PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 27, 1997)
839,895 SHARES
[LOGO]
DUKE REALTY INVESTMENTS, INC.
Common Stock
__________________
Duke Realty Investments, Inc. (the "Company") is a self-
administered and self-managed real estate investment trust
that began operations through a related entity in 1972. As
of December 31, 1997, the Company owned a diversified
portfolio of 355 in-service industrial, office and retail
properties, encompassing approximately 40.7 million square
feet located in eight states, and 25 buildings and three
building expansions encompassing approximately 5.2 million
square feet under development. The Company also owned
approximately 1,700 acres of land for future development.
The Company expects to continue to pay regular quarterly
dividends to its shareholders.
All of the shares of Common Stock offered hereby are being
sold by the Company. The Common Stock is listed on the New
York Stock Exchange under the symbol DRE. The last reported
sale price for the Common Stock on March 25, 1998 was
$23.8125 per share.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO
WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
EVEREN Securities, Inc. (the "Underwriter") has agreed to
purchase the Common Stock from the Company at a price of
$22.6219 per share, resulting in aggregate proceeds to the
Company of $19,000,021 before payment of expenses by the
Company estimated at $25,000, subject to the terms and
conditions of a terms agreement and related underwriting
agreement (collectively, the "Underwriting Agreement"). The
Underwriter intends to sell the shares of Common Stock to
the sponsor of a newly-formed unit investment trust (the
"Trust") at an aggregate purchase price of $19,340,000,
resulting in an aggregate underwriting discount of $339,979.
See "Underwriting." Such sponsor intends to deposit the
shares of Common Stock into the Trust in exchange for units
in the Trust. The units of the Trust will be sold to
investors at a price based upon the net asset value of the
securities in the Trust. For purposes of this calculation,
the value of the Common Stock as of the evaluation time for
units of the Trust on March 25, 1998 was $23.8125 per share
of Common Stock.
------------------
The shares of Common Stock are offered by the Underwriter,
subject to prior sale, when, as and if delivered to and
accepted by the Underwriter and subject to its right to
reject orders in whole or in part. It is expected that
delivery of the Common Stock offered hereby will be made at
the offices of EVEREN Securities, Inc., Chicago, Illinois,
on or about March 30, 1998.
-------------------
EVEREN SECURITIES, INC.
----------------------
The date of this Prospectus Supplement is March 25,
1998.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE
IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT
THE PRICE OF THE COMMON STOCK, INCLUDING ENTERING
STABILIZING BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
<PAGE>
THE FOLLOWING INFORMATION IS QUALIFIED IN ITS ENTIRETY BY,
AND SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS OR DOCUMENTS
INCORPORATED HEREIN AND THEREIN BY REFERENCE. UNLESS
INDICATED OTHERWISE, THE INFORMATION CONTAINED IN THIS
PROSPECTUS SUPPLEMENT IS PRESENTED AS OF DECEMBER 31, 1997.
SHARE AND PER SHARE AMOUNTS IN THIS PROSPECTUS SUPPLEMENT
REFLECT THE COMPANY'S TWO-FOR-ONE STOCK SPLIT WHICH OCCURRED
ON AUGUST 25, 1997. SEE "RECENT DEVELOPMENTS." ALL
REFERENCES TO THE "COMPANY" IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS INCLUDE THE COMPANY AND
THOSE ENTITIES OWNED OR CONTROLLED BY THE COMPANY, UNLESS
THE CONTEXT INDICATES OTHERWISE.
WHEN USED IN THIS PROSPECTUS SUPPLEMENT, THE WORDS
"BELIEVES," "EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED
TO IDENTIFY FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY. READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK
ONLY AS OF THE DATE HEREOF. THE COMPANY UNDERTAKES NO
OBLIGATION TO PUBLICLY RELEASE THE RESULTS OF ANY REVISIONS
TO THESE FORWARD-LOOKING STATEMENTS WHICH MAY BE MADE TO
REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO
REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
THE COMPANY
The Company is a self-administered and self-managed real
estate investment trust (a "REIT") that began operations
through a related entity in 1972. At December 31, 1997, the
Company owned a diversified portfolio of 355 in-service
industrial, office and retail properties (the "Properties"),
encompassing approximately 40.7 million square feet located
in eight states, and 25 buildings and three building
expansions encompassing approximately 5.2 million square
feet under development. The Company also owned approximately
1,700 acres of unencumbered land (the "Land") for future
development, of which approximately 70% is zoned for
industrial use and which is typically located adjacent to
the Properties. The Company provides leasing, management,
construction, development and other tenant-related services
for the Properties and certain properties owned by third
parties. The Company believes that the Midwest offers a
relatively strong and stable economy compared to other
regions of the United States and provides significant growth
potential due to its central location, established
manufacturing base, skilled work force and moderate labor
costs.
