<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
{X} Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee Required) for the fiscal year ended
December 31, 1994
or
{ } Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required) for the transition period from
___________ to ___________
Commission file number 1-9044
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DUKE REALTY INVESTMENTS, INC.
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(Exact name of registrant as specified in its charter)
Indiana 35-1740409
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8888 Keystone Crossing, Suite 1200
Indianapolis, Indiana 46250
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(Address of principal executive offices) (Zip Code)
(317) 846-4700
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class: which registered:
Common Stock ($.01 par value) New York Stock Exchange
------------------------------------- --------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
-------------------------------------------------------------------------------
(Title of Class)
-------------------------------------------------------------------------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ____
The aggregate market value of the voting shares of the Registrant's outstanding
shares held by non-affiliates of the Registrant is $540,385,853 based on the
last reported sale price on March 8, 1995.
The number of shares outstanding as of March 8, 1995 was 20,391,919.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement dated March 17, 1995 of the Registrant, filed
pursuant to Regulation 14A, are incorporated by reference in Part III of this
Annual Report on Form 10-K.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
Regulation S-K is not contained herein, and will not be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )
<PAGE>
TABLE OF CONTENTS
FORM 10-K
Item No. Page(s)
-------- -------
PART I
1. Business . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Properties . . . . . . . . . . . . . . . . . . . . . . . 1 - 7
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 7
4. Submission of Matters to a Vote of Security Holders. . . 7
PART II
5. Market for the Registrant's Common Stock and Related
Security Holder Matters. . . . . . . . . . . . . . . . 7 - 8
6. Selected Financial Data. . . . . . . . . . . . . . . . . 8
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . 9 - 14
8. Financial Statements and Supplementary Data. . . . . . . 14
9. Changes in and Disagreements with Accountants and
Financial Disclosure . . . . . . . . . . . . . . . . . 14
PART III
10. Directors and Executive Officers of the Registrant . . . 14 - 16
11. Executive Compensation . . . . . . . . . . . . . . . . . 16
12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . 6
13. Certain Relationships and Related Transactions . . . . . 17
PART IV
14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K . . . . . . . . . . . . . . . . . . . . . . . 17 - 37
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 - 39
Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 - 41
<PAGE>
PART I
ITEM 1. BUSINESS
Duke Realty Investments, Inc. (the "Company") is a self-administered, self-
managed and fully integrated UPREIT ("Umbrella Partnership Real Estate
Investment Trust") engaged in the long term ownership and operation of high
quality real estate. It began operations through a predecessor in 1972. As of
December 31, 1994, the Company owned a diversified portfolio of 128 income-
producing industrial, office and retail properties (the "Properties"),
encompassing approximately 12.9 million square feet leased to approximately
1,100 tenants located primarily in eight states, and 9 buildings encompassing
approximately 2.4 million square feet currently under development. The Company
also owns approximately 930 acres of unencumbered land for future development,
of which approximately 80% is zoned for industrial use. The land is primarily
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 other third parties which total approximately
12.0 million square feet. The Company is one of the largest real estate
companies in the midwest and has the largest commercial real estate operations
in Indianapolis and Cincinnati. The Company's Midwest properties benefit from
above-average economic growth in the region and high occupancy levels.
The Company has developed almost 40 million square feet of commercial property
since its founding. 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 five years, the Company developed an average of
approximately 2.0 million square feet per year. The Company was reorganized in
October 1993 (the "Reorganization"). From the completion of its Reorganization
through December 31, 1994, the Company completed development of 1.3 million
square feet and acquired 900,000 square feet of commercial properties. Also,
the Company has under development approximately 2.4 million square feet of
commercial space that is 82% pre-leased which is expected to be completed in
1995.
The Company manages approximately 27 million square feet of property, including
12 million square feet owned by third parties. In addition to providing services
to approximately 1,100 tenants in the Properties, the Company provides such
services to over 1,200 tenants in approximately 150 properties owned by others.
For additional information regarding the Company's investments and operations,
see Item 7, Management's Discussion and Analysis of Financial Condition and
results of Operations and Item 8, Financial Statements and Supplementary Data.
ITEM 2. PROPERTIES
The Company owns a diversified portfolio of 137 commercial properties
encompassing approximately 15.3 million net rentable square feet located
primarily in eight states and approximately 930 acres of land for future
development. (See Notes 4 and 5 to Financial Statements, Item 8 hereof.) The
properties are described below.
- 1 -
<PAGE>
<TABLE>
<CAPTION>
PERCENT
LEASED AT
NAME/ OWNERSHIP COMPANY'S YEAR LAND AREA NET RENTABLE DECEMBER 31,
LOCATION INTEREST OWNERSHIP DEVELOPED (ACRES) AREA (SQ.FT.) 1994 (1)
-------- --------- --------- --------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
INDUSTRIAL
Indianapolis, Indiana
PARK 100
BUSINESS PARK
Building 38 Fee 100% 1978 1.11 6,000 100%
Building 43 Fee 100% 1971 2.07 26,871 100%
Building 74 Fee 10%-50% (2) 1988 12.41 257,400 100%
Building 76 Fee 10%-50% (2) 1988 5.10 81,695 100%
Building 77 Fee 100% 1988 7.96 193,400 100%
Building 78 Fee 10%-50% (2) 1988 21.80 512,777 100%
Building 79 Fee 100% 1988 4.47 66,000 94%
Building 80 Fee 100% 1988 4.47 66,000 100%
Building 83 Fee 100% 1989 5.34 96,000 100%
Building 84 Fee 100% 1989 5.34 96,000 100%
Building 85 Fee 10%-50% (2) 1989 9.70 180,100 100%
Building 87 Fee 10%-50% (2) 1989 14.20 350,000 100%
Building 89 Fee 10%-50% (2) 1990 11.28 311,600 100%
Building 91 Fee 10%-50% (2) 1990 7.53 144,000 100%
Building 92 Fee 10%-50% (2) 1991 4.38 45,917 100%
Building 95 Fee 100% 1993 15.23 336,000 100%
Building 96 Fee 100% 1994 27.25 553,900 100%
Building 98 Fee 100% 1968 37.34 503,900 84%
Building 109 Fee 100% 1985 4.80 46,000 100%
Building 117 Fee 10%-50% (2) 1988 13.36 135,600 87%
Building 120 Fee 10%-50% (2) 1989 4.54 54,982 100%
Building 122 Fee 100% 1990 6.17 73,274 100%
Building 125 Fee 100% 1994 7.80 98,000 100%
Building 126 Fee 100% 1984 4.04 60,100 86%
SHADELAND STATION
Buildings 204 & 205 Fee 100% 1984 4.09 48,600 93%
HUNTER CREEK
BUSINESS PARK
Building 1 Fee 10%-50% (2) 1989 5.97 86,500 100%
Building 2 Fee 10%-50% (2) 1989 8.86 202,560 100%
HILLSDALE TECHNECENTER
Building 4 Fee 100% 1987 7.85 73,874 88%
Building 5 Fee 100% 1987 5.44 67,500 100%
Building 6 Fee 100% 1987 4.25 64,000 100%
Carmel, Indiana
HAMILTON CROSSING
Building 1 Fee 100% 1989 4.70 51,825 93%
Greenwood, Indiana
SOUTH PARK
BUSINESS CENTER
Building 2 Fee 100% 1990 7.10 86,806 98%
Cincinnati, Ohio
PARK 50 TECHNECENTER
Building 20 Fee 100% 1987 8.37 96,000 100%
Building 25 Fee 100% 1989 12.20 78,328 89%
GOVERNOR'S POINTE
4700 Building Fee 100% 1987 5.51 76,400 92%
4800 Building Fee 100% 1989 7.07 80,000 92%
4900 Building Fee 100% 1987 9.41 76,400 99%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PERCENT
LEASED AT
NAME/ OWNERSHIP COMPANY'S YEAR LAND AREA NET RENTABLE DECEMBER 31,
LOCATION INTEREST OWNERSHIP DEVELOPED (ACRES) AREA (SQ.FT.) 1994 (1)
-------- --------- --------- --------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
WORLD PARK
Building 5 Fee 100% 1987 5.00 57,900 75%
Building 6 Fee 100% 1987 7.26 92,400 100%
Building 7 Fee 100% 1987 8.63 96,000 100%
Building 8 Fee 100% 1989 14.60 192,000 100%
Building 9 Fee 100% 1989 4.47 58,800 93%
Building 11 Fee 100% 1989 8.98 96,000 100%
Building 14 Fee 100% 1989 8.91 166,400 100%
Building 15 Fee 100% 1990 6.50 93,600 100%
Building 16 Fee 100% 1989 7.00 93,600 100%
ENTERPRISE
BUSINESS PARK
Building A Fee 100% 1990 7.52 87,400 95%
Building B Fee 100% 1990 7.52 84,940 93%
TRI-COUNTY
BUSINESS PARK
Xetron Fee 10% (3) 1994 29.00 100,193 100%
OTHER INDUSTRIAL -
CINCINNATI
U.S. Post Office
Building Fee 40% (4) 1992 2.60 57,886 100%
Columbus, Ohio
Pet Foods
Distribution Building Fee 100% 1993 6.06 252,000 100%
MBM Building Fee 100% 1978 3.98 83,000 100%
Hebron, Kentucky
SOUTHPARK BUSINESS
CENTER
Building 1 Fee 100% 1990 7.90 96,000 100%
Building 3 Fee 100% 1991 10.79 192,000 73%
CR Services Fee 100% 1994 22.50 214,840 100%
Redken Laboratories Fee 100% 1994 19.00 166,400 100%
Decatur, Illinois
PARK 101
BUSINESS CENTER
Building 3 Fee 100% 1979 5.76 75,600 77%
Building 8 Fee 100% 1980 3.16 50,400 84%
Nashville, Tennessee
HAYWOOD OAKS
TECHNECENTER
Building 2 Fee 100% 1988 2.94 50,400 100%
Building 3 Fee 100% 1988 2.94 52,800 100%
Building 4 Fee 100% 1988 5.23 46,800 100%
Building 5 Fee 100% 1988 5.23 60,300 96%
Building 6 Fee 100% 1989 10.53 113,400 100%
Greenbriar Business Park Fee 100% 1986 10.73 134,759 88%
Milwaukee, Wisconsin
Music Box Building Fee 33% (5) 1993 8.90 153,600 100%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PERCENT
LEASED AT
NAME/ OWNERSHIP COMPANY'S YEAR LAND AREA NET RENTABLE DECEMBER 31,
LOCATION INTEREST OWNERSHIP DEVELOPED (ACRES) AREA (SQ.FT.) 1994 (1)
-------- --------- --------- --------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
OFFICE
Indianapolis, Indiana
PARK 100
BUSINESS PARK
Building 34 Fee 100% 1979 2.00 22,272 89%
Building 116 Fee 100% 1988 5.28 35,700 100%
Building 118 Fee 100% 1988 6.50 35,700 100%
Building 119 Fee 100% 1989 6.50 53,300 100%
CopyRite Building Fee 50% (6) 1992 3.88 48,000 100%
WOODFIELD AT THE
CROSSING
Two Woodfield Crossing Fee 100% 1987 7.50 117,818 92%
Three Woodfield Crossing Fee 100% 1989 13.30 259,777 95%
PARKWOOD CROSSING
Parkwood I Fee 50% (7) 1990 5.93 108,281 97%
SHADELAND STATION
7240 Shadeland Station Fee 67% (8) 1985 2.14 45,585 94%
7330 Shadeland Station Fee 100% 1988 4.50 42,619 100%
7340 Shadeland Station Fee 100% 1989 2.50 32,235 100%
7351 Shadeland Station Fee 100% 1983 2.14 27,740 100%
7369 Shadeland Station Fee 100% 1989 2.20 15,551 100%
7400 Shadeland Station Fee 100% 1990 2.80 49,544 98%
KEYSTONE AT THE CROSSING
F.C. Tucker Building (9) Fee/Ground Lease 100% 1978 N/A 4,840 100%
3520 Commerce
Crossing (10) Ground/Bldg.Lease 100% 1976 N/A 30,000 100%
Carmel, Indiana
CARMEL MEDICAL CENTER
Building I (11) Fee/Ground Lease 100% 1985 N/A 40,060 100%
Building II (11) Fee/Ground Lease 100% 1989 N/A 39,973 100%
Greenwood, Indiana
SOUTH PARK BUSINESS
CENTER
Building 1 Fee 100% 1989 5.40 39,715 91%
Building 3 Fee 100% 1990 3.25 35,900 100%
Cincinnati, Ohio
GOVERNOR'S HILL
8600 Governor's Hill Fee 100% 1986 10.79 200,584 88%
8700 Governor's Hill Fee 100% 1985 4.98 58,617 100%
8790 Governor's Hill Fee 100% 1985 5.00 58,177 63%
8800 Governor's Hill Fee 100% 1985 2.13 28,700 100%
GOVERNOR'S POINTE
4605 Governor's Pointe Fee 100% 1990 8.00 175,485 100%
4705 Governor's Pointe Fee 100% 1988 7.50 140,984 19%
4770 Governor's Pointe Fee 100% 1986 4.50 76,037 79%
PARK 50 TECHNECENTER
