<PAGE>
Filed Pursuant to Rule 424(b)(2) Registration No. 33-54997
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED APRIL 28, 1995
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 29, 1994)
2,500,000 SHARES
[LOGO]
DUKE REALTY INVESTMENTS, INC.
COMMON STOCK
------------------------
Duke Realty Investments, Inc. (the "Company") is a self-administered and
self-managed real estate investment trust that began operations through a
predecessor in 1972. The Company owns a diversified portfolio of 136 in-service
industrial, office and retail properties, encompassing approximately 14.4
million square feet and located in eight states, and 19 buildings and two
building expansions encompassing approximately 3.0 million square feet currently
under development. The Company also owns approximately 900 acres of land for
future development. The Company has the largest commercial real estate
operations in Indianapolis and Cincinnati and is one of the largest real estate
companies in the Midwest. The Company expects to continue to pay regular
quarterly dividends to its shareholders.
All of the shares of Common Stock offered hereby are being sold by the
Company. The Common Stock is listed on the New York Stock Exchange under the
symbol DRE. The last reported sale price for the Common Stock on April 26, 1995
was $27.00 per share.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2)
<S> <C> <C> <C>
Per Share.................................. $ $ $
Total (3).................................. $ $ $
<FN>
(1) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $325,000.
(3) The Company has granted the several Underwriters an option to purchase up
to an additional 375,000 shares of Common Stock to cover over-allotments.
If all such shares are purchased, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."
</TABLE>
------------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
-------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, subject to
approval of certain legal matters by counsel for the Underwriters. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the shares of
Common Stock offered hereby will be made in New York, New York on or about May
, 1995.
------------------------
MERRILL LYNCH & CO.
ALEX. BROWN & SONS
INCORPORATED
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
MCDONALD & COMPANY
SECURITIES, INC.
-----------------
The date of this Prospectus Supplement is May , 1995.
<PAGE>
[ MAP ]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
S-2
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS OR INCORPORATED HEREIN AND
THEREIN BY REFERENCE. UNLESS INDICATED OTHERWISE, THE INFORMATION CONTAINED IN
THIS PROSPECTUS SUPPLEMENT (I) ASSUMES NO EXERCISE OF THE UNDERWRITERS'
OVER-ALLOTMENT OPTION AND (II) IS PRESENTED AS OF MARCH 31, 1995. ALL REFERENCES
TO THE "COMPANY" IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
INCLUDE THE COMPANY, THOSE ENTITIES OWNED OR CONTROLLED BY THE COMPANY AND
PREDECESSORS OF THE COMPANY, UNLESS THE CONTEXT INDICATES OTHERWISE.
THE COMPANY
The Company is a self-administered and self-managed real estate investment
trust (a "REIT") that began operations through a predecessor in 1972. The
Company owns a diversified portfolio of 136 in-service industrial, office and
retail properties (the "Properties"), encompassing approximately 14.4 million
square feet and located in eight states, and 19 buildings and two building
expansions encompassing approximately 3.0 million square feet currently under
development. The Company also owns approximately 900 acres of unencumbered land
(the "Land") for future development, of which approximately 80% is zoned for
industrial use and which is typically located adjacent to the Properties. The
Company provides leasing, management, construction, development and other
tenant-related services for the Properties and certain properties owned by third
parties. The Company has the largest commercial real estate operations in
Indianapolis and Cincinnati and is one of the largest real estate companies in
the Midwest. The Company believes that the Midwest offers a relatively strong
and stable economy compared to other regions of the United States and provides
significant growth potential due to its central location, established
manufacturing base, skilled work force and moderate labor costs.
The Company has developed over 35 million square feet of commercial property
since its founding. According to published industry reports, the Company is one
of the most active developers of industrial properties in the United States,
based on square footage under construction. During the last six years, the
Company developed an average of approximately 2.1 million square feet per year.
In 1994, the Company placed in service 1.3 million square feet of new
development and acquired 931,000 square feet of property. In the first quarter
of 1995, the Company placed in service and acquired an additional 835,000 and
712,000 square feet of properties, respectively. Also, the Company currently has
3.0 million square feet under development.
The Company manages approximately 27 million square feet of property,
including over 12 million square feet owned by third parties. The Company
manages approximately 30% of all suburban office, warehousing and light
manufacturing space in Indianapolis, and approximately 18% of all office,
warehousing and light manufacturing space in Cincinnati. In addition to
providing services to approximately 1,100 tenants in the Properties, the Company
provides such services to over 1,300 tenants in approximately 150 properties
owned by others. Based on market data, the Company believes that it was
responsible in 1994 for approximately 66% of the net absorption (gross space
leased minus lease terminations and expirations) of warehousing and light
manufacturing space in Indianapolis and approximately 29% of the net absorption
of warehousing and light manufacturing space in Cincinnati. The Company believes
its dominant position in its markets gives it a competitive advantage in its
real estate activities.
After completion of this offering (the "Offering"), the six senior officers
of the Company, who collectively have over 115 years of experience in the real
estate industry and have been with the Company for an average of over 16 years,
will beneficially own Common Stock and partnership interests ("Units")
exchangeable for Common Stock that represent approximately 14% of the Company's
Common Stock on a fully diluted basis.
S-3
<PAGE>
The following table provides an overview of the Properties.
SUMMARY OF PROPERTIES
(IN THOUSANDS, EXCEPT PERCENTAGES)
<TABLE>
<CAPTION>
PERCENT
ANNUAL OF TOTAL
PERCENT NET NET EFFECTIVE OCCUPANCY
OF TOTAL EFFECTIVE ANNUAL AT
TYPE OF PROPERTY SQUARE FEET SQUARE FEET RENT (1) RENT MARCH 31, 1995
- --------------------------------------------- ----------- --------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C>
Industrial................................... 9,089 63% $ 34,241 40% 94.53%
Office....................................... 3,987 28% 40,225 46% 90.50%
Retail....................................... 1,366 9% 12,315 14% 96.78%
----------- --- ------------ --- -----
Total........................................ 14,442 100% $ 86,781 100% 93.62%
----------- --- ------------ --- -----
----------- --- ------------ --- -----
<FN>
- ------------------------
(1) Represents annual net effective rent due from tenants in occupancy as of
March 31, 1995. Net effective rent ("Net Effective Rent") equals the
average annual rental property revenue over the terms of the respective
leases, excluding additional rent due as operating expense reimbursements,
landlord allowances for operating expenses and percentage rents.
</TABLE>
RECENT DEVELOPMENTS
REORGANIZATION, 1993 AND 1994 OFFERINGS AND DIVIDEND INCREASE. In October
1993, the Company acquired substantially all of the properties and businesses of
Duke Associates, a related full-service commercial real estate firm operating
primarily in the Midwest (the "Reorganization"). As part of the Reorganization,
the Company sold additional Common Stock through an offering (the "1993
Offering"), raising net proceeds of $309.3 million. In September 1994, the
Company completed an additional Common Stock offering (the "1994 Offering"),
raising net proceeds of $92.1 million. In July 1994, the Company increased its
quarterly dividend from $.45 to $.47 per share.
DEVELOPMENT AND ACQUISITION ACTIVITY. During 1994, the Company completed
development of and placed in service 10 properties with 1.3 million square feet
having a total cost of $52.4 million. In the first quarter of 1995, the Company
placed in service two additional properties with 835,000 square feet having a
total cost of $17.2 million. The Company currently has 19 properties and two
property expansions under development comprising 3.0 million square feet which
will have a total cost of $168.8 million upon completion. Also during 1994, the
Company acquired five properties with 931,000 square feet at a total cost of
$33.6 million. In the first quarter of 1995, the Company acquired an additional
six properties with 712,000 square feet at a total cost of $18.5 million.
These property additions (the "New Properties"), totaling 6.8 million square
feet, consist of 71% industrial, 17% office and 12% retail projects. The total
cost (including allocation of land) of the New Properties is $290.5 million. The
New Properties in service at March 31, 1995 are 94.1% leased, and the New
Properties under construction are 79.3% pre-leased for a combined total of 87.6%
leased. The New Properties provide an initial weighted average unleveraged
return on cost (computed as property annual contractual net operating income
("NOI") divided by total project costs) of 10.5% assuming no further leasing.
The Company expects the weighted average unleveraged return to be 11.8% with
anticipated leasing activity. The annual contractual NOI to be generated from
the New Properties, once placed in service, will be $30.0 million, increasing to
$34.2 million with anticipated additional leasing. The cost of the New
Properties expected to be placed in service in the second quarter of 1995 is
$26.9 million, in the third quarter of 1995 is $32.8 million, in the fourth
quarter of 1995 is $65.1 million and in 1996 is $44.0 million.
S-4
<PAGE>
The total cost of the New Properties of $290.5 million includes land basis
of $13.9 million which represents non-cash allocations of the portion of the
Company's unencumbered Land used in the development of the New Properties. The
stabilized weighted average unleveraged return on cost for the New Properties
net of this land basis is expected to be 12.4% as compared to the 11.8%
including the land basis. Assuming completion of the Offering, these net
development and acquisition expenditures of $276.6 million will be funded 54%
through equity and 46% through debt financings.
The following table sets forth information regarding each of the New
Properties.
<TABLE>
<CAPTION>
IN-SERVICE OR PERCENT
ANTICIPATED PROPERTY PERCENTAGE SQUARE LEASED OR
IN-SERVICE DATE PROJECT/ TENANT LOCATION TYPE OWNERSHIP FEET PRE-LEASED(1) INITIAL LEASE TERM
- ------------------ ------------------------ ---------------- ---------- --------- --------- ---------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DEVELOPMENT COMPLETED IN 1994:
1st Qtr. 1994 Xetron Cincinnati, OH Industrial 10% 100,193 100% 10 years
1st Qtr. 1994 Caterpillar Indianapolis, IN Industrial 100% 336,000 100% 6 years
2nd Qtr. 1994 Daydream Publishing Indianapolis, IN Industrial 100% 98,000 100% 10 years
2nd Qtr. 1994 Redken Cincinnati, OH Industrial 100% 166,400 100% 5 years
2nd Qtr. 1994 CR Services Cincinnati, OH Industrial 100% 214,840 100% 10 years
3rd Qtr. 1994 Indiana Insurance Columbus, OH Office 100% 49,600 100% 10 years
3rd Qtr. 1994 Veteran's Administration Columbus, OH Office 100% 118,000 100% 20 years
3rd Qtr. 1994 Sports Unlimited Cincinnati, OH Retail 100% 67,148 100% 20 years
4th Qtr. 1994 Galyan's Columbus, OH Retail 100% 74,636 100% 20 years
4th Qtr. 1994 Kohl's Cincinnati, OH Retail 100% 80,684 100% 25 years
--------- ---
1,305,501 100%
--------- ---
DEVELOPMENT COMPLETED IN 1995:
1st Qtr. 1995 Park 100 Building 97 Indianapolis, IN Industrial 100% 280,800 79% Varies
1st Qtr. 1995 Silver Burdett Indianapolis, IN Industrial 100% 553,900 100% 7 years
--------- ---
834,700 93%
--------- ---
UNDER DEVELOPMENT:
2nd Qtr. 1995 Building 98 Expansion Indianapolis, IN Industrial 100% 97,000 100% 6 years
2nd Qtr. 1995 World Park Building 17 Cincinnati, OH Industrial 100% 304,000 100% 10 years
2nd Qtr. 1995 Sterling Software Columbus, OH Office 100% 57,660 100% 15 years
2nd Qtr. 1995 John Alden Columbus, OH Office 100% 101,200 100% 15 years
3rd Qtr. 1995 Park 100 Building 127 Indianapolis, IN Industrial 100% 93,600 69% 10 years(2),(3)
3rd Qtr. 1995 Park 100 Building 99 Indianapolis, IN Industrial 50% 364,800 42% 10 years(2),(3)
3rd Qtr. 1995 Petsmart Expansion Columbus, OH Industrial 100% 132,000 100% 15 years
3rd Qtr. 1995 Southpointe Building I Columbus, OH Industrial 100% 293,824 70% (4)
3rd Qtr. 1995 Haywood Oaks Bldg. 7 Nashville, TN Industrial 100% 66,523 30% 5 years(2),(5)
3rd Qtr. 1995 St. Francis Hospital Indianapolis, IN Office 100% 95,579 69% Varies
3rd Qtr. 1995 Office Max Cincinnati, OH Retail 100% 23,500 100% 15 years
4th Qtr. 1995 Park 100 Building 100 Indianapolis, IN Industrial 100% 117,500 24% 10 years(2),(3)
4th Qtr. 1995 Dayco Louisville, KY Industrial 100% 282,539 100% 15 years
4th Qtr. 1995 Community Hospital Indianapolis, IN Office 100% 38,193 100% 15 years
4th Qtr. 1995 Cardinal Health Columbus, OH Office 100% 132,854 100% Varies
4th Qtr. 1995 John Alden Miami, FL Office 100% 251,316 100% 20 years
4th Qtr. 1995 Sofa Express Cincinnati, OH Retail 100% 15,000 100% 10 years
4th Qtr. 1995 Best Buy Columbus, OH Retail 100% 68,400 85% 15 years(2)
1st Qtr. 1996 Parkwood Crossing Indianapolis, IN Office 50% 93,300 48% 10 years(2)
2nd Qtr. 1996 Wal-Mart Columbus, OH Retail 100% 149,429 100% 21 years
4th Qtr. 1996 Ohio National Cincinnati, OH Office 100% 212,125 69% 20 years(2),(6)
--------- ---
2,990,342 79%
--------- ---
1994 ACQUISITIONS:
2nd Qtr. 1994 Park 100 Building 126 Indianapolis, IN Industrial 100% 60,100 100% Varies
2nd Qtr. 1994 Coldwater Crossing Fort Wayne, IN Retail 100% 246,365 95% Varies
3rd Qtr. 1994 Park 100 Building 98 Indianapolis, IN Industrial 100% 406,900 93% Varies
4th Qtr. 1994 Greenbriar Business Park Nashville, TN Industrial 100% 134,759 98% Varies
4th Qtr. 1994 MBM Building Columbus, OH Industrial 100% 83,000 100% 3 years
--------- ---
931,124 95%
--------- ---
</TABLE>
S-5
<PAGE>
<TABLE>
<CAPTION>
IN-SERVICE OR PERCENT
ANTICIPATED PROPERTY PERCENTAGE SQUARE LEASED OR
IN-SERVICE DATE PROJECT/ TENANT LOCATION TYPE OWNERSHIP FEET PRE-LEASED(1) INITIAL LEASE TERM
- ------------------ ------------------------ ---------------- ---------- --------- --------- ---------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1995 ACQUISITIONS:
1st Qtr. 1995 Park 100 Building 107 Indianapolis, IN Industrial 100% 58,783 89% Varies
1st Qtr. 1995 Palomar Building Indianapolis, IN Industrial 100% 99,350 100% 10 years
1st Qtr. 1995 Franklin Rd. Center Indianapolis, IN Industrial 100% 367,065 69% Varies
1st Qtr. 1995 University Moving Cincinnati, OH Industrial 100% 70,000 100% 6 years
1st Qtr. 1995 Keebler Building Nashville, TN Industrial 100% 36,150 100% 6 years
1st Qtr. 1995 Eastgate Square Cincinnati, OH Retail 100% 80,682 100% Varies
--------- ---
712,030 83%
--------- ---
Grand Total 6,773,697 88%
--------- ---
--------- ---
<FN>
- ------------------------------
(1) Represents completed leasing activity through April 26, 1995, except as
described in footnote 4.
(2) Represents term of the leased portion of this building.
(3) Located in Park 100 Industrial Park where the Company owns or manages 6.6
million square feet of similar space which is 97% leased.
(4) The Company has letters of intent and is completing final lease
negotiations with two tenants for the 70% leased percentage indicated. The
leases with these tenants are expected to be executed by May 15, 1995 with
terms of 5 to 7 years.
(5) Located within Haywood Oaks TechneCenter where the Company owns and manages
324,000 square feet of similar space which is 95% leased.
(6) This project is currently owned in a joint venture in which the Company
owns a 50% interest; however, the Company has a contract to purchase its
joint venture partner's interest. This acquisition is expected to be
completed by May 15, 1995.
</TABLE>
LAND ACTIVITY. The above development activities used 205 acres of the
Company's unencumbered Land. The Company has acquired 86 additional acres, has
leased 20 acres and has sold 85 acres of Land, leaving approximately 900 acres
of unencumbered Land held for its future development activities. In addition,
the Company controls 800 acres of industrial land through options which expire
over the next 15 years.
ST. LOUIS. Consistent with its business strategy of expanding in attractive
Midwestern markets, the Company has carefully analyzed the real estate
investment potential of several major Midwestern metropolitan areas. Based upon
this analysis, management has concluded that the St. Louis market offers the
most attractive real estate investment returns in the industrial and suburban
office markets based on the following factors: (i) fragmented competition; (ii)
strong real estate fundamentals; and (iii) favorable economic conditions.
Management believes that St. Louis is not currently served by a dominant
industrial or office property owner, developer or manager. The Company expects
to utilize its experience and capabilities to pursue real estate opportunities
and to establish a significant market presence in St Louis. Demonstrating its
commitment to expanding its operations in St. Louis, the Company is establishing
a regional office and recently entered into a contract to purchase three Class A
suburban office buildings totaling 339,000 square feet for an aggregate purchase
price in excess of $29 million. Although the contract is non-binding and the
closing of the acquisition is subject to final due diligence, the Company
expects this acquisition to be completed in the second quarter of 1995. The
Company is also actively exploring other development and acquisition
opportunities in St. Louis.
The St. Louis office and industrial markets are characterized by decreasing
supply and increasing demand. According to F.W. Dodge, for the period 1989 to
1994, building permits issued in St. Louis for construction of new industrial
properties declined by 37% from 1,517,000 to 956,000 square feet, and for
construction of new office properties by 24% from 915,000 to 693,000 square
feet. CB Commercial Real
S-6
<PAGE>
Estate Group, Inc. ("CB Commercial") also reported a decrease in industrial and
office vacancy rates from 5.2% to 4.9% and from 14.3% to 7.6%, respectively, for
the same period. These vacancy rates compare favorably with the national
averages for industrial and office properties of 7.4% and 15.0%, respectively.
St. Louis is well suited as a distribution hub, having a central location at
the intersection of four interstate highways. According to the St. Louis
Regional Commerce and Growth Association ("RCGA"), St. Louis ranks second as a
rail center and inland port, has the lowest total mileage from the 24 largest
cities in the mid-United States to the same metropolitan area, and ranks fifth
nationally as the site of corporate headquarters.
