DUKE REALTY INVESTMENTS INC, 424B5, 1996-03-15

DUKE REALTY INVESTMENTS INC
424B5, 1996-03-15
REAL ESTATE INVESTMENT TRUSTS

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<PAGE>

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED MARCH 14, 1996

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 29, 1994)
3,500,000 SHARES

[LOGO]

DUKE REALTY INVESTMENTS, INC.
COMMON STOCK
--------------

Duke Realty Investments, Inc. (the "Company") is a self-administered and
self-managed real estate investment trust
that began operations through a related entity in 1972. As of March 1, 1996, the
Company owned a diversified portfolio of 213 in-service industrial, office and
retail properties, encompassing approximately 21.9 million square feet and
located in eight states, and 12 buildings and one building expansion
encompassing approximately 3.2 million square feet under development. The
Company also owns approximately 1,150 acres of land for future development. The
Company has the largest commercial real estate operations in Indianapolis and
Cincinnati and is one of the largest real estate companies in the Midwest. The
Company expects to continue to pay regular quarterly dividends to its
shareholders.

All of the shares of Common Stock offered hereby are being sold by the
Company. The Common Stock is listed on the New York Stock Exchange under the
symbol DRE. The last reported sale price for the Common Stock on March 7, 1996
was $31.50 per share.
---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO
WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2)
<S> <C> <C> <C>
Per Share........................................ $ $ $
Total (3)........................................ $ $ $
</TABLE>

(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $325,000.
(3) The Company has granted to the several Underwriters an option to purchase up
to an additional 525,000 shares of Common Stock to cover over-allotments, if
any. If all of such shares are purchased, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
---------------------

THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
-------------------

The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, subject to
approval of certain legal matters by counsel for the Underwriters. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the shares of
Common Stock will be made in New York, New York on or about , 1996.
---------------------

MERRILL LYNCH & CO.
ALEX. BROWN & SONS
INCORPORATED
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
MCDONALD & COMPANY
SECURITIES, INC.
-----------------

The date of this Prospectus Supplement is , 1996.
<PAGE>
[ MAP ]

IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

S-2
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS OR INCORPORATED HEREIN AND
THEREIN BY REFERENCE. UNLESS INDICATED OTHERWISE, THE INFORMATION CONTAINED IN
THIS PROSPECTUS SUPPLEMENT IS PRESENTED AS OF DECEMBER 31, 1995. ALL REFERENCES
TO THE "COMPANY" IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
INCLUDE THE COMPANY AND THOSE ENTITIES OWNED OR CONTROLLED BY THE COMPANY,
UNLESS THE CONTEXT INDICATES OTHERWISE.

THE COMPANY

The Company is a self-administered and self-managed real estate investment
trust (a "REIT") that began operations through a related entity in 1972. At
December 31, 1995, the Company owned a diversified portfolio of 202 in-service
industrial, office and retail properties (the "Properties"), encompassing
approximately 20.1 million square feet and located in eight states, and 13
buildings and two building expansions encompassing approximately 3.4 million
square feet under development. Since December 31, 1995, the Company acquired 10
properties, began development of one property, placed two properties and one
building expansion in service and sold one property, bringing the Company's
total portfolio at March 1, 1996 to 225 properties encompassing 25.1 million
square feet including 213 properties with 21.9 million square feet in service.
The Company also owns approximately 1,150 acres of unencumbered land (the
"Land") for future development, of which approximately 80% is zoned for
industrial use and which is typically located adjacent to the Properties. The
Company provides leasing, management, construction, development and other
tenant-related services for the Properties and certain properties owned by third
parties. The Company has the largest commercial real estate operations in
Indianapolis and Cincinnati and is one of the largest real estate companies in
the Midwest. The Company believes that the Midwest offers a relatively strong
and stable economy compared to other regions of the United States and provides
significant growth potential through its central location, established
manufacturing base, skilled work force and moderate labor costs.

The Company has developed over 41 million square feet of commercial property
since its founding. During the last five years, the Company developed an average
of approximately 2.5 million square feet per year. In 1995, the Company placed
in service 3.1 million square feet of new development and acquired 4.6 million
square feet of property.

The Company manages approximately 33 million square feet of property,
including over 9.5 million square feet owned by third parties. The Company
manages approximately 33% and 24% of all competitive suburban office,
warehousing and light manufacturing space in Indianapolis and Cincinnati,
respectively. In addition to providing services to approximately 1,400 tenants
in the Properties, the Company provides such services to over 1,200 tenants in
approximately 125 properties owned by third parties. Based on market data
maintained by the Company, the Company believes that it was responsible in 1995
for approximately 55% and 66% of the net absorption (gross space leased minus
lease terminations and expirations) of competitive suburban office, warehousing
and light manufacturing space in Indianapolis and Cincinnati, respectively. The
Company believes that its dominant position in its primary markets gives it a
competitive advantage in its real estate activities.

After completion of this offering (the "Offering"), the six senior officers
of the Company, who collectively have over 121 years of experience in the real
estate industry and have been with the Company for an average of over 17 years,
will beneficially own common stock of the Company ("Common Stock") and units of
partnership interest ("Units") issued by Duke Realty Limited Partnership (the
"Operating Partnership") exchangeable for Common Stock that represent
approximately 12% of the Company's Common Stock on a fully diluted basis.

S-3
<PAGE>
The following tables provide an overview of the Properties.

SUMMARY OF PROPERTIES
(IN THOUSANDS, EXCEPT PERCENTAGES)

<TABLE>
<CAPTION>
PERCENT OF
PERCENT OF ANNUAL NET TOTAL NET OCCUPANCY AT
SQUARE TOTAL EFFECTIVE EFFECTIVE DECEMBER 31,
TYPE OF PROPERTY FEET SQUARE FEET RENT (1) ANNUAL RENT 1995
- ------------------------------------------------------------- ------ ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Industrial................................................... 13,692 68% $ 52,320 45% 96.1%
Office....................................................... 4,905 25 52,114 44 94.1%
Retail....................................................... 1,476 7 13,124 11 93.8%
------ --- ------------- --- ---
Total........................................................ 20,073 100% $117,558 100% 95.4%
------ --- ------------- --- ---
------ --- ------------- --- ---
</TABLE>

- ------------------------
(1) Represents annual net effective rent due from tenants in occupancy as of
December 31, 1995. Net effective rent ("Net Effective Rent") equals the
average annual rental property revenue over the terms of the respective
leases, excluding additional rent due as operating expense reimbursements,
landlord allowances for operating expenses and percentage rents.

SQUARE FOOTAGE AND ANNUAL NET EFFECTIVE RENT OF PROPERTIES
(IN THOUSANDS, EXCEPT PERCENTAGES)

<TABLE>
<CAPTION>
SQUARE FEET PERCENT OF
------------------------------------------------- ANNUAL NET ANNUAL NET
PERCENT OF EFFECTIVE EFFECTIVE
STATE INDUSTRIAL OFFICE RETAIL TOTAL TOTAL RENT (1) RENT
- ---------------------------------------------- ---------- ------ ------ ------ ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Indiana....................................... 8,954 1,247 440 10,641 53% $ 47,869 41%
Ohio.......................................... 2,945 2,950 829 6,724 34 53,017 45
Kentucky...................................... 952 -- -- 952 5 2,444 2
Tennessee..................................... 562 -- -- 562 3 3,425 3
Missouri...................................... -- 463 33 496 2 5,439 5
Illinois...................................... 126 -- 174 300 1 2,244 2
Michigan...................................... -- 245 -- 245 1 2,629 2
Wisconsin..................................... 153 -- -- 153 1 491 --
---------- ------ ------ ------ --- ------------- ---
Total..................................... 13,692 4,905 1,476 20,073 100% $117,558 100%
---------- ------ ------ ------ --- ------------- ---
---------- ------ ------ ------ --- ------------- ---
</TABLE>

- ------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
December 31, 1995.

S-4
<PAGE>
RECENT DEVELOPMENTS

OPERATING PERFORMANCE. The Company's strong operating performance is
reflected by its increase in rental income from $88.2 million for the year ended
December 31, 1994 to $112.9 million for the year ended December 31, 1995, a 28%
increase. This growth was the result of an increase in both the square footage
of property in-service from 12.9 million square feet to 20.1 million square feet
and the occupancy of this portfolio from 94.5% to 95.4% from December 31, 1994
to December 31, 1995. Also, for the year ended December 31, 1995, net effective
rental rates increased by 8.8% for industrial properties, 4.4% for office
properties and 12.1% for retail properties on 847,000 square feet of leases
renewed by the Company. As a result, the Company's Board of Directors announced
in the third quarter of 1995 a 4.3% increase in its regular quarterly dividend
from $.47 to $.49 per share of Common Stock.

DEVELOPMENT AND ACQUISITION ACTIVITY. During 1995, the Company completed
development of and placed in service 17 properties and two property expansions
comprising 3.1 million square feet at a total cost of $106.0 million. The
Company has 13 properties and two property expansions under development
comprising 3.4 million square feet which will have a total cost of $167.2
million upon completion. Also during 1995, the Company acquired 35 properties
with 2.3 million square feet and the remaining 50% joint venture interest in a
previously developed property at a total cost of $110.9 million.

These property additions (the "New Properties"), totaling 8.9 million square
feet, consist of 71% industrial, 21% office and 8% retail projects. The total
cost of the New Properties is expected to be $384.1 million. At December 31,
1995, the New Properties which have been placed in service are 95% leased, and
the New Properties under construction are 87% pre-leased for a combined total of
92% leased. The New Properties are expected to provide an initial weighted
average unleveraged return on cost (computed as property annual contractual net
operating income ("NOI") divided by total project costs) of 11.1% assuming no
further leasing. The Company expects the weighted average unleveraged return to
be 12.1% with anticipated leasing activity. The annual contractual NOI to be
generated from the New Properties, once placed in service, will be $42.6
million, increasing to $45.7 million with anticipated additional leasing. The
cost of the New Properties to be placed in service in the first quarter of 1996
is $65.0 million, in the second quarter of 1996 is $19.5 million, in the third
quarter of 1996 is $82.5 million, and in 1997 is $240,000.

S-5
<PAGE>
The following table sets forth information regarding each of the New
Properties.
<TABLE>
<CAPTION>
IN-SERVICE OR
ANTICIPATED PROPERTY PERCENTAGE SQUARE
IN-SERVICE DATE PROJECT/TENANT LOCATION TYPE OWNERSHIP FEET
- --------------- ------------------------------ ---------------- -------------- --------- ---------
<S> <C> <C> <C> <C> <C>
DEVELOPMENT COMPLETED IN 1995:
1st Qtr. 1995 Silver Burdett Ginn Indianapolis, IN Industrial 100% 553,900
1st Qtr. 1995 Park 100 Building 97 Indianapolis, IN Industrial 100% 280,800
2nd Qtr. 1995 Park 100 Building 98 Expansion Indianapolis, IN Industrial 100% 97,000
2nd Qtr. 1995 Sterling Software Building 2 Columbus, OH Office 100% 57,660
2nd Qtr. 1995 John Alden -- Columbus Columbus, OH Office 100% 101,200
2nd Qtr. 1995 World Park Building 17 Cincinnati, OH Industrial 50% 304,000
3rd Qtr. 1995 Park 100 Building 100 Indianapolis, IN Industrial 100% 117,500
3rd Qtr. 1995 St. Francis Indianapolis, IN Medical Office 100% 95,579
3rd Qtr. 1995 South Pointe Building A Columbus, OH Industrial 100% 293,824
3rd Qtr. 1995 Petsmart Expansion Columbus, OH Industrial 100% 156,000
3rd Qtr. 1995 Office Max Cincinnati, OH Retail 100% 23,484
3rd Qtr. 1995 Park 100 Building 99 Indianapolis, IN Industrial 50% 364,800
4th Qtr. 1995 Dayco Louisville, KY Industrial 50% 282,539
4th Qtr. 1995 Park 100 Building 127 Indianapolis, IN Industrial 100% 93,600
4th Qtr. 1995 Best Buy at Tuttle Crossing Columbus, OH Retail 100% 68,400
4th Qtr. 1995 Community MOB -- East Indianapolis, IN Medical Office 100% 38,193
Sofa Express -- Governor's
4th Qtr. 1995 Plaza Cincinnati, OH Retail 100% 15,000
4th Qtr. 1995 Cardinal Health Columbus, OH Office 100% 132,854
4th Qtr. 1995 Haywood Oaks Building 7 Nashville, TN Industrial 100% 66,873
---------
3,143,206
---------
UNDER DEVELOPMENT
1st Qtr. 1996 John Alden -- Miami Miami, FL Office 100% 251,316
1st Qtr. 1996 Sofa Express -- Eastgate Cincinnati, OH Retail 100% 13,500
1st Qtr. 1996 Thomson Consumer Electronics Indianapolis, IN Industrial 100%(3) 599,040
1st Qtr. 1996 Park 100 Building 128 Indianapolis, IN Industrial 100% 322,000
1st Qtr. 1996 Two Parkwood Indianapolis, IN Office 100% 93,300
2nd Qtr. 1996 South Pointe Building B Columbus, OH Industrial 100% 307,200
2nd Qtr. 1996 American Air Filter Lebanon, IN Industrial 100% 153,600
2nd Qtr. 1996 Wal-Mart at Tuttle Crossing Columbus, OH Retail 100% 149,429
3rd Qtr. 1996 Nationwide Columbus, OH Office 100% 315,102
3rd Qtr. 1996 Bigg's Supercenter Cincinnati, OH Retail 100% 160,000
3rd Qtr. 1996 Day Dream Publishing Expansion Indianapolis, IN Industrial 100% 97,080
3rd Qtr. 1996 Little Brown & Co. Lebanon, IN Industrial 100%(3) 500,455
3rd Qtr. 1996 Ohio National Life Cincinnati, OH Office 100% 212,125
3rd Qtr. 1996 Sterling Software Building 3 Columbus, OH Office 100% 64,500
3rd Qtr. 1997 Fountain Place Cincinnati, OH Retail 25% 209,585
---------
3,448,232
---------
1995 ACQUISITIONS:
1st Qtr. 1995 Park 100 Building 107 Indianapolis, IN Industrial 100% 58,783
1st Qtr. 1995 Palomar Building Indianapolis, IN Industrial 100% 99,350
1st Qtr. 1995 Keebler Building Nashville, TN Industrial 100% 36,150
1st Qtr. 1995 Franklin Road Business Center Indianapolis, IN Industrial 100% 367,065
1st Qtr. 1995 University Moving Cincinnati, OH Industrial 100% 70,000
1st Qtr. 1995 Eastgate Square Cincinnati, OH Retail 100% 80,682
2nd Qtr. 1995 Enterprise Park Cincinnati, OH Industrial 100% 116,150
2nd Qtr. 1995 Laumeier I St. Louis, MO Office 100% 113,852
2nd Qtr. 1995 Laumeier II St. Louis, MO Office 100% 110,541
2nd Qtr. 1995 Westview St. Louis, MO Office 100% 114,722
2nd Qtr. 1995 NAMPAC Indianapolis, IN Industrial 100% 83,200
3rd Qtr. 1995 8465 Keystone Crossing Indianapolis, IN Office 100% 28,298
3rd Qtr. 1995 Park Fletcher Indianapolis, IN Industrial 50% 828,865
4th Qtr. 1995 Westmark St. Louis, MO Office 100% 123,889
4th Qtr. 1995 Fairfield Business Center Cincinnati, OH Industrial 100% 115,823
4th Qtr. 1995 One Parkwood Indianapolis, IN Office 100% -- (4)
---------
2,347,370
---------
8,938,808
---------
---------

<CAPTION>
IN-SERVICE OR PERCENT LEASED INITIAL
ANTICIPATED OR LEASE
IN-SERVICE DATE PRE-LEASED (1) TERM (2)
- --------------- -------------- --------
<S> <C> <C>
DEVELOPMENT COMPLETED IN 1995:
1st Qtr. 1995 100% 7 Years
1st Qtr. 1995 100% Varies
2nd Qtr. 1995 100% 6 Years
2nd Qtr. 1995 100% 15 Years
2nd Qtr. 1995 100% 15 Years
2nd Qtr. 1995 100% 10 Years
3rd Qtr. 1995 100% 10 Years
3rd Qtr. 1995 75% Varies
3rd Qtr. 1995 70% 5 Years
3rd Qtr. 1995 100% 15 Years
3rd Qtr. 1995 100% 15 Years
3rd Qtr. 1995 100% 10 Years
4th Qtr. 1995 100% 15 Years
4th Qtr. 1995 100% 10 Years
4th Qtr. 1995 85% 15 Years
4th Qtr. 1995 100% 15 Years

4th Qtr. 1995 100% 10 Years
4th Qtr. 1995 100% 10 Years
4th Qtr. 1995 57% 5 Years
---
95%
---
UNDER DEVELOPMENT:
1st Qtr. 1996 100% 20 Years
1st Qtr. 1996 100% 10 Years
1st Qtr. 1996 100% 10 Years
1st Qtr. 1996 100% 10 Years
1st Qtr. 1996 87% 10 Years
2nd Qtr. 1996 0% N/A
2nd Qtr. 1996 100% 15 Years
2nd Qtr. 1996 100% 21 Years
3rd Qtr. 1996 100% 6 Years
3rd Qtr. 1996 100% 20 Years
3rd Qtr. 1996 100% 8 Years
3rd Qtr. 1996 100% 10 Years
3rd Qtr. 1996 67% 20 Years
3rd Qtr. 1996 100% 15 Years
3rd Qtr. 1997 79% 20 Years
---
87%
---
1995 ACQUISITIONS:
1st Qtr. 1995 97% Varies
1st Qtr. 1995 100% 10 Years
1st Qtr. 1995 100% 15 Years
1st Qtr. 1995 90% 1 Year
1st Qtr. 1995 100% Varies
1st Qtr. 1995 100% Varies
2nd Qtr. 1995 98% Varies
2nd Qtr. 1995 98% Varies
2nd Qtr. 1995 100% Varies
2nd Qtr. 1995 98% Varies
2nd Qtr. 1995 100% 10 Years
3rd Qtr. 1995 92% Varies
3rd Qtr. 1995 89% Varies
4th Qtr. 1995 100% 5 Years
4th Qtr. 1995 85% Varies
4th Qtr. 1995 100% Varies
---
94%
---
92%
---
---
</TABLE>

- ----------------------------------
(1) Represents percent leased or pre-leased at December 31, 1995.
(2) Represents lease term of the building's primary tenant or tenants.
(3) These properties will be contributed to a joint venture upon completion.
(4) During 1995, the Company acquired the 50% interest of its unaffiliated joint
venture partner.