SDRC Building Fee 100% 1991 13.00 221,215 100%
400 TechneCenter Drive Fee 100% 1985 8.19 70,644 90%
DOWNTOWN CINCINNATI
311 Elm Street (12) Ground/Bldg. Lease 100% 1902/1986 (13) N/A 90,127 100%
312 Plum Street Fee 100% 1987 .69 230,000 82%
312 Elm Street (14) Fee/Ground Lease 100% 1992 1.10 378,000 87%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PERCENT
LEASED AT
NAME/ OWNERSHIP COMPANY'S YEAR LAND AREA NET RENTABLE DECEMBER 31,
LOCATION INTEREST OWNERSHIP DEVELOPED (ACRES) AREA (SQ.FT.) 1994 (1)
-------- --------- --------- --------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
KENWOOD COMMONS
Building I Fee 50% (15) 1986 2.09 46,470 99%
Building II Fee 50% (15) 1986 2.09 46,434 94%
OTHER OFFICE -
CINCINNATI
Triangle Office Park Fee 100% 1965/1985 (16) 15.64 172,650 83%
Fidelity Drive Building Fee 100% 1972 8.34 38,000 100%
Tri-County Office Park Fee 100% 1971, 1973,1982 (17) 11.27 102,166 67%
Columbus, Ohio
THE CORPORATE PARK
AT TUTTLE CROSSING
4600 Lakehurst Fee 100% 1990 7.66 106,300 100%
4650 Lakehurst Fee 100% 1990 13.00 164,639 100%
5555 Parkcenter Fee 100% 1992 6.09 83,971 100%
4700 Lakehurst Fee 100% 1994 3.86 49,600 98%
Veterans Administration
Clinic Fee 100% 1994 4.98 118,000 100%
Livonia, Michigan
SEVEN MILE CROSSING
38705 Seven Mile (18) Fee/Ground Lease 100% 1988 N/A 113,066 97%
38701 Seven Mile (18) Fee/Ground Lease 100% 1989 N/A 132,153 98%
RETAIL
Indianapolis, Indiana
PARK 100
BUSINESS PARK
Woodland Shoppes
Building 121 Fee 100% 1989 2.27 19,716 70%
Park 100 Retail Center Fee 100% 1978 .82 14,504 79%
CASTLETON CORNER
Michael's Plaza Fee 100% 1984 4.50 46,374 100%
Cub Plaza Fee 100% 1986 6.83 60,136 96%
Fort Wayne, Indiana
Coldwater Crossing Fee 100% 1990 35.38 246,365 98%
Greenwood, Indiana
GREENWOOD CORNER
First Indiana Bank
Branch Fee 100% 1988 1.00 2,400 100%
Greenwood Corner
Shoppes Fee 100% 1986 7.45 50,840 100%
Dayton, Ohio
Sugarcreek Plaza Fee 100% 1988 17.46 77,940 98%
Cincinnati, Ohio
Governor's Plaza Fee 100% 1990 35.00 181,493 100%
King's Mall Shopping
Center I Fee 100% 1990 5.68 52,661 83%
King's Mall Shopping
Center II Fee 100% 1988 8.90 67,725 100%
Steinberg's Fee 100% 1993 1.90 21,008 100%
Park 50 Plaza Fee 100% 1989 2.20 18,000 42%
Kohl's Fee 100% 1994 12.00 80,684 100%
Sports Unlimited Fee 100% 1994 7.00 67,148 100%
Ellisville, Missouri
Ellisville, Plaza Fee 100% 1987 3.70 32,754 96%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PERCENT
LEASED AT
NAME/ OWNERSHIP COMPANY'S YEAR LAND AREA NET RENTABLE DECEMBER 31,
LOCATION INTEREST OWNERSHIP DEVELOPED (ACRES) AREA (SQ.FT.) 1994 (1)
-------- --------- --------- --------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Bloomington, Illinois
Lakewood Plaza
Shopping Center Fee 100% 1987 11.23 84,410 91%
Champaign, Illinois
Market View Fee 100% 1985 8.50 86,553 90%
Livonia, Michigan
Cooker Restaurant Ground Lease (19) 100% N/A N/A N/A 100%
Columbus, Ohio
Galyans Trading
Company Fee 100% 1994 4.90 74,636 100%
INDUSTRIAL - UNDER
CONSTRUCTION
Indianapolis, Indiana
PARK 100
BUSINESS PARK
Building 97 Fee 100% 1994 12.30 280,800 79%
Building 99 Fee 50% 1994 18.00 364,800 42%
Cincinnati, Ohio
WORLD PARK
MicroAge Fee 100% 1994 15.10 304,000 100%
OFFICE - UNDER
CONSTRUCTION
Columbus, Ohio
TUTTLE CROSSING
Sterling Software Fee 100% 1994 3.33 57,660 100%
John Alden Fee 100% 1994 6.51 101,200 100%
Cardinal Health Fee 100% 1994 9.00 124,101 0% (20)
Miami, Florida
John Alden Fee 100% 1994 7.81 251,316 100%
MEDICAL OFFICE -
UNDER CONSTRUCTION
Greenwood, Indiana
St. Francis Medical
Building Fee/Ground Lease(21) 100% 1994 N/A 95,579 56%
</TABLE>
(1) Includes space leased, even if not occupied, as of December 31, 1994.
(2) These buildings are 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.
(3) The Company owns a 10% interest in this building as a limited partner and
shares in the cash flow from the building in accordance with such
ownership interest.
(4) This building is owned by a limited partnership in which the Company has a
1% general partnership interest and a 39% limited partnership interest.
The Company shares in the cash flow from such building in accordance with
the Company's ownership interest.
(5) The Company owns a 33.33% interest in this building as a limited partner
and shares in the cash flow from the building in accordance with such
ownership interest.
(6) The Company owns a 50% general partnership interest in this building with
the other 50% being owned by the tenant in the building. The Company
shares in the cash flow from the building in accordance with such
partnership interest.
(7) This building is 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.
- 6 -
<PAGE>
(8) The Company owns a 66.67% general partnership interest in the partnership
owning this building. The remaining interest is owned by a former tenant
in the building. The Company shares in the cash flow of this building in
accordance with the Company's partnership interest.
(9) The Company has a leasehold interest in the land underlying this building
with a lease term expiring October 31, 2067.
(10) The Company has a leasehold interest in the land underlying this building
with a lease term expiring May 9, 2006.
(11) The Company owns these buildings and has a leasehold interest in the land
underlying these buildings, with the lease term expiring November 16, 2043.
(12) 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.
(13) This building was renovated in 1986.
(14) 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.
(15) These buildings are owned by Kenwood Office Associates, a partnership in
which the Company has a 50% general partnership interest. The Company
shares in the cash flow from such buildings in accordance with the
Company's ownership interest.
(16) This building was renovated in 1985.
(17) Tri-County Office Park has four buildings. One was built in 1971, two were
built in 1973, and one was built in 1982.
(18) 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.
(19) 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.
(20) Subsequent to December 31, 1994, a lease to occupy 100% of the property was
executed.
(21) 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.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the year ended December 31, 1994.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The Company's Common Shares are listed for trading on the New York Stock
Exchange, symbol DRE. Set forth below are the high and low reported sales prices
on the New York Stock Exchange and the cash dividends per share declared during
each quarter. Comparable cash dividends are expected in the future. As of March
7, 1995, there were 2,397 record holders of Common Shares. All such information
prior to the quarter ended December 31, 1993 has been adjusted for the 1 for 4.2
reverse stock split effected prior to completion of the 1993 Common Stock
offering (the "1993 Offering").
- 7 -
<PAGE>
On January 26, 1995, the Company declared a quarterly cash dividend of $0.47 per
share payable on February 28, 1995 to shareholders of record on February 14,
1995.
<TABLE>
<CAPTION>
1994 1993
-------------------------- --------------------------
QUARTER ENDED HIGH LOW DIVIDEND HIGH LOW DIVIDEND
------------- ---- --- -------- ---- --- --------
<S> <C> <C> <C> <C> <C> <C>
December 31 $28.25 $23.50 $ .47 $26.25 $22.00 $ .42
September 30 27.25 24.75 .47 24.68 19.43 .42
June 30 27.25 23.25 .45 21.53 17.85 .42
March 31 26.00 20.25 .45 22.05 15.75 .42
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Actual Pro forma (1) Actual
------ ----------------- ----------------------------------------------------
1994 1993 1992 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Revenues:
Rental Operations $ 89,358 $ 80,887 $ 75,526 $ 89,358 $ 33,515 $ 17,675 $ 16,789 $ 15,747
Service Operations 18,473 17,016 16,636 18,473 5,654 - - -
-------- -------- --------- -------- -------- --------- -------- --------
TOTAL REVENUES $107,831 $ 97,903 $ 92,162 $107,831 $ 39,169 $ 17,675 $ 16,789 $ 15,747
-------- -------- --------- -------- -------- --------- -------- --------
-------- -------- --------- -------- -------- --------- -------- --------
NET INCOME (LOSS) $ 26,216 $ 19,076 $ 14,346 $ 26,216 $ 5,013 $( 653) $( 1,607) $( 571)
-------- -------- --------- -------- -------- --------- -------- --------
-------- -------- --------- -------- -------- --------- -------- --------
FUNDS FROM OPERATIONS (2) $ 49,359 $ 42,166 $ 36,624 $ 49,359 $ 13,615 $ 3,764 $ 2,420 $ 2,192
-------- -------- --------- -------- -------- --------- -------- --------
-------- -------- --------- -------- -------- --------- -------- --------
PER SHARE DATA (3):
Net Income (Loss) per
Share (3) $ 1.53 $ 1.19 $ 0.89 $ 1.53 $ 0.92 $ (0.32) $ (0.79) $ (0.28)
Funds From Operations
per Share/Unit (4) 2.30 2.06 1.79 2.30 1.79 1.84 1.18 1.07
Dividends Declared per
Share 1.84 1.84 1.68 1.68 1.68 2.56
WEIGHTED AVERAGE SHARES
OUTSTANDING (3) 17,139 16,046 16,046 17,139 5,459 2,045 2,045 2,045
FINANCIAL POSITION:
Total Assets $774,901 $632,885 $121,881 $126,917 $129,817
Total Property Debt $298,640 $248,433 $ 80,707 $ 80,808 $ 79,637
Total Shareholders' Equity $445,384 $347,038 $ 36,129 $ 40,220 $ 45,265
Total Shares Outstanding at end of year (3) 20,391 16,046 2,045 2,045 2,045
<FN>
(1) Pro forma results give effect to the Company's acquisition of Duke
Associates and the 1993 Offering as if they had occurred at the beginning
of each period presented.
(2) Funds From Operations, defined by the National Association of Real Estate
Investment Trusts as net income or loss excluding gains or losses from debt
restructuring and sales of property plus depreciation and amortization,
and after adjustments for unconsolidated partnerships and joint ventures
(adjustments for unconsolidated partnerships and joint ventures are
calculated to reflect Funds From Operations on the same basis), is
presented without reduction for minority interest of unitholders. Funds
From Operations 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.
(3) All such information has been adjusted for the 1 for 4.2 reverse stock
split effected prior to the completion of the 1993 Offering. The number of
shares excludes the outstanding minority interest partnership units which
are exchangeable on a one-for-one basis for shares of Common Stock.
(4) Funds From Operations per share/unit includes the effect of the minority
interest partnership units.
</TABLE>
- 8 -
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE COMPANY
The Company was formed in 1985 and qualifies as a real estate investment trust
("REIT") under the provisions of the Internal Revenue Code. The Company is an
open-ended, perpetual-life REIT which owns and operates a portfolio of
commercial properties in the Midwest.
REORGANIZATION AND OFFERINGS
In October 1993, the Company acquired substantially all of the properties and
businesses of Duke Associates, a full-service commercial real estate firm
operating primarily in the Midwest (the "Reorganization"). In connection with
the Reorganization, the Company effected a 1 for 4.2 reverse stock split
relating to its existing shares and subsequently issued an additional 14,000,833
shares of Common Stock through an offering (the "Offering"). Substantially all
of the approximately $309.3 million of net proceeds of the Offering were used to
repay indebtedness of the reorganized company. As a result of the
Reorganization, the Company's properties are owned through Duke Realty Limited
Partnership, an Indiana limited partnership ("DRLP"), of which the Company is
the sole general partner and was the owner of 78% of the partnership interests
("Units") as of October 1993.
In 1994, the Company issued an additional 3,887,300 common shares through an
additional offering ("1994 Offering") and received net proceeds of approximately
$92.1 million. The proceeds of the 1994 Offering were contributed to DRLP in
exchange for additional Units and were used by DRLP to fund current development
and acquisition costs.
In 1994, as a result of Unitholders exchanging their Units for shares of the
Company pursuant to the DRLP Partnership Agreement, the Company also acquired an
additional interest in DRLP through the issuance of 456,375 common shares for a
like number of Units. The acquired additional interest in DRLP was recorded at
the fair market value of the Company's common stock on the date of acquisition.
The acquisition amount of $11.5 million was allocated to rental property,
undeveloped land and investments in unconsolidated companies based on their
estimated fair values. As a result of these transactions, the Company owns an
83.62% interest in DRLP as of December 31, 1994.
RESULT OF OPERATIONS - HISTORICAL AND PRO FORMA
The historical results of operations changed dramatically in all respects from
1992 to 1993 and 1994 as a result of the Reorganization and Offerings discussed
above. All operating categories of revenues and expenses reflect significant
increases because of the addition of properties and businesses purchased in
connection with the Reorganization.
Following is a summary of the Company's operating results for each of the years
in the three-year period ended December 31, 1994:
- 9 -
<PAGE>
<TABLE>
<CAPTION>
Actual Pro forma
------- -------------------
(in thousands, except per share amounts) 1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Rental revenues $89,358 $80,887 $75,526
Earnings from rental operations 24,494 20,353 15,678
Earnings from service operations 6,308 3,511 2,465
Operating income 30,802 23,864 18,143
Minority interest in earnings 7,840 5,903 4,020
Net income 26,216 19,076 14,346
Weighted average shares
outstanding 17,139 16,046 16,046
Net income per share $ 1.53 $ 1.19 $ .89
</TABLE>
Earnings from rental operations for the year ended December 31, 1994 were $24.5
million. This $4.1 million increase over pro forma earnings from rental
operations for the year ended December 31, 1993 results from an $8.5 million
increase in rental revenue related to the expansion of the property portfolio
through acquisition and development of additional properties offset by a $2.8
million increase in operating expenses related to these additional properties.
This increase was also offset by a $1.6 million increase in interest expense on
borrowings used to fund the acquisition and development of the additional
properties. The pro forma earnings from rental operations increased from $15.7
million for the year ended December 31, 1992 to $20.4 million for the year ended
December 31, 1993. This $4.7 million increase is primarily attributed to a $5.4
million increase in rental revenue resulting from expansion of the property
portfolio and growth in the average occupancy of the properties, offset by
additional depreciation, amortization and operating expenses related to the
portfolio expansion.
The following table sets forth information regarding the Company's portfolio of
rental properties as of December 31, 1994:
<TABLE>
<CAPTION>
In-Service Properties Under Development
---------------------------- ----------------------------
(in thousands) Total Percent Total Percent
Percent Square of Percent Square of
Type Leased Feet Total Leased Feet Total
---- ------- ------ ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Industrial 96.4% 7,623 59.1% 84.5% 1,732 73.3%
Office 89.9% 3,789 29.4 76.8% 534 22.6
Retail 95.8% 1,285 10.0 -- % -- --
Medical 99.9% 198 1.5 56.0% 96 4.1
----- ------ ------ ----- ----- ------
Total 94.5% 12,895 100.0% 81.6% 2,362 100.0%
----- ------ ------ ----- ----- ------
----- ------ ------ ----- ----- ------
</TABLE>
Management expects occupancy to remain stable because (i) only 7.7% and 10.4% of
the Company's occupied square footage is subject to leases expiring in 1995 and
1996, respectively and (ii) the Company's renewal percentage averaged 73% and
65% in 1994 and 1993, respectively. The following table reflects the Company's
lease expiration schedule as of December 31, 1994, including properties under
development, by product type indicating square footage and annualized base
rents:
- 10 -
<PAGE>
<TABLE>
<CAPTION>
(in thousands) Industrial Office Retail Total
------------------ ------------------ ------------------ -------------------
Year of Square Square Square Square
Expiration Feet Dollar Feet Dollar Feet Dollar Feet Dollar
---------- ---- ------ ---- ----- ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995 703 $ 2,808 334 $ 4,340 55 $ 613 1,092 $ 7,761
1996 842 4,279 479 6,283 153 1,381 1,474 11,943
1997 698 3,154 428 5,659 119 1,299 1,245 10,112
1998 1,456 6,104 407 5,319 80 845 1,943 12,268
1999 1,353 6,092 332 4,154 95 984 1,780 11,230
2000 980 4,358 287 4,038 68 660 1,335 9,056
2001 1,047 3,994 228 3,045 33 307 1,308 7,346
2002 77 460 175 2,090 95 859 347 3,409
2003 35 428 118 1,780 37 325 190 2,533
2004 604 2,339 50 611 7 59 661 3,009
Thereafter 1,017 3,719 1,229 17,130 490 3,830 2,736 24,679
----- ------- ----- ------- ----- ------- ------ --------
Total Occupied 8,812 $37,735 4,067 $54,449 1,232 $11,162 14,111 $103,346
----- ------- ----- ------- ----- ------- ------ --------
----- ------- ----- ------- ----- ------- ------ --------
Total Portfolio 9,355 4,617 1,285 15,257
----- ----- ----- ------
----- ----- ----- ------
</TABLE>
This stable occupancy, along with firm rental rates in each of the Company's
markets, will 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 2.4 million square
feet of properties under development at December 31, 1994 are placed in service
over the next four quarters.
Earnings from service operations for the year ended December 31, 1994 were $6.3
million. This $2.8 million increase in earnings from service operations
compared to pro forma earnings from service operations for the year ended 1993
is primarily the result of increased construction management fees related to a
20% increase in third party construction volume combined with increased margins
on 38% of the 1994 construction volume. In addition, the significant growth and
development of Company-owned properties resulted in an increased allocation of
operating costs to such properties, thereby reducing the proportionate amount of
such costs attributable to third party fee services.
The pro forma earnings from service operations increased from $2.5 million for
the year ended December 31, 1992 to $3.5 million for the year ended December 31,
1993. This $1.0 million increase resulted primarily from increased management
and maintenance fees realized through expansion of the managed properties
portfolio and lower operating expenses resulting from reduced payroll and
overhead costs offset by a decrease in revenues from leasing fees resulting from
the recognition of significant leasing fees on two large third-party projects
in 1992.
Net income for the year ended December 31, 1994 was $26.2 million compared to
pro forma net income of $19.1 million for the year ended December 31, 1993 and
$14.3 million for the year ended December 31, 1992. These increases are
primarily due to the operating result fluctuations explained above.
In September 1994, the Company exercised an option to purchase a mortgage loan
to a consolidated subsidiary of the Company from an affiliate. As a result of
the exercise of this option, the Company recognized an approximate $2 million
gain. This gain is reflected as a component of earnings from property sales.
- 11 -
<PAGE>
FUNDS FROM OPERATIONS
Management believes that Funds From Operations ("FFO"), which is defined by the
National Association of Real Estate Investment Trusts as net income or loss
excluding gains or losses from debt restructuring and sales of property plus
depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures (adjustments for unconsolidated partnerships and
joint ventures are calculated to reflect FFO on the same basis), is the industry
standard for reporting the operations of real estate investment trusts.
The following table reflects the calculation of the Company's FFO for each of
the years in the three-year period ended December 31, 1994:
<TABLE>
<CAPTION>
ACTUAL PRO FORMA
------ ---------------
1994 1993 1992
(in thousands) ---- ---- ----
<S> <C> <C> <C>
Net Income $ 26,216 $ 19,075 $ 14,346
Add back:
Depreciation and amortization 16,785 17,602 17,573
Amortization of deferred financing costs 1,251 476 453
Depreciation and amortization of joint ventures 554 405 290
Gain on property sales ( 2,198) ( 517) --
Minority interest of unitholders 6,751 5,125 3,962
-------- -------- -------
FUNDS FROM OPERATIONS $ 49,359 $ 42,166 $ 36,624
-------- -------- -------
-------- -------- -------
</TABLE>
Management anticipates continued growth in FFO. The following table indicates
such growth for the three-year period ended December 31, 1994:
<TABLE>
<CAPTION>
ACTUAL PRO FORMA
------ ----------------------
1994 1993 1992
(in thousands, except per share amounts) ---- ---- ----
<S> <C> <C> <C>
Rental operations:
Original portfolio $58,201 $56,628 $51,681
Development 2,240 - -
Acquisitions 2,463 - -
Investments in unconsolidated companies 1,407 1,002 513
Interest expense (18,920) (17,280) (16,900)
-------- -------- --------
Net rental operations 45,391 40,350 35,294
Service operations, net of minority interest 5,389 2,732 2,458
Other, net ( 1,421) ( 916) ( 1,128)
-------- -------- --------
FUNDS FROM OPERATIONS $49,359 $42,166 $36,624
-------- -------- --------
-------- -------- --------
Weighted average shares/units 21,467 20,478 20,478
-------- -------- --------
-------- -------- --------
FFO per weighted average share/unit $ 2.30 $ 2.06 $ 1.79
-------- -------- --------
-------- -------- --------
Dividends paid per share/unit $ 1.84
--------
--------
FFO payout ratio 80.9%
--------
--------
</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.
- 12 -
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities totaling $51.9 million for the year
ended December 31, 1994, 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-leasing of the
Company's properties.
The investing activities of the Company for the year ended December 31, 1994 of
$116.2 million were primarily the result of costs incurred for the acquisition
and development of 16 properties placed in service during the year and nine
properties and two major building expansions under construction as of
December 31, 1994. The estimated remaining development costs for these nine
properties and two expansions as of December 31, 1994 total $68.7 million.
The Company owns approximately 930 acres of unencumbered land for future
development of which, approximately 80% is zoned for industrial use. This land
is primarily located adjacent to the Company's existing properties. The Company
intends to use this land to expand its build-to-suit business (development
projects substantially pre-leased to a single tenant).
The recurring capital needs of the Company are funded primarily through the
undistributed net cash provided by operating activities. Following is an
analysis of the Company's recurring capital expenditures:
<TABLE>
<CAPTION>
(in thousands) 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Tenant improvements $ 3,056 $ 2,015 $ 1,047
Deferred costs 2,407 636 432
Building improvements 474 136 121
------ ------ ------
Total $ 5,937 $ 2,787 $ 1,600
------ ------ ------
------ ------ ------
</TABLE>
New property development and acquisition costs are funded through a combination
of debt and equity proceeds. In March 1994, the Company obtained a $60 million
revolving credit facility which is available to fund existing and new
development costs and to provide working capital as needed. In August 1994, the
Company closed a seven-year, $60 million mortgage loan which bears interest at
8.72%. In September 1994, the Company received $92.1 million of net proceeds
from the 1994 Offering. A portion of the proceeds of the mortgage loan and the
1994 Offering were used to retire the outstanding balance of the line of credit
and to fund costs on projects under construction. The remaining proceeds will
be used to fund additional costs on projects under construction, costs related
to projects for which construction will commence subsequent to December 31, 1994
and costs of anticipated acquisitions. In the interim, the excess proceeds are
invested in interest-bearing cash equivalents.
During 1994, the Company obtained investment grade ratings from Standard &
Poor's, Moody's and Duff & Phelps. The Company currently has on file a Form S-3
Registration Statement with the Securities and Exchange Commission which has
remaining availability as of December 31, 1994 of approximately $222 million to
issue additional common stock, preferred stock or unsecured debt securities as
the Company requires additional capital.
- 13 -
<PAGE>
The Company has obtained a commitment for a $100 million unsecured line of
credit which will replace the existing $60 million secured line of credit. The
facility is expected to be available in April 1995.
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 mortgage and construction indebtedness). The
Company's debt to total market capitalization ratio at December 31, 1994 was
30.2% compared to 35.3% at December 31, 1993.
The mortgage debt outstanding at December 31, 1994 consists of notes totaling
$298.6 million with a weighted average interest rate of 7.30% maturing at
various dates through 2018. Scheduled principal amortization of mortgage debt
totaled $1.5 million for the year ended December 31, 1994. Following is a
summary of the scheduled future amortization and maturities of the Company's
mortgage debt:
<TABLE>
<CAPTION>
(in thousands)
Future Weighted Average
Scheduled Future Interest Rate of
Year Amortization Maturities Total Debt Reduction
---- ------------ ---------- -------- ----------------
<S> <C> <C> <C> <C>
1995 $ 1,848 $ 1,401 $ 3,249 8.43%
1996 3,091 62,276 65,367 5.55%
1997 3,856 -- 3,856 7.10%
1998 2,223 81,179 83,402 6.67%
1999 2,423 -- 2,423 8.30%
2000 2,637 246 2,883 8.46%
2001 2,291 58,394 60,685 8.70%
2002 2,494 -- 2,494 8.18%
2003 251 69,389 69,640 8.48%
Thereafter 4,641 -- 4,641
------- ------- -------
Total $25,755 $272,885 $298,640
------- ------- -------
------- ------- -------
</TABLE>
The Company intends to pay regular quarterly dividends with a general policy of
distributing no more than 90% of FFO. The dividend declared on January 26,
1995 represented 81.0% of fourth quarter FFO.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data are included under Item 14 of
this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item for Directors and certain Executive
Officers is incorporated by reference in the Company's Proxy Statement dated
March 17, 1995, for its annual Meeting of Shareholders to be held on April 27,
1995, under the heading "Proposal No. 1: Election of Directors" on pages 3-5.