The Company has developed approximately 54 million square
feet of commercial property since its founding including an
average of approximately 4.8 million square feet per year
during the last five years. In addition, the Company
acquired approximately 14.1 million square feet during the
three years ended December 31, 1997. During 1997, the
Company placed in service 5.3 million square feet of new
development and acquired 8.4 million square feet of
property.
The Company manages approximately 54 million square feet
of property, including over 8.3 million square feet owned by
third parties. The Company manages approximately 37% and 27%
of all competitive suburban office, warehousing and light
manufacturing space in Indianapolis and Cincinnati,
respectively. In addition to providing services to more than
2,300 tenants in the Properties, the Company provides such
services to nearly 1,000 tenants in 92 properties owned by
third parties. Based on market data maintained by the
Company, the Company believes that it was responsible in the
first six months of 1997 for approximately 72% and 39% of
the net absorption (gross space leased minus lease
terminations and expirations) of competitive suburban
office, warehousing and light manufacturing space in
Indianapolis and Cincinnati, respectively. The Company
believes that its dominant position in the primary markets
in which it operates gives it a competitive advantage in its
real estate activities.
All of the Company's interests in the Properties and Land
are held directly or indirectly by, and substantially all of
its operations relating to the Properties are conducted
through Duke Realty Limited Partnership (the "Operating
Partnership"). Partnership interests ("Units") in the
Operating Partnership may
<PAGE>
be exchanged by the holders thereof, other than the Company,
for Common Stock of the Company on a one-for-one basis.
Upon an exchange of Units for Common Stock, the Company's
percentage interest in the Operating Partnership will
increase. The Company controls the Operating Partnership as
the sole general partner and owner, as of December 31, 1997
of approximately 87% of the Units. In addition, the senior
management team of the Company owns approximately 10.75% of
the Company through Common Stock and Unit ownership.
The following tables provide an overview of the
Properties.
<TABLE>
<CAPTION>
SUMMARY OF PROPERTIES
(IN THOUSANDS, EXCEPT PERCENTAGES)
PERCENT
ANNUAL OF TOTAL OCCUPANCY
PERCENT NET NET EFFECTIVE AT
SQUARE OF TOTAL EFFE. ANNUAL DECEMBER 31,
TYPE OF PROPERTY FEET SQ. FT. RENT(1) RENT 1997
- ---------------- ----- ------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Industrial 27,880 69% $101,074 41% 93.3%
Office 10,747 26% 128,879 52% 95.8%
Retail 2,041 5% 18,028 7% 95.8%
------ ---- ------- ----
Total 40,668 100% $247,981 100% 94.1%
====== ==== ======= ====
</TABLE>
- --------------
(1) Represents annual net effective rent due from tenants
in occupancy as of December 31, 1997. Net effective rent
("Net Effective Rent") equals the average annual rental
property revenue over the terms of the respective leases,
excluding additional rent due as operating expense
reimbursements, landlord allowances for operating
expenses and percentage rents.
<TABLE>
<CAPTION>
SQUARE FOOTAGE AND ANNUAL NET EFFECTIVE RENT OF PROPERTIES
(IN THOUSANDS, EXCEPT PERCENTAGES)
SQUARE FEET PERCENT OF
------------------------------------------------------------ ANNUAL
PRIMARY % OF NET EFFECTIVE NET EFFECTIVE
MARKET INDUSTRIAL OFFICE RETAIL TOTAL TOTAL RENT (1) RENT
- ------------ --------- ------ ------ ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Indianapolis 13,875 1,519 194 15,588 38% $65,776 27%
Cincinnati 4,649 3,403 1,130 9,182 22% 62,581 25%
St Louis 1,266 1,902 - 3,168 8% 31,017 13%
Columbus 2,275 1,549 219 4,043 10% 28,104 11%
Cleveland 1,464 1,311 - 2,775 7% 20,507 8%
Chicago - 995 - 995 2% 15,606 6%
Minneapolis 3,156 68 - 3,224 8% 12,960 5%
Nashville 633 - - 633 2% 4,651 2%
Other (2) 562 - 498 1,060 3% 6,779 3%
------ ------ ----- ------ ----------- ----
Total 27,880 10,747 2,041 40,668 100% $247,981 100%
====== ====== ===== ====== =========== ====
</TABLE>
-----------
(1) Represents annual Net Effective Rent due from tenants
in occupancy as of December 31, 1997, excluding
additional rent due as a result of operating expense
reimbursements, landlord allowances for operating
expenses and percentage rents.