S-6
<PAGE>
In addition to the 2.3 million square feet of acquisitions noted above, in
December 1995, the Company formed a 50/50 joint venture with an institutional
investor. The joint venture will own 46 industrial buildings totaling over 4.7
million square feet and 113 acres of land. The Company contributed 19 properties
and the land, and will contribute two properties currently under development to
the venture, while the institutional investor contributed cash equal to the
value of the Company's contribution. The venture purchased an additional 25
properties located primarily in the Park 100 Business Park in Indianapolis. This
venture was formed to enhance the Company's return on its investment in these
properties and to solidify its position in its flagship Park 100 Business Park.

FINANCING. In January 1996, the Company increased the commitment amount on
its unsecured line of credit (the "Line of Credit") from $100 million to $150
million and reduced the borrowing rate from the 30-day London Interbank Offered
Rate ("LIBOR") plus 2.00% to LIBOR plus 1.625%. The Line of Credit had a balance
outstanding of $123.0 million on March 1, 1996 and matures in April 1998. The
net proceeds of the Offering will be used to retire substantially all of the
balance outstanding on the Line of Credit. The Company intends to continue to
use the Line of Credit to provide interim funding of development and
acquisitions of additional rental properties.

In September 1995, the Company issued $150.0 million of 7 1/4% and 7 3/8%
investment grade unsecured Notes due 2002 and 2005, respectively (the "1995 Debt
Offering"). The net proceeds were used to retire outstanding indebtedness and to
fund acquisition and development of additional rental properties. As a result of
this debt offering, the Company was able to significantly reduce its secured
indebtedness and enhance its operating flexibility.

LAND ACTIVITY. In 1995, the Company's development activities used 219 acres
of the Company's unencumbered Land. The Company also acquired 490 additional
acres, leased 10 acres and sold 16 acres of Land, leaving approximately 1,150
acres of unencumbered Land held for its future development activities. In
addition, the Company controls 700 acres of industrial land through options
which expire over the next 15 years.

CLEVELAND. Consistent with its business strategy of expanding into
attractive Midwestern markets, in February 1996 the Company acquired the assets
and operations of an established real estate development and management company
in Cleveland, Ohio, for approximately $76 million. The acquisition included a
portfolio of eight Class A office buildings consisting of 782,000 gross square
feet in suburban Cleveland, with an occupancy rate of 99%. These properties will
produce an initial weighted average unleveraged return on cost in excess of 11%.
The acquisition was partially financed through the issuance of Units to the
seller.

The Cleveland acquisition is a natural extension of the Company's presence
in the Midwest and Ohio. Management believes that Cleveland is not currently
served by a dominant industrial or suburban office property owner, developer or
manager. The acquisition allows the Company to establish an immediate presence
in the market with the ability to expand into both the suburban office and
industrial markets. The Company believes that the Cleveland market will continue
to benefit from strong real estate fundamentals. Specifically, the suburban
office market of the Rockside Road Corridor, where seven of the properties are
located, has had positive net absorption for six consecutive years with a 1995
year end occupancy of 97%. According to CB Commercial Real Estate Group, Inc.
("CB Commercial"), Cleveland's industrial vacancy rates declined from 7.8% to
6.7% over the twelve months ended December 31, 1995 and compared favorably to
the national average of 6.9%. The Company continues to actively explore both
development and acquisition opportunities in Cleveland. See "The Company --
Cleveland".

S-7
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered.............. 3,500,000 shares (1)
Common Stock to be Outstanding
After the Offering............... 31,804,375 shares (2)
Use of Proceeds................... To retire a substantial portion of the outstanding
balance on the Line of Credit (as defined herein) which
is used to fund development and acquisition of
additional rental properties.
New York Stock Exchange Symbol.... DRE
</TABLE>

- ------------------------
(1) Assumes the Underwriters' over allotment option to purchase up to 525,000
shares of Common Stock is not exercised. See "Underwriting".

(2) Includes 1,324,368 unregistered shares of Common Stock and 4,151,396 Units
issued by the Operating Partnership which are exchangeable by the holders
for shares of Common Stock. Does not include 866,066 shares of Common Stock
issuable upon exercise of outstanding employee stock options or 407,061
Units issued subsequent to December 31, 1995 in connection with the
acquisition of property by the Company.

S-8
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA

The following table sets forth selected consolidated financial and operating
information for the Company on a historical basis. The information was derived
from the Company's consolidated financial statements, which are incorporated by
reference in the accompanying Prospectus.

The following selected financial information should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" for the Company and the consolidated financial statements
incorporated by reference in the accompanying Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------------------
ACTUAL PRO FORMA (1) ACTUAL
------------------------ ------------- ---------
1995 1994 1993 1993
---------- ------------ ------------- ---------
(IN THOUSANDS, EXCEPT PROPERTIES AND PER SHARE DATA)
<S> <C> <C> <C> <C>
Results of Operations:
Revenues:
Rental Operations......................................................... $ 113,641 $ 89,299 $ 81,122 $ 33,648
Service Operations........................................................ 17,777 18,473 17,016 5,654
---------- ------------ ------------- ---------
Total Revenues.............................................................. $ 131,418 $ 107,772 $ 98,138 $ 39,302
---------- ------------ ------------- ---------
---------- ------------ ------------- ---------
Net Income.................................................................. $ 35,019 $ 26,216 $ 19,076 $ 5,013
---------- ------------ ------------- ---------
---------- ------------ ------------- ---------
Share Data (2):
Net Income per Share...................................................... $ 1.54 $ 1.53(3) $ 1.19 $ 0.92
Dividends Declared per Share.............................................. 1.92 1.84 1.80 1.68
Weighted Average Shares Outstanding....................................... 22,679 17,139 16,046 5,459
Balance Sheet Data as of December 31:
Total Assets.............................................................. $1,033,268 $ 763,377 $632,885 $ 632,885
Total Debt................................................................ $ 454,820 $ 298,640 $249,034 $ 249,034
Total Shareholders' Equity................................................ 449,464 $ 363,395 $273,021 $ 273,021
Total Common Shares Outstanding (4)....................................... 24,152 20,391 16,046 16,046
Other Data:
Funds From Operations (5)................................................. $ 56,476 $ 39,415 $ 33,008 $ 11,205
Cash Flow Provided by (Used by):
Operating activities.................................................... $ 78,620 $ 51,873 (6) $ 14,363
Investing activities.................................................... (289,569) (116,238) (6) (315,025)
Financing activities.................................................... 176,243 94,733 (6) 310,717
Number of In-Service Properties at end of year.............................. 202 128 113 113
In-Service square feet available at end of year............................. 20,073 12,896 10,850 10,850
</TABLE>

- ------------------------
(1) 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. Pro Forma results give effect to the Company's
acquisition of Duke Associates and the 1993 offering of 14,000,833 shares of
Common Stock as if they had occurred on January 1, 1993.

(2) All such information has been adjusted for the 1 for 4.2 reverse stock split
effected in October 1993. The number of shares excludes the outstanding
minority interest Units which are exchangeable on a one-for-one basis for
shares of Common Stock.

(3) Included in the 1994 net income was a $2.0 million nonrecurring gain on
property sale.

(4) Excludes Units held by persons other than the Company which are exchangeable
for Common Stock.

S-9
<PAGE>
(5) Funds From Operations ("FFO") is defined by the National Association of Real
Estate Investment Trusts ("NAREIT") as net income or loss excluding gains or
losses from debt restructuring and sales of property plus depreciation and
amortization, and after adjustments for minority interest, unconsolidated
partnerships and joint ventures (adjustments for minority interest,
unconsolidated partnerships and joint ventures are calculated to reflect FFO
on the same basis). FFO 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. The calculation of FFO for the years ended December 31,
1994 and 1993 has been revised to conform with the presentation of FFO for
the year ended December 31, 1995, which excludes amounts attributable to
minority interests. In March 1995, NAREIT issued a clarification of its
definition of FFO. The clarification provides that amortization of deferred
financing costs and depreciation of non-rental real estate assets are no
longer to be added back to net income in arriving at FFO. The Company
adopted these changes effective January 1, 1996. The amounts in this table
do not include the effect of the new clarifications. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Funds From Operations."

(6) This information is unavailable on a Pro Forma basis.

S-10
<PAGE>
THE COMPANY

The Company is a self-administered and self-managed real estate investment
trust that began operations through a related entity in 1972. At December 31,
1995, the Company owned a diversified portfolio of 202 in-service industrial,
office and retail Properties, encompassing approximately 20.1 million square
feet and located in eight states, and 13 buildings and two building expansions
encompassing approximately 3.4 million square feet under development. Since
December 31, 1995, the Company acquired 10 properties, began development of one
property, placed two properties and one building expansion in service and sold
one property, bringing the Company's total portfolio at March 1, 1996 to 225
properties encompassing 25.1 million square feet including 213 properties with
21.9 million square feet in service. The Company also owns approximately 1,150
acres of unencumbered Land for future development, of which approximately 80% is
zoned for industrial use and which is typically located adjacent to the
Properties. The Company provides leasing, management, construction, development
and other tenant-related services for the Properties and certain properties
owned by third parties. The Company has the largest commercial real estate
operations in Indianapolis and Cincinnati and is one of the largest real estate
companies in the Midwest. The Company believes that the Midwest offers a
relatively strong and stable economy compared to other regions of the United
States and provides significant growth potential through its central location,
established manufacturing base, skilled work force and moderate labor costs.

After completion of this Offering, the six senior officers of the Company,
who collectively have over 121 years of experience in the real estate industry
and have been with the Company for an average of over 17 years, will
beneficially own Common Stock and Units exchangeable for Common Stock that
represent approximately 12% of the Company's Common Stock on a fully diluted
basis.

All of the Company's interests in the Properties and Land are held directly
or indirectly by, and substantially all of its operations relating to the
Properties are conducted through, the Operating Partnership. Units in the
Operating Partnership may be exchanged by the holders thereof, other than the
Company, for Common Stock of the Company on a one for one basis. Upon an
exchange of Units for Common Stock, the Company's percentage interest in the
Operating Partnership will increase. The Company controls the Operating
Partnership as the sole general partner and owner, as of December 31, 1995, of
approximately 85.3% of the Units.

S-11
<PAGE>
BUSINESS STRATEGY

The Company's business objective is to increase its Funds From Operations by
(i) maintaining and increasing property occupancy and rental rates through the
aggressive management of its portfolio of existing properties; (ii) expanding
existing properties; (iii) developing and acquiring new properties; and (iv)
providing a full line of real estate services to the Company's tenants and to
third parties.

The Company believes that the analysis of real estate opportunities and
risks can be done most effectively at regional or local levels. As a result, the
Company intends to continue its emphasis on increasing its market share and
effective rents in its existing markets primarily within the Midwest. The
Company also expects to utilize its approximately 1,150 acres of unencumbered
Land and its many business relationships with more than 2,600 commercial tenants
to expand its build-to-suit business (development projects substantially
pre-leased to a single tenant) and to pursue other development and acquisition
opportunities in its existing markets and elsewhere, primarily in the Midwest.
The Company believes that this regional focus will allow it to assess market
supply and demand for real estate more effectively as well as to capitalize on
its strong relationships with its tenant base.

The Company's policy is to seek to develop and acquire substantially
pre-leased Class A commercial properties located in markets with attractive
investment potential for FORTUNE 500 companies and other quality regional and
local firms. The Company's industrial and suburban office development focuses on
business parks and mixed use developments suitable for development of multiple
projects on a single site and where the Company can create and control the
business environment. These business parks and mixed use developments generally
include restaurants and other amenities which the Company believes create an
atmosphere that is particularly efficient and desirable. The Company's retail
development focuses on community, power and neighborhood centers in its existing
markets. As a fully integrated real estate company, the Company is able to
arrange for or provide to its industrial, office and retail tenants not only
well located and well maintained facilities, but also additional services such
as build-to-suit construction, tenant finish construction, expansion flexibility
and advertising and marketing services.

FINANCING STRATEGY

The Company seeks to maintain a well-balanced, conservative and flexible
capital structure by: (i) currently targeting a ratio of long-term debt to total
market capitalization in the range of 25% to 40%; (ii) extending and sequencing
the maturity dates of its debt; (iii) borrowing primarily at fixed rates; (iv)
generally pursuing current and future long-term debt financings and refinancings
on an unsecured basis; (v) maintaining conservative debt service and fixed
charge coverage ratios; and (vi) maintaining a conservative dividend payout
ratio. Management believes that these strategies have enabled and should
continue to enable the Company to access the debt and equity capital markets for
its long-term requirements such as debt refinancings and financing for
development and acquisitions of additional rental Properties. The Company has
demonstrated its ability to access the equity and debt markets to finance its
activities through public offerings of Common Stock in October 1993, September
1994 and May 1995 and unsecured notes in September 1995 which generated
aggregate net proceeds of $647.7 million.

CLEVELAND

Consistent with its business strategy of expanding into attractive
Midwestern markets, in February 1996 the Company acquired the assets and
operations of an established real estate development and management company in
Cleveland, Ohio, for approximately $76 million. The acquisition included a
portfolio of eight Class A office buildings consisting of 782,000 gross square
feet in suburban Cleveland with an occupancy rate of 99%. These properties will
produce an initial weighted average unleveraged return on cost in excess of 11%.
The acquisition was partially financed through the issuance of Units to the
seller.

S-12
<PAGE>
presence in the market with the ability to expand into both the suburban office
and industrial markets. The Company believes that the Cleveland market will
continue to benefit from strong real estate fundamentals. The Company continues
to actively explore both development and acquisition opportunites in Cleveland.

The Cleveland suburban office and industrial markets are characterized by
strong underlying real estate fundamentals. The suburban office market of the
Rockside Road Corridor, where seven of the Company's newly acquired properties
are located, has had positive net absorption for six consecutive years and had a
1995 year end occupancy of 97%. Overall, CB Commercial reported that the
Cleveland suburban office vacancy rate declined from 13.6% to 10.7% over the
twelve months ended December 31, 1995 compared with a national average of 13.4%.
The Society of Industrial and Office Realtors ("SIOR") forecasts total new
construction in the suburban office market of 100,000 square feet over the next
three years and net absorption of 1,125,000 square feet over the same period.
Favorable supply and demand relationships also exist in the industrial market.
CB Commercial has reported that Cleveland's industrial vacancy rates declined
from 7.8% to 6.7% over the twelve months ended December 31, 1995 and compared
favorably to the national average of 6.9%. SIOR indicates that Cleveland's
industrial market had an average annual net absorption of 3,000,000 square feet
of space over the past four years.

Cleveland is a city with many positive business trends and attributes.
According to the Greater Cleveland Growth Association, Cleveland is the
corporate headquarters of 28 FORTUNE 500 companies and 60 other companies with
revenues of $100 million or more. Additionally, 39% of the FORTUNE 500 companies
have a presence in Cleveland. Further, the Cleveland World Trade Center recently
opened to help facilitate Cleveland's growing export activity. According to the
February 1996 issue of PROFILES magazine, the number of local businesses
involved in world trade increased from 1,600 to 2,300 from 1991 to 1994 and
exports from the city are now $5.2 billion annually.

Cleveland also ranks as one of the top locations in the United States for
business growth. According to the February 1996 issue of SITE SELECTION
magazine, Cleveland was the fifth and seventh highest ranked metropolitan area
in the country for new or expanded facilities and new manufacturing plants,
respectively, in 1995. This performance helped Ohio to be the number one state
in the United States for new and expanded corporate facilities for the third
straight year. Specific examples of Cleveland's business expansions include two
facilities totaling more than $200 million for Ford Motor Company and more than
$100 million of facilities for Lincoln Electric Company and Keycorp.

