
million during the three months ended September 30, 2000.
In conjunction with this disposition strategy, included in net real
estate investments are 35 buildings with a net book value of $130.3
million which were classified as held for sale by the Partnership
at September 30, 2000. The Partnership expects to complete these
and other dispositions and use the proceeds to fund future
investments in real estate assets.
Net Income Available for Common Unitholders
-------------------------------------------
Net income available for common unitholders for the three months
ended September 30, 2000, was $51.9 million compared to net income
available for common unitholders of $48.0 million for the three
months ended September 30, 1999. This increase results primarily
from the operating result fluctuations in rental and service
operations explained above.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2000 TO NINE MONTHS
ENDED SEPTEMBER 30, 1999
-------------------------------------------------------------------
Rental Operations
-----------------
Rental Operations revenue increased to $538.9 million from $369.4
million for the nine months ended September 30, 2000, compared to
the same period in 1999. This increase is primarily due to the
increase in the number of in-service properties during the
respective periods, particularly, the revenues from the 335
buildings obtained in the Weeks Merger, for which nine months of
operations are included in 2000 compared to three months in 1999.
As of September 30, 2000, the Partnership had 878 properties in
service compared to 841 properties at September 30, 1999.
Rental property, real estate tax and depreciation and amortization
expenses increased for the nine months ended September 30, 2000,
compared to the same period in 1999 due to the increase in the
number of in-service properties during the respective periods.
The $46.2 million increase in interest expense is primarily
attributable to higher outstanding debt balances associated with
the financing of the Partnership's investment activities. The
increased balances include $450 million of unsecured debt issued in
1999, the assumption of $185 million of secured debt and $287
million of unsecured debt in the merger with Weeks Corporation in
July 1999, and increased borrowings on the Partnership's lines of
credit. These higher borrowing costs were partially offset by the
capitalization of interest on increased property development
activities.
As a result of the above-mentioned items, earnings from Rental
Operations increased $32.2 million from $136.1 million for the nine
months ended September 30, 1999, to $168.3 million for the nine
months ended September 30, 2000.
- 17 -
<PAGE>
Service Operations
------------------
Service Operations revenues increased by $24.4 million from $36.6
million for the nine months ended September 30, 1999, to $61.0
million for the nine months ended September 30, 2000, primarily as
a result of increases in construction and development income from
increased third-party construction.
Service Operations operating expenses increased from $24.1 million
for the nine months ended September 30, 1999, to $36.2 million for
the nine months ended September 30, 2000, primarily due to
increases in payroll and maintenance expenses due to the overall
growth of the Partnership and the increased portfolio of buildings
associated with this growth.
As a result, earnings from Service Operations increased from $12.5
million for the nine months ended September 30, 1999, to $24.8
million for the nine months ended September 30, 2000.
Other Income and Expenses
-------------------------
Interest income increased from $1.8 million for the nine months
ended September 30, 1999, to $5.5 million for the same period in
2000 primarily through earnings on funds deposited in tax deferred
exchange escrows of $3.3 million.
The Partnership has a disposition strategy to pursue favorable
opportunities to dispose of real estate assets that no longer meet
long-term investment objectives of the Partnership, which resulted
in net sales proceeds of $345.1 million and a net gain of $22.6
million during the nine months ended September 30, 2000.
Net Income Available for Common Unitholders
---------------------------------------------
Net income available for common unitholders for the nine months
ended September 30, 2000 was $160.6 million compared $111.6 million
for the nine months ended September 30, 1999. This increase results
primarily from the operating result fluctuations in rental and
service operations explained above.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities totaling $301.4 million
and $258.8 million for the nine months ended September 30, 2000 and
1999, respectively, represents the primary source of liquidity to
fund distributions to unitholders and the other minority interests
and to fund recurring costs associated with the renovation and re-
letting of the Partnership's properties.
Net cash used by investing activities totaling $243.8 million and
$571.5 million for the nine months ended September 30, 2000 and
1999, respectively, represents the investment of funds by the
Partnership to expand its portfolio of rental properties through
the development and acquisition of additional rental properties,
net of proceeds received from property sales.