(2) Represents properties not located in the Company's
primary markets. These properties are located in other
similar Midwestern markets.
<PAGE>
RECENT DEVELOPMENTS
OPERATING PERFORMANCE, DIVIDEND AND STOCK SPLIT
For the year ended December 31, 1997, the Company reported
the following information as compared to 1996.
<TABLE>
<CAPTION>
Year Ended
December 31,
----------------------
1997 1996
---- ----
(In thousands)
<S> <C> <C>
Net income available for
common shareholders $ 65,999 $ 50,872
Revenues 252,080 182,089
Funds From Operations 107,256 76,079
Cash flow provided by (used by):
Operating activities 159,195 95,135
Investing activities (597,324) (276,748)
Financing activities 443,148 181,220
</TABLE>
On January 29, 1998, the Company's Board of Directors
declared a regular quarterly common dividend of $.30 per
share, payable on February 27, 1998 to common shareholders
of record on February 13, 1998. The Company effected a
two-for-one split of its common stock (the "Stock Split")
which was paid on August 25, 1997 to common shareholders of
record on August 18, 1997. Share and per share amounts in
this Prospectus Supplement have been restated to reflect the
effect of the Stock Split.
FINANCING
In July 1997, the Company issued 3.0 million Depositary
Shares, each representing 1/10 of a Series B Cumulative Step-
Up Redeemable Preferred Share, raising net proceeds of
$146.1 million. These securities are not redeemable prior to
September 30, 2007 and offer a cumulative distribution of
7.99% through September 2012, and 9.99% thereafter. The
proceeds of this financing were fully used to reduce the
outstanding balance on the Company's unsecured line of
credit and to fund the development and acquisition of
additional rental properties.
The Company issued $100.0 million of unsecured Pass-
through Asset Trust Securities ("PATS") on August 21, 1997.
The PATS bear interest at a coupon rate of 6.95% and mature
on August 15, 2004. The effective rate of the PATS is
7.347%, which includes the effect of the settlement of a
forward Treasury lock agreement which the Company entered
into in April 1997. The Company and an affiliate of the
placement agent for the PATS can effectively agree to reset
the interest rate and remarket the underlying notes with a
maturity of August 15, 2011.
The Company reduced the interest rate on its $150.0
million unsecured line of credit from the 30-day London
Interbank Offered Rate ("LIBOR") plus 1.25% to LIBOR plus
1.00% effective March 27, 1997. Effective August 28, 1997,
the unsecured line of credit was increased to $200.0 million
and the interest rate was reduced to LIBOR plus .80%. This
line of credit also includes a "competitive bid option" and
matures in April 2001.
In September 1997, the Company issued approximately 10.5
million shares of its Common Stock for public sale through a
group of underwriters, raising net proceeds of $214.4
million. The Company also issued 926,280 shares of Common
Stock to a unit trust, raising net proceeds of approximately
$18.9 million.
In December 1997 and February 1998, the Company issued
449,438 and 661,157 shares of its Common Stock,
respectively, to unit trusts, raising combined net proceeds
of approximately $23.8 million.
<PAGE>
The Company issued $100 million of unsecured Puttable
Reset Securities ("PURS") in March 1998. The PURS bear
interest at a coupon rate of 7.05% and mature on March 1,
2016. On March 1, 2006, the interest rate may be reset as a
fixed rate determined on the basis of certain bids to be
requested from reference dealers, and the PURS are subject
to a call option held by one of the underwriters involved in
the sale of the PURS and,if the call is not exercised, to
the right of the holders to put the PURS to the Company, in
each case on the terms and conditions described therein. The
effective interest rate of the PURS is 6.72%, which includes
the effect of the settlement of a forward Treasury lock
agreement which the Company entered into in December 1997.
DEVELOPMENT AND ACQUISITIONS
During 1997, the Company completed development of and
placed in service 28 properties and two property expansions
comprising 5.3 million square feet at a total cost of $195.6
million. The Company had 25 properties and three property
expansions under development at December 31, 1997 comprising
5.2 million square feet which will have a total cost of
$257.3 million upon completion. Also during 1997, the
Company acquired 84 properties with 8.4 million square feet
at a total cost of $597.9 million.
These property additions (the "New Properties"), totaling
18.9 million square feet, consist of 71% industrial, 26%
office and 3% retail projects. The total cost of the New
Properties is expected to be $1.05 billion. At December 31,
1997, the New Properties which have been placed in service
are 94% leased, and the New Properties under construction
are 60% pre-leased for a combined total of 84% leased. The
New Properties are expected to provide a weighted average
unleveraged stabilized return on cost (computed as property
annual contractual net operating income ("NOI") divided by
total project costs) of 10.7% with anticipated leasing
activity. The annual contractual NOI to be generated from
the New Properties, once placed in service, will be $112.4
million with anticipated additional leasing.
