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DUKE REALTY CORP - Annual Report: 2012 (Form 10-K)



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
  X      ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2012
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 Realty Corporation) 0-20625 (Duke Realty Limited Partnership)
DUKE REALTY CORPORATION
DUKE REALTY LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in Its Charter)
 
Indiana (Duke Realty Corporation)
 
35-1740409 (Duke Realty Corporation)
Indiana (Duke Realty Limited Partnership)
 
35-1898425 (Duke Realty Limited Partnership)
(State or Other Jurisdiction of
Incorporation or Organization)
 
(IRS Employer
Identification Number)
600 East 96th Street, Suite 100
Indianapolis, Indiana
 
46240
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant's telephone number, including area code: (317) 808-6000
Securities registered pursuant to Section 12(b) of the Act:
 
 
Title of Each Class:
  
Name of Each Exchange on Which Registered:
Duke Realty Corporation
 
Common Stock ($.01 par value)
  
New York Stock Exchange
Duke Realty Corporation
 
Depositary Shares, each representing a 1/10 interest in a 6.625%
Series J Cumulative Redeemable Preferred Share ($.01 par value)
  
New York Stock Exchange
Duke Realty Corporation
 
Depositary Shares, each representing a 1/10 interest in a 6.5%
Series K Cumulative Redeemable Preferred Share ($.01 par value)
  
New York Stock Exchange
Duke Realty Corporation
 
Depositary Shares, each representing a 1/10 interest in a 6.6%
Series L Cumulative Redeemable Preferred Share ($.01 par value)
  
New York Stock Exchange
Duke Realty Corporation
 
Depositary Shares, each representing a 1/10 interest in an 8.375%
Series O Cumulative Redeemable Preferred Share ($.01 par value)
  
New York Stock Exchange
Duke Realty Limited Partnership
 
None
 
None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   
Duke Realty Corporation
Yes x
 No   o
 
Duke Realty Limited Partnership
Yes x
 No   o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    
Duke Realty Corporation
Yes  o
No  x
 
Duke Realty Limited Partnership
Yes  o
No  x
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.    
Duke Realty Corporation
Yes x
 No   o
 
Duke Realty Limited Partnership
Yes x
 No   o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Duke Realty Corporation
Yes x
 No   o
 
Duke Realty Limited Partnership
Yes x
 No   o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x







Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Duke Realty Corporation:
Large accelerated filer  x
Accelerated filer  o
Non-accelerated filer  o
Smaller reporting company  o
Duke Realty Limited Partnership:
Large accelerated filer  o
Accelerated filer  o
Non-accelerated filer  x
Smaller reporting company  o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Duke Realty Corporation
Yes  o
No  x
 
Duke Realty Limited Partnership
Yes  o
No  x
The aggregate market value of the voting shares of Duke Realty Corporation's outstanding common shares held by non-affiliates of Duke Realty Corporation is $3.9 billion based on the last reported sale price on June 30, 2012.
The number of common shares of Duke Realty Corporation, $.01 par value outstanding as of February 22, 2013 was 321,666,224.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of Duke Realty Corporation's Definitive Proxy Statement for its 2013 Annual Meeting of Shareholders (the "Proxy Statement") to be filed pursuant to Rule 14a-6 of the Securities Exchange Act of 1934, as amended, are incorporated by reference into this Form 10-K. Other than those portions of the Proxy Statement specifically incorporated by reference pursuant to Items 10 through 14 of Part III hereof, no other portions of the Proxy Statement shall be deemed so incorporated.



EXPLANATORY NOTE
This report combines the annual reports on Form 10-K for the year ended December 31, 2012 of both Duke Realty Corporation and Duke Realty Limited Partnership. Unless stated otherwise or the context otherwise requires, references to "Duke Realty Corporation" or the "General Partner" mean Duke Realty Corporation and its consolidated subsidiaries; and references to the "Partnership" mean Duke Realty Limited Partnership and its consolidated subsidiaries. The terms the "Company," "we," "us" and "our" refer to the General Partner and the Partnership, collectively, and those entities owned or controlled by the General Partner and/or the Partnership.
Duke Realty Corporation is a self-administered and self-managed real estate investment trust ("REIT") and is the sole general partner of the Partnership, owning 98.4% of the common partnership interests of the Partnership ("General Partner Units") as of December 31, 2012. The remaining 1.6% of the common partnership interests ("Limited Partner Units" and, together with the General Partner Units, the "Common Units") are owned by limited partners. As the sole general partner of the Partnership, the General Partner has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Partnership. The General Partner also owns preferred partnership interests in the Partnership ("Preferred Units").
The General Partner and the Partnership are operated as one enterprise. The management of the General Partner consists of the same members as the management of the Partnership. As the sole general partner with control of the Partnership, the General Partner consolidates the Partnership for financial reporting purposes, and the General Partner does not have any significant assets other than its investment in the Partnership. Therefore, the assets and liabilities of the General Partner and the Partnership are substantially the same.
We believe combining the annual reports on Form 10-K of the General Partner and the Partnