<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
{X} Annual report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 (Fee Required) for the fiscal
year ended DECEMBER 31, 1995
or
{ } Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 (No Fee Required) for
the transition period from ___________ to ___________
Commission file number 1-9044
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DUKE REALTY INVESTMENTS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
INDIANA 35-1740409
- ---------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8888 Keystone Crossing, Suite 1200
Indianapolis, Indiana 46240
- ---------------------------------- -------------------------------
(Address of principal executive offices) (Zip Code)
(317) 846-4700
----------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
Common Stock ($.01 par value) New York Stock Exchange
- ----------------------------------- ------------------------------------------
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
Regulation S-K is not contained herein, and will not be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )
The aggregate market value of the voting shares of the Registrant's outstanding
shares held by non-affiliates of the Registrant is $702,906,772 based on the
last reported sale price on March 11, 1996.
The number of Common Shares outstanding as of March 11, 1996 was 24,152,979.
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates by reference the Registrant's Proxy Statement related to
the Annual Meeting of Shareholders to be held April 25, 1996.
<PAGE>
TABLE OF CONTENTS
FORM 10-K
Item No. Page(s)
- -------- -------
PART I
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 3
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . 3 - 10
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 11
4. Submission of Matters to a Vote of Security Holders. . . . . 11
PART II
5. Market for the Registrant's Common Stock and Related
Security Holder Matters.. . . . . . . . . . . . . . . . . . 11
6. Selected Financial Data. . . . . . . . . . . . . . . . . . . 12
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . 12 - 20
8. Financial Statements and Supplementary Data. . . . . . . . . 20
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure. . . . . . . . . . . . . . . . . . 20
PART III
10. Directors and Executive Officers of the Registrant . . . . . 20 - 22
11. Executive Compensation........ . . . . . . . . . . . . . . . 22
12. Security Ownership of Certain Beneficial Owners and
Management. . . . . . . . . . . . . . . . . . . . . . . . . 22
13. Certain Relationships and Related Transactions . . . . . . . 22
PART IV
14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . 23 - 48
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 - 50
Exhibits
<PAGE>
PART I
ITEM 1. BUSINESS
Duke Realty Investments, Inc. (the "Company") is a self-administered and self-
managed real estate investment trust ("REIT"). The Company began operations
upon completion of its initial public offering in February 1986. In October
1993, the Company completed an additional common stock offering and acquired
the rental real estate and service businesses of Duke Associates whose
operations began in 1972. The Company's primary business segment is the
ownership and rental of industrial, office and retail properties throughout
the Midwest. As of December 31, 1995, it owned interests in a diversified
portfolio of 215 rental properties comprising 23.5 million square feet
(including 13 properties and two expansions comprising 3.4 million square feet
under development). Substantially all of these properties are located in the
Company's primary markets of Indianapolis, Indiana; Cincinnati, and Columbus,
Ohio; Detroit, Michigan; St. Louis, Missouri and Nashville, Tennessee. In
addition to its Rental Operations, the Company through its Service Operations
provides, on a fee basis, leasing, management, construction, development and
other real estate services for approximately 9.7 million square feet of
properties owned by third-parties. See Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Item 8,"
Financial Statements and Supplementary Data" for financial information of these
industry segments. The Company's rental operations are conducted through Duke
Realty Limited Partnership (the "Operating Partnership"). In addition, the
Company conducts operations through Duke Realty Services Limited Partnership
and Duke Construction Limited Partnership, in which the Company's
wholly-owned subsidiary, Duke Services, Inc., is the sole general partner.
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's corporate headquarters and executive offices are located in
Indianapolis, Indiana. In addition, the Company has six regional offices located
in Cincinnati, Ohio; Columbus, Ohio; Decatur, Illinois; Detroit, Michigan;
Nashville, Tennessee and St. Louis, Missouri. The Company had 425 employees as
of December 31, 1995.
BUSINESS STRATEGY
The Company's business objective is to increase its Funds From Operations
("FFO") 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. FFO 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
interests, unconsolidated partnerships and joint ventures are calculated to
reflect FFO on the same basis). 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 equity
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. As a fully integrated commercial real estate firm, the Company
believes that its in-house leasing, management, development and construction
services and the Company's significant base of commercially zoned and
unencumbered land in existing business parks should give the Company a
competitive advantage in its future development activities.
The Company believes that the analysis of real estate opportunities and risks
can be done most effectively at regional or local levels. As a result, the
Company intends to continue its emphasis on increasing its market share and
effective rents in its primary markets 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 primary markets and elsewhere, 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.
-1-
<PAGE>
The Company's policy is to seek to develop and acquire Class A commercial
properties located in markets with high growth potential for Fortune 500
companies and other quality regional and local firms. The Company's industrial
and suburban office development focuses on business parks and mixed-use
developments suitable for development of multiple projects on a single site
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 will 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.
Consistent with its business strategy of expanding in attractive Midwestern
markets, the Company carefully analyzed the real estate investment potential of
several major Midwestern metropolitan areas. Based on this analysis, management
concluded that the St. Louis and Cleveland markets offer attractive real estate
investment returns in the industrial and suburban office markets based on the
following factors: (i) fragmented competition; (ii) strong real estate
fundamentals; and (iii) favorable economic conditions.
In 1995, the Company established a regional office in St. Louis and acquired
463,000 square feet of suburban office properties and 153 acres of land for the
future development of industrial properties. In February 1996, the Company
acquired a 782,000 square foot suburban office portfolio and the operating
personnel of an independent real estate developer and operator in Cleveland.
The Company intends to aggressively pursue the development and acquisition of
additional rental properties in both the St. Louis and Cleveland markets.
All of the Company's properties are located in areas that include competitive
properties. Such properties are generally owned by institutional investors or
other local real estate operators; however, no single competitor or small group
of competitors is dominant in the Company's markets. The supply and demand of
similar available rental properties may affect the rental rates the Company will
receive on its properties. Based upon the current occupancy rates in the Company
and competitive properties, the Company believes there will not be significant
competitive pressure to lower rental rates in the near future.
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; and (v) maintaining conservative debt service and fixed
charge coverage ratios. Management believes that these strategies have enabled
and should continue to enable the Company to access the debt and equity
capital markets for their long-term requirements such as debt refinancings
and financing development and acquisitions of additional rental properties.
In October 1993, the Company received $309.3 million of net proceeds from the
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issuance of common stock (the "Offering"), in September 1994, the Company
received $92.1 million of net proceeds from the issuance of common stock (the
"1994 Offering"), in May 1995, the Company received $96.3 million of net
proceeds from the issuance of common stock (the "1995 Offering") and in
September 1995, the Company issued $150.0 million of unsecured debt (the
"1995 Debt Offering"). Based on these offerings, the Company has demonstrated
its abilities to access the public markets as a source of capital to fund
future growth. In addition, as discussed under Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
the Company has a $150.0 million line of credit available for short-term
fundings of development and acquisition of additional rental properties. The
Company's debt to total market capitalization ratio (total market
capitalization is defined as the total market value of all outstanding Common
Shares and units of limited parnership interest ("Units") in the Operating
Partnership plus outstanding indebtedness) at March 8, 1996 was 38.3%. The
Company's ratio of earnings to debt service and ratio of earnings to fixed
charges for the year ended December 31, 1995 were 2.79x and 2.38x,
respectively. In computing the ratio of earnings to debt service, earnings
have been calculated by adding debt service to income before gains or losses
on property sales and minority interest in earnings of the Operating
Partnership. Debt service consists of interest and recurring principle
amortization (excluding maturities) and excludes amortization of debt
issuance costs. In computing the ratio of earnings to fixed charges, earnings
have been calculated by adding fixed charges, excluding capitalized interest,
to income before gains or losses on property sales and minority interest in
earnings of the Operating Partnership. Fixed charges consist (if applicable)
of interest costs, whether expensed or capitalized, the interest component of
rental expense, amortization of debt issuance costs and preferred stock
distributions. Management believes these measures to be consistent with its
financing strategy.
OTHER
The Company's operations are not dependent on a single or few customers as no
single customer accounts for more than 3% of the Company's total revenue. The
Company's operations are not subject to any significant seasonal fluctuations.
The Company believes it is in compliance with environmental regulations and does
not anticipate material effects of continued compliance.
For additional information regarding the Company's investments and operations,
see Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and Item 8, "Financial Statements and Supplementary
Data." For additional information about the Company's business segments see Item
8, "Financial Statements and Supplementary Data."
ITEM 2. PROPERTIES
The Company owns an interest in a diversified portfolio of 215 commercial
properties encompassing approximately 23.5 million net rentable square feet
located primarily in five states and approximately 1,150 acres of land for
future development. (See Notes 4 and 5 to Financial Statements, Item 8
hereof.) The properties are described on the following pages.
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<PAGE>
<TABLE>
<CAPTION>
PERCENT
OCCUPIED AT
NAME/ OWNERSHIP COMPANY'S YEAR LAND AREA NET RENTABLE DECEMBER 31,
LOCATION INTEREST OWNERSHIP CONSTRUCTED (ACRES) AREA (SQ.FT.) 1995
- -------- --------- --------- ----------- --------- ------------- ------------
INDUSTRIAL
- ----------
INDIANAPOLIS, INDIANA
PARK 100 BUSINESS PARK
<S> <C> <C> <C> <C> <C> <C>
Building 38 Fee 100% 1978 1.11 6,000 100%
Building 48 Fee 50% (1) 1984 8.63 127,410 100%
Building 49 Fee 50% (1) 1982 4.55 89,600 100%
Building 50 Fee 50% (1) 1982 4.09 51,200 100%
Building 52 Fee 50% (1) 1983 2.70 34,800 100%
Building 53 Fee 50% (1) 1984 4.23 76,800 100%
Building 54 Fee 50% (1) 1984 4.42 76,800 100%
Building 55 Fee 50% (1) 1984 3.83 43,200 100%
Building 56 Fee 50% (1) 1984 15.94 300,000 100%
Building 57 Fee 50% (1) 1984 7.70 128,800 100%
Building 58 Fee 50% (1) 1984 8.03 128,800 100%
Building 59 Fee 50% (1) 1985 5.14 83,200 100%
Building 60 Fee 50% (1) 1985 4.78 83,200 100%
Building 62 Fee 50% (1) 1986 7.70 128,800 100%
Building 67 Fee 50% (1) 1987 4.23 72,350 100%
Building 68 Fee 50% (1) 1987 4.23 72,360 100%
Building 71 Fee 50% (1) 1987 9.06 193,400 100%
Building 74 Fee 10%-50% (2) 1988 12.41 257,400 100%
Building 76 Fee 10%-50% (2) 1988 5.10 81,695 100%
Building 78 Fee 10%-50% (2) 1988 21.80 512,777 100%
Building 79 Fee 100% 1988 4.47 66,000 100%
Building 80 Fee 100% 1988 4.47 66,000 100%
Building 83 Fee 100% 1989 5.34 96,000 100%
Building 84 Fee 100% 1989 5.34 96,000 100%
Building 85 Fee 10%-50% (2) 1989 9.70 180,100 100%
Building 89 Fee 10%-50% (2) 1990 11.28 311,600 100%
Building 91 Fee 10%-50% (2) 1990 7.53 144,000 80%
Building 92 Fee 10%-50% (2) 1991 4.38 45,917 100%
Building 95 Fee 100% 1993 15.23 336,000 100%
Building 96 Fee 100% 1994 27.69 553,900 100%
Building 97 Fee 100% 1994 13.38 280,800 100%
Building 98 Fee 100% 1968 37.34 508,306 100%
Building 99 Fee 50% (3) 1994 18.00 364,800 100%
Building 100 Fee 100% 1995 7.00 117,500 100%
Building 101 Fee 50% (1) 1983 4.37 45,000 86%
Building 105 Fee 50% (1) 1983 4.64 41,400 100%
Building 106 Fee 50% (1) 1978 4.64 41,400 94%
Building 107 Fee 100% 1984 3.56 58,783 97%
Building 108 Fee 50% (1) 1983 6.36 60,300 81%
Building 109 Fee 100% 1985 4.80 46,000 100%
Building 113 Fee 50% (1) 1987 6.20 72,000 100%
Building 114 Fee 50% (1) 1987 6.20 56,700 98%
Building 117 Fee 10%-50% (2) 1988 13.36 135,600 100%
Building 120 Fee 10%-50% (2) 1989 4.54 54,982 100%
Building 122 Fee 100% 1990 6.17 73,274 100%
Building 125 Fee 100% (4) 1994 13.81 195,080 100%
Building 126 Fee 100% 1984 4.04 60,100 100%
Building 127 Fee 100% 1995 6.50 93,600 100%
PARK FLETCHER
Building 2 Fee 50% (1) 1970 1.31 20,160 0%
Building 4 Fee 50% (1) 1974 1.73 23,000 100%
Building 6 Fee 50% (1) 1971 3.13 36,180 85%
Building 7 Fee 50% (1) 1974 3.00 41,900 100%
Building 8 Fee 50% (1) 1974 2.11 18,000 100%
Building 14 Fee 100% 1978 1.39 19,480 100%
Building 15 Fee 50% (1) 1979 5.74 72,800 100%
Building 16 Fee 50% (1) 1979 3.17 35,200 100%
Building 18 Fee 50% (1) 1980 5.52 43,950 100%
Building 21 Fee 50% (1) 1983 2.95 37,224 66%
Building 22 Fee 50% (1) 1983 2.96 48,635 100%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PERCENT
OCCUPIED AT
NAME/ OWNERSHIP COMPANY'S YEAR LAND AREA NET RENTABLE DECEMBER 31,
LOCATION INTEREST OWNERSHIP CONSTRUCTED (ACRES) AREA (SQ.FT.) 1995
- -------- --------- --------- ----------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Building 26 Fee 50% (1) 1983 2.91 28,340 100%
Building 27 Fee 25% (1) 1985 3.01 39,178 100%
Building 28 Fee 25% (1) 1985 7.22 93,880 90%
Building 29 Fee 50% (1) 1987 7.16 92,044 83%
Building 30 Fee 50% (1) 1989 5.93 78,568 100%
Building 31 Fee 50% (1) 1990 2.62 33,029 100%
Building 32 Fee 50% (1) 1990 5.43 67,297 64%
SHADELAND STATION
Buildings 204 & 205 Fee 100% 1984 4.09 48,600 100%
HUNTER CREEK BUSINESS PARK
Building 1 Fee 10%-50% (2) 1989 5.97 86,500 100%
Building 2 Fee 10%-50% (2) 1989 8.86 202,560 87%
HILLSDALE TECHNECENTER
Building 1 Fee 50% (1) 1986 9.16 73,436 90%
Building 2 Fee 50% (1) 1986 5.50 83,600 100%
Building 3 Fee 50% (1) 1987 5.50 84,050 100%
Building 4 Fee 100% 1987 7.85 73,874 100%
Building 5 Fee 100% 1987 5.44 67,500 98%
Building 6 Fee 100% 1987 4.25 64,000 100%
Franklin Road
Business Center Fee 100% 1962, 28.00 367,065 90%
1971,
1974
Palomar Business
Center Fee 100% 1973 4.50 99,350 100%
Nampac Fee 100% 1974 6.20 83,200 100%
CARMEL, INDIANA
HAMILTON CROSSING
Building 1 Fee 100% 1989 4.70 51,825 93%
GREENWOOD, INDIANA
SOUTH PARK BUSINESS CENTER
Building 2 Fee 100% 1990 7.10 86,806 92%
CINCINNATI, OHIO
PARK 50 TECHNECENTER
Building 20 Fee 100% 1987 8.37 96,000 100%
Building 25 Fee 100% 1989 12.20 78,328 89%
GOVERNOR'S POINTE
4700 Building Fee 100% 1987 5.51 76,400 94%
4800 Building Fee 100% 1989 7.07 80,000 92%
4900 Building Fee 100% 1987 9.41 76,400 100%
WORLD PARK
Building 5 Fee 100% 1987 5.00 59,700 79%
Building 6 Fee 100% 1987 7.26 92,400 100%
Building 7 Fee 100% 1987 8.63 96,000 100%
Building 8 Fee 100% 1989 14.60 192,000 100%
Building 9 Fee 100% 1989 4.47 58,800 84%