The Company's expectations of total cost and weighted
average unleveraged stabilized return on cost constitute
forward-looking information that is subject to risks
inherent in the completion of construction of the properties
under development and the leasing of any unleased portion of
the properties. Such risks could cause actual results to
differ materially from the Company's expectations.
The following table sets forth information regarding each
of the New Properties as of December 31, 1997.
<TABLE>
<CAPTION>
IN-SERVICE OR % LEASED
ANTICIPATED PROPERTY % OWNER- SQUARE OR PRE-
IN-SERVICE DATE PROJECT/TENANT LOCATION TYPE SHIP FEET LEASED (1)
- --------------- ------------------- --------------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
DEVELOPMENT COMPLETED IN 1997:
1st Qtr. 1997 Park Fletcher
Bldg. 33 Indianapolis, INIndustrial 50% 112,710 100%
1st Qtr. 1997 Dukeport 2 St. Louis, MOIndustrial 100% 244,800 65%
2nd Qtr. 1997 Silver Burdett
Ginn Expansion Indianapolis, INIndustrial 100% 183,950 100%
2nd Qtr. 1997 Vanstar Indianapolis, INIndu
strial 100% 415,680 100%
2nd Qtr. 1997 North Airport
Park Bldg. 2 Indianapolis, INIndustrial 100%377,280 100%
2nd Qtr. 1997 Pamida Lebanon, INIndustrial 100% 200,000 100%
2nd Qtr. 1997 Skyport Bldg. 1Cincinnati, OHIndu
strial 100% 316,800 100%
2nd Qtr. 1997 Parkwood PlaceColumbus, OH Office 100% 156,000 100%
2nd Qtr. 1997 Purity WholesaleLebanon, INIndust
rial 100% 556,248 100%
3rd Qtr. 1997 Freedom Square IIICleveland, OH O
ffice 100% 71,025 79%
3rd Qtr. 1997 Sofa Express -
Florence Florence, KY Retail 100% 20,250 100%
3rd Qtr. 1997 Mr. Coffee Cleveland, OHIndustr
ial 100% 458,000 100%
3rd Qtr. 1997 Southpointe CColumbus, OHIndustrial 100% 322,000 100%
3rd Qtr. 1997 Three ParkwoodIndianapolis, INOff
ice 100% 121,246 89%
4th Qtr. 1997 Beiersdorf Cincinnati, OHIndust
rial 100% 252,000 100%
4th Qtr. 1997 Haywood Oaks
Bldg. 8 Nashville, TN Industrial 100% 71,610 100%
4th Qtr. 1997 Anthem Cincinnati, OHOffice 100% 78,240 100%
4th Qtr. 1997 4660 Governor's Pte.Cincinnati, OHOffice 100% 76,465 91%
4th Qtr. 1997 CompmanagementColumbus, OH Office 100% 68,700 100%
4th Qtr. 1997 SouthPte. Bldg. DColumbus, OHIndu
strial 100% 116,520 35%
4th Qtr. 1997 Hamilton Crossing
Bldg. 2 Indianapolis, IN Office 100% 32,800 77%
4th Qtr. 1997 Park 100 Bldg. 133Indianapolis, INIndustrial 100% 20,530 100%
4th Qtr. 1997 Landerbrook Corporate
Ctr. Cleveland, OH Office 100%110,148 72%
4th Qtr. 1997 Gov. Point Retail
North (Lowes) Cincinnati, OHRetail 100% 128,747 100%
4th Qtr. 1997 Mosteller II Cincinnati, OHIndust
rial 100% 261,440 77%
4th Qtr. 1997 Park Fletcher
Bldg. 34 Indianapolis, INIndustrial 50%230,400 100%
4th Qtr. 1997 SouthPte. Bldg. EColumbus, OHIndu
strial 100% 82,520 0%
4th Qtr. 1997 Park 100 Bldg. 132Indianapolis, INOffice 100% 27,600 100%
4th Qtr. 1997 Biggs B-ShoppesCincinnati, OHRetail 100% 13,000 100%
4th Qtr. 1997 Fountain PlaceCincinnati, OHRetail 25% 207,170 95%
---------
5,333,879 93%
---------
<PAGE>
UNDER DEVELOPMENT:
1st Qtr. 1998 Park Fletcher
Bldg. 35 Indianapolis, INIndustrial 50% 96,000 67%
1st Qtr. 1998 Dukeport 3 St. Louis, MOIndustr
ial 100% 214,400 0%
1st Qtr. 1998 Prentice HallLebanon, INIndustrial 100% 577,340 100%