With more than 2.5 million residents, the St. Louis metropolitan area is the
sixteenth most populous metropolitan area in the United States. According to the
United States Department of Labor's Bureau of Labor Statistics, the unemployment
rate from January 1, 1994 to January 1, 1995 declined from 5.4% to 4.3%,
significantly lower than the national average of 5.7% on January 1, 1995. St.
Louis also experienced a 1994 job growth rate of 3.2%. St. Louis' economic base
includes distribution, government, manufacturing, wholesale and retail trade,
and service related industries. According to the RCGA, St. Louis has the lowest
cost of living among the top 20 metropolitan areas.
DEBT FINANCING. In August 1994, the Company closed on a seven year, $60
million mortgage loan which bears interest at a fixed annual rate of 8.72%. The
final funding of this mortgage loan occurred in December 1994. Substantially all
of the proceeds from the mortgage loan were used to fund property development
and acquisitions.
In April 1995, the Company replaced its existing $60 million secured
revolving line of credit with a $100 million unsecured revolving line of credit.
The new line of credit bears interest at the 30 day London Interbank Offering
Rate ("LIBOR") plus 200 basis points and matures in April 1998. The Company
intends to use the revolving line of credit to fund property development and
acquisitions.
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered........................................ 2,500,000 shares (1)
Common Stock to be Outstanding After the Offering........... 26,896,660 shares (2)
Use of Proceeds............................................. Principally to retire interim
financing incurred to fund
the Company's development and
acquisition activities and to
fund current development and
acquisition projects.
New York Stock Exchange Symbol.............................. DRE
<FN>
- ------------------------
(1) Assumes the Underwriters' over-allotment option to purchase up to 375,000
shares of Common Stock is not exercised. See "Underwriting."
(2) Includes 1,291,808 unregistered shares of Common Stock and 4,004,741 Units
issued by Duke Realty Limited Partnership (the "Operating Partnership")
which are exchangeable by the holders for shares of Common Stock. Does not
include 766,500 shares of Common Stock issuable upon exercise of outstand-
ing employee stock options or 132,997 Units issued subsequent to March 31,
1995 in connection with the acquisition of property by the Company.
</TABLE>
S-7
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
ACTUAL THREE MONTHS ENDED
MARCH 31, ACTUAL PRO FORMA(1)
---------------------------- -------- ------------
1995 1994 1994 1993
------------- ------------ -------- ------------
(IN THOUSANDS, EXCEPT PROPERTIES AND PER SHARE DATA)
<S> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
Rental properties....................................... $ 24,929 $20,334 $ 87,786 $79,639
Property management, maintenance and leasing fees....... 2,476 2,452 11,084 11,496
Construction and development fees....................... 1,155 1,639 6,107 4,875
Interest and other income............................... 861 547 2,854 1,893
------------- ------------ -------- ------------
Total operating revenue................................... $ 29,421 $24,972 $107,831 $97,903
------------- ------------ -------- ------------
------------- ------------ -------- ------------
Interest expense.......................................... $ 5,145 $ 4,231 $ 18,920 $17,280
Depreciation and amortization............................. 5,592 4,019 18,036 18,078
Equity in earnings of unconsolidated companies............ 439 561 1,056 598
Income before minority interest........................... 9,067 7,762 34,056 24,978
Net income................................................ $ 7,416 $ 5,599 $ 26,216 $19,076
------------- ------------ -------- ------------
------------- ------------ -------- ------------
Net income per share...................................... $ 0.36 $ 0.35 $ 1.53 $ 1.19
------------- ------------ -------- ------------
------------- ------------ -------- ------------
OTHER DATA:
Funds from Operations (2)................................. $ 14,604 $11,410 $ 49,359 $42,166
Funds from Operations per share/unit (2).................. $ .60 $ .56 $ 2.30 $ 2.06
Common Stock outstanding at end of period (3)............. 24,397 20,478 24,384 20,478
Number of Properties at end of period..................... 136 117 128 114
Square feet available at end of period.................... 14,442 11,520 12,895 10,867
BALANCE SHEET DATA (as of March 31, 1995):
Real estate investments, before accumulated
depreciation............................................. $758,395
Total assets.............................................. 772,999
Total debt................................................ 298,497
Shareholders' equity...................................... 443,242
<FN>
- ------------------------------
(1) Reflects October 1993 Reorganization of the Company. Presented as if the
companies were combined as of January 1, 1993.
(2) Funds from Operations ("FFO"), as defined by the National Association of
Real Estate Investment Trusts ("NAREIT"), is net income adjusted for
depreciation and amortization and gains or losses from property sales. FFO
does not represent cash flows from operations as defined by generally
accepted accounting principles, should not be considered as an alternative
to net income as an indicator of the Company's operating performance and is
not indicative of cash available to fund all cash flow needs. In March
1995, NAREIT issued a clarification of its definition of FFO. The
clarification provides that amortization of deferred financing costs and
depreciation of non-rental real estate assets are no longer to be added
back to net income in arriving at FFO. These changes are to be implemented
no later than 1996. The amounts in this table do NOT include the effect of
the new clarifications. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Funds From Operations."
(3) Includes 4,005 Units as of March 31, 1995 held by persons other than the
Company which are exchangeable for Common Stock.
</TABLE>
S-8
<PAGE>
THE COMPANY
The Company is a self-administered and self-managed REIT that began
operations through a predecessor in 1972. The Company owns a diversified
portfolio of 136 in-service industrial, office and retail Properties,
encompassing approximately 14.4 million square feet and located in eight states,
and 19 buildings and two building expansions encompassing approximately 3.0
million square feet currently under development. The Company also owns
approximately 900 acres of unencumbered Land for future development, of which
approximately 80% is zoned for industrial use and which is typically located
adjacent to the Properties. The Company provides leasing, management,
construction, development and other tenant-related services for the Properties
and certain properties owned by third parties. The Company has the largest
commercial real estate operations in Indianapolis and Cincinnati and is one of
the largest real estate companies in the Midwest. The Company believes that the
Midwest offers a relatively strong and stable economy compared to other regions
of the United States and provides significant growth potential due to its
central location, established manufacturing base, skilled work force and
moderate labor costs.
The Company has developed over 35 million square feet of commercial property
since its founding. According to published industry reports, the Company is one
of the most active developers of industrial properties in the United States,
based on square footage under construction. During the last six years, the
Company developed an average of approximately 2.1 million square feet per year.
In 1994, the Company placed in service 1.3 million square feet of new
development and acquired 931,000 square feet of property. In the first quarter
of 1995, the Company placed in service and acquired an additional 835,000 and
712,000 square feet of properties, respectively. Also, the Company currently has
3.0 million square feet under development.
The Company manages approximately 27 million square feet of property,
including over 12 million square feet owned by third parties. The Company
manages approximately 30% of all suburban office, warehousing and light
manufacturing space in Indianapolis, and approximately 18% of all office,
warehousing and light manufacturing space in Cincinnati. In addition to
providing services to approximately 1,100 tenants in the Properties, the Company
provides such services to over 1,300 tenants in approximately 150 properties
owned by others. Based on market data, the Company believes that it was
responsible in 1994 for approximately 66% of the net absorption (gross space
leased minus lease terminations and expirations) of warehousing and light
manufacturing space in Indianapolis and approximately 29% of the net absorption
of warehousing and light manufacturing space in Cincinnati. The Company believes
its dominant position in its markets gives it a competitive advantage in its
real estate activities.
After completion of the Offering, the six senior officers of the Company,
who collectively have over 115 years of experience in the real estate industry
and have been with the Company for an average of 16 years, will beneficially own
Common Stock and Units exchangeable for Common Stock that represent
approximately 14% of the Company's Common Stock on a fully diluted basis.
BUSINESS STRATEGY
The Company's business objective is to increase its Funds from Operations
per share by (i) maintaining and increasing property occupancy and rental rates
through the aggressive management of its portfolio of existing properties; (ii)
expanding existing properties; (iii) developing and acquiring new properties;
and (iv) providing a full line of real estate services to the Company's tenants
and to third parties. As a fully integrated commercial real estate firm, the
Company believes that its in-house leasing, management, development and
construction services and the Company's significant base of commercially zoned
and unencumbered land in existing business parks should give the Company a
competitive advantage in its future development activities.
The Company believes that the analysis of real estate opportunities and
risks can be done most effectively at regional or local levels. As a result, the
Company intends to continue its emphasis on increasing its market share and
effective rents in its existing markets primarily within the Midwest. The
Company also
S-9
<PAGE>
expects to utilize its approximately 900 acres of unencumbered Land and its many
business relationships with more than 2,400 commercial tenants to expand its
build-to-suit business (development projects substantially pre-leased to a
single tenant) and to pursue other development and acquisition opportunities in
its existing markets and elsewhere, primarily in the Midwest. The Company
believes that this regional focus will allow it to assess market supply and
demand for real estate more effectively as well as to capitalize on its strong
relationships with its tenant base.
The Company's policy is to develop and seek to acquire Class A commercial
properties located in markets with high growth potential for Fortune 500
companies and other quality regional and local firms. The Company's industrial
and suburban office development focuses on business parks and mixed-use
developments suitable for development of multiple projects on a single site and
where the Company can create and control the business environment. These
business parks and mixed-use developments generally include restaurants and
other amenities which the Company believes create an atmosphere that is
particularly efficient and desirable. The Company's retail development focuses
on community, power and neighborhood centers in its existing markets. As a fully
integrated real estate company, the Company is able to arrange for or provide to
its industrial, office and retail tenants not only well located and well
maintained facilities, but also additional services such as build-to-suit
construction, tenant finish construction, expansion flexibility and advertising
and marketing services.
ST. LOUIS
Consistent with its business strategy of expanding in attractive Midwestern
markets, the Company has carefully analyzed the real estate investment potential
of several major Midwestern metropolitan areas. Based upon this analysis,
management has concluded that the St. Louis market offers the most attractive
real estate investment returns in the industrial and suburban office markets
based on the following factors: (i) fragmented competition; (ii) strong real
estate fundamentals; and (iii) favorable economic conditions.
Management believes that St. Louis is not currently served by a dominant
industrial or office property owner, developer or manager. The Company expects
to utilize its experience and capabilities to pursue real estate opportunities
and to establish a significant market presence in St. Louis. Demonstrating its
commitment to expanding its operations in St. Louis, the Company is establishing
a regional office and recently entered into a contract to purchase three Class A
suburban office buildings totaling 339,000 square feet for an aggregate purchase
price in excess of $29 million. Although the contract is non-binding and the
closing of the acquisition is subject to final due diligence, the Company
expects this acquisition to be completed in the second quarter of 1995. The
Company is also actively exploring other development and acquisition
opportunities in St. Louis.
The St. Louis office and industrial markets are characterized by decreasing
supply and increasing demand. According to F.W. Dodge, for the period 1989 to
1994, building permits issued in St. Louis for construction of new industrial
properties declined by 37% from 1,517,000 to 956,000 square feet, and for
construction of new office properties by 24% from 915,000 to 693,000 square
feet. CB Commercial also reported a decrease in industrial and office vacancy
rates from 5.2% to 4.9% and from 14.3% to 7.6%, respectively, for the same
period. These vacancy rates compare favorably with the national averages for
industrial and office properties of 7.4% and 15.0%, respectively.
St. Louis is well suited as a distribution hub, having a central location at
the intersection of four interstate highways. According to the RCGA, St. Louis
ranks second as a rail center and inland port, has the lowest total mileage from
the 24 largest cities in the mid-United States to the same metropolitan area,
and ranks fifth nationally as the site of corporate headquarters.
With more than 2.5 million residents, the St. Louis metropolitan area is the
sixteenth most populous metropolitan area in the United States. According to the
United States Department of Labor's Bureau of Labor Statistics, the unemployment
rate from January 1, 1994 to January 1, 1995 declined from 5.4% to 4.3%,
significantly lower than the national average of 5.7% on January 1, 1995. St.
Louis also experienced a
S-10
<PAGE>
1994 job growth rate of 3.2%. St. Louis' economic base includes distribution,
government, manufacturing, wholesale and retail trade, and service related
industries. According to the RCGA, St. Louis has the lowest cost of living among
the top 20 metropolitan areas.
THE MIDWEST REAL ESTATE MARKET
The Company believes that the Midwest offers a relatively strong and stable
economy compared to other regions of the United States and provides significant
growth potential due to its central location, established manufacturing base,
skilled work force and moderate labor costs. In addition, the interstate highway
systems serving Indianapolis, Cincinnati and Columbus, principal markets in
which the Properties are located, help make those cities prime industrial and
office property locations. According to the Chicago Association of Commerce and
Industry, these three cities rank first, third and fourth, respectively, in
being centrally located to the top 100 markets in the United States.
Employment statistics are generally a useful measure of the viability of a
commercial real estate market because the demand for industrial and office space
in a geographic area is usually linked to the levels of business activity and
disposable income. According to the United States Department of Labor's Bureau
of Labor Statistics, the unemployment rate for February 1, 1995 was 3.47%, 3.94%
and 3.29% in the Indianapolis, Cincinnati and Columbus metropolitan areas,
respectively, compared to 7.4% for the United States. Additionally, total
non-farm employment has increased 15.19%, 8.63% and 12.28% from January 1989 to
December 1994 for the Indianapolis, Cincinnati and Columbus metropolitan areas,
respectively, as compared to 7.54% for the United States.
Management believes that the Company's assets are located in strong real
estate markets with good investment potential. The Winter 1995 issue of Ernst &
Young's MARKETSCORE ("MarketScore") rated 63 metropolitan areas in the United
States in terms of their real estate investment potential for the succeeding two
years. The study segmented each metropolitan area by property type and
considered real estate, economic and demographic variables such as vacancy
rates, construction, rental trends, job growth, population and household growth,
and household income. Approximately 14.2 million square feet of the Company's
in-service and under development Properties are in markets considered by Ernst &
Young to have good or excellent investment potential. The March 1995 issue of
Lehman Brothers METROVIEW ("Metroview") ranks Cincinnati, Columbus and
Indianapolis among the ten best industrial markets in the United States.
INDIANAPOLIS, INDIANA. With more than 1.4 million residents, Indianapolis
is Indiana's largest metropolitan area. With a central location at the
intersection of four interstate highways, Indianapolis continues to attract new
growth by offering a skilled work force and stable economic base. Indianapolis'
economic base includes distribution, government, manufacturing, retail trade,
service and tourism related industries. According to the Indianapolis Chamber of
Commerce, United Airlines, Federal Express and Dow-Elanco have recently
established major new facilities in Indianapolis which are expected to create
20,000 new jobs. The Indianapolis industrial market continues to have a
declining vacancy rate. According to CB Commercial, the industrial vacancy rate
decreased 1.4% over the twelve months ended December 31, 1994 to 3.6%, less than
half of the national industrial vacancy rate average of 7.4%. According to
Landauer Real Estate Counselor's 1994 Real Estate Market Forecast and the Winter
1995 issue of MarketScore, Indianapolis is rated as the first and second best
warehouse and distribution market, respectively, in the United States. The
Indianapolis suburban office market has also strengthened in 1994. According to
CB Commercial, at December 31, 1994, Indianapolis had a 12.5% suburban office
vacancy rate compared to a national average of 15.0%. Moreover, from 1992 to
1994, Indianapolis was the fifth most improved suburban office market in the
country in terms of vacancy rate change as reported by CB Commercial.
CINCINNATI, OHIO. Cincinnati is the second largest metropolitan area in
Ohio with a population of more than 1.5 million. With an unemployment rate which
is below the national average, Cincinnati's economic base is healthy and
diverse. Balanced between major Fortune 500 employers and entrepreneurial
enterprises, Cincinnati's economic base includes banking, distribution,
manufacturing, retail trade and service
S-11
<PAGE>
related industries. Relatively low taxes, an expanding airport (a major North
American hub for Delta Airlines) and aggressive state and local incentive
packages designed to attract new business have contributed to major corporate
relocations in Cincinnati. Indicative of the economic strength in Cincinnati,
the industrial vacancy rate as reported by CB Commercial declined by 1.2% to
3.7% over the twelve months ended December 31, 1994, half the national average
of 7.4%. As reported by CB Commercial, the Cincinnati suburban office market
vacancy rate improved 3.1% in 1994 to 14.0% at December 31, 1994 as compared to
a national average of 15.0%, and the Cincinnati downtown office vacancy rate
improved 2.0% to 14.3% at December 31, 1994 as compared to the national average
of 16.3%.
COLUMBUS, OHIO. The Columbus metropolitan area has a population of
approximately 1.4 million and is the third largest metropolitan area in Ohio.
The city's central location, well-trained work force and high quality of life
have established Columbus as a major transportation and distribution center.
Columbus' economic base includes distribution, government, manufacturing, retail
trade and service related industries. As reported by CB Commercial as of
December 31, 1994, the industrial and suburban office vacancy rates in Columbus
declined to 5.3% and 8.1% compared to the national averages of 7.4% and 15.0%,
respectively. This suburban office vacancy rate is the seventh lowest out of 53
markets surveyed by CB Commercial. Additionally, the Company believes that the
Class A suburban office submarket in which it operates has a vacancy rate below
5%. Metroview rated Columbus as the second best office market in the United
States.
RECENT DEVELOPMENTS
REORGANIZATION, 1993 AND 1994 OFFERINGS AND DIVIDEND INCREASE. As part of
the Reorganization, the Company acquired substantially all of the properties and
businesses of Duke Associates, a related full-service commercial real estate
firm operating primarily in the Midwest. The Company also sold additional Common
Stock through the 1993 Offering, raising net proceeds of $309.3 million. In
September 1994, the Company completed the 1994 Offering, raising net proceeds of
$92.1 million. In July 1994, the Company increased its quarterly dividend from
$.45 to $.47 per share.
DEVELOPMENT AND ACQUISITION ACTIVITY. During 1994, the Company completed
development of and placed in service 10 properties with 1.3 million square feet
having a total cost of $52.4 million. In the first quarter of 1995, the Company
placed in service two additional properties with 835,000 square feet having a
total cost of $17.2 million. The Company currently has 19 properties and two
property expansions under development comprising 3.0 million square feet which
will have a total cost of $168.8 million upon completion. Also during 1994, the
Company acquired five properties with 931,000 square feet at a total cost of
$33.6 million. In the first quarter of 1995, the Company acquired an additional
six properties with 712,000 square feet at a total cost of $18.5 million.
