<PAGE>
As filed with the Securities and Exchange Commission on June 6, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 6, 1995
DUKE REALTY INVESTMENTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Indiana 1-9044 35-1740409
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
8888 Keystone Crossing, Suite 1200
Indianapolis, Indiana 46240
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 574-3531
NOT APPLICABLE
(Former name or former address changed since last report)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Item 5. Pursuant to a reorganization which occurred on October 4, 1993, Duke
Realty Investments, Inc. acquired substantially all of the properties
and businesses of Duke Associates, a full-service commercial real
estate firm operating in the Midwest. In connection with the
reorganization, the audited financial statements of Duke Realty
Limited Partnership (an 84%-owned subsidiary of Duke Realty
Investments, Inc.) as of December 31, 1994 and 1993 and for each of
the years in the three-year period ended December 31, 1994, are being
filed as an exhibit to this form.
Item 7. Financial Statements and Exhibits
The following exhibit is filed with this report:
Exhibit
Number
------
99 Audited financial statements of Duke Realty Limited
Partnership as of December 31, 1994 and 1993 and for
each of the years in the three-year period ended
December 31, 1994.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Duke Realty Investments, Inc.
(Registrant)
Date: June 6, 1995 By: /s/ Dennis D. Oklak
------------------------------
Dennis D. Oklak
Vice President and Treasurer
<PAGE>
EXHIBIT 99
INDEX
PAGE(S)
-------
Independent Auditors' Report 3
Consolidated Balance Sheets, December 31, 1994 and 1993 4
Consolidated Statements of Operations,
Years ended December 31, 1994, 1993 and 1992 5
Consolidated Statements of Cash Flows,
Years ended December 31, 1994, 1993 and 1992 6
Consolidated Statements of Partners' Equity,
Years ended December 31, 1994, 1993 and 1992 7
Notes to Consolidated Financial Statements 8 - 15
<PAGE>
INDEPENDENT AUDITORS' REPORT
THE PARTNERS
DUKE REALTY LIMITED PARTNERSHIP
AND SUBSIDIARIES:
We have audited the accompanying consolidated balance sheets of Duke Realty
Limited Partnership and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of operations and partners' equity and cash
flows for each of the years in the three-year period ended December 31, 1994.
These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements 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 examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also 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 Limited
Partnership 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.
KPMG Peat Marwick, LLP
January 25, 1995
- 3 -
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<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 40,427 10,065
Accounts receivable from tenants, net of allowance of $450 and $397 4,257 4,558
Accrued straight-line rents, net of allowance $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 11,845 6,109
Escrow deposits and other assets 6,384 4,448
------ ------
$ 775,884 $ 633,885
------- -------
------- -------
LIABILITIES AND PARTNERS' 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
Other accrued expenses 3,174 3,363
Other liabilities 3,564 3,629
Tenant security deposits and prepaid rents 3,472 3,053
------- -------
Total liabilities 328,166 283,897
------- -------
Minority interest (Note 2) 420 293
-------- -------
Partners' equity 447,298 349,695
------- -------
$ 775,884 $ 633,885
------- -------
------- -------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
- 4 -
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<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) (1,088) (293) -
----- ----- -----
Net income (loss) $32,968 $ 6,670 $ (653)
------ ------ ------
------ ------ ------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
- 5 -
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
1994 1993 1992
------- ------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 32,968 $ 6,670 $ (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 fees 1,251 294 184
Amortization of deferred leasing and other costs 1,717 616 310
Minority interest in earnings of subsidiaries 1,088 293 -
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 1,335 2,075 (5)
Equity in earnings of unconsolidated companies (219) (131) -
------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 51,856 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 (9,367) (4,742) (1,256)
Net repayment of advances to unconsolidated companies 277 (200) -
------- ------- -------
NET CASH USED BY INVESTING ACTIVITIES (116,227) (315,025) (710)
------- ------- -------
Cash flows from financing activities:
Contributions from partners 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 partners (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 30,362 10,055 (209)
Cash and cash equivalents at beginning of year 10,065 10 219
------- ------- -------
Cash and cash equivalents at end of year $ 40,427 $ 10,065 $ 10
------- ------- -------
------- ------- -------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
- 6 -
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
BALANCE AT DECEMBER 31, 1991 $ 40,220
Net loss (653)
Distributions to partners (3,438)
-------
BALANCE AT DECEMBER 31, 1992 36,129
Capital contribution from Duke Realty Investments, Inc. 310,334
Net income 6,670
Distributions to partners (3,438)
-------
BALANCE AT DECEMBER 31, 1993 349,695
Net income 32,968
Capital contribution from Duke Realty Investments, Inc. 92,171
Acquisition of additional limited partnership interest by
Duke Realty Investments, Inc. 11,523
Acquisition of property in exchange for limited partnership interest 455
Distributions to partners (39,514)
-------
BALANCE AT DECEMBER 31, 1994 $ 447,298
--------
--------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
- 7 -
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) THE PARTNERSHIP
Duke Realty Limited Partnership (the "Partnership") was formed
on October 4, 1993, when Duke Realty Investments, Inc. (the
"Predecessor Company") completed the acquisition of
substantially all of the properties and businesses of Duke
Associates, a full-service commercial real estate firm. In
connection with the acquisition, the Predecessor Company issued
an additional 14,000,833 shares of common stock through an
offering ("the Offering"). The Predecessor Company then
contributed all of its properties and related assets and
liabilities along with the net proceeds from the Offering to the
Partnership in exchange for a 78.36% general partnership
interest represented by 16,046,144 partnership units. Duke
Associates contributed its properties to the Partnership subject
to their existing liabilities in exchange for a 21.64% limited
partnership interest represented by 4,432,109 partnership units
("Units"). The limited partnership units are exchangeable for
shares of the Predecessor Company's common stock on a one-for-
one basis commencing October 4, 1994.
