UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
------- -------
----------------------------------------------------------------------
Commission File Number: 1-9044
-------
DUKE-WEEKS REALTY CORPORATION
State of Incorporation: IRS Employer ID Number:
Indiana 35-1740409
------------------------ -----------------------
Address of principal executive offices:
600 East 96th Street, Suite 100
------------------------------
Indianapolis, Indiana 46260
-----------------------------
Telephone: (317) 808-6000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
The number of Common Shares outstanding as of November 10, 2000 was
127,535,186 ($.01 par value).
<PAGE>
DUKE-WEEKS REALTY CORPORATION
INDEX
PART I - FINANCIAL INFORMATION PAGE
------------------------------ ----
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of
September 30, 2000 (Unaudited) and December 31, 1999 2
Condensed Consolidated Statements of Operations for the
three and nine months ended September 30, 2000 and 1999
(Unaudited) 3
Condensed Consolidated Statements of Cash Flows for the
nine months ended September 30, 2000 and 1999 (Unaudited) 4
Condensed Consolidated Statement of Shareholders' Equity
for the nine months ended September 30, 2000 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements
(Unaudited) 6-11
Independent Accountants' Review Report 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 13-21
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings 21
Item 2. Changes in Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote
of Security Holders 21
Item 5. Other Information 21-22
Item 6. Exhibits and Reports on Form 8-K 22
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DUKE-WEEKS REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
ASSETS 2000 1999
------ ----------- ------------
(Unaudited)
<S> <C> <C>
Real estate investments:
Land and improvements $ 628,439 $ 602,789
Buildings and tenant improvements 4,326,808 4,124,117
Construction in progress 235,304 327,944
Investments in unconsolidated companies 160,094 145,587
Land held for development 262,340 246,533
--------- ---------
5,612,985 5,446,970
Accumulated depreciation (340,950) (254,574)
--------- ---------
Net real estate investments 5,272,035 5,192,396
Cash and cash equivalents 41,287 18,765
Accounts receivable from tenants,
net of allowance of $1,367 and $1,775 17,377 26,844
Straight-line rent receivable, net of
allowance of $841 38,027 29,770
Receivables on construction contracts 47,501 29,537
Deferred financing costs, net of
accumulated amortization of $11,921
and $9,082 13,504 16,651
Deferred leasing and other costs, net
of accumulated amortization of $32,255
and $21,287 106,418 83,153
Escrow deposits and other assets 89,746 89,122
--------- ---------
$5,625,895 $5,486,238
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Indebtedness:
Secured debt $ 448,105 $ 528,665
Unsecured notes 1,286,660 1,326,811
Unsecured lines of credit 466,000 258,000
--------- ---------
2,200,765 2,113,476
Construction payables and
amounts due subcontractors 89,607 89,985
Accounts payable 3,378 3,179
Accrued expenses:
Real estate taxes 66,922 47,604
Interest 19,562 20,658
Other 56,438 42,295
Other liabilities 31,333 30,544
Tenant security deposits and prepaid rents 33,629 36,156
--------- ---------
Total liabilities 2,501,634 2,383,897
--------- ---------
Minority interest 438,093 433,745
--------- ---------
Shareholders' equity:
Preferred shares ($.01 par value);
5,000 shares authorized 609,117 609,998
Common shares ($.01 par value);
150,000 shares authorized;
127,509 and 125,823 shares
issued and outstanding 1,275 1,258
Additional paid-in capital 2,171,737 2,139,772
Distributions in excess of net income (95,961) (82,432)
--------- ---------
Total shareholders' equity 2,686,168 2,668,596
--------- ---------
$5,625,895 $5,486,238
========= =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
- 2 -
<PAGE>
DUKE-WEEKS REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
RENTAL OPERATIONS:
Revenues:
Rental income $182,525 $157,001 $528,617 $360,849
Equity in earnings of
unconsolidated companies 3,235 3,272 10,285 8,559
------- ------- ------- -------
185,760 160,273 538,902 369,408
Operating expenses: ------- ------- ------- -------
Rental expenses 30,322 25,095 87,428 61,222
Real estate taxes 18,833 16,408 56,417 38,899
Interest expense 36,376 25,960 105,310 59,080
Depreciation and amortization 41,884 32,738 121,429 74,127
------- ------- ------- -------
127,415 100,201 370,584 233,328
------- ------- ------- -------
Earnings from rental
operations 58,345 60,072 168,318 136,080
------- ------- ------- -------
SERVICE OPERATIONS:
Revenues:
Property management,
maintenance and
leasing fees 5,937 7,255 18,202 14,676
Construction and development
activity income 15,634 7,817 41,581 20,976
Other income 332 330 1,226 910
------- ------- ------- -------
21,903 15,402 61,009 36,562
Operating expenses 13,410 11,531 36,187 24,073
------- ------- ------- -------
Earnings from
service operations 8,493 3,871 24,822 12,489
------- ------- ------- -------
General and administrative
expense (5,825) (4,626) (15,499) (11,737)
------- ------- ------- -------
Operating income 61,013 59,317 177,641 136,832
OTHER INCOME (EXPENSE):
Interest income 1,630 699 5,533 1,844
Earnings from land
and depreciated
property sales 4,459 3,095 22,550 7,380
Other expense (111) (133) (361) (471)
Minority interest in earnings
of common unitholders (6,800) (6,543) (21,111) (13,184)
Minority interest in earnings
of preferred unitholders (2,102) (2,102) (6,306) (2,102)
Other minority interest in
earnings of subsidiaries (697) (617) (1,669) (1,497)
------- ------- ------- -------
Net income 57,392 53,716 176,277 128,802
Dividends on preferred shares (12,243) (12,254) (36,744) (30,350)
------- ------- ------- -------
Net income available for
common shareholders $ 45,149 $ 41,462 $139,533 $ 98,452
======= ======= ======= =======
Net income per common share:
Basic $ .36 $ .35 $ 1.10 $ 1.00
======= ======= ======= =======
Diluted $ .35 $ .35 $ 1.09 $ 1.00
======= ======= ======= =======
Weighted average number of
common shares outstanding 127,010 118,820 126,561 97,966
======= ======= ======= =======
Weighted average number of
common and dilutive
potential common shares 147,916 138,923 147,218 112,106
======= ======= ======= =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
- 3 -
<PAGE>
DUKE-WEEKS REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $176,277 $128,802
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation of buildings and tenant
improvements 107,906 66,993
Amortization of deferred financing costs 2,702 1,324
Amortization of deferred leasing
and other costs 13,523 7,134
Minority interest in earnings 29,086 16,784
Straight-line rent adjustment (12,819) (7,462)
Earnings from land and depreciated
property sales (22,550) (7,380)
Construction contracts, net (18,342) 29,741
Other accrued revenues and expenses, net 25,377 22,725
Equity in earnings in excess of operating
distributions received from
unconsolidated companies (105) (942)
------- -------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 301,055 257,719
------- -------
Cash flows from investing activities:
Development of real estate investments (409,428) (306,031)
Acquisition of real estate investments (5,932) (124,968)
Acquisition of land held for development
and infrastructure costs (73,194) (82,995)
Recurring costs:
Tenant improvements (24,085) (14,003)
Leasing costs (14,175) (7,952)
Building improvements (4,924) (1,564)
Other deferred leasing costs (27,941) (17,126)
Other deferred costs and other assets (9,290) (37,822)
Escrow for property exchanges, net 5,235 -
Proceeds from land and depreciated
property sales, net 345,064 35,524
Capital distributions received
from unconsolidated companies - 16,802
Net investment in and advances
to unconsolidated companies (24,891) (30,048)
------- -------
NET CASH USED BY INVESTING ACTIVITIES (243,561) (570,183)
------- -------
Cash flows from financing activities:
Proceeds from issuance of
common shares, net 22,723 203,365
Proceeds (payments) from
issuance (repurchase)
of preferred shares, net (881) 96,519
Proceeds from indebtedness - 300,000
Borrowings on lines of credit, net 240,026 174,000
Repayments on indebtedness including
principal amortization (73,810) (264,711)
Distributions to common shareholders (153,062) (105,227)
Distributions to preferred shareholders (36,744) (30,350)
Distributions to preferred unitholders (6,306) (2,102)
Distributions to minority interest (24,518) (15,557)
Deferred financing costs (2,400) (5,141)
------- -------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES (34,972) 350,796
------- -------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 22,522 38,332
Cash and cash equivalents at
beginning of period 18,765 6,950
------- -------
Cash and cash equivalents at end of period $ 41,287 $ 45,282
======= =======
Significant non-cash items:
Assumption of debt for real
estate acquisitions $ - $ 26,186
======= =======
Acquisition of minority interest $ 8,334 $ 49,457
======= =======
Issuance of limited partner units for
real estate acquisitions $ 7,615 $ 2,017
======= =======
Transfer of mortgage debt in sale
of depreciated property $ 72,650 $ -
======= =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
- 4 -
<PAGE>
DUKE-WEEKS REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Additional Distributions
Preferred Common Paid-in in Excess of
Shares Shares Capital Net Income Total
---------- ------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C>
BALANCE AT
DECEMBER 31, 1999 $609,998 $1,258 $2,139,772 $(82,432) $2,668,596
Issuance of common
shares - 13 23,635 - 23,648
Acquisition of
minority interest - 4 8,330 - 8,334
Repurchase of
preferred shares (881) - - - (881)
Net income - - - 176,277 176,277
Distributions
to preferred
shareholders - - - (36,744) (36,744)
Distributions
to common
Shareholders
($1.21 per share) - - - (153,062) (153,062)
------- ----- --------- ------- ---------
BALANCE AT
SEPTEMBER 30, 2000 $609,117 $1,275 $2,171,737 $(95,961) $2,686,168
======= ===== ========= ======= =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
- 5 -
<PAGE>
DUKE-WEEKS REALTY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. FINANCIAL STATEMENTS
The interim condensed consolidated financial statements included
herein have been prepared by Duke-Weeks Realty Corporation (the
"Company") without audit. The statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and the instructions for Form 10-Q
and Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation
have been included. These financial statements should be read in
conjunction with the consolidated financial statements and notes
thereto included in the Company's Annual Report to Shareholders.
THE COMPANY
The Company's rental operations are conducted through Duke-Weeks
Realty Limited Partnership ("DWRLP"), of which the Company owns
86.9% at September 30, 2000. The remaining interests in DWRLP are
exchangeable for shares of the Company's common stock on a one-for-
one basis. The Company conducts service 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 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.
2. LINES OF CREDIT
The Company has the following lines of credit available (in
thousands):
Outstanding
Borrowing Maturity Interest at September
Description Capacity Date Rate 30, 2000
------------------------ --------- ----------- -------- ------------
Unsecured Line of Credit $450,000 April 2001 LIBOR + .70% $436,000
Unsecured Line of Credit $300,000 June 2001 LIBOR + .90% $ 30,000
Secured Line of Credit $150,000 January 2003 LIBOR + 1.05% $ 32,026
The lines of credit are used to fund development and acquisition of
additional rental properties and to provide working capital.
The $450 million line of credit allows the Company an option to
obtain borrowings from the financial institutions that participate
in the line of credit at rates lower than the stated interest rate,
subject to certain restrictions. Amounts outstanding on the line of
credit at September 30, 2000 are at LIBOR + .51% to .70%.
- 6 -
<PAGE>
3. RELATED PARTY TRANSACTIONS
The Company provides management, maintenance, leasing,
construction, and other tenant related services to properties in
which certain executive officers have continuing ownership
interests. The Company was paid fees totaling $1.7 million and $2.0
million for such services for the nine months ended September 30,
2000 and 1999, 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.
At September 30, 2000, other assets included outstanding loan
advances totaling $2.4 million due from a related party, under a
$5.7 million demand loan agreement. The loan bears interest at
LIBOR plus 2.10% and is secured by real estate assets held by the
related entity, which the Company has arrangements to acquire in
future periods. Interest earned under the agreement and included in
the accompanying condensed consolidated statements of operations
totaled $173,705 for the nine months ended September 30, 2000.
4. NET INCOME PER COMMON SHARE
Basic net income per common share is computed by dividing net
income available for common shareholders by the weighted average number
of common shares outstanding for the period. Diluted net income per
share is computed by dividing the sum of net income available for
common shareholderss and minority interest in earnings of unitholders,
by the sum of the weighted average number of common shares and
dilutive potential common shares outstanding for the period.
The following table reconciles the components of basic and diluted
net income per common share for the three and nine months ended
September 30 (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
2000 1999 2000 1999
---- ---- ---- ----
Net income available for
common shareholders $ 45,149 $ 41,462 $139,533 $ 98,452
Minority interest in
earnings of common
unitholders 6,800 6,543 21,111 13,184
------- ------- ------- -------
Diluted net income
available for common
shares and dilutive
potential shares $ 51,949 $ 48,005 $160,644 $111,636
======= ======= ======= =======
Weighted average number
of common shares outstanding 127,010 118,820 126,561 97,966
Weighted average partnership
units outstanding 19,128 18,901 19,102 13,120
Dilutive shares for long-term
compensation plans 1,778 1,202 1,555 1,020
------- ------- ------- -------
Weighted average number of
common shares and dilutive
potential common shares 147,916 138,923 147,218 112,106
======= ======= ======= =======
The Preferred D Series Convertible stock and the Series G preferred
limited partner units were anti-dilutive at September 30, 2000;
therefore, no conversion to common shares is included in weighted
dilutive potential common shares outstanding.
5. SEGMENT REPORTING
The Company is engaged in four operating segments; the ownership and
rental of office, industrial and retail real estate investments and
the providing of various real estate services such as property
- 7 -
<PAGE>
management, maintenance, leasing and construction management to
third-party property owners ("Service Operations"). The Company's
reportable segments offer different products or services and are
managed separately because each requires different operating
strategies and management expertise. There are no material
intersegment sales or transfers.
Non-segment revenue to reconcile to total revenue consists mainly
of equity in earnings of unconsolidated companies. Non-segment
assets to reconcile to total assets consist of corporate assets
including cash, deferred financing costs and investments in
unconsolidated companies.
The Company assesses and measures segment operating results based
on an industry performance measure referred to as Funds From
Operations ("FFO"). The National Association of Real Estate
Investment Trusts defines FFO as net income or loss, excluding
gains or losses from debt restructuring and sales of depreciated
operating property, plus operating property depreciation and
amortization and adjustments for minority interest and
unconsolidated companies on the same basis. FFO is not a measure of
operating results or cash flows from operating activities as
measured by generally accepted accounting principles, is not
necessarily indicative of cash available to fund cash needs and
should not be considered an alternative to cash flows as a measure
of liquidity. Interest expense and other non-property specific
revenues and expenses are not allocated to individual segments in
determining the Company's performance measure.
The revenues and FFO for each of the reportable segments for the
three and nine months ended September 30, 2000 and 1999, and the
assets for each of the reportable segments as of September 30, 2000
and December 31, 1999, are summarized as follows (in thousands):
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- --------------------
2000 1999 2000 1999
---- ---- ---- ----
Revenues
--------
Rental Operations:
Office $ 87,811 $ 75,628 $251,785 $198,025
Industrial 87,513 74,877 256,032 143,267
Retail 7,434 7,248 22,325 19,326
Service Operations 21,903 15,402 61,009 36,562
------- ------- ------- -------
Total Segment FFO 204,661 173,155 591,151 397,180
Non-Segment Revenue 3,002 2,520 8,760 8,790
------- ------- ------- -------
Consolidated Revenue $207,663 $175,675 $599,911 $405,970
======= ======= ======= =======
- 8 -
<PAGE>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -----------------
2000 1999 2000 1999
---- ---- ---- ----
Funds From Operations
Rental Operations:
Office $ 59,091 $ 51,981 $171,817 $135,764
Industrial 68,536 59,296 200,182 111,578
Retail 5,801 5,874 17,833 15,659
Services Operations 8,493 3,871 24,822 12,489
------- ------- ------- -------
Total Segment FFO 141,921 121,022 414,654 275,490
Non-Segment FFO:
Interest expense (36,376) (25,960) (105,310) (59,080)
Interest income 1,630 699 5,533 1,844
General and
administrative
expenses (5,825) (4,626) (15,499) (11,737)
Gain on land sales 2,612 690 6,525 1,577
Other revenues and
expenses, net (250) (1,798) (5,855) (2,792)
Minority interest
in earnings-
common unitholders (6,800) (6,543) (21,111) (13,184)
Minority interest
in earnings-
preferred
unitholders (2,102) (2,102) (6,306) (2,102)
Other minority
interest in
earnings of
subsidiaries (697) (617) (1,669) (1,497)
Minority interest
share of FFO
adjustments (5,501) (4,292) (14,482) (8,545)
Joint venture FFO 5,298 4,553 15,751 12,632
Dividends on
preferred shares (12,243) (12,254) (36,744) (30,350)
------- ------- ------- -------
Consolidated FFO 81,667 68,772 235,487 162,256
Depreciation and
amortization (41,884) (32,738) (121,429) (74,127)
Share of joint
venture
adjustments (1,982) (1,270) (5,032) (4,026)
Earnings from
depreciated
property sales 1,847 2,406 16,025 5,804
Minority interest
share of FFO
adjustments 5,501 4,292 14,482 8,545
------- ------- ------- -------
Net Income
Available for
Common
Shareholders $ 45,149 $ 41,462 $139,533 $ 98,452
======= ======= ======= =======
September 30, December 31,
2000 1999
------------- ------------
Assets
Rental Operations:
Office $2,405,913 $2,252,795
Industrial 2,689,542 2,707,028
Retail 186,628 205,993
Service Operations 93,460 62,335
--------- ---------
Total Segment Assets 5,375,543 5,228,151
Non-Segment Assets 250,352 258,087
--------- ---------
Consolidated Assets $5,625,895 $5,486,238
========= =========
6. REAL ESTATE ASSETS HELD FOR SALE
In order to redeploy capital, the Company has an active sales
program through which it is continually pursuing favorable
opportunities to dispose of real estate assets that do not meet
long-term investment objectives of the Company. At September 30,
2000, the Company had 15 industrial, 17 office and three retail
properties comprising approximately 3.9 million square feet held
for sale. Of these properties, six build-to-suit industrial, four
build-to-suit office and two build-to-suit retail properties were
under development at September 30, 2000. Net operating income
(defined as total property revenues, less property expenses, which
include real estate taxes, repairs and maintenance, property
management, utilities, insurance and other expenses) of the
properties held for sale for the nine months ended September 30,
2000, was approximately $9.8 million. Net book value of the
properties held for sale at September 30, 2000, was $130.3 million.
There can be no assurances that such properties will be sold.
- 9 -
<PAGE>
7. SHAREHOLDERS' EQUITY
The following series of preferred shares are outstanding as of
September 30, 2000 (in thousands, except percentages):
Shares Dividend Redemption Liquidation
Description Outstanding Rate Date Preference Convertible
------------------ ----------- -------- ---------- ----------- -----------
Preferred A Series 300 9.100% 08/31/01 $ 75,000 No
Preferred B Series 300 7.990% 09/30/07 150,000 No
Preferred D Series 536 7.375% 12/31/03 134,117 Yes
Preferred E Series 400 8.250% 01/20/04 100,000 No
Preferred F Series 600 8.000% 10/10/02 150,000 No
All series of preferred shares require cumulative distributions,
have no stated maturity date, and the redemption price of each
series may only be paid from the proceeds of other capital shares
of the Company, which may include other classes or series of
preferred shares.
The Preferred Series D shares are convertible at a conversion rate
of 9.3677 common shares for each preferred share outstanding.
The dividend rate on the Preferred B Series shares increases to 9.99%
after September 12, 2012.
8. MERGER WITH WEEKS CORPORATION
In July 1999, Weeks Corporation ("Weeks"), a self-administered,
self-managed geographically focused Real Estate Investment Trust
("REIT") which operated primarily in the southeastern United
States, was merged with and into Duke Realty Investments, Inc.
("Duke"). The combined company has continued under the name Duke-
Weeks Realty Corporation ("the Company"). The total purchase price
of Weeks aggregated approximately $1.9 billion, which included the
assumption of the outstanding debt and liabilities of Weeks of
approximately $775 million. The transaction was structured as a tax-
free merger and was accounted for under the purchase method.
The following summarized pro forma unaudited information represents
the combined historical operating results of Weeks and Duke with
the appropriate purchase accounting adjustments, assuming the
merger had occurred on January 1, 1999. The pro forma financial
information presented is not necessarily indicative of what the
Company's actual operating results would have been had Weeks and
Duke constituted a single entity during such periods (in thousands,
except per share amounts):
Nine Months Ended
September 30,
-----------------------
2000 1999
---- ----
(ACTUAL) (Pro Forma)
Rental income $528,617 $451,932
======= =======
Net income available for
common shareholders $139,533 $116,972
======= =======
Weighted average common
shares outstanding:
Basic 126,561 116,735
======= =======
Dilute 147,143 137,540
======= =======
Net income per common share:
Basic $ 1.10 $ 1.00
======= =======
Diluted $ 1.09 $ 0.99
======= =======
- 10 -
<PAGE>
9.RECLASSIFICATIONS
Certain 1999 balances have been reclassified to conform to 2000
presentation.
10. SUBSEQUENT EVENTS
DECLARATION OF DIVIDENDS
The Board of Directors declared the following dividends on October
25, 2000:
Quarterly
Class Amount/Share Record Date Payment Date
---------- ------------ ----------- -------------
Common $ 0.43 November 14, 2000 November 30, 2000
Preferred:
Series A $0.56875 November 16, 2000 November 30, 2000
Series B $0.99875 December 15, 2000 December 29, 2000
Series D $0.46094 December 15, 2000 December 29, 2000
Series E $0.51563 December 15, 2000 December 29, 2000
Series F $0.50000 January 17, 2000 January 31, 2000
INVESTMENT IN JOINT VENTURE
On October 4, 2000, the Company sold or contributed $469 million of
industrial properties and $18 million of undeveloped land to a joint
venture in which the Company will have a 50% interest. This transaction
expands an existing venture which, upon completion of this transaction,
will own 129 buildings totaling more than 21 million square feet with a
value of $789 million. The venture properties are secured by $383
million of first mortgage debt. The Company will provide real estate
related services to the venture through its Service Operations.