Building 11 Fee 100% 1989 8.98 96,000 100%
Building 14 Fee 100% 1989 8.91 166,400 100%
Building 15 Fee 100% 1990 6.50 93,600 100%
Building 16 Fee 100% 1989 7.00 93,600 100%
MicroAge Fee 50% (1) 1994 15.10 304,000 100%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PERCENT
OCCUPIED AT
NAME/ OWNERSHIP COMPANY'S YEAR LAND AREA NET RENTABLE DECEMBER 31,
LOCATION INTEREST OWNERSHIP CONSTRUCTED (ACRES) AREA (SQ.FT.) 1995
- -------- --------- --------- ----------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
ENTERPRISE BUSINESS PARK
Building 1 Fee 100% 1990 7.52 87,400 85%
Building 2 Fee 100% 1990 7.52 84,940 97%
Building A Fee 100% 1987 2.65 20,888 100%
Building B Fee 100% 1988 2.65 34,940 95%
Building D Fee 100% 1989 5.40 60,322 100%
TRI-COUNTY BUSINESS PARK
Xetron Fee 10% (5) 1994 29.00 100,193 100%
FAIRFIELD BUSINESS CENTER
Building D Fee 100% 1990 3.23 40,223 89%
Building E Fee 100% 1990 6.07 75,600 83%
OTHER INDUSTRIAL - CINCINNATI
U.S. Post Office Building Fee 40% (6) 1992 2.60 57,886 100%
University Moving Fee 100% 1991 4.95 70,000 100%
COLUMBUS, OHIO
Pet Foods Building Fee 100% 1993 16.22 276,000 100%
MBM Building Fee 100% 1978 3.98 83,000 100%
South Pointe A Fee 100% 1995 14.06 293,824 70%
HEBRON, KENTUCKY
SOUTHPARK BUSINESS CENTER
Building 1 Fee 100% 1990 7.90 96,000 57%
Building 3 Fee 100% 1991 10.79 192,000 87%
CR Services Fee 100% 1994 22.50 214,840 100%
Redken Laboratories Fee 100% 1994 28.79 166,400 100%
LOUISVILLE, KENTUCKY
Dayco Fee 50% (1) 1995 30.00 282,539 100%
DECATUR, ILLINOIS
PARK 101 BUSINESS CENTER
Building 3 Fee 100% 1979 5.76 75,600 80%
Building 8 Fee 100% 1980 3.16 50,400 95%
NASHVILLE, TENNESSEE
HAYWOOD OAKS TECHNECENTER
Building 2 Fee 100% 1988 2.94 50,400 91%
Building 3 Fee 100% 1988 2.94 52,800 100%
Building 4 Fee 100% 1988 5.23 46,800 83%
Building 5 Fee 100% 1988 5.23 61,171 100%
Building 6 Fee 100% 1989 10.53 113,400 100%
Building 7 Fee 100% 1995 8.24 66,873 57%
Greenbriar Business Park Fee 100% 1986 10.73 134,759 96%
Keebler Building Fee 100% 1985 4.39 36,150 100%
MILWAUKEE, WISCONSIN
S.F. Music Box Building Fee 33% (7) 1993 8.90 153,600 100%
OFFICE
INDIANAPOLIS, INDIANA
PARK 100 BUSINESS PARK
Building 34 Fee 100% 1979 2.00 22,272 93%
Building 116 Fee 100% 1988 5.28 35,700 91%
Building 118 Fee 100% 1988 6.50 35,700 100%
Building 119 Fee 100% 1989 6.50 53,300 100%
CopyRite Building Fee 50% (8) 1992 3.88 48,000 100%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PERCENT
OCCUPIED AT
NAME/ OWNERSHIP COMPANY'S YEAR LAND AREA NET RENTABLE DECEMBER 31,
LOCATION INTEREST OWNERSHIP CONSTRUCTED (ACRES) AREA (SQ.FT.) 1995
- -------- --------- --------- ----------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
WOODFIELD AT THE CROSSING
Two Woodfield Crossing Fee 100% 1987 7.50 117,818 94%
Three Woodfield Crossing Fee 100% 1989 13.30 259,777 94%
PARKWOOD CROSSING
One Parkwood Fee 100% 1989 5.93 108,281 100%
SHADELAND STATION
7240 Shadeland Station Fee 67%(9) 1985 2.14 45,585 95%
7330 Shadeland Station Fee 100% 1988 4.50 42,619 100%
7340 Shadeland Station Fee 100% 1989 2.50 32,235 100%
7351 Shadeland Station Fee 100% 1983 2.14 27,740 98%
7369 Shadeland Station Fee 100% 1989 2.20 15,551 100%
7400 Shadeland Station Fee 100% 1990 2.80 49,544 100%
KEYSTONE AT THE CROSSING
F.C. Tucker Building (10) Fee/ Ground Lease 100% 1978 N/A 4,840 100%
3520 Commerce Crossing (11) Ground/Bldg.Lease 100% 1976 N/A 30,000 100%
8465 Keystone Fee 100% 1983 1.31 28,298 92%
CARMEL, INDIANA
CARMEL MEDICAL CENTER
Building I (12) Fee/Ground Lease 100% 1985 N/A 40,060 87%
Building II (12) Fee/Ground Lease 100% 1989 N/A 39,973 91%
GREENWOOD, INDIANA
SOUTH PARK BUSINESS CENTER
Building 1 Fee 100% 1989 5.40 39,715 100%
Building 3 Fee 100% 1990 3.25 35,900 95%
St. Francis Medical Building(13) Fee/Ground Lease 100% 1995 N/A 95,579 75%
Community MOB Fee 100% 1995 4.00 38,193 100%
CINCINNATI, OHIO
GOVERNOR'S HILL
8600 Governor's Hill Fee 100% 1986 10.79 200,584 93%
8700 Governor's Hill Fee 100% 1985 4.98 58,617 100%
8790 Governor's Hill Fee 100% 1985 5.00 58,177 72%
8800 Governor's Hill Fee 100% 1985 2.13 28,700 100%
GOVERNOR'S POINTE
4605 Governor's Pointe Fee 100% 1990 8.00 175,485 100%
4705 Governor's Pointe Fee 100% 1988 7.50 140,984 98%
4770 Governor's Pointe Fee 100% 1986 4.50 76,037 88%
PARK 50 TECHNECENTER
SDRC Building Fee 100% 1991 13.00 221,215 100%
Building 17 Fee 100% 1985 8.19 70,644 91%
DOWNTOWN CINCINNATI
311 Elm Street (14) Ground/Bldg. Lease 100% 1902/1986(15) N/A 90,127 100%
312 Plum Street Fee 100% 1987 .69 230,489 89%
312 Elm Street Fee 100% 1992 1.10 378,786 92%
KENWOOD COMMONS
Building I Fee 50%(16) 1986 2.09 46,470 99%
Building II Fee 50%(16) 1986 2.09 46,434 90%
OTHER OFFICE - CINCINNATI
Triangle Office Park Fee 100% 1965/1985(17) 15.64 172,650 61%
Fidelity Drive Building Fee 100% 1972 8.34 38,000 100%
Tri-County Office Park Fee 100% 1971, 1973, 11.27 102,166 81%
1982 (18)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PERCENT
OCCUPIED AT
NAME/ OWNERSHIP COMPANY'S YEAR LAND AREA NET RENTABLE DECEMBER 31,
LOCATION INTEREST OWNERSHIP CONSTRUCTED (ACRES) AREA (SQ.FT.) 1995
- -------- --------- --------- ----------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
COLUMBUS, OHIO
TUTTLE CROSSING
4600 Lakehurst (Sterling 1) Fee 100% 1990 7.66 106,300 100%
4650 Lakehurst (Litel) Fee 100% 1990 13.00 164,639 100%
5555 Parkcenter (Xerox) Fee 100% 1992 6.09 83,971 100%
4700 Lakehurst (Indiana Insurance) Fee 100% 1994 3.86 49,600 100%
Sterling 2 Fee 100% 1995 3.33 57,660 100%
John Alden Fee 100% 1995 6.51 101,200 100%
Cardinal Health Fee 100% 1995 10.95 132,854 100%
Veterans Administration Clinic Fee 100% 1994 4.98 118,000 100%
LIVONIA, MICHIGAN
SEVEN MILE CROSSING
38705 Seven Mile (19) Fee/Ground Lease 100% 1988 N/A 113,066 95%
38701 Seven Mile (19) Fee/Ground Lease 100% 1989 N/A 132,153 85%
ST. LOUIS, MISSOURI
Laumeier I Fee 100% 1987 4.29 113,852 99%
Laumeier II Fee 100% 1988 4.64 110,541 100%
Westview Place Fee 100% 1988 2.69 114,722 98%
Westmark Fee 100% 1987 6.95 123,889 100%
RETAIL
INDIANAPOLIS, INDIANA
PARK 100 BUSINESS PARK
Building 121 Fee 100% 1989 2.27 19,716 76%
Building 32 Fee 100% 1978 .82 14,504 89%
CASTLETON CORNER
Michael's Plaza Fee 100% 1984 4.50 46,374 98%
Cub Plaza Fee 100% 1986 6.83 60,136 89%
FORT WAYNE, INDIANA
Coldwater Crossing Fee 100% 1990 35.38 246,365 95%
GREENWOOD, INDIANA
GREENWOOD CORNER
First Indiana Bank Branch Fee 100% 1988 1.00 2,400 100%
Greenwood Corner Shoppes Fee 100% 1986 7.45 50,840 50%
DAYTON, OHIO
Sugarcreek Plaza Fee 100% 1988 17.46 77,940 92%
CINCINNATI, OHIO
Governor's Plaza Fee 100% 1990 35.00 181,493 100%
King's Mall Shopping Center I Fee 100% 1990 5.68 52,661 100%
King's Mall Shopping Center II Fee 100% 1988 8.90 67,725 85%
Steinberg's Fee 100% 1993 1.90 21,008 100%
Park 50 Plaza Fee 100% 1989 2.20 18,000 42%
Kohl's Fee 100% 1994 12.00 80,684 100%
Sports Unlimited Fee 100% 1994 7.00 67,148 100%
Eastgate Square (20) Fee 100% 1990 11.60 94,182 100%
Office Max Fee 100% 1995 2.25 23,484 100%
Sofa Express - Governor's Plaza Fee 100% 1995 1.13 15,000 100%
ELLISVILLE, MISSOURI
Ellisville Plaza (21) Fee 100% 1987 3.70 32,754 96%
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
PERCENT
OCCUPIED AT
NAME/ OWNERSHIP COMPANY'S YEAR LAND AREA NET RENTABLE DECEMBER 31,
LOCATION INTEREST OWNERSHIP CONSTRUCTED (ACRES) AREA (SQ.FT.) 1995
- -------- --------- --------- ----------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
BLOOMINGTON, ILLINOIS
Lakewood Plaza Fee 100% 1987 11.23 87,010 98%
CHAMPAIGN, ILLINOIS
Market View Fee 100% 1985 8.50 86,553 100%
LIVONIA, MICHIGAN
Cooker Restaurant Ground Lease (22) 100% N/A N/A N/A 100%
COLUMBUS, OHIO
Galyans Trading Company Fee 100% 1994 4.90 74,636 100%
Best Buy Fee 100% 1995 7.00 68,400 85%
UNDER CONSTRUCTION
Expected
In-service Percent
Date Pre-leased
---------- ----------
INDUSTRIAL
INDIANAPOLIS, INDIANA
PARK 100 BUSINESS PARK
Building 128 Fee 100% February 1996 14.40 322,000 100%
Thomson Consumer Electronics Fee 100%(23) February 1996 52.00 599,040 100%
LEBANON, INDIANA
American Air Filter Fee 100% April 1996 10.40 153,600 100%
Little, Brown and Company Fee 100%(23) September 1996 31.60 500,455 100%
COLUMBUS, OHIO
South Pointe B Fee 100% April 1996 13.16 307,200 0%
OFFICE
INDIANAPOLIS, INDIANA
Two Parkwood Fee 100% February 1996 5.96 93,300 88%
CINCINNATI, OHIO
Ohio National Fee 100% September 1996 9.00 212,125 67%
COLUMBUS, OHIO
TUTTLE CROSSING
Nationwide Fee 100% July 1996 17.90 315,102 100%
Sterling 3 Fee 100% September 1996 3.56 64,500 100%
MIAMI, FLORIDA
John Alden Fee 100% January/ 7.81 251,316 100%
March 1996
RETAIL
CINCINNATI, OHIO
Bigg's Supercenter Fee 100% August 1996 14.00 160,000 100%
Fountain Place Fee 25% September 1997 1.98 209,585 79%
COLUMBUS, OHIO
TUTTLE CROSSING
WalMart Fee 100% April 1996 13.00 149,429 100%
-------- ----------
1,632.23 23,520,898
-------- ----------
-------- ----------
</TABLE>
-9-
<PAGE>
(1) These buildings are owned by a limited liability company in which the
Company is a 50% partner. The Company shares in the profit or loss from such
buildings in accordance with the Company's ownership interest. This limited
liability company owns a 50% general partnership interest in Park Fletcher
Buildings 27 and 28 and shares in the profit or loss from these buildings in
accordance with the limited liability company's interest.
(2) These buildings are owned by a partnership in which the Company is a
partner. The Company owns a 10% capital interest in the partnership and
receives a 50% interest in the residual cash flow after payment of a 9%
preferred return to the other partner on its capital interest.
(3) This building is owned in partnership with a tenant of the building. The
Company owns a 50% general partnership interest in the partnership. The Company
shares in the profit or loss from the building in accordance with such ownership
interest.
(4) The square footage of this building and the percent occupied includes a
100% pre-leased expansion of 97,080 square feet which is under construction
as of December 31, 1995.
(5) This building is owned by a partnership in which the Company owns a 10%
limited partnership interest. The Company shares in the cash flow from the
building in accordance with such ownership interest.
(6) This building is owned by a limited partnership in which the Company has a
1% general partnership interest and a 39% limited partnership interest. The
Company shares in the profit or loss from such building in accordance with the
Company's ownership interest.
(7) This building is owned by a partnership in which the Company owns a 33.33%
limited partnership interest. The Company shares in the profit or loss from the
building in accordance with such ownership interest.
(8) This building is owned in partnership with a tenant of the building. The
Company owns a 50% general partnership interest in the partnership. The Company
shares in the profit or loss from the building in accordance with such ownership
interest.
(9) The Company owns a 66.67% general partnership interest in the partnership
owning this building. The Company shares in the profit or loss of this building
in accordance with the Company's partnership interest.
(10) The Company owns the building and has a leasehold interest in the land
underlying this building with a lease term expiring October 31, 2067.
(11) The Company has a leasehold interest in this building with a lease term
expiring May 9, 2006.
(12) The Company owns these buildings and has a leasehold interest in the land
underlying these buildings, with the lease term expiring November 16, 2043.
(13) The Company owns this building and has a leasehold interest in the land
underlying this building with a lease term expiring August 2045, with two 20-
year options.
(14) The Company has a leasehold interest in the building and the underlying
land with a lease term expiring December 31, 2020. The Company has an option
to purchase the fee interest in the property throughout the term of the lease.
(15) This building was renovated in 1986.
(16) These buildings are owned by a partnership in which the Company has a 50%
general partnership interest. The Company shares in the profit or loss from
such buildings in accordance with the Company's ownership interest.
(17) This building was renovated in 1985.
(18) Tri-County Office Park consists of four buildings. One was built in 1971,
two were built in 1973, and one was built in 1982.
(19) The Company owns these buildings and has a leasehold interest in the land
underlying these buildings, with a lease term expiring May 31, 2057.
(20) The square footage of this building and the percent occupied includes
a 100% pre-leased expansion of 13,500 square feet which is under construction
as of December 31, 1995.
(21) This building was sold in January 1996.
(22) The Company has a leasehold interest in the land with the lease term
expiring May 31, 2057 and subleases the land to the tenant with the sublease
term expiring on August 31, 2009.
(23) These two buildings will be contributed to the limited liability company
referenced in footnote (1) upon completion.
-10-
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company or any subsidiary
was a party or to which any of their property is subject other than routine
litigation incidental to the Company's business. In the opinion of management,
such litigation is not material to the Company's business operations or
financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the year ended December 31, 1995.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The Company's Common Shares are listed for trading on the New York Stock
Exchange, symbol DRE. Set forth below are the high and low reported sales prices
on the New York Stock Exchange and the cash dividends per share declared during
each quarter. Comparable cash dividends are expected in the future. As of
March 7, 1996, there were 2,494 record holders of Common Shares.
On February 1, 1996, the Company declared a quarterly cash dividend of $0.49 per
share payable on February 29, 1996 to shareholders of record on February 15,
1996.
<TABLE>
<CAPTION>
1995 1994
------------------------ ------------------------
QUARTER ENDED HIGH LOW DIVIDEND HIGH LOW DIVIDEND
- ------------ ---- --- -------- ---- --- --------
<S> <C> <C> <C> <C> <C> <C>
December 31 $31.75 $27.63 $ .49 $28.25 $23.50 $ .47
September 30 31.63 27.63 .49 27.25 24.75 .47
June 30 29.25 26.25 .47 27.25 23.25 .45
March 31 27.88 25.13 .47 26.00 20.25 .45
</TABLE>
Of the total dividends for 1995 of $1.92 per share, 85.51% was taxable to
shareholders as ordinary income, .82% was taxable as long-term capital gains and
13.67% was a return of capital to shareholders. Of the total dividends for 1994
of $1.84 per share, 78.18% was taxable to shareholders as ordinary income and
21.82% was a return of capital to shareholders. Dividends per share of $1.50
and $1.27 were required for the Company to maintain its REIT status in 1995 and
1994, respectively.
-11-
<PAGE>
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The following sets forth selected consolidated financial and operating
information on a historical basis for the Company for each of the years ended
December 31, 1995, 1994, 1993, 1992, and 1991. The following information should
be read in conjunction with Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" for the Company and Item 8,
"Financial Statements and Supplementary Data" included in this Form 10-K.
<TABLE>
<CAPTION>
(in thousands, except per share amounts)
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Revenues:
Rental Operations $ 113,641 $ 89,299 $ 33,648 $ 17,675 $ 16,789
Service Operations 17,777 18,473 5,654 - -
--------- -------- ------- ------- -------
TOTAL REVENUES $ 131,418 $ 107,772 $ 39,302 $ 17,675 $ 16,789
--------- -------- ------- ------- -------
--------- -------- ------- ------- -------
NET INCOME (LOSS) $ 35,019 $ 26,216 $ 5,013 $ (653) $ (1,607)
--------- -------- ------- ------- -------
--------- -------- ------- ------- -------
PER SHARE DATA (1):
Net Income (Loss) per Share $ 1.54 $ 1.53 $ 0.92 $ (0.32) $ (0.79)
Dividends Declared per Share 1.92 1.84 1.68 1.68 1.68
Weighted Average Shares
Outstanding 22,679 17,139 5,459 2,045 2,045
BALANCE SHEET DATA:
Total Assets $1,045,588 $ 774,901 $632,885 $121,881 $126,917
Total Debt $ 454,820 $ 298,640 $248,433 $ 80,707 $ 80,808
Total Shareholders' Equity $ 534,789 $ 445,384 $347,038 $ 36,129 $ 40,220
Total Shares Outstanding
at end of year (1) 24,152 20,391 16,046 2,045 2,045
OTHER DATA:
Funds From Operations (2) $ 56,476 $ 39,415 $ 11,205 $ 3,764 $ 2,420
Cash Flow Provided by (Used by):
Operating activities $ 78,620 51,873 14,363 5,453 2,451
Investing activities (289,569) (116,238) (315,025) (710) (845)
Financing activities 176,243 94,733 310,717 (4,952) (1,387)
</TABLE>
(1) All such information has been adjusted for the 1 for 4.2 reverse stock
split effected prior to the completion of the 1993 Offering. The number of
shares excludes the outstanding minority interest partnership units which
are exchangeable on a one-for-one basis for shares of Common Stock.