The New Properties, totaling 6.8 million square feet, consist of 71%
industrial, 17% office and 12% retail projects. The total cost (including
allocation of land) of the New Properties is $290.5 million. The New Properties
in service at March 31, 1995 are 94.1% leased, and the New Properties under
construction are 79.3% pre-leased for a combined total of 87.6% leased. The New
Properties provide an initial weighted average unleveraged return on cost
(computed as property annual contractual NOI divided by total project costs) of
10.5% assuming no further leasing. The Company expects the weighted average
unleveraged return to be 11.8% with anticipated leasing activity. The annual
contractual NOI to be generated from the New Properties, once placed in service,
will be $30.0 million, increasing to $34.2 million with anticipated additional
leasing. The cost of the New Properties expected to be placed in service in the
second quarter of 1995 is $26.9 million, in the third quarter of 1995 is $32.8
million, in the fourth quarter of 1995 is $65.1 million, and in 1996 is $44.0
million.
The total cost of the New Properties of $290.5 million includes land basis
of $13.9 million which represents non-cash allocations of the portion of the
Company's unencumbered Land used in the development of the New Properties. The
stabilized weighted average unleveraged return on cost for the New
S-12
<PAGE>
Properties net of this land basis is expected to be 12.4% as compared to the
11.8% including the land basis. Assuming completion of the Offering, these net
development and acquisition expenditures of $276.6 million will be funded 54%
through equity and 46% through debt financings.
The following table sets forth information regarding each of the New
Properties.
<TABLE>
<CAPTION>
IN-SERVICE OR PERCENT
ANTICIPATED PROPERTY PERCENTAGE SQUARE LEASED OR
IN-SERVICE DATE PROJECT/ TENANT LOCATION TYPE OWNERSHIP FEET PRE-LEASED(1) INITIAL LEASE TERM
- ------------------ ------------------------ ---------------- ---------- --------- --------- ---------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DEVELOPMENT COMPLETED IN 1994:
1st Qtr. 1994 Xetron Cincinnati, OH Industrial 10% 100,193 100% 10 years
1st Qtr. 1994 Caterpillar Indianapolis, IN Industrial 100% 336,000 100% 6 years
2nd Qtr. 1994 Daydream Publishing Indianapolis, IN Industrial 100% 98,000 100% 10 years
2nd Qtr. 1994 Redken Cincinnati, OH Industrial 100% 166,400 100% 5 years
2nd Qtr. 1994 CR Services Cincinnati, OH Industrial 100% 214,840 100% 10 years
3rd Qtr. 1994 Indiana Insurance Columbus, OH Office 100% 49,600 100% 10 years
3rd Qtr. 1994 Veteran's Administration Columbus, OH Office 100% 118,000 100% 20 years
3rd Qtr. 1994 Sports Unlimited Cincinnati, OH Retail 100% 67,148 100% 20 years
4th Qtr. 1994 Galyan's Columbus, OH Retail 100% 74,636 100% 20 years
4th Qtr. 1994 Kohl's Cincinnati, OH Retail 100% 80,684 100% 25 years
--------- ---
1,305,501 100%
--------- ---
DEVELOPMENT COMPLETED IN 1995:
1st Qtr. 1995 Park 100 Building 97 Indianapolis, IN Industrial 100% 280,800 79% Varies
1st Qtr. 1995 Silver Burdett Indianapolis, IN Industrial 100% 553,900 100% 7 years
--------- ---
834,700 93%
--------- ---
UNDER DEVELOPMENT:
2nd Qtr. 1995 Building 98 Expansion Indianapolis, IN Industrial 100% 97,000 100% 6 years
2nd Qtr. 1995 World Park Building 17 Cincinnati, OH Industrial 100% 304,000 100% 10 years
2nd Qtr. 1995 Sterling Software Columbus, OH Office 100% 57,660 100% 15 years
2nd Qtr. 1995 John Alden Columbus, OH Office 100% 101,200 100% 15 years
3rd Qtr. 1995 Park 100 Building 127 Indianapolis, IN Industrial 100% 93,600 69% 10 years(2),(3)
3rd Qtr. 1995 Park 100 Building 99 Indianapolis, IN Industrial 50% 364,800 42% 10 years(2),(3)
3rd Qtr. 1995 Petsmart Expansion Columbus, OH Industrial 100% 132,000 100% 15 years
3rd Qtr. 1995 Southpointe Type III Columbus, OH Industrial 100% 293,824 70% (4)
3rd Qtr. 1995 Haywood Oaks Bldg. 7 Nashville, TN Industrial 100% 66,523 30% 5 years(2),(5)
3rd Qtr. 1995 St. Francis Hospital Indianapolis, IN Office 100% 95,579 69% Varies
3rd Qtr. 1995 Office Max Cincinnati, OH Retail 100% 23,500 100% 15 years
4th Qtr. 1995 Park 100 Building 100 Indianapolis, IN Industrial 100% 117,500 24% 10 years(2),(3)
4th Qtr. 1995 Dayco Louisville, KY Industrial 100% 282,539 100% 15 years
4th Qtr. 1995 Community Hospital Indianapolis, IN Office 100% 38,193 100% 15 years
4th Qtr. 1995 Cardinal Health Columbus, OH Office 100% 132,854 100% Varies
4th Qtr. 1995 John Alden Miami, FL Office 100% 251,316 100% 20 years
4th Qtr. 1995 Sofa Express Cincinnati, OH Retail 100% 15,000 100% 10 years
4th Qtr. 1995 Best Buy Columbus, OH Retail 100% 68,400 85% 15 years(2)
1st Qtr. 1996 Parkwood Crossing Indianapolis, IN Office 50% 93,300 48% 10 years(2)
2nd Qtr. 1996 Wal-Mart Columbus, OH Retail 100% 149,429 100% 21 years
4th Qtr. 1996 Ohio National Cincinnati, OH Office 100% 212,125 69% 20 years(2),(6)
--------- ---
2,990,342 79%
--------- ---
1994 ACQUISITIONS:
2nd Qtr. 1994 Park 100 Building 126 Indianapolis, IN Industrial 100% 60,100 100% Varies
2nd Qtr. 1994 Coldwater Crossing Fort Wayne, IN Retail 100% 246,365 95% Varies
3rd Qtr. 1994 Park 100 Building 98 Indianapolis, IN Industrial 100% 406,900 93% Varies
4th Qtr. 1994 Greenbriar Business Park Nashville, TN Industrial 100% 134,759 98% Varies
4th Qtr. 1994 MBM Building Columbus, OH Industrial 100% 83,000 100% 3 years
--------- ---
931,124 95%
--------- ---
</TABLE>
S-13
<PAGE>
<TABLE>
<CAPTION>
IN-SERVICE OR PERCENT
ANTICIPATED PROPERTY PERCENTAGE SQUARE LEASED OR
IN-SERVICE DATE PROJECT/ TENANT LOCATION TYPE OWNERSHIP FEET PRE-LEASED(1) INITIAL LEASE TERM
- ------------------ ------------------------ ---------------- ---------- --------- --------- ---------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1995 ACQUISITIONS:
1st Qtr. 1995 Park 100 Building 107 Indianapolis, IN Industrial 100% 58,783 89% Varies
1st Qtr. 1995 Palomar Building Indianapolis, IN Industrial 100% 99,350 100% 10 years
1st Qtr. 1995 Franklin Rd. Center Indianapolis, IN Industrial 100% 367,065 69% Varies
1st Qtr. 1995 University Moving Cincinnati, OH Industrial 100% 70,000 100% 6 years
1st Qtr. 1995 Keebler Building Nashville, TN Industrial 100% 36,150 100% 6 years
1st Qtr. 1995 Eastgate Square Cincinnati, OH Retail 100% 80,682 100% Varies
--------- ---
712,030 83%
--------- ---
Grand Total 6,773,697 88%
--------- ---
--------- ---
<FN>
- ------------------------------
(1) Represents completed leasing activity through April 26, 1995, except as
described in footnote 4.
(2) Represents term of the leased portion of this building.
(3) Located in Park 100 Industrial Park where the Company owns or manages 6.6
million square feet of similar space which is 97% leased.
(4) The Company has letters of intent with two tenants for the 70% leased
percentage indicated. The leases with these tenants are expected to be
executed by May 15, 1995.
(5) Located within Haywood Oaks TechneCenter where the Company owns and manages
324,000 square feet of similar space which is 95% leased.
(6) This project is currently owned in a joint venture in which the Company
owns a 50% interest; however, the Company has a contract to purchase its
joint venture partner's interest. This acquisition is expected to be
completed by May 15, 1995.
</TABLE>
LAND ACTIVITY. The above development activities used 205 acres of the
Company's unencumbered Land. The Company has acquired 86 additional acres, has
leased 20 acres and has sold 85 acres of Land, leaving approximately 900 acres
of unencumbered Land held for its future development activities. In addition,
the Company controls 800 acres of industrial land through options which expire
over the next 15 years.
ST. LOUIS. Consistent with its business strategy of expanding in attractive
Midwestern markets, the Company has carefully analyzed the real estate
investment potential of several major Midwestern metropolitan areas. Based upon
this analysis, management has concluded that the St. Louis market offers the
most attractive real estate investment returns in the industrial and suburban
office markets based on the following factors: (i) fragmented competition; (ii)
strong real estate fundamentals; and (iii) favorable economic conditions.
Management believes that St. Louis is not currently served by a dominant
industrial or office property owner, developer or manager. The Company expects
to utilize its experience and capabilities to pursue real estate opportunities
and to establish a significant market presence in St. Louis. Demonstrating its
commitment to expanding its operations in St. Louis, the Company is establishing
a regional office and recently entered into a contract to purchase three Class A
suburban office buildings totaling 339,000 square feet for an aggregate purchase
price in excess of $29 million. Although the contract is non-binding and the
closing of the acquisition is subject to final due diligence, the Company
expects this acquisition to be completed in the second quarter of 1995. The
Company is also actively exploring other development and acquisition
opportunities in St. Louis.
The St. Louis office and industrial markets are characterized by decreasing
supply and increasing demand. According to F.W. Dodge, for the period 1989 to
1994, building permits issued in St. Louis for construction of new industrial
properties declined by 37% from 1,517,000 to 956,000 square feet, and for
construction of new office properties by 24% from 915,000 to 693,000 square
feet. CB Commercial also
S-14
<PAGE>
reported a decrease in industrial and office vacancy rates from 5.2% to 4.9% and
from 14.3% to 7.6%, respectively, for the same period. These vacancy rates
compare favorably with the national averages for industrial and office
properties of 7.4% and 15.0%, respectively.
St. Louis is well suited as a distribution hub, having a central location at
the intersection of four interstate highways. According to the RCGA, St. Louis
ranks second as a rail center and inland port, has the lowest total mileage from
the 24 largest cities in the mid-United States to the same metropolitan area,
and ranks fifth nationally as the site of corporate headquarters.
With more than 2.5 million residents, the St. Louis metropolitan area is the
sixteenth most populous metropolitan area in the United States. According to the
United States Department of Labor's Bureau of Labor Statistics, the unemployment
rate from January 1, 1994 to January 1, 1995 declined from 5.4% to 4.3%,
significantly lower than the national average of 5.7% on January 1, 1995. St.
Louis also experienced a 1994 job growth rate of 3.2%. St. Louis' economic base
includes distribution, government, manufacturing, wholesale and retail trade,
and service related industries. According to the RCGA, St. Louis has the lowest
cost of living among the top 20 metropolitan areas.
DEBT FINANCING. In August 1994, the Company closed on a seven year, $60
million mortgage loan which bears interest at a fixed annual rate of 8.72%. The
final funding of this mortgage loan occurred in December 1994. Substantially all
of the proceeds from the mortgage loan were used to fund property development
and acquisitions.
In April 1995, the Company replaced its existing $60 million secured
revolving line of credit with a $100 million unsecured revolving line of credit.
The new line of credit bears interest at the 30 day LIBOR plus 200 basis points
and matures in April 1998. The Company intends to use the revolving line of
credit to fund property development and acquisitions.
THIRD PARTY DEVELOPMENT AND MANAGEMENT ACTIVITIES. The Company provides
property management, leasing, construction and development services to
properties owned by third parties. Since the Reorganization, the Company has
increased the square footage of property managed for third parties from 11.8
million to 12.2 million square feet. The following are current third party
construction and development contracts:
<TABLE>
<CAPTION>
SQUARE FOOTAGE
PROPERTY LOCATION UNDER DEVELOPMENT PRODUCT TYPE
- -------------------------- ----------------- ------------------ ------------
<S> <C> <C> <C>
Lowes Cincinnati, OH 240,000 Industrial
Sysco Foods Louisville, KY 195,000 Industrial
Downing Displays Cincinnati, OH 110,000 Industrial
Hendrickson -- Turner Lebanon, IN 80,000 Industrial
Eagle Enterprises Lebanon, IN 60,000 Industrial
Grant Medical Columbus, OH 13,000 Office
Geottsch Cincinnati, OH 11,500 Office
</TABLE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of Common Stock offered hereby
are expected to be approximately $63.6 million (approximately $73.2 million if
the Underwriters' over-allotment option is exercised in full), assuming an
offering price of $27.00 (the closing price of the Common Stock on the New York
Stock Exchange on April 26, 1995). The Company intends to use the net proceeds
of the Offering to retire outstanding interim financing used to fund development
and acquisition costs and to fund remaining development and acquisition costs to
be incurred in the second quarter of 1995. The interim financing consists of the
$50.0 million expected to be outstanding at May 31, 1995 on the Company's
unsecured revolving line of credit which bears interest at LIBOR plus 200 basis
points and matures in April 1998. Pending such uses, the net proceeds may be
invested in short-term income producing investments such as commercial paper,
government securities or money market funds that invest in government
securities.
S-15
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND HISTORY
The Common Stock is listed on the New York Stock Exchange under the symbol
DRE. The following table sets forth the high and low sale prices of the Common
Stock of the periods indicated and the dividend paid per share for each such
period.
<TABLE>
<CAPTION>
CLOSING PRICES
PER SHARE (1)
-------------------- DIVIDENDS
QUARTERLY PERIOD HIGH LOW PER SHARE (1)
- -------------------------------------------------------------------------------- --------- --------- ---------------
<S> <C> <C> <C>
1993
First Quarter................................................................. $ 22.05 $ 15.75 $ 0.42
Second Quarter................................................................ 21.53 18.38 0.42
Third Quarter................................................................. 24.68 19.42 0.42
Fourth Quarter................................................................ 26.00 22.13 0.45
1994
First Quarter................................................................. 26.00 21.00 0.45
Second Quarter................................................................ 27.25 23.50 0.47
Third Quarter................................................................. 27.13 25.00 0.47
Fourth Quarter................................................................ 28.25 23.75 0.47
1995
First Quarter................................................................. 26.78 25.25 0.47
Second Quarter (through April 26, 1995)....................................... 27.25 26.25
<FN>
- ------------------------
(1) All information for periods prior to the Fourth Quarter of 1993 has been
adjusted for the 1 for 4.2 reverse stock split effected in October, 1993 as
part of the Reorganization.
</TABLE>
The last reported sale price of the Common Stock on the New York Stock
Exchange on April 26, 1995 was $27.00 per share. As of April 26, 1995, there
were 2,381 registered holders of Common Stock.
Since its organization in 1986, the Company has paid regular and
uninterrupted dividends. The Company intends to continue to declare quarterly
dividends on its Common Stock. However, no assurances can be given as to the
amounts of future dividends as such dividends are subject to the Company's cash
flow from operations, earnings, financial condition, capital requirements and
such other factors as the Board of Directors deems relevant. On April 27, 1995,
the Company's Board of Directors declared its regular quarterly dividend of
$0.47 per share to shareholders of record on May 15, 1995. The Company has
determined that approximately 22% of the per share distribution for 1994
represented return of capital to the shareholders for income tax purposes. No
assurance can be given that such percentage will not change in future years.
DIVIDEND REINVESTMENT PLAN
The Company has an Automatic Dividend Reinvestment Plan (the "Plan") which
allows shareholders to acquire additional shares of Common Stock by
automatically reinvesting cash dividends. Common Stock is acquired pursuant to
the Plan at a price equal to the prevailing market price of such Common Stock,
without payment of any brokerage commission or service charge. The Plan also
allows participating shareholders to purchase Common Stock pursuant to the same
terms and in the same manner as cash dividends are invested in amounts of not
less than $100 and more than $3,000 per calendar quarter, without payment of any
brokerage commission or service charge. Shareholders who do not participate in
the Plan continue to receive cash dividends, as declared. As of April 26, 1995,
approximately 19% of the Company's registered shareholders participated in the
Plan.
S-16
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of March
31, 1995 and as adjusted to give effect to the Offering and the anticipated use
of the proceeds thereof as described under "Use of Proceeds."
<TABLE>
<CAPTION>
MARCH 31, 1995
------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Property Indebtedness........................................................... $ 298,497 $ 298,497
---------- -----------
Shareholders' Equity:
Preferred Stock ($.01 par value),
5,000 shares authorized, none issued
Common Stock ($.01 par value),
45,000 shares authorized; 20,392 outstanding; 22,892 outstanding as adjusted
(1).......................................................................... 204 229
Additional paid-in-capital.................................................... 481,128 544,700
Distributions in excess of net income......................................... (38,090) (38,090)
---------- -----------
Total Shareholders' Equity.................................................... 443,242 506,839
---------- -----------
Total Capitalization............................................................ $ 741,739 $ 805,336
---------- -----------
---------- -----------
<FN>
- ------------------------
(1) Does not include 767 shares of Common Stock issuable upon exercise of
outstanding employee stock options, 4,005 shares reserved for issuance upon
exchange of issued and outstanding Units, or 133 shares reserved for
issuance upon exchange of Units issued subsequent to March 31, 1995.
</TABLE>
S-17
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following sets forth selected financial and operating information for
the Company for the year ended December 31, 1994 and for the three months ended
March 31, 1995 and 1994 which were derived from the Company's financial
statements, which are incorporated by reference in the accompanying Prospectus.
Also set forth are selected financial data on a pro forma basis for the year
ended December 31, 1993. The pro forma information is presented as if the 1993
Offering and the Reorganization had occurred as of January 1, 1993. Also set
forth are selected balance sheet data for the Company as of March 31, 1995.