With more than 2.9 million residents, the Greater Cleveland area is the 14th
largest metropolitan area in the United States. According to the United States
Department of Labor's Bureau of Labor Statistics, the unemployment rate in
Cleveland at December 1, 1995 was 5.1% compared to a national average of 5.5%.
Cleveland also experienced job growth of 4.3% from 1993 to 1995. According to
the Greater Cleveland Growth Association, Cleveland's economic base includes a
broad base of industry sectors with a decreasing proportion from 1989 to 1993 of
manufacturing and transportation-related employment and increasing employment in
the Service and Finance, Insurance and Real Estate sectors.

THE MIDWEST REAL ESTATE MARKET

The Company believes that the Midwest offers a relatively strong and stable
economy compared to other regions of the United States and provides attractive
new opportunities through its central location, established manufacturing base,
skilled work force and moderate labor costs. In addition, the interstate highway
systems serving Indianapolis, Cincinnati and Columbus (markets in which
approximately 85% and 88% of the Properties, in terms of both dollar value of
Net Effective Rent and square footage, respectively, are located) help make
those cities prime industrial and office property locations. According to the
Chicago Association of Commerce and Industry, these three cities rank first,
third and fourth, respectively, in being centrally located to the top 100
markets in the United States.

Employment statistics are generally a useful measure of the viability of a
commercial real estate market because the demand for industrial and office space
in a geographic area is usually linked to the levels of

S-13
<PAGE>
business activity and disposable income. According to the United States
Department of Labor's Bureau of Labor Statistics, the unemployment rate at
December 1, 1995 was 3.5%, 4.1% and 3.3% in the Indianapolis, Cincinnati and
Columbus metropolitan areas, respectively, compared to 5.5% for the United
States. Additionally, total non-farm employment has increased 17.6%, 8.9% and
13.1% from January 1989 to December 1995 for the Indianapolis, Cincinnati and
Columbus metropolitan areas, respectively, as compared to 7.6% for the United
States.

Management believes that the Company's assets are located in strong real
estate markets with good investment potential. The Fall 1995 issue of
MARKETSCORE, a National Real Estate Index and Ernst & Young Kenneth Leventhal
Real Estate Group publication ("MarketScore"), rated 63 metropolitan areas in
the United States in terms of their real estate investment potential for the
succeeding two years. The study segmented each metropolitan area by property
type and considered real estate, economic and demographic variables such as
vacancy rates, construction, rental trends, job growth, population and household
growth, and household income. Approximately 93% of the Company's in-service and
under-development Properties based on square feet are in markets considered by
MarketScore to have good or excellent investment potential.

INDIANAPOLIS, INDIANA. With more than 1.5 million residents, Indianapolis
is Indiana's largest metropolitan area. With a central location at the
intersection of four interstate highways, Indianapolis continues to attract new
growth by offering a skilled work force and stable economic base. Indianapolis'
economic base includes distribution, government, manufacturing, retail trade,
service and tourism related industries. According to the Indianapolis Chamber of
Commerce, United Airlines, Federal Express and Dow Elanco have recently
established major new facilities in Indianapolis. The Indianapolis industrial
market continues to have a declining vacancy rate. According to CB Commercial,
the industrial vacancy rate decreased by 2.5% over the 24 months ended December
31, 1995 to 2.5%, less than the national industrial vacancy rate average of
6.9%. According to the Fall 1995 issue of MarketScore, Indianapolis is rated as
the second best warehouse and distribution market in the United States. The
Indianapolis suburban office market also strengthened over the 24-month period.
According to CB Commercial, at December 31, 1995, Indianapolis had a 9.6%
suburban office vacancy rate compared to a national average of 13.4%.

CINCINNATI, OHIO. Cincinnati is the second largest metropolitan area in
Ohio with a population of 1.6 million. With an unemployment rate which is below
the national average, Cincinnati's economic base is healthy and diverse.
Balanced between major FORTUNE 500 employers and entrepreneurial enterprises,
Cincinnati's economic base includes banking, distribution, manufacturing, retail
trade and service related industries. Relatively low taxes, an expanding airport
(a major North American hub for Delta Airlines) and aggressive state and local
incentive packages designed to attract new business have contributed to major
corporate relocations in Cincinnati. Indicative of the economic strength in
Cincinnati, the industrial vacancy rate as reported by CB Commercial declined by
2.0% over the 24 months ended December 31, 1995 to 2.9%, less than half the
national average of 6.9%. As reported by CB Commercial, the Cincinnati suburban
office market vacancy rate was 13.2% at December 31, 1995 compared to a national
average of 13.4%, and the Cincinnati downtown office vacancy rate improved 2.7%
over the same period to 13.6% at December 31, 1995 compared to the national
average of 15.1%.

COLUMBUS, OHIO. The Columbus metropolitan area has a population of
approximately 1.4 million and is the third largest metropolitan area in Ohio.
The city's central location, well-trained work force and high quality of life
have established Columbus as a major transportation and distribution center.
Columbus' economic base includes distribution, government, manufacturing, retail
trade and service-related industries. As reported by CB Commercial, as of
December 31, 1995, the industrial and suburban office vacancy rates in Columbus
were 5.9% and 8.6% compared to the national averages of 6.9% and 13.4%,
respectively. This suburban office vacancy rate is the eleventh lowest out of 54
markets surveyed by CB Commercial.

S-14
<PAGE>
The following table summarizes important economic and performance statistics
for the Company's principal markets and for the United States.

<TABLE>
<CAPTION>
DECEMBER 1995 DECEMBER 1995
CENTRAL DECEMBER 1995 JOB GROWTH INDUSTRIAL SUBURBAN/CBD
LOCATION UNEMPLOYMENT SINCE 1989 PROPERTY VACANCY OFFICE VACANCY RATE
RANKING (1) RATE (2) (2) RATE (3) (3)
--------------- -------------- ------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Indianapolis, Indiana....... First 3.5% 17.6% 2.5% 9.6%
Cincinnati, Ohio............ Third 4.1% 8.9% 2.9% 13.2%/13.6%(4)
Columbus, Ohio.............. Fourth 3.3% 13.1% 5.9% 8.6%
United States............... -- 5.5% 7.6% 6.9% 13.4%/15.1%(4)
</TABLE>

- ------------------------
(1) Source: Chicago Association of Commerce and Industry. A ranking based on
proximity to the largest 100 metropolitan areas in the United States.

(2) Source: United States Department of Labor's Bureau of Labor Statistics.

(3) Source: CB Commercial.

(4) Second number represents central business district (CBD) office vacancy
rate. Cincinnati is the only market in which the Company owns central
business district office properties.

Consistent with its business strategy of expanding in attractive Midwestern
markets, in 1995 the Company established a regional office in St. Louis,
Missouri. The Company believes that the St. Louis market offers attractive real
estate investment returns in the industrial and suburban office markets because
of its fragmented competition, strong real estate fundamentals and favorable
economic conditions. The Company has purchased four suburban office buildings
totaling 463,000 square feet and 152 acres of land for industrial property
development in the St. Louis market. On a portion of this land, the Company has
begun construction of a 403,000 square foot bulk warehouse which is 71%
pre-leased and is expected to be completed in the fourth quarter of 1996.

MARKET POSITION

The Company manages approximately 33 million square feet of property,
including over 9.5 million square feet owned by third parties. The Company
manages approximately 33% and 24% of all competitive suburban office,
warehousing and light manufacturing space in Indianapolis and Cincinnati,
respectively. In addition to providing services to approximately 1,400 tenants
in the Properties, the Company provides such services to over 1,200 tenants in
approximately 125 properties owned by third parties. Based on market data
maintained by the Company, the Company believes that it was responsible in 1995
for approximately 55% and 66% of the net absorption (gross space leased minus
lease terminations and expirations) of competitive suburban office, warehousing
and light manufacturing space in Indianapolis and Cincinnati, respectively. The
Company believes that its dominant position in the primary markets in which it
operates gives it a competitive advantage in its real estate activities.

TENANT BASE

The Company's Properties have a diverse and stable base of approximately
1,400 tenants. Many of the tenants are FORTUNE 500 companies engaged in a wide
variety of businesses, including manufacturing, retailing, wholesale trade,
distribution, and professional services. Approximately 50% of the square footage
of the Properties is occupied by tenants with a net worth based on book value of
$100 million or greater. Approximately 75% of the gross leasable area of the
Properties is occupied by tenants who have been in business for more than 10
years. The Company renewed 92% of the square feet of tenants in the fourth
quarter of 1995 on approximately 387,000 square feet up for renewal. No single
tenant accounts for more than 3% of the Company's total gross effective rent
(computed using the average annual rental property revenue over the terms of the
respective leases including landlord operating expense allowances but excluding
additional rent due as operating expense reimbursements).

S-15
<PAGE>
The following table sets forth information regarding the 10 largest tenants
of the Properties based upon annualized gross effective rents as of December 31,
1995.

<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF ANNUALIZED ANNUALIZED
PRIMARY YEAR OF LEASE SQUARE TOTAL SQUARE GROSS EFFECTIVE GROSS EFFECTIVE
TENANT LOCATION EXPIRATION FOOTAGE FEET RENT (2) RENT
- ------------------------- ------------ -------------- --------- ------------- --------------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
General Electric Cincinnati 1996 - 2001 (1) 265,926 1.38% $ 3,246 2.45%
Anheuser-Busch Companies St. Louis 1997 - 2002 (1) 155,568 0.81% 2,689 2.03%
LCI Communications, Inc. Columbus 1996 - 2005 (1) 165,713 0.86% 2,531 1.91%
Southwestern Bell St. Louis 1999 156,289 0.81% 2,464 1.86%
SDRC Cincinnati 2011 221,215 1.15% 2,426 1.83%
Associated Insurance
Companies, Inc. Indianapolis 1996 - 1998 (1) 283,156 1.47% 2,422 1.83%
Lenscrafters, Inc. Cincinnati 1996 - 2005 (1) 243,596 1.26% 2,269 1.71%
Cardinal Health Columbus 1998 - 2005(1) 132,854 0.69% 1,912 1.44%
Prudential Insurance Cincinnati 1998 - 2002 (1) 126,221 0.66% 1,715 1.30%
Cincinnati Enquirer Cincinnati 2012 109,306 0.57% 1,639 1.24%
--------- ------ ------- -------
1,859,844 9.66% $23,313 17.61%
--------- ------ ------- -------
--------- ------ ------- -------
</TABLE>

- ------------------------
(1) Includes more than one lease with maturities during the indicated range of
years.

(2) Represents annual gross effective rent due under leases in place at December
31, 1995. Annual gross effective rent equals the average annual rental
property revenue over the terms of the respective leases including landlord
operating expense allowance and excluding additional rent due as operating
expense reimbursements.

RECENT DEVELOPMENTS

OPERATING PERFORMANCE The Company's strong operating performance is
reflected by its increase in rental income from $88.2 million for the year ended
December 31, 1994 to $112.9 million for the year ended December 31, 1995, a 28%
increase. This growth was the result of an increase in both the square footage
of property in-service from 12.9 million square feet to 20.1 million square feet
and the occupancy of this portfolio from 94.5% to 95.4% from December 31, 1994
to December 31, 1995. Also, for the year ended December 31, 1995, net effective
rental rates increased by 8.8% for industrial properties, 4.4% for office
properties and 12.1% for retail properties on 847,000 square feet of leases
renewed by the Company. As a result, the Company's Board of Directors announced
in the third quarter of 1995 a 4.3% increase in its regular quarterly dividend
from $.47 to $.49 per share of Common Stock.

These New Properties, totaling 8.9 million square feet, consist of 71%
industrial, 21% office and 8% retail projects. The total cost of the New
Properties is expected to be $384.1 million. At December 31, 1995, the New
Properties which have been placed in service are 95% leased, and the New
Properties under construction are 87% pre-leased for a combined total of 92%
leased. The New Properties are expected to provide an initial weighted average
unleveraged return on cost (computed as property annual contractual NOI divided
by total project costs) of 11.1% assuming no further leasing. The Company
expects the weighted average unleveraged return to be 12.1% with anticipated
leasing activity. The annual contractual NOI to be generated from the New
Properties, once placed in service, will be $42.6 million, increasing to

S-16
<PAGE>
$45.7 million with anticipated additional leasing. The cost of the New
Properties to be placed in service in the first quarter of 1996 is $65.0
million, in the second quarter of 1996 is $19.5 million, in the third quarter of
1996 is $82.5 million, and in 1997 is $240,000.

The following table sets forth information regarding each of the New
Properties.
<TABLE>
<CAPTION>
PERCENT
IN-SERVICE OR LEASED
ANTICIPATED PROPERTY PERCENTAGE SQUARE OR PRE-
IN-SERVICE DATE PROJECT/TENANT LOCATION TYPE OWNERSHIP FEET LEASED (1)
- --------------- -------------------------------- --------------- ------------- ------------- --------- -------------
DEVELOPMENT COMPLETED IN 1995:
<S> <C> <C> <C> <C> <C> <C>
Silver Burdett Ginn Indianapolis,
1st Qtr. 1995 IN Industrial 100% 553,900 100%
Park 100 Building 97 Indianapolis,
1st Qtr. 1995 IN Industrial 100% 280,800 100%
Park 100 Building 98 Expansion Indianapolis,
2nd Qtr. 1995 IN Industrial 100% 97,000 100%
2nd Qtr. 1995 Sterling Software Building 2 Columbus, OH Office 100% 57,660 100%
2nd Qtr. 1995 John Alden -- Columbus Columbus, OH Office 100% 101,200 100%
2nd Qtr. 1995 World Park Building 17 Cincinnati, OH Industrial 50% 304,000 100%
Park 100 Building 100 Indianapolis,
3rd Qtr. 1995 IN Industrial 100% 117,500 100%
St. Francis Indianapolis, Medical
3rd Qtr. 1995 IN Office 100% 95,579 75%
3rd Qtr. 1995 South Pointe Building A Columbus, OH Industrial 100% 293,824 70%
3rd Qtr. 1995 Petsmart Expansion Columbus, OH Industrial 100% 156,000 100%
3rd Qtr. 1995 Office Max Cincinnati, OH Retail 100% 23,484 100%
Park 100 Building 99 Indianapolis,
3rd Qtr. 1995 IN Industrial 50% 364,800 100%
4th Qtr. 1995 Dayco Louisville, KY Industrial 50% 282,539 100%
Park 100 Building 127 Indianapolis,
4th Qtr. 1995 IN Industrial 100% 93,600 100%
4th Qtr. 1995 Best Buy at Tuttle Crossing Columbus, OH Retail 100% 68,400 85%
Community MOB -- East Indianapolis, Medical
4th Qtr. 1995 IN Office 100% 38,193 100%
Sofa Express -- Governor's Plaza Cincinnati, OH Retail 100% 15,000 100%
4th Qtr. 1995
4th Qtr. 1995 Cardinal Health Columbus, OH Office 100% 132,854 100%
4th Qtr. 1995 Haywood Oaks Building 7 Nashville, TN Industrial 100% 66,873 57%
--------- ------
3,143,206 95%
--------- ------
UNDER DEVELOPMENT
1st Qtr. 1996 John Alden -- Miami Miami, FL Office 100% 251,316 100%
1st Qtr. 1996 Sofa Express -- Eastgate Cincinnati, OH Retail 100% 13,500 100%
Thomson Consumer Electronics Indianapolis,
1st Qtr. 1996 IN Industrial 100%(3) 599,040 100%
Park 100 Building 128 Indianapolis,
1st Qtr. 1996 IN Industrial 100% 322,000 100%
Two Parkwood Indianapolis,
1st Qtr. 1996 IN Office 100% 93,300 87%
2nd Qtr. 1996 South Pointe Building B Columbus, OH Industrial 100% 307,200 0%
2nd Qtr. 1996 American Air Filter Lebanon, IN Industrial 100% 153,600 100%
2nd Qtr. 1996 Wal-Mart at Tuttle Crossing Columbus, OH Retail 100% 149,429 100%
3rd Qtr. 1996 Nationwide Columbus, OH Office 100% 315,102 100%
3rd Qtr. 1996 Bigg's Supercenter Cincinnati, OH Retail 100% 160,000 100%
Day Dream Publishing Expansion Indianapolis,
3rd Qtr. 1996 IN Industrial 100% 97,080 100%
3rd Qtr. 1996 Little Brown & Co. Lebanon, IN Industrial 100%(3) 500,455 100%
3rd Qtr. 1996 Ohio National Life Cincinnati, OH Office 100% 212,125 67%
3rd Qtr. 1996 Sterling Software Building 3 Columbus, OH Office 100% 64,500 100%
3rd Qtr. 1997 Fountain Place Cincinnati, OH Retail 25% 209,585 79%
--------- ------
3,448,232 87%
--------- ------