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 Predecessor Company's contribution. The
operating results of the acquired properties and businesses have
been included in the consolidated operating results subsequent
to the date of acquisition.
In 1994, the Predecessor Company issued an additional 3,887,300
common shares through an additional offering ("1994 Offering")
and received net proceeds of $92.1 million. These proceeds were
contributed to the Partnership in exchange for additional
partnership units and were used by the Partnership to fund
current development and acquisition costs.
In 1994, the Predecessor Company acquired an additional interest
in the Partnership through the issuance of 456,375 common shares
for a like number of partnership units. The acquired additional
interest in the Partnership was recorded at the fair market
value of the Predecessor 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. The Predecessor Company owns an 83.62% interest in the
Partnership 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 Partnership has an 89%
profits interest and effective control of their operations.
(continued)
- 8 -
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1993 1992
---- ----
(in thousands)
<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
Net income 23,864 18,143
</TABLE>
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts and
operations of the Predecessor Company for the period from
December 31, 1991 to October 4, 1993 and the accounts and
operations of the Partnership and its majority-owned or
controlled subsidiaries for the period from October 4, 1993
(date of formation) to December 31, 1993, and for the year ended
December 31, 1994. The equity interests in these majority-owned
or controlled subsidiaries not owned by the Partnership are
reflected as minority interests in the consolidated financial
statements. 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
Partnership 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.
(continued)
- 9 -
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
INVESTMENTS IN UNCONSOLIDATED COMPANIES
The equity method of accounting is used for investments in non-majority
owned partnerships and joint ventures in which the Partnership 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 Partnership 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
Partnership.
CASH EQUIVALENTS
Highly liquid investments with a maturity of three months or
less when purchased are classified as cash equivalents.
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.
(continued)
- 10 -
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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 Partnership 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.
INCOME TAXES
As a partnership, the allocated share of income or loss for the
year is included in the income tax returns of the partners;
accordingly, no accounting for income taxes is required in the
accompanying consolidated financial statements.
state and local taxes.
(3) RELATED PARTY TRANSACTIONS
The Partnership provides management, leasing, construction and
other tenant related services to partnerships in which certain
executive officers of the Predecessor Company have continuing
ownership interests and 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 Partnership has an option
to purchase each of the properties owned by these partnerships.
(4) INVESTMENTS IN UNCONSOLIDATED COMPANIES
The Partnership 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 Partnership
acquired the equity interests of two of its unaffiliated joint venture
partners in 1994 and the related properties are now owned 100% by the
Partnership. As part of the purchase of one of the joint venture
interests, the Partnership assumed a $4.5 million mortgage loan. In
addition, a joint venture which owned undeveloped land was dissolved
with the Partnership obtaining direct ownership of undeveloped land.
The Partnership recorded the land at approximately $4.4 million based on
the balance of its investments in and advances to the joint venture
prior to dissolution. The operating results of the acquired properties
have been included in the consolidated operating results subsequent to
the date of acquisition.
(continued)
- 11 -
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP 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.
(continued)
- 12 -
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(5) PROPERTY INDEBTEDNESS
<TABLE>
<CAPTION>
Property indebtedness at December 31 consists of the following:
1994 1993
---- ----
<S> <C> <C>
(in thousands)
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 Partnership has entered into an interest rate swap agreement to
effectively fix the interest rate on the majority of its floating rate
debt. Under the interest rate swap, the Partnership 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.
(continued)
- 13 -
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The Partnership 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 Partnership 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 Partnership 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 Partnership had no
borrowings under the line at December 31, 1994.
(6) LEASING ACTIVITY
Future minimum rents due to the Partnership 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.
(continued)
- 14 -
<PAGE>
DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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.
(7) EMPLOYEE BENEFIT PLAN
In October 1993, the Partnership established a profit sharing and salary
deferral plan. The Partnership 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 Partnership was
$370,000 and $74,000, for 1994 and 1993, respectively.
In October 1993, the Partnership also established a health and welfare
plan. The Partnership makes contributions to the plan throughout the year
as necessary to fund claims not covered by employee contributions. Total
expense recognized by the Partnership related to this plan was $766,000 and
$204,000 for 1994 and 1993, respectively.
(8) STOCK OPTION PLAN
In October 1993, the Partnership established a stock option plan under
which 1,315,000 shares of the Predecessor Company's 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>
- 15 -