The following selected financial information should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" for the Company and the financial statements incorporated by
reference in the accompanying Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
ACTUAL THREE MONTHS ENDED
MARCH 31, ACTUAL PRO FORMA(1)
---------------------------- -------- ------------
1995 1994 1994 1993
------------- ------------ -------- ------------
(IN THOUSANDS, EXCEPT PROPERTIES AND PER SHARE DATA)
<S> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
Rental properties..................................... $ 24,929 $20,334 $ 87,786 $79,639
Property management, maintenance and leasing fees..... 2,476 2,452 11,084 11,496
Construction and development fees..................... 1,155 1,639 6,107 4,875
Interest and other income............................. 861 547 2,854 1,893
------------- ------------ -------- ------------
Total operating revenue................................. $ 29,421 $24,972 $107,831 $97,903
------------- ------------ -------- ------------
------------- ------------ -------- ------------
Interest expense........................................ $ 5,145 $ 4,231 $ 18,920 $17,280
Depreciation and amortization........................... 5,592 4,019 18,036 18,078
Equity in earnings of unconsolidated companies.......... 439 561 1,056 598
Income before minority interest......................... 9,067 7,762 34,056 24,978
Net income.............................................. $ 7,416 $ 5,599 $ 26,216 $19,076
------------- ------------ -------- ------------
------------- ------------ -------- ------------
Net income per share.................................... $ 0.36 $ 0.35 $ 1.53 $ 1.19
------------- ------------ -------- ------------
------------- ------------ -------- ------------
OTHER DATA:
Funds from Operations (2)............................... $ 14,604 $11,410 $ 49,359 $42,166
Funds from Operations per share/unit (2)................ $ .60 $ .56 $ 2.30 $ 2.06
Common Stock outstanding at end of period (3)........... 24,397 20,478 24,384 20,478
Number of Properties at end of period................... 136 117 128 114
Square feet available at end of period.................. 14,442 11,520 12,895 10,867
BALANCE SHEET DATA (as of March 31, 1995):
Real estate investments, before accumulated
depreciation........................................... $758,395
Total assets............................................ 772,999
Total debt.............................................. 298,497
Shareholders' equity.................................... 443,242
<FN>
- ------------------------------
(1) Reflects October, 1993 Reorganization of the Company. Presented as if the
companies were combined as of January 1, 1993.
(2) Funds from Operations as defined by the National Association of Real Estate
Investment Trusts is net income adjusted for depreciation and amortization
and gains or losses from property sales. FFO does not represent cash flows
from operations as defined by generally accepted accounting principles,
should not be considered as an alternative to net income as an indicator of
the Company's operating performance and is not indicative of cash available
to fund all cash flow needs. In March 1995, NAREIT issued a clarification
of its definition of FFO. The clarification provides that amortization of
deferred financing costs and depreciation of non-rental real estate assets
are no longer added back to net income in arriving at FFO. These changes
are to be implemented no later than 1996. The amounts in this table do NOT
include the effect of the new clarifications. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Funds From
Operations."
(3) Includes 4,005 Units as of March 31, 1995 held by persons other than the
Company which are exchangeable for Common Stock.
</TABLE>
S-18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS -- THREE MONTHS ENDED MARCH 31, 1995 COMPARED TO THREE
MONTHS ENDED MARCH 31, 1994
Revenues from rental operations increased from $20.6 million for the three
months ended March 31, 1994 to $25.6 million for the three months ended March
31, 1995. This $5.0 million increase is attributable to the expansion of the
in-service rental property portfolio through the acquisition and development of
19 properties totaling approximately 2.9 million square feet since March 31,
1994. The increase is also due to the one-time establishment of a $750,000
allowance for accrued straight-line rents receivable during the three months
ended March 31, 1994.
Operating expenses related to rental operations increased from $15.0 million
for the three months ended March 31, 1994 to $18.2 million for the three months
ended March 31, 1995. The main components of this increase include (i) $600,000
of additional rental expenses related to the 19 additional in-service
properties; (ii) $900,000 increase in interest expense on borrowings used to
fund the acquisition and development costs of the additional in-service
properties; and (iii) $1.6 million of additional depreciation and amortization
related to the additional in-service properties.
Revenues from Service Operations decreased from $4.4 million for the three
months ended March 31, 1994 to $3.8 million for the three months ended March 31,
1995. This decrease was due to decreased construction management and development
fees resulting from decreased third-party construction and development activity.
Operating expenses related to Service Operations decreased from $2.9 million
for the three months ended March 31, 1994 to $2.6 million for the three months
ended March 31, 1995. This decrease was due to the significant growth and
development of Company-owned properties which resulted in increased allocation
of operating costs to such properties, thereby reducing the proportionate amount
of such costs attributable to third party fee services.
Primarily as a result of the fluctuations discussed above, net income and
net income per weighted average share increased from $5.6 million and $0.35 per
share, respectively, for the three months ended March 31, 1994 to $7.4 million
and $0.36 per share for the three months ended March 31, 1995, respectively.
The occupancy at March 31, 1995 for all of the in-service properties in
which the Company owns a whole or partial interest was 94.5% for the industrial
properties (94.7% at March 31, 1994), 90.5% for the office properties (91.9% at
March 31, 1994), and 96.8% for the retail properties (89.7% at March 31, 1994),
for an overall occupancy rate of 93.6% (93.4% at March 31, 1994). The decrease
in office occupancy is the result of one tenant which exercised an option to
terminate a lease of 114,000 square feet in order to relocate to a new 200,000
square foot facility developed on a third-party fee basis by the Company. In
April 1995, the Company received a letter of intent from Entex Corporation and
is in lease negotiations, subject to final due diligence, to lease 82,000 square
feet of this space.
The following table sets forth information regarding the Company's portfolio
of rental properties as of March 31, 1995:
<TABLE>
<CAPTION>
PROPERTIES
IN-SERVICE PROPERTIES UNDER
------------------------------------ DEVELOPMENT
TOTAL ------------------------
PERCENT SQUARE PERCENT OF PERCENT TOTAL
TYPE LEASED FEET TOTAL LEASED SQUARE FEET
- --------------------------------------------------------- ----------- --------- ------------ ----------- -----------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C>
Industrial............................................... 94.5% 9,089 63% 61.9% 1,752
Office................................................... 90.5% 3,987 28 84.9% 982
Retail................................................... 96.8% 1,366 9 96.1% 256
--- --------- --- --- -----
Total................................................ 93.6% 14,442 100% 72.5% 2,990
--- --------- --- --- -----
--- --------- --- --- -----
<CAPTION>
PERCENT OF
TYPE TOTAL
- --------------------------------------------------------- ------------
<S> <C>
Industrial............................................... 59%
Office................................................... 32
Retail................................................... 9
---
Total................................................ 100%
---
---
</TABLE>
S-19
<PAGE>
Management expects occupancy to remain stable because (i) only 5.3% and
10.9% of the Company's total leased square footage is subject to leases expiring
in the remainder of 1995 and 1996, respectively, and (ii) the Company's renewal
percentage averaged 73% and 65% in 1994 and 1993, respectively. This stable
occupancy, along with increasing rental rates in the Company's markets, should
allow the in-service portfolio to continue to provide a comparable level of
earnings from rental operations in the future. The Company expects to also
realize growth in earnings from rental operations as the 3.0 million square feet
of properties under development at March 31, 1995 are placed in service.
FUNDS FROM OPERATIONS
Management believes that FFO is the industry standard for reporting the
operations of real estate investment trusts. In March 1995, NAREIT issued a
clarification of its definition of FFO. The clarification provides that
amortization of deferred financing costs and depreciation of non-rental real
estate assets are no longer to be added back to net income in arriving at FFO.
Although the Company has not yet adopted the new method, the following table
presents the Company's FFO under both methods of calculation for illustrative
purposes:
<TABLE>
<CAPTION>
CURRENT METHOD NEW METHOD
------------------------------- -------------------------------
THREE MONTHS YEAR THREE MONTHS YEAR
ENDED MARCH 31, ENDED ENDED MARCH 31, ENDED
-------------------- --------- -------------------- ---------
1995 1994 1994 1995 1994 1994
--------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C>
Net Income...................................... $ 7,416 $ 5,599 $ 26,216 $ 7,416 $ 5,599 $ 26,216
Add back:
Depreciation and amortization................. 5,213 3,878 16,785 5,213 3,878 16,785
Amortization of deferred financing costs and
depreciation of non-rental real estate
assets....................................... 444 182 1,453 -- -- --
Depreciation and amortization of joint
ventures..................................... 73 125 352 73 125 352
Gain on property sales........................ -- (181) (2,198) -- (181) (2,198)
Minority interest of unitholders.............. 1,458 1,807 6,751 1,458 1,807 6,751
--------- --------- --------- --------- --------- ---------
FUNDS FROM OPERATIONS........................... $ 14,604 $ 11,410 $ 49,359 $ 14,160 $ 11,228 $ 47,906
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Weighted average shares/units outstanding....... 24,388 20,478 21,467 24,388 20,478 21,467
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
FFO per weighted average share/unit............. $ .60 $ .56 $ 2.30 $ .58 $ .55 $ 2.23
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Dividends paid per share/unit................... $ .47 $ .45 $ 1.84 $ .47 $ .45 $ 1.84
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
FFO payout ratio (1)............................ 78.3% 80.4% 80.9% 81.0% 81.8% 82.5%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
<FN>
- ------------------------
(1) Calculated as the dividends paid per share/unit divided by FFO per weighted
average share/unit.
</TABLE>
S-20
<PAGE>
Management anticipates continued growth in FFO through (i) maintaining and
increasing property occupancy and rental rates through aggressive management of
the Company's existing portfolio of properties; (ii) expanding existing
properties; (iii) developing and acquiring new properties; and (iv) providing a
full line of real estate services to the Company's tenants and to third parties.
The following table indicates the components of the Company's FFO by primary
business segment:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1995 1994
--------- ---------
(IN THOUSANDS,
EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C>
Rental operations:
Original portfolio (1)................................................ $ 14,916 $ 14,029
Development (2)....................................................... 1,757 196
Acquisitions (3)...................................................... 1,568 --
Investments in unconsolidated companies................................. 511 685
Interest expense........................................................ (5,145) (4,231)
--------- ---------
Net rental operations................................................. 13,607 10,679
Service operations, net of minority interest............................ 1,021 1,107
Other, net.............................................................. (24) (376)
--------- ---------
FUNDS FROM OPERATIONS................................................... $ 14,604 $ 11,410
--------- ---------
--------- ---------
<FN>
- ------------------------
(1) Consists of the components of FFO from the portfolio of properties
in-service at the date of the Reorganization.
(2) Consists of the components of FFO from all properties developed and placed
in-service subsequent to the date of the Reorganization.
(3) Consists of the components of FFO from all properties acquired subsequent
to the date of the Reorganization.
</TABLE>
While management believes that FFO is the most relevant and widely used
measure of the Company'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 Company's operating performance, and is not indicative of cash
available to fund all cash flow needs.
LIQUIDITY AND CAPITAL RESOURCES
The Company pays regular quarterly dividends with a policy of distributing
no more than 90% of FFO. The dividend declared on April 27, 1995 represented
78.3% of first quarter FFO. Rental and Service Operation revenue have been the
principal sources of capital available to fund the Company's operating expenses,
debt service and recurring capital expenditures. Net cash provided by operating
activities, totaling $15.9 million for the three months ended March 31, 1995,
represents the primary source of liquidity to fund distributions to
shareholders, unitholders and the minority interests and to fund recurring costs
associated with the renovation and re-letting of the Company's properties.
Recurring capital expenditures for the three months ended March 31, 1995 were
$1.2 million. Funds Available for Distribution (Funds From Operations adjusted
for straight-line rent and recurring capital expenditures) for the three months
ended March 31, 1995 were $12.7 million, resulting in a payout ratio for the
dividends for such period of 90.4% of Funds Available for Distribution.
The investing activities of the Company for the three months ended March 31,
1995 of $35.0 million were primarily the result of costs incurred for the
development and acquisition of eight properties placed in service during the
three months and 19 properties under development as of March 31, 1995. The
estimated remaining development costs for these 19 properties as of March 31,
1995 is $119.4 million. These investing
S-21
<PAGE>
activities for new property development and acquisitions are funded through a
combination of debt and equity proceeds. The Company has a $100 million
unsecured revolving credit facility which bears interest at LIBOR plus 200 basis
points and matures in April 1998. Following the Offering, the line of credit
will be fully available to fund these investing activities. Also, during 1994,
the Company obtained implied investment grade ratings for its senior unsecured
debt from Standard & Poor's, Moody's and Duff & Phelps. These ratings should
provide the Company with access to the public unsecured debt market to fund
future investing activities.
The Company intends to limit its debt to no more than 50% of its total
market capitalization (defined as the total market value of all shares and units
outstanding plus the outstanding property indebtedness). The Company's debt to
total market capitalization ratio at March 31, 1995 was 31.6% compared to 30.2%
at December 31, 1994. Following the Offering, the Company's debt to total market
capitalization ratio will be 29.0%, based on a stock price of $27.00 per share.
After the Offering, the Company could incur up to $431.3 million of additional
debt and remain within its 50% of debt to total market capitalization guideline,
based on a stock price of $27.00 per share.
The mortgage debt outstanding at March 31, 1995 consists of notes totaling
$298.5 million with a weighted average interest rate of 7.31% maturing at
various dates through 2018, of which only 1.5% is currently floating rate debt.
Scheduled principal amortization of mortgage debt totaled $354,000 for the three
months ended March 31, 1995. A portion of the proceeds of the Offering will be
used to retire the expected balance on the Company's line of credit, making it
fully available for future acquisitions and development. The total debt in
unconsolidated subsidiaries at March 31, 1995 is $50.5 million of which the
Company's percentage share is $11.3 million. The unconsolidated subsidiary debt
has a weighted average interest rate of 7.11%, of which only 17.2% is currently
floating rate debt.
Following is a summary of the scheduled future amortization and maturities
of the Company's mortgage debt (in thousands, except percentages):
<TABLE>
<CAPTION>
FUTURE
SCHEDULED FUTURE
YEAR AMORTIZATION MATURITIES TOTAL
- ------------------------------------------------------------------ ------------ ---------- ----------
<S> <C> <C> <C>
1995.............................................................. $ 1,438 $ -- $ 1,438
1996.............................................................. 3,091 62,327 65,418
1997.............................................................. 3,856 -- 3,856
1998.............................................................. 2,223 81,205 83,428
1999.............................................................. 2,423 -- 2,423
2000.............................................................. 2,637 246 2,883
2001.............................................................. 2,291 59,954 62,245
2002.............................................................. 2,494 -- 2,494
2003.............................................................. 251 69,389 69,640
Thereafter........................................................ 4,672 -- 4,672
------------ ---------- ----------
$ 25,376 $ 273,121 $ 298,497
------------ ---------- ----------
------------ ---------- ----------
</TABLE>
S-22
<PAGE>
PROPERTIES
GENERAL
The Company owns whole or partial interests in (i) the in-service
Properties, consisting of 136 industrial, office and retail properties located
in Indiana, Ohio, Illinois, Michigan, Tennessee, Kentucky, Wisconsin and
Missouri; (ii) 19 buildings currently under development and (iii) the Land,
consisting of approximately 900 acres of unencumbered land for future
development in Indiana, Ohio, Illinois, Kentucky, and Tennessee. The Properties
are comprised of a broad range of product types which include bulk and medium
bulk warehouse and distribution facilities, light manufacturing facilities,
multi-tenant flex space buildings, suburban office buildings, downtown office
buildings, and neighborhood, power and community shopping centers. Substantially
all of the Properties were originally developed by the Company. The total square
footage of the Properties in service is approximately 14.4 million, consisting
of approximately 9.1 million square feet of industrial space, approximately 3.9
million square feet of office space and approximately 1.4 million square feet of
retail space. The total square footage of the 19 buildings and two building
expansions currently under development is approximately 3.0 million square feet,
consisting of approximately 1.8 million square feet of industrial space,
approximately 1.0 million square feet of office space and approximately 250,000
square feet of retail space. The Properties' average annual net effective rental
per leased square foot at March 31, 1995 was $6.42. The total annual net
effective rental income of the Properties based upon tenants in occupancy as of
March 31, 1995 is approximately $86.8 million, with $34.3 million relating to
the industrial Properties, $40.2 million relating to the office Properties and
$12.3 million relating to the retail Properties. At March 31, 1995, the
Properties were approximately 94% leased.
The following table gives a summary of the location and type of Properties
in service by square footage.
SQUARE FOOTAGE OF PROPERTIES BY STATE AND TYPE OF PROPERTY
<TABLE>
<CAPTION>
STATE INDUSTRIAL OFFICE RETAIL TOTAL
- ----------------------------------------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Indiana.................................. 5,686,179 1,084,610 440,335 7,211,124
Ohio..................................... 1,959,047 2,656,800 721,977 5,337,824
Illinois................................. 126,000 -- 170,963 296,963
Tennessee................................ 495,480 -- -- 495,480
Kentucky................................. 669,240 -- -- 669,240
Missouri................................. -- -- 32,754 32,754
Michigan................................. -- 245,219 -- 245,219
Wisconsin................................ 153,600 -- -- 153,600
---------- ---------- ---------- ------------
Total................................ 9,089,546 3,986,629 1,366,029 14,442,204
---------- ---------- ---------- ------------
---------- ---------- ---------- ------------
Percent of total..................... 63% 28% 9% 100%
---------- ---------- ---------- ------------
---------- ---------- ---------- ------------
</TABLE>
S-23
<PAGE>
The following table sets forth the aggregate average percent leased for all
of the Properties during the indicated periods.
AVERAGE OCCUPANCY
(ALL PROPERTIES)
<TABLE>
<CAPTION>
SQUARE FEET AVERAGE
YEAR AVAILABLE OCCUPANCY
- -------------------------------------------------------------------- ------------ -------------
<S> <C> <C>
Through March 31, 1995.............................................. 14,442,204 94.0%
1994................................................................ 12,894,603 93.8%
1993................................................................ 10,864,245 92.1%
1992................................................................ 10,572,874 89.3%
</TABLE>
The following table shows lease expirations for leases in place as of March
31, 1995 for each of the ten years beginning with the remainder of 1995 for the
Properties, assuming none of the tenants exercises early termination or renewal
options.