1st Qtr. 1998 Software ArtistryIndianapolis, IN Office 100%
108,273 75%
1st Qtr. 1998 World Park Bldg. 28Cincinnati, OHIndustrial 100%
220,160 87%
1st Qtr. 1998 Woodland Corporate
Ctr. One Indianapolis, INOffice 100% 77,125 74%
1st Qtr. 1998 Park Fletcher
Bldg. 36 Indianapolis, INIndustrial 50% 52,800 0%
2nd Qtr. 1998 Rings Road Office
Bldg. Columbus, OH Office 100% 145,000 29%
2nd Qtr. 1998 World Park Bldg. 29Cincinnati, OHIndustrial 100%
452,000 100%
2nd Qtr. 1998 Dukeport 4 St. Louis, MOIndustr
ial 100% 153,600 0%
2nd Qtr. 1998 Sterling 4 Columbus, OH Office 100% 94,219 100%
2nd Qtr. 1998 MCI St. Louis, MO Office 100% 97,356 100%
2nd Qtr. 1998 Westport Center ISt. Louis, MOInd
ustrial 100% 177,600 0%
2nd Qtr. 1998 Park 100 Bldg. 134Indianapolis, INIndustrial 100% 110,400 41%
2nd Qtr. 1998 Fountain Parkway
Bldg. 1 Cleveland, OHIndustrial 100%108,704 0%
2nd Qtr. 1998 Strongville Park 82,
Bldg. 1 Cleveland, OHIndustrial 100% 72,000 0%
2nd Qtr. 1998 Thomson ExpansionIndianapolis, INIndustrial 50%
740,155 100%
2nd Qtr. 1998 Franklin Road Exp.Indianapolis, INIndustrial 100%
150,000 61%
2nd Qtr. 1998 General CableLebanon, INIndustrial 100% 395,472 50%
2nd Qtr. 1998 Sun TV Columbus, OHIndustrial 100% 231,936 100%
3rd Qtr. 1998 Creekside Crossing
One Nashville, TN Office 100%112,800 0%
3rd Qtr. 1998 Governors Pte.
4680 Bldg. Cincinnati, OHOffice 100%126,102 0%
3rd Qtr. 1998 Western Hills
Marketplace Cincinnati, OHRetail 100%148,140 82%
3rd Qtr. 1998 Four ParkwoodIndianapolis, INOffice 100% 132,836 0%
4th Qtr. 1998 Tri-County
Marketplace Cincinnati, OHRetail 100% 74,174 100%
4th Qtr. 1998 520 Maryville Ctr.St. Louis, MOOf
fice 100% 113,659 0%
4th Qtr. 1998 Park Center Bldg. 1Cleveland, OHO
ffice 100% 133,550 0%
1st Qtr. 1999 One Easton OvalColumbus, OHOffice 100% 127,080 0%
---------
5,242,881 60%
---------
1997 ACQUISITIONS
2nd Qtr. 1997 NGIC/Pte. 70 St. Louis, MO Office 100% 215,549 99%
2nd Qtr. 1997 Dyment/Johnson
Controls Cleveland, OHIndustrial 100%331,550 100%
2nd Qtr. 1997 Central Park
of Lisle Chicago, IL Office 50% 345,200 93%
2nd Qtr. 1997 8555 Keystone
Crossing Indianapolis, INOffice 100% 75,545 94%
2nd Qtr. 1997 Sun TV Columbus, OHIndustrial 100% 789,175 100%
3rd Qtr. 1997 7910 and 7320
Kentucky Drive Cincinnati, OHIndust
rial 100% 132,274 100%
3rd Qtr. 1997 One Ashview Cincinnati, OHOffice 100% 120,853 100%
3rd Qtr. 1997 Remington Bldg.sCincinnati, OHOff
ice 100% 76,556100%
3rd Qtr. 1997 Executive TowersChicago, ILOffice 100% 649,842 98%
3rd Qtr. 1997 Riverport
Properties St. Louis, MOOffice/Industrial100%582,091 100%
3rd Qtr. 1997 6111 Oaktree Blvd.Cleveland, OH O
ffice 100% 70,90683%
4th Qtr. 1997 Blue Ash Office
Center VI Cincinnati, OHOffice 100% 35,603 90%
4th Qtr. 1997 Baur PortfolioSt. Louis, MOOffice
/Industrial 100% 982,114 98%
4th Qtr. 1997 Solon Indus. Bldg.sCleveland, OHI
ndustrial 100% 674,432 91%
4th Qtr. 1997 RL Johnson
Portfolio Minneapolis, MNIndustrial 100% 3,224,301 90%
4th Qtr. 1997 Kenwood Executive
Center Cincinnati, OHOffice 100% 49,984 97%
----------
8,355,975 94%
----------
18,932,735 84%
==========
</TABLE>
- --------------
(1)Represents completed leasing activity through December
31, 1997.