- 14 -
<PAGE>
The following information is provided regarding the executive officers of the
Company who do not serve as Directors of the Company:
DAVID R. MENNEL
Age 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
Age 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.
JOHN NEMECEK
Age 39, President of Asset and Property Management - Mr. Nemecek joined the
Company in 1994. Prior to joining the Company, Mr. Nemecek was the Senior
Vice President/Florida Division of Compass Real Estate.
MICHAEL COLETTA
Age 44, Vice President of Asset and Property Management - Mr. Coletta joined
the Company in 1981 and was awarded the Certified Property Manager
designation by the Institute of Real Estate Management in 1989.
DAYLE M. EBY
Age 43, Vice President, General Counsel and Secretary - Ms. Eby joined the
Company in 1989. Prior to that time, Ms. Eby was with the law firm of Bose
McKinney & Evans.
DENNIS D. OKLAK
Age 41, Vice President and Treasurer - Mr. Oklak joined the Company in 1986
and has served as the Tax Manager and Controller of Development. Prior to
joining the Company, Mr. Oklak was a Senior Manager with the public
accounting firm of Deloitte Haskins + Sells.
STEVEN R. KENNEDY
Age 38, Vice President of Construction Services - Mr. Kennedy joined the
Company in 1986. Prior to that time, Mr. Kennedy was a Project Manager for
Charles Pankow Builders, Inc.
RICHARD HORN
Age 37, Vice President of Acquisitions - Mr. Horn joined the Company in 1984.
He has served in leasing and development for the Company and has overseen the
Nashville and Michigan operations of the Company since 1988 and 1990,
respectively.
ROBERT FESSLER
Age 37, Vice President, Ohio Industrial Group - Mr. Fessler joined the
Company in 1987 and is responsible for the Cincinnati industrial development
and leasing activities. Prior to joining the Company, Mr. Fessler was a
leasing representative with Trammel Crow.
- 15 -
<PAGE>
JIM GRAY
Age 34, Assistant Vice President, Ohio Office Group - Mr. Gray joined the
Company in 1989 and is responsible for the Cincinnati office development and
leasing activities. Prior to joining the Company, Mr. Gray was Vice
President and General Counsel for Brian Properties, Inc., a Chicago area
commercial real estate developer.
DONALD HUNTER
Age 35, Vice President, Columbus Group - Mr. Hunter joined the Company in
1989 and is responsible for the Columbus development and management
activities of the Company. Prior to joining the Company, Mr. Hunter was with
Cushman and Wakefield, a national real estate firm.
WAYNE LINGAFELTER
Age 35, Vice President, Indiana Office Group - Mr. Lingafelter joined the
Company in 1987 and is responsible for the Indiana office leasing and
development activities. Prior to that time, Mr. Lingafelter was with the
management consulting firm of DRI, Inc.
WILLIAM E. LINVILLE
Age 40, Vice President, Indiana Industrial Group - Mr. Linville joined the
Company in 1987. Prior to that time, Mr. Linville was Vice President and
Regional Manager of the CB Commercial Brokerage Office in Indianapolis.
FRANCIS B. QUINN
Age 40, Vice President, Retail Group - Mr. Quinn joined the Company in 1982.
Prior to that time, Mr. Quinn was with F.C. Tucker, an Indiana real estate
firm.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's officers and directors, and persons who own more than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors and greater
than 10% shareholders are required by Securities and Exchange Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file. Information regarding Section 16(a) filings is incorporated by reference
in the Company's Proxy Statement dated March 17, 1995, for its Annual Meeting of
shareholders to be held on April 27, 1995, under the headings "Compliance with
Section 16(a) of the Securities Exchange Act of 1934" on page 11.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference in the
Company's Proxy Statement dated March 17, 1995, for its Annual Meeting of
shareholders to be held on April 27, 1995, under the heading "Executive
Compensation" on pages 6-9.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference in the
Company's Proxy Statement dated March 17, 1995, for its Annual Meeting of
shareholders to be held on April 27, 1995, under the headings "Voting
Securities and Beneficial Owners" on pages 1-3.
- 16 -
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference in the
Company's Proxy Statement dated March 17, 1995, for its Annual Meeting of
shareholders to be held on April 27, 1995, under the heading "Certain
Transactions" on pages 9-10.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) DOCUMENTS FILED AS PART OF THIS REPORT.
1. CONSOLIDATED FINANCIAL STATEMENTS:
INDEX
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1994 and 1993
Consolidated Statements of Operations, Years Ended December 31, 1994,
1993 and 1992
Consolidated Statements of Cash Flows, Years Ended December 31, 1994,
1993 and 1992
Consolidated Statements of Shareholders' Equity, Years Ended
December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
INDEX
Schedule III - Real Estate and Accumulated Depreciation
EDGAR FINANCIAL DATA SCHEDULE
Exhibit 27 - Financial Data Schedule for year ended December 31, 1994
(EDGAR filing only)
Other schedules are omitted for the reasons that they are not required,
are not applicable, or the required information is set forth in the
financial statements or notes thereto.
- 17 -
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Directors
Duke Realty Investments, Inc.:
We have audited the consolidated financial statements of Duke Realty
Investments, Inc. and Subsidiaries as listed in the accompanying index. In
connection with our audits of the consolidated financial statements, we also
have audited the financial statement schedule as listed in the accompanying
index. These consolidated financial statements and the financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on the consolidated financial statements and the
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Duke Realty
Investments, Inc. and Subsidiaries as of December 31, 1994 and 1993 and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1994, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
KPMG PEAT MARWICK LLP
Indianapolis, Indiana
January 25, 1995
- 18 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
December 31,
------------------------------
1994 1993
--------- ----------
ASSETS
------
<S> <C> <C>
Real estate investments (Note 5):
Land and improvements $ 72,758 $ 55,563
Buildings and tenant improvements 580,794 484,813
Construction in progress 22,967 9,726
Land held for development 47,194 42,741
--------- ---------
723,713 592,843
Accumulated depreciation ( 38,058) (23,725)
--------- ---------
Net real estate investments 685,655 569,118
Cash and cash equivalents 40,433 10,065
Accounts receivable from tenants, net of allowance of $450 and $397 4,257 4,558
Accrued straight-line rents, net of allowance of $841 and $93 5,030 3,499
Receivables on construction contracts 7,478 15,901
Investments in unconsolidated companies (Note 4) 8,418 14,270
Deferred financing costs, net of accumulated amortization
of $1,755 and $1,125 6,390 5,917
Deferred leasing and other costs, net of accumulated amortization
of $2,702 and $1,883 11,856 6,109
Escrow deposits and other assets 5,384 3,448
--------- ---------
$ 774,901 $ 632,885
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Property indebtedness (Note 5):
Mortgage loans $ 298,640 $ 240,135
Construction loans -- 4,728
Land contract payable -- 3,570
Notes payable -- 601
--------- ---------
298,640 249,034
Construction payables and amounts due subcontractors 9,464 15,482
Accounts payable 869 1,122
Accrued real estate taxes 8,983 8,214
Accrued expenses 3,191 3,363
Other liabilities 3,564 3,629
Tenant security deposits and prepaid rents 3,472 3,053
--------- ---------
Total liabilities 328,183 283,897
--------- ---------
Minority interest (Note 2) 1,334 1,950
--------- ---------
Common shares ($.01 par value); 45,000 authorized;
20,391 and 16,046 shares issued and outstanding 204 160
Additional paid-in capital 481,101 377,450
Distributions in excess of net income ( 35,921) (30,572)
--------- ---------
Total shareholders' equity 445,384 347,038
--------- ---------
$ 774,901 $ 632,885
--------- ---------
--------- ---------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
- 19 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
RENTAL OPERATIONS:
Revenues:
Rental income (Note 6) $87,786 $33,228 $17,657
Interest and other income 1,572 287 18
------- ------- -------
89,358 33,515 17,675
------- ------- -------
Operating expenses:
Rental expenses 17,507 7,059 3,919
Real estate taxes 8,256 3,403 1,787
Interest expense (Note 5) 18,920 10,334 7,582
Depreciation and amortization 18,036 7,369 4,483
General and administrative 2,145 737 623
------- ------- -------
64,864 28,902 18,394
------- ------- -------
Earnings (loss) from rental operations 24,494 4,613 (719)
------- ------- -------
SERVICE OPERATIONS:
Revenues:
Property management, maintenance and
leasing fees 11,084 3,000 --
Construction management and development fees 6,107 2,501 --
Interest and other income 1,282 153 --
------- ------- -------
18,473 5,654 --
------- ------- -------
Operating expenses:
Payroll 8,723 2,688 --
Maintenance 1,069 473 --
Office and other 2,373 957 --
------- ------- -------
12,165 4,118 --
------- ------- -------
Earnings from service operations 6,308 1,536 --
------- ------- -------
Operating income (loss) 30,802 6,149 (719)
------- ------- -------
Earnings from property sales 2,198 517 66
Equity in earnings of unconsolidated companies (Note 4) 1,056 297 --
Minority interest in earnings of subsidiaries (Note 2) ( 7,840) (1,950) --
------- ------- -------
Net income (loss) $26,216 $ 5,013 $ (653)
------- ------- -------
------- ------- -------
Net income (loss) per share $ 1.53 $ .92 $ (.32)
------- ------- -------
------- ------- -------
Weighted average number of shares outstanding 17,139 $ 5,459 $ 2,045
------- ------- -------
------- ------- -------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
- 20 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------
1994 1993 1992
-------- ------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 26,216 $ 5,013 $ (653)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation of buildings and tenant improvements 15,068 6,459 3,989
Amortization of deferred financing costs 1,251 294 184
Amortization of deferred leasing and other costs 1,717 616 310
Minority interest in earnings of subsidiaries 7,840 1,950 --
Straight-line rent adjustment (2,307) (570) 522
Allowance for straight-line rent receivable 748 93 --
Earnings from property sales, net (2,198) (517) (66)
Proceeds from lease terminations in excess of gains -- -- 1,172
Construction contracts, net 2,405 (919) --
Other accrued revenues and expenses, net 1,352 2,075 (5)
Equity in earnings of unconsolidated companies (219) (131) --
-------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 51,873 14,363 5,453
-------- ------- -------
Cash flows from investing activities:
Proceeds from property sales, net 3,337 1,306 1,888
Building, development and acquisition costs (103,753) (6,613) --
Tenant improvements (6,721) (2,706) (1,342)
Acquisition of properties and businesses -- (302,070) --
Deferred costs and other assets (9,378) (4,742) (1,256)
Net repayment of advances to unconsolidated companies 277 (200) --
-------- ------- -------
NET CASH USED BY INVESTING ACTIVITIES (116,238) (315,025) (710)
-------- ------- -------
Cash flows from financing activities:
Proceeds from issuance of common shares, net 92,145 309,334 --
Proceeds from property indebtedness 125,004 88,945 7,250
Payments on property indebtedness (79,649) (78,496) (8,076)
Distributions to shareholders and unitholders (39,514) (3,438) (3,438)
Distributions to minority interest (1,191) -- --
Deferred financing costs (2,062) (5,628) (688)
-------- ------- -------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 94,733 310,717 (4,952)
-------- ------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 30,368 10,055 (209)
Cash and cash equivalents at beginning of year 10,065 10 219
-------- ------- -------
Cash and cash equivalents at end of year $ 40,433 $ 10,065 $ 10
-------- ------- -------
-------- ------- -------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
- 21 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Additional Distributions
Common Paid--in in Excess of
Shares Capital Net Income
------ ---------- -------------
<S> <C> <C> <C>
BALANCE AT DECEMBER 31, 1991 $ 86 $ 68,190 $(28,056)
Net loss -- -- (653)
Distributions to shareholders ($1.68 per share) -- -- (3,438)
------- -------- --------
BALANCE AT DECEMBER 31, 1992 86 68,190 (32,147)
Reverse stock split (66) 66 --
Proceeds from issuance of common shares,
net of underwriting discounts and offering
costs of $23,394 140 309,194 --
Net income -- -- 5,013
Distributions to shareholders ($1.68 per share) -- -- (3,438)
------- -------- --------
BALANCE AT DECEMBER 31, 1993 160 377,450 (30,572)
Proceeds from issuance of common shares, net
of underwriting discounts and offering
costs of $6,009 39 92,132 --
Acquisition of minority interest 5 11,519 --
Net income -- -- 26,216
Distributions to shareholders ($1.84 per share) -- -- (31,565)
------- --------- --------
BALANCE AT DECEMBER 31, 1994 $ 204 $ 481,101 $(35,921)
------- --------- --------
------- --------- --------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
- 22 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) THE COMPANY
Duke Realty Investments, Inc. (the "Company") was formed in 1985 and
qualifies as a real estate investment trust ("REIT") under the provisions
of the Internal Revenue Code. The Company is an open-ended, perpetual-life
REIT which owns and operates a portfolio of commercial properties in the
Midwest.