LEASE EXPIRATIONS
(ALL PROPERTIES)
<TABLE>
<CAPTION>
ANNUAL NET PERCENT OF
EFFECTIVE ANNUAL NET PERCENT OF
NET RENTABLE ANNUAL NET RENT PER EFFECTIVE TOTAL LEASED
AREA (IN SQ. EFFECTIVE SQ. FT. RENT SQ. FT.
YEAR OF NUMBER OF FT.) SUBJECT RENT UNDER UNDER REPRESENTED REPRESENTED
LEASE LEASES TO EXPIRING EXPIRING EXPIRING BY EXPIRING BY EXPIRING
EXPIRATION EXPIRING LEASES LEASES (1) LEASES (1) LEASES LEASES
- ----------- ----------- ------------ ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1995 173 833,781 $ 5,365,346 $ 6.43 6.18% 6.16%
1996 217 1,711,946 10,455,386 $ 6.11 12.05% 12.66%
1997 178 1,260,903 8,460,882 $ 6.71 9.75% 9.33%
1998 170 2,019,620 10,791,957 $ 5.34 12.44% 14.94%
1999 144 1,871,864 10,424,439 $ 5.57 12.01% 13.84%
2000 79 1,396,436 8,844,133 $ 6.33 10.19% 10.33%
2001 39 1,321,664 7,251,512 $ 5.49 8.36% 9.77%
2002 18 392,178 3,389,158 $ 8.64 3.91% 2.90%
2003 12 194,570 2,251,148 $ 11.57 2.59% 1.44%
2004 11 766,849 3,299,221 $ 4.30 3.80% 5.68%
2005 and 34 1,751,484 16,247,719 $ 9.28 18.72% 12.95%
thereafter
----- ------------ -------------
TOTAL 1,075 13,521,295 $ 86,780,901 $ 6.42
----- ------------ -------------
----- ------------ -------------
<FN>
- ------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
March 31, 1995.
</TABLE>
INDUSTRIAL PROPERTIES
The industrial Properties are primarily in industrial or business parks that
have been developed by the Company and include all types of warehouse and light
manufacturing buildings from multi-tenant flex space facilities providing leased
space as small as 1,200 square feet to bulk distribution facilities providing
leased space of more than 500,000 square feet. Approximately 80% of the square
footage of the industrial properties is contained in bulk distribution
facilities. The diversity of industrial buildings allows the Company to cater to
many segments of the industrial market and renders the Company less dependent
upon any specific market segment.
S-24
<PAGE>
The following table sets forth the aggregate average percent leased and Net
Effective Rent per leased square foot for the industrial Properties during the
indicated periods.
AVERAGE OCCUPANCY AND AVERAGE RENTALS
(INDUSTRIAL PROPERTIES)
<TABLE>
<CAPTION>
NET EFFECTIVE
SQUARE FEET AVERAGE RENT PER LEASED
YEAR AVAILABLE OCCUPANCY SQUARE FOOT (1)
- ------------------------------------------------------------ --------------- -------------- -----------------
<S> <C> <C> <C>
Through March 31, 1995...................................... 9,089,546 95.4% $3.95(2),(3)
1994........................................................ 7,622,627 95.5% $4.05(2)
1993........................................................ 6,235,835 93.2% $4.06
1992........................................................ 5,962,235 89.7% $3.91
<FN>
- ------------------------
(1) Calculated as the Net Effective Rent for the indicated period divided by
the average total square feet under lease during the same period.
(2) During 1994 and the first three months of 1995 the Company renewed 66% of
its industrial leases up for renewal. The rental rate of the 634,000 square
feet renewed during this period increased 9.48% for the renewal period as
compared to the prior lease term. During this same period, the Company
leased an additional 922,000 square feet in the in-service Properties at a
net effective rental rate of $4.26 per square foot.
(3) The average Net Effective Rent per leased square foot decreased in the
first three months of 1995 because the increase in square footage available
relates primarily to bulk warehouse space which provides a lower average
Net Effective Rent per leased square foot.
</TABLE>
The following table shows lease expirations for leases in place as of March
31, 1995, for each of the ten years beginning with the remainder of 1995, for
the industrial Properties, assuming none of the tenants exercises early
termination or renewal options.
LEASE EXPIRATIONS
(INDUSTRIAL PROPERTIES)
<TABLE>
<CAPTION>
ANNUAL
NET NET PERCENT OF PERCENT OF
RENTABLE EFFECTIVE ANNUAL NET TOTAL
AREA (IN ANNUAL NET RENT PER EFFECTIVE LEASED SQ.
NUMBER SQ. FT.) EFFECTIVE SQ. FT. RENT FT.
YEAR OF OF SUBJECT TO RENT UNDER UNDER REPRESENTED REPRESENTED
LEASE LEASES EXPIRING EXPIRING EXPIRING BY EXPIRING BY EXPIRING
EXPIRATION EXPIRING LEASES LEASES(1) LEASES(1) LEASES LEASES
- ---------- -------- ---------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
1995 53 511,813 $ 2,111,227 $ 4.12 6.17% 5.96%
1996 79 1,086,624 4,269,424 $ 3.93 12.47% 12.65%
1997 49 718,866 2,855,536 $ 3.97 8.34% 8.37%
1998 57 1,483,996 5,417,023 $ 3.65 15.82% 17.27%
1999 59 1,415,469 5,747,044 $ 4.06 16.78% 16.47%
2000 33 1,019,494 4,142,955 $ 4.06 12.10% 11.87%
2001 15 1,046,872 4,264,468 $ 4.07 12.45% 12.18%
2002 7 124,980 499,661 $ 4.00 1.46% 1.45%
2003 3 40,378 441,951 $10.95 1.29% .47%
2004 7 703,033 2,552,673 $ 3.63 7.46% 8.18%
2005 and 5 440,373 1,938,529 $ 4.40 5.66% 5.13%
thereafter
--- ---------- -----------
TOTAL 367 8,591,898 $34,240,491 $ 3.99
--- ---------- -----------
--- ---------- -----------
<FN>
- ------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
March 31, 1995.
</TABLE>
S-25
<PAGE>
OFFICE PROPERTIES
The Company's portfolio of office Properties includes three downtown
buildings as well as 41 suburban office buildings located in developed business
parks and mixed-use developments with excellent interstate access and
visibility. The Company believes that all of its office Properties are among the
highest in quality available to tenants in its markets. This diverse mix of
office buildings is occupied by tenants spanning all segments of the office
market.
The following table sets forth the aggregate average percent leased and Net
Effective Rent per leased square foot for the office Properties during the
indicated periods.
AVERAGE OCCUPANCY AND AVERAGE RENTALS
(OFFICE PROPERTIES)
<TABLE>
<CAPTION>
NET EFFECTIVE
RENT PER
SQUARE FEET AVERAGE LEASED
YEAR AVAILABLE OCCUPANCY SQUARE FOOT (1)
- ------------------------------------------------------------ ----------- -------------- -----------------
<S> <C> <C> <C>
Through March 31, 1995...................................... 3,986,629 90.4% $10.89(2)
1994........................................................ 3,986,629 90.7% $10.86(2)
1993........................................................ 3,811,904 90.5% $10.91
1992........................................................ 3,811,904 88.9% $10.89
<FN>
- ------------------------
(1) Calculated as the Net Effective Rent for the indicated period, divided by
the average total square feet under lease during the same period.
(2) During 1994 and the first three months of 1995 the Company renewed 63% of
its office leases up for renewal. The rental rate of the 383,000 square
feet renewed during this period increased 4.06% for the renewal period as
compared to the prior lease term. During this same period, the Company
leased an additional 298,000 square feet in the in-service Properties at a
net effective rental rate of $9.85 per square foot.
</TABLE>
The following table shows lease expirations for leases in place as of March
31, 1995, for each of the ten years beginning with the remainder of 1995, for
the office Properties, assuming none of the tenants exercises early termination
or renewal options.
LEASE EXPIRATIONS
(OFFICE PROPERTIES)
<TABLE>
<CAPTION>
NET
RENTABLE ANNUAL NET PERCENT OF PERCENT OF
AREA (IN EFFECTIVE ANNUAL NET TOTAL
SQ. FT.) ANNUAL NET RENT PER EFFECTIVE LEASED SQ.
NUMBER SUBJECT EFFECTIVE SQ. FT. RENT FT.
YEAR OF OF TO RENT UNDER UNDER REPRESENTED REPRESENTED
LEASE LEASES EXPIRING EXPIRING EXPIRING BY EXPIRING BY EXPIRING
EXPIRATION EXPIRING LEASES LEASES (1) LEASES (1) LEASES LEASES
- ---------- -------- --------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
1995 98 280,137 $ 2,766,101 $ 9.87 6.88% 7.77%
1996 94 473,366 4,767,760 $10.07 11.85% 13.12%
1997 87 436,355 4,425,376 $10.14 11.00% 12.10%
1998 79 427,999 4,253,087 $ 9.94 10.57% 11.86%
1999 55 334,204 3,432,850 $10.27 8.53% 9.26%
2000 25 281,807 3,698,922 $13.13 9.20% 7.81%
2001 20 241,892 2,675,731 $11.06 6.65% 6.71%
2002 4 172,353 2,027,932 $11.77 5.04% 4.78%
2003 5 117,696 1,479,320 $12.57 3.68% 3.26%
2004 2 50,628 610,839 $12.07 1.52% 1.40%
2005 and 12 790,933 10,087,575 $12.75 25.08% 21.93%
thereafter
--- --------- -----------
TOTAL 481 3,607,370 $40,225,493 $11.15
--- --------- -----------
--- --------- -----------
<FN>
- ------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
March 31, 1995.
</TABLE>
S-26
<PAGE>
RETAIL PROPERTIES
The retail Properties, which cater to a variety of retail markets, include
one regional shopping center, 12 neighborhood shopping centers, three shopping
centers designed primarily to serve the business parks in which they are located
and five free-standing single tenant buildings. The retail Properties are
generally located in upscale suburban and high growth areas.
The following table sets forth the aggregate average percent leased and Net
Effective Rent per leased square foot for the retail Properties during the
indicated periods.
AVERAGE OCCUPANCY AND AVERAGE RENTALS
(RETAIL PROPERTIES)
<TABLE>
<CAPTION>
NET EFFECTIVE
RENT PER
SQUARE FEET AVERAGE LEASED
YEAR AVAILABLE OCCUPANCY SQUARE FOOT (1)
- ------------------------------------------------------------ ----------- -------------- -----------------
<S> <C> <C> <C>
Through March 31, 1995...................................... 1,366,029 96.3% $9.16(2)
1994........................................................ 1,285,347 93.6% $8.96(2)
1993........................................................ 816,506 91.2% $9.04
1992........................................................ 795,506 87.2% $8.85
<FN>
- ------------------------
(1) Calculated as the Net Effective Rent for the indicated period divided by
the average total square feet under lease during the same period.
(2) During 1994 and the first three months of 1995, the Company renewed 77% of
its retail leases up for renewal. The rental rate of the 70,000 square feet
renewed during this period increased 8.41% for the renewal period as
compared to the prior lease term. During this same period, the Company
leased an additional 104,000 square feet in the in-service Properties at a
net effective rental rate of $10.71 per square foot.
</TABLE>
The following table shows lease expirations for leases in place as of March
31, 1995, for each of the ten years beginning with the remainder of 1995, for
the retail Properties, assuming none of the tenants exercises early termination
or renewal options.
LEASE EXPIRATIONS
(RETAIL PROPERTIES)
<TABLE>
<CAPTION>
NET ANNUAL
RENTABLE NET PERCENT OF PERCENT OF
AREA (IN EFFECTIVE ANNUAL NET TOTAL
SQ. FT.) ANNUAL NET RENT PER EFFECTIVE LEASED SQ.
NUMBER SUBJECT EFFECTIVE SQ. FT. RENT FT.
YEAR OF OF TO RENT UNDER UNDER REPRESENTED REPRESENTED
LEASE LEASES EXPIRING EXPIRING EXPIRING BY EXPIRING BY EXPIRING
EXPIRATION EXPIRING LEASES LEASES(1) LEASES(1) LEASES LEASES
- ---------- -------- -------- ---------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
1995 22 41,831 $ 488,017 $11.67 3.96% 3.16%
1996 44 151,956 1,418,203 $ 9.33 11.52% 11.49%
1997 42 105,682 1,179,967 $11.17 9.58% 7.99%
1998 34 107,625 1,121,846 $10.42 9.11% 8.14%
1999 30 122,191 1,244,544 $10.19 10.11% 9.24%
2000 21 95,135 1,002,255 $10.54 8.14% 7.20%
2001 4 32,900 311,312 $ 9.46 2.53% 2.49%
2002 7 94,845 861,543 $ 9.08 7.00% 7.17%
2003 4 36,496 329,876 $ 9.04 2.68% 2.76%
2004 2 13,188 135,708 $10.29 1.10% 1.00%
2005 and 17 520,180 4,221,615 $ 8.12 34.28% 39.35%
thereafter
--- -------- ----------
TOTAL 227 1,322,029 $12,314,886 $ 9.32
--- -------- ----------
--- -------- ----------
<FN>
- ------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
March 31, 1995.
</TABLE>
S-27
<PAGE>
LAND
Substantially all the approximately 900 acres of unencumbered Land is
located adjacent to the Properties in industrial or business parks that have
been developed by the Company. Approximately 80% of the Land is zoned for
industrial use, with the remainder zoned for either office or retail use. All of
the Land is unencumbered, has available to it appropriate utilities and is ready
for immediate development. The Company believes that approximately 120 buildings
containing approximately 11 million square feet of commercial development can be
constructed on the Land. The Company believes that the Land gives it a
competitive advantage over other real estate companies operating in its markets.
The following table describes the acreage and zoning of the Land as of March
31, 1995.
LAND HELD FOR DEVELOPMENT
<TABLE>
<CAPTION>
YEAR COMPANY'S
DESCRIPTION/LOCATION ZONED USE ACQUIRED ACREAGE OWNERSHIP
- -------------------------------------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
Park 100 Business Park Industrial 1972-1993 328.5 100%
Indianapolis, IN
South Park Business Center Industrial 1989 53.9 100%
Greenwood, IN
Park 50 TechneCenter Industrial 1977/1989 57.8 100%
Cincinnati, OH
World Park Industrial 1987/1991 101.1 100%
Cincinnati, OH
Southpark Business Center Industrial 1989 7.0 100%
Hebron, KY
Governor's Pointe Industrial 1986 50.1 100%(1)
Cincinnati, OH
Haywood Oaks TechneCenter Industrial 1988 15.4 100%
Nashville, TN
Park 101 Industrial 1986 59.1 100%
Decatur, IL
Southpointe Industrial 1994 38.8 100%
Columbus, OH
Parkwood Crossing Office 1989 39.0 50%(2)
Indianapolis, IN
Hamilton Crossing Office 1988 71.3 100%
Carmel, IN
Merchant Street Office 1990 5.6 100%
Cincinnati, OH
Tri-County Office Park Office 1986 3.2 100%
Cincinnati, OH
American Center Office 1990 2.8 100%
Nashville, TN
Corporate Park at Tuttle Crossing Office 1989/1994 13.8 100%
Columbus, OH
Fidelity Drive Office 1984 10.0 100%
Cincinnati, OH
Coldwater Crossing Retail 1994 8.4 100%
Ft. Wayne, IN
<FN>
- ------------------------
(1) Pursuant to a land contract whereby the Company is the purchaser.
(2) Owned by a partnership in which the Company is a 50% partner.
</TABLE>
S-28
<PAGE>
TENANTS
The Company's Properties have a diverse and stable base of approximately
1,100 tenants. Many of the tenants are Fortune 500 companies and engage in a
wide variety of businesses, including manufacturing, retailing, wholesale trade,
distribution, and professional services. Approximately 50% of the square footage
of the Properties is occupied by tenants with a net worth based on book value of
$100 million or greater. Approximately 75% of the gross leasable area of the
Properties is occupied by tenants who have been in business for more than 10
years. The Company renewed 69% of the square feet of tenants up for renewal over
the two years ended December 31, 1994, on approximately 2.7 million square feet
up for renewal. No single tenant accounts for more than 3% of the Company's
Total Gross Effective Rent.
The following table sets forth information regarding the 10 largest tenants
of the Properties based upon annualized gross effective rents as of March 31,
1995.
<TABLE>
<CAPTION>
ANNUALIZED PERCENTAGE OF
YEAR OF PERCENTAGE GROSS TOTAL GROSS
PRIMARY LEASE SQUARE OF TOTAL EFFECTIVE EFFECTIVE
TENANT LOCATION EXPIRATION FOOTAGE SQUARE FEET RENT (2) RENT
- ------------------------- --------- ------------ --------- -------------- ----------- -------------
(IN
THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
General Electric......... Cincinnati 1996-2001(1) 241,789 1.7% $ 2,930 3.0%
LCI Communications,
Inc..................... Columbus 2005 164,639 1.1% 2,515 2.6%
SDRC..................... Cincinnati 2011 221,215 1.5% 2,426 2.5%
Lenscrafters, Inc........ Cincinnati 1995-1999(1) 233,579 1.6% 2,097 2.2%
Associated Group......... Indiana 1996-1998(1) 194,529 1.3% 1,726 1.8%
Cincinnati Enquirer...... Cincinnati 2012(1) 117,301 0.8% 1,709 1.8%
Silver Burdett Ginn,
Inc..................... Indiana 2001 553,900 3.8% 1,546 1.6%
Ordernet Services, Inc. Columbus 1995-2003(1) 106,300 0.7% 1,402 1.5%
General Services
Administration Cincinnati 1998 77,189 0.5% 1,326 1.4%
Champion Spark Plugs Co. Indiana 2001 512,777 3.6% 1,230 1.3%
--------- --- ----------- -----
TOTAL.................... 2,423,218 16.8% $ 18,907 19.7%
--------- --- ----------- -----
--------- --- ----------- -----
<FN>
- ------------------------
(1) Represents more than one lease with maturities during the indicated range
of years.
(2) Represents annual gross effective rents due from tenants in occupancy as of
March 31, 1995. Annual gross effective rents equals the average annual
rental property revenue over the terms of the respective leases including
landlord operating expense allowances and excluding additional rent due as
operating expense reimbursements.
</TABLE>
S-29
<PAGE>
TABLE OF PROPERTIES
The following table sets forth information concerning the Company's
properties as of March 31, 1995.