- 18 -
<PAGE>
Net cash provided (used) by (for) financing activities totaling
($35.0) million and $350.9 million for the nine months ended
September 30, 2000 and 1999, respectively, is comprised of debt and
equity issuances, net of distributions to unitholders and minority
interests and repayments of outstanding indebtedness. In the first
nine months of 2000, the Partnership received $22.7 million of net
proceeds from the General Partner's issuance of common shares which
was used to reduce amounts outstanding under the Partnership's
lines of credit and to fund the development and acquisition of
additional rental properties.
In the first nine months of 1999, the Partnership received $203.4
million of net proceeds from the General Partner's issuance of
common shares, received $96.5 million from the General Partner's
issuance of preferred shares and issued $300.0 million of unsecured
debt. The Partnership used the net proceeds to reduce amounts
outstanding under the Partnership's lines of credit and to fund the
development and acquisition of additional rental properties.
The Partnership has the following lines of credit available (in
thousands):
Outstanding
Borrowing Maturity Interest at September
Description Capacity Date Rate 30, 2000
------------------------ --------- ------------ ------------- ------------
Unsecured Line of Credit $450,000 April 2001 LIBOR + .70% $436,000
Unsecured Line of Credit $300,000 June 2001 LIBOR + .90% $ 30,000
Secured Line of Credit $150,000 January 2003 LIBOR + 1.05% $ 32,026
The lines of credit are used to fund development and acquisition of
additional rental properties and to provide working capital.
The $450 million line of credit allows the Partnership an option to
obtain borrowings from the financial institutions that participate
in the line of credit at rates lower than the stated interest rate,
subject to certain restrictions. Amounts outstanding on the line of
credit at September 30, 2000 are at LIBOR + .51% to .70%.
The General Partner and the Partnership currently have on file one
Form S-3 Registration Statement with the Securities and Exchange
Commission ("Shelf Registration") which has remaining availability
as of September 30, 2000 of $793.0 million to issue common stock,
preferred stock or unsecured debt securities. The General Partner
and the Partnership intend to issue additional equity or debt under
this Shelf Registration as market conditions change and capital
needs arise to fund the development and acquisition of additional
rental properties. The General Partner and the Partnership also
plan to file additional shelf registrations as necessary.
The total debt outstanding at September 30, 2000, consists of notes
totaling $2.2 billion with a weighted average interest rate of
7.31% maturing at various dates through 2028. The Partnership has
$1.8 billion of unsecured debt and $448.1 million of secured debt
outstanding at September 30, 2000. Scheduled principal amortization
of such debt totaled $8.8 million for the nine months ended
September 30, 2000.
Following is a summary of the scheduled future amortization and
maturities of the Partnership's indebtedness at September 30, 2000
(in thousands):
- 19 -
<PAGE>
Future Repayments
---------------------------------------- Weighted Average
Scheduled Interest Rate of
Year Amortization Maturities Total Future Repayments
---- ------------ ---------- ----- -----------------
2000 $ 2,750 $ - $ 2,750 7.31%
2001 11,605 645,381 656,986 7.31%
2002 11,836 55,037 66,873 7.36%
2003 11,433 313,239 324,672 7.71%
2004 9,893 176,146 186,039 7.41%
2005 8,654 213,662 222,316 7.25%
2006 7,725 146,178 153,903 7.12%
2007 5,802 116,579 122,381 7.13%
2008 4,756 100,000 104,756 6.77%
2009 5,099 150,000 155,099 7.73%
Thereafter 29,990 175,000 204,990 6.88%
------- --------- ---------
Total $109,543 $2,091,222 $2,200,765 7.31%
======= ========= =========
FUNDS FROM OPERATIONS
Management believes that Funds From Operations ("FFO"), which is
defined by the National Association of Real Estate Investment
Trusts as net income or loss, excluding gains or losses from debt
restructuring and sales of depreciated property, plus operating
property depreciation and amortization and adjustments for minority
interest and unconsolidated companies on the same basis, is the
industry standard for reporting the operations of real estate
investment trusts.