- 11 -
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
--------------------------------------
The Board of Directors
DUKE-WEEKS REALTY CORPORATION:
We have reviewed the condensed consolidated balance sheet of Duke-
Weeks Realty Corporation and subsidiaries as of September 30, 2000,
the related condensed consolidated statements of operations for the
three months and nine months ended September 30, 2000 and 1999, the
related condensed consolidated statements of cash flows for the
nine months ended September 30, 2000 and 1999, and the related
condensed consolidated statement of shareholders' equity for the
nine months ended September 30, 2000. These condensed consolidated
financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the condensed consolidated financial
statements referred to above for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Duke-Weeks
Realty Corporation and subsidiaries as of December 31, 1999, and
the related consolidated statements of operations, shareholders'
equity and cash flows for the year then ended (not presented
herein); and in our report dated January 25, 2000, we expressed an
unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1999 is
fairly presented, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
KPMG LLP
Indianapolis, Indiana
October 25, 2000
- 12 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
--------
The Company's operating results depend primarily upon income from
the rental operations of its industrial, office and retail
properties located in its primary markets. This income from rental
operations is substantially influenced by the supply and demand for
the Company's rental space in its primary markets. In addition, the
Company's continued growth is dependent upon its ability to
maintain occupancy rates and increase rental rates of its in-
service portfolio and to continue development and acquisition of
additional rental properties.
The Company's primary markets have continued to offer strong and
stable local economies and have provided attractive new development
opportunities because of their established manufacturing base,
skilled work force and moderate labor costs. The Company expects to
continue to maintain its overall occupancy levels and also expects
to be able to increase rental rates as leases are renewed or new
leases are executed. This combination 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.
The Company tracks same property performance which compares those
properties that were in-service for all of a calendar two-year
period. The net operating income from the same property portfolio
increased 4.75% for the nine months ended September 30, 2000,
compared to the nine months ended September 30, 1999.
The following table sets forth information regarding the Company's
in-service portfolio of rental properties as of September 30, 2000
and 1999 (in thousands, except percentages):
Total Percent of
Square Feet Total Square Feet Percent Occupied
----------------- ----------------- ----------------
Type 2000 1999 2000 1999 2000 1999
---- ---- ---- ---- ---- ---- ----
Industrial
Service Centers 13,359 11,313 13.9% 12.8% 92.3% 93.9%
Bulk 59,431 56,527 62.0 64.0 94.2% 92.4%
Office
Suburban 19,663 16,751 20.5 19.0 92.0% 92.7%
CBD 861 861 1.0 1.0 97.1% 92.2%
Retail 2,535 2,836 2.6 3.2 97.0% 93.7%
------ ------ ----- -----
Total 95,849 88,288 100.0% 100.0% 93.6% 92.7%
====== ====== ===== =====
- 13 -
<PAGE>
The following table reflects the Company's in-service portfolio
lease expiration schedule as of September 30, 2000, by product
type, indicating square footage and annualized net effective rents
under expiring leases (in thousands, except per square foot
amounts):
<TABLE>
<CAPTION>
Total Industrial Office Retail
----- ---------- ------ ------
Yr of Square Square Square Square
Exp Feet Revenue Feet Revenue Feet Revenue Feet Revenue
--------- ------- ------- ------- ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000 2,463 $ 14,857 1,967 $ 8,668 425 $ 5,526 71 $ 663
2001 9,252 57,766 7,147 31,960 2,034 24,913 71 893
2002 9,373 60,402 7,451 36,922 1,848 22,444 74 1,036
2003 10,212 67,927 8,073 40,017 2,021 26,486 118 1,424
2004 9,588 66,870 7,271 35,050 2,227 30,574 90 1,246
2005 12,673 91,363 9,425 45,687 2,921 42,393 327 3,283
2006 7,134 41,480 5,836 23,124 1,276 18,073 22 283
2007 5,704 35,281 4,764 22,006 868 12,563 72 712
2008 5,433 33,114 4,460 19,940 910 12,460 63 714
2009 6,416 39,930 5,218 22,530 1,092 15,951 106 1,449
2010
and
Thereafter 11,436 92,994 6,686 29,830 3,306 49,751 1,444 13,413
------ ------- ------ ------- ------ ------- ----- ------
Total
Leased 89,684 $601,984 68,298 $315,734 18,928 $261,134 2,458 $25,116
====== ======= ====== ======= ====== ======= ===== ======
Total
Portfolio
Sq Ft 95,849 72,790 20,524 2,535
====== ====== ====== =====
Annualized
net effective
rent per
sq ft $ 6.71 $ 4.62 $ 13.80 $ 10.22
====== ====== ======= ======
</TABLE>
The Company also expects to realize growth in earnings from rental
operations through the development and acquisition of additional
rental properties in its primary markets and the completion of the
7.9 million square feet of properties under development by the
Company at September 30, 2000, over the next three quarters and
thereafter. These properties under development should provide
future earnings through Service Operations income upon sale or from
rental operations growth as they are placed in service as follows
(in thousands, except percent leased and stabilized returns):
Anticipated
In-Service Square Percent Project Stabilized
Date Feet Leased Costs Return
------------ ------- ------- -------- -----------
Held for Rental:
4th Quarter 2000 2,516 45% $180,844 11.4%
1st Quarter 2001 2,287 39% 115,400 11.5%
2nd Quarter 2001 1,043 0% 69,822 11.9%
Thereafter 128 0% 13,148 12.0%
----- -------
5,974 34% $379,214 11.6%
===== =======
Build-to-Suit for Sale:
4th Quarter 2000 - 0% $ -
1st Quarter 2001 291 54% 24,747
2nd Quarter 2001 488 68% 34,642
Thereafter 1,157 100% 97,996
----- -------
1,936 85% $157,385
===== =======
Total 7,910 46% $536,599
===== =======
- 14 -
<PAGE>
MERGER WITH WEEKS CORPORATION
-----------------------------
In July 1999, Weeks Corporation ("Weeks"), a self-administered,
self-managed geographically focused Real Estate Investment Trust
("REIT") which operated primarily in the southeastern United
States, was merged with and into Duke Realty Investments, Inc.