<CAPTION>
IN-SERVICE OR INITIAL
ANTICIPATED LEASE
IN-SERVICE DATE TERM (2)
- --------------- -----------
DEVELOPMENT COMPLETED IN 1995:
<S> <C>
1st Qtr. 1995 7 Years
1st Qtr. 1995 Varies
2nd Qtr. 1995 6 Years
2nd Qtr. 1995 15 Years
2nd Qtr. 1995 15 Years
2nd Qtr. 1995 10 Years
3rd Qtr. 1995 10 Years
3rd Qtr. 1995 Varies
3rd Qtr. 1995 5 Years
3rd Qtr. 1995 15 Years
3rd Qtr. 1995 15 Years
3rd Qtr. 1995 10 Years
4th Qtr. 1995 15 Years
4th Qtr. 1995 10 Years
4th Qtr. 1995 15 Years
4th Qtr. 1995 15 Years
10 Years
4th Qtr. 1995
4th Qtr. 1995 10 Years
4th Qtr. 1995 5 Years
UNDER DEVELOPMENT
1st Qtr. 1996 20 Years
1st Qtr. 1996 10 Years
1st Qtr. 1996 10 Years
1st Qtr. 1996 10 Years
1st Qtr. 1996 10 Years
2nd Qtr. 1996 N/A
2nd Qtr. 1996 15 Years
2nd Qtr. 1996 21 Years
3rd Qtr. 1996 6 Years
3rd Qtr. 1996 20 Years
3rd Qtr. 1996 8 Years
3rd Qtr. 1996 10 Years
3rd Qtr. 1996 20 Years
3rd Qtr. 1996 15 Years
3rd Qtr. 1997 20 Years
</TABLE>

S-17
<PAGE>
<TABLE>
<CAPTION>
IN-SERVICE OR
ANTICIPATED PROPERTY PERCENTAGE SQUARE
IN-SERVICE DATE PROJECT/TENANT LOCATION TYPE OWNERSHIP FEET
- --------------- --------------------------------- ---------------- -------------- --------- ---------
<S> <C> <C> <C> <C> <C>
1995 ACQUISITIONS:
1st Qtr. 1995 Park 100 Building 107 Indianapolis, IN Industrial 100% 58,783
1st Qtr. 1995 Palomar Building Indianapolis, IN Industrial 100% 99,350
1st Qtr. 1995 Keebler Building Nashville, TN Industrial 100% 36,150
1st Qtr. 1995 Franklin Road Business Center Indianapolis, IN Industrial 100% 367,065
1st Qtr. 1995 University Moving Cincinnati, OH Industrial 100% 70,000
1st Qtr. 1995 Eastgate Square Cincinnati, OH Retail 100% 80,682
2nd Qtr. 1995 Enterprise Park Cincinnati, OH Industrial 100% 116,150
2nd Qtr. 1995 Laumeier I St. Louis, MO Office 100% 113,852
2nd Qtr. 1995 Laumeier II St. Louis, MO Office 100% 110,541
2nd Qtr. 1995 Westview St. Louis, MO Office 100% 114,722
2nd Qtr. 1995 NAMPAC Indianapolis, IN Industrial 100% 83,200
3rd Qtr. 1995 8465 Keystone Crossing Indianapolis, IN Office 100% 28,298
3rd Qtr. 1995 Park Fletcher Indianapolis, IN Industrial 50% 828,865
4th Qtr. 1995 Westmark St. Louis, MO Office 100% 123,889
4th Qtr. 1995 Fairfield Business Center Cincinnati, OH Industrial 100% 115,823
4th Qtr. 1995 One Parkwood Indianapolis, IN Office 100% -- (4)
---------
2,347,370
---------
8,938,808
---------
---------

<CAPTION>
PERCENT
IN-SERVICE OR LEASED INITIAL
ANTICIPATED OR PRE- LEASE
IN-SERVICE DATE LEASED (1) TERM (2)
- --------------- ---------- --------
<S> <C> <C>
1995 ACQUISITIONS:
1st Qtr. 1995 97% Varies
1st Qtr. 1995 100% 10 Years
1st Qtr. 1995 100% 15 Years
1st Qtr. 1995 90% 1 Year
1st Qtr. 1995 100% Varies
1st Qtr. 1995 100% Varies
2nd Qtr. 1995 98% Varies
2nd Qtr. 1995 98% Varies
2nd Qtr. 1995 100% Varies
2nd Qtr. 1995 98% Varies
2nd Qtr. 1995 100% 10 Years
3rd Qtr. 1995 92% Varies
3rd Qtr. 1995 89% Varies
4th Qtr. 1995 100% 5 Years
4th Qtr. 1995 85% Varies
4th Qtr. 1995 100% Varies
---
94%
---
92%
---
---
</TABLE>

- ------------------------------
(1) Represents percent leased or pre-leased at December 31, 1995.

(2) Represents lease term of the building's primary tenant or tenants.

(3) These properties will be contributed to a joint venture upon completion.

(4) During 1995, the Company acquired the 50% interest of its unaffiliated
joint venture partner.

In addition to the 2.3 million square feet of acquisitions noted above, in
December 1995, the Company formed a 50/50 joint venture with an institutional
investor. The joint venture will own 46 industrial buildings totaling over 4.7
million square feet and 113 acres of land. The Company contributed 19 properties
and the land, and will contribute two properties currently under development to
the venture, while the institutional investor contributed cash equal to the
value of the Company's contribution. The venture purchased an additional 25
properties located primarily in the Park 100 Business Park in Indianapolis. This
venture was formed to enhance the Company's return on its investment in these
properties and to solidify its position in its flagship Park 100 Business Park.

FINANCING. In January 1996, the Company increased the commitment amount on
its unsecured Line of Credit from $100 million to $150 million and reduced the
borrowing rate from LIBOR plus 2.00% to LIBOR plus 1.625%. The Line of Credit
had a balance outstanding of $123.0 million on March 1, 1996 and matures in
April 1998. The net proceeds of the Offering will be used to retire
substantially all of the balance outstanding on the Line of Credit. The Company
intends to continue to use the Line of Credit to provide interim funding of
development and acquisitions of additional rental properties.

In September 1995, the Company issued $150.0 million of 7 1/4% and 7 3/8%
investment grade unsecured Notes due 2002 and 2005, respectively. The net
proceeds were used to retire outstanding indebtedness and to fund acquisition
and development of additional rental properties. As a result of this debt
offering, the Company was able to significantly reduce its secured indebtedness
and enhance its operating flexibility.

S-18
<PAGE>
CLEVELAND. Consistent with its business strategy of expanding into
attractive Midwestern markets, in February 1996 the Company acquired the assets
and operations of an established real estate development and management company
in Cleveland, Ohio, for approximately $76 million. The acquisition included a
portfolio of eight Class A office buildings consisting of 782,000 gross square
feet in suburban Cleveland, with an occupancy rate of 99%. These properties will
produce an initial weighted average unleveraged return on cost in excess of 11%.
The acquisition was partially financed through the issuance of Units to the
seller.

The Cleveland acquisition is a natural extension of the Company's presence
in the Midwest and Ohio. Management believes that Cleveland is not currently
served by a dominant industrial or suburban office property owner, developer or
manager. The acquisition allows the Company to establish an immediate presence
in the market with the ability to expand into both the suburban office and
industrial markets. The Company believes that the Cleveland market will continue
to benefit from strong real estate fundamentals. Specifically, the suburban
office market of the Rockside Road Corridor, where seven of the properties are
located, has had positive net absorption for six consecutive years with a 1995
year end occupancy of 97%. According to CB Commercial, Cleveland's industrial
vacancy rates declined from 7.8% to 6.7% over the twelve months ended December
31, 1995 and compared favorably to the national average of 6.9%. The Company
continues to actively explore both development and acquisition opportunities in
Cleveland. See "The Company -- Cleveland".

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Common Stock offered
hereby are expected to be approximately $104.0 million (approximately $119.7
million if the Underwriters' over-allotment option is exercised in full),
assuming an offering price of $31.50 (the closing price of the Common Stock on
the New York Stock Exchange on March 7, 1996). The Company intends to use the
net proceeds to retire a substantial portion of the outstanding balance on the
Line of Credit which is used to fund development and acquisition of additional
rental properties. The Line of Credit had $123.0 million outstanding on March 1,
1996 and bears interest at LIBOR plus 1.625%.

PRICE RANGE OF COMMON STOCK AND DIVIDEND HISTORY

The Common Stock is listed on the New York Stock Exchange under the symbol
DRE. The following table sets forth the high and low sale prices of the Common
Stock of the periods indicated and the dividend paid per share for each such
period.

<TABLE>
<CAPTION>
CLOSING PRICES
PER SHARE
-------------------- DIVIDENDS
QUARTERLY PERIOD HIGH LOW PER SHARE
- --------------------------------------------------------------- --------- --------- -----------
<S> <C> <C> <C>
1994
First Quarter................................................ $ 26.00 $ 20.25 $ 0.45
Second Quarter............................................... 27.25 23.25 0.45
Third Quarter................................................ 27.25 24.75 0.47
Fourth Quarter............................................... 28.25 23.50 0.47
1995
First Quarter................................................ 27.88 25.13 0.47
Second Quarter............................................... 29.25 26.25 0.47
Third Quarter................................................ 31.63 27.63 0.49
Fourth Quarter............................................... 31.75 27.63 0.49
1996
First Quarter (through March 7, 1996)........................ 32.13 31.13
</TABLE>

The last reported sale price of the Common Stock on the New York Stock
Exchange on March 7, 1996 was $31.50 per share. As of March 7, 1996, there were
2,494 registered holders of Common Stock.

S-19
<PAGE>
Since its organization in 1986, the Company has paid regular and
uninterrupted dividends. The Company intends to continue to declare quarterly
dividends on its Common Stock. However, no assurances can be given as to the
amounts of future dividends as such dividends are subject to the Company's cash
flow from operations, earnings, financial condition, capital requirements and
such other factors as the Board of Directors deems relevant. The Company has
determined that approximately 14% of the per share distribution for 1995
represented return of capital to the shareholders for income tax purposes. No
assurance can be given that such percentage will not change in future years.

DIVIDEND REINVESTMENT PLAN

The Company has an Automatic Dividend Reinvestment Plan (the "Plan") which
allows shareholders to acquire additional shares of Common Stock by
automatically reinvesting cash dividends. Common Stock is acquired pursuant to
the Plan at a price equal to the prevailing market price of such Common Stock,
without payment of any brokerage commission or service charge. The Plan also
allows participating shareholders to purchase Common Stock pursuant to the same
terms and in the same manner as cash dividends are invested in amounts of not
less than $100 and more than $3,000 per calendar quarter, without payment of any
brokerage commission or service charge. Shareholders who do not participate in
the Plan continue to receive cash dividends, as declared. As of March 7, 1996,
approximately 35% of the Company's registered shareholders participated in the
Plan.

S-20
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company and its
subsidiaries as of December 31, 1995 and as adjusted to give effect to the
Offering and the anticipated use of the net proceeds thereof as described under
"Use of Proceeds." The table should be read in conjunction with the Company's
consolidated financial statements incorporated herein by reference.

<TABLE>
<CAPTION>
DECEMBER 31, 1995
------------------------
HISTORICAL AS ADJUSTED
---------- ------------
(IN THOUSANDS)
<S> <C> <C>
Debt:
Mortgage Debt......................................................................... $ 259,820 $ 259,820
7 1/4% Notes due 2002................................................................. 50,000 50,000
7 3/8% Notes due 2005................................................................. 100,000 100,000
Line of Credit........................................................................ 45,000 --
---------- ------------
Total Debt............................................................................ 454,820 409,820
---------- ------------
Minority Interest....................................................................... 77,741 77,741
---------- ------------
Shareholders' Equity:
Preferred Stock ($.01 par value), 5,000 shares authorized, none issued
Common Stock ($.01 par value), 45,000 shares authorized; 24,152 outstanding; 27,652
outstanding as adjusted (1).......................................................... 493,204 597,253
Distributions in excess of net income................................................. (43,740) (43,740)
---------- ------------
Total Shareholders' Equity............................................................ 449,464 553,513
---------- ------------
Total Capitalization.................................................................... $ 982,025 $ 1,041,074
---------- ------------
---------- ------------
</TABLE>

- ------------------------
(1) Does not include 1 share of Common Stock issued subsequent to December 31,
1995 as directors' compensation, 866 shares of Common Stock issuable upon
exercise of outstanding employee stock options or 4,151 shares reserved for
issuance upon exchange of issued and outstanding Units. Also does not
include 407 Units issued subsequent to December 31, 1995 in connection with
the acquisition of property by the Company.

S-21
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" for the Company and the financial statements
incorporated by reference in the accompanying Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------
ACTUAL PRO FORMA ACTUAL
----------------------- ----------- ----------
1995 1994 1993 (1) 1993
----------- ---------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING DATA:
RENTAL OPERATIONS:
Revenues:
Rental income.............................................. $ 112,931 $ 88,243 $ 80,524 $ 33,351
Equity in earnings of unconsolidated companies............. 710 1,056 598 297
----------- ---------- ----------- ----------
113,641 89,299 81,122 33,648
----------- ---------- ----------- ----------
Operating expenses:
Rental expenses............................................ 21,497 17,507 15,627 7,059
Real estate taxes.......................................... 9,683 8,256 7,744 3,403
Interest expense........................................... 21,424 18,920 17,280 10,334
Depreciation and amortization.............................. 24,337 18,036 18,078 7,369
----------- ---------- ----------- ----------
76,941 62,719 58,729 28,165
----------- ---------- ----------- ----------
Earnings from rental operations........................ 36,700 26,580 22,393 5,483
----------- ---------- ----------- ----------
SERVICE OPERATIONS:
Revenues:
Property management, maintenance and leasing fees.......... 11,138 11,084 11,496 3,000
Construction management and development fees............... 5,582 6,107 4,875 2,501
Other income............................................... 1,057 1,282 645 153
----------- ---------- ----------- ----------
17,777 18,473 17,016 5,654
----------- ---------- ----------- ----------
Operating expenses:
Payroll.................................................... 8,236 8,723 9,543 2,688
Maintenance................................................ 1,344 1,069 1,401 473
Office and other........................................... 2,451 2,373 2,561 957
----------- ---------- ----------- ----------
12,031 12,165 13,505 4,118
----------- ---------- ----------- ----------
Earnings from service operations....................... 5,746 6,308 3,511 1,536
----------- ---------- ----------- ----------
General and administrative expense............................. (2,169) (2,145) (1,805) (737)
----------- ---------- ----------- ----------

Operating income............................................... 40,277 30,743 24,099 6,282

OTHER INCOME (EXPENSE):
Interest income.............................................. 1,900 1,115 363 164
Earnings from property sales................................. 283 2,198 517 517
Minority interest in earnings of subsidiaries................ (7,441) (7,840) (5,903) (1,950)
----------- ---------- ----------- ----------
Net income..................................................... $ 35,019 $ 26,216 $ 19,076 $ 5,013
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
</TABLE>

S-22
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------
ACTUAL PRO FORMA ACTUAL
----------------------- ----------- ----------
1995 1994 1993 (1) 1993
----------- ---------- ----------- ----------
(IN THOUSANDS, EXCEPT PROPERTIES)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA (as of December 31):
Real estate investments........................................ $ 951,179 $ 712,189 $ 592,843 $ 592,843
Accumulated depreciation....................................... (56,335) (38,058) (23,725) (23,725)
----------- ---------- ----------- ----------
Net real estate investments.................................. 894,844 674,131 569,118 569,118
Cash........................................................... 5,727 40,433 10,065 10,065
Investments in unconsolidated companies........................ 67,771 8,418 14,270 14,270
Other assets................................................... 64,926 40,395 39,432 39,432
----------- ---------- ----------- ----------
Total assets............................................... 1,033,268 763,377 632,885 632,885
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
Mortgage debt.................................................. $ 259,820 $ 298,640 $ 249,034 $ 249,034
7 1/4% Notes due 2002.......................................... 50,000 -- -- --
7 3/8% Notes due 2005.......................................... 100,000 -- -- --
Line of credit................................................. 45,000 -- -- --
----------- ---------- ----------- ----------
Total debt................................................. 454,820 298,640 249,034 249,034
Other liabilities.............................................. 51,243 29,543 34,863 34,863
----------- ---------- ----------- ----------
Total liabilities.......................................... 506,063 328,183 283,897 283,897
Minority interest.............................................. 77,741 71,799 75,967 75,967
Shareholders' equity........................................... 449,464 363,395 273,021 273,021
----------- ---------- ----------- ----------
Total liabilities and shareholders' equity................. $ 1,033,268 $ 763,377 $ 632,885 $ 632,885
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
OTHER DATA:
Funds from Operations Available to Common Shareholders (2)..... $ 56,476 $ 39,415 $ 33,008 $ 11,205
Cash flow provided by (used in):
Operating activities......................................... $ 78,620 $ 51,873 (3) $ 14,363
Investing activities......................................... $ (289,569) $ (116,238) (3) $ (315,025)
Financing activities......................................... $ 176,243 $ 94,733 (3) $ 310,717
Weighted average shares outstanding (4)........................ 22,679 17,139 16,046 5,459
Number of in-service Properties at end of year................. 202 128 113 113
In-Service square feet available at end of year................ 20,073 12,896 10,850 10,850
</TABLE>

- --------------------------
(1) 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. The Pro Forma results give effect to the
Company's acquisition of Duke Associates and the 1993 offering of 14,000,833
shares of Common Stock as if they had occurred on January 1, 1993.