The following table reflects the calculation of the Partnership's
FFO for the three and nine months ended September 30 as follows (in
thousands):
Three months ended Nine months ended
September 30, September 30,
------------------- -----------------
2000 1999 2000 1999
---- ---- ---- ----
Net income available for
common unitholders $51,949 $48,005 $160,644 $111,636
Add back:
Depreciation and amortization 41,884 32,738 121,429 74,127
Share of joint venture adjustments 1,982 1,270 5,032 4,026
Earnings from depreciated property
sales (1,847) (2,406) (16,025) (5,804)
------- ------- ------- -------
Funds From Operations $93,968 $79,607 $271,080 $183,985
======= ======= ======= =======
Cash flow provided by (used by):
Operating activities $126,831 $176,189 $301,396 $258,759
Investing activities 14,649 (248,488) (243,819) (571,464)
Financing activities (141,764) (50,985) (34,972) 350,891
The increase in FFO for the three and nine months ended September
30, 2000 compared to the three and nine months ended September 30,
1999, results primarily from the increased in-service rental
property portfolio as discussed above under "Results of
Operations."
While management believes that FFO is the most relevant and widely
used measure of the Partnership's operating performance, such
amount does not represent cash flow from operations as defined by
generally accepted accounting principles, should not be considered
as an alternative to net income as an indicator of the
Partnership's operating performance, and is not indicative of cash
available to fund all cash flow needs.
- 20 -
<PAGE>
ACCOUNTING CHANGES
In June 1998, the Financial Accounting Standards Board issued
Statement No. 133, "Accounting for Derivative Instruments and for
Hedging Activities," effective for fiscal years beginning after
June 15, 2000. The statement will require the Partnership to
recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value
through income. If the derivative is a hedge, then depending on the
nature of the hedge, changes in the fair value will either be
offset through earnings, against the change in fair value of hedged
assets, liabilities or firm commitments or recognized in other
comprehensive income until the hedged item is recognized in income.
The ineffective portion of a hedge's change in fair value will be
immediately recognized in income. The adoption of this statement
will not have a material impact on the Partnership's financial
statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
--------------------------
None
Item 2. Changes in Securities
------------------------------
None
Item 3. Defaults upon Senior Securities
----------------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
None
Item 5. Other Information
--------------------------
When used in this Form 10-Q, the words "believes," "expects,"
"estimates" and similar expressions are intended to identify
forward looking-statements. Such statements are subject to
certain risks and uncertainties which could cause actual
results to differ materially. In particular, among the factors
that could cause actual results to differ materially are
continued qualification as a real estate investment trust,
general business and economic conditions, competition,
increases in real estate construction costs, interest rates,
accessibility of debt and equity capital markets and other
risks inherent in the real estate business including tenant
defaults, potential liability relating to environmental
matters and illiquidity of real estate investments. Readers
are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date hereof.
The Partnership undertakes no obligation to publicly release
the results of any revisions to these forward-looking
statements which may be made to reflect events or
circumstances after the date hereof or to reflect the
occurrence of unanticipated events. Readers are also advised
to refer to the Partnership's Form 8-K Report as filed with
the U.S. Securities and Exchange Commission on March 29, 1996
for additional information concerning these risks.
- 21 -
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
Exhibits
--------
Exhibit 15. Letter regarding unaudited interim financial information
Exhibit 27. Financial Data Schedule (EDGAR Filing Only)
Reports on Form 8-K
-------------------
None
- 22 -
<PAGE>
SIGNATURES
Pursuant to the requirements 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-WEEKS REALTY LIMITED PARTNERSHIP
By: Duke-Weeks Realty Limited Partnership,
General Partner
Registrant
Date: November 12, 2000 /s/ Thomas L. Hefner
----------------- -----------------------------
President and
Chief Executive Officer
/s/ Darell E. Zink, Jr.
-----------------------------
Executive Vice President and
Chief Financial Officer
/s/ Dennis D. Oklak
-----------------------------
Executive Vice President and
Chief Administrative Officer
- 23 -