("Duke"). The combined company has continued under the name Duke-
Weeks Realty Corporation ("the Company"). The total purchase price
of Weeks aggregated approximately $1.9 billion, which included the
assumption of the outstanding debt and liabilities of Weeks of
approximately $775 million. The transaction was structured as a tax-
free merger and was accounted for under the purchase method.
The following summarized pro forma unaudited information represents
the combined historical operating results of Weeks and Duke with
the appropriate purchase accounting adjustments, assuming the
merger had occurred on January 1, 1999. The pro forma financial
information presented is not necessarily indicative of what the
Company's actual operating results would have been had Weeks and
Duke constituted a single entity during such periods (in thousands,
except per share amounts):
Nine Months Ended
September 30,
----------------------
2000 1999
---- ----
(Actual) (Pro Forma)
Rental income $528,617 $451,932
======= =======
Net income available
for common shareholders $139,533 $116,972
======= =======
Weighted average common
shares outstanding:
Basic 126,561 116,735
======= =======
Diluted 147,143 137,540
======= =======
Net income per common share:
Basic $ 1.10 $ 1.00
======= =======
Diluted $ 1.09 $ 0.99
======= =======
RESULTS OF OPERATIONS
---------------------
Following is a summary of the Company's operating results and
property statistics for the three and nine months ended September
30, 2000 and 1999 (in thousands, except number of properties and
per share amounts):
Three months ended Nine months ended
September 30, September 30,
------------------ ------------------
2000 1999 2000 1999
---- ---- ---- ----
Rental Operations revenue $185,760 $160,273 $538,902 $369,408
Service Operations revenue 21,903 15,402 61,009 36,562
Earnings from Rental Operations 58,345 60,072 168,318 136,080
Earnings from Service Operations 8,493 3,871 24,822 12,489
Operating income 61,013 59,317 177,641 136,832
Net income available for
common shares $ 45,149 $ 41,462 $139,533 $ 98,452
Weighted average common
shares outstanding 127,010 118,820 126,561 97,966
Weighted average common
and dilutive potential
common shares 147,916 138,923 147,143 112,106
Basic income per common share $ .36 $ .35 $ 1.10 $ 1.00
Diluted income per common share $ .35 $ .35 $ 1.09 $ 1.00
Number of in-service properties
at end of period 878 841 878 841
In-service square footage
at end of period 95,849 88,288 95,849 88,288
Under development square
footage at end of period 7,910 12,479 7,910 12,479
- 15 -
<PAGE>
Rental Operations
-----------------
Rental Operations revenue increased to $185.8 million from $160.3
million for the three months ended September 30, 2000, compared to
the same period in 1999. This increase is primarily due to the
increase in the number of in-service properties during the
respective periods. As of September 30, 2000, the Company had 878
properties in service compared to 841 properties at September 30,
1999. The following is a summary of the Company's acquisition and
development activity since January 1, 1999:
Square
Buildings Feet
--------- ------
Properties owned as of:
January 1, 1999 453 52,028
Weeks merger 335 28,569
Acquisitions 30 2,867
Developments placed in service 68 10,903
Dispositions (21) (1,890)
Building remeasurements - 25
--- ------
December 31, 1999 865 92,502
Acquisitions 2 169
Developments placed in service 57 9,561
Dispositions (46) (6,390)
Building remeasurements - 7
--- ------
September 30, 2000 878 95,849
=== ======
Rental property, real estate tax and depreciation and amortization
expenses increased for the three months ended September 30, 2000,
compared to the same period in 1999, due to the increase in the
number of in-service properties during the respective periods.
The $10.4 million increase in interest expense is primarily
attributable to higher outstanding debt balances associated with
the financing of the Company's investment activities. The increased
balances include $150 million of unsecured debt issued in the
fourth quarter of 1999, and increased borrowings on the Company's
lines of credit. These higher borrowing costs were partially
offset by the capitalization of interest on increased property
development activities.
As a result of the above-mentioned items, earnings from Rental
Operations decreased $1.8 million from $60.1 million for the three
months ended September 30, 1999, to $58.3 million for the three
months ended September 30, 2000.
Service Operations
------------------
Service Operations revenues increased by $6.5 million from $15.4
million for the three months ended September 30, 1999, to $21.9
million for the three months ended September 30, 2000, primarily as
a result of increases in construction and development income from
increased third-party construction.
- 16 -
<PAGE>
Service Operations operating expenses increased from $11.5 million
for the three months ended September 30, 1999, to $13.4 million for
the three months ended September 30, 2000, primarily due to
increases in payroll and maintenance expenses due to the overall
growth of the Company and the increased portfolio of buildings
associated with this growth.
As a result, earnings from Service Operations increased from $3.9
million for the three months ended September 30, 1999, to $8.5
million for the three months ended September 30, 2000.
Other Income and Expenses
-------------------------
Interest income increased from $699,000 for the three months ended
September 30, 1999, to $1.6 million for the same period in 2000
primarily through earnings on funds deposited in tax deferred
exchange escrows of $794,000.