(2) Funds from Operations is defined by the NAREIT as net income or loss
excluding gains or losses from debt restructuring and sales of property plus
depreciation and amortization, and after adjustments for minority interest,
unconsolidated partnerships and joint ventures (adjustments for minority
interests, unconsolidated partnerships and joint ventures are calculated to
reflect FFO on the same basis). FFO 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. The calculation of FFO for the years ended
December 31, 1994 and 1993 has been revised to conform with the presentation
of FFO for the year ended December 31, 1995, which excludes amounts
attributable to minority interests. In March 1995, NAREIT issued a
clarification of its definition of FFO. The clarification provides that
amortization of deferred financing costs and depreciation of non-rental real
estate assets are no longer to be added back to net income in arriving at
FFO. The Company adopted these changes effective January 1, 1996. The
amounts in this table do not include the effect of the new clarifications.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Funds From Operations."

(3) This information is unavailable on a Pro Forma basis.

(4) Excludes Units held by persons other than the Company which are exchangeable
for Common Stock.

S-23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

OVERVIEW

The Company's operating results depend primarily upon income from the rental
operations of its industrial, office and retail properties located in its
primary markets. This income from rental operations is substantially influenced
by the supply and demand for the Company's rental space in its primary markets.

In addition, the Company's continued growth is dependent upon its ability to
maintain occupancy rates and increase rental rates on its in-service portfolios
and to continue development and acquisition of additional rental properties. The
Company's primary markets in the Midwest have continued to offer strong and
stable local economies compared to other regions of the United States and have
provided attractive new development opportunities because of their central
location, established manufacturing base, skilled work force and moderate labor
costs. Consequently, the Company's overall occupancy rate of its in-service
portfolio has exceeded 93% the last two years and was at 95.4% at December 31,
1995. The Company expects to continue to maintain its overall occupancy levels
at comparable levels and also expects to be able to increase rental rates as
leases are renewed or new leases are executed. This stable occupancy as well as
increasing rental rates should improve the Company's results of operations from
its in-service properties. The Company's strategy for continued growth also
includes developing and acquiring additional rental properties in its primary
markets and expanding into other attractive Midwestern markets.

The following table sets forth information regarding the Company's
in-service portfolio of rental properties as of December 31, 1995 and 1994 (in
thousands, except percentages):

<TABLE>
<CAPTION>
TOTAL PERCENT OF
SQUARE FEET TOTAL SQUARE FEET PERCENT OCCUPIED
-------------------- -------------------- --------------------
TYPE 1995 1994 1995 1994 1995 1994
- ---------------------------------------------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INDUSTRIAL
Service Centers................................... 2,802 2,051 14.0% 15.9% 94.7% 93.4%
Bulk.............................................. 10,890 5,573 54.3% 43.2% 96.5% 97.5%
OFFICE
Suburban.......................................... 3,874 3,090 19.3% 24.0% 94.7% 90.5%
CBD............................................... 699 699 3.5% 5.4% 92.3% 87.2%
Medical........................................... 332 198 1.6% 1.5% 90.3% 100.0%
RETAIL.............................................. 1,476 1,285 7.3% 10.0% 93.8% 95.8%
--------- --------- --------- ---------
Total........................................... 20,073 12,896 100.0% 100.0% 95.4% 94.5%
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

S-24
<PAGE>
RESULTS OF OPERATIONS

Following is a summary of the Company's operating results and property
statistics for each of the years in the three-year period ended December 31,
1995 (in thousands, except number of properties and per share amounts):

<TABLE>
<CAPTION>
1995 1994 1993
---------- --------- ---------
<S> <C> <C> <C>
Rental Operations revenue....................................................... $ 113,641 $ 89,299 $ 33,648
Service Operations revenue...................................................... 17,777 18,473 5,654
Earnings from Rental Operations................................................. 36,700 26,580 5,483
Earnings from Service Operations................................................ 5,746 6,308 1,536
Operating income................................................................ 40,277 30,743 6,282
Minority interest in earnings................................................... 7,441 7,840 1,950
Net income...................................................................... 35,019 26,216 5,013
Weighted average shares outstanding............................................. 22,679 17,139 5,459
Net income per share............................................................ $ 1.54 $ 1.53 $ 0.92
Number of in-service properties at end of year.................................. 202 128 113
In-service square footage at end of year........................................ 20,073 12,896 10,850
Under development square footage end of year.................................... 3,448 2,362 1,270
</TABLE>

COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1994

RENTAL OPERATIONS. The Company increased its in-service portfolio of rental
properties from 128 properties comprising 12.9 million square feet at December
31, 1994 to 202 properties comprising 20.1 million square feet at December 31,
1995 through the acquisition of 60 properties totaling 4.6 million square feet
and the placement in service of 17 properties and two building expansions
totaling 3.2 million square feet developed by the Company. The Company also
disposed of three properties totaling 570,000 square feet. These 74 net
additional rental properties primarily account for the $24.3 million increase in
revenues from Rental Operations from 1994 to 1995.

The increase from 1994 to 1995 in rental expenses, real estate taxes and
depreciation and amortization expense is also a result of the additional 74
in-service rental properties.

Interest expense increased by approximately $2.5 million. This increase was
primarily because of interest expense on the $150 million of unsecured notes
which the Company issued in the 1995 Debt Offering. These notes bear interest at
an effective rate of 7.46%. The proceeds from the sale of these notes were used
to (i) retire the then-outstanding balance of $35.0 million on the Line of
Credit; (ii) retire $39.5 million of mortgage debt which had a weighted average
interest rate of 6.08% and was scheduled to reset at a market interest rate in
the fourth quarter of 1995; and (iii) fund development and acquisition of
additional rental properties during the fourth quarter of 1995.

As a result of the above-mentioned items, earnings from rental operations
increased $10.1 million from $26.6 million for the year ended December 31, 1994
to $36.7 million for the year ended December 31, 1995.

Stable occupancy, along with stable rental rates in each of the Company's
markets, will allow the in-service portfolio to continue to provide a comparable
or increasing level of earnings from rental operations. The Company also expects
to realize growth in earnings from rental operations through (i) the placement
in-service of the 3.4 million square feet of properties under development at
December 31, 1995 over the next seven quarters; (ii) development and acquisition
of additional rental properties in its primary markets; and (iii) expansion into
other attractive Midwestern markets.

SERVICE OPERATIONS. Earnings from Service Operations decreased by
approximately $600,000 in 1995 as compared to 1994. This decrease results
primarily from a decrease in construction fees even though total construction
volume remained consistent. This decrease in fees resulted from certain
contracts with above-market fees in 1994 which were not obtained in 1995.
Property management, maintenance and leasing fees

S-25
<PAGE>
remained consistent from 1994 to 1995. Payroll expense decreased from 1994 to
1995 as a result of the allocation of a greater portion of these costs to the
Company's Rental Operations segment. Other operating expenses did not change
materially.

At December 31, 1995, the backlog of construction fees on signed
construction contracts was $3.9 million as compared to $1.7 million at December
31, 1994. As a result of the acquisition by an unconsolidated subsidiary of the
Company of 2.2 million square feet of managed property, the Company anticipates
a slight decrease in management, leasing and maintenance fee revenues in 1996 as
well as a decrease in the operating expenses of the segment.

OTHER INCOME (EXPENSE). Interest income increased from $1.1 million for the
year ended December 31, 1994 to $1.9 million for the year ended December 31,
1995 as a result of the temporary short-term investment of excess proceeds from
the Company's 1995 offering of Common Stock (the "1995 Equity Offering") as well
as the 1995 Debt Offering.

As part of its October 1993 acquisition of Duke Associates, the Company
acquired an option to purchase an interest in an entity which provided
telecommunication services to tenants in properties owned and managed by the
Company. At the time the option was acquired, the option was not considered to
have value because of recurring net operating losses being incurred by such
entity. Subsequent to the acquisition of the option, the entity made changes in
its operations, principally entering into new contracts for the purchase of
telecommunication services and the provision of billing services, which
significantly improved its operating results. As a result of these improvements
in operating results, the entity entered into an agreement to sell its
telecommunications business to an unaffiliated third party at an amount
significantly in excess of the Company's option price. The net proceeds from the
sale were then loaned to a subsidiary of the Company with a mortgage on certain
property. The Company subsequently exercised its option to acquire the interest
in this entity and recognized a gain of approximately $2.0 million based on the
difference between its option price and the net proceeds received from the sale
to the unaffiliated third-party. Such gain is included in earnings from property
sales in 1994.

NET INCOME. Net income for the year ended December 31, 1995 was $35.0
million compared to net income of $26.2 million for the year ended December 31,
1994. This increase results primarily from the operating result fluctuations in
rental and service operations explained above.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities totaling $78.6 million, $51.9
million and $14.4 million for the years ended December 31, 1995, 1994 and 1993,
respectively, represents the primary source of liquidity to fund distributions
to shareholders, unitholders and the other minority interests and to fund
recurring costs associated with the renovation and reletting of the Company's
properties. The primary reason for the increases in net cash provided by
operating activities is, as discussed above under "Results of Operations," the
increase in net income each year resulting from the expansion of the in-service
portfolio through development and acquisitions of additional rental properties.

Net cash used by investing activities totaling $289.6 million, $116.2
million and $315.0 million for the years ended December 31, 1995, 1994 and 1993,
respectively, represents the investment of funds by the Company to expand its
portfolio of rental properties through the development and acquisition of
additional rental properties. Of the $315.0 million used in investing activities
in 1993, $302.1 million related to acquisition of the Duke Associates' rental
properties and service businesses. In 1994, $107.4 million was invested in the
development and acquisition of additional rental properties and $12.4 million
was used for tenant improvements, leasing costs and other deferred assets. In
1995, the development and acquisition of additional rental properties increased
to $251.0 million with $24.1 million being used for recurring tenant
improvements, leasing costs and other deferred costs. In addition, in 1995,
$16.7 million was invested in rental operations of a newly formed, 50% owned,
joint venture which also included the contribution of rental property and
undeveloped land with a carrying value of approximately $42.7 million.

S-26
<PAGE>
Net cash provided by financing activities totaling $176.2 million, $94.7
million and $310.7 million for the years ended December 31, 1995, 1994 and 1993,
respectively, is comprised of debt and equity issuances net of distributions to
shareholders and unitholders and repayments of outstanding indebtedness. In
1993, the Company received $309.3 million from an offering of Common Stock which
was used primarily for the acquisition of Duke Associates. In 1994, the Company
received $92.1 million from an offering of Common Stock and $60.0 million from a
seven-year mortgage loan. Of the total of $152.1 million, the Company used $60.0
million to repay the balance outstanding on the Line of Credit, $6.0 million to
retire outstanding mortgage indebtedness, and the remainder primarily to fund
development and acquisition of additional rental properties. In 1995, the
Company received $96.3 million of proceeds from the 1995 Equity Offering and
used $11.0 million to repay the balance outstanding on the Line of Credit and
the remainder to fund development and acquisition of additional rental
properties. The Company also received $150.0 million from the 1995 Debt Offering
and used $39.5 million to retire outstanding mortgage indebtedness, $35.0
million to repay the balance outstanding on the Line of Credit, and the
remainder to fund acquisition and development of additional rental properties.

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>
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Tenant improvements........................................................ $ 4,312 $ 3,056 $ 2,015
Leasing costs.............................................................. 3,519 2,407 636
Building improvements...................................................... 757 474 136
--------- --------- ---------
Total...................................................................... $ 8,588 $ 5,937 $ 2,787
--------- --------- ---------
--------- --------- ---------
</TABLE>

In March 1994, the Company obtained a $60 million secured credit facility
which was available to fund development and acquisition of additional rental
properties and to provide working capital as needed. In April 1995, the Company
replaced the secured line of credit with the $100 million unsecured Line of
Credit which matures in April 1998. Borrowings of $45 million under the Line of
Credit as of December 31, 1995 bear interest at one month LIBOR plus 2.00%,
which ranged from 7.7500% to 7.9375%. In January 1996, the Company increased the
Line of Credit to $150 million and reduced the borrowing rate to LIBOR plus
1.625%. The current effective interest rate on the Line of Credit based on the
30-day LIBOR rate as of March 4, 1996 is 6.94%.

The Company currently has on file two Form S-3 Registration Statements with
the Securities and Exchange Commission (the "Shelf Registrations") which, after
completion of this Offering, will have remaining availability of approximately
$220 million to issue additional common stock, preferred stock or unsecured debt
securities. The Company intends to issue additional securities under the Shelf
Registrations to fund the development and acquisition of additional rental
properties.

The Company intends to maintain a conservative capital structure. The
Company's debt to total market capitalization ratio at December 31, 1995 was
33.9% compared to 30.2% at December 31, 1994. Following the Offering, the
Company's debt to total market capitalization ratio will be 29.03% based on a
market price of the Company's Common Stock of $31.50 per share.

S-27
<PAGE>
The total debt outstanding at December 31, 1995 consists of notes totaling
$454.8 million of which, excluding the balance outstanding on the Line of
Credit, less than 1% is variable rate debt. The total debt has a weighted
average interest rate of 7.50% at December 31, 1995 maturing at various dates
through 2018. Scheduled principal amortization of such debt totaled $1.65
million for the year ended December 31, 1995. Following is a summary of the
scheduled future amortization and maturities of the Company's indebtedness:

<TABLE>
<CAPTION>
REPAYMENTS
-------------------------------------
(IN THOUSANDS) WEIGHTED AVERAGE
SCHEDULED INTEREST RATE OF
YEAR AMORTIZATION MATURITIES TOTAL FUTURE REPAYMENTS
- ------------------------------ ------------- ---------- -------- -----------------
<S> <C> <C> <C> <C>
1996.......................... $ 1,855 $ 59,619 $ 61,474 5.31%
1997.......................... 2,156 -- 2,156 8.04%
1998.......................... 2,410 90,216 92,626 7.49%
1999.......................... 2,625 -- 2,625 8.25%
2000.......................... 2,637 4,852 7,489 7.86%
2001.......................... 2,291 59,954 62,245 8.72%
2002.......................... 2,494 50,000 52,494 7.37%
2003.......................... 252 68,813 69,065 8.48%
2004.......................... 274 -- 274 5.20%
2005.......................... 300 100,000 100,300 7.51%
Thereafter.................... 4,072 -- 4,072 5.20%
------------- ---------- --------
Total......................... $21,366 $ 433,454 $454,820
------------- ---------- --------
------------- ---------- --------
</TABLE>

The 1996 maturities of $59.6 million indicated above occur in October
through December. The Company currently intends to repay this debt through the
issuance of either common or preferred equity or unsecured debt securities
available under the Shelf Registrations. The Company estimates that if unsecured
debt securities are issued, based on current market interest rates, the rate on
such debt would increase by approximately 1.6%. Of the 1998 maturities, $45.0
million represents the outstanding balance as of December 31, 1995 on the Line
of Credit. The balance outstanding on the Line of Credit as of March 1, 1996 is
$123.0 million. The proceeds from the Offering will be used to retire a
substantial portion of this balance outstanding which will increase the
availability to borrow under the Line of Credit to fund future acquisitions and
development.

The Company intends to continue to pay regular quarterly distributions from
net cash provided by operating activities. A quarterly dividend of $.49 per
Common Share was declared on February 1, 1996 which represents an annualized
distribution of $1.96 per share.

FUNDS FROM OPERATIONS

Management believes that 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 minority interest, unconsolidated
partnerships and joint ventures (adjustments for minority interest,
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.

S-28
<PAGE>
The following table reflects the calculation of the Company's FFO for the
years ended December 31, as follows (in thousands):

<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Net income................................................................. $ 35,019 $ 26,216 $ 5,013
Add back:
Depreciation and amortization............................................ 23,118 16,785 7,075
Amortization of deferred financing costs and depreciation of non-rental
real estate assets...................................................... 1,918 1,453 327
Share of joint venture depreciation and amortization..................... 411 352 60
Gain on property sales................................................... (283) (2,198) (517)
Adjustment for minority interest share of add-backs...................... (3,707) (3,193) (753)
----------- ----------- -----------
Funds From Operations...................................................... $ 56,476 $ 39,415 $ 11,205
----------- ----------- -----------
----------- ----------- -----------
Cash flow provided by (used by):
Operating activities..................................................... $ 78,620 $ 51,873 $ 14,363
Investing activities..................................................... (289,569) (116,238) (315,025)
Financing activities..................................................... 176,243 94,733 310,717
</TABLE>

The increase in FFO for the three year period results primarily from the
increased in-service rental property portfolio as discussed above under "Results
of Operations". The following table indicates components of such growth for each
of the years ended December 31, as follows (in thousands):

<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Rental operations:
Original portfolio.......................................................... $ 59,399 $ 58,201 $ 23,300
Development................................................................. 10,668 2,240 --
Acquisitions................................................................ 12,014 2,463 --
Investments in unconsolidated companies..................................... 1,121 1,407 357
Interest expense............................................................ (21,424) (18,920) (10,334)
---------- ---------- ----------
Net rental operations..................................................... 61,778 45,391 13,323
Service operations, net of minority interest.................................. 4,767 5,389 1,277
Minority interest of unitholders.............................................. (6,530) (6,751) (1,657)
Other, net.................................................................... 168 (1,421) (985)
Adjustment for minority interest share of add-backs........................... (3,707) (3,193) (753)
---------- ---------- ----------
Funds From Operations......................................................... $ 56,476 $ 39,415 $ 11,205
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

In March 1995, NAREIT issued a clarification of its definition of FFO
effective for years beginning after December 31, 1995. The clarification
provides that amortization of deferred financing costs and depreciation of
non-rental real estate assets are no longer to be added back to net income in
arriving at FFO. The Company's FFO under the new method of calculation would
have been $54.7 million, $38.2 million, and $11.1 million for the three years
ended December 31, 1995, 1994, and 1993, respectively. The Company adopted these
changes effective January 1, 1996.