<TABLE>
<CAPTION>
COMPANY'S SQUARE PERCENT
NAME/LOCATION OWNERSHIP YEAR BUILT FEET LEASED (1) SIGNIFICANT TENANTS (2)
- -------------------------- ---------- -------------- ------- ---------- -----------------------------------
<S> <C> <C> <C> <C> <C>
INDUSTRIAL
Indianapolis, Indiana
PARK 100 BUSINESS PARK
Building 38 100% 1978 6,000 100% Langford's Collision (100%)
Building 43 100% 1971 26,871 0% (4)
Building 74 10%-50% (3) 1988 257,400 100% Wood Industries (35%), Ternes
Packaging - Indiana (65%)
Building 76 10%-50% (3) 1988 81,695 100% Telamon Corp. (36%), Howard W. Sams
(19%), Lextron (25%),
Ingersoll-Rand (20%)
Building 77 100% 1988 193,400 100% Service Graphics (65%), Federal
Mogul Corp. (35%)
Building 78 10%-50% (3) 1988 512,777 100% Champion Spark Plug (100%)
Building 79 100% 1988 66,000 100% Compression Engineering (53%),
Thrall Distribution (15%), Curtis
International (13%)
Building 80 100% 1988 66,000 88% Data Chem, Inc. (21%), Arcane
Leasing Resources (13%), Hill-Rom
Company (10%), Coast to Coast
Analytical (20%)
Building 83 100% 1989 96,000 100% Digital Communications (40%),
Telamon Corp. (25%), State Lottery
Commission (22%), Bel Hybrids &
Magnetics (13%)
Building 84 100% 1989 96,000 100% Magnetech Corp. (27%), Datagraphic,
Inc. (18%), Courterco, Inc. (30%),
Nina International, Inc. (25%)
Building 85 10%-50% (3) 1989 180,100 100% Pepsico, Inc. (100%)
Building 87 10%-50% (3) 1989 350,000 100% Epson America, Inc. (100%)
Building 89 10%-50% (3) 1990 311,600 100% Becton Dickinson & Co. (100%)
Building 91 10%-50% (3) 1990 144,000 60% Pepsico, Inc. (60%)
Building 92 10%-50% (3) 1991 45,917 100% Keebler Company (100%)
Building 95 100% 1993 336,000 100% Caterpillar Logistics (100%)
Building 96 100% 1994 553,900 100% Silver Burdett Ginn. Inc. (100%)
Building 97 100% 1994/1995 280,800 79% Butler-McDonald Inc. (53%) Major
Pharmaceutical (26%)
Building 98 100% 1968 503,900 94% Purity Wholesale Grocers (30%),
Select Beverages, Inc. (19%),
Spectrum Products, Inc. (10%),
Pinnacle Oil (10%)
Building 107 100% 1984 58,783 89% Enviroplan, Inc. (50%), Duke Realty
Investments (39%)
</TABLE>
S-30
<PAGE>
<TABLE>
<CAPTION>
COMPANY'S SQUARE PERCENT
NAME/LOCATION OWNERSHIP YEAR BUILT FEET LEASED (1) SIGNIFICANT TENANTS (2)
- -------------------------- ---------- -------------- ------- ---------- -----------------------------------
<S> <C> <C> <C> <C> <C>
Building 109 100% 1985 46,000 100% First Data Resources (12%), NBG
Ent. (11%), Quick Change (18%),
Wabash Valley Power Assoc. (12%),
J.N. Fauver (10%), David Copher
M.D. (10%)
Building 117 10%-50% (3) 1988 135,600 88% Acordia School Benefits (29%)
Building 120 10%-50% (3) 1989 54,982 100% Nat'l Retail Hardware (38%),
Peoples Bank & Trust (40%)
Building 122 100% 1990 73,274 100% Haynes & Pittenger (38%), RJE
Interiors, Inc. (14%), Anthem
Benefit Services (32%)
Building 125 100% 1994 98,000 100% Day Dream Publishing, Inc. (100%)
Building 126 100% 1984 60,100 100% Harlan Bakeries, Inc. (14%), RJE
Interiors, Inc. (36%), Amarr Cos.,
Inc. (13%), Commercial Movers,
Inc. (11%), Just Desserts, Inc.
(12%), Cutting USA (14%)
SHADELAND STATION
Buildings 204 & 205 100% 1984 48,600 100% Southwestern Bell (80%)
HUNTER CREEK BUSINESS PARK
Building 1 10%-50% (3) 1989 86,500 100% Trilithic (41%), Nissin Int'l
Transport (22%), Exhaust Prod.
Warehouse (15%), Lazarus Real
Estate, Inc. (22%)
Building 2 10%-50% (3) 1989 202,560 87% Wal-Mart Stores (50%), Continental
Baking Co. (37%)
HILLSDALE TECHNECENTER
Building 4 100% 1987 73,874 94% Dugdale Communications (13%),
Community Hospitals (31%), Net
Midwest, Inc. (12%)
Building 5 100% 1987 67,500 99% Wiltrout Sales (17%), Advanced
Automation Tech. (12%), Aspinall &
Associates (10%), Liquid Control
Corp. (16%)
Building 6 100% 1987 64,000 100% Adminastar (100%)
OTHER INDUSTRIAL -- INDIANAPOLIS
Franklin Road Business 100% 1962 367,065 69% GATX Logistics, Inc. (69%)
Center
Palomar Business Center 100% 1973 99,350 100% Palomar Inc. (100%)
Carmel, Indiana
HAMILTON CROSSING
Building 1 100% 1989 51,825 93% Charles Schwab & Co. (30%), Bacompt
Systems, Inc. (28%), Trinity Homes
(13%)
</TABLE>
S-31
<PAGE>
<TABLE>
<CAPTION>
COMPANY'S SQUARE PERCENT
NAME/LOCATION OWNERSHIP YEAR BUILT FEET LEASED (1) SIGNIFICANT TENANTS (2)
- -------------------------- ---------- -------------- ------- ---------- -----------------------------------
<S> <C> <C> <C> <C> <C>
Greenwood, Indiana
SOUTH PARK BUSINESS CENTER
Building 2 100% 1990 86,806 92% Acordia Construction Benefits
(12%), American Electronics, Inc.
(10%), Tetra Pak, Inc. (11%)
Cincinnati, Ohio (5)
PARK 50 TECHNECENTER
Building 20 100% 1987 96,000 100% Computer Technology (31%), Zonic
Corp. (17%), Martec, Inc. (15%)
Building 25 100% 1989 78,328 88% SDRC (25%), Hyper Shoppes, Inc.
(30%), MarketWare Corp. (33%)
GOVERNOR'S POINTE
4700 Building 100% 1987 76,400 89% Allen Bradley Co. (19%), Konica
Business Machines (12%), FACS
Group Inc. (12%)
4800 Building 100% 1989 80,000 92% General Electric (50%), Community
Mutual Ins. Co. (27%)
4900 Building 100% 1987 76,400 99% Federated Dept. Stores (57%),
Intergraph Corporation (13%), Ford
Motor Co. (10%)
WORLD PARK
Building 5 100% 1987 59,700 75% Amerimed Equip. (17%)
Building 6 100% 1987 92,400 100% Caterpillar Logistics (56%),
Omnicare, Inc. (26%), Copy
Duplicating Products (11%)
Building 7 100% 1987 96,000 100% CTL-Aerospace (100%)
Building 8 100% 1989 192,000 100% Container Corp. (38%), Duplex
Products, Inc. (31%), Brendamour
Moving & Storage (13%), Perkins
Restaurant Co. (18%)
Building 9 100% 1989 58,800 93% Lenscrafters (20%), Philips Medical
Systems (20%)
Building 11 100% 1989 96,000 100% Cincinnati Screen Supply (20%), The
U.S. Shoe Corp. (70%)
Building 14 100% 1989 166,400 100% Kenco/Microage (62%), Suntory Water
Group (12%), Microage Computer
(26%)
Building 15 100% 1990 93,600 100% Stolle Research & Develop (100%)
Building 16 100% 1989 93,600 100% Valvoline, Inc. (100%)
</TABLE>
S-32
<PAGE>
<TABLE>
<CAPTION>
COMPANY'S SQUARE PERCENT
NAME/LOCATION OWNERSHIP YEAR BUILT FEET LEASED (1) SIGNIFICANT TENANTS (2)
- -------------------------- ---------- -------------- ------- ---------- -----------------------------------
<S> <C> <C> <C> <C> <C>
ENTERPRISE BUSINESS PARK
Building A 100% 1990 87,400 95% The Future Now, Inc. (32%),
Advanced Office Systems (14%)
Building B 100% 1990 84,940 93% General Electric Supply (11%),
Payless Cashways, Inc. (18%)
SOUTHPARK BUSINESS
CENTER
Building 1 100% 1990 96,000 100% James & Loretta England (44%),
Surgical Laser Technology (33%),
Quality Food & Vending (13%),
Drysdale Direct Express (10%)
Building 3 100% 1991 192,000 73% Cincinnati Terminal Warehouse (73%)
CR Services 100% 1994 214,840 100% SKF USA, Inc. (100%)
Redken Laboratories 100% 1994 166,400 100% Redken Laboratories, Inc. (100%)
TRI-COUNTY BUSINESS PARK
Xetron 10% (6) 1994 100,193 100% Xetron (100%)
OTHER INDUSTRIAL --
CINCINNATI
U.S. Post Office 40% (6) 1992 57,886 100% U.S. Postal Service (100%)
Building
University Moving 100% 1991 70,000 100% University Moving & Storage (100%)
Columbus, Ohio
PET FOODS
Pet Foods Distribution 100% 1993 252,000 100% Pet Foods (100%)
Building
WESTBELT INDUSTRIAL PARK
MBM Building 100% 1978 83,000 100% MBM Corporation (100%)
Decatur, Illinois
PARK 101 BUSINESS CENTER
Building 3 100% 1979 75,600 77% Illinois Power Company (12%)
Building 8 100% 1980 50,400 84% Federal Express (14%), Decatur
Office Systems (14%), Hinckley-
Schmitt, Inc. (13%)
Nashville, Tennessee
HAYWOOD OAKS
TECHNECENTER
Building 2 100% 1988 50,400 100% Beacon Int'l, U.S.A. (19%), Major
Video Concepts (31%), Synermed,
Inc. (17%), Vari-Life, Inc. (10%),
Physicians Sales & Service (10%)
</TABLE>
S-33
<PAGE>
<TABLE>
<CAPTION>
COMPANY'S SQUARE PERCENT
NAME/LOCATION OWNERSHIP YEAR BUILT FEET LEASED (1) SIGNIFICANT TENANTS (2)
- -------------------------- ---------- -------------- ------- ---------- -----------------------------------
<S> <C> <C> <C> <C> <C>
Building 3 100% 1988 52,800 86% Copper & Brass Sales (23%), ATEC
Associates, Inc. (30%), Virogroup,
Inc. (25%)
Building 4 100% 1988 46,800 100% Primus Automotive (62%), Product
Assembly (17%)
Building 5 100% 1988 61,171 95% Allen-Bradley Co., Inc. (28%)
Building 6 100% 1989 113,400 95% Primus Automotive (46%)
GREENBRIAR BUSINESS
CENTER
Greenbriar 100% 1986 134,759 98% Envoy Corporation (16%), United
Parcel Service (11%)
JACKSON BUSINESS PARK
Keebler Distribution 100% 1985 36,150 100% Keebler Co. (100%)
Center
Milwaukee, Wisconsin
Music Box Building 33% (6) 1993 153,600 100% San Francisco Music Box Company, a
subsidiary of The Woolworth
Companies (100%)
OFFICE
Indianapolis, Indiana
PARK 100 BUSINESS PARK
Building 34 100% 1979 22,272 97% James H. Drew Corp. (20%), Indiana
Properties, Inc. (12%), Million &
Co., P.C. (12%)
Building 116 100% 1988 35,700 100% Technalysis, Inc. (37%), Woolpert
Consultants (37%)
Building 118 100% 1988 35,700 100% Benicorp Ins. (33%), Construction
Campbell Contracting Inc. (12%),
Magazine Grp. (15%), Acordia
Senior Benefits (20%), Policy
Management Systems (20%)
Building 119 100% 1989 53,300 100% Anthem Health Sys. (96%)
CopyRite Building 50% (6) 1992 48,000 100% Alco Standard Corporation (100%)
WOODFIELD AT THE
CROSSING
Two Woodfield Crossing 100% 1987 117,818 93% General Accident Ins. Co. (19%)
Three Woodfield Crossing 100% 1989 259,777 91% E.F.S., Inc. (20%), Medi-Span, Inc.
(10%)
PARKWOOD CROSSING
Parkwood I 50% (7) 1990 108,281 100% VanGuard Services (11%)
SHADELAND STATION
7240 Shadeland Station 67% (6) 1985 45,585 90% Den-Mat Corp. (14%), James River
Paper Co., Inc. (44%)
</TABLE>
S-34
<PAGE>
<TABLE>
<CAPTION>
COMPANY'S SQUARE PERCENT
NAME/LOCATION OWNERSHIP YEAR BUILT FEET LEASED (1) SIGNIFICANT TENANTS (2)
- -------------------------- ---------- -------------- ------- ---------- -----------------------------------
<S> <C> <C> <C> <C> <C>
7330 Shadeland Station 100% 1988 42,619 100% American Family Ins. (78%), Walker
Parker Consulting (13%)
7340 Shadeland Station 100% 1989 32,235 100% Truevision, Inc. (72%)
7351 Shadeland Station 100% 1983 27,740 76% SWL, Inc. (11%), Garrison & Kiefer
(16%), Action Systems Associates
(10%), EPIC Leadership (10%)
7369 Shadeland Station 100% 1989 15,551 100% Truevision, Inc. (70%), Sams,
Bullock & Lee (15%), Techsoft
Systems, Inc. (15%)
7400 Shadeland Station 100% 1990 49,544 100% Edward B. Morris Assoc. (27%),
Ryland Mortgage Company (12%), IMC
Credit Services (10%), Guaranty
National Insurance (10%)
KEYSTONE AT THE CROSSING
F.C. Tucker Building (8) 100% 1978 4,840 100% F. C. Tucker (100%)
3520 Commerce Crossing 100% 1976 30,000 100% Indiana Wesleyan University (100%)
(9)
Carmel, Indiana
CARMEL MEDICAL CENTER
Building I (10) 100% 1985 40,060 97% Indiana Institute for Low Back Care
(17%), Carmel OB/ GYN (12%)
Building II (10) 100% 1989 39,973 97% St. Vincent Sports Med. (26%), St.
Vincent Hosp. & Health (31%)
Greenwood, Indiana
SOUTH PARK BUSINESS
CENTER
Building 1 100% 1989 39,715 91% Alverno Admin (18%), Brylane L.P.
(29%), Cummins Engine Co., Inc.
(12%)
Building 3 100% 1990 35,900 100% United Home Life Ins. (50%),
Personnel Management, Inc. (24%),
Philip Morris U.S.A. (12%)
Cincinnati, Ohio(5)
GOVERNOR'S HILL
8600 Governor's Hill 100% 1986 200,584 88% Lenscrafters (75%)
8700 Governor's Hill 100% 1985 58,617 100% General Electric Corp. (100%)
8790 Governor's Hill 100% 1985 58,177 66% Tandem Computers, Inc. (14%)
8800 Governor's Hill 100% 1985 28,700 100% Southern Ohio Telephone (100%)
GOVERNOR'S POINTE
4605 Governor's Pointe 100% 1990 175,485 100% GE Capital (74%), Cincom Systems,
Inc. (16%)
</TABLE>
S-35
<PAGE>
<TABLE>
<CAPTION>
COMPANY'S SQUARE PERCENT
NAME/LOCATION OWNERSHIP YEAR BUILT FEET LEASED (1) SIGNIFICANT TENANTS (2)
- -------------------------- ---------- -------------- ------- ---------- -----------------------------------
<S> <C> <C> <C> <C> <C>
4705 Governor's Pointe 100% 1988 140,984 19% Ford Motor Company (19%)
4770 Governor's Pointe 100% 1986 76,037 88% Pizza Hut of America (13%)
PARK 50 TECHNECENTER
SDRC Building 100% 1991 221,215 100% SDRC (100%)
400 TechneCenter Drive 100% 1985 70,644 93% Cyprus Coal (7%)
DOWNTOWN CINCINNATI
311 Elm Street (11) 100% 1902/1986(12) 90,127 100% Star Bank (75%), Space Design
Interior, Inc. (25%)
312 Plum Street 100% 1987 230,000 82% Cincinnati Bell (39%), Savings &
Loan Data Corp. (26%)
312 Elm Street (13) 100% 1992 378,000 87% Cincinnati Enquirer (28%),
Prudential Insurance Co. (24%),
GSA (20%)
KENWOOD COMMONS
Building I 50% (6) 1986 46,470 100% Digital Communications (100%)
Building II 50% (6) 1986 46,434 94% Bethesda Health Care (16%), Cross &
Associates (20%)
OTHER OFFICE --
CINCINNATI
Triangle Office Park 100% 1965/1985(14) 172,650 81% Accufax (10%)
Fidelity Drive Building 100% 1972 38,000 100% Frequency Marketing (100%)
Tri-County Office Park 100% 1971, 1973(&15) 102,166 59% Pope & Assoc. (13%)
1982
Columbus, Ohio
THE CORPORATE PARK AT
TUTTLE CROSSING
4600 Lakehurst 100% 1990 106,300 100% Ordernet Services (100%)
4650 Lakehurst 100% 1990 164,639 100% LCI Communications (Litel) (100%)
5555 Parkcenter 100% 1992 83,971 100% Xerox (33%), Metal Forge (30%),
VOCA (28%)
4700 Lakehurst 100% 1994 49,600 100% Indiana Insurance (51%), Geraghty &
Miller, Inc. (39%), Duke Realty
Investments (10%)
OTHER OFFICE -- COLUMBUS
Veterans Administration 100% 1994 118,000 100% VA Hospital (100%)
Clinic
Livonia, Michigan
SEVEN MILE CROSSING
38705 Seven Mile (16) 100% 1988 113,066 99% Amoco Oil Co. (12%)
38701 Seven Mile (16) 100% 1989 132,153 97% U.S. Sprint Communications (21%)
</TABLE>
S-36
<PAGE>
<TABLE>
<CAPTION>
COMPANY'S SQUARE PERCENT
NAME/LOCATION OWNERSHIP YEAR BUILT FEET LEASED (1) SIGNIFICANT TENANTS (2)
- -------------------------- ---------- -------------- ------- ---------- -----------------------------------
<S> <C> <C> <C> <C> <C>
RETAIL
Indianapolis, Indiana
PARK 100 BUSINESS PARK
Woodland Shoppes 100% 1989 19,716 76% McTee, Inc. (18%), D.K. Brunchies,
Building 121 Inc. (18%), Dr. Jeffrey Golder
(11%), Subway (14%)
Park 100 Retail Center 100% 1978 14,504 59% The Cleaning Shop (10%), Instant
Copy (10%), Park 100 Liquors
(21%), The Sign Source (10%)
CASTLETON CORNER
Michael's Plaza 100% 1984 46,374 100% Michael's Arts & Crafts (40%),
Hoosier Cash & Carry (28%)
Cub Plaza 100% 1986 60,136 91% Petsmart (38%), Outback Steakhouse,
Inc. (12%)
Fort Wayne, Indiana
Coldwater Crossing 100% 1990 246,365 98% Cub Foods (26%), Regal Cinemas,
Inc. (13%)
Greenwood, Indiana
GREENWOOD CORNER
First Indiana Bank 100% 1988 2,400 100% First Indiana Bank (100%)
Branch
Greenwood Corner Shoppes 100% 1986 50,840 100% Fraziers Distributing (11%), Drug
Emporium (45%)
Dayton, Ohio
Sugarcreek Plaza 100% 1988 77,940 98% Drug Emporium (31%)
Cincinnati, Ohio (5)
Governor's Plaza 100% 1990 181,493 99% Wal-Mart (63%)
King's Mall Shopping 100% 1990 52,661 96% Body Dynamics (26%), Evenson Cards
Center I Shop (11%), Grand Oriental (12%)
King's Mall Shopping 100% 1988 67,725 99% Pet Food Supermarket (37%),
Center II Discovery Zone (15%)
Steinberg's 100% 1993 21,008 100% Steinberg's Inc. (100%)
Park 50 Plaza 100% 1989 18,000 42% Park 50 Copy (13%), Kibby Raymor
Productions (13%)
Kohl's 100% 1994 80,684 100% Kohl's (100%)
Sports Unlimited 100% 1994 67,148 100% Cincinnati Sports (76%), Fore
Seasons Golf, Inc. (10%), Brown
Group Retail, Inc. (14%)
Eastgate Square 100% 1990 80,682 100% Michael's Stores, Inc. (19%), Chuck
E. Cheese (11%)
</TABLE>
S-37
<PAGE>
<TABLE>
<CAPTION>
COMPANY'S SQUARE PERCENT
NAME/LOCATION OWNERSHIP YEAR BUILT FEET LEASED (1) SIGNIFICANT TENANTS (2)
- -------------------------- ---------- -------------- ------- ---------- -----------------------------------
<S> <C> <C> <C> <C> <C>
Columbus, Ohio
Galyan's Trading Company 100% 1994 74,636 100% Galyan's Trading Co. (100%)
Ellisville, Missouri
Ellisville Plaza 100% 1987 32,754 96% Pier I Imports (22%), Fitzpatrick
Pharmacy (12%), Outback Steakhouse
(20%)
Bloomington, Illinois
Lakewood Plaza Shopping 100% 1987 84,410 99% Shoe Carnival (21%), Staples, Inc.