On October 4, 1993, the Company completed the acquisition of substantially
all of the properties and businesses of Duke Associates, a full-service
commercial real estate firm operating primarily in the Midwest. In
connection with the acquisition, the Company effected a 1 for 4.2 reverse
stock split of its existing common shares and issued an additional
14,000,833 shares through an offering ("the Offering"). All of the share
and per share amounts have been restated to reflect the reverse split.
The acquisition was accounted for under the purchase method. The value of
$466.0 million assigned to the acquired properties and businesses was equal
to the property debt and other net liabilities assumed, of which $302.0
million was repaid with the proceeds of the Offering. The operating
results of the acquired properties and businesses have been included in the
consolidated operating results subsequent to the date of acquisition. The
Company contributed all of its properties and related assets and
liabilities along with the net proceeds from the Offering to Duke Realty
Limited Partnership ("DRLP") in exchange for a 78.36% general partnership
interest represented by 16,046,144 partnership units in DRLP ("Units").
Duke Associates contributed its properties to DRLP subject to their
existing liabilities in exchange for a 21.64% limited partnership minority
interest represented by 4,432,109 Units in DRLP. Limited partnership Units
are exchangeable for shares of the Company's common stock on a one-for-one
basis commencing October 4, 1994.
In 1994, the Company issued an additional 3,887,300 common shares through
an additional offering ("1994 Offering") and received net proceeds of
approximately $92.1 million. The proceeds of the 1994 Offering were
contributed to DRLP in exchange for additional Units and were used by DRLP
to fund current development and acquisition costs.
In 1994, the Company also acquired an additional interest in DRLP through
the issuance of 456,375 common shares for a like number of Units. The
acquired additional interest in DRLP was recorded at the fair market value
of the Company's common stock on the date of acquisition. The acquisition
amount of $11.5 million was allocated to rental property, undeveloped land
and investments in unconsolidated companies based on their estimated fair
values. As a result of these transactions, the Company owns an 83.62%
interest in DRLP as of December 31, 1994.
The related service businesses are conducted through Duke Realty Services
Limited Partnership ("DRSLP") and Duke Construction Limited Partnership
("DCLP"), in which the Company's wholly-owned subsidiary, Duke Services,
Inc., is the sole general partner. The following unaudited pro forma
information has been prepared assuming the Offering and the acquisition of
the Duke Associates' properties and businesses had occurred at the
beginning of the periods presented:
- 23 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1993 1992
---- ----
(in thousands, except per share amounts)
<S> <C> <C>
Rental revenues $ 80,887 $ 75,526
Earnings from rental operations 20,353 15,678
Earnings from service operations 3,511 2,465
Operating income 23,864 18,143
Minority interest in earnings 5,903 4,020
Net income 19,076 14,346
Net income per share $ 1.19 $ .89
</TABLE>
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its majority-owned or controlled subsidiaries. The equity interests in
these majority-owned or controlled subsidiaries not owned by the Company
are reflected as minority interests in the consolidated financial
statements. All significant intercompany balances and transactions have
been eliminated in the consolidated financial statements.
REAL ESTATE INVESTMENTS
Real estate investments are recorded at cost and are depreciated on the
straight-line method over 40 years. Properties constructed by the Company
are recorded at cost which includes all fees, interest and related costs
incurred during the development of properties. These costs are classified
as construction in progress until the property is placed in service.
Maintenance and repairs are charged to expense as incurred. Tenant
improvement costs are depreciated on the straight-line method over the term
of the related leases.
INVESTMENTS IN UNCONSOLIDATED COMPANIES
The equity method of accounting is used for investments in non-majority
owned partnerships and joint ventures in which the Company has the ability
to exercise significant influence over operating and financial policies.
The cost method of accounting is used for non-majority owned joint ventures
over which the Company does not have the ability to exercise significant
influence. Management believes that the difference between the cost method
and the equity method does not significantly affect the financial position
or results of operations of the Company.
CASH EQUIVALENTS
Highly liquid investments with a maturity of three months or less when
purchased are classified as cash equivalents.
- 24 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
DEFERRED COSTS
Costs incurred in connection with financing or leasing are amortized on the
straight-line method over the term of the related loan or lease.
Unamortized costs are charged to expense upon the early termination of the
lease or upon early payment of the financing.
Prepaid interest is amortized to interest expense using the effective
interest method over the term of the related loan.
REVENUES
Rental income from leases with scheduled rental increases during their
terms is recognized for financial reporting purposes on a straight-line
basis.
Management fees are based on a percentage of rental receipts of properties
managed and are recognized as the rental receipts are collected.
Maintenance fees are based upon established hourly rates and are recognized
as the services are performed. Leasing fees are based on the gross value
of leases signed and are generally recognized upon lease execution.
Construction management and development fees are generally based on a
percentage of costs and are recognized as the project costs are incurred.
Fees earned on construction contracts are recognized on the percentage of
completion method based upon the ratio of costs incurred to total estimated
costs.
Earnings from property sales are recorded upon closing using the full
accrual method. Cost of land sales is generally determined based on the
percentage of land sold within a particular development.
PROJECT COSTS
All direct and indirect costs clearly associated with the acquisition,
development, construction and rental of real estate projects owned by the
Company are capitalized. Capitalized costs associated with acquisition,
development and construction of real estate projects are included in real
estate investments and costs associated with the rental of real estate
projects are included in deferred costs.
NET INCOME (LOSS) PER SHARE
Net income (loss) per share is calculated using the weighted average number
of shares outstanding during the year. Common stock equivalents
(consisting entirely of stock options) that in the aggregate dilute income
per share by less than 3% are not considered in computing average shares
outstanding. Exchanges of the DRLP partnership units for the Company's
common shares do not affect net income per share.
- 25 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
FEDERAL INCOME TAXES
The Company qualifies and intends to continue to qualify as a REIT under
the Internal Revenue Code. As a REIT, the Company is allowed to reduce
taxable income by all or a portion of its distributions to shareholders.
As distributions have exceeded taxable income, no provision for federal
income taxes has been made in the accompanying consolidated financial
statements.
Earnings and profits, which determine the taxability of dividends to
shareholders, differ from net income reported for financial reporting
purposes primarily because of different depreciable lives and bases of
rental properties and differences in the timing of recognition of earnings
upon disposition of properties.
Of the total distributions for 1994 of $1.84 per share, 78.18% was taxable
to shareholders as ordinary income and 21.82% was a return of capital to
shareholders. Distributions for 1993 of $1.68 per share were 100% taxable
to the shareholders as ordinary income. Of the total distributions for
1992 of $1.68 per share, 33.93% was taxable to the shareholders as ordinary
income and 66.07% was a return of capital to shareholders.
(3) RELATED PARTY TRANSACTIONS
The Company provides management, leasing, construction and other tenant
related services to partnerships in which certain executive officers have
continuing ownership interests. The Company was paid fees totaling
$2,271,000 and $885,000 for such services in 1994 and 1993, respectively.
Management believes the terms for such services are equivalent to those
available in the market. The Company has an option to purchase the
executive officers' interest in each of these properties.
(4) INVESTMENTS IN UNCONSOLIDATED COMPANIES
The Company has equity interests ranging from 10% to 50% in unconsolidated
partnerships and joint ventures which own and operate commercial properties
and hold land for development. The Company acquired the equity interests of
two of its unaffiliated joint venture partners in 1994. As part of the
purchase of one of the joint venture interests, the Company assumed a $4.5
million mortgage loan. In addition, a joint venture which owned
undeveloped land was dissolved with the Company obtaining direct ownership
of undeveloped land. The Company recorded the land at the balance of its
investments in and advances to the joint venture prior to dissolution,
approximately $4.4 million. The operating results of the acquired
properties have been included in the consolidated operating results
subsequent to the date of acquisition.
- 26 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Combined summarized financial information of the companies which are
accounted for by the equity method as of December 31, 1994 and December
31, 1993 and for the year ended December 31, 1994 and the three months
ended December 31, 1993 are as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------
1994 1993
-------- --------
(in thousands)
<S> <C> <C>
Land, buildings and tenant improvements $14,530 24,702
Land held for development 1,377 4,667
Other assets 1,978 3,751
------- ------
17,885 33,120
------- ------
------- ------
Property indebtedness 17,719 29,486
Other liabilities 591 4,262
------- ------
18,310 33,748
Owners' deficit (425) (628)
------- ------
$17,885 33,120
------- ------
------- ------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED Three months ended
DECEMBER 31, 1994 December 31, 1993
----------------- ------------------
(in thousands)
<S> <C> <C>
Rental income $ 3,419 950
----- ---
----- ---
Net income $ 224 211
----- ---
</TABLE>
Investments in unconsolidated companies include $6.4 million and $6.2
million at December 31, 1994 and 1993, respectively, related to joint
ventures on the cost method. Included in equity in earnings of
unconsolidated companies are distributions from a joint venture accounted
for on the cost method totaling $837,000 and $166,000 in 1994 and 1993,
respectively.
- 27 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(5) PROPERTY INDEBTEDNESS
Property indebtedness at December 31 consists of the following:
<TABLE>
<CAPTION>
1994 1993
---- ----
(in thousands)
<S> <C> <C>
Mortgage note with monthly payments of $668,000 including principal and
interest at 8.50% due in 2003 $ 80,621 81,736
Mortgage note with monthly payments of interest of $436,000 through
August 1997. Thereafter, monthly payments of $471,000 including principal
and interest at 8.72% due in 2001 60,000 --
Mortgage note with monthly payments of interest at 7.25% due in 1998 25,500 25,500
Three mortgage notes with monthly payments of interest at rates ranging from
5.29% to 5.44% due in 1996 59,568 58,110
Mortgage note with monthly payments of interest at 5.81% due in 1998 22,000 22,000
Mortgage note with monthly payments of $104,000 including principal and interest
at 6.80% due in 1998 15,802 15,973
Mortgage notes with monthly payments in varying amounts including interest at
rates ranging from 5.20% to 10.75% due in varying amounts through 2018 35,149 36,816
Two construction loans drawn under commitments aggregating $6,342,000
with monthly payments of interest at an effective rate of 6.70% due in 1994 -- 4,728
Land contract with monthly payments of interest at 4.00% due in 1994 -- 3,570
Notes payable with monthly payments in varying amounts including interest
at rates ranging from 6.50% to 12.00% due in varying amounts through 1995 -- 601
-------- --------
$298,640 $249,034
-------- --------
-------- --------
</TABLE>
The Company has entered into an interest rate swap agreement on $35.2 million of
the Company's outstanding mortgage debt to effectively fix the interest rate on
the majority of its floating rate debt. Under the interest rate swap, the
Company pays or receives the difference between a fixed rate of 4.38% and a
floating rate of LIBOR + .75% based on the notional principal amount of $35.2
million. The amount paid or received on the swap agreement is included in
interest expense on a monthly basis. The swap matures along with the related
mortgage loan in October 1996. The fair value of the interest rate swap
agreement at December 31, 1994 was $1.9 million. The fair value was estimated
by discounting the expected cash flows to be received under the swap agreement
using rates currently available for interest rate swaps of similar terms and
maturities.
- 28 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The Company has a $6.4 million letter of credit which secures $6.3 million
of mortgage notes. The letter of credit requires a 2% annual fee and
matures in September 1999. The Company has guaranteed fifty percent of an
$8.2 million letter of credit obligation of one of its unconsolidated
companies which matures in September 1997.
At December 31, 1994, scheduled amortization and maturities of all property
indebtedness for the next five years are as follows: 1995, $3.2 million;
1996, $65.4 million; 1997, $3.9 million; 1998, $83.4 million; and 1999,
$2.4 million.
Cash paid for interest in 1994, 1993, and 1992 was $20.3 million, $10.5
million, and $7.6 million, respectively. Total interest capitalized in
1994 was $1.7 million.
In 1994, the Company obtained a $60 million revolving line of credit which
is available to fund development costs and provide working capital. The
revolving line of credit matures on March 31, 1996, and bears interest
payable monthly at LIBOR + 2% (an average effective rate of 6.45% for
1994). The maximum and average amounts outstanding during 1994 were
$60,000,000 and $17,980,000, respectively. The Company had no borrowings
under the line at December 31, 1994.
(6) LEASING ACTIVITY
Future minimum rents due to the Company under non-cancelable operating
leases at December 31, 1994 are scheduled as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
(in thousands)
<S> <C>
1995 $ 81,712
1996 75,281
1997 65,919
1998 56,421
1999 47,317
Thereafter 239,967
-------
$ 566,617
-------
-------
</TABLE>
Rental income for 1992 includes $921,000 of non-recurring income from lease
terminations, which represents the excess of the cash received from three
termination agreements over the carrying value of the assets relating
specifically to the terminating tenants.