RECENT ACQUISITIONS
During the fourth quarter of 1997, the Company purchased
two large portfolios of properties in St. Louis and
Minneapolis (the "Recent Acquisitions") for an aggregate
purchase price of approximately $292.4 million.
The following describes each of the Recent Acquisitions.
BAUR PROPERTIES. In October 1997, the Company acquired
Baur Properties' existing rental properties and operations
in St. Louis. Baur Properties has been in operation in St.
Louis for over 43 years and is one of the leading suburban
office developers and operators in the Midwest. The Baur
rental property portfolio consists of eight suburban office
buildings totaling 904,000 square feet and three industrial
buildings totaling 78,000 square feet. Seven of the suburban
office projects are located in Maryville Centre, one of the
premier suburban office parks in St. Louis. The acquisition
also included undeveloped land to accommodate approximately
one million square feet of additional suburban office
development and the property management and development
operations of Baur Properties. Accordingly, Edward T. Baur,
the Chairman of Baur Properties, became Vice President and
General Manager of the Company's St. Louis operations.
Along with its existing operations in St. Louis, the Company
believes this acquisition will make it the dominant real
estate developer in this market. The Company believes this
acquisition is in accordance with its strategy of dominating
its Midwestern markets.
R.L. JOHNSON COMPANY. In October 1997, the Company
acquired R.L. Johnson Company's existing rental properties
and operations in Minneapolis. R.L. Johnson Company has been
in operation for over 34 years and is one of the leading
developers and operators of industrial real estate in
Minneapolis. The R.L. Johnson rental property portfolio
consists of 41 industrial buildings totaling 3.2 million
square feet. Robb Johnson, the President of R.L. Johnson
Company, became Vice President and General Manager of the
Company's Minneapolis operations. The Company believes this
acquisition is in accordance with its strategy of dominating
its Midwestern markets.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the
Common Stock offered hereby, after deducting the estimated
offering expenses, are expected to be approximately $19.0
million. The Company presently intends to use the net
proceeds to fund development and acquisition of additional
rental properties. See "Recent Developments."
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND HISTORY
The Common Stock is listed on the New York Stock Exchange
under the symbol DRE. The following table sets forth the
high and low sale prices of the Common Stock for the periods
indicated and the dividend paid per share during each such
period. All share price and dividend information has been
adjusted to reflect the effect of the Stock Split.
<TABLE>
<CAPTION>
CLOSING PRICES
PER SHARE
-------------------- DIVIDENDS
QUARTERLY PERIOD HIGH LOW PER SHARE
- ------------------- ---------------- ------------
<S> <C> <C> <C>
1996
First Quarter $16.25 $14.56 $0.245
Second Quarter 15.25 14.19 0.245
Third Quarter 16.63 14.50 0.255
Fourth Quarter 19.25 16.38 0.255
1997
First Quarter 21.44 19.00 0.255
Second Quarter 20.88 17.13 0.255
Third Quarter 23.63 19.81 0.295
Fourth Quarter 25.00 21.38 0.300
1998
First Quarter
(through March 25, 1998)24.63 22.63 0.300
</TABLE>
The last reported sale price of the Common Stock on the
New York Stock Exchange on March 25, 1998 was $23.8125 per
share. As of March 25, 1998, there were 8,595 registered
holders of Common Stock.
Since its organization in 1986, the Company has paid
regular and uninterrupted dividends. The Company intends to
continue to declare quarterly dividends on its Common Stock.
However, no assurances can be given as to the amounts of
future dividends as such dividends are subject to the
Company's cash flow from operations, earnings, financial
condition, capital requirements and such other factors as
the Board of Directors deems relevant. The Company has
determined that none of the per share distribution for 1997
represented return of capital to the shareholders for income
tax purposes. No assurance can be given that such percentage
will not change in future years.
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
For a discussion of material federal income tax
consequences applicable to distributions to shareholders and
the Company's election to be taxed as a REIT, see "Federal
Income Tax Considerations" in the accompanying Prospectus.