The calculation of FFO for the years ended December 31, 1994 and 1993 has
been revised to conform with the presentation of FFO for the year ended December
31, 1995 which excludes amounts attributable to minority interests.

While management believes that FFO is a relevant measure of the Company's
operating performance because it is widely used by industry analysts to measure
the operating performance of REITs, 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.

S-29
<PAGE>
PROPERTIES

GENERAL

The Company owns a diversified portfolio of properties which includes (i)
the in-service Properties, consisting of 202 industrial, office and retail
properties located in Indiana, Ohio, Illinois, Michigan, Tennessee, Kentucky,
Wisconsin and Missouri; (ii) 13 buildings and two building expansions currently
under development; and (iii) the Land, consisting of approximately 1,150 acres
of unencumbered land for future development in Indiana, Ohio, Missouri,
Illinois, Kentucky, and Tennessee. The Company owns the entire equity interest
in 150 of the Properties, including property under development, and a partial
interest in the remainder of the Properties. The Properties are comprised of a
broad range of product types which include bulk and medium bulk warehouse and
distribution facilities, light manufacturing facilities, multi-tenant flex space
buildings, suburban office buildings, downtown office buildings, and
neighborhood, power and community shopping centers. The Company believes that
its Properties are of the highest quality available to tenants in its markets.
The total square footage of the in-service Properties is approximately 20.1
million, consisting of approximately 13.7 million square feet of industrial
space, approximately 4.9 million square feet of office space and approximately
1.5 million square feet of retail space. The total square footage of the 13
buildings and two building expansions currently under development is
approximately 3.4 million square feet, consisting of approximately 2.0 million
square feet of industrial space, approximately 900,000 square feet of office
space and approximately 500,000 square feet of retail space. The current
development projects are 87% leased as of December 31, 1995. The total annual
Net Effective Rental income of the Properties based upon tenants in occupancy as
of December 31, 1995 is approximately $117.5 million, with $52.3 million
relating to the industrial Properties, $52.1 million relating to the office
Properties and $13.1 million relating to the retail Properties. At December 31,
1995, the Properties were approximately 95% leased.

The following tables provide an overview of the Properties.

SQUARE FOOTAGE AND ANNUAL NET EFFECTIVE RENT OF PROPERTIES

<TABLE>
<CAPTION>
ANNUAL PERCENT OF
NET ANNUAL
PERCENT OF EFFECTIVE NET EFFECTIVE
STATE INDUSTRIAL OFFICE RETAIL TOTAL TOTAL RENT (1) RENT
- ----------------------------------- ----------- --------- --------- --------- ----------- ------------ ---------------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C>
Indiana............................ 8,954 1,247 440 10,641 53% $ 47,869 41%
Ohio............................... 2,945 2,950 829 6,724 34 53,017 45
Kentucky........................... 952 -- -- 952 5 2,444 2
Tennessee.......................... 562 -- -- 562 3 3,425 3
Missouri........................... -- 463 33 496 2 5,439 5
Illinois........................... 126 -- 174 300 1 2,244 2
Michigan........................... -- 245 -- 245 1 2,629 2
Wisconsin.......................... 153 -- -- 153 1 491 --
----------- --------- --------- --------- ----- ------------ ---
Total.......................... 13,692 4,905 1,476 20,073 100% $ 117,558 100%
----------- --------- --------- --------- ----- ------------ ---
----------- --------- --------- --------- ----- ------------ ---

Percent of total square feet... 68% 25% 7% 100%
----------- --------- --------- ---------
----------- --------- --------- ---------
</TABLE>

- ------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
December 31, 1995. Net Effective Rent equals the average annual rental
property revenue over the terms of the respective leases, excluding
additional rent due as operating expense reimbursements, landlord allowances
for operating expenses and percentage rents.

S-30
<PAGE>
SUMMARY OF PROPERTIES

<TABLE>
<CAPTION>
PERCENT
ANNUAL OF TOTAL OCCUPANCY
PERCENT NET NET EFFECTIVE AT
SQUARE OF TOTAL EFFECTIVE ANNUAL DECEMBER 31,
TYPE OF PROPERTY FEET SQUARE FEET RENT (1) RENT (1) 1995
- ------------------------------------------------ --------- ------------- ------------ ------------- -------------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C>
Industrial...................................... 13,692 68% $ 52,320 45% 96.1%
Office.......................................... 4,905 25 52,114 44 94.1%
Retail.......................................... 1,476 7 13,124 11 93.8%
--------- ----- ------------ ----- ------
Total....................................... 20,073 100% $ 117,558 100% 95.4%
--------- ----- ------------ ----- ------
--------- ----- ------------ ----- ------
</TABLE>

- ------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
December 31, 1995.

The following table sets forth the aggregate average percent leased for all
of the Properties during the indicated periods.

AVERAGE OCCUPANCY
(ALL PROPERTIES)

<TABLE>
<CAPTION>
SQUARE FEET AVERAGE
YEAR AVAILABLE OCCUPANCY
- ------------------------------------------------------------------------------ ------------ -------------
<S> <C> <C>
1995.......................................................................... 20,072,666 95.1%
1994.......................................................................... 12,894,603 93.8%
1993.......................................................................... 10,864,245 92.1%
</TABLE>

S-31
<PAGE>
The following table shows lease expirations for leases in place as of
December 31, 1995 for each of the ten years beginning with 1996 for the
Properties, assuming none of the tenants exercises early termination or renewal
options.

LEASE EXPIRATIONS
(ALL PROPERTIES)

<TABLE>
<CAPTION>
ANNUAL NET PERCENT OF PERCENT OF
NET RENTABLE EFFECTIVE ANNUAL NET TOTAL
AREA (IN ANNUAL NET RENT PER EFFECTIVE LEASED
NUMBER SQ. FT.) EFFECTIVE RENT SQ. FT. RENT SQ. FT.
YEAR OF OF SUBJECT UNDER UNDER REPRESENTED REPRESENTED
LEASE LEASES TO EXPIRING EXPIRING EXPIRING BY EXPIRING BY EXPIRING
EXPIRATION EXPIRING LEASES LEASES (1) LEASES (1) LEASES LEASES
- ---------- -------- -------------- -------------- ---------- ----------- -----------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
1996 306 2,289 $ 11,732 $ 5.13 9.98% 11.95%
1997 237 1,818 11,530 $ 6.34 9.81% 9.49%
1998 253 2,921 15,262 $ 5.22 12.98% 15.25%
1999 191 2,612 15,586 $ 5.97 13.26% 13.63%
2000 175 2,414 14,095 $ 5.84 11.99% 12.60%
2001 73 1,834 9,364 $ 5.11 7.97% 9.57%
2002 38 727 6,110 $ 8.40 5.20% 3.79%
2003 14 208 2,399 $11.53 2.04% 1.09%
2004 13 886 3,990 $ 4.50 3.39% 4.62%
2005 42 1,373 10,536 $ 7.67 8.96% 7.17%
2006 and 34 2,078 16,954 $ 8.16 14.42% 10.84%
thereafter
-------- -------------- -------------- ---------- ----------- -----------
TOTAL 1,376 19,160 $117,558 $ 6.14 100.00% 100.00%
-------- -------------- -------------- ---------- ----------- -----------
-------- -------------- -------------- ---------- ----------- -----------
</TABLE>

- ------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
December 31, 1995.

INDUSTRIAL PROPERTIES

The 124 industrial Properties are primarily located in industrial or
business parks that have been developed by the Company and consist of 80 bulk
distribution facilities and 44 service center facilities. Approximately 80% of
the square footage of the industrial Properties is contained in bulk
distribution facilities. The bulk distribution facilities accommodate the needs
of large warehouse and distribution users with ceiling clear heights of 20 feet
and more while providing leased space to many large tenants including users of
more than 500,000 square feet. The service center facilities are also known as
flex buildings or light industrial properties which generally have 12 to 18 foot
ceiling heights and a combination of drive-up and dock loading access. These
service center facilities accommodate users of 1,200 square feet and up. The
diversity of the industrial buildings allows the Company to cater to many
segments of the industrial market and renders the Company less dependent upon
any specific market segment. Over 90% of the industrial Properties are in the
Company's primary markets of Indianapolis, Cincinnati and Columbus. Over 80% of
the square footage of the industrial Properties was constructed or acquired and
renovated by the Company in the last 10 years.

S-32
<PAGE>
The following table sets forth the aggregate average percent leased and Net
Effective Rent per leased square foot for the industrial Properties during the
indicated periods.

AVERAGE OCCUPANCY AND AVERAGE RENTALS
(INDUSTRIAL PROPERTIES)

<TABLE>
<CAPTION>
NET EFFECTIVE
SQUARE FEET AVERAGE RENT PER LEASED
YEAR AVAILABLE OCCUPANCY SQUARE FOOT (1)
- ------------------------------------------------------------ --------------- -------------- -----------------
<S> <C> <C> <C>
1995........................................................ 13,692,461 96.2% $3.93(2)(3)
1994........................................................ 7,622,627 95.5% $4.05
1993........................................................ 6,235,835 93.2% $4.06
</TABLE>

- ------------------------
(1) Calculated as the Net Effective Rent for the indicated period divided by the
average total square feet under lease during the same period.

(2) During 1995, the Company renewed 55% of its industrial leases up for
renewal. The rental rate of the 394,000 square feet renewed during this
period increased 8.8% for the renewal period as compared to the prior lease
term. During this same period, the Company leased an additional 579,000
square feet in the in-service Properties at a Net Effective Rental rate of
$4.19 per square foot.

(3) The average Net Effective Rent per leased square foot decreased in 1995
because the increase in square footage available relates primarily to bulk
warehouse space which provides a lower average Net Effective Rent per leased
square foot.

The following table shows lease expirations for leases in place as of
December 31, 1995 for each of the ten years beginning with 1996 for the
industrial Properties, assuming none of the tenants exercises early termination
or renewal options.

LEASE EXPIRATIONS
(INDUSTRIAL PROPERTIES)

<TABLE>
<CAPTION>
ANNUAL NET PERCENT OF PERCENT OF
EFFECTIVE ANNUAL NET TOTAL
NET RENTABLE RENT PER EFFECTIVE LEASED
NUMBER AREA (IN SQ. ANNUAL NET SQ. FT. RENT SQ. FT.
YEAR OF OF FT.) SUBJECT EFFECTIVE RENT UNDER REPRESENTED REPRESENTED
LEASE LEASES TO EXPIRING UNDER EXPIRING EXPIRING BY EXPIRING BY EXPIRING
EXPIRATION EXPIRING LEASES LEASES (1) LEASES (1) LEASES LEASES
- ---------- -------- -------------- --------------- ---------- ----------- -----------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
1996 148 1,824 $ 7,233 $ 3.97 13.83% 13.86%
1997 108 1,269 5,851 $ 4.61 11.18 9.64
1998 113 2,262 8,466 $ 3.74 16.18 17.19
1999 86 1,862 7,724 $ 4.15 14.76 14.15
2000 85 1,849 7,238 $ 3.91 13.83 14.05
2001 30 1,490 5,696 $ 3.82 10.89 11.32
2002 13 265 1,115 $ 4.21 2.13 2.01
2003 3 40 442 $11.05 0.84 0.30
2004 8 810 3,128 $ 3.86 5.98 6.15
2005 11 703 2,555 $ 3.63 4.88 5.34
2006 and 5 788 2,872 $ 3.64 5.50 5.99
thereafter
--- ------ ------- ---------- ----------- -----------
TOTAL 610 13,162 $52,320 $ 3.98 100.00% 100.00%
--- ------ ------- ---------- ----------- -----------
--- ------ ------- ---------- ----------- -----------
</TABLE>

- ------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
December 31, 1995.

S-33
<PAGE>
OFFICE PROPERTIES

The Company owns a portfolio of 54 office Properties, including 46 suburban
office buildings which range from single-story to mid-rise and are located in
developed business parks and mixed use developments with excellent interstate
access and visibility. Five of the suburban office buildings are medical
buildings, including a single tenant facility with a 20 year lease and two
multi-tenant properties attached to a hospital. In addition, the Company owns
three downtown office buildings consisting of two new high-rise buildings and
one rehabilitated building. The office Properties are a collection of modern
facilities with over 85% constructed or renovated within the last ten years. The
Company believes that these primarily Class A office Properties are among the
highest quality available to tenants in its markets. This diverse mix of office
buildings is occupied by tenants spanning all segments of the office market.

The following table sets forth the aggregate average percent leased and Net
Effective Rent per leased square foot for the office Properties during the
indicated periods.

AVERAGE OCCUPANCY AND AVERAGE RENT
(OFFICE PROPERTIES)

<TABLE>
<CAPTION>
NET EFFECTIVE
SQUARE FEET AVERAGE RENT PER LEASED
YEAR AVAILABLE OCCUPANCY SQUARE FOOT (1)
- ------------------------------------------------------------------------ ----------- ------------- ---------------
<S> <C> <C> <C>
1995.................................................................... 4,904,692 92.4% $ 11.02(2)
1994.................................................................... 3,986,629 90.7% $ 10.86
1993.................................................................... 3,811,904 90.5% $ 10.91
</TABLE>

- ------------------------
(1) Calculated as the Net Effective Rent for the indicated period divided by the
average total square feet under lease during the same period.

(2) During 1995, the Company renewed 76% of its office leases up for renewal.
The rental rate of the 372,000 square feet renewed during this period
increased 4.4% for the renewal period as compared to the prior lease term.
During this same period, the Company leased an additional 402,000 square
feet in the in-service Properties at a Net Effective Rental rate of $10.52
per square foot.

S-34
<PAGE>
The following table shows lease expirations for leases in place as of
December 31, 1995 for each of the ten years beginning with 1996 for the office
Properties, assuming none of the tenants exercises early termination or renewal
options.

LEASE EXPIRATIONS
(OFFICE PROPERTIES)

<TABLE>
<CAPTION>
ANNUAL NET PERCENT OF PERCENT OF
EFFECTIVE ANNUAL NET TOTAL
NET RENTABLE RENT PER EFFECTIVE LEASED SQ.
NUMBER AREA (IN SQ. ANNUAL NET SQ. FT. RENT FT.
YEAR OF OF FT.) SUBJECT EFFECTIVE RENT UNDER REPRESENTED REPRESENTED
LEASE LEASES TO EXPIRING UNDER EXPIRING EXPIRING BY EXPIRING BY EXPIRING
EXPIRATION EXPIRING LEASES LEASES (1) LEASES (1) LEASES LEASES
- ---------- -------- -------------- -------------- ---------- ----------- -----------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
1996 123 382 $ 3,662 $ 9.59 7.03% 8.28%
1997 93 458 4,648 $10.15 8.92 9.92
1998 103 549 5,631 $10.26 10.81 11.89
1999 74 624 6,582 $10.55 12.63 13.52
2000 54 441 5,454 $12.37 10.47 9.55
2001 28 285 3,035 $10.65 5.82 6.18
2002 18 375 4,203 $11.21 8.07 8.13
2003 7 131 1,627 $12.42 3.12 2.84
2004 3 63 726 $11.52 1.39 1.37
2005 22 498 6,494 $13.04 12.46 10.79
2006 and 16 809 10,052 $12.43 19.28 17.53
thereafter
--- ----- ------- ---------- ----------- -----------
TOTAL 541 4,615 $52,114 $11.29 100.00% 100.00%
--- ----- ------- ---------- ----------- -----------
--- ----- ------- ---------- ----------- -----------
</TABLE>

- ------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
December 31, 1995.

RETAIL PROPERTIES

The retail Properties, which cater to a variety of retail markets, include
one regional shopping center, 13 neighborhood shopping centers, three shopping
centers designed primarily to serve the business parks in which they are located
and seven free-standing single-tenant buildings. The regional and neighborhood
shopping centers either have well known anchor tenants such as Wal-Mart and Pet
Food Supermarket, or are located adjacent to major retailers such as Kroger or
in areas where other large commercial facilities draw consumers. The retail
Properties are generally located in upscale suburban and high growth areas.

The following table sets forth the aggregate average percent leased and Net
Effective Rent per leased square foot for the retail Properties during the
indicated periods.

AVERAGE OCCUPANCY AND AVERAGE RENT
(RETAIL PROPERTIES)

<TABLE>
<CAPTION>
NET EFFECTIVE
SQUARE FEET AVERAGE RENT PER LEASED
YEAR AVAILABLE OCCUPANCY SQUARE FOOT (1)
- ------------------------------------------------------------------------ ----------- ------------- ----------------
<S> <C> <C> <C>
1995.................................................................... 1,475,513 94.7% $ 9.09(2)
1994.................................................................... 1,285,347 93.6% $ 8.96
1993.................................................................... 816,506 91.2% $ 9.04
</TABLE>

- ------------------------

(1) Calculated as the Net Effective Rent for the indicated period divided by the
average total square feet under lease during the same period.

S-35
<PAGE>
(2) During 1995, the Company renewed 86% of its retail leases up for renewal.
The rental rate of the 81,000 square feet renewed during this period
increased 12.1% for the renewal period as compared to the prior lease term.
During this same period, the Company leased an additional 71,000 square feet
in the in-service Properties at a Net Effective Rental rate of $10.77 per
square foot.