(2) Funds From Operations 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 Funds From
Operations on the same basis). Funds From Operations does not represent
cash flow from operations as defined by generally accepted accounting
principles, should not be considered as an alternative to net income as an
indicator of the Company's operating performance, and is not indicative of
cash available to fund all cash flow needs. The calculation of Funds From
Operations for the years ended December 31, 1994 and 1993 has been revised
to conform with the presentation of Funds From Operations for the year
ended December 31, 1995 which excludes amounts attributable to minority
interests.
ITEM 7. 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.
-12-
<PAGE>
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>
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 at year end 3,448 2,362 1,270
</TABLE>
-13-
<PAGE>
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 September 1995. These notes bear interest at an
effective rate of 7.46%. The proceeds from these notes were used to (i) retire
the outstanding balance of $35.0 million on the Company's 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) to 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.
Management expects occupancy of the in-service property portfolio to remain
stable because (i) only 10.3% and 8.2% of the Company's occupied square footage
is subject to leases expiring in 1996 and 1997, respectively, and (ii) the
Company's renewal percentage averaged 65%, 73% and 65% in 1995, 1994 and 1993,
respectively. The following table reflects the Company's lease expiration
schedule as of December 31, 1995, including properties under development, by
product type indicating square footage and annualized net effective rents under
expiring leases:
<TABLE>
<CAPTION>
(in thousands) Industrial Office Retail Total
--------------------- ------------------ ------------------ -------------------
Year of Square Square Square Square
Expiration Feet Dollar Feet Dollar Feet Dollar Feet Dollar
- ------------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1,825 $ 7,232 382 $ 3,662 83 $ 838 2,290 $ 11,732
1997 1,269 5,851 458 4,648 92 1,031 1,819 11,530
1998 2,262 8,466 549 5,631 109 1,165 2,920 15,262
1999 1,862 7,724 626 6,602 125 1,280 2,613 15,607
2000 1,849 7,238 441 5,454 124 1,442 2,414 14,134
2001 1,490 5,696 293 3,148 60 633 1,843 9,477
2002 265 1,115 595 6,333 88 792 948 8,240
2003 40 442 131 1,627 36 329 207 2,399
2004 810 3,128 89 1,043 13 136 912 4,306
2005 703 2,556 498 6,494 160 1,487 1,361 10,536
Thereafter 2,460 7,582 1,413 19,060 981 6,983 4,854 33,625
------ ------ ----- ------ ----- ------ ------ -------
Total Leased 14,835 $57,030 5,475 $63,702 1,871 $16,116 22,181 $136,848
------ ------ ----- ------ ----- ------ ------ -------
------ ------ ----- ------ ----- ------ ------ -------
Total Portfolio 15,672 5,841 2,008 23,521
------ ----- ----- ------
------ ----- ----- ------
Annualized net
effective rent
per square foot $ 3.84 $ 11.63 $ 8.61 $ 6.16
------ ------ ------ -------
------ ------ ------ -------
</TABLE>
- 14 -
<PAGE>
This 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) the development and
acquisition of additional rental properties in its primary markets; and (iii)
the 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 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 1995 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.
- 15 -
<PAGE>
COMPARISON OF YEAR ENDED DECEMBER 31, 1994 TO YEAR ENDED DECEMBER 31, 1993
RENTAL OPERATIONS
As of December 31, 1992, the Company owned 30 properties totaling approximately
2.0 million square feet. In October 1993, the Company acquired substantially all
of the properties of Duke Associates, a full-service commercial real estate firm
operating primarily in the Midwest. In connection with the acquisition, the
Company effected a 1 for 4.2 reverse stock split relating to its existing shares
and subsequently issued an additional 14,000,833 shares of Common Stock through
an offering. Substantially all of the approximately $309.2 million of net
proceeds of the Offering were used to repay property indebtedness of Duke
Associates assumed by the Company as part of its acquisition. The Company
acquired 83 in-service properties as part of this transaction. The operating
results of the acquired properties have been included in the Company's
consolidated operating results subsequent to the date of acquisition. As a
result of the acquisition in October 1993, the 1993 results of operations
include nine months of operations of the original 30 property portfolio and
three months of operations of the 113 property portfolio.
Also, during 1994, the Company developed and placed in service and acquired a
total of 15 properties to bring its total portfolio of in-service properties to
128 as of December 31, 1994. A full year of operations for the 113 properties as
well as the addition of the 15 properties account for the increase in Rental
Operation revenues and operating expenses from 1993 to 1994.
SERVICE OPERATIONS
The Company acquired its Service Operations as part of its acquisition of Duke
Associates in October 1993. Service Operation revenues and operating expenses
subsequent to the date of acquisition are included in the Company's 1993
operations. The increase in Service Operation revenue, operating expenses and
earnings from 1993 to 1994 results from the inclusion of a full year of such
operations in 1994.
GENERAL AND ADMINISTRATIVE
General and administrative expense increased from 1993 to 1994 primarily as a
result of the increase in the size of the Company through the acquisition of
Duke Associates' Rental and Service Operations and the placement in-service of
15 developed or acquired properties in 1994.
OTHER INCOME (EXPENSE)
Interest income increased from 1993 to 1994 primarily as a result of an increase
in temporary cash investments because of the increased size of the Company as
well as the temporary short-term investment of excess proceeds from the 1994
Offering.
Earnings from property sales increased from 1993 to 1994 primarily as a result
of the gain recognized on the exercise by the Company of an option to acquire
an interest in a telecommunications entity as discussed above under Other
Income (Expense) in the comparison of 1994 to 1995.
Minority interest in earnings of subsidiaries resulted from the acquisition of
Duke Associates in October 1993. The increase from 1993 to 1994 results from
allocation of a full year's income to the minority interests in 1994.
- 16 -
<PAGE>
NET INCOME
Primarily as a result of the items discussed above, net income increased
from $5.0 million for the year ended December 31, 1993 to $26.2 million for
the year ended December 31, 1994.
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 re-letting 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 tenant improvements, leasing costs and other deferred assets.
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.
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 $309.2 million from the 1993
Offering which was used primarily for the acquisition of Duke Associates. In
1994, the Company received $92.1 million from the 1994 Offering and $60.0
million from a seven-year mortgage loan. Of the $152.1 million of these
proceeds, 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 from the 1995
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>
(in thousands) 1995 1994 1993
---- ---- ----
<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>
- 17 -
<PAGE>
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 a $100 million unsecured
line of credit which matures in April 1998. Borrowings of $45 million under
this 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 unsecured 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 have
remaining availability as of December 31, 1995 of approximately $330 million
to issue additional common stock, preferred stock or unsecured debt
securities. The Company intends to issue additional securities under such
Shelf Registrations to fund the development and acquisition of additional
rental properties.
The total debt outstanding at December 31, 1995 consists of notes totaling
$454.8 million with a weighted average interest rate of 7.50% 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>
Weighted Average
Interest Rate of
Year Repayments Future Repayments
---- ---------------------------------------- -----------------
(in thousands)
Scheduled
Amortization Maturities Total
------------ ---------- -----
<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 its 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
Company's line of credit.
- 18 -
<PAGE>
The Company intends to pay regular quarterly dividends 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 dividend of $1.96 per share.
FUNDS FROM OPERATIONS
Management believes that Funds From Operations ("FFO"), which is defined by the
National Association of Real Estate Investment Trusts as net income or loss
excluding gains or losses from debt restructuring and sales of property plus
depreciation and amortization, and after adjustments for 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.
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>
- 19 -
<PAGE>
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 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 equity 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.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data are included under Item 14 of
this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND ON ACCOUNTING
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item for Directors and certain Executive
Officers will be contained in a definitive proxy statement which the Registrant
anticipates will be filed no later than April 29, 1996, which proxy statement is
incorporated herein by reference, and thus this part has been omitted in
accordance with General Instruction G(3) to Form 10-K.
The following information is provided regarding the executive officers of the
Company who do not serve as Directors of the Company:
GARY A. BURK
Age 44, President of Construction Services and Executive Vice President of Duke
Services, Inc. - Mr. Burk joined the Company in 1979, and has been responsible
for the Company's construction management operations since 1986.
ROSS C. FARRO
Age 52, Vice President, Cleveland Group - Mr. Farro joined the Company in
January 1996 and is responsible for the Cleveland activities of the Company.
Prior to joining the Company, Mr. Farro was an independent real estate
developer and operator.
- 20 -
<PAGE>
ROBERT D. FESSLER
Age 38, Vice President, Ohio Industrial Group - Mr. Fessler joined the Company
in 1987 and is responsible for the Cincinnati industrial activities of the
Company. Prior to joining the Company, Mr. Fessler was a leasing
representative with Trammel Crow.
JOHN R. GASKIN
Age 34, Vice President, General Counsel and Secretary - Mr. Gaskin joined the
Company in 1990. Prior to joining the Company, Mr. Gaskin worked as an
associate attorney in a mid-size Indianapolis, Indiana law firm.
RICHARD W. HORN
Age 38, Vice President of Acquisitions - Mr. Horn joined the Company in 1984.
Mr. Horn is responsible for the acquisition activities of the Company and
also oversees the Nashville and Michigan operations of the Company.
DONALD J. HUNTER
Age 36, Vice President, Columbus Group - Mr. Hunter joined the Company in 1989
and is responsible for the Columbus activities of the Company. Prior to
joining the Company, Mr. Hunter was with Cushman and Wakefield, a national
real estate firm.
STEVEN R. KENNEDY
Age 39, Vice President of Construction Services - Mr. Kennedy joined the
Company in 1986. Prior to that time, Mr. Kennedy was a Project Manager for
Charles Pankow Builders, Inc.
WAYNE H. LINGAFELTER
Age 36, Vice President, Indiana Office Group - Mr. Lingafelter joined the
Company in 1987 and is responsible for the Indiana office activities of the
Company. Prior to that time, Mr. Lingafelter was with the management
consulting firm of DRI, Inc.
WILLIAM E. LINVILLE, III
Age 41, Vice President, Indiana Industrial Group - Mr. Linville joined the
Company in 1987 and is responsible for the Indianapolis industrial activities
of the Company. Prior to that time, Mr. Linville was Vice President
and Regional Manager of the CB Commercial Brokerage Office in Indianapolis.
DAVID R. MENNEL
Age 41, General Manager of Services Operations and President of Duke Services,
Inc.- Mr. Mennel was with the accounting firm of Peat, Marwick & Mitchell Co.
and the property development firm of Melvin Simon & Associates before joining
the Company in 1978.
DAVID P. MINTON
Age 38, Vice President, St. Louis Group - Mr. Minton joined the Company in 1995
and is responsible for the St. Louis activities of the Company. Prior to
joining the Company, Mr. Minton was Vice President of the Paragon Group, a
national real estate development and management firm.
- 21 -
<PAGE>
MICHAEL L. MYRVOLD
Age 40, Vice President, Retail Group - Mr. Myrvold joined the Company in 1995
and is responsible for retail activities of the Company. Prior to
joining the Company, Mr. Myrvold was Vice President of Real Estate of the
Melville Realty Co., Inc.
JOHN M. NEMECEK
Age 40, President of Asset and Property Management - Mr. Nemecek joined the
Company in 1994. Prior to joining the Company, Mr. Nemecek was the Senior Vice
President/Florida Division of Compass Real Estate.
DENNIS D. OKLAK
Age 42, Vice President and Treasurer - Mr. Oklak joined the Company in 1986 and
has served as Tax Manager and Controller of Development. Prior to joining the
Company, Mr. Oklak was a Senior Manager with the public accounting firm of
Deloitte Haskins + Sells.
JEFFREY G. TULLOCH
Age 50, Vice President and General Manager, Cincinnati Group - Mr. Tulloch
joined the Company in 1995 and is responsible for the all Cincinnati
activities of the Company. Mr. Tulloch was Senior Vice President of the
Galbreath Company before joining the Company.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's officers and directors, and persons who own more than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors and greater
than 10% shareholders are required by Securities and Exchange Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file. Information regarding Section 16(a) filings will be contained in a
definitive proxy statement which the Registrant anticipates will be filed no
later than April 29, 1996, which proxy statement is incorporated herein by
reference, and thus this part has been omitted in accordance with General
Instruction G(3) to Form 10-K.
ITEM 11, 12, 13 EXECUTIVE COMPENSATION, SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.
The information required by Item 11, Item 12 and Item 13 will be contained in a
definitive proxy statement which the Registrant anticipates will be filed no
later than April 29, 1996, which proxy statement is incorporated herein by
reference, and thus this part has been omitted in accordance with General
Instruction G(3) to Form 10-K.
- 22 -
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) DOCUMENTS FILED AS PART OF THIS REPORT.
1. CONSOLIDATED FINANCIAL STATEMENTS:
Index
-----
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1995 and 1994
Consolidated Statements of Operations, Years Ended December 31, 1995, 1994
and 1993
Consolidated Statements of Cash Flows, Years Ended December 31, 1995, 1994
and 1993
Consolidated Statements of Shareholders' Equity, Years Ended December 31,
1995, 1994 and 1993
Notes to Consolidated Financial Statements
Duke Associates Combined Statements of Operations and Cash Flows for
the Nine Months Ended September 30, 1993 (Unaudited)
2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
INDEX
-----
Schedule III - Real Estate and Accumulated Depreciation
EDGAR FINANCIAL DATA SCHEDULE
Exhibit 27 - Financial Data Schedule for year ended December 31, 1995
(EDGAR filing only)
Other schedules are omitted for the reasons that they are not required, are
not applicable, or the required information is set forth in the financial
statements or notes thereto.
- 23 -
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Directors
Duke Realty Investments, Inc.:
We have audited the consolidated financial statements of Duke Realty
Investments, Inc. and Subsidiaries as listed in the accompanying index. In
connection with our audits of the consolidated financial statements, we also
have audited the financial statement schedule as listed in the accompanying
index. These consolidated financial statements and the financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on the consolidated financial statements and the
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Duke Realty
Investments, Inc. and Subsidiaries as of December 31, 1995 and 1994 and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
KPMG PEAT MARWICK LLP
Indianapolis, Indiana
January 31, 1996
- 24 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
------ ------
ASSETS
<S> <C> <C>
Real estate investments:
Land and improvements $ 91,550 $ 72,758
Buildings and tenant improvements 712,614 580,794
Construction in progress 96,698 22,967
Land held for development 62,637 47,194
--------- -------
963,499 723,713
Accumulated depreciation (56,335) ( 38,058)
--------- -------
Net real estate investments 907,164 685,655
Cash and cash equivalents 5,727 40,433
Accounts receivable from tenants, net of allowance of $624 and $450 5,184 4,257
Accrued straight-line rents, net of allowance of $841 8,101 5,030
Receivables on construction contracts 9,462 7,478
Investments in unconsolidated companies 67,771 8,418
Deferred financing costs, net of accumulated amortization of $2,072 and $1,755 8,141 6,390
Deferred leasing and other costs, net of accumulated amortization of $4,959 and $2,702 20,620 11,856
Escrow deposits and other assets 13,418 5,384
--------- -------
$1,045,588 $ 774,901
--------- -------
--------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Indebtedness:
Mortgage debt $ 259,820 $ 298,640
Unsecured notes 150,000 -
Line of credit 45,000 -
--------- -------
454,820 298,640
Construction payables and amounts due subcontractors 21,410 9,464
Accounts payable 1,132 869
Accrued real estate taxes 10,374 8,983
Accrued interest 3,461 314
Other accrued expenses 5,504 2,877
Other liabilities 5,490 3,564
Tenant security deposits and prepaid rents 3,872 3,472
--------- -------
Total liabilities 506,063 328,183
--------- -------
Minority interest 4,736 1,334
--------- -------
Common shares ($.01 par value); 45,000 authorized;
24,152 and 20,391 shares issued and outstanding 241 204
Additional paid-in capital 578,288 481,101
Distributions in excess of net income (43,740) (35,921)
--------- -------
Total shareholders' equity 534,789 445,384
--------- -------
$1,045,588 $ 774,901
--------- -------
--------- -------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
- 25 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
RENTAL OPERATIONS:
Revenues:
Rental income $112,931 $88,243 $33,351
Equity in earnings of unconsolidated companies 710 1,056 297
------- ------ ------
113,641 89,299 33,648
------- ------ ------
Operating expenses:
Rental expenses 21,497 17,507 7,059
Real estate taxes 9,683 8,256 3,403
Interest expense 21,424 18,920 10,334
Depreciation and amortization 24,337 18,036 7,369
------- ------ ------
76,941 62,719 28,165
------- ------ ------
Earnings from rental operations 36,700 26,580 5,483
------- ------ ------
SERVICE OPERATIONS:
Revenues:
Property management, maintenance and leasing fees 11,138 11,084 3,000
Construction management and development fees 5,582 6,107 2,501
Other income 1,057 1,282 153
------- ------ ------
17,777 18,473 5,654
------- ------ ------
Operating expenses:
Payroll 8,236 8,723 2,688
Maintenance 1,344 1,069 473
Office and other 2,451 2,373 957
------- ------ ------
12,031 12,165 4,118
------- ------ ------
Earnings from service operations 5,746 6,308 1,536
------- ------ ------
General and administrative expense (2,169) (2,145) ( 737)
------- ------ ------
Operating income 40,277 30,743 6,282
OTHER INCOME (EXPENSE):
Interest income 1,900 1,115 164
Earnings from property sales 283 2,198 517
Minority interest in earnings of subsidiaries ( 7,441) ( 7,840) ( 1,950)
------- ------ ------
Net income $ 35,019 $26,216 $ 5,013
------- ------ ------
------- ------ ------
Net income per share $ 1.54 $ 1.53 $ .92
------- ------ ------
------- ------ ------
Weighted average number of shares outstanding 22,679 17,139 5,459
------- ------ ------
------- ------ ------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
- 26 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $35,019 $ 26,216 $ 5,013
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of buildings and tenant improvements 20,416 15,068 6,459
Amortization of deferred financing costs 1,218 1,251 294
Amortization of deferred leasing and other costs 2,703 1,717 616
Minority interest in earnings of subsidiaries 7,441 7,840 1,950
Straight-line rent adjustment (3,198) (2,307) (570)
Allowance for straight-line rent receivable - 748 93
Earnings from property sales, net (283) (2,198) (517)
Construction contracts, net 8,722 2,405 (919)
Other accrued revenues and expenses, net 6,771 1,352 2,075
Equity in earnings of unconsolidated companies (189) (219) (131)
------ ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 78,620 51,873 14,363
------ ------- -------
Cash flows from investing activities:
Proceeds from property sales, net 5,281 3,337 1,306
Rental property development costs (128,879) (55,819) (7,168)
Rental property recurring building improvements (757) (474) (136)
Acquisition of rental properties (57,427) (44,201) -
Acquisition of undeveloped land (38,361) (6,924) -
Acquisition of businesses (25,620) - (302,070)
Recurring tenant improvements (4,312) (3,056) (2,015)
Recurring leasing costs (3,519) (2,407) (636)
Other deferred costs and other assets (16,225) (6,971) (4,106)
Net investment in and advances to unconsolidated companies (19,750) 277 (200)
------ ------- -------
NET CASH USED BY INVESTING ACTIVITIES (289,569) (116,238) (315,025)
------- ------- -------
Cash flows from financing activities:
Proceeds from issuance of common shares, net 96,297 92,145 309,334
Proceeds from indebtedness 195,051 61,504 88,945
Payments on indebtedness (60,030) (16,149) (78,496)
Distributions to shareholders (42,838) (31,565) (3,438)
Distributions to minority interest (8,940) (9,140) -
Deferred financing costs (3,297) (2,062) (5,628)
------ ------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 176,243 94,733 310,717
------ ------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (34,706) 30,368 10,055
Cash and cash equivalents at beginning of year 40,433 10,065 10
------ ------- -------
Cash and cash equivalents at end of year $ 5,727 $ 40,433 $ 10,065
------ ------- -------
------ ------- -------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
- 27 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Additional Distributions
Common Paid-in in Excess of
Shares Capital Net Income
-------- ---------- -------------
<S> <C> <C> <C>
BALANCE AT DECEMBER 31, 1992 $ 86 $ 68,190 $(32,147)
Reverse stock split (66) 66 -
Proceeds from issuance of common shares,
net of underwriting discounts and offering
costs of $23,394 140 309,194 -
Net income - - 5,013
Distributions to shareholders ($1.68 per share) - - (3,438)
------ -------- ------
BALANCE AT DECEMBER 31, 1993 160 377,450 (30,572)
Proceeds from issuance of common shares, net
of underwriting discounts and offering
costs of $6,009 39 92,132 -
Acquisition of minority interest 5 11,519 -
Net income - - 26,216
Distributions to shareholders ($1.84 per share) - - (31,565)
------ -------- ------
BALANCE AT DECEMBER 31, 1994 204 481,101 (35,921)
Proceeds from issuance of common shares, net
of underwriting discounts and offering
costs of $5,767 37 96,391 -
Acquisition of minority interest - 796 -
Net income - - 35,019
Distributions to shareholders ($1.92 per share) - - (42,838)
------ -------- ------
BALANCE AT DECEMBER 31, 1995 $ 241 $ 578,288 $(43,740)
------ -------- ------
------ -------- ------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
- 28 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) THE COMPANY
The Company was formed in 1985 and qualifies as a real estate investment
trust ("REIT") under the provisions of the Internal Revenue Code. The
Company is an open-ended, perpetual-life REIT which owns and operates a
portfolio of industrial, office and retail properties in the Midwest. The
Company's primary markets are in Indianapolis, Indiana; Cincinnati and
Columbus, Ohio; Detroit, Michigan; St. Louis, Missouri, and Nashville,
Tennessee.