In addition to minimum rents, certain leases require reimbursements of
specified operating expenses which amounted to $10.0 million, $3.6 million,
and $1.8 million for the years ended December 31, 1994, 1993 and 1992,
respectively. Certain of the leases also provide for the payment of
additional rent based on a percentage of the tenant's revenues.
- 29 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(7) EMPLOYEE BENEFIT PLANS
In October 1993, the Company established a profit sharing and salary
deferral plan. The Company matches the employees' contributions up to two
percent of the employees' salary and may also make annual discretionary
contributions to the plan. Total expense recognized by the Company was
$370,000 and $74,000 for 1994 and 1993, respectively.
In October 1993, the Company also established a contributory health and
welfare plan. The Company makes contributions to the plan throughout the
year as necessary to fund claims not covered by employee contributions.
Total expense recognized by the Company related to this plan was $766,000
and $204,000 for 1994 and 1993, respectively.
(8) STOCK OPTION PLAN
In October 1993, the Company established a stock option plan under which
1,315,000 shares of common stock were reserved for the exercise of options
which may be issued to the executive officers and certain key employees.
The term of these options is ten years from the date of grant. The options
vest 20% per year over a five-year period with initial vesting one year
from the date of grant.
<TABLE>
<CAPTION>
Option
Number price per
of shares share
-------- ---------
<S> <C> <C>
Granted in 1993 681,500 $ 23.75
Granted in 1994 -- --
-------
Outstanding at December 31, 1994 681,500 23.75
-------
-------
</TABLE>
- 30 -
<PAGE>
DUKE REALTY INVESTMENTS, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION SCHEDULE III
DECEMBER 31, 1994
<TABLE>
<CAPTION>
(IN THOUSANDS)
INITIAL COST TO COMPANY COSTS (1)
------------------------- CAPITALIZED
BUILDING ENCUMBER- BUILDINGS/ SUBSEQUENT TO
LOCATION / DEVELOPMENT BUILDING TYPE ANCES LAND IMPROVEMENTS ACQUISITION
------------------------------- -------------------- ---------- --------- ------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INDIANAPOLIS, INDIANA
-------------------------------
PARK 100 BUSINESS PARK BUILDING #32 RETAIL $519 64 740 79
PARK 100 BUSINESS PARK BUILDING #34 OFFICE 1,008 131 1,455 200
PARK 100 BUSINESS PARK BUILDING #38 INDUSTRIAL 0 25 241 11
PARK 100 BUSINESS PARK BUILDING #43 INDUSTRIAL 565 60 590 29
PARK 100 BUSINESS PARK BUILDING #77 INDUSTRIAL 3,331 383 3,779 778
PARK 100 BUSINESS PARK BUILDING #79 INDUSTRIAL 1,077 184 1,764 180
PARK 100 BUSINESS PARK BUILDING #80 INDUSTRIAL 1,473 251 2,412 102
PARK 100 BUSINESS PARK BUILDING #83 INDUSTRIAL 1,500 247 2,572 85
PARK 100 BUSINESS PARK BUILDING #84 INDUSTRIAL 1,500 347 2,604 59
PARK 100 BUSINESS PARK BUILDING #95 INDUSTRIAL 3,429 642 4,747 0
PARK 100 BUSINESS PARK BUILDING #96 INDUSTRIAL 6,437 1,414 8,704 0
PARK 100 BUSINESS PARK BUILDING #97 T.I. INDUSTRIAL 0 0 536 0
PARK 100 BUSINESS PARK BUILDING #98 INDUSTRIAL 0 473 3,888 421
PARK 100 BUSINESS PARK BUILDING #109 INDUSTRIAL 1,473 240 1,865 (190)
PARK 100 BUSINESS PARK BUILDING #116 OFFICE 2,199 341 3,144 (179)
PARK 100 BUSINESS PARK BUILDING #118 OFFICE 1,358 226 2,229 115
PARK 100 BUSINESS PARK BUILDING #119 OFFICE 2,250 388 3,386 143
PARK 100 BUSINESS PARK BUILDING #121 RETAIL 0 592 960 31
PARK 100 BUSINESS PARK BUILDING #122 INDUSTRIAL 0 284 3,359 159
PARK 100 BUSINESS PARK BUILDING #125 INDUSTRIAL 1,683 358 2,287 0
PARK 100 BUSINESS PARK BUILDING #126 INDUSTRIAL 0 165 1,365 49
PARK 100 BUSINESS PARK ZOLLMAN LAND LEASE INDUSTRIAL 0 115 0 0
SHADELAND STATION 7351 SHADELAND OFFICE 1,401 101 1,359 51
SHADELAND STATION BUILDING #204/205 INDUSTRIAL 2,068 260 2,595 156
SHADELAND STATION 7240 SHADELAND OFFICE 2,730 152 3,113 752
SHADELAND STATION 7330 SHADELAND OFFICE 2,712 255 4,045 (363)
SHADELAND STATION 7369 SHADELAND OFFICE 0 100 1,129 28
SHADELAND STATION 7340 SHADELAND OFFICE 1,500 165 2,458 59
SHADELAND STATION 7400 SHADELAND OFFICE 2,000 570 2,959 188
CASTLETON CORNER CUB PLAZA RETAIL 3,376 540 4,850 114
CASTLETON SHOPPING CENTER MICHAEL'S PLAZA RETAIL 2,485 749 3,400 156
SOUTH PARK, INDIANA BUILDING #1 OFFICE 1,500 287 2,328 297
SOUTH PARK, INDIANA BUILDING #2 INDUSTRIAL 2,000 334 3,081 252
SOUTH PARK, INDIANA BUILDING #3 OFFICE 0 208 2,150 318
SOUTH PARK, INDIANA BRYLANE PARKING LOT OFFICE 0 0 54 0
GREENWOOD CORNER GREENWOOD CORNER RETAIL 2,918 390 3,435 (250)
GREENWOOD CORNER 1st INDIANA BANK BRANCH RETAIL 259 46 245 7
CARMEL MEDICAL I CARMEL MEDICAL I OFFICE 2,977 0 3,710 (437)
CARMEL MEDICAL II CARMEL MEDICAL II OFFICE 3,008 0 4,000 136
HILLSDALE TECHNECENTER BUILDING #4 INDUSTRIAL 2,483 366 4,711 36
HILLSDALE TECHNECENTER BUILDING #5 INDUSTRIAL 1,706 251 3,235 23
HILLSDALE TECHNECENTER BUILDING #6 INDUSTRIAL 2,138 315 4,054 17
WOODFIELD AT THE CROSSING WOODFIELD II OFFICE 0 719 9,106 367
WOODFIELD AT THE CROSSING WOODFIELD III OFFICE 0 3,767 19,817 788
KEYSTONE AT THE CROSSING 3520 COMMERCE CRSG OFFICE 0 19 560 12
HAMILTON CROSSING BUILDING #1 OFFICE 1,750 526 2,424 186
KEYSTONE AT THE CROSSING F.C. TUCKER BUILDING OFFICE 0 0 264 5
FORT WAYNE, INDIANA
-------------------------------
COLDWATER CROSSING COLDWATER SHOPPES RETAIL 11,596 2,310 15,827 89
NASHVILLE, TENNESSEE
-------------------------------
HAYWOOD OAKS TECHNECENTER BUILDING #2 INDUSTRIAL 1,059 395 1,767 31
HAYWOOD OAKS TECHNECENTER BUILDING #3 INDUSTRIAL 928 346 1,575 159
HAYWOOD OAKS TECHNECENTER BUILDING #4 INDUSTRIAL 1,166 435 1,948 9
HAYWOOD OAKS TECHNECENTER BUILDING #5 INDUSTRIAL 1,684 629 2,816 104
HAYWOOD OAKS TECHNECENTER BUILDING #6 INDUSTRIAL 3,500 924 5,730 247
GREENBRIAR BUSINESS PARK GREENBRIAR INDUSTRIAL 0 1,445 4,488 98
<CAPTION>
(IN THOUSANDS)
TOTAL COST
----------------------------------------
LAND & BUILDINGS/ ACCUMULATED DATE OF DATE DEPRECIABLE
LOCATION / DEVELOPMENT IMPROVEMENTS IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED LIFE
---------------------- ---------------------------------------- ------------ ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INDIANAPOLIS, INDIANA
-------------------------
PARK 100 BUSINESS PARK 65 818 883 188 1978 1986 (6)
PARK 100 BUSINESS PARK 133 1,653 1,786 369 1979 1986 (6)
PARK 100 BUSINESS PARK 26 251 277 8 1978 1993 (6)
PARK 100 BUSINESS PARK 62 618 679 134 1971 1986 (6)
PARK 100 BUSINESS PARK 392 4,548 4,940 929 1988 1989 (6)
PARK 100 BUSINESS PARK 187 1,941 2,128 62 1988 1993 (6)
PARK 100 BUSINESS PARK 256 2,509 2,765 84 1988 1993 (6)
PARK 100 BUSINESS PARK 252 2,652 2,904 90 1989 1993 (6)
PARK 100 BUSINESS PARK 354 2,657 3,010 81 1989 1993 (6)
PARK 100 BUSINESS PARK 642 4,747 5,390 116 1993 1994 (6)
PARK 100 BUSINESS PARK 1,414 8,704 10,118 0 1994 1994 (6)
PARK 100 BUSINESS PARK 0 536 536 0 1994 1994 (6)
PARK 100 BUSINESS PARK 473 4,309 4,782 56 1968 1994 (6)
PARK 100 BUSINESS PARK 246 1,669 1,915 403 1985 1986 (6)
PARK 100 BUSINESS PARK 348 2,958 3,306 455 1988 1988 (6)
PARK 100 BUSINESS PARK 230 2,340 2,570 84 1988 1993 (6)
PARK 100 BUSINESS PARK 395 3,522 3,917 112 1989 1993 (6)
PARK 100 BUSINESS PARK 604 979 1,583 30 1989 1993 (6)
PARK 100 BUSINESS PARK 290 3,513 3,802 127 1990 1993 (6)
PARK 100 BUSINESS PARK 358 2,287 2,645 37 1994 1994 (6)
PARK 100 BUSINESS PARK 165 1,414 1,579 24 1984 1994 (6)
PARK 100 BUSINESS PARK 115 0 115 0 N/A 1994 (6)
SHADELAND STATION 103 1,408 1,511 45 1983 1993 (6)
SHADELAND STATION 266 2,746 3,011 596 1984 1986 (6)
SHADELAND STATION 152 3,864 4,017 833 1985 1993 (6)
SHADELAND STATION 260 3,676 3,937 548 1988 1988 (6)
SHADELAND STATION 102 1,155 1,257 36 1989 1993 (6)
SHADELAND STATION 169 2,514 2,682 78 1989 1993 (6)
SHADELAND STATION 581 3,135 3,717 115 1990 1993 (6)
CASTLETON CORNER 550 4,954 5,504 1,091 1986 1986 (6)
CASTLETON SHOPPING CENTER 764 3,541 4,305 115 1984 1993 (6)
SOUTH PARK, INDIANA 292 2,620 2,912 111 1989 1993 (6)
SOUTH PARK, INDIANA 341 3,326 3,667 117 1990 1993 (6)
SOUTH PARK, INDIANA 212 2,464 2,676 122 1990 1993 (6)
SOUTH PARK, INDIANA 0 54 54 2 N/A 1994 (6)
GREENWOOD CORNER 400 3,175 3,575 686 1986 1993 (6)
GREENWOOD CORNER 47 250 298 8 1986 1986 (6)
CARMEL MEDICAL I 0 3,273 3,273 769 1985 1986 (6)
CARMEL MEDICAL II 0 4,136 4,136 413 1989 1990 (6)
HILLSDALE TECHNECENTER 366 4,747 5,113 153 1987 1993 (6)
HILLSDALE TECHNECENTER 252 3,258 3,509 102 1987 1993 (6)
HILLSDALE TECHNECENTER 315 4,071 4,386 127 1987 1993 (6)
WOODFIELD AT THE CROSSING 733 9,459 10,192 315 1987 1993 (6)
WOODFIELD AT THE CROSSING 3,843 20,529 24,372 651 1989 1993 (6)
KEYSTONE AT THE CROSSING 0 591 591 20 1976 1993 (6)
HAMILTON CROSSING 536 2,600 3,136 82 1989 1993 (6)
KEYSTONE AT THE CROSSING 0 269 269 12 1978 1993 (6)
FORT WAYNE, INDIANA
-------------------------
COLDWATER CROSSING 2,310 15,916 18,226 198 1990 1994 (6)
NASHVILLE, TENNESSEE
-------------------------
HAYWOOD OAKS TECHNECENTER 395 1,798 2,193 58 1988 1993 (6)
HAYWOOD OAKS TECHNECENTER 346 1,734 2,080 81 1988 1993 (6)
HAYWOOD OAKS TECHNECENTER 435 1,957 2,392 61 1988 1993 (6)
HAYWOOD OAKS TECHNECENTER 629 2,921 3,549 109 1988 1993 (6)
HAYWOOD OAKS TECHNECENTER 946 5,955 6,901 200 1989 1993 (6)
GREENBRIAR BUSINESS PARK 1,445 4,586 6,031 18 1986 1993 (6)
</TABLE>
- 31 -
<PAGE>
DUKE REALTY INVESTMENTS, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION SCHEDULE III
DECEMBER 31, 1994
<TABLE>
<CAPTION>
(IN THOUSANDS)
INITIAL COST TO COMPANY COSTS (1)
------------------------- CAPITALIZED
BUILDING ENCUMBER- BUILDINGS/ SUBSEQUENT TO