The following table shows lease expirations for leases in place as of
December 31, 1995 for each of the ten years beginning with 1996 for the retail
Properties, assuming none of the tenants exercises early termination or renewal
options.

LEASE EXPIRATIONS
(RETAIL PROPERTIES)

<TABLE>
<CAPTION>
ANNUAL NET PERCENT OF PERCENT OF
NET RENTABLE EFFECTIVE ANNUAL NET TOTAL
AREA (IN RENT PER EFFECTIVE LEASED SQ.
NUMBER SQ. FT.) ANNUAL NET SQ. FT. RENT FT.
YEAR OF OF SUBJECT TO EFFECTIVE RENT UNDER REPRESENTED REPRESENTED
LEASE LEASES EXPIRING UNDER EXPIRING EXPIRING BY EXPIRING BY EXPIRING
EXPIRATION EXPIRING LEASES LEASES (1) LEASES (1) LEASES LEASES
- ---------- -------- -------------- -------------- ---------- ----------- -----------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
1996 35 83 $ 838 $10.10 6.39% 5.99%
1997 36 92 1,031 $11.21 7.85 6.65
1998 37 109 1,165 $10.69 8.88 7.88
1999 31 125 1,281 $10.25 9.76 9.03
2000 36 124 1,403 $11.31 10.69 8.96
2001 15 60 633 $10.55 4.82 4.34
2002 7 88 792 $ 9.00 6.03 6.36
2003 4 37 329 $ 8.89 2.51 2.67
2004 2 13 136 $10.46 1.04 0.94
2005 9 173 1,487 $ 8.60 11.33 12.50
2006 and 13 480 4,029 $ 8.39 30.70 34.68
thereafter
--- ----- ------- ---------- ----------- -----------
TOTAL 225 1,384 $13,124 $ 9.48 100.00% 100.00%
--- ----- ------- ---------- ----------- -----------
--- ----- ------- ---------- ----------- -----------
</TABLE>

- ------------------------
(1) Represents annual Net Effective Rent due from tenants in occupancy as of
December 31, 1995.

LAND

Substantially all of the approximately 1,150 acres of unencumbered Land is
located adjacent to the Properties in industrial or business parks that have
been developed by the Company. Approximately 80% of the Land is zoned for
industrial use, with the remainder zoned for either office or retail use. All of
the Land is unencumbered, has available to it appropriate utilities and is ready
for immediate development. The Company believes that approximately 15 million
square feet of commercial development can be constructed on the Land. The
Company believes that the Land gives it a competitive advantage over other real
estate companies operating in its markets.

S-36
<PAGE>
The following table describes the acreage and zoning of the Land as of
December 31, 1995.

LAND HELD FOR DEVELOPMENT

<TABLE>
<CAPTION>
YEAR COMPANY'S
DESCRIPTION LOCATION ZONED USE ACQUIRED ACREAGE OWNERSHIP
- --------------------------------- ------------------------ ---------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Park 100 Business Park Indianapolis, IN Industria1 1972-1995 324.6 100%
North Airport Park Indianapolis, IN Industrial 1995 34.5 100%
Park Fletcher Indianapolis, IN Industrial 1995 113.0 50%(1)
South Park Business Center Greenwood, IN Industrial 1989 36.1 100%
Park 101 Decatur, IL Industrial 1986 56.7 100%
Park 50 TechneCenter Cincinnati, OH Industrial 1977/1989 55.3 100%
World Park Cincinnati, OH Industrial 1987/1991 101.1 100%
Southpark Business Center Hebron, OH Industrial 1989/1995 21.4 100%
Haywood Oaks Technecenter Nashville, TN Industrial 1988 15.4 100%
Southpointe Columbus, OH Industrial 1994 25.7 100%
Earth City St. Louis, MO Industrial 1995 131.4 100%
Parkwood Crossing Indianapolis, IN Office 1989 40.3 100%
Hamilton Crossing Carmel, IN Office 1988 71.3 100%
Governor's Pointe Cincinnati, OH Office 1986 31.2 80%(2)
Merchant Street Cincinnati, OH Office 1990 5.6 100%
Tri-County Office Park Cincinnati, OH Office 1986 3.2 100%
Fidelity Drive Cincinnati, OH Office 1984 10.0 100%
American Center Nashville, TN Office 1990 2.8 100%
Corporate Park at Tuttle Crossing Columbus, OH Office 1989/1994/1995 10.8 100%
Corporate Park at Tuttle Crossing Columbus, OH Retail 1995 9.6 100%
Coldwater Crossing Fort Wayne, IN Retail 1994 5.1 100%
Governor's Pointe Cincinnati, OH Retail 1995 18.9 80%(2)
Governor's Point Shopping Center Cincinnati, OH Retail 1995 6.7 100%
South Park Greenwood, IN Retail 1989 16.8 100%
-----------
1,147.5
-----------
-----------
</TABLE>

- ------------------------
(1) Owned by a partnership in which the Company is a 50% partner.

(2) Pursuant to a land contract whereby the Company is the purchaser.

S-37
<PAGE>
MANAGEMENT

The directors and senior officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATIONS AND POSITIONS
- ------------------------- --- --------------------------------------------------------------------------------
<S> <C> <C>
John W. Wynne 63 Director and Chairman of the Board.
Thomas L. Hefner 49 Director and President and Chief Executive Officer.
Daniel C. Staton 43 Director and Executive Vice President and Chief Operating Officer.
Darell E. Zink, Jr. 49 Director and Executive Vice President, Chief Financial Officer.
Geoffrey Button 47 Director; Independent real estate consultant.
Ngaire E. Cuneo 45 Director; Executive Vice President, Corporate Development, Conseco, Inc.
Howard L. Feinsand 48 Director; Managing Director, Citicorp North America, Inc.
John D. Peterson 63 Director; Chairman and Chief Executive Officer of City Securities Corporation.
James E. Rogers 48 Director; Vice Chairman, President and Chief Operating Officer of CINergy.
Lee Stanfield 88 Director; Independent real estate developer, investor and consultant.
Jay J. Strauss 60 Director; Chairman and Chief Executive Officer of Regent Realty Group, Inc.
Gary A. Burk 44 President of Construction Services and Executive Vice President of Duke
Services, Inc.
Ross C. Farro 52 Vice President, Cleveland Group
Robert D. Fessler 38 Vice President, Ohio Industrial Group
John R. Gaskin 34 Vice President, General Counsel and Secretary
Richard W. Horn 38 Vice President of Acquisitions
Donald J. Hunter 36 Vice President, Columbus Group
Steven R. Kennedy 39 Vice President of Construction Services
Wayne H. Lingafelter 36 Vice President, Indiana Office Group
William E. Linville, III 41 Vice President, Indiana Industrial Group
David R. Mennel 41 General Manager of Services Operations and President of Duke Services, Inc.
David P. Minton 38 Vice President, St. Louis Group
Michael L. Myrvold 40 Vice President, Retail Group
John M. Nemecek 40 President of Asset and Property Management
Dennis D. Oklak 42 Vice President and Treasurer
Jeffrey G. Tulloch 50 Vice President and General Manager, Cincinnati Group
</TABLE>

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

GENERAL

The following discussion summarizes certain Federal income tax consequences
to an investor in shares of Common Stock. Such discussion is based upon current
law. The discussion is focused on the classification

S-38
<PAGE>
of the Company as a REIT and does not address all tax considerations applicable
to prospective investors, nor does the discussion give a detailed description of
any state, local, or foreign tax considerations. This discussion does not
describe all of the aspects of Federal income taxation that may be relevant to a
prospective shareholder in light of his or her particular circumstances or to
certain types of shareholders (including insurance companies, tax-exempt
entities, financial institutions or broker dealers, foreign corporations and
persons who are not citizens or residents of the United States) subject to
special treatment under the Federal income tax laws. As used in this section,
the term "Company" refers solely to Duke Realty Investments, Inc.

EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT WITH HIS OR HER OWN TAX
ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE PURCHASE,
OWNERSHIP AND SALE OF COMMON STOCK IN AN ENTITY ELECTING TO BE TAXED AS A REAL
ESTATE INVESTMENT TRUST, INCLUDING THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES
OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.

TAXATION OF THE COMPANY

GENERAL. The Company expects to continue to be taxed as a REIT for Federal
income tax purposes. Management believes that the Company was organized and has
operated in such a manner as to meet the requirements for qualification and
taxation as a REIT under the Internal Revenue Code of 1986, as amended (the
"Code"), and that the Company intends to continue to operate in such a manner.
No assurance, however, can be given that the Company will continue to operate in
a manner so as to remain qualified as a REIT.

In the opinion of Bose McKinney & Evans which has acted as counsel to the
Company ("Counsel"), assuming the Company was organized in conformity with and
has satisfied the requirements for qualification and taxation as a REIT under
the Code for each of its taxable years from and including the first year for
which the Company made the election to be taxed as a REIT, and the assumptions
and representations referred to below are true, the proposed methods of
operation of the Company, the Operating Partnership and Duke Realty Services
Limited Partnership (the "Services Partnership") will permit the Company to
continue to qualify to be taxed as a REIT for its current and subsequent taxable
years. This opinion is based upon certain assumptions relating to the
organization and operation of Duke Services, Inc. ("DSI"), the Operating
Partnership and the Services Partnership and is conditioned upon certain
representations made by Company personnel and affiliates as to certain factual
matters relating to the Company's past operations and the intended manner of
future operation of the Company, the Operating Partnership, and the Services
Partnership. The opinion is further based upon a letter ruling received by the
Company from the IRS dated September 30, 1994, which concluded that the
Company's and the Operating Partnership's distributive shares of the gross
income of the Services Partnership will be in proportion to their respective
percentage shares of the capital interests of the partners of the Services
Partnership. Counsel is not aware of any facts or circumstances which are
inconsistent with these assumptions and representations. Unlike a tax ruling, an
opinion of counsel is not binding upon the IRS, and no assurance can be given
that the IRS will not challenge the status of the Company as a REIT for Federal
income tax purposes. The Company's qualification and taxation as a REIT has
depended and will depend upon, among other things, the Company's ability to meet
on a continuing basis, through ownership of assets, actual annual operating
results, receipt of qualifying real estate income, distribution levels and
diversity of stock ownership, the various qualification tests imposed under the
Code discussed below. Counsel has not reviewed past compliance with these tests
and will not review compliance with these tests on a periodic or continuing
basis. Accordingly, no assurance can be given respecting the satisfaction of
such tests. See "Taxation of the Company -- Failure to Qualify."

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<PAGE>
The following is a general summary of the Code sections which govern the
Federal income tax treatment of a REIT and its shareholders. These sections of
the Code are highly technical and complex. This summary is qualified in its
entirety by the applicable Code provisions, Treasury Regulations, and
administrative and judicial interpretations thereof as currently in effect.

If the Company qualifies for taxation as a REIT and distributes to its
shareholders at least 95% of its REIT taxable income, it generally is not
subject to Federal corporate income taxes on net income that it currently
distributes to shareholders. This treatment substantially eliminates the "double
taxation" (at the corporate and shareholder levels) that generally results from
investment in a corporation. However, the Company will be subject to Federal
income tax as follows: (i) the Company will be taxed at regular corporate rates
on any undistributed REIT taxable income, including undistributed net capital
gains; (ii) under certain circumstances, the Company may be subject to the
"alternative minimum tax" on its items of tax preference, if any; (iii) if the
Company has net income from prohibited transactions (which are, in general,
certain sales or other dispositions of property other than foreclosure property
held primarily for sale to customers in the ordinary course of business), such
income will be subject to a 100% tax; (iv) if the Company should fail to satisfy
the 75% gross income test or the 95% gross income test (as discussed below), and
has nonetheless maintained its qualification as a REIT because certain other
requirements have been met, it will be subject to a 100% tax on the gross income
attributable to the greater of the amount by which the Company fails the 75% or
95% test, multiplied by a fraction intended to reflect the Company's
profitability; (v) if the Company should fail to distribute during each calendar
year at least the sum of (1) 85% of its REIT ordinary income for such year; (2)
95% of its REIT capital gain net income for such year; and (3) any undistributed
taxable income from prior years, it would be subject to a 4% excise tax on the
excess of such required distribution over the amounts actually distributed; (vi)
if the Company has (1) net income from the sale or other disposition of
"foreclosure property" (which is, in general, property acquired by the Company
by foreclosure or otherwise on default on a loan secured by the property) which
is held primarily for sale to customers in the ordinary course of business; or
(2) other non-qualifying income from foreclosure property, it will be subject to
tax on such income at the highest corporate rate; and (vii) if the Company
acquires any asset from a C corporation (i.e., generally a corporation subject
to tax at the corporate level) in a transaction in which the basis of the asset
in the Company's hands is determined by reference to the basis of the asset (or
any other property) in the hands of the C corporation, and the Company
recognizes gain on the disposition of such asset during the 10-year period (the
"Restriction Period") beginning on the date on which such asset was acquired by
the Company, then, pursuant to guidelines issued by the IRS, the excess of the
fair market value of such property at the beginning of the applicable
Restriction Period over the Company's adjusted basis in such asset as of the
beginning of such Restriction Period will be subject to a tax at the highest
regular corporate rate. The results described above with respect to the
recognition of built-in gain assume that the Company will make an election
pursuant to IRS Notice 88-19 or applicable future administrative rules or
Treasury Regulations.

REQUIREMENTS FOR QUALIFICATION. The Code defines a REIT as a corporation,
trust or association: (1) which is managed by one or more trustees or directors;
(2) the beneficial ownership of which is evidenced by transferable shares or by
transferable certificates of beneficial interest; (3) which would be taxable as
a domestic corporation but for Sections 856 through 859 of the Code; (4) which
is neither a financial institution nor an insurance company subject to certain
provisions of the Code; (5) which has the calendar year as its taxable year; (6)
the beneficial ownership of which is held by 100 or more persons; (7) during the
last half of each taxable year not more than 50% in value of the outstanding
stock of which is owned, directly or indirectly, by five or fewer individuals
(as defined in the Code to include certain entities); and (8) which meets
certain income and assets tests, described below. The Company believes it
currently satisfies requirements (1) through (7), and believes that it will
continue to do so. In order to help comply with requirement (7), the Company has
placed certain restrictions on the transfer of shares of Common Stock.

INCOME TESTS. In order to qualify as a REIT, there are three gross income
tests that must be satisfied annually. First, at least 75% of the Company's
gross income (excluding gross income from prohibited

S-40
<PAGE>
transactions) for each taxable year must be derived directly or indirectly from
investments relating to real property (including "rents from real property,"
gain from the sale of real property and, in certain circumstances, interest) or
from qualified types of temporary investments. Second, at least 95% of the
Company's gross income (excluding gross income from prohibited transactions) for
each taxable year must be derived from the same items which qualify under the
75% income test or from dividends, interest and gain from the sale or
disposition of stock or securities, or from any combination of the foregoing.
Third, less than 30% of the Company's gross income (including gross income from
prohibited transactions) must be derived from gain in connection with the sale
or other disposition of stock or securities held for less than one year,
property in a prohibited transaction, and real property held for less than four
years (other than involuntary conversions and foreclosure property).

Rents received by the Company will qualify as "rents from real property" in
satisfying the gross income tests for a REIT described above only if several
conditions (related to the relationship of the tenant to the Company, the method
of determining the rent payable and nature of the property leased) are met. The
Company does not anticipate receiving rents in excess of a de minimis amount
that fail to meet these conditions. Finally, for rents received to qualify as
"rents from real property," the Company generally must not operate or manage the
property or furnish or render services to tenants, other than through an
"independent contractor" that is adequately compensated and from whom the
Company derives no income; provided, however, that the Company may perform
services "usually or customarily rendered" in connection with the rental of
space for occupancy only and not otherwise considered "rendered to the occupant"
("Permissible Services").

The Company provides certain management, development, construction and other
tenant-related services (collectively, "Real Estate Services") with respect to
the Properties through the Operating Partnership, which is not an independent
contractor. Management believes that the Real Estate Services provided to
tenants by the Operating Partnership are Permissible Services. To the extent
Real Estate Services to tenants do not constitute Permissible Services, such
services are performed by independent contractors.

The Company derives a portion of its income from the Operating Partnership's
interest as a limited partner in the Services Partnership and its ownership of
DSI which is a general partner of the Services Partnership. The Services
Partnership receives fees for Real Estate Services with respect to properties
that are not owned directly by the Operating Partnership, which fees will not
qualify as rents from real property. In addition, the Services Partnership
receives fees in consideration for the performance of management and
administrative services with respect to Properties not entirely owned by the
Operating Partnership. All or a portion of such management and administrative
fees will also not qualify as "rents from real property" for purposes of the 75%
or 95% gross income tests. Pursuant to Treasury Regulations, a partner's capital
interest in a partnership determines its proportionate interest in the
partnership's gross income from partnership assets for purposes of the 75% and
95% gross income tests. For this purpose, the capital interest of a partner is
determined by dividing its capital account by the sum of all partners' capital
accounts. Presently, the Operating Partnership's capital interest in the
Services Partnership is 9% and DSI's capital interest in the Services
Partnership is 1%. The partnership agreement of the Services Partnership
provides, however, for varying allocations of income which differ from capital
interests, subject to certain limitations on the aggregate amount of gross
income which may be allocated to the Operating Partnership and DSI. The Company
has obtained a letter ruling from the IRS that allocations according to capital
interests are proper for applying the 75% and 95% gross income tests. Thus, for
purposes of these gross income tests, at present the Services Partnership
allocates 9% of its gross income to the Operating Partnership and 1% to DSI.
Although certain of the Real Estate Services fees allocated from the Services
Partnership do not qualify under the 75% or 95% gross income tests as "rents
from real property," the Company believes that, at least presently and in the
near term, the aggregate amount of such fees (and any other non-qualifying
income) allocated to the Company in any taxable year will not cause the Company
to exceed the limits on non-qualifying income under the 75% or 95% gross income
tests described above.