On October 4, 1993, the Company completed the acquisition of substantially
all of the properties and businesses of Duke Associates, a full-service
commercial real estate firm operating primarily in the Midwest. In
connection with the acquisition, the Company effected a 1 for 4.2 reverse
stock split of its existing common shares and issued an additional
14,000,833 shares through an offering ("the 1993 Offering") which provided
net proceeds of $309.2 million. All of the share and per share amounts have
been restated to reflect the reverse split.
The acquisition was accounted for under the purchase method. The value of
$466.0 million assigned to the acquired properties and businesses was equal
to the property debt and other net liabilities assumed, of which $302.1
million was repaid with the proceeds of the 1993 Offering. The operating
results of the acquired properties and businesses have been included in the
consolidated operating results subsequent to the date of acquisition. The
Company contributed all of its properties and related assets and liabilities
along with the net proceeds from the 1993 Offering to Duke Realty Limited
Partnership ("DRLP") in exchange for a 78.36% general partnership interest
represented by 16,046,144 partnership units in DRLP ("Units"). Duke
Associates contributed its properties to DRLP subject to their existing
liabilities in exchange for a 21.64% limited partnership minority interest
represented by 4,432,109 Units in DRLP. Limited partnership Units are
exchangeable for shares of the Company's common stock on a one-for-one basis
subject generally to a one year holding period.
The Company's rental operations are conducted through DRLP. In addition, the
Company conducts operations through Duke Realty Services Limited Partnership
("DRSLP") and Duke Construction Limited Partnership ("DCLP"), in which the
Company's wholly-owned subsidiary, Duke Services, Inc., is the sole general
partner. The consolidated financial statements include the accounts of the
Company and its majority-owned or controlled subsidiaries. The equity
interests in these majority-owned or controlled subsidiaries not owned by
the Company are reflected as minority interests in the consolidated
financial statements.
In 1994, the Company issued an additional 3,887,300 shares of Common Stock
through an additional offering ("1994 Offering") and received net proceeds
of approximately $92.1 million. The proceeds of the 1994 Offering were
contributed to DRLP in exchange for additional Units and were used by DRLP
to fund development and acquisition costs of additional rental properties.
- 29 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
In 1995, the Company issued an additional 3,727,500 shares of Common Stock
through another additional offering ("1995 Offering") and received net
proceeds of approximately $96.3 million. The proceeds of the 1995 offering
were contributed to DRLP in exchange for additional units and were used by
DRLP to fund development and acquisition of additional rental properties.
On September 22, 1995, the Company issued $150 million of unsecured notes
through a debt offering ("Debt Offering"). A portion of the proceeds of the
Debt Offering was used to reduce amounts outstanding on its unsecured credit
facility and other mortgage debt and to fund current development and
acquisition of additional rental properties.
In 1995 and 1994, as a result of Unitholders exchanging their Units for
shares of Common Stock of the Company pursuant to the DRLP Partnership
Agreement, the Company acquired a portion of the minority interest in
DRLP through the issuance of 27,760 and 456,375 shares of Common Stock,
respectively, for a like number of Units. The acquisition of the minority
interest was accounted for under the purchase method with assets acquired
recorded at the fair market value of the Company's Common Stock on the date
of acquisition. The acquisition amounts of $796,000 and $11.5 million in
1995 and 1994, respectively, were allocated to rental property, undeveloped
land and investments in unconsolidated companies based on their estimated
fair values. As a result of the contributions of the offering proceeds and
the exchange of units for shares, the Company owns an 85.3% interest in
DRLP at December 31, 1995.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its majority-owned or controlled subsidiaries. The equity interests in
these majority-owned or controlled subsidiaries not owned by the Company are
reflected as minority interests in the consolidated financial statements.
All significant intercompany balances and transactions have been eliminated
in the consolidated financial statements.
SEGMENT OPERATIONS
The Company is engaged in two business segments, the ownership and rental of
real estate investments ("Rental Operations") and the providing of various
real estate services such as property management, maintenance, leasing and
construction management to third-party property owners ("Service
Operations"). There are no intersegment sales or transfers between Rental
Operations and Service Operations. The identifiable assets of the Service
Operations consisting of cash, accounts receivable, constructiion
receivables and other assets as of December 31, 1995 and 1994 were
$15.8 million and $13.2 million, respectively. Capital expenditures
related to Service Operations were $1.5 million, $761,000 and $134,000
for the years ended December 31, 1995, 1994, and 1993, respectively. All
remaining assets, capital expenditures, depreciation, amortization and
investments in and advances to unconsolidated companies relate to Rental
Operations. The operations of each segment are reflected separately on the
Statement of Operations.
- 30 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
REAL ESTATE INVESTMENTS
Real estate investments are stated at the lower of cost less accumulated
depreciation or fair value if impairment is identified. Buildings and land
improvements are depreciated on the straight-line method over 40 years, and
tenant improvement costs are depreciated on the straight-line method over
the term of the related lease.
Project costs, including interest and real estate taxes incurred in
connection with construction or expansion of real estate investments, are
capitalized as a cost of the property and depreciated over the estimated
useful life of the related asset.
The Company has adopted STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
NO. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR
LONG-LIVED ASSETS TO BE DISPOSED OF, with no impact on the financial
statements. The Company evaluates its real estate investments upon
occurrence of significant changes in the operations, but not less than
annually, to assess whether any impairment indications are present,
including recurring operating losses and significant adverse changes in
legal factors or business climate that affect the recovery of the recorded
value. If any real estate investment is considered impaired, a loss is
provided to reduce the carrying value of the property to its estimated
fair value.
INVESTMENTS IN UNCONSOLIDATED COMPANIES
The equity method of accounting is used for investments in non-majority
owned partnerships and joint ventures in which the Company has the ability
to exercise significant influence over operating and financial policies. Any
difference between the carrying amount of these investments and the
underlying equity in net assets is amortized to equity in earnings of
unconsolidated companies over 40 years. The cost method of accounting is
used for non-majority owned joint ventures over which the Company does not
have the ability to exercise significant influence. The difference between
the cost method and the equity method for such ventures does not
significantly affect the financial position or results of operations of the
Company.
CASH EQUIVALENTS
Highly liquid investments with a maturity of three months or less when
purchased are classified as cash equivalents.
DEFERRED COSTS
Costs incurred in connection with financing or leasing are amortized on the
straight-line method over the term of the related loan or lease.
Unamortized costs are charged to expense upon the early termination of the
lease or upon early payment of the financing.
Prepaid interest is amortized to interest expense using the effective
interest method over the terms of the related loans.
- 31 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
REVENUES
RENTAL OPERATIONS
Rental income from leases with scheduled rental increases during their terms
is recognized for financial reporting purposes on a straight-line basis.
SERVICE OPERATIONS
Management fees are based on a percentage of rental receipts of properties
managed and are recognized as the rental receipts are collected. Maintenance
fees are based upon established hourly rates and are recognized as the
services are performed. Leasing fees are based on a percentage of the total
rental due under completed leases and are generally recognized upon lease
execution. Construction management and development fees are generally based
on a percentage of costs and are recognized as the project costs are
incurred. Other income consists primarily of payroll reimbursements for on-
site property management services.
PROJECT COSTS
All direct and indirect costs clearly associated with the acquisition,
development, construction and rental of real estate projects owned by the
Company are capitalized. Capitalized costs associated with acquisition,
development and construction of properties are included in real estate
investments and costs associated with the rental of properties are included
in deferred costs.
STOCK BASED COMPENSATION
The Company grants stock options for a fixed number of shares to employees
with an exercise price equal to the fair value of the shares at the date of
grant. The Company accounts for stock option grants in accordance with APB
Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and, accordingly,
recognizes no compensation expense for the stock option grants.
NET INCOME PER SHARE
Net income per share is calculated using the weighted average number of
shares outstanding during the year. Common stock equivalents (consisting
of stock options and units) that in the aggregate dilute income per share by
less than 3% are not considered in computing weighted average shares
outstanding.
- 32 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
FEDERAL INCOME TAXES
The Company qualifies and intends to continue to qualify as a REIT under the
Internal Revenue Code. As a REIT, the Company is allowed to reduce taxable
income by all or a portion of its distributions to shareholders. As
distributions have exceeded taxable income, no provision for federal income
taxes has been made in the accompanying consolidated financial statements.
Earnings and profits, which determine the taxability of dividends to
shareholders, differ from net income reported for financial reporting
purposes primarily because of different depreciable lives and bases of
rental properties and differences in the timing of recognition of earnings
upon disposition of properties.
Of the total distributions for 1995 of $1.92 per share, 85.51% was taxable
to shareholders as ordinary income, .82% was taxable as long-term capital
gains and 13.67% was a return of capital to shareholders. Of the total
distributions for 1994 of $1.84 per share, 78.18% was taxable to
shareholders as ordinary income and 21.82% was a return of capital to
shareholders. Distributions for 1993 of $1.68 per share were 100% taxable
to the shareholders as ordinary income.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of the Company's financial instruments, including accounts
receivable, accounts payable, accrued expenses, mortgage debt, unsecured
notes payable, line of credit and other financial instruments, generally
determined using the present value of estimated future cash flows using a
discount rate commensurate with the risks involved, approximate their
carrying or contract values.
USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Actual results
could differ from those estimates.
(3) RELATED PARTY TRANSACTIONS
The Company provides management, leasing, construction and other tenant
related services to partnerships in which certain executive officers have
continuing ownership interests. The Company was paid fees totaling
$1,942,000, $2,271,000 and $885,000 for such services in 1995, 1994 and
1993, respectively. Management believes the terms for such services are
equivalent to those available in the market. The Company has an option to
purchase the executive officers' interest in each of these properties which
expires October 2003. The option price of each property was established at
the date the option was granted.
- 33 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(4) INVESTMENTS IN UNCONSOLIDATED COMPANIES
The Company has equity interests ranging from 10% to 50% in unconsolidated
partnerships and joint ventures which own and operate rental properties and
hold land for development in the Midwest. In 1995, the Company acquired its
unaffiliated partner's 50% interest in a joint venture which owned two
suburban office rental properties (one of which was under construction as of
December 31, 1995) and 40.3 acres of land held for development. The
Company accounted for the acquisition of the 50% interest using the
purchase method with its recorded investment in the properties equal to
the sum of the balance of its investment in and advances to the joint
venture at the date of acquisition, the net liabilities assumed and cash
paid to the joint venture partner amounting to $24.4 million. The fair
value of the property exceeds the Company's recorded investment. In 1994,
the Company acquired its unaffiliated partner's 55% interest in a
partnership which owned a suburban office rental property. The Company
accounted for the acquisition of the 55% interest using the purchase method
with its recorded investment in the property equal to the sum of its
investment in the partnership at the date of acquisition, the cash payment
to the unaffiliated partner, the cash repayment of a portion of the
partnership's mortgage loan and net liabilities assumed, including the
remaining balance on the partnership's mortgage loan of $4.5 million. The
fair value of the property exceeds the Company's recorded investment. Also
in 1994, a partnership in which the Company owned a 50% interest was
dissolved through the distribution of all assets and liabilities to the
partners. At the date of dissolution, the Company had loans and advances
to the partnership totaling $4.2 million. Under terms of the dissolution
agreement, the Company received 71 acres of land held for development and
the partnership was not required to repay the Company's loans and
advances. The Company's recorded investment in the property received is
equal to the sum of its investment in and loans and advances to the
partnership at the date of dissolution. The fair value of the property
exceeds the Company's recorded investment.
On December 28, 1995, the Company formed a joint venture (Dugan Realty
L.L.C.) with an institutional real estate investor and purchased 25
industrial buildings totaling approximately 2.3 million square feet. Upon
formation of the venture, the Company contributed approximately 1.4 million
square feet of recently developed and acquired industrial properties, 113
acres of recently acquired land held for future development at an agreed
value of $50.8 million, and approximately $16.7 million of cash for a 50.1%
interest in the joint venture. The Company's recorded investment at
December 31, 1995 in the joint venture of $59.4 million is the sum of the
carrying value of the properties, land, and cash contributed. Upon
completion of 1.1 million square feet of property currently under
development, the Company will contribute these properties to the joint
venture and receive a $12.5 million cash distribution. The agreed value
of the 1.1 million square feet upon contribution is expected to be
approximately $25.0 million. The Company will record its investment in the
joint venture related to the additional contribution at its carrying value.
The joint venture partner is required to contribute cash to the venture
equal to 49.9% of the agreed value of the properties contributed and this
cash will be distributed to the Company and reduce its recorded investment
in the venture. The Company's joint venture partner contributed cash of
$67.5 million which was equal to the agreed value of the Company's
contribution. The total cash contributed by the Company and the joint
venture partner was used to purchase the 25 industrial buildings noted
above. The recently acquired industrial properties and the undeveloped
land which were contributed were acquired as part of the acquisition of
Park Fletcher, Inc., an Indianapolis, Indiana based real estate development
and management company. The acquisition was accounted for under the
purchase method. The recorded carrying value of acquired properties and
land was equal to the net liabilities assumed plus cash paid plus mortgage
indebtedness assumed of $17.4 million. The fair value of the property
exceeds the Company's recorded investment. The operating results of the
acquired properties and land have been included in the consolidated
operating results subsequent to the date of acquisition. The Company
accounts for its investment in this joint venture on the equity method
because the joint venture partner's approval is required for all major
decisions and the joint venture partner has equal control regarding the
primary day-to-day operations of the venture.
- 34 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Combined summarized financial information of the companies which are accounted
for by the equity method as of December 31, 1995 and December 31, 1994 and for
the years ended December 31, 1995, 1994, and 1993 are as follows (in
thousands):
<TABLE>
<CAPTION>
December 31,
------------------------
1995 1994
------ ------
<S> <C> <C>
Land, buildings and tenant improvements, net $155,628 $14,530
Land held for development 8,515 1,377
Other assets 4,742 1,978
-------- -------
168,885 17,885
-------- -------
-------- -------
Property indebtedness 28,185 17,719
Other liabilities 3,736 591
-------- -------
31,921 18,310
Owners' equity (deficit) 136,964 (425)
-------- -------
$168,885 $ 17,885
-------- -------
-------- -------
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Rental income $3,398 $3,419 $ 950
Net income $ 363 $ 224 $ 211
</TABLE>
Investments in unconsolidated companies include $6.0 million and $6.4 million at
December 31, 1995 and 1994, respectively, related to joint ventures on the cost
method. Included in equity in earnings of unconsolidated companies are
distributions from a joint venture accounted for on the cost method totaling
$521,000, $837,000 and $166,000 in 1995, 1994 and 1993, respectively.