Center (23%)
Champaign, Illinois
Market View 100% 1985 86,553 94% T.J. Maxx (29%), Silo #425 (14%)
Livonia, Michigan
Cooker Restaurant 100% (17) N/A N/A 100% Cooker Restaurant
INDUSTRIAL -- UNDER
CONSTRUCTION
Indianapolis, Indiana
PARK 100 BUSINESS PARK
Building 99 50% (6) 1994/1995 364,800 42% South Carolina Tees (42%)
Building 100 100% 1995 117,500 24% Hoosier Cash & Carry, Inc. (24%)
Building 127 100% 1995 96,300 67% Capitol City Container (67%)
Cincinnati, Ohio (5)
WORLD PARK
Building 17 100% 1994/1995 304,000 100% Microage (100%)
Columbus, Ohio
South Pointe Building I 100% 1995 293,824 0% (18)
Nashville, Tennessee
Haywood Oaks 100% 1995 66,523 30% Copper and Brass Sales (30%)
Technecenter Building 7
Louisville, Kentucky
Dayco 100% 1995 282,539 100% Dayco Products, Inc. (100%)
OFFICE -- UNDER
CONSTRUCTION
Indianapolis, Indiana
Two Parkwood 50% (6) 1995 93,300 48% Quantum Health Resources (48%)
Cincinnati, Ohio (5)
Ohio National 100% (19) 1995 212,125 67% Ohio National (67%)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
COMPANY'S SQUARE PERCENT
NAME/LOCATION OWNERSHIP YEAR BUILT FEET LEASED (1) SIGNIFICANT TENANTS (2)
- -------------------------- ---------- -------------- ------- ---------- -----------------------------------
<S> <C> <C> <C> <C> <C>
Columbus, Ohio
TUTTLE CROSSING
Building 4 100% 1994/1995 57,660 100% Sterling Software, Inc. (100%)
Building 5 100% 1994/1995 101,200 100% John Alden Life Insurance (100%)
Building 6 100% 1995 132,854 100% Cardinal Health (100%)
Miami, Florida
John Alden 100% 1995 251,316 100% John Alden Life Insurance (100%)
MEDICAL OFFICE -- UNDER
CONSTRUCTION
Greenwood, Indiana
St. Francis Medical 100% (20) 1994/1995 95,579 69% Indianapolis Gastroenterology
Building (19%),
Southside OB-GYN(14%),
St. Francis Hospital(11%)
Indianapolis, Indiana
Community Hospital 100% 1995 38,193 100% Community Hospitals of Indiana
(100%)
RETAIL -- UNDER
CONSTRUCTION
Cincinnati, Ohio (5)
Sofa Express 100% 1995 15,000 100% Living Room Inc. (100%)
Office Max 100% 1995 23,500 100% Office Max, Inc. (100%)
Columbus, Ohio
TUTTLE CROSSING
Wal-Mart 100% 1995 149,429 100% Wal-Mart (100%)
Best Buy 100% 1995 68,400 85% Best Buy (85%)
<FN>
- --------------------------
(1) Includes space leased, even if not occupied, as of March 31, 1995.
(2) Includes tenants leasing 10% or more of square footage in any one Property
(with the percentage of square footage in parentheses) or the largest
tenant if no tenant is over 10%.
(3) Owned by a partnership in which the Company is a joint venture partner. The
Company owns a 10% capital interest in the partnership and will receive a
50% interest in the residual cash flow after payment of a preferred return
to the other partner on its capital interest.
(4) Under contract to be sold with a closing expected in May, 1995.
(5) Properties designated to be in Cincinnati, Ohio may be in the greater
Cincinnati area.
(6) The Company owns a percentage interest in this building as indicated and
shares in the cash flow from the building in accordance with such ownership
interest.
(7) Owned by Parkwood Crossing Joint Venture, a partnership in which the
Company is a joint venture partner. The Company has a 50% general
partnership interest and shares in the cash flow from such building in
accordance with such ownership interest after payment of a cumulative
preferred return to the other partner.
(8) The Company has a leasehold interest in the land underlying this building
with a lease term expiring October 31, 2067.
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
(9) The Company has a leasehold interest in the building and the underlying
land with a lease term expiring May 9, 2006.
(10) The Company owns these buildings and has a leasehold interest in the land
underlying these buildings, with the lease term expiring November 16, 2043.
(11) The Company has a leasehold interest in the building and the underlying
land with a lease term expiring December 31, 2020. The Company has an
option to purchase the fee interest in the property at any time.
(12) Renovated in 1986.
(13) A portion of the land underlying this building is held by the Company as a
leasehold interest, with the lease term expiring March 31, 2021.
(14) Renovated in 1985.
(15) Tri-County Office Park has four buildings. One was built in 1971, two were
built in 1973, and one was built in 1982.
(16) The Company has a leasehold interest in the land underlying these
buildings, with a lease term expiring May 31, 2057, and the Company owns
the buildings.
(17) The Company holds the land under this building under a long-term lease with
the lease term expiring May 31, 2057 and subleases the land to the tenant
with the sublease term expiring on August 31, 2009. In the event of a
default by the tenant under the sublease, the Company would acquire title
to the building upon termination of the sublease.
(18) The Company has letters of intent and is completing final lease
negotiations with two tenants to lease 70% of the building. The leases with
these tenants are expected to be executed by May 15, 1995.
(19) This project is currently owned in a joint venture in which the Company
owns a 50% interest; however, the Company has a contract to purchase its
joint venture partner's interest. This acquisition is expected to be
completed May 15, 1995.
(20) The Company will hold a leasehold interest in the land underlying this
owned building upon completion for a term of 50 years commencing when the
building is completed, with two 20-year options.
</TABLE>
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<PAGE>
MANAGEMENT
The directors and six senior officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATIONS AND OTHER DIRECTORSHIPS
- ------------------------- --- ---------------------------------------------------------------------------------
<S> <C> <C>
John W. Wynne 62 Director and Chairman of the Board; Director of First Indiana Corporation;
retired from Bose McKinney & Evans, attorneys. Mr. Wynne is one of the original
founders of the Company.
Thomas L. Hefner 48 Director and President and Chief Executive Officer. Mr. Hefner joined the Company
in 1981 and became Chief Operating Officer in 1986. Before joining the Company,
Mr. Hefner served as a Vice President of Indiana National Bank and Senior Vice
President of INB Mortgage Corporation. He has also served as the General Manager
of the Company's Indiana operations.
Daniel C. Staton 42 Director and Executive Vice President and Chief Operating Officer. Mr. Staton
joined the Company in 1981 and has been responsible for the Company's Ohio
operations since 1983.
Darell E. Zink, Jr. 48 Director and Executive Vice President, Chief Financial Officer and Assistant
Secretary; Director of Inland Mortgage Corporation. Mr. Zink joined the Company
in 1982 and is a former partner of Bose McKinney & Evans, attorneys.
Geoffrey Button 46 Director; Executive Director of Wyndham Investments Limited, a property holding
company of Allied Domecq Pension Funds; Director of Major Realty, a
Florida-based development company.
Ngaire E. Cuneo 44 Director; Executive Vice President, Corporate Development, Conseco, Inc., an
owner, operator and provider of services to companies in the financial services
industry, since 1992. Prior to 1992, Ms. Cuneo was Senior Vice President and
corporate officer of General Electric Capital Corp. Director of Conseco, Inc.
and Bankers Life Holding Corporation.
Howard L. Feinsand 47 Director; Managing Director, Citicorp North America Inc. since April 1995. Prior
to April 1995 Mr. Feinsand was Senior Vice President of G E Capital Aviation
Services, Inc.
John D. Peterson 62 Director; Chairman and Chief Executive Officer of City Securities Corporation, a
securities brokerage firm headquartered in Indianapolis, Indiana for which he
has served in a variety of positions since 1955; Director of Capital Industries,
Inc., a distributor of truck parts and related services, and Lilly Industries,
Inc., a manufacturer of industrial coatings.
James E. Rogers 47 Director; Vice Chairman, President and Chief Operating Officer of CINergy, a
regional utility holding company, since 1994. Prior to 1994, Chairman, President
and Chief Executive Officer of PSI Energy, Inc. Director of CINergy Corp., PSI
Energy, Inc., NBD Indiana, Inc. and Bankers Life Holding Corporation.
Lee Stanfield 87 Director; Currently an independent real estate developer, investor and
consultant. Formerly President of Eastern Shopping Centers, Inc., which
converted to Mortgage Growth Investors, a publicly traded REIT. Prior to that
time, Mr. Stanfield was Senior Vice President and Chief Financial Officer of
Winston-Muss Corp., a housing and shopping center developer.
</TABLE>
S-41
<PAGE>
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATIONS AND OTHER DIRECTORSHIPS
- ------------------------- --- ---------------------------------------------------------------------------------
<S> <C> <C>
Jay J. Strauss 59 Director; Chairman and Chief Executive Officer of Regent Realty Group, Inc., a
general real estate and mortgage banking firm. Mr. Strauss served from 1984 to
1988 as Chairman and Chief Executive Officer of Focus Financial Group, a
mortgage banking firm. From 1978 to 1984, Mr. Strauss served as President and
Chief Executive Officer of the Abacus Group, another mortgage banking firm, and
was Chairman of the real estate division of Walter E. Heller & Company
(presently known as Heller Financial, Inc.), a commercial finance company.
David R. Mennel 40 General Manager of Services Operations and President of Duke Services, Inc. Mr.
Mennel was with the accounting firm of Peat Marwick Mitchell and Company and the
property development firm of Melvin Simon & Associates before joining the
Company in 1978. He was previously the Treasurer of the Company.
Gary A. Burk 43 President of Construction Services. Mr. Burk joined the Company in 1979, and has
been responsible for the Company's construction management operations since
1986.
</TABLE>
FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following discussion summarizes certain Federal income tax consequences
to an investor in shares of Common Stock. Such discussion is based upon current
law. The discussion is focused on the classification of the Company as a REIT
and does not address all tax considerations applicable to prospective investors,
nor does the discussion give a detailed description of any state, local, or
foreign tax considerations. This discussion does not describe all of the aspects
of Federal income taxation that may be relevant to a prospective shareholder in
light of his or her particular circumstances or to certain types of shareholders
(including insurance companies, tax-exempt entities, financial institutions or
broker-dealers, foreign corporations and persons who are not citizens or
residents of the United States) subject to special treatment under the Federal
income tax laws. As used in this section, the term "Company" refers solely to
Duke Realty Investments, Inc.
EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT WITH HIS OR HER OWN TAX
ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE PURCHASE,
OWNERSHIP AND SALE OF COMMON STOCK IN AN ENTITY ELECTING TO BE TAXED AS A REAL
ESTATE INVESTMENT TRUST, INCLUDING THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES
OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.
TAXATION OF THE COMPANY
GENERAL. The Company expects to continue to be taxed as a REIT for Federal
income tax purposes. Management believes that the Company was organized and has
operated in such a manner as to meet the requirements for qualification and
taxation as a REIT under the Internal Revenue Code of 1986, as amended (the
"Code"), and that the Company intends to continue to operate in such a manner.
No assurance, however, can be given that the Company will continue to operate in
a manner so as to remain qualified as a REIT.
In the opinion of Bose McKinney & Evans which has acted as counsel to the
Company ("Counsel"), assuming the Company was organized in conformity with and
has satisfied the requirements for qualification and taxation as a REIT under
the Code for each of its taxable years from and including the first year for
which the Company made the election to be taxed as a REIT, and the assumptions
and representations
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<PAGE>
referred to below are true, the proposed methods of operation of the Company,
the Operating Partnership and Duke Realty Services Limited Partnership (the
"Services Partnership") will permit the Company to continue to qualify to be
taxed as a REIT for its current and subsequent taxable years. This opinion is
based upon certain assumptions relating to the organization and operation of
Duke Services, Inc. ("DSI"), the Operating Partnership and the Services
Partnership and is conditioned upon certain representations made by Company
personnel and affiliates as to certain factual matters relating to the Company's
past operations and the intended manner of future operation of the Company, the
Operating Partnership, and the Services Partnership. The opinion is further
based upon the Company's receipt of a letter ruling from the IRS dated September
30, 1994, which concluded that the Company's and the Operating Partnership's
distributive shares of the gross income of the Services Partnership will be in
proportion to their respective percentage shares of the capital interests of the
partners of the Services Partnership. Counsel is not aware of any facts or
circumstances which are inconsistent with these assumptions and representations.
Unlike a tax ruling, an opinion of counsel is not binding upon the IRS, and no
assurance can be given that the IRS will not challenge the status of the Company
as a REIT for Federal income tax purposes. The Company's qualification and
taxation as a REIT has depended and will depend upon, among other things, the
Company's ability to meet on a continuing basis, through ownership of assets,
actual annual operating results, receipt of qualifying real estate income,
distribution levels and diversity of stock ownership, the various qualification
tests imposed under the Code discussed below. Counsel has not reviewed past
compliance with these tests and will not review compliance with these tests on a
periodic or continuing basis. Accordingly, no assurance can be given respecting
the satisfaction of such tests. See "Taxation of the Company -- Failure to
Qualify."
The following is a general summary of the Code sections which govern the
Federal income tax treatment of a REIT and its shareholders. These sections of
the Code are highly technical and complex. This summary is qualified in its
entirety by the applicable Code provisions, Treasury Regulations, and
administrative and judicial interpretations thereof as currently in effect.
If the Company qualifies for taxation as a REIT and distributes to its
shareholders at least 95% of its REIT taxable income, it generally is not
subject to Federal corporate income taxes on net income that it currently
distributes to shareholders. This treatment substantially eliminates the "double
taxation" (at the corporate and shareholder levels) that generally results from
investment in a corporation. However, the Company will be subject to Federal
income tax as follows: (i) the Company will be taxed at regular corporate rates
on any undistributed REIT taxable income, including undistributed net capital
gains; (ii) under certain circumstances, the Company may be subject to the
"alternative minimum tax" on its items of tax preference, if any; (iii) if the
Company has net income from prohibited transactions (which are, in general,
certain sales or other dispositions of property other than foreclosure property
held primarily for sale to customers in the ordinary course of business), such
income will be subject to a 100% tax; (iv) if the Company should fail to satisfy
the 75% gross income test or the 95% gross income test (as discussed below), and
has nonetheless maintained its qualification as a REIT because certain other
requirements have been met, it will be subject to a 100% tax on the gross income
attributable to the greater of the amount by which the Company fails the 75% or
95% test, multiplied by a fraction intended to reflect the Company's
profitability; (v) if the Company should fail to distribute during each calendar
year at least the sum of (1) 85% of its REIT ordinary income for such year; (2)
95% of its REIT capital gain net income for such year; and (3) any undistributed
taxable income from prior years, it would be subject to a 4% excise tax on the
excess of such required distribution over the amounts actually distributed; (vi)
if the Company has (1) net income from the sale or other disposition of
"foreclosure property" (which is, in general, property acquired by the Company
by foreclosure or otherwise on default on a loan secured by the property) which
is held primarily for sale to customers in the ordinary course of business; or
(2) other non-qualifying income from foreclosure property, it will be subject to
tax on such income at the highest corporate rate; and (vii) if the Company
acquires any asset from a C corporation (I.E., generally a corporation subject
to tax at the corporate level) in a transaction in which the basis of the asset
in the Company's hands is determined by reference to the basis of the asset (or
any other property) in the hands of the C corporation, and the Company
recognizes gain on the disposition of such asset during the 10-year period (the
"Restriction Period") beginning on the date on which such asset was
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<PAGE>
acquired by the Company, then, pursuant to guidelines issued by the IRS, the
excess of the fair market value of such property at the beginning of the
applicable Restriction Period over the Company's adjusted basis in such asset as
of the beginning of such Restriction Period will be subject to a tax at the
highest regular corporate rate. The results described above with respect to the
recognition of built-in gain assume that the Company will make an election
pursuant to IRS Notice 88-19 or applicable future administrative rules or
Treasury Regulations.