Prospective purchasers should be aware that the recently
enacted Taxpayer Relief Act of 1997 (the "1997 Act") made
numerous changes to the Code, including reducing the maximum
tax imposed on net capital gains from the sale or exchange
of assets held for more than 18 months by individuals,
trusts and estates to 20%. This reduced tax rate is
effective for sales and exchanges occurring after July 28,
1997. The 1997 Act also makes certain changes to the
requirements to qualify as a REIT and to the taxation of
REITs and their shareholders.
The 1997 Act contains significant changes to the taxation
of capital gains of individuals, trusts and estates. For
gains realized after July 28, 1997, and subject to certain
exceptions, the maximum rate of tax on net capital gains of
individuals, trusts and estates from the sale or exchange of
assets held for more than 18 months has been reduced to 20%,
and the maximum rate is reduced to 18% for assets acquired
after December 31, 2000 and held for more than five years.
For taxpayers who would be subject to a maximum tax rate of
15%, the rate on net capital gains is reduced to 10%, and
effective for taxable years commencing after December 31,
2000, the rate is reduced to 8% for assets held for more
than five years. The maximum rate for net capital gains
attributable to the sale of depreciable real property held
for more than 18 months is 25% to the extent of the
deductions for depreciation with respect to such property.
Long-term capital gain allocated to a shareholder by the
Company will be subject to the 25% rate to the extent that
the gain does not exceed depreciation on real property sold
by the Company. The maximum rate of capital gains tax for
capital assets held more than one year but not more than 18
months remains at 28%. The taxation of capital gains of
corporations was not changed by the 1997 Act.
The 1997 Act also includes several provisions that are
intended to simplify the taxation of REITs. These
provisions are effective for taxable years beginning after
the date of enactment of the 1997 Act which, as to the
Company, is its taxable year commencing January 1, 1998.
First, in determining whether a REIT satisfies the income
tests, a REIT's rental income from a property will not cease
to qualify as "rents from real property" merely because the
REIT performs services for a tenant other than permitted
customary services if the amount that the REIT is deemed to
have received as a result of performing such impermissible
services does not exceed one percent of all amounts received
directly or indirectly by the REIT with respect to such
property. The amount that a REIT will be deemed to have
received for performing impermissible services is at least
150% of the direct cost to the REIT of providing those
services. Second, certain non-cash income, including income
from cancellation of indebtedness and original issue
discount, will be excluded from income in determining the
amount of dividends that a REIT is required to distribute.
Third, a REIT may elect to retain and pay income tax on any
net long-term capital gains and require its shareholders to
include such undistributed net capital gains in their
income. If a REIT makes such an election, the REIT's
shareholders would receive a tax credit attributable to
their share of capital gains tax paid by the REIT on the
undistributed net capital gain that was included in the
shareholders' income, and such shareholders will receive an
increase in the basis of their shares in the amount of
undistributed net capital gain included in their income
reduced by the amount of the credit. Fourth, the 1997 Act
repeals the requirement that a REIT receive less than 30% of
its gross income from the sale or disposition of stock or
securities held for less than one year, gain from prohibited
transactions, and gain from certain sales of real property
held less than four years. Finally, the 1997 Act contains a
number of technical provisions that reduce the risk that a
REIT will inadvertently cease to qualify as a REIT.
PROPOSED TAX LEGISLATION
On February 2, 1998, President Clinton released his budget
proposal for fiscal year 1999 (the "Proposal"). Two
provisions contained in the Proposal could affect the
Company if enacted in final form.
<PAGE>
First, the Proposal would prohibit a REIT from owning,
directly or indirectly, more than 10% of the voting power or
value of all classes of a C corporation's stock (other than
the stock of a qualified REIT subsidiary). Currently, a
REIT may own no more than 10% of the voting stock of a C
corporation, but its ownership of the nonvoting stock of a C
corporation is not limited (other than by the rule that the
value of a REIT's combined equity and debt interests in a C
corporation may not exceed 5% of the value of a REIT's total
assets). That provision is proposed to be effective with
respect to stock in a C corporation acquired by a REIT on or
after the date of "first committee action" (i.e., first
action by the House Ways and Means Committee with respect to
the provision). If enacted as presently written, that
provision would severely limit the use by a REIT of taxable
subsidiaries to conduct businesses the income from which
would be nonqualifying income if received directly by the
REIT.
Second, the Proposal would require recognition of any
built-in gain associated with the assets of a "large" C
corporation (i.e., a C corporation whose stock has a fair
market value of more than $5 million) upon its conversion to
REIT status or merger into a REIT. That provision is
proposed to be effective for conversions to REIT status
effective for taxable years beginning after January 1, 1999
and mergers of C corporations into REITs that occur after
December 31, 1998. This provision would require immediate
recognition of gain if, at any time after December 31, 1998,
a "large" C corporation merges into the Company.