- 35 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(5) INDEBTEDNESS
Indebtedness at December 31 consists of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
(in thousands)
<S> <C> <C>
Mortgage note with monthly payments of $668,000 including principal and
interest at 8.50% due in 2003 $ 78,832 $ 80,621
Mortgage note with monthly payments of interest of $436,000 through
August 1997. Thereafter, monthly payments of $471,000 including principal
and interest at 8.72% due in 2001 60,000 60,000
Mortgage note with monthly payments of interest at 7.25% due in 1998 25,500 25,500
Three mortgage notes with monthly payments of interest at rates ranging from
5.29% to 5.44% due in 1996 59,619 59,568
Mortgage note with monthly payments of interest at 5.81% due in 1998 - 22,000
Mortgage note with monthly payments of $104,000 including principal and interest
at 6.80% due in 1998 15,619 15,802
Mortgage notes with monthly payments in varying amounts including interest at
rates ranging from 5.20% to 10.25% due in varying amounts through 2018 20,250 35,149
------- -------
Total Mortgage Debt 259,820 298,640
Unsecured notes with semi-annual payments of interest at 7.25% (effective rate
of 7.328%) due in 2002 50,000 -
Unsecured notes with semi-annual payments of interest at 7.375% (effective rate
of 7.519%) due in 2005 100,000 -
Unsecured line of credit with monthly payments of interest at LIBOR + 2.00%
due in 1998 45,000 -
------- -------
Total Indebtedness $454,820 $298,640
------- -------
------- -------
</TABLE>
As of December 31, 1995, the $259.8 million of mortgage notes are collateralized
by rental properties with a net carrying value of $440 million. As of December
31, 1994, the $298.6 million of mortgage notes were collateralized by rental
properties with a net carrying value of $490 million and the Company's $60
million secured line of credit was collateralized by rental properties with a
net carrying value of $122 million.
On September 22, 1995, the Company issued $150 million of unsecured notes.
Interest is payable semi-annually on March 22 and September 22, commencing on
March 22, 1996.
- 36 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
In 1994, the Company obtained a $60 million secured line of credit which was
available to fund development costs and provide working capital. This secured
line of credit was scheduled to mature on March 31, 1996. The interest rate was
based on LIBOR plus 2% (an average effective rate of 6.45% for 1994). The
maximum and average amounts outstanding during 1994 were $60.0 million and $18.0
million, respectively. The Company had no borrowings under the line at December
31, 1994.
In April 1995, the Company replaced its secured line of credit with an
unsecured line of credit in the aggregate amount of $100 million. The unsecured
line of credit matures in April 1998. Borrowings under this line of credit
required interest at one month LIBOR plus 2.00% which ranged from 7.7500% to
7.9375% as of December 31, 1995. The maximum and average amounts outstanding
during 1995 under both lines of credit were $45.0 million and $2.2 million
respectively, with an average effective rate of 7.89%. In January 1996, the
Company increased its amount available under the unsecured line of credit to
$150 million and reduced the borrowing rate to LIBOR plus 1.625%.
The Company has an interest rate swap agreement on $35.2 million of the
Company's outstanding mortgage debt to effectively fix the interest rate on the
majority of its floating rate debt. Under the interest rate swap, the Company
pays or receives the difference between a fixed rate of 4.38% and a floating
rate of LIBOR plus .75% based on the notional principal amount of $35.2 million.
The amount paid or received on the swap agreement is included in interest
expense on a monthly basis. The swap matures along with the related mortgage
loan in October 1996. The estimated fair value of the interest rate swap
agreement at December 31, 1995 was $174,000. The fair value was estimated by
discounting the expected cash flows to be received under the swap agreement
using rates currently available for interest rate swaps of similar terms and
maturities.
The Company has a $6.2 million letter of credit which secures $6.2 million of
mortgage notes. The letter of credit requires a 2% annual fee and matures in
September 1999. The Company also has guaranteed fifty percent of an $8.1
million letter of credit obligation of one of its unconsolidated companies which
matures in September 1997.
At December 31, 1995, scheduled amortization and maturities of all indebtedness
for the next five years and thereafter are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
(in thousands)
<S> <C>
1996 $ 61,474
1997 2,156
1998 92,626
1999 2,625
2000 7,489
Thereafter 288,450
-------
$454,820
-------
-------
</TABLE>
- 37 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Cash paid for interest in 1995, 1994, and 1993 was $22.1 million, $20.3
million, and $10.5 million, respectively. Total interest capitalized in
1995 and 1994 was $4.2 million and $1.7 million, respectively. No interest
was capitalized in 1993.
(6) LEASING ACTIVITY
Future minimum rents due to the Company under non-cancelable operating
leases at December 31, 1995 are scheduled as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
(in thousands)
<S> <C>
1996 $113,325
1997 111,573
1998 100,807
1999 88,059
2000 73,106
Thereafter 433,083
-------
$ 919,953
-------
-------
</TABLE>
In addition to minimum rents, certain leases require reimbursements of
specified operating expenses which amounted to $12.7 million, $10.0 million,
and $3.6 million for the years ended December 31, 1995, 1994 and 1993,
respectively.
(7) EMPLOYEE BENEFIT PLANS
In October 1993, the Company established a profit sharing and salary
deferral plan. The Company matches the employees' contributions up to two
percent of the employees' salary and may also make annual discretionary
contributions to the plan. Total expense recognized by the Company was
$245,000, $370,000 and $74,000 for 1995, 1994 and 1993, respectively.
In October 1993, the Company also established a contributory health and
welfare plan. The Company makes contributions to the plan throughout the
year as necessary to fund claims not covered by employee contributions.
Total expense recognized by the Company related to this plan was $882,000,
$766,000 and $204,000 for 1995, 1994 and 1993, respectively. Included in
total expense is an estimate based on historical experience of the effect of
claims incurred but not reported as of year-end.
- 38 -
<PAGE>
DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(8) STOCK OPTION PLAN
In October 1993, the Company established a stock option plan under which
1,315,000 shares of common stock were reserved for the exercise of options
which may be issued to the executive officers and certain key employees.
The term of these options is ten years from the date of grant. The options
vest 20% per year over a five-year period with initial vesting one year from
the date of grant.
<TABLE>
<CAPTION>
Number of Option
shares subject price per
to options share
-------------- ------------------
<S> <C> <C>
Balance at January 1, 1993 - -
Options granted 681,500 $23.75
Options forfeited - -
Options exercised - -
------- ------------------
Balance at December 31, 1993 681,500 $23.75
Options granted - -
Options forfeited - -
Options exercised - -
------- ------------------
Balance at December 31, 1994 681,500 $23.75
Options granted 225,466 $25.875 to $30.625
Options forfeited ( 39,900) $23.75 to $25.875
Options exercised ( 1,000) $23.75
------- ------------------
Balance at December 31, 1995 866,066 $ 23.75 to $30.625
------- ------------------
------- ------------------
</TABLE>
- 39 -
<PAGE>
DUKE ASSOCIATES
COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1993
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
Rental Operations:
Revenues:
Rental income $42,721
Interest and other income 1,012
-------
43,733
-------
Operating expenses:
Rental expenses 8,765
Real estate taxes 4,340
Interest expense 25,580
Depreciation and amortization 10,599
General and administrative 780
-------
50,064
-------
Loss from rental operations (6,331)
-------
Property management operations:
Revenue:
Property management, maintenance and leasing fees 8,431
Construction and development fees 2,591
Interest and other income 932
-------
11,954
-------
Operating expenses:
Payroll 6,077
Maintenance 941
Office and other 1,543
-------
8,561
-------
Earnings from property management operations 3,393
-------
Operating loss (2,938)
Equity in earnings of non-combined companies 199
-------
Net loss $(2,739)
-------
-------
</TABLE>
- 40 -
<PAGE>
DUKE ASSOCIATES
COMBINED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1993
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $ (2,739)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation 7,200
Amortization 3,399
Straight-line rent adjustment (1,356)
Increase in construction receivables (10,109)
Other accrued revenues and expenses, net 9,298
Equity in earnings of non-combined companies (199)
-------------
Net cash provided by operating activities 5,494
-------------
Cash flows from investing activities:
Land and construction costs (3,252)
Distributions from non-combined companies 47
Deferred charges and other assets (3,193)
-------------
Net cash used by investing activities (6,398)
-------------
Cash flows from financing activities:
Proceeds from property indebtedness 39,407
Payments on property indebtedness (5,959)
Contributions by owners 10,221
Distributions to owners (24,224)
Advances from affiliates, net (13,480)
-------------
Net cash provided by financing activities 5,965
-------------
Net increase in cash and cash equivalents 5,061
Cash and cash equivalents at beginning of period 1,046
-------------
Cash and cash equivalents at end of period $ 6,107
-------------
-------------
</TABLE>
See accompanying notes to combined financial statements.
- 41 -
<PAGE>
DUKE ASSOCIATES
NOTES TO COMBINED STATEMENTS OF OPERATIONS AND CASH FLOWS
(UNAUDITED)
(1) ORGANIZATION AND BASIS OF COMBINATION
The accompanying combined statements of operations and cash flows
of Duke Associates include the operations and cash flows from the operating
businesses, commercial rental properties and undeveloped land acquired by
Duke Realty Investments, Inc. (the "Company"). Duke Associates represents
substantially all of the real estate properties and operating businesses under
common control of the current Duke Associates owners which are engaged in the
ownership, leasing, management, construction and development businesses of
commercial real estate in the Midwest.
The statements of operations and cash flows of Duke Asssociates have been
presented on the combined basis because of the common ownership and management
of the related properties and operating businesses. After the aforementioned
acquisition, the properties and operating businesses will be majority owned
and controlled by the Company through its subsidiaries to be formed and known
as Duke Realty Limited Partnership and Duke Services, Inc. The equity method of
accounting is used for investments in non-majority owned partnerships and joint
ventures in which Duke Associates has the ability to exercise significant
influence over operating and financial policies. The cost method of accounting
is used for two non-majority owned joint ventures over which Duke Associates
does not have the ability to exercise significant influence, and the
differences between the cost method and the equity method of accounting for
these joint ventures does not significantly affect the financial position or
results of operations.
All significant intercompany balances and transactions have been
eliminated in the combined financial statements.
The combined statements of operations and cash flows for the nine months
ended September 30, 1993 are unaudited; however, in the opinion of management,
all adjustments (consisting solely of normal recurring adjustments) necessary
for a fair presentation of the combined financial statements for this interim
period have been included. The results for the interim period ended September
30, 1993 are not necessarily indicative of the results to be obtained for the
full fiscal year.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUES
All leases are classified as operating leases and rental income is
recognized on the straight-line basis over the terms of the leases.
Management fees are based on a percentage of rental receipts of properties
managed and are recognized as the rental receipts are collected.
Leasing fees are based on the gross value of leases signed and are
recognized as earned under the terms of the various contracts.
Maintenance fees are recognized as the services are performed based upon
established hourly rates.
Construction management fees are generally based on a fixed percentage of
costs and are recognized as the project costs are incurred.
- 42 -
<PAGE>
DUKE ASSOCIATES
NOTES TO COMBINED STATEMENTS OF OPERATIONS AND CASH FLOWS - (CONTINUED)
(UNAUDITED)
Development fees are generally based on a percentage of total project costs of
properties developed and are recognized throughout the development process of
the related properties.
FINANCING AND LEASING COSTS
Costs incurred in connection with financing or leasing are amortized on a
straight-line method over the term of the related loan or lease. Unamortized
leasing costs are charged to expense upon the early termination of the lease.
INCOME TAXES
Income taxes are not provided in the accompanying combined financial
statements because the entities that own the properties and the operating
businesses are either partnerships or S corporations and the taxable income