The Company has a disposition strategy to pursue favorable
opportunities to dispose of real estate assets that no longer meet
long-term investment objectives of the Company, which resulted in
net sales proceeds of $130.8 million and a net gain of $4.5 million
during the three months ended September 30, 2000.
In conjunction with this disposition strategy, included in net real
estate investments are 35 buildings with a net book value of $130.3
million which were classified as held for sale by the Company at
September 30, 2000. The Company expects to complete these and other
dispositions and use the proceeds to fund future investments in
real estate assets.
Net Income Available for Common Shareholders
--------------------------------------------
Net income available for common shareholders for the three months
ended September 30, 2000, was $45.1 million compared to net income
available for common shareholders of $41.5 million for the three
months ended September 30, 1999. This increase results primarily
from the operating result fluctuations in rental and service
operations explained above.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2000 TO NINE MONTHS ENDED
SEPTEMBER 30, 1999
-----------------------------------------------------------------------
Rental Operations
-----------------
Rental Operations revenue increased to $538.9 million from $369.4
million for the nine months ended September 30, 2000, compared to
the same period in 1999. This increase is primarily due to the
increase in the number of in-service properties during the
respective periods, particularly, the revenues from the 335
buildings obtained in the Weeks Merger, for which nine months of
operations are included in 2000 compared to three months in 1999.
As of September 30, 2000, the Company had 878 properties in service
compared to 841 properties at September 30, 1999.
Rental property, real estate tax and depreciation and amortization
expenses increased for the nine months ended September 30, 2000,
compared to the same period in 1999 due to the increase in the
number of in-service properties during the respective periods.
- 17 -
<PAGE>
The $46.2 million increase in interest expense is primarily
attributable to higher outstanding debt balances associated with
the financing of the Company's investment activities. The increased
balances include $450 million of unsecured debt issued in 1999, the
assumption of $185 million of secured debt and $287 million of
unsecured debt in the merger with Weeks Corporation in July 1999,
and increased borrowings on the Company's lines of credit. These
higher borrowing costs were partially offset by the capitalization
of interest on increased property development activities.
As a result of the above-mentioned items, earnings from Rental
Operations increased $32.2 million from $136.1 million for the nine
months ended September 30, 1999, to $168.3 million for the nine
months ended September 30, 2000.
Service Operations
------------------
Service Operations revenues increased by $24.4 million from $36.6
million for the nine months ended September 30, 1999, to $61.0
million for the nine months ended September 30, 2000, primarily as
a result of increases in construction and development income from
increased third-party construction.
Service Operations operating expenses increased from $24.1 million
for the nine months ended September 30, 1999, to $36.2 million for
the nine months ended September 30, 2000, primarily due to
increases in payroll and maintenance expenses due to the overall
growth of the Company and the increased portfolio of buildings
associated with this growth.
As a result, earnings from Service Operations increased from $12.5
million for the nine months ended September 30, 1999, to $24.8
million for the nine months ended September 30, 2000.
Other Income and Expenses
-------------------------
Interest income increased from $1.8 million for the nine months
ended September 30, 1999, to $5.5 million for the same period in
2000 primarily through earnings on funds deposited in tax deferred
exchange escrows of $3.3 million.
The Company has a disposition strategy to pursue favorable
opportunities to dispose of real estate assets that no longer meet
long-term investment objectives of the Company, which resulted in
net sales proceeds of $345.1 million and a net gain of $22.6
million during the nine months ended September 30, 2000.
Net Income Available for Common Shareholders
--------------------------------------------
Net income available for common shareholders for the nine months
ended September 30, 2000 was $139.5 million compared $98.5 million
for the nine months ended September 30, 1999. This increase results
primarily from the operating result fluctuations in rental and
service operations explained above.
- 18 -
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities totaling $301.2 million
and $257.7 million for the nine months ended September 30, 2000 and
1999, 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.
Net cash used by investing activities totaling $243.6 million and
$570.2 million for the nine months ended September 30, 2000 and
1999, 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, net of
proceeds received from property sales.
Net cash provided (used) by (for) financing activities totaling
($35.0) million and $350.8 million for the nine months ended
September 30, 2000 and 1999, respectively, is comprised of debt and
equity issuances, net of distributions to shareholders and minority
interests and repayments of outstanding indebtedness. In the first
nine months of 2000, the Company received $22.7 million of net
proceeds from the issuance of common shares which was used to
reduce amounts outstanding under the Company's lines of credit and
to fund the development and acquisition of additional rental
properties.
In the first nine months of 1999, the Company received $203.4
million of net proceeds from the issuance of common shares, received
$96.5 million from the issuance of preferred shares and issued
$300.0 million of unsecured debt. The Company used the net proceeds
to reduce amounts outstanding under the Company's lines of credit
and to fund the development and acquisition of additional rental
properties.
The Company has the following lines of credit available (in
thousands):
Outstanding
Borrowing Maturity Interest at September
Description Capacity Date Rate 30, 2000
------------------------ --------- -------- ------------ ------------
Unsecured Line of Credit $450,000 April 2001 LIBOR + .70% $436,000
Unsecured Line of Credit $300,000 June 2001 LIBOR + .90% $ 30,000
Secured Line of Credit $150,000 January 2003 LIBOR + 1.05% $ 32,026
The lines of credit are used to fund development and acquisition of
additional rental properties and to provide working capital.
The $450 million line of credit allows the Company an option to
obtain borrowings from the financial institutions that participate
in the line of credit at rates lower than the stated interest rate,
subject to certain restrictions. Amounts outstanding on the line of
credit at September 30, 2000 are at LIBOR + .51% to .70%.