<PAGE>
UNDERWRITING
Subject to the terms and conditions contained in the
Underwriting Agreement, the Company has agreed to sell to
EVEREN Securities, Inc. (the "Underwriter"), and the
Underwriter has agreed to purchase from the Company, 839,895
shares of Common Stock at the public offering price less the
underwriting discounts and commissions set forth on the
cover page of this Prospectus Supplement. The Underwriting
Agreement provides that the Underwriter's obligation to
purchase the Common Stock is subject to the satisfaction of
certain conditions, including the receipt of certain legal
opinions. The nature of the Underwriter's obligation is
such that it is committed to purchase all of the shares of
Common Stock if any shares are purchased.
The Underwriter intends to sell the shares of Common Stock
to Nike Securities, L.P., which intends to deposit such
shares, together with shares of common stock of other
entities also acquired from the Underwriter, into a newly-
formed unit investment trust (the "Trust") registered under
the Investment Company Act of 1940, as amended, in exchange
for units in the Trust. The Underwriter is not an affiliate
of Nike Securities, L.P. or the Trust. The Underwriter
intends to sell the shares of Common Stock to Nike
Securities, L.P. at an aggregate purchase price of
$19,340,000. It is anticipated that the Underwriter will
also participate in the distribution of units of the Trust
and will receive compensation therefor.
In the Underwriting Agreement, the Company has agreed to
indemnify the Underwriter against certain liabilities,
including liabilities under the Securities Act of 1933, as
amended, or to contribute to payments the Underwriter may be
required to make in respect thereof.
Until the distribution of the shares of Common Stock is
completed, rules of the Securities and Exchange Commission
may limit the ability of the Underwriter to bid for and
purchase shares of Common Stock. As an exception to these
rules, the Underwriter is permitted to engage in certain
transactions that stabilize the price of the Common Stock.
Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the
Common Stock. It is not currently anticipated that the
Underwriter will engage in any such transactions in
connection with this Offering.
If the Underwriter creates a short position in the Common
Stock in connection with the Offering (i.e., if it sells
more shares of Common Stock than are set forth on the cover
page of this Prospectus Supplement), the Underwriter may
reduce that short position by purchasing Common Stock in the
open market.
In general, purchases of a security for the purpose of
stabilization or to reduce a short position could cause the
price of the security to be higher than it might otherwise
be in the absence of such purchases.
Neither the Company nor the Underwriter makes any
representation or prediction as to the direction or
magnitude of any effect that the transactions described
above may have on the price of the Common Stock. In
addition, neither the Company nor the Underwriter makes any
representation that the Underwriter will engage in such
transactions or that such transactions, once commenced, will
not be discontinued without notice.
In the ordinary course of business, the Underwriter and
its affiliates have engaged, and may in the future engage,
in investment banking transactions with the Company.
<PAGE>
LEGAL MATTERS
In addition to the legal opinions for the Company
referred to under "Legal Opinions" in the accompanying
Prospectus, the description of Federal income tax matters
contained in this Prospectus Supplement entitled "Certain
Federal Income Tax Considerations" is based upon the opinion
of Bose McKinney & Evans. The legality of the shares of
Common Stock offered hereby will be passed upon for the
Underwriters by Chapman and Cutler, Chicago, Illinois.
Chapman and Cutler will rely on the opinion of Bose McKinney
& Evans as to certain matters of Indiana law.
<PAGE>
NO DEALER, SALESMAN OR OTHER INDIVIDUAL HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS
IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCE, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS
SUPPLEMENT OR IN THE PROSPECTUS OR IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
___________________
839,895 SHARES
[LOGO]
COMMON STOCK
<PAGE>
TABLE OF CONTENTS
Page
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PROSPECTUS SUPPLEMENT
The Company S-3
Recent Developments S-5
Use of Proceeds S-8
Price Range of Common Stock and
Dividend History S-9
Certain Federal Income Tax Considerations S-10
Underwriting S-12
Legal Matters S-12
PROSPECTUS
Available Information 2
Incorporation of Certain Documents
by Reference 2
The Company and the Operating Partnership 3
Use of Proceeds 3
Ratios of Earnings to Fixed Charges 4
Description of Debt Securities 4
Description of Preferred Stock 15
Description of Depositary Shares 21
Description of Common Stock 24
Federal Income Tax Considerations 26
Plan of Distribution 33
Legal Opinions 34
Experts 34
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PROSPECTUS SUPPLEMENT
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EVEREN SECURITIES, INC.
MARCH 25, 1998