or loss is included in the income tax returns of the individual partners or
shareholders.
- 43 -
<PAGE>
<TABLE>
<CAPTION>
DUKE REALTY LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31,1995
SCHEDULE III
(IN THOUSANDS)
BUILDING ENCUMBER-
LOCATION / DEVELOPMENT BUILDING TYPE ANCES
- ------------------------------ --------------------------- -------------- ------------
INDIANAPOLIS, INDIANA
- ---------------------
<S> <C> <C> <C>
PARK 100 BUSINESS PARK BUILDING #32 RETAIL $ 512
PARK 100 BUSINESS PARK BUILDING #34 OFFICE 1,083
PARK 100 BUSINESS PARK BUILDING #38 INDUSTRIAL 0
PARK 100 BUSINESS PARK BUILDING #79 INDUSTRIAL 1,035
PARK 100 BUSINESS PARK BUILDING #80 INDUSTRIAL 1,339
PARK 100 BUSINESS PARK BUILDING #83 INDUSTRIAL 0
PARK 100 BUSINESS PARK BUILDING #84 INDUSTRIAL 0
PARK 100 BUSINESS PARK BUILDING #95 INDUSTRIAL 3,444
PARK 100 BUSINESS PARK BUILDING #96 INDUSTRIAL 6,488
PARK 100 BUSINESS PARK BUILDING #97 INDUSTRIAL 0
PARK 100 BUSINESS PARK BUILDING #98 INDUSTRIAL 0
PARK 100 BUSINESS PARK BUILDING #100 INDUSTRIAL 0
PARK 100 BUSINESS PARK BUILDING #107 INDUSTRIAL 1,560
PARK 100 BUSINESS PARK BUILDING #109 INDUSTRIAL 1,200
PARK 100 BUSINESS PARK BUILDING #116 OFFICE 2,016
PARK 100 BUSINESS PARK BUILDING #118 OFFICE 1,254
PARK 100 BUSINESS PARK BUILDING #119 OFFICE 0
PARK 100 BUSINESS PARK BUILDING #121 RETAIL 0
PARK 100 BUSINESS PARK BUILDING #122 INDUSTRIAL 0
PARK 100 BUSINESS PARK BUILDING #125 INDUSTRIAL 1,690
PARK 100 BUSINESS PARK BUILDING #126 INDUSTRIAL 0
PARK 100 BUSINESS PARK BUILDING #127 INDUSTRIAL 0
PARK 100 BUSINESS PARK NORGATE LAND LEASE INDUSTRIAL 0
PARK 100 BUSINESS PARK SCHAHET HOTELS LAND LEASE INDUSTRIAL 0
PARK 100 BUSINESS PARK KENNY ROGERS LAND LEASE INDUSTRIAL 0
PARK 100 BUSINESS PARK NORCO LAND LEASE INDUSTRIAL 0
PARK 100 BUSINESS PARK ZOLLMAN LAND LEASE INDUSTRIAL 0
SHADELAND STATION 7351 SHADELAND OFFICE 0
SHADELAND STATION BUILDING #204/205 INDUSTRIAL 1,832
SHADELAND STATION 7240 SHADELEND OFFICE (2) 2,706
SHADELAND STATION 7330 SHADELAND OFFICE 2,420
SHADELAND STATION 7369 SHADELAND OFFICE 0
SHADELAND STATION 7340 SHADELAND OFFICE 0
SHADELAND STATION 7400 SHADELAND OFFICE 0
CASTLETON CORNER CUB PLAZA RETAIL 3,304
CASTLETON SHOPPING CENTER MICHAEL'S PLAZA RETAIL 2,447
SOUTH PARK, INDIANA BUILDING #1 OFFICE 0
SOUTH PARK, INDIANA BUILDING #2 INDUSTRIAL 0
SOUTH PARK, INDIANA BUILDING #3 OFFICE 0
SOUTH PARK, INDIANA BRYLANE PARKING LOT LEASE OFFICE 0
SOUTH PARK, INDIANA LEE'S IN LAND LEASE INDUSTRIAL 0
GREENWOOD CORNER GREENWOOD CORNER RETAIL 2,176
GREENWOOD CORNER 1st INDIANA BANK BRANCH RETAIL 257
CARMEL MEDICAL I CARMEL MEDICAL I MEDICAL 1,948
ST. FRANCIS ST. FRANCIS MEDICAL 0
COMMUNITY MOB COMMUNITY MOB MEDICAL 0
CARMEL MEDICAL II CARMEL MEDICAL II MEDICAL 2,525
HILLSDALE TECHNECENTER BUILDING #4 INDUSTRIAL 2,482
HILLSDALE TECHNECENTER BUILDING #5 INDUSTRIAL 1,752
HILLSDALE TECHNECENTER BUILDING #6 INDUSTRIAL 2,111
KEYSTONE AT THE CROSSING 8465 KEYSTONE OFFICE 0
WOODFIELD AT THE CROSSING WOODFIELD II OFFICE 6,241
WOODFIELD AT THE CROSSING WOODFIELD III OFFICE 0
KEYSTONE AT THE CROSSING 3520 COMMERCE CRSG OFFICE 0
ONE PARKWOOD ONE PARKWOOD OFFICE 0
PALAMOR PALAMOR INDUSTRIAL 0
FRANKLIN ROAD BUSINESS CTR. FRANKLIN ROAD BUSINESS CTR. INDUSTRIAL 0
NAMPAC BUILDING NAMPAC BUILDING INDUSTRIAL 0
HAMILTON CROSSING BUILDING #1 OFFICE 0
KEYSTONE AT THE CROSSING F.C. TUCKER BUILDING OFFICE 0
PARK FLETCHER BUILDING #14 INDUSTRIAL 0
FORT WAYNE
- ------------------------------
COLDWATER CROSSING COLDWATER SHOPPES RETAIL 11,703
NASHVILLE, TENNESSEE
- ------------------------------
KEEBLER BUILDING KEEBLER BUILDING INDUSTRIAL 0
HAYWOOD OAKS TECHNECENTER BUILDING #2 INDUSTRIAL 1,055
HAYWOOD OAKS TECHNECENTER BUILDING #3 INDUSTRIAL 1,003
HAYWOOD OAKS TECHNECENTER BUILDING #4 INDUSTRIAL 1,151
HAYWOOD OAKS TECHNECENTER BUILDING #5 INDUSTRIAL 1,742
HAYWOOD OAKS TECHNECENTER BUILDING #6 INDUSTRIAL 0
HAYWOOD OAKS TECHNECENTER BUILDING #7 INDUSTRIAL 0
GREENBRIAR BUSINESS PARK GREENBRIAR INDUSTRIAL 0
HEBRON, KENTUCKY
- ------------------------------
SOUTHPARK, KENTUCKY CR SERVICES INDUSTRIAL 3,277
SOUTHPARK, KENTUCKY BUILDING #1 INDUSTRIAL 0
SOUTHPARK, KENTUCKY BUILDING #3 INDUSTRIAL 0
SOUTHPARK, KENTUCKY REDKEN INDUSTRIAL 2,471
CINCINNATI, OHIO
- ------------------------------
PARK 50 TECHNECENTER BUILDING #17 OFFICE 3,602
PARK 50 TECHNECENTER BUILDING #20 INDUSTRIAL 4,336
PARK 50 TECHNECENTER BUILDING #24 RETAIL 0
PARK 50 TECHNECENTER BUILDING #25 INDUSTRIAL 0
PARK 50 TECHNECENTER SDRC BUILDING OFFICE 13,640
FIDELITY DRIVE DUN & BRADSTREET OFFICE 1,836
WORLD PARK BUILDING #5 INDUSTRIAL 2,217
WORLD PARK BUILDING #6 INDUSTRIAL 2,459
WORLD PARK BUILDING #7 INDUSTRIAL 2,854
WORLD PARK BUILDING #8 INDUSTRIAL 2,842
WORLD PARK BUILDING #9 INDUSTRIAL 1,613
WORLD PARK BUILDING #11 INDUSTRIAL 2,563
WORLD PARK BUILDING #14 INDUSTRIAL 1,937
WORLD PARK BUILDING #15 INDUSTRIAL 0
WORLD PARK BUILDING #16 INDUSTRIAL 1,621
EASTGATE PLAZA EASTGATE PLAZA RETAIL 0
FAIRFIELD BUSINESS CENTER BUILDING D OFFICE 0
FAIRFIELD BUSINESS CENTER BUILDING E OFFICE 0
UNIVERSITY MOVING UNIVERSITY MOVING INDUSTRIAL 0
TRI-COUNTY OFFICE PARK BUILDINGS #1 - #4 OFFICE (3) 0
GOVERNOR'S PLAZA GOVERNOR'S PLAZA RETAIL 7,173
GOVERNOR'S PLAZA KING'S MALL II RETAIL 3,816
GOVERNOR'S PLAZA KOHLS RETAIL 0
SOFA EXPRESS SOFA EXPRESS RETAIL 0
OFFICE MAX OFFICE MAX RETAIL 0
312 ELM BUILDING 312 ELM OFFICE 34,990
311 ELM STREET ZUSSMAN OFFICE 0
ENTERPRISE BUSINESS PARK BUILDING 1 INDUSTRIAL 4,310
ENTERPRISE BUSINESS PARK BUILDING 2 INDUSTRIAL 3,118
ENTERPRISE BUSINESS PARK BUILDING A INDUSTRIAL 514
ENTERPRISE BUSINESS PARK BUILDING B INDUSTRIAL 790
ENTERPRISE BUSINESS PARK BUILDING D INDUSTRIAL 1,322
312 PLUM STREET S & L DATA OFFICE 0
TRIANGLE OFFICE PARK BUILDINGS #1 - #38 OFFICE 6,155
GOVERNOR'S HILL 8790 GOVERNOR'S HILL OFFICE 0
GOVERNOR'S HILL 8700 GOVERNOR'S HILL OFFICE 0
GOVERNOR'S HILL 8800 GOVERNOR'S HILL OFFICE 1,736
GOVERNOR'S HILL 8600 GOVERNOR'S HILL OFFICE 15,619
GOVERNOR'S POINTE 4770 GOVERNOR'S POINTE OFFICE 4,839
GOVERNOR'S POINTE 4700 BUILDING INDUSTRIAL 3,647
GOVERNOR'S POINTE 4900 BUILDING INDUSTRIAL 3,018
GOVERNOR'S POINTE 4705 GOVERNOR'S POINTE OFFICE 0
GOVERNOR'S POINTE 4800 GOVERNOR'S POINTE OFFICE 0
GOVERNOR'S POINTE 4605 GOVERNOR'S POINTE OFFICE 11,080
MONTGOMERY CROSSING STEINBERG'S RETAIL 719
MONTGOMERY CROSSING II SPORTS UNLIMITED RETAIL 2,844
GOVERNOR'S PLAZA KING'S AUTO MALL I RETAIL 3,383
SUGARCREEK PLAZA SUGARCREEK PLAZA RETAIL 4,132
COLUMBUS
- ------------------------------
CORP. PARK AT TUTTLE CRSG LITEL OFFICE 0
CORP. PARK AT TUTTLE CRSG STERLING 1 OFFICE 0
CORP. PARK AT TUTTLE CRSG INDIANA INSURANCE OFFICE 0
CORP. PARK AT TUTTLE CRSG STERLING 2 OFFICE 0
CORP. PARK AT TUTTLE CRSG JOHN ALDEN LIFE INSURANCE OFFICE 0
CORP. PARK AT TUTTLE CRSG CARDINAL HEALTH OFFICE 0
SOUTH POINTE BUILDING A INDUSTRIAL 0
PET FOODS BUILD-TO-SUIT PET FOODS DISTRIBUTION INDUSTRIAL 0
GALYAN'S GALYAN'S RETAIL 3,234
BEST BUY BEST BUY RETAIL 0
MBM BUILDING MBM BUILDING INDUSTRIAL 0
V.A. HOSPITAL V.A. HOSPITAL MEDICAL 6,340
CORP. PARK AT TUTTLE CRSG XEROX OFFICE 4,500
LIVONIA, MICHIGAN
- ------------------------------
LIVONIA BUILDING A OFFICE 0
LIVONIA BUILDING B OFFICE 0
DECATUR, ILLINOIS
- ------------------------------
PARK 101 BUILDING #3 INDUSTRIAL 1,964
PARK 101 BUILDING #8 INDUSTRIAL 1,057
PARK 101 ILL POWER LAND LEASE INDUSTRIAL 0
BLOOMINGTON, ILLINOIS
- ------------------------------
LAKEWOOD PLAZA LAKEWOOD PLAZA RETAIL 5,308
CHAMPAIGN, ILLINOIS
- ------------------------------
MARKET VIEW SHOPPING CTR MARKET VIEW CENTER RETAIL 4,263
ELLISVILLE, MISSOURI
- ------------------------------
ELLISVILLE PLAZA ELLISVILLE PLAZA RETAIL 2,204
ST. LOUIS, MISSOURI
- ------------------------------
LAUMEIER I LAUMEIER I OFFICE 0
LAUMEIER II LAUMEIER II OFFICE 0
WESTVIEW PLACE WESTVIEW PLACE OFFICE 0
WESTMARK WESTMARK OFFICE 0
VARIOUS LOCATIONS
- ------------------------------
LAND IMP. - UNDEVELOPED LAND N/A N/A 0
ELIMINATIONS
---------------
TOTALS $ 259,820
---------------
---------------
<CAPTION>
INITIAL COST TO COMPANY COSTS (1)
------------------------- CAPITALIZED
BUILDINGS/ SUBSEQUENT TO
LOCATION/DEVELOPMENT BUILDING LAND IMPROVEMENTS ACQUISITION
- ------------------------------ --------------------------- -------- ------------ ---------------
<S> <C> <C> <C> <C>
INDIANAPOLIS, INDIANA
- ------------------------------
PARK 100 BUSINESS PARK BUILDING #32 64 740 45
PARK 100 BUSINESS PARK BUILDING #34 131 1,455 208
PARK 100 BUSINESS PARK BUILDING #38 25 241 25
PARK 100 BUSINESS PARK BUILDING #79 184 1,764 207
PARK 100 BUSINESS PARK BUILDING #80 251 2,412 125
PARK 100 BUSINESS PARK BUILDING #83 247 2,572 88
PARK 100 BUSINESS PARK BUILDING #84 347 2,604 63
PARK 100 BUSINESS PARK BUILDING #95 642 4,756 8
PARK 100 BUSINESS PARK BUILDING #96 1,414 8,734 37
PARK 100 BUSINESS PARK BUILDING #97 676 4,294 1,029
PARK 100 BUSINESS PARK BUILDING #98 473 6,022 1,169
PARK 100 BUSINESS PARK BUILDING #100 103 2,179 526
PARK 100 BUSINESS PARK BUILDING #107 99 1,575 89
PARK 100 BUSINESS PARK BUILDING #109 240 1,865 (119)
PARK 100 BUSINESS PARK BUILDING #116 341 3,144 (147)
PARK 100 BUSINESS PARK BUILDING #118 226 2,229 154
PARK 100 BUSINESS PARK BUILDING #119 388 3,386 161
PARK 100 BUSINESS PARK BUILDING #121 592 960 53
PARK 100 BUSINESS PARK BUILDING #122 284 3,359 173
PARK 100 BUSINESS PARK BUILDING #125 358 2,291 5
PARK 100 BUSINESS PARK BUILDING #126 165 1,362 80
PARK 100 BUSINESS PARK BUILDING #127 96 1,726 379
PARK 100 BUSINESS PARK NORGATE LAND LEASE 51 0 0
PARK 100 BUSINESS PARK SCHAHET HOTELS LAND LEASE 131 0 0
PARK 100 BUSINESS PARK KENNY ROGERS LAND LEASE 56 0 9
PARK 100 BUSINESS PARK NORCO LAND LEASE 0 38 0
PARK 100 BUSINESS PARK ZOLLMAN LAND LEASE 115 0 (0)
SHADELAND STATION 7351 SHADELAND 101 1,359 91
SHADELAND STATION BUILDING #204/205 260 2,595 179
SHADELAND STATION 7240 SHADELEND 152 3,113 776
SHADELAND STATION 7330 SHADELAND 255 4,045 (293)
SHADELAND STATION 7369 SHADELAND 100 1,129 37
SHADELAND STATION 7340 SHADELAND 165 2,458 68
SHADELAND STATION 7400 SHADELAND 570 2,959 252
CASTLETON CORNER CUB PLAZA 540 4,850 80
CASTLETON SHOPPING CENTER MICHAEL'S PLAZA 749 3,400 175
SOUTH PARK, INDIANA BUILDING #1 287 2,328 271
SOUTH PARK, INDIANA BUILDING #2 334 3,081 262
SOUTH PARK, INDIANA BUILDING #3 208 2,150 333
SOUTH PARK, INDIANA BRYLANE PARKING LOT LEASE 0 54 3
SOUTH PARK, INDIANA LEE'S IN LAND LEASE 0 5 0
GREENWOOD CORNER GREENWOOD CORNER 390 3,435 (223)
GREENWOOD CORNER 1st INDIANA BANK BRANCH 46 245 7
CARMEL MEDICAL I CARMEL MEDICAL I 0 3,710 (485)
ST. FRANCIS ST. FRANCIS 0 5,839 0
COMMUNITY MOB COMMUNITY MOB 350 1,925 521
CARMEL MEDICAL II CARMEL MEDICAL II 0 4,000 181
HILLSDALE TECHNECENTER BUILDING #4 366 4,711 88
HILLSDALE TECHNECENTER BUILDING #5 251 3,235 161
HILLSDALE TECHNECENTER BUILDING #6 315 4,054 25
KEYSTONE AT THE CROSSING 8465 KEYSTONE 89 1,302 11
WOODFIELD AT THE CROSSING WOODFIELD II 719 9,106 508
WOODFIELD AT THE CROSSING WOODFIELD III 3,767 19,817 1,245
KEYSTONE AT THE CROSSING 3520 COMMERCE CRSG 19 560 23
ONE PARKWOOD ONE PARKWOOD 1,018 9,578 0
PALAMOR PALAMOR 158 1,148 303
FRANKLIN ROAD BUSINESS CTR. FRANKLIN ROAD BUSINESS CTR. 594 3,986 945
NAMPAC BUILDING NAMPAC BUILDING 274 1,622 0
HAMILTON CROSSING BUILDING #1 526 2,424 189
KEYSTONE AT THE CROSSING F.C. TUCKER BUILDING 0 264 5
PARK FLETCHER BUILDING #14 76 722 0
FORT WAYNE
- ------------------------------
COLDWATER CROSSING COLDWATER SHOPPES 2,310 15,827 236
NASHVILLE, TENNESSEE
- ------------------------------
KEEBLER BUILDING KEEBLER BUILDING 307 1,183 0
HAYWOOD OAKS TECHNECENTER BUILDING #2 395 1,767 34
HAYWOOD OAKS TECHNECENTER BUILDING #3 346 1,575 168
HAYWOOD OAKS TECHNECENTER BUILDING #4 435 1,948 12
HAYWOOD OAKS TECHNECENTER BUILDING #5 629 2,816 180
HAYWOOD OAKS TECHNECENTER BUILDING #6 924 5,730 229
HAYWOOD OAKS TECHNECENTER BUILDING #7 456 1,642 183
GREENBRIAR BUSINESS PARK GREENBRIAR 1,445 4,490 209
HEBRON, KENTUCKY
- ------------------------------
SOUTHPARK, KENTUCKY CR SERVICES 1,085 4,060 0
SOUTHPARK, KENTUCKY BUILDING #1 682 3,725 94
SOUTHPARK, KENTUCKY BUILDING #3 841 3,382 98
SOUTHPARK, KENTUCKY REDKEN 779 3,095 5
CINCINNATI, OHIO
- ------------------------------
PARK 50 TECHNECENTER BUILDING #17 500 6,200 (737)
PARK 50 TECHNECENTER BUILDING #20 461 7,450 (732)
PARK 50 TECHNECENTER BUILDING #24 151 809 84
PARK 50 TECHNECENTER BUILDING #25 1,161 3,758 126
PARK 50 TECHNECENTER SDRC BUILDING 911 19,004 391
FIDELITY DRIVE DUN & BRADSTREET 270 2,510 260
WORLD PARK BUILDING #5 270 3,260 141
WORLD PARK BUILDING #6 378 4,488 (795)
WORLD PARK BUILDING #7 525 4,150 50
WORLD PARK BUILDING #8 561 5,309 45
WORLD PARK BUILDING #9 317 2,993 47
WORLD PARK BUILDING #11 460 4,701 174
WORLD PARK BUILDING #14 380 3,592 59
WORLD PARK BUILDING #15 373 2,274 211
WORLD PARK BUILDING #16 321 3,033 20
EASTGATE PLAZA EASTGATE PLAZA 2,030 4,079 18
FAIRFIELD BUSINESS CENTER BUILDING D 135 1,639 0
FAIRFIELD BUSINESS CENTER BUILDING E 398 2,461 0
UNIVERSITY MOVING UNIVERSITY MOVING 248 1,612 0
TRI-COUNTY OFFICE PARK BUILDINGS #1 - #4 217 5,211 484
GOVERNOR'S PLAZA GOVERNOR'S PLAZA 2,012 8,452 215
GOVERNOR'S PLAZA KING'S MALL II 1,928 3,636 117
GOVERNOR'S PLAZA KOHLS 1,345 3,575 6
SOFA EXPRESS SOFA EXPRESS 145 771 19
OFFICE MAX OFFICE MAX 651 1,223 2
312 ELM BUILDING 312 ELM 4,750 43,823 3,520
311 ELM STREET ZUSSMAN 339 6,226 146
ENTERPRISE BUSINESS PARK BUILDING 1 1,030 5,482 254
ENTERPRISE BUSINESS PARK BUILDING 2 733 3,443 719
ENTERPRISE BUSINESS PARK BUILDING A 119 685 0
ENTERPRISE BUSINESS PARK BUILDING B 119 1,117 0
ENTERPRISE BUSINESS PARK BUILDING D 243 1,802 24
312 PLUM STREET S & L DATA 2,539 24,312 1,023
TRIANGLE OFFICE PARK BUILDINGS #1 - #38 1,000 10,440 1,281
GOVERNOR'S HILL 8790 GOVERNOR'S HILL 400 4,581 216
GOVERNOR'S HILL 8700 GOVERNOR'S HILL 459 5,705 151
GOVERNOR'S HILL 8800 GOVERNOR'S HILL 225 2,305 344
GOVERNOR'S HILL 8600 GOVERNOR'S HILL 1,220 17,689 863