LOCATION / DEVELOPMENT BUILDING TYPE ANCES LAND IMPROVEMENTS ACQUISITION
------------------------------- -------------------- ---------- --------- ------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
HEBRON, KENTUCKY
-------------------------------
SOUTHPARK, KENTUCKY CR SERVICES INDUSTRIAL 3,273 1,085 4,060 0
SOUTHPARK, KENTUCKY BUILDING #1 INDUSTRIAL 0 682 3,725 89
SOUTHPARK, KENTUCKY BUILDING #3 INDUSTRIAL 0 841 3,382 93
SOUTHPARK, KENTUCKY REDKEN INDUSTRIAL 2,454 779 3,078 0
CINCINNATI, OHIO
-------------------------------
PARK 50 TECHNECENTER BUILDING #17 OFFICE 3,682 500 6,200 (757)
PARK 50 TECHNECENTER BUILDING #20 INDUSTRIAL 4,093 461 7,450 (782)
PARK 50 TECHNECENTER BUILDING #24 (PLAZA) RETAIL 0 151 809 69
PARK 50 TECHNECENTER BUILDING #25 INDUSTRIAL 0 1,161 3,755 122
PARK 50 TECHNECENTER SDRC BUILDING OFFICE 14,448 911 19,004 371
FIDELTY DRIVE DUN & BRADSTREET OFFICE 2,360 270 2,510 231
WORLD PARK BUILDING #5 INDUSTRIAL 2,243 270 3,260 57
WORLD PARK BUILDING #6 INDUSTRIAL 2,302 378 4,488 (818)
WORLD PARK BUILDING #7 INDUSTRIAL 3,527 525 4,150 17
WORLD PARK BUILDING #8 INDUSTRIAL 2,872 561 5,309 22
WORLD PARK BUILDING #9 INDUSTRIAL 1,619 317 2,993 26
WORLD PARK BUILDING #11 INDUSTRIAL 2,353 460 4,701 158
WORLD PARK BUILDING #14 INDUSTRIAL 1,943 380 3,592 37
WORLD PARK BUILDING #15 INDUSTRIAL 0 373 2,274 201
WORLD PARK BUILDING #16 INDUSTRIAL 1,641 321 3,033 10
TRI-COUNTY OFFICE PARK BUILDINGS #1 - #4 OFFICE(3) 0 217 5,214 306
GOVERNOR'S PLAZA GOVERNOR'S PLAZA RETAIL 7,357 2,012 8,452 203
GOVERNOR'S PLAZA KING'S MALL II RETAIL 3,960 1,928 3,636 110
GOVERNOR'S PLAZA KOHLS RETAIL 0 1,345 3,561 0
312 ELM BUILDING 312 ELM OFFICE 33,802 4,750 43,823 2,005
311 ELM STREET ZUSSMAN OFFICE 339 6,226 133
ENTERPRISE BUSINESS PARK BUILDING A INDUSTRIAL 4,288 1,030 5,482 228
ENTERPRISE BUSINESS PARK BUILDING B INDUSTRIAL 2,941 733 3,443 446
312 PLUM STREET S & L DATA OFFICE 0 2,539 24,312 641
TRIANGLE OFFICE PARK BUILDINGS #1-#38 OFFICE 6,275 1,000 10,440 1,084
GOVERNOR'S HILL 8790 GOVERNOR'S HILL OFFICE 0 400 4,581 106
GOVERNOR'S HILL 8700 GOVERNOR'S HILL OFFICE 0 459 5,705 125
GOVERNOR'S HILL 8800 GOVERNOR'S HILL OFFICE 2,104 225 2,305 340
GOVERNOR'S HILL 8600 GOVERNOR'S HILL OFFICE 15,802 1,220 17,689 630
GOVERNOR'S POINTE 4770 GOVERNOR'S POINTE OFFICE 4,376 586 7,609 (393)
GOVERNOR'S POINTE 4700 BUILDING INDUSTRIAL 3,486 584 5,465 (115)
GOVERNOR'S POINTE 4900 BUILDING INDUSTRIAL 4,232 654 4,017 313
GOVERNOR'S POINTE 4705 GOVERNOR'S POINTE OFFICE 0 719 6,910 154
GOVERNOR'S POINTE 4800 GOVERNOR'S POINTE OFFICE 0 978 4,742 536
GOVERNOR'S POINTE 4605 GOVERNOR'S POINTE OFFICE 10,978 630 16,236 389
MONTGOMERY CROSSING STEINBERG'S RETAIL 0 260 851 79
MONTGOMERY CROSSING II SPORTS UNLIMITED RETAIL 2,822 778 3,657 0
GOVERNOR'S PLAZA KING'S AUTO MALL I RETAIL 3,792 1,085 3,859 597
SUGARCREEK PLAZA SUGARCREEK PLAZA RETAIL 4,408 898 6,492 (580)
COLUMBUS, OHIO
-------------------------------
CORP. PARK AT TUTTLE CRSG LITEL OFFICE 12,500 2,618 17,428 403
CORP. PARK AT TUTTLE CRSG ORDERNET SERVICES OFFICE 9,500 1,494 11,856 269
CORP. PARK AT TUTTLE CRSG INDIANA INSURANCE OFFICE 0 717 2,035 693
PET FOODS BUILD-TO-SUIT PET FOODS DISTRIBUTION INDUSTRIAL 0 268 2,462 163
GALYAN'S BUILDING #136 RETAIL 3,215 1,925 3,128 0
MBM BUILDING MBM BUILDING OFFICE 0 170 1,916 0
V. A. HOSPITAL V. A. HOSPITAL OFFICE 6,884 703 9,016 0
CORP. PARK AT TUTTLE CRSG XEROX OFFICE 4,500 1,580 8,630 0
<CAPTION>
(IN THOUSANDS)
TOTAL COST
----------------------------------------
LAND & BUILDINGS/ ACCUMULATED DATE OF DATE DEPRECIABLE
LOCATION / DEVELOPMENT IMPROVEMENTS IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED LIFE
---------------------- ---------------------------------------- ------------ ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
HEBRON, KENTUCKY
-------------------------
SOUTHPARK, KENTUCKY 1,085 4,060 5,145 54 1994 1994 (6)
SOUTHPARK, KENTUCKY 696 3,800 4,496 116 1990 1993 (6)
SOUTHPARK, KENTUCKY 858 3,458 4,316 106 1991 1993 (6)
SOUTHPARK, KENTUCKY 779 3,078 3,857 46 1994 1994 (6)
CINCINNATI, OHIO
-------------------------
PARK 50 TECHNECENTER 510 5,433 5,943 1,322 1985 1986 (6)
PARK 50 TECHNECENTER 469 6,660 7,129 1,048 1987 1988 (6)
PARK 50 TECHNECENTER 154 875 1,029 27 1989 1993 (6)
PARK 50 TECHNECENTER 1,184 3,854 5,038 117 1989 1993 (6)
PARK 50 TECHNECENTER 929 19,356 20,286 594 1991 1993 (6)
FIDELTY DRIVE 277 2,734 3,011 663 1972 1986 (6)
WORLD PARK 276 3,311 3,587 684 1987 1990 (6)
WORLD PARK 385 3,663 4,048 614 1987 1990 (6)
WORLD PARK 537 4,156 4,692 618 1987 1990 (6)
WORLD PARK 561 5,331 5,892 166 1989 1993 (6)
WORLD PARK 317 3,020 3,336 97 1989 1993 (6)
WORLD PARK 460 4,859 5,319 163 1989 1993 (6)
WORLD PARK 380 3,629 4,009 118 1989 1993 (6)
WORLD PARK 381 2,467 2,848 78 1990 1993 (6)
WORLD PARK 321 3,043 3,364 95 1989 1993 (6)
TRI-COUNTY OFFICE PARK 221 5,516 5,737 172 1971 1993 (6)
GOVERNOR'S PLAZA 2,053 8,614 10,667 266 1990 1993 (6)
GOVERNOR'S PLAZA 1,952 3,722 5,674 114 1988 1989 (6)
GOVERNOR'S PLAZA 1,345 3,561 4,906 15 1994 1994 (6)
312 ELM BUILDING 4,845 45,732 50,578 1,402 1992 1993 (6)
311 ELM STREET 346 6,352 6,698 195 1902 (4) 1993 (6)
ENTERPRISE BUSINESS PARK 1,051 5,690 6,740 174 1990 1993 (6)
ENTERPRISE BUSINESS PARK 747 3,875 4,622 172 1990 1993 (6)
312 PLUM STREET 2,590 24,903 27,492 773 1987 1993 (6)
TRIANGLE OFFICE PARK 1,018 11,506 12,524 3,439 1965 (5) 1986 (6)
GOVERNOR'S HILL 408 4,679 5,087 144 1985 1993 (6)
GOVERNOR'S HILL 468 5,820 6,289 178 1985 1993 (6)
GOVERNOR'S HILL 231 2,639 2,870 738 1985 1986 (6)
GOVERNOR'S HILL 1,245 18,295 19,539 609 1986 1993 (6)
GOVERNOR'S POINTE 596 7,205 7,802 1,142 1986 1988 (6)
GOVERNOR'S POINTE 595 5,339 5,934 901 1987 1988 (6)
GOVERNOR'S POINTE 673 4,311 4,984 812 1987 1989 (6)
GOVERNOR'S POINTE 733 7,050 7,783 216 1988 1993 (6)
GOVERNOR'S POINTE 998 5,258 6,256 192 1989 1993 (6)
GOVERNOR'S POINTE 643 16,612 17,255 518 1990 1993 (6)
MONTGOMERY CROSSING 260 930 1,190 2 1993 1993 (6)
MONTGOMERY CROSSING II 778 3,657 4,435 37 1994 1994 (6)
GOVERNOR'S PLAZA 1,124 4,417 5,541 649 1990 1993 (6)
SUGARCREEK PLAZA 916 5,894 6,810 919 1988 1988 (6)
COLUMBUS, OHIO
-------------------------
CORP. PARK AT TUTTLE CRSG 2,670 17,779 20,449 545 1990 1993 (6)
CORP. PARK AT TUTTLE CRSG 1,524 12,095 13,619 371 1990 1993 (6)
CORP. PARK AT TUTTLE CRSG 717 2,728 3,445 41 1994 1994 (6)
PET FOODS BUILD-TO-SUIT 273 2,620 2,893 80 1993 1993 (6)
GALYAN'S 1,925 3,128 5,053 19 1994 1994 (6)
MBM BUILDING 170 1,916 2,086 0 1978 1994 (6)
V. A. HOSPITAL 703 9,016 9,719 67 1994 1994 (6)
CORP. PARK AT TUTTLE CRSG 1,580 8,630 10,209 143 1992 1994 (6)
</TABLE>
- 32 -
<PAGE>
DUKE REALTY INVESTMENTS, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION SCHEDULE III
DECEMBER 31, 1994
<TABLE>
<CAPTION>
(IN THOUSANDS)
INITIAL COST TO COMPANY COSTS (1)
------------------------- CAPITALIZED
BUILDING ENCUMBER- BUILDINGS/ SUBSEQUENT TO
LOCATION / DEVELOPMENT BUILDING TYPE ANCES LAND IMPROVEMENTS ACQUISITION
------------------------------- -------------------- ---------- --------- ------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
LIVONIA, MICHIGAN
-------------------------------
LIVONIA BUILDING A OFFICE 0 0 9,474 526
LIVONIA BUILDING B OFFICE 0 0 11,930 423
ELLISVILLE, MISSOURI
-------------------------------
ELLISVILLE PLAZA ELLISVILLE PLAZA RETAIL 1,289 802 3,143 (324)
DECATUR, ILLINOIS
-------------------------------
PARK 101 BUILDING #3 INDUSTRIAL 1,640 275 2,405 599
PARK 101 BUILDING #8 INDUSTRIAL 1,193 80 1,660 (24)
PARK 101 ILL POWER LAND LEASE INDUSTRIAL 0 198 0 0
BLOOMINGTON, ILLINOIS
-------------------------------
LAKEWOOD PLAZA LAKEWOOD PLAZA RETAIL 5,201 766 7,199 256
CHAMPAIGN, ILLINOIS
-------------------------------
MARKET VIEW SHOPPING CTR MARKET VIEW CENTER RETAIL 4,539 740 6,830 (752)
VARIOUS LOCATIONS
-------------------------------
LAND HELD FOR DEVELOPMENT N/A N/A 0 44,656 0 2,538
CONSTRUCTION IN PROGRESS N/A N/A 0 0 1,165 21,802
ELIMINATIONS
-------- -------- -------- --------
TOTALS $298,640 116,321 568,617 38,760
-------- -------- -------- --------
-------- -------- -------- --------
<CAPTION>
(IN THOUSANDS)
TOTAL COST
----------------------------------------
LAND & BUILDINGS/ ACCUMULATED DATE OF DATE DEPRECIABLE
LOCATION / DEVELOPMENT IMPROVEMENTS IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED LIFE
---------------------- ---------------------------------------- ------------ ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
LIVONIA, MICHIGAN
-------------------------
LIVONIA 0 10,000 10,000 357 1988 1993 (6)
LIVONIA 0 12,353 12,353 416 1989 1993 (6)
ELLISVILLE, MISSOURI
-------------------------
ELLISVILLE PLAZA 802 2,819 3,621 420 1987 1988 (6)
DECATUR, ILLINOIS
-------------------------
PARK 101 280 3,000 3,279 820 1979 1986 (6)
PARK 101 184 1,532 1,716 351 1980 1986 (6)
PARK 101 198 0 198 0 N/A 1994 (6)
BLOOMINGTON, ILLINOIS
-------------------------
LAKEWOOD PLAZA 786 7,435 8,221 1,133 1987 1988 (6)
CHAMPAIGN, ILLINOIS
-------------------------
MARKET VIEW SHOPPING CTR 755 6,063 6,818 1,353 1985 1986 (6)
VARIOUS LOCATIONS
-------------------------
LAND HELD FOR DEVELOPMENT 47,194 0 47,194 174
CONSTRUCTION IN PROGRESS 0 22,967 22,967
ELIMINATIONS 15 15
-------- -------- -------- --------
119,952 603,761 723,713 38,058
-------- -------- -------- --------
-------- -------- -------- --------
- 33 -
<PAGE>
<FN>
(1) Costs capitalized subsequent to acquisition include decreases for purchase
price reduction payments received and land sales or takedowns.