The Company currently has on file one Form S-3 Registration
Statement with the Securities and Exchange Commission ("Shelf
Registration") which has remaining availability as of September 30,
2000 of $793.0 million to issue common stock, preferred stock or
unsecured debt securities. The Company intends to issue additional
equity or debt under this Shelf Registration as market conditions
change and capital needs arise to fund the development and
acquisition of additional rental properties. The Company also plans
to file additional shelf registrations as necessary.
- 19 -
<PAGE>
The total debt outstanding at September 30, 2000, consists of notes
totaling $2.2 billion with a weighted average interest rate of
7.31% maturing at various dates through 2028. The Company has $1.8
billion of unsecured debt and $448.1 million of secured debt
outstanding at September 30, 2000. Scheduled principal amortization
of such debt totaled $8.8 million for the nine months ended
September 30, 2000.
Following is a summary of the scheduled future amortization and
maturities of the Company's indebtedness at September 30, 2000 (in
thousands):
Future Repayments
-------------------------------------- Weighted Average
Scheduled Interest Rate of
Year Amortization Maturities Total Future Repayments
---- ------------ ---------- ----- -----------------
2000 $ 2,750 $ - $ 2,750 7.31%
2001 11,605 645,381 656,986 7.31%
2002 11,836 55,037 66,873 7.36%
2003 11,433 313,239 324,672 7.71%
2004 9,893 176,146 186,039 7.41%
2005 8,654 213,662 222,316 7.25%
2006 7,725 146,178 153,903 7.12%
2007 5,802 116,579 122,381 7.13%
2008 4,756 100,000 104,756 6.77%
2009 5,099 150,000 155,099 7.73%
Thereafter 29,990 175,000 204,990 6.88%
------- --------- ---------
Total $109,543 $2,091,222 $2,200,765 7.31%
======= ========= =========
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 depreciated property, plus operating
property depreciation and amortization and adjustments for minority
interest and unconsolidated companies 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 three and nine months ended September 30 as follows (in
thousands):
Three months ended Nine months ended
September 30, September 30,
------------------ ----------------
2000 1999 2000 1999
---- ---- ---- ----
Net income available
for common shares $ 45,149 $ 41,462 $139,533 $ 98,452
Add back:
Depreciation and
amortization 41,884 32,738 121,429 74,127
Share of joint venture
adjustments 1,982 1,270 5,032 4,026
Earnings from depreciated
property sales (1,847) (2,406) (16,025) (5,804)
Minority interest share
of add-backs (5,501) (4,292) (14,482) (8,545)
------- ------- ------- -------
FUNDS FROM OPERATIONS $ 81,667 $ 68,772 $235,487 $162,256
======= ======= ======= =======
CASH FLOW PROVIDED BY
(USED BY):
Operating activities $126,913 $175,233 $301,055 $257,719
Investing activities 14,421 (251,822) (243,561) (570,183)
Financing activities (141,764) (50,873) (34,972) 350,796
The increase in FFO for the three and nine months ended September
30, 2000 compared to the three and nine months ended September 30,
1999, results primarily from the increased in-service rental
property portfolio as discussed above under "Results of
Operations."
- 20 -
<PAGE>
While management believes that FFO is the most relevant and widely
used measure of the Company's operating performance, such amount
does not represent cash flow from operations as defined by
generally accepted accounting principles, should not be considered
as an alternative to net income as an indicator of the Company's
operating performance, and is not indicative of cash available to
fund all cash flow needs.
ACCOUNTING CHANGES
In June 1998, the Financial Accounting Standards Board issued
Statement No. 133, "Accounting for Derivative Instruments and for
Hedging Activities," effective for fiscal years beginning after
June 15, 2000. The statement will require the Company to recognize
all derivatives on the balance sheet at fair value. Derivatives
that are not hedges must be adjusted to fair value through income.
If the derivative is a hedge, then depending on the nature of the
hedge, changes in the fair value will either be offset through
earnings, against the change in fair value of hedged assets,
liabilities or firm commitments or recognized in other
comprehensive income until the hedged item is recognized in income.
The ineffective portion of a hedge's change in fair value will be
immediately recognized in income. The adoption of this statement
will not have a material impact on the Company's financial
statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
--------------------------
None
Item 2. Changes in Securities
------------------------------
None
Item 3. Defaults upon Senior Securities
----------------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
None
Item 5. Other Information
--------------------------
When used in this Form 10-Q, the words "believes," "expects,"
"estimates" and similar expressions are intended to identify
forward looking-statements. Such statements are subject to certain
risks and uncertainties which could cause actual results to differ
materially. In particular, among the factors that could cause
actual results to differ materially are continued qualification as
a real estate investment trust, general business and economic
conditions, competition, increases in real estate construction
costs, interest rates, accessibility of debt and equity capital
markets and other risks inherent in the real estate business
including tenant defaults, potential liability relating to
- 21 -
<PAGE>
environmental matters and illiquidity of real estate investments.
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. Readers are also
advised to refer to the Company's Form 8-K Report as filed with the
U.S. Securities and Exchange Commission on March 29, 1996 for
additional information concerning these risks.
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
Exhibits
--------
Exhibit 15. Letter regarding unaudited interim financial information
Exhibit 27. Financial Data Schedule (EDGAR Filing Only)
Reports on Form 8-K
-------------------
None
- 22 -
<PAGE>
SIGNATURES
Pursuant to the requirements 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-WEEKS REALTY CORPORATION
----------------------------- Registrant
Date: November 13, 2000 /s/ Thomas L. Hefner
----------------- ------------------------------
President and
Chief Executive Officer
/s/ Darell E. Zink, Jr.
-----------------------------
Executive Vice President and
Chief Financial Officer
/s/ Dennis D. Oklak
-----------------------------
Executive Vice President and
Chief Administrative Officer
(Chief Accounting Officer)
- 23 -