GOVERNOR'S POINTE 4770 GOVERNOR'S POINTE 586 7,609 (183)
GOVERNOR'S POINTE 4700 BUILDING 584 5,465 (10)
GOVERNOR'S POINTE 4900 BUILDING 654 4,017 326
GOVERNOR'S POINTE 4705 GOVERNOR'S POINTE 719 6,910 1,207
GOVERNOR'S POINTE 4800 GOVERNOR'S POINTE 978 4,742 554
GOVERNOR'S POINTE 4605 GOVERNOR'S POINTE 630 16,236 527
MONTGOMERY CROSSING STEINBERG'S 260 852 79
MONTGOMERY CROSSING II SPORTS UNLIMITED 778 3,687 0
GOVERNOR'S PLAZA KING'S AUTO MALL I 1,085 3,859 657
SUGARCREEK PLAZA SUGARCREEK PLAZA 898 6,492 (549)
COLUMBUS
- ------------------------------
CORP. PARK AT TUTTLE CRSG LITEL 2,618 17,428 442
CORP. PARK AT TUTTLE CRSG STERLING 1 1,494 11,856 284
CORP. PARK AT TUTTLE CRSG INDIANA INSURANCE 717 2,081 746
CORP. PARK AT TUTTLE CRSG STERLING 2 605 5,300 9
CORP. PARK AT TUTTLE CRSG JOHN ALDEN LIFE INSURANCE 1,066 6,856 13
CORP. PARK AT TUTTLE CRSG CARDINAL HEALTH 1,600 9,556 0
SOUTH POINTE BUILDING A 594 4,355 442
PET FOODS BUILD-TO-SUIT PET FOODS DISTRIBUTION 268 4,932 929
GALYAN'S GALYAN'S 1,925 3,146 6
BEST BUY BEST BUY 1,570 2,538 437
MBM BUILDING MBM BUILDING 170 1,916 5
V.A. HOSPITAL V.A. HOSPITAL 703 9,239 11
CORP. PARK AT TUTTLE CRSG XEROX 1,580 8,630 25
LIVONIA, MICHIGAN
- ------------------------------
LIVONIA 0 9,474 612
LIVONIA BUILDING A 0 11,930 554
BUILDING B
DECATUR, ILLINOIS
- ------------------------------
PARK 101 BUILDING #3 275 2,405 572
PARK 101 BUILDING #8 80 1,660 9
PARK 101 ILL POWER LAND LEASE 212 0 0
BLOOMINGTON, ILLINOIS
- ------------------------------
LAKEWOOD PLAZA LAKEWOOD PLAZA 766 7,199 824
CHAMPAIGN, ILLINOIS
- ------------------------------
MARKET VIEW SHOPPING CTR MARKET VIEW CENTER 740 6,830 (512)
ELLISVILLE, MISSOURI
- ------------------------------
ELLISVILLE PLAZA ELLISVILLE PLAZA 802 3,143 (295)
ST. LOUIS, MISSOURI
- ------------------------------
LAUMEIER I LAUMEIER I 1,220 9,091 0
LAUMEIER II LAUMEIER II 1,258 9,054 315
WESTVIEW PLACE WESTVIEW PLACE 673 8,389 4
WESTMARK WESTMARK 1,200 9,759 0
VARIOUS LOCATIONS
- ------------------------------
LAND IMP. - UNDEVELOPED LAND N/A 0 0 0
ELIMINATIONS
-------- ------------ ---------------
TOTALS 89,643 686,595 28,340
-------- ------------ ---------------
-------- ------------ ---------------
<CAPTION>
GROSS BOOK VALUE AT DECEMBER 31, 1995
---------------------------------------
LAND & BUILDINGS/
LOCATION/DEVELOPMENT BUILDING IMPROVEMENTS IMPROVEMENTS TOTAL
- ------------------------------ --------------------- ------------ ------------ --------
<S> <C> <C> <C> <C>
INDIANAPOLIS, INDIANA
- ------------------------------
PARK 100 BUSINESS PARK BUILDING #32 65 784 849
PARK 100 BUSINESS PARK BUILDING #34 133 1,661 1,794
PARK 100 BUSINESS PARK BUILDING #38 26 265 291
PARK 100 BUSINESS PARK BUILDING #79 187 1,968 2,155
PARK 100 BUSINESS PARK BUILDING #80 256 2,532 2,788
PARK 100 BUSINESS PARK BUILDING #83 252 2,655 2,907
PARK 100 BUSINESS PARK BUILDING #84 354 2,660 3,014
PARK 100 BUSINESS PARK BUILDING #95 642 4,764 5,406
PARK 100 BUSINESS PARK BUILDING #96 1,436 8,750 10,186
PARK 100 BUSINESS PARK BUILDING #97 676 5,323 5,999
PARK 100 BUSINESS PARK BUILDING #98 273 7,390 7,664
PARK 100 BUSINESS PARK BUILDING #100 103 2,706 2,809
PARK 100 BUSINESS PARK BUILDING #107 99 1,663 1,762
PARK 100 BUSINESS PARK BUILDING #109 246 1,740 1,986
PARK 100 BUSINESS PARK BUILDING #116 348 2,990 3,338
PARK 100 BUSINESS PARK BUILDING #118 230 2,379 2,609
PARK 100 BUSINESS PARK BUILDING #119 395 3,539 3,935
PARK 100 BUSINESS PARK BUILDING #121 604 1,001 1,605
PARK 100 BUSINESS PARK BUILDING #122 290 3,526 3,816
PARK 100 BUSINESS PARK BUILDING #125 358 2,295 2,654
PARK 100 BUSINESS PARK BUILDING #126 165 1,443 1,608
PARK 100 BUSINESS PARK BUILDING #127 96 2,105 2,201
PARK 100 BUSINESS PARK NORGATE LAND LEASE 51 0 51
PARK 100 BUSINESS PARK SCHAHET HOTELS LAND LEASE 131 0 131
PARK 100 BUSINESS PARK KENNY ROGERS LAND LEASE 56 9 65
PARK 100 BUSINESS PARK NORCO LAND LEASE 0 38 38
PARK 100 BUSINESS PARK ZOLLMAN LAND LEASE 115 0 115
SHADELAND STATION 7351 SHADELAND 103 1,449 1,551
SHADELAND STATION BUILDING #204/205 266 2,768 3,034
SHADELAND STATION 7240 SHADELEND 152 3,889 4,041
SHADELAND STATION 7330 SHADELAND 260 3,746 4,007
SHADELAND STATION 7369 SHADELAND 102 1,164 1,266
SHADELAND STATION 7340 SHADELAND 169 2,523 2,691
SHADELAND STATION 7400 SHADELAND 581 3,199 3,781
CASTLETON CORNER CUB PLAZA 550 4,920 5,470
CASTLETON SHOPPING CENTER MICHAEL'S PLAZA 764 3,561 4,324
SOUTH PARK, INDIANA BUILDING #1 292 2,594 2,886
SOUTH PARK, INDIANA BUILDING #2 341 3,336 3,677
SOUTH PARK, INDIANA BUILDING #3 212 2,479 2,691
SOUTH PARK, INDIANA BRYLANE PARKING LOT LEASE 0 57 57
SOUTH PARK, INDIANA LEE'S IN LAND LEASE 0 5 5
GREENWOOD CORNER GREENWOOD CORNER 400 3,202 3,602
GREENWOOD CORNER 1st INDIANA BANK BRANCH 47 251 298
CARMEL MEDICAL I CARMEL MEDICAL I 0 3,225 3,225
ST. FRANCIS ST. FRANCIS 0 5,839 5,839
COMMUNITY MOB COMMUNITY MOB 350 2,446 2,796
CARMEL MEDICAL II CARMEL MEDICAL II 0 4,181 4,181
HILLSDALE TECHNECENTER BUILDING #4 366 4,800 5,165
HILLSDALE TECHNECENTER BUILDING #5 251 3,396 3,647
HILLSDALE TECHNECENTER BUILDING #6 315 4,080 4,394
KEYSTONE AT THE CROSSING 8465 KEYSTONE 89 1,313 1,402
WOODFIELD AT THE CROSSING WOODFIELD II 733 9,600 10,333
WOODFIELD AT THE CROSSING WOODFIELD III 3,843 20,987 24,829
KEYSTONE AT THE CROSSING 3520 COMMERCE CRSG 0 602 602
ONE PARKWOOD ONE PARKWOOD 1,018 9,578 10,596
PALAMOR PALAMOR 158 1,450 1,608
FRANKLIN ROAD BUSINESS CTR. FRANKLIN ROAD BUSINESS CTR. 594 4,931 5,525
NAMPAC BUILDING NAMPAC BUILDING 274 1,622 1,896
HAMILTON CROSSING BUILDING #1 536 2,603 3,139
KEYSTONE AT THE CROSSING F.C. TUCKER BUILDING 0 269 269
PARK FLETCHER BUILDING #14 76 722 798
FORT WAYNE
- ------------------------------
COLDWATER CROSSING COLDWATER SHOPPES 2,310 16,063 18,373
NASHVILLE, TENNESSEE
- ------------------------------
KEEBLER BUILDING KEEBLER BUILDING 307 1,183 1,490
HAYWOOD OAKS TECHNECENTER BUILDING #2 395 1,801 2,196
HAYWOOD OAKS TECHNECENTER BUILDING #3 346 1,742 2,089
HAYWOOD OAKS TECHNECENTER BUILDING #4 435 1,960 2,395
HAYWOOD OAKS TECHNECENTER BUILDING #5 629 2,996 3,625
HAYWOOD OAKS TECHNECENTER BUILDING #6 946 5,938 6,883
HAYWOOD OAKS TECHNECENTER BUILDING #7 456 1,826 2,282
GREENBRIAR BUSINESS PARK GREENBRIAR 1,445 4,699 6,145
HEBRON, KENTUCKY
- ------------------------------
SOUTHPARK, KENTUCKY CR SERVICES 1,085 4,060 5,145
SOUTHPARK, KENTUCKY BUILDING #1 696 3,805 4,501
SOUTHPARK, KENTUCKY BUILDING #2 858 3,463 4,321
SOUTHPARK, KENTUCKY REDKEN 779 3,100 3,879
CINCINNATI, OHIO
- ------------------------------
PARK 50 TECHNECENTER BUILDING #17 510 5,453 5,963
PARK 50 TECHNECENTER BUILDING #20 469 6,710 7,179
PARK 50 TECHNECENTER BUILDING #24 154 890 1,044
PARK 50 TECHNECENTER BUILDING #25 1,184 3,861 5,045
PARK 50 TECHNECENTER SDRC BUILDING 929 19,377 20,306
FIDELITY DRIVE DUN & BRADSTREET 277 2,763 3,040
WORLD PARK BUILDING #5 276 3,395 3,671
WORLD PARK BUILDING #6 385 3,686 4,071
WORLD PARK BUILDING #7 537 4,188 4,725
WORLD PARK BUILDING #8 561 5,354 5,915
WORLD PARK BUILDING #9 317 3,041 3,357
WORLD PARK BUILDING #11 460 4,875 5,335
WORLD PARK BUILDING #14 380 3,651 4,031
WORLD PARK BUILDING #15 381 2,477 2,858
WORLD PARK BUILDING #16 321 3,053 3,374
EASTGATE PLAZA EASTGATE PLAZA 2,030 4,097 6,127
FAIRFIELD BUSINESS CENTER BUILDING D 135 1,639 1,774
FAIRFIELD BUSINESS CENTER BUILDING E 398 2,461 2,859
UNIVERSITY MOVING UNIVERSITY MOVING 248 1,612 1,860
TRI-COUNTY OFFICE PARK BUILDINGS #1 - #4 221 5,691 5,912
GOVERNOR'S PLAZA GOVERNOR'S PLAZA 2,053 8,627 10,679
GOVERNOR'S PLAZA KING'S MALL II 1,952 3,729 5,681
GOVERNOR'S PLAZA KOHLS 1,345 3,582 4,927
SOFA EXPRESS SOFA EXPRESS 145 789 935
OFFICE MAX OFFICE MAX 651 1,226 1,877
312 ELM BUILDING 312 ELM 5,428 46,664 52,093
311 ELM STREET ZUSSMAN 0 6,711 6,711
ENTERPRISE BUSINESS PARK BUILDING 1 1,051 5,715 6,766
ENTERPRISE BUSINESS PARK BUILDING 2 747 4,148 4,895
ENTERPRISE BUSINESS PARK BUILDING A 119 685 804
ENTERPRISE BUSINESS PARK BUILDING B 119 1,117 1,236
ENTERPRISE BUSINESS PARK BUILDING D 243 1,827 2,070
312 PLUM STREET S & L DATA 2,590 25,285 27,874
TRIANGLE OFFICE PARK BUILDINGS #1 - #38 1,018 11,703 12,721
GOVERNOR'S HILL 8790 GOVERNOR'S HILL 408 4,789 5,197
GOVERNOR'S HILL 8700 GOVERNOR'S HILL 468 5,847 6,315
GOVERNOR'S HILL 8800 GOVERNOR'S HILL 231 2,642 2,874
GOVERNOR'S HILL 8600 GOVERNOR'S HILL 1,245 18,527 19,772
GOVERNOR'S POINTE 4770 GOVERNOR'S POINTE 596 7,416 8,012
GOVERNOR'S POINTE 4700 BUILDING 595 5,444 6,039
GOVERNOR'S POINTE 4900 BUILDING 673 4,324 4,997
GOVERNOR'S POINTE 4705 GOVERNOR'S POINTE 733 8,103 8,836
GOVERNOR'S POINTE 4800 GOVERNOR'S POINTE 998 5,276 6,274
GOVERNOR'S POINTE 4605 GOVERNOR'S POINTE 643 16,750 17,393
MONTGOMERY CROSSING STEINBERG'S 260 931 1,191
MONTGOMERY CROSSING II SPORTS UNLIMITED 778 3,687 4,465
GOVERNOR'S PLAZA KING'S AUTO MALL I 1,124 4,477 5,601
SUGARCREEK PLAZA SUGARCREEK PLAZA 922 5,919 6,841
COLUMBUS
- ------------------------------
CORP. PARK AT TUTTLE CRSG LITEL 2,670 17,818 20,488
CORP. PARK AT TUTTLE CRSG STERLING 1 1,524 12,110 13,634
CORP. PARK AT TUTTLE CRSG INDIANA INSURANCE 717 2,827 3,544
CORP. PARK AT TUTTLE CRSG STERLING 2 605 5,309 5,914
CORP. PARK AT TUTTLE CRSG JOHN ALDEN LIFE INSURANCE 1,066 6,869 7,935
CORP. PARK AT TUTTLE CRSG CARDINAL HEALTH 1,600 9,556 11,156
SOUTH POINTE BUILDING A 594 4,797 5,391
PET FOODS BUILD-TO-SUIT PET FOODS DISTRIBUTION 1,031 5,098 6,130
GALYAN'S GALYAN'S 1,925 3,152 5,077
BEST BUY BEST BUY 1,570 2,974 4,544
MBM BUILDING MBM BUILDING 170 1,921 2,091
V.A. HOSPITAL V.A. HOSPITAL 703 9,250 9,953
CORP. PARK AT TUTTLE CRSG XEROX 1,580 8,655 10,235
LIVONIA, MICHIGAN
- ------------------------------
LIVONIA BUILDING A 0 10,086 10,086
LIVONIA BUILDING B 0 12,484 12,484
DECATUR, ILLINOIS
- ------------------------------
PARK 101 BUILDING #3 280 2,972 3,252
PARK 101 BUILDING #8 184 1,566 1,749
PARK 101 ILL POWER AND LEASE 212 0 212
BLOOMINGTON, ILLINOIS
- ------------------------------
LAKEWOOD PLAZA LAKEWOOD PLAZA 786 8,003 8,789
CHAMPAIGN, ILLINOIS
- ------------------------------
MARKET VIEW SHOPPING CTR MARKET VIEW CENTER 755 6,303 7,058
ELLISVILLE, MISSOURI
- ------------------------------
ELLISVILLE PLAZA ELLISVILLE PLAZA 802 2,848 3,650
ST. LOUIS, MISSOURI
- ------------------------------
LAUMEIER I LAUMEIER I 1,220 9,091 10,311
LAUMEIER II LAUMEIER II 1,258 9,368 10,626
WESTVIEW PLACE WESTVIEW PLACE 673 8,393 9,066
WESTMARK WESTMARK 1,200 9,759 10,959
VARIOUS LOCATIONS
- ------------------------------
LAND IMP. - UNDEVELOPED LAND N/A 0 0 0
ELIMINATIONS 0 (414) (414)
------------ ------------ --------
TOTALS 91,550 712,614 804,164
------------ ------------ --------
------------ ------------ --------
<CAPTION>
ACCUMULATED DATE OF DATE DEPRECIABLE
LOCATION/DEVELOPMENT BUILDING DEPRECIATION CONSTRUCTION ACQUIRED LIFE
- ------------------------------ --------------------- ------------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C>
INDIANAPOLIS, INDIANA
- ------------------------------
PARK 100 BUSINESS PARK BUILDING #32 194 1978 1986 (6)
PARK 100 BUSINESS PARK BUILDING #34 439 1979 1986 (6)
PARK 100 BUSINESS PARK BUILDING #38 15 1978 1993 (6)
PARK 100 BUSINESS PARK BUILDING #79 137 1988 1993 (6)
PARK 100 BUSINESS PARK BUILDING #80 173 1988 1993 (6)
PARK 100 BUSINESS PARK BUILDING #83 166 1989 1993 (6)
PARK 100 BUSINESS PARK BUILDING #84 150 1989 1993 (6)
PARK 100 BUSINESS PARK BUILDING #95 238 1993 1994 (6)
PARK 100 BUSINESS PARK BUILDING #96 219 1994 1994 (6)
PARK 100 BUSINESS PARK BUILDING #97 304 1994 1994 (6)
PARK 100 BUSINESS PARK BUILDING #98 381 1968 1994 (6)
PARK 100 BUSINESS PARK BUILDING #100 41 1995 1995 (6)
PARK 100 BUSINESS PARK BUILDING #107 48 1984 1995 (6)
PARK 100 BUSINESS PARK BUILDING #109 482 1985 1986 (6)
PARK 100 BUSINESS PARK BUILDING #116 551 1988 1988 (6)
PARK 100 BUSINESS PARK BUILDING #118 166 1988 1993 (6)
PARK 100 BUSINESS PARK BUILDING #119 227 1989 1993 (6)
PARK 100 BUSINESS PARK BUILDING #121 56 1989 1993 (6)
PARK 100 BUSINESS PARK BUILDING #122 233 1990 1993 (6)
PARK 100 BUSINESS PARK BUILDING #125 96 1994 1994 (6)
PARK 100 BUSINESS PARK BUILDING #126 67 1984 1994 (6)
PARK 100 BUSINESS PARK BUILDING #127 50 1995 1995 (6)
PARK 100 BUSINESS PARK NORGATE LAND LEASE 0 N/A 1995 (6)
PARK 100 BUSINESS PARK SCHAHET HOTELS LAND LEASE 0 N/A 1995 (6)
PARK 100 BUSINESS PARK KENNY ROGERS LAND LEASE 0 N/A 1995 (6)
PARK 100 BUSINESS PARK NORCO LAND LEASE 31 N/A 1995 (6)
PARK 100 BUSINESS PARK ZOLLMAN LAND LEASE 0 N/A 1994 (6)
SHADELAND STATION 7351 SHADELAND 92 1983 1993 (6)
SHADELAND STATION BUILDING #204/205 694 1984 1986 (6)
SHADELAND STATION 7240 SHADELEND 938 1985 1993 (6)
SHADELAND STATION 7330 SHADELAND 658 1988 1988 (6)
SHADELAND STATION 7369 SHADELAND 67 1989 1993 (6)
SHADELAND STATION 7340 SHADELAND 145 1989 1993 (6)
SHADELAND STATION 7400 SHADELAND 223 1990 1993 (6)
CASTLETON CORNER CUB PLAZA 1,224 1986 1986 (6)
CASTLETON SHOPPING CENTER MICHAEL'S PLAZA 222 1984 1993 (6)
SOUTH PARK, INDIANA BUILDING #1 238 1989 1993 (6)
SOUTH PARK, INDIANA BUILDING #2 217 1990 1993 (6)
SOUTH PARK, INDIANA BUILDING #3 233 1990 1993 (6)
SOUTH PARK, INDIANA BRYLANE PARKING LOT LEASE 8 N/A 1994 (6)
SOUTH PARK, INDIANA LEE'S IN LAND LEASE 0 N/A N/A (6)
GREENWOOD CORNER GREENWOOD CORNER 790 1986 1986 (6)
GREENWOOD CORNER 1st INDIANA BANK BRANCH 14 1988 1993 (6)
CARMEL MEDICAL I CARMEL MEDICAL I 838 1985 1986 (6)
ST. FRANCIS ST. FRANCIS 129 1995 1995 (6)
COMMUNITY MOB COMMUNITY MOB 18 1995 1995 (6)
CARMEL MEDICAL II CARMEL MEDICAL II 528 1989 1990 (6)
HILLSDALE TECHNECENTER BUILDING #4 282 1987 1993 (6)
HILLSDALE TECHNECENTER BUILDING #5 206 1987 1993 (6)
HILLSDALE TECHNECENTER BUILDING #6 229 1987 1993 (6)
KEYSTONE AT THE CROSSING 8465 KEYSTONE 13 1983 1995 (6)
WOODFIELD AT THE CROSSING WOODFIELD II 646 1987 1993 (6)
WOODFIELD AT THE CROSSING WOODFIELD III 1,370 1989 1993 (6)