S-41
<PAGE>
If the Company fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a REIT for such year
if it is entitled to relief under certain provisions of the Code. It is not
possible, however, to state whether in all circumstances the Company would be
entitled to the benefit of these relief provisions. Even if these relief
provisions apply, a tax would be imposed on certain excess net income.

ASSET TESTS. In order for the Company to maintain its qualification as a
REIT, at the close of each quarter of its taxable year, it must also satisfy
three tests relating to the nature of its assets. First, at least 75% of the
value of the Company's total assets must be represented by "real estate assets,"
cash, cash items, and government securities. Second, not more than 25% of the
Company's total assets may be represented by securities other than those in the
75% assets class. Third, of the assets held in securities other than those in
the 75% assets class, the value of any one issuer's securities owned by the
Company may not exceed 5% of the value of the Company's total assets, and the
Company may not own more than 10% of any one issuer's outstanding voting
securities (excluding securities of a qualified REIT subsidiary [as defined in
the Code] or another REIT).

The Company is deemed to directly hold its proportionate share of all real
estate and other assets of the Operating Partnership as well as its
proportionate share of all assets deemed owned by the Operating Partnership and
DSI through their ownership of partnership interests in the Services Partnership
and other partnerships. As a result, management believes that more than 75% of
the Company's assets are real estate assets. In addition, management does not
expect the Company to hold (1) any securities representing more than 10% of any
one issuer's voting securities other than DSI, which is a qualified REIT
subsidiary, nor (2) securities of any one issuer exceeding 5% of the value of
the Company's gross assets (determined in accordance with generally accepted
accounting principles).

ANNUAL DISTRIBUTION REQUIREMENTS. The Company, in order to qualify as a
REIT, generally must distribute dividends (other than capital gain dividends) to
its shareholders in an amount at least equal to (A) the sum of (i) 95% of the
Company's "REIT taxable income" (computed without regard to the dividends paid
deduction and the Company's net capital gain), and (ii) 95% of the net income
(after tax), if any, from foreclosure property, minus (B) the sum of certain
items of non-cash income. In addition, if the Company disposes of any asset
during its Restriction Period, the Company will be required to distribute at
least 95% of the built-in gain (after tax), if any, recognized on the
disposition of such asset. Such distributions must be paid in the taxable year
to which they relate, or in the following taxable year if declared before the
Company timely files its tax return for such year and if paid on or before the
first regular dividend payment after such declaration. To the extent that the
Company does not distribute all of its net capital gain or distributes at least
95%, but less than 100%, of its "REIT taxable income," as adjusted, it will be
subject to tax on the undistributed amount at regular capital gains and ordinary
corporate tax rates. Furthermore, if the Company should fail to distribute
during each calendar year at least the sum of (i) 85% of its REIT ordinary
income for such year, (ii) 95% of its REIT net capital gain income for such
year, and (iii) any undistributed taxable income from prior periods, the Company
will be subject to regular capital gains and ordinary corporate tax rates on
undistributed income and also may be subject to a 4% excise tax on undistributed
income in certain events. The Company believes that it has made and intends to
continue to make timely distributions sufficient to satisfy the annual
distribution requirements. In this regard, the partnership agreement of the
Operating Partnership authorizes the Company, as general partner, to take such
steps as may be necessary to cause the Operating Partnership to distribute to
its partners an amount sufficient to permit the Company to meet these
distribution requirements. It is possible, however, that the Company, from time
to time, may not have sufficient cash or other liquid assets to meet the 95%
distribution requirement due primarily to the expenditure of cash for
nondeductible expenses such as principal amortization or capital expenditures.
In such event, the Company may borrow or may cause the Operating Partnership to
arrange for short-term or other borrowing to permit the payment of required
dividends or pay dividends in the form of taxable stock dividends. If the amount
of nondeductible expenses exceeds non-cash deductions, the Operating Partnership
may refinance its indebtedness to reduce principal payments and borrow funds for
capital expenditures.

S-42
<PAGE>
FAILURE TO QUALIFY. If the Company fails to qualify for taxation as a REIT
in any taxable year, the Company will be subject to tax (including any
applicable corporate alternative minimum tax) on its taxable income at regular
corporate rates. Distributions to shareholders in any year in which the Company
fails to qualify will not be required to be made and, if made, will not be
deductible by the Company. Unless entitled to relief under specific statutory
provisions, the Company also will be disqualified from taxation as a REIT for
the four taxable years following the year during which qualification was lost.
It is not possible to state whether in all circumstances the Company would be
entitled to such statutory relief.

TAX ASPECTS OF THE COMPANY'S INVESTMENTS IN PARTNERSHIPS

EFFECT OF TAX STATUS OF OPERATING PARTNERSHIP AND SERVICES PARTNERSHIP AND
OTHER PARTNERSHIPS ON REIT QUALIFICATION. All of the Company's investments are
through DSI and the Operating Partnership, which in turn hold interests in other
partnerships, including the Services Partnership. The Company believes that the
Operating Partnership, and each other partnership in which it holds an interest,
is properly treated as a partnership for tax purposes (and not as an association
taxable as a corporation). If, however, the Operating Partnership were treated
as an association taxable as a corporation, the Company would cease to qualify
as a REIT. If the Services Partnership or any of the other partnerships were
treated as an association taxable as a corporation and the Operating
Partnership's interest in such partnership exceeded 10% of the partnership's
voting interests or the value of such interest exceeded 5% of the value of the
Company's assets, the Company would cease to qualify as a REIT. Furthermore, in
such a situation, any partnerships treated as a corporation would be subject to
corporate income taxes, and distributions from any such partnership to the
Company would be treated as dividends, which are not taken into account in
satisfying the 75% gross income test described above and which therefore could
make it more difficult for the Company to meet the 75% gross income test
described above.

TAX ALLOCATIONS WITH RESPECT TO THE PROPERTIES. The Operating Partnership
was formed by way of contributions of appreciated property (including certain of
the Properties) to the Operating Partnership. When property is contributed to a
partnership in exchange for an interest in the partnership, the partnership
generally takes a carryover basis in that property for tax purposes equal to the
adjusted basis of the contributing partner in the property, rather than a basis
equal to the fair market value of the property at the time of contribution (this
difference is referred to as "Book-Tax Difference"). The partnership agreement
of the Operating Partnership requires allocations of income, gain, loss and
deduction with respect to a contributed Property be made in a manner consistent
with the special rules of Section 704(c) of the Code and the regulations
thereunder, which will tend to eliminate the Book-Tax Differences with respect
to the contributed Properties over the life of the Operating Partnership.
However, because of certain technical limitations, the special allocation rules
of Section 704(c) may not always entirely eliminate the Book-Tax Differences on
an annual basis or with respect to a specific taxable transaction such as a
sale. Thus, the carryover basis of the contributed Properties in the hands of
the Operating Partnership could cause the Company (i) to be allocated lower
amounts of depreciation and other deductions for tax purposes than would be
allocated to the Company if all Properties were to have a tax basis equal to
their fair market value at the time of contribution, and (ii) possibly to be
allocated taxable gain in the event of a sale of such contributed Properties in
excess of the economic or book income allocated to the Company as a result of
such sale. The foregoing principles also apply in determining the earnings and
profits of the Company for purposes of determining the portion of distributions
taxable as dividend income. The application of these rules over time may result
in a higher portion of distributions being taxed as dividends than would have
occurred had the Company purchased its interests in the Properties at their
agreed values.

TAXATION OF DISTRIBUTIONS TO TAXABLE DOMESTIC SHAREHOLDERS

As long as the Company qualifies as a REIT, distributions made to the
Company's taxable domestic shareholders out of current or accumulated earnings
and profits (and not designated as capital gain dividends) will be taken into
account by them as ordinary income and will not be eligible for the dividends
received deduction for corporations. Distributions that are designated as
capital gain dividends will be taxed as long-term capital gains (to the extent
they do not exceed the Company's actual net capital gain for the

S-43
<PAGE>
taxable year). However, corporate holders may be required to treat up to 20% of
certain capital gain dividends as ordinary income. Distributions in excess of
current and accumulated earnings and profits will not be taxable to a holder to
the extent that they do not exceed the adjusted tax basis of the holder's
shares, but rather will reduce the adjusted basis of such shares. To the extent
that such distributions exceed the adjusted basis of a holder's shares they will
be included in income as long-term capital gain (or short-term capital gain if
the shares have been held for one year or less) assuming the shares are a
capital asset in the hands of the holder. In addition, any dividend declared by
the Company in October, November or December of any year payable to a
shareholder of record on a specified date in any such month shall be treated as
both paid by the Company and received by the shareholder on December 31 of such
year; provided that the dividend is actually paid by the Company during January
of the following calendar year. Shareholders may not include in their individual
income tax returns any net operating losses or capital losses of the Company.

BACKUP WITHHOLDING

The Company will report to its domestic shareholders and the IRS the amount
of dividends paid during each calendar year, and the amount of tax withheld, if
any. Under the backup withholding rules, a shareholder may be subject to backup
withholding at the rate of 31% with respect to dividends paid unless such holder
(a) is a corporation or comes within certain other exempt categories and, when
required, demonstrates this fact, or (b) provides a taxpayer identification
number, certifies as to no loss of exemption from backup withholding, and
otherwise complies with applicable requirements of the backup withholding rules.
A shareholder that does not provide the Company with his correct taxpayer
identification number may also be subject to penalties imposed by the IRS. Any
amount paid as backup withholding will be creditable against the shareholder's
income tax liability. In addition, the Company may be required to withhold a
portion of capital gain distributions to any shareholders who fail to certify
their non-foreign status to the Company.

FOREIGN SHAREHOLDERS

The rules governing United States income taxation of nonresident alien
individuals, foreign corporations, foreign partnerships, and foreign trust and
estates (collectively, "Non-U.S. Shareholders") are quite complex. Certain
distributions paid by the Company to Non-U.S. Shareholders will be subject to
U.S. tax withholding. Prospective Non-U.S. Shareholders should consult with
their own tax advisors to determine the impact of Federal, state and local
income tax laws on an investment in the Company, and to determine their
reporting requirements, if any.

STATE AND LOCAL TAXES

The Company or its shareholders or both may be subject to state, local or
other taxation in various state, local or other jurisdictions, including those
in which they transact business or reside. The tax treatment in such
jurisdictions may differ from the Federal income tax consequences discussed
above. Consequently, prospective shareholders should consult their own tax
advisors regarding the effect of state and local tax laws on an investment in
shares of the Company.

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<PAGE>
UNDERWRITING

Subject to the terms and conditions contained in the terms agreement and
related underwriting agreement (collectively, the "Underwriting Agreement"), the
Company has agreed to sell to each of the Underwriters named below, and each of
the Underwriters for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), Alex. Brown & Sons Incorporated, Dean Witter Reynolds Inc.,
A.G. Edwards & Sons, Inc. and McDonald & Company Securities, Inc. are acting as
representatives (the "Representatives") has severally agreed to purchase from
the Company, the respective number of shares of Common Stock set forth after its
name below. The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, and that the
Underwriters will be obligated to purchase all of the shares of Common Stock if
any are purchased.

<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERWRITER OF COMMON STOCK
- --------------------------------------------------------------------------- -----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.....................................................
Alex. Brown & Sons Incorporated............................................
Dean Witter Reynolds Inc...................................................
A.G. Edwards & Sons, Inc...................................................
McDonald & Company Securities, Inc.........................................
-----------------
Total............................................................ 3,500,000
-----------------
-----------------
</TABLE>

The Representatives have advised the Company that they propose initially to
offer the Common Stock to the public at the public offering price set forth on
the cover page of this Prospectus Supplement, and to certain dealers at such
price less a concession not in excess of $ per share. The Underwriters may
allow, and such dealers may reallow, a discount not in excess of $ to certain
other dealers. After the Offering, the public offering price, concession and
discounts may be changed.

The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus Supplement, to purchase up
to an aggregate of 525,000 additional shares of Common Stock at the price to the
public set forth on the cover page of this Prospectus Supplement, less the
underwriting discount. The Underwriters may exercise this option only to cover
over-allotments, if any. If the Underwriters exercise this option, each of the
Underwriters will have a firm commitment, subject to certain conditions, to
purchase approximately the same percentage thereof which the number of shares of
Common Stock to be purchased by it shown in the foregoing table bears to the
3,500,000 shares of Common Stock offered hereby.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments the Underwriters may be required to make in respect
thereof.

The Company and the executive officers of the Company and the Directors have
agreed that for a period of 90 days from the date of this Prospectus Supplement
they will not, without prior and written consent of the Representatives, offer,
sell or otherwise dispose of any shares of Common Stock or any other security
convertible into or exercisable for shares of Common Stock (except pursuant to
the Company's stock option or dividend reinvestment plans and certain other
agreements).

Merrill Lynch from time to time provides investment banking and financial
advisory services to the Company. Merrill Lynch also acted as representative of
various underwriters in connection with public offerings of the Company's Common
Stock and debt securities in 1993, 1994 and 1995.

S-45
<PAGE>
LEGAL MATTERS

In addition to the legal opinions referred to under "Legal Opinions" in the
accompanying Prospectus, the description of Federal income tax matters contained
in this Prospectus Supplement entitled "Certain Federal Income Tax
Considerations" is based upon the opinion of Bose McKinney and Evans.

S-46
<PAGE>

APPENDIX

Inside front cover page of Prospectus Supplement:

On the inside front cover page of the Prospectus Supplement is graphic
material entitled "Duke Realty Investments Principal Markets" consisting of
(1) a map of the continental United States on which the states of Missouri,
Wisconsin, Illinois, Michigan, Indiana, Kentucky, Tennessee and Ohio are
shaded and (2) a larger map of such states on which the city of Indianapolis,
Indiana is shown as the Corporate Headquarters; the cities of Decatur,
Illinois, Detroit, Michigan, St. Louis, Missouri, Columbus, Ohio, Cincinnati,
Ohio, Cleveland, Ohio and Nashville, Tennessee are shown as Regional Office
locations; and the cities of Milwaukee, Wisconsin, St. Louis, Missouri,
Bloomington, Illinois, Champaign, Illinois, Decatur, Illinois, Indianapolis,
Indiana, Nashville, Tennessee, Detroit, Michigan, Fort Wayne, Indiana,
Columbus, Ohio, Dayton, Ohio, Cincinnati, Ohio, Cleveland, Ohio and Covington,
Kentucky are shown as Duke Markets.

Inside back cover page of Prospectus Supplement:

On the inside back cover page of the Prospectus Supplement are five
color photographs, as follows:

(1) An aerial photograph of a business park, captioned "Park 100
Business Park - Indianapolis, Indiana"

(2) An aerial photograph of a building captioned "Park 100
Business Park, Indianapolis, Indiana, Silver Burdett Ginn
(Building 96) (Completed January 1995)"

(3) A photograph of a building captioned "Corporate Plaza One,
Cleveland, Ohio (Acquired February 1996)"

(4) A photograph of a building captioned "Kohl's Department Store
Cincinnati, Ohio (Completed November 1994)"

(5) A photograph of a building captioned "The Corporate Park at
Tuttle Crossing, Columbus, Ohio Sterling Software (Completed
April 1995)"

<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESMAN OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS SUPPLEMENT OR IN THE PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.

-------------------

TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Supplement Summary..................... S-3
The Company....................................... S-11
Recent Developments............................... S-16
Use of Proceeds................................... S-19
Price Range of Common Stock and Dividend
History.......................................... S-19
Capitalization.................................... S-21
Selected Consolidated Financial Data.............. S-22
Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. S-24
Properties........................................ S-30
Management........................................ S-38
Certain Federal Income Tax Considerations......... S-38
Underwriting...................................... S-45
Legal Matters..................................... S-46
PROSPECTUS
Available Information............................. 2
Incorporation of Certain Documents by Reference... 2
The Company....................................... 3
Use of Proceeds................................... 3
Ratios of Earnings to Fixed Charges............... 3
Description of Debt Securities.................... 4
Description of Preferred Stock.................... 14
Description of Common Stock....................... 20
Plan of Distribution.............................. 21
Legal Opinions.................................... 22
Experts........................................... 22
</TABLE>

3,500,000 SHARES

[LOGO]

COMMON STOCK

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PROSPECTUS SUPPLEMENT

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MERRILL LYNCH & CO.
ALEX. BROWN & SONS
INCORPORATED
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
MCDONALD & COMPANY
SECURITIES, INC.

MARCH , 1996

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