(2) The Company owns a 66.67% interest in the partnership owning this building.
The Company shares in the cash flow of this building in accordance with the
Company's partnership interests.
(3) The four buildings comprising Tri-County Office Park were constrtucted in
1971, 1973, and 1982.
(4) This building was renovated in 1986.
(5) This building was renovated in 1985.
(6) Depreciation of real estate is computed using the straight-line method over
40 years for building and shorter periods based on lease terms (generally 3
to 10 years) for tenant improvements.
</TABLE>
<TABLE>
<CAPTION>
Real Estate Assets Accumulated Depreciation
-------------------------------- -------------------------------
1994 1993 1992 1994 1993 1992
-------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of year $592,843 132,459 134,129 $23,725 17,508 14,118
Additions during year:
Acquisitions 57,218 452,665 0 0 (242) 0
Construction costs and tenant
improvements 58,819 8,881 1,555 0 0 0
Depreciation expense 0 0 0 15,068 6,459 3,989
Acquisition of minority interest and
joint venture interest 15,742 0 0 0 0 0
-------------------------------- -------------------------------
724,622 594,005 135,684 38,793 23,725 18,107
Deductions during year:
Costs of real estate sold (909) (1,162) (2,291) 0 0 (489)
Other 0 0 (934) (735) 0 (110)
-------------------------------- -------------------------------
Balance at end of year $723,713 592,843 132,459 $38,058 23,725 17,508
-------------------------------- -------------------------------
-------------------------------- -------------------------------
</TABLE>
- 34 -
<PAGE>
3. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1 Articles of Incorporation of Registrant are incorporated herein by
reference to Exhibit 3.3 to the registration statement on Form S-2, as
amended, filed on June 8, 1993, as File No. 33-64038 (the "Registration
Statement").
3.2 By-Laws of Registrant are incorporated herein by reference to Exhibit
3.4 to the Registration Statement.
4. Instruments Defining Rights of Security Holders, including Indentures,
are incorporated herein by reference to Articles V, VI, VIII, IX and X
of Registrant's Articles of Incorporation.
10.1 Agreement of Limited Partnership of Duke Realty Limited Partnership
(the "Operating Partnership") is incorporated herein by reference to
Exhibit 10.1 to the Registration Statement.
10.2 Agreement of Limited Partnership of Duke Realty Services Limited
Partnership (the "Services Partnership") is incorporated herein by
reference to Exhibit 10.2 to the Registration Statement.
10.3 Promissory Note of the Services Partnership is incorporated herein by
reference to Exhibit 10.3 to the Registration Statement.
10.4 Duke Realty Services Partnership 1993 Stock Option Plan is incorporated
herein by reference to Exhibit 10.4 to the Registration Statement.
10.5 Acquisition Option Agreement relating to certain properties not
contributed to the Operating Partnership by Duke Associates (the
"Excluded Properties") is incorporated herein by reference to Exhibit
10.5 to the Registration Statement.
10.6 Management Agreement relating to the Excluded Properties is
incorporated herein by reference to Exhibit 10.6 to the Registration
Statement.
10.7 Contribution Agreement for certain properties and land contributed by
Duke Associates and Registrant to the Operating Partnership is
incorporated herein by reference to Exhibit 10.7 to the Registration
Statement.
10.8 Contribution Agreement for certain assets and contracts contributed by
Duke Associates to the Service Partnership is incorporated herein by
reference to Exhibit 10.8 to the Registration Statement.
10.9 Contribution Agreement for certain contracts contributed by Duke
Associates to the Operating Partnership is incorporated herein by
reference to Exhibit 10.9 to the Registration Statement.
- 35 -
<PAGE>
10.10 Stock Purchase Agreement is incorporated herein by reference to Exhibit
10.10 to the Registration Statement.
10.11 Indemnification Agreement is incorporated herein by reference to Exhibit
10.11 to the Registration Statement.
21. List of Subsidiaries of Registrant.
24. Executed powers of attorney of certain directors.
27. Financial Data Schedule
99.1 Selected Quarterly Financial Information
- 36 -
<PAGE>
The Company will furnish to any security holder, upon written request,
copies of any exhibit incorporated by reference, for a fee of 15 cents
per page, to cover the costs of furnishing the exhibits. Written
request should include a representation that the person making the
request was the beneficial owner of securities entitled to vote at the
1995 Annual Meeting of Shareholders.
(b) REPORTS ON FORM 8-K
A report on Form 8-K dated August 26, 1994 was filed to report under
Item 5 the unaudited financial statements of Duke Associates for the
nine months ended September 30, 1993.
A report on Form 8-K dated October 13, 1994 was filed to report under
Item 5 the exercise of a favorable option to purchase an asset of an
affiliated company.
- 37 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
DUKE REALTY INVESTMENTS, INC.
March 28 , 1995 By: /s/ Thomas L. Hefner
------------------------- --------------------------------------
Thomas L. Hefner
President and Chief Executive Officer
By: /s/ Darell E. Zink, Jr.
--------------------------------------
Darell E. Zink, Jr.
Executive Vice President and
Chief Financial Officer
By: /s/ Dennis D. Oklak
--------------------------------------
Dennis D. Oklak
Vice President and Treasurer
(Chief Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Date Title
--------- ---- -----
/s/ John W. Wynne 3/28/95 Chairman of the Board
------------------------- ----------
John W. Wynne
/s/ Thomas L. Hefner 3/28/95 President and Chief Executive
------------------------- ---------- Officer and Director
Thomas L. Hefner
/s/ Daniel C. Staton 3/28/95 Executive Vice President and Chief
------------------------- ---------- Operating Officer and Director
Daniel C. Staton
/s/ Darell E. Zink, Jr. 3/28/95 Executive Vice President and Chief
------------------------- ---------- Financial Officer and Director
Darell E. Zink, Jr.
- 38 -
<PAGE>
/s/ Geoffrey Button 3/28/95 Director
------------------------- ----------
Geoffrey Button
/s/ John D. Peterson 3/28/95 Director
------------------------- ----------
John D. Peterson
/s/ Dr. Sydney C. Reagan 3/28/95 Director
------------------------- ----------
Dr. Sydney C. Reagan
/s/ Lee Stanfield 3/28/95 Director
------------------------- ----------
Lee Stanfield
/s/ Jay J. Strauss 3/28/95 Director
------------------------- ----------
Jay J. Strauss
/s/ Howard L. Feinsand 3/28/95 Director
------------------------- ----------
Howard L. Feinsand
/s/ James E. Rogers 3/28/95 Director
------------------------- ----------
James E. Rogers
- 39 -
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF DUKE REALTY INVESTMENTS, INC.
<TABLE>
<CAPTION>
Names Under Which
State of Incorporation Subsidiary Does
Subsidiary or Organization Business
------------------------- ---------------------- -------------------------------
<S> <C> <C>
Duke Realty Limited Partnership Indiana Duke Realty Limited Partnership
Duke Services, Inc. Indiana Duke Services, Inc.
Duke Realty Services Limited Indiana Duke Realty Services Limited
Partnership Partnership
Duke Realty Construction, Inc. Indiana Duke Realty Construction, Inc.
Duke Construction Limited Indiana Duke Construction Limited
Partnership Partnership
B/D Limited Partnership Indiana B/D Limited Partnership
Lamida Partners Limited Ohio Lamida Partners Limited
Partnership Partnership
Duna Developers Ohio Duna Developers
Kenwood Office Associates Ohio Kenwood Office Associates
Park Creek Venture Indiana Park Creek Venture
Parkrite Limited Partnership Indiana Parkrite Limited Partnership
Parkwood Joint Venture Indiana Parkwood Joint Venture
Post Road Limited Partnership Indiana Post Road Limited Partnership
Shadeland Station Office Indiana Shadeland Station Office
Associates II Limited Partnership Associates II Limited
Partnership
Brisben/Duke Partnership Ohio Brisben/Duke Partnership
SCRED Ohio Limited Partnership Ohio SCRED Ohio
</TABLE>
- 40 -
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 40,433
<SECURITIES> 0
<RECEIVABLES> 18,056
<ALLOWANCES> (1,291)
<INVENTORY> 0
<CURRENT-ASSETS> 57,552
<PP&E> 723,713
<DEPRECIATION> (38,058)
<TOTAL-ASSETS> 774,901
<CURRENT-LIABILITIES> 29,543
<BONDS> 298,640
<COMMON> 204
0
0
<OTHER-SE> 445,180
<TOTAL-LIABILITY-AND-EQUITY> 774,901
<SALES> 0
<TOTAL-REVENUES> 111,085
<CGS> 58,109
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,840
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,920
<INCOME-PRETAX> 26,216
<INCOME-TAX> 0
<INCOME-CONTINUING> 26,216
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,216
<EPS-PRIMARY> 1.53
<EPS-DILUTED> 0
</TABLE>
<PAGE>
EXHIBIT 99.1
SELECTED QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
Selected quarterly information for the years ended December 31, 1994 and 1993 is
as follows (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------------------------
1994 DECEMBER 31 SEPTEMBER 30 JUNE 30 MARCH 31
------------------------------------- ----------- ------------ ------- ---------
<S> <C> <C> <C> <C>
Revenues $ 28,738 $ 27,826 $ 26,295 $ 24,972
Net income $ 7,111 $ 7,685 $ 5,821 $ 5,599
Net income per share (1) $ 0.35 $ 0.48 $ 0.36 $ 0.35
Weighted average shares 20,304 16,072 16,046 16,046
Funds From Operations (2) $ 13,992 $ 12,129 $ 11,828 $ 11,410
Funds From Operations per share/unit (2) $ 0.58 $ 0.59 $ 0.58 $ 0.56
Weighted average shares/units outstanding (2) 24,312 20,566 20,478 20,478
1993
-------------------------------------
Revenues $ 26,188 $ 4,301 $ 4,437 $ 4,243
Net income (loss) $ 6,003 $ (383) $ (257) $ (350)
Net income (loss) per share (1) $ 0.37 $ (0.19) $ (0.13) $ ( 0.17)
Weighted average shares 16,046 2,045 2,045 2,045
Funds From Operations (2) $ 11,231 $ 10,433 $ 10,499 $ 10,003
Funds From Operations per share/unit (2) $ 0.55 $ 0.53 $ 0.51 $ 0.49
Weighted average shares/units outstanding (2) 20,478 20,478 20,478 20,478
<FN>
(1) Quarterly net income (loss) per share prior to the fourth quarter of 1993
has been adjusted for the 1 for 4.2 reverse stock split effected prior to
the completion of the 1993 Offering. Net income per share for all quarters
subsequent to the 1993 Offering is based on the weighted average number of
shares outstanding during each quarter.
(2) Funds From Operations is presented without reduction for minority interest
of unitholders. Funds From Operations per share/unit includes the effect
of minority interest partnership units. Funds From Operations and Funds
From Operations per share/unit prior to the fourth quarter of 1993 are
presented on a pro forma basis.
</TABLE>
- 41 -