KEYSTONE AT THE CROSSING 3520 COMMERCE CRSG 107 1976 1993 (6)
ONE PARKWOOD ONE PARKWOOD 0 1989 1995 (6)
PALAMOR PALAMOR 36 1973 1995 (6)
FRANKLIN ROAD BUSINESS CTR. FRANKLIN ROAD BUSINESS CTR. 103 1962 1995 (6)
NAMPAC BUILDING NAMPAC BUILDING 27 1974 1995 (6)
HAMILTON CROSSING BUILDING #1 162 1989 1993 (6)
KEYSTONE AT THE CROSSING F.C. TUCKER BUILDING 15 1978 1993 (6)
PARK FLETCHER BUILDING #14 5 1978 1995 (6)
FORT WAYNE
- ------------------------------
COLDWATER CROSSING COLDWATER SHOPPES 621 1990 1994 (6)
NASHVILLE, TENNESSEE
- ------------------------------
KEEBLER BUILDING KEEBLER BUILDING 25 1985 1995 (6)
HAYWOOD OAKS TECHNECENTER BUILDING #2 109 1988 1993 (6)
HAYWOOD OAKS TECHNECENTER BUILDING #3 159 1988 1993 (6)
HAYWOOD OAKS TECHNECENTER BUILDING #4 110 1988 1993 (6)
HAYWOOD OAKS TECHNECENTER BUILDING #5 205 1988 1993 (6)
HAYWOOD OAKS TECHNECENTER BUILDING #6 365 1989 1993 (6)
HAYWOOD OAKS TECHNECENTER BUILDING #7 5 1995 1995 (6)
GREENBRIAR BUSINESS PARK GREENBRIAR 179 1986 1993 (6)
HEBRON, KENTUCKY
- ------------------------------
SOUTHPARK, KENTUCKY CR SERVICES 156 1994 1994 (6)
SOUTHPARK, KENTUCKY BUILDING #1 211 1990 1993 (6)
SOUTHPARK, KENTUCKY BUILDING #2 193 1991 1993 (6)
SOUTHPARK, KENTUCKY REDKEN 123 1994 1994 (6)
CINCINNATI, OHIO
- ------------------------------
PARK 50 TECHNECENTER BUILDING #17 1,566 1985 1986 (6)
PARK 50 TECHNECENTER BUILDING #20 1,246 1987 1988 (6)
PARK 50 TECHNECENTER BUILDING #24 56 1989 1993 (6)
PARK 50 TECHNECENTER BUILDING #25 217 1989 1993 (6)
PARK 50 TECHNECENTER SDRC BUILDING 1,078 1991 1993 (6)
FIDELITY DRIVE DUN & BRADSTREET 739 1972 1986 (6)
WORLD PARK BUILDING #5 803 1987 1990 (6)
WORLD PARK BUILDING #6 738 1987 1990 (6)
WORLD PARK BUILDING #7 722 1987 1990 (6)
WORLD PARK BUILDING #8 300 1989 1993 (6)
WORLD PARK BUILDING #9 177 1989 1993 (6)
WORLD PARK BUILDING #11 307 1989 1993 (6)
WORLD PARK BUILDING #14 216 1989 1993 (6)
WORLD PARK BUILDING #15 164 1990 1993 (6)
WORLD PARK BUILDING #16 171 1989 1993 (6)
EASTGATE PLAZA EASTGATE PLAZA 89 1990 1995 (6)
FAIRFIELD BUSINESS CENTER BUILDING D 5 1990 1995 (6)
FAIRFIELD BUSINESS CENTER BUILDING E 7 1990 1995 (6)
UNIVERSITY MOVING UNIVERSITY MOVING 34 1991 1995 (6)
TRI-COUNTY OFFICE PARK BUILDINGS #1 - #4 355 1971 1993 (6)
GOVERNOR'S PLAZA GOVERNOR'S PLAZA 483 1990 1993 (6)
GOVERNOR'S PLAZA KING'S MALL II 207 1988 1989 (6)
GOVERNOR'S PLAZA KOHLS 104 1994 1994 (6)
SOFA EXPRESS SOFA EXPRESS 5 1995 1995 (6)
OFFICE MAX OFFICE MAX 14 1995 1995 (6)
312 ELM BUILDING 312 ELM 2,680 1992 1993 (6)
311 ELM STREET ZUSSMAN 367 1902(4) 1993 (6)
ENTERPRISE BUSINESS PARK BUILDING 1 335 1990 1993 (6)
ENTERPRISE BUSINESS PARK BUILDING 2 337 1990 1993 (6)
ENTERPRISE BUSINESS PARK BUILDING A 10 1987 1995 (6)
ENTERPRISE BUSINESS PARK BUILDING B 17 1988 1995 (6)
ENTERPRISE BUSINESS PARK BUILDING D 29 1989 1995 (6)
312 PLUM STREET S & L DATA 1,416 1987 1993 (6)
TRIANGLE OFFICE PARK BUILDINGS #1 - #38 3,842 1965(5) 1986 (6)
GOVERNOR'S HILL 8790 GOVERNOR'S HILL 270 1985 1991 (6)
GOVERNOR'S HILL 8700 GOVERNOR'S HILL 324 1985 1993 (6)
GOVERNOR'S HILL 8800 GOVERNOR'S HILL 873 1985 1986 (6)
GOVERNOR'S HILL 8600 GOVERNOR'S HILL 1,112 1986 1991 (6)
GOVERNOR'S POINTE 4770 GOVERNOR'S POINTE 1,384 1986 1988 (6)
GOVERNOR'S POINTE 4700 BUILDING 1,084 1987 1988 (6)
GOVERNOR'S POINTE 4900 BUILDING 969 1987 1989 (6)
GOVERNOR'S POINTE 4705 GOVERNOR'S POINTE 421 1988 1993 (6)
GOVERNOR'S POINTE 4800 GOVERNOR'S POINTE 399 1989 1993 (6)
GOVERNOR'S POINTE 4605 GOVERNOR'S POINTE 963 1990 1993 (6)
MONTGOMERY CROSSING STEINBERG'S 25 1993 1993 (6)
MONTGOMERY CROSSING II SPORTS UNLIMITED 129 1994 1994 (6)
GOVERNOR'S PLAZA KING'S AUTO MALL I 804 1990 1993 (6)
SUGARCREEK PLAZA SUGARCREEK PLAZA 1,094 1988 1988 (6)
COLUMBUS
- ------------------------------
CORP. PARK AT TUTTLE CRSG LITEL 989 1990 1993 (6)
CORP. PARK AT TUTTLE CRSG STERLING 1 673 1990 1993 (6)
CORP. PARK AT TUTTLE CRSG INDIANA INSURANCE 196 1994 1994 (6)
CORP. PARK AT TUTTLE CRSG STERLING 2 98 1995 1995 (6)
CORP. PARK AT TUTTLE CRSG JOHN ALDEN LIFE INSURANCE 127 1995 1995 (6)
CORP. PARK AT TUTTLE CRSG CARDINAL HEALTH 125 1995 1995 (6)
SOUTH POINTE BUILDING A 56 1995 1995 (6)
PET FOODS BUILD-TO-SUIT PET FOODS DISTRIBUTION 167 1993 1993 (6)
GALYAN'S GALYAN'S 98 1994 1994 (6)
BEST BUY BEST BUY 15 1995 1995 (6)
MBM BUILDING MBM BUILDING 48 1978 1994 (6)
V.A. HOSPITAL V.A. HOSPITAL 294 1994 1994 (6)
CORP. PARK AT TUTTLE CRSG XEROX 366 1992 1994 (6)
LIVONIA, MICHIGAN
- ------------------------------
LIVONIA BUILDING A 687 1988 1993 (6)
LIVONIA BUILDING B 787 1989 1993 (6)
DECATUR, ILLINOIS
- ------------------------------
PARK 101 BUILDING #3 872 1979 1986 (6)
PARK 101 BUILDING #8 408 1980 1986 (6)
PARK 101 ILL POWER AND LEASE 0 N/A 1994 (6)
BLOOMINGTON, ILLINOIS
- ------------------------------
LAKEWOOD PLAZA LAKEWOOD PLAZA 1,430 1987 1988 (6)
CHAMPAIGN, ILLINOIS
- ------------------------------
MARKET VIEW SHOPPING CTR MARKET VIEW CENTER 1,553 1985 1986 (6)
ELLISVILLE, MISSOURI
- ------------------------------
ELLISVILLE PLAZA ELLISVILLE PLAZA 506 1987 1988 (6)
ST. LOUIS, MISSOURI
- ------------------------------
LAUMEIER I LAUMEIER I 133 1987 1995 (6)
LAUMEIER II LAUMEIER II 137 1988 1995 (6)
WESTVIEW PLACE WESTVIEW PLACE 122 1988 1995 (6)
WESTMARK WESTMARK 40 1987 1995 (6)
VARIOUS LOCATIONS
- ------------------------------
LAND IMP. - UNDEVELOPED LAND N/A 316
ELIMINATIONS 0
-------------
TOTALS 56,335
-------------
-------------
</TABLE>
- 44 -
<PAGE>
DUKE REALTY INVESTMENTS, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
(IN THOUSANDS)
(1) Costs capitalized subsequent to acquisition include decreases for purchase
price reduction payments received and land sales or takedowns.
(2) The Company owns a 66.67% interest in the partnership owning this building.
The Company shares in the cash flow of this building in accordance with the
Company's partnership interests.
(3) The four buildings comprising Tri-County Office Park were constructed in
1971,1973, and 1982.
(4) This building was renovated in 1986.
(5) This building was renovated in 1985.
(6) Depreciation of real estate is computed using the straight-line method over
40 years for building and shorter periods based on lease terms (generally 3
to 10 years) for tenant improvements.
<TABLE>
<CAPTION>
Real Estate Assets Accumulated Depreciation
--------------------------------- --------------------------------
1995 1994 1993 1995 1994 1993
--------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of year $ 653,552 $ 540,376 132,459 $ 38,058 $ 23,725 17,508
Additions during year:
Acquisitions 114,705 57,218 400,198 0 0 (242)
Construction costs and tenant improvements 84,790 41,125 8,881 0 0 0
Depreciation expense 0 0 0 20,416 15,068 6,459
Acquisition of minority interest
and joint venture interest 796 15,742 0 0 0 0
--------------------------------- --------------------------------
853,843 654,461 541,538 58,474 38,793 23,725
Deductions during year:
Cost of real estate sold (4,393) (909) (1,162) (1,259) 0 0
Contribution to Joint Venture (44,725) 0 0 (319) 0 0
Other (561) 0 0 (561) (735) 0
----------------------------------------------------------------------
Balance at end of year $ 804,164 $ 653,552 540,376 $ 56,335 $ 38,058 23,725
----------------------------------------------------------------------
----------------------------------------------------------------------
</TABLE>
- 45 -
<PAGE>
3. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
3.1 Articles of Incorporation of Registrant are incorporated herein by
reference to Exhibit 3.1 to the registration statement on Form S-3, as
amended, filed on July 28, 1995, as File No. 33-61361 (the "1995
Registration Statement").
3.2 By-Laws of Registrant are incorporated herein by reference to Exhibit 3.2
to the 1995 Registration Statement.
4.1 Instruments Defining Rights of Security Holders, including Indentures, are
incorporated herein by reference to Articles V, VI, VIII, IX and X of
Registrant's Articles of Incorporation.
4.2 Indenture between Duke Realty Limited Partnership and The First National
Bank of Chicago, Trustee, and the First Supplement thereto, are
incorporated by reference to Exhibits 4.1 and 4.2 to the report of the
Registrant on Form 8-K filed September 19, 1995.
10.1 Amended and Restated Agreement of Limited Partnership of Duke Realty
Limited Partnership (the "Operating Partnership") is incorporated herein
by reference to Exhibit 10.1 to the registration statement on Form S-2, as
amended, filed on June 8, 1993, as File No. 33-64038 (the "1993
Registration Statement).
10.2 First and Second Amendments to Amended and Restated Agreement of Limited
Partnership of the Operating Partnership.
10.3 Second Amended and Restated Agreement of Limited Partnership of Duke
Realty Services Limited Partnership (the "Services Partnership").
10.4 Promissory Note of the Services Partnership is incorporated herein by
reference to Exhibit 10.3 to the 1993 Registration Statement.
10.5 Duke Realty Services Partnership 1993 Stock Option Plan is incorporated
herein by reference to Exhibit 10.4 to the 1993 Registration Statement.
10.6 Acquisition Option Agreement relating to certain properties not
contributed to the Operating Partnership by Duke Associates (the "Excluded
Properties") is incorporated herein by reference to Exhibit 10.5 to the
1993 Registration Statement.
10.7 Management Agreement relating to the Excluded Properties is incorporated
herein by reference to Exhibit 10.6 to the 1993 Registration Statement.
10.8 Contribution Agreement for certain properties and land contributed by Duke
Associates and Registrant to the Operating Partnership is incorporated
herein by reference to Exhibit 10.7 to the 1993 Registration Statement.
- 46 -
<PAGE>
10.9 Contribution Agreement for certain assets and contracts contributed by
Duke Associates to the Service Partnership is incorporated herein by
reference to Exhibit 10.8 to the 1993 Registration Statement.
10.10 Contribution Agreement for certain contracts contributed by Duke
Associates to the Operating Partnership is incorporated herein by
reference to Exhibit 10.9 to the 1993 Registration Statement.
10.11 Stock Purchase Agreement is incorporated herein by reference to Exhibit
10.10 to the 1993 Registration Statement.
10.12 Indemnification Agreement is incorporated herein by reference to Exhibit
10.11 to the 1993 Registration Statement.
10.13 1995 Key Employee Stock Option Plan
10.14 1995 Dividend Increase Unit Plan
10.15 1995 Shareholder Value Plan
21. List of Subsidiaries of Registrant.
23. Consent of KPMG Peat Marwick.
24. Executed powers of attorney of certain directors.
27. Financial Data Schedule
99.1 Selected Quarterly Financial Information
- 47 -
<PAGE>
The Company will furnish to any security holder, upon written request, copies of
any exhibit incorporated by reference, for a fee of 15 cents per page, to cover
the costs of furnishing the exhibits. Written request should include a
representation that the person making the request was the beneficial owner of
securities entitled to vote at the 1996 Annual Meeting of Shareholders.
(b) REPORTS ON FORM 8-K
A report on Form 8-K dated January 12, 1996 was filed with the Commission to
report under Item 5 the formation of a joint venture with an institutional real
estate investor.
- 48 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
DUKE REALTY INVESTMENTS, INC.
March 20 , 1996 By: /s/ Thomas L. Hefner
- ------------------------------ -------------------------------
Thomas L. Hefner
President and Chief Executive Officer
By: /s/ Darell E. Zink, Jr.
-------------------------------
Darell E. Zink, Jr.
Executive Vice President and
Chief Financial Officer
By: /s/ Dennis D. Oklak
-------------------------------
Dennis D. Oklak
Vice President and Treasurer
(Chief Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Date Title
--------- ---- -----
/S/ John W. Wynne* 3/20/96 Chairman of the Board
- ------------------------- ---------------
John W. Wynne
/s/ Thomas L. Hefner* 3/20/96 President and Chief Executive
- ------------------------- --------------- Officer and Director
Thomas L. Hefner
/s/ Daniel C. Staton* 3/20/96 Executive Vice President and
- ------------------------- --------------- Chief Operating Officer and
Daniel C. Staton Director
/s/ Darell E. Zink, Jr.* 3/20/96 Executive Vice President and
- ------------------------- --------------- Chief Financial Officer and
Darell E. Zink, Jr. Director
- 49 -
<PAGE>
/s/ Geoffrey Button* 3/20/96 Director
- ------------------------- ---------------
Geoffrey Button
/s/ John D. Peterson* 3/20/96 Director
- ------------------------- ---------------
John D. Peterson
/s/ Ngaire E. Cuneo* 3/20/96 Director
- ------------------------- ---------------
Ngaire E. Cuneo
/s/ Lee Stanfield* 3/20/96 Director
- ------------------------- ---------------
Lee Stanfield
/s/ Jay J. Strauss* 3/20/96 Director
- ------------------------- ---------------
Jay J. Strauss
/s/ Howard L. Feinsand* 3/20/96 Director
- ------------------------- ---------------
Howard L. Feinsand
/s/ James E. Rogers* 3/20/96 Director
- ------------------------- ---------------
James E. Rogers
*By Dennis D. Oklak, Attorney-in-Fact
- 50 -
<PAGE>
EXHIBIT 23
The Board of Directors
DUKE REALTY INVESTMENTS, INC.:
We consent to incorporation by reference in the registration statements
(No. 33-54977 and No. 33-61361) on Form S-3 and No. 33-55727 on Form S-8 of Duke
Realty Investments, Inc. of our report dated January 31, 1996, relating to the
consolidated balance sheets of Duke Realty Investments, Inc. and Subsidiaries as
of December 31, 1995 and 1994, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1995 and the related schedule, which report
appears in the December 31, 1995 annual report on Form 10-K/A of Duke Realty
Investments, Inc.
/s/ KPMG Peat Marwick, LLP
Indianapolis, Indiana
March 18, 1996