REQUIREMENTS FOR QUALIFICATION. The Code defines a REIT as a corporation,
trust or association: (1) which is managed by one or more trustees or directors;
(2) the beneficial ownership of which is evidenced by transferable shares or by
transferable certificates of beneficial interest; (3) which would be taxable as
a domestic corporation but for Sections 856 through 859 of the Code; (4) which
is neither a financial institution nor an insurance company subject to certain
provisions of the Code; (5) which has the calendar year as its taxable year; (6)
the beneficial ownership of which is held by 100 or more persons; (7) during the
last half of each taxable year not more than 50% in value of the outstanding
stock of which is owned, directly or indirectly, by five or fewer individuals
(as defined in the Code to include certain entities); and (8) which meets
certain income and assets tests, described below. The Company believes it
currently satisfies requirements (1) through (7).
INCOME TESTS. In order to qualify as a REIT, there are three gross income
tests that must be satisfied annually. First, at least 75% of the Company's
gross income (excluding gross income from prohibited transactions) for each
taxable year must be derived directly or indirectly from investments relating to
real property (including "rents from real property," gain from the sale of real
property and, in certain circumstances, interest) or from qualified types of
temporary investments. Second, at least 95% of the Company's gross income
(excluding gross income from prohibited transactions) for each taxable year must
be derived from the same items which qualify under the 75% income test or from
dividends, interest and gain from the sale or disposition of stock or
securities, or from any combination of the foregoing. Third, less than 30% of
the Company's gross income (including gross income from prohibited transactions)
must be derived from gain in connection with the sale or other disposition of
stock or securities held for less than one year, property in a prohibited
transaction, and real property held for less than four years (other than
involuntary conversions and foreclosure property).
Rents received by the Company will qualify as "rents from real property" in
satisfying the gross income tests for a REIT described above only if several
conditions (related to the relationship of the tenant to the Company, the method
of determining the rent payable and nature of the property leased) are met. The
Company does not anticipate receiving rents in excess of a de minimis amount
that fail to meet these conditions. Finally, for rents received to qualify as
"rents from real property," the Company generally must not operate or manage the
property or furnish or render services to tenants, other than through an
"independent contractor" that is adequately compensated and from whom the
Company derives no income; provided, however, that the Company may perform
services "usually or customarily rendered" in connection with the rental of
space for occupancy only and not otherwise considered "rendered to the occupant"
("Permissible Services").
The Company provides certain management, development, construction and other
tenant-related services (collectively, "Real Estate Services") with respect to
the Properties through the Operating Partnership, which is not an independent
contractor. Management believes that the material services provided to tenants
by the Operating Partnership are Permissible Services. To the extent services to
tenants do not constitute Permissible Services, such services are performed by
an independent contractor.
The Company derives a portion of its income from the Operating Partnership's
interest as a limited partner in the Services Partnership and its ownership of
DSI which is a general partner of the Services Partnership. The Services
Partnership receives fees for Real Estate Services with respect to properties
that are not owned directly by the Operating Partnership, which fees will not
qualify as rents from real property. In addition, the Services Partnership
receives fees in consideration for the performance of management and
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<PAGE>
administrative services with respect to Properties not entirely owned by the
Operating Partnership. All or a portion of such management and administrative
fees will also not qualify as "rents from real property" for purposes of the 75%
or 95% gross income tests. Pursuant to Treasury Regulations, a partner's capital
interest in a partnership determines its proportionate interest in the
partnership's gross income from partnership assets for purposes of the 75% and
95% gross income tests. For this purpose, the capital interest of a partner is
determined by dividing its capital account by the sum of all partners' capital
accounts. Presently, the Operating Partnership's capital interest in the
Services Partnership is 9% and DSI's capital interest in the Services
Partnership is 1%. The partnership agreement of the Services Partnership
provides, however, for varying allocations of income which differ from capital
interests, subject to certain limitations on the aggregate amount of gross
income which may be allocated to the Operating Partnership and DSI. The Company
has obtained a letter ruling from the IRS that allocations according to capital
interests are proper for applying the 75% and 95% gross income tests. Thus, for
purposes of these gross income tests, at present the Services Partnership
allocates 9% of its gross income to the Operating Partnership and 1% to DSI.
Although certain of the Real Estate Services fees allocated from the Services
Partnership do not qualify under the 75% or 95% gross income tests as "rents
from real property," the Company believes that, at least presently and in the
near term, the aggregate amount of such fees (and any other non- qualifying
income) allocated to the Company in any taxable year will not cause the Company
to exceed the limits on non-qualifying income under the 75% or 95% gross income
tests described above.
If the Company fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a REIT for such year
if it is entitled to relief under certain provisions of the Code. It is not
possible, however, to state whether in all circumstances the Company would be
entitled to the benefit of these relief provisions. Even if these relief
provisions apply, a tax would be imposed on certain excess net income.
ASSET TESTS. In order for the Company to maintain its qualification as a
REIT, at the close of each quarter of its taxable year, it must also satisfy
three tests relating to the nature of its assets. First, at least 75% of the
value of the Company's total assets must be represented by "real estate assets,"
cash, cash items, and government securities. Second, not more than 25% of the
Company's total assets may be represented by securities other than those in the
75% assets class. Third, of the assets held in securities other than those in
the 75% assets class, the value of any one issuer's securities owned by the
Company may not exceed 5% of the value of the Company's total assets, and the
Company may not own more than 10% of any one issuer's outstanding voting
securities (excluding securities of a qualified REIT subsidiary [as defined in
the Code] or another REIT).
The Company is deemed to directly hold its proportionate share of all real
estate and other assets of the Operating Partnership and should be considered to
hold its proportionate share of all assets deemed owned by the Operating
Partnership and DSI through their ownership of partnership interests in the
Services Partnership and other partnerships. As a result, management believes
that more than 75% of the Company's assets are real estate assets. In addition,
management does not expect the Company to hold (1) any securities representing
more than 10% of any one issuer's voting securities other than DSI, which is a
qualified REIT subsidiary, nor (2) securities of any one issuer exceeding 5% of
the value of the Company's gross assets (determined in accordance with generally
accepted accounting principles).
ANNUAL DISTRIBUTION REQUIREMENTS. The Company, in order to qualify as a
REIT, generally must distribute dividends (other than capital gain dividends) to
its shareholders in an amount at least equal to (A) the sum of (i) 95% of the
Company's "REIT taxable income" (computed without regard to the dividends paid
deduction and the Company's net capital gain), and (ii) 95% of the net income
(after tax), if any, from foreclosure property, minus (B) the sum of certain
items of non-cash income. In addition, if the Company disposes of any asset
during its Restriction Period, the Company will be required to distribute at
least 95% of the built-in gain (after tax), if any, recognized on the
disposition of such asset. Such distributions must be paid in the taxable year
to which they relate, or in the following taxable year if declared before the
Company timely files its tax return for such year and if paid on or before the
first regular dividend payment after such
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<PAGE>
declaration. To the extent that the Company does not distribute all of its net
capital gain or distributes at least 95%, but less than 100%, of its "REIT
taxable income," as adjusted, it will be subject to tax on the undistributed
amount at regular capital gains and ordinary corporate tax rates. Furthermore,
if the Company should fail to distribute during each calendar year at least the
sum of (i) 85% of its REIT ordinary income for such year, (ii) 95% of its REIT
net capital gain income for such year, and (iii) any undistributed taxable
income from prior periods, the Company will be subject to regular capital gains
and ordinary corporate tax rates on undistributed income and also may be subject
to a 4% excise tax on undistributed income in certain events. The Company
believes that it has made and intends to continue to make timely distributions
sufficient to satisfy the annual distribution requirements. In this regard, the
partnership agreement of the Operating Partnership authorizes the Company, as
general partner, to take such steps as may be necessary to cause the Operating
Partnership to distribute to its partners an amount sufficient to permit the
Company to meet these distribution requirements. It is possible, however, that
the Company, from time to time, may not have sufficient cash or other liquid
assets to meet the 95% distribution requirement due primarily to the expenditure
of cash for nondeductible expenses such as principal amortization or capital
expenditures. In such event, the Company may borrow or may cause the Operating
Partnership to arrange for short-term or other borrowing to permit the payment
of required dividends or pay dividends in the form of taxable stock dividends.
If the amount of nondeductible expenses exceeds non-cash deductions, the
Operating Partnership may refinance its indebtedness to reduce principal
payments and borrow funds for capital expenditures.
FAILURE TO QUALIFY. If the Company fails to qualify for taxation as a REIT
in any taxable year, the Company will be subject to tax (including any
applicable corporate alternative minimum tax) on its taxable income at regular
corporate rates. Unless entitled to relief under specific statutory provisions,
the Company also will be disqualified from taxation as a REIT for the four
taxable years following the year during which qualification was lost. It is not
possible to state whether in all circumstances the Company would be entitled to
such statutory relief.
OTHER TAX CONSIDERATIONS
EFFECT OF TAX STATUS OF OPERATING PARTNERSHIP AND SERVICES PARTNERSHIP AND
OTHER PARTNERSHIPS ON REIT QUALIFICATION. All of the Company's investments are
through DSI and the Operating Partnership, which in turn hold interests in other
partnerships, including the Services Partnership. The Company believes that the
Operating Partnership, and each other partnership in which it holds an interest,
is properly treated as a partnership for tax purposes (and not as an association
taxable as a corporation). If, however, the Operating Partnership were treated
as an association taxable as a corporation, the Company would cease to qualify
as a REIT. If the Services Partnership or any of the other partnerships were
treated as an association taxable as a corporation and the Operating
Partnership's interest in such partnership exceeded 10% of the partnership's
voting interests or the value of such interest exceeded 5% of the value of the
Company's assets, the Company would cease to qualify as a REIT. Furthermore, in
such a situation, any partnerships treated as a corporation would be subject to
corporate income taxes, and distributions from any such partnership to the
Company would be treated as dividends, which are not taken into account in
satisfying the 75% gross income test described above and which therefore could
make it more difficult for the Company to meet the 75% asset test described
above.
TAX ALLOCATIONS WITH RESPECT TO THE PROPERTIES. The Operating Partnership
was formed by way of contributions of appreciated property (including certain of
the Properties) to the Operating Partnership. When property is contributed to a
partnership in exchange for an interest in the partnership, the partnership
generally takes a carryover basis in that property for tax purposes equal to the
adjusted basis of the contributing partner in the property, rather than a basis
equal to the fair market value of the property at the time of contribution (this
difference is referred to as "Book-Tax Difference"). The partnership agreement
of the Operating Partnership requires allocations of income, gain, loss and
deduction with respect to a contributed Property be made in a manner consistent
with the special rules of Section 704(c) of the Code and the regulations
thereunder, which will tend to eliminate the Book-Tax Differences with respect
to the contributed Properties over the life of the Operating Partnership.
However, because of certain technical
S-46
<PAGE>
limitations, the special allocation rules of Section 704(c) may not always
entirely eliminate the Book-Tax Differences on an annual basis or with respect
to a specific taxable transaction such as a sale. Thus, the carryover basis of
the contributed Properties in the hands of the Operating Partnership could cause
the Company (i) to be allocated lower amounts of depreciation and other
deductions for tax purposes than would be allocated to the Company if all
Properties were to have a tax basis equal to their fair market value at the time
of contribution, and (ii) possibly to be allocated taxable gain in the event of
a sale of such contributed Properties in excess of the economic or book income
allocated to the Company as a result of such sale. The foregoing principles also
apply in determining the earnings and profits of the Company for purposes of
determining the portion of distributions taxable as dividend income. The
application of these rules over time may result in a higher portion of
distributions being taxed as dividends than would have occurred had the Company
purchased its interests in the Properties at their agreed values.
STATE AND LOCAL TAXES. The Company or its shareholders or both may be
subject to state, local or other taxation in various state, local or other
jurisdictions, including those in which they transact business or reside. The
tax treatment in such jurisdictions may differ from the Federal income tax
consequences discussed above.
FOREIGN SHAREHOLDERS. The rules governing United States income taxation of
nonresident alien individuals, foreign corporations, foreign partnerships, and
foreign trust and estates (collectively, "Non-U.S. Shareholders") are quite
complex. Certain distributions paid by the Company to Non-U.S. Shareholders will
be subject to U.S. tax withholding. Prospective Non-U.S. Shareholders should
consult with their own tax advisors to determine the impact of Federal, state
and local income tax laws on an investment in the Company, and to determine
their reporting requirements, if any.
S-47
<PAGE>
UNDERWRITING
Subject to the terms and conditions contained in the underwriting agreement
(the "Underwriting Agreement"), the Company has agreed to sell to each of the
Underwriters named below, and each of the Underwriters for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Alex. Brown & Sons Incorporated, Dean
Witter Reynolds Inc., A.G. Edwards & Sons, Inc. and McDonald & Company
Securities, Inc. are acting as representatives (the "Representatives") has
severally agreed to purchase, the respective number of shares of Common Stock
set forth below opposite their respective names. The Underwriting Agreement
provides that the obligations of the Underwriters are subject to certain
conditions precedent and that the Underwriters will be obligated to purchase all
of the shares of Common Stock if any are purchased.
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERWRITER OF COMMON STOCK
- --------------------------------------------------------------------------- -----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.....................................................
Alex. Brown & Sons Incorporated............................................
Dean Witter Reynolds Inc...................................................
A.G. Edwards & Sons, Inc...................................................
McDonald & Company Securities, Inc.........................................
-----------------
Total............................................................ 2,500,000
-----------------
-----------------
</TABLE>
The Representatives have advised the Company that the Underwriters propose
initially to offer the Common Stock to the public at the public offering price
set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less a concession not in excess of $ per share. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $ per share on sales to certain other dealers. After the Offering, the
public offering price, concession and discounts may be changed.
The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus Supplement, to purchase up
to an aggregate of 375,000 additional shares of Common Stock at the price to the
public set forth on the cover page to this Prospectus Supplement, less the
underwriting discount. The Underwriters may exercise this option only to cover
over-allotments, if any. To the extent that the Underwriters exercise this
option, each Underwriter will be obligated, subject to certain conditions, to
purchase the number of additional shares of Common Stock proportionate to such
Underwriter's initial amount reflected in the foregoing table.
The Company and the executive officers of the Company and the Directors have
agreed that for a period of 90 days from the date of this Prospectus Supplement
they will not, without prior and written consent of the Representatives, offer,
sell or otherwise dispose of any shares of Common Stock or any security
convertible into or exercisable for shares of Common Stock (except pursuant to
the Company's Stock Option or Dividend Reinvestment Plans and certain other
agreements).
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments the Underwriters may be required to make in respect
thereof.
LEGAL MATTERS
In addition to the legal opinions referred to under "Legal Opinions" in the
accompanying Prospectus, the description of Federal income tax matters contained
in this Prospectus Supplement entitled "Federal Income Tax Considerations" is
based upon the opinion of Bose McKinney and Evans.
S-48
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS SUPPLEMENT OR IN THE PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
-------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Supplement Summary..................... S-3
The Company....................................... S-9
Recent Developments............................... S-12
Use of Proceeds................................... S-15
Price Range of Common Stock and Dividend
History.......................................... S-16
Capitalization.................................... S-17
Selected Consolidated Financial Data.............. S-18
Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. S-19
Properties........................................ S-23
Management........................................ S-41
Federal Income Tax Considerations................. S-42
Underwriting...................................... S-48
Legal Matters..................................... S-48
PROSPECTUS
Available Information............................. 2
Incorporation of Certain Documents by Reference... 2
The Company....................................... 3
Use of Proceeds................................... 3
Ratios of Earnings to Fixed Charges............... 3
Description of Debt Securities.................... 4
Description of Preferred Stock.................... 14
Description of Common Stock....................... 20
Plan of Distribution.............................. 21
Legal Opinions.................................... 22
Experts........................................... 22
</TABLE>
2,500,000 SHARES
[LOGO]
COMMON STOCK
-------------------
PROSPECTUS SUPPLEMENT
-------------------
MERRILL LYNCH & CO.
ALEX. BROWN & SONS
INCORPORATED
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
MCDONALD & COMPANY
SECURITIES, INC.
MAY , 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
APPENDIX
Inside front cover page of Prospectus Supplement:
On the inside front cover page of the Prospectus Supplement is graphic
material entitled "Duke Realty Investments Principal Markets" consisting of
(1) a map of the continental United States on which the states of Missouri,
Wisconsin, Illinois, Michigan, Indiana, Kentucky, Tennessee and Ohio are
shaded and (2) a larger map of such states on which the city of Indianapolis,
Indiana is shown as the Corporate Headquarters; the cities of Decatur,
Illinois, Detroit, Michigan, St. Louis, Missouri, Columbus, Ohio, Cincinnati,
Ohio and Nashville, Tennessee are shown as Regional Office locations; and
the cities of Milwaukee, Wisconsin, St. Louis, Missouri, Bloomington, Illinois,
Champaign, Illinois, Decatur, Illinois, Indianapolis, Indiana, Nashville,
Tennessee, Detroit, Michigan, Fort Wayne, Indiana, Columbus, Ohio, Dayton,
Ohio, Cincinnati, Ohio and Covington, Kentucky are shown as Duke Markets.
Inside back cover page of Prospectus Supplement:
On the inside back cover page of the Prospectus Supplement are five
color photographs, as follows:
(1) An aerial photograph of a business park, captioned "Park 100
Business Park - Indianapolis, Indiana"
(2) An aerial photograph of a building captioned "Park 100
Business Park, Indianapolis, Indiana, Silver Burdett Ginn
(Building 96) (Completed January 1995)"
(3) A photograph of a building captioned "Greenbriar Business Park,
Nashville, Tennessee (Acquired November 1994)
(4) A photograph of a building captioned Galyan's, Columbus, Ohio
(Completed October 1994)
(5) A photograph of a building captioned "The Corporate Park at
Tuttle Crossing, Columbus, Ohio Sterling Software (Completed
April 1995)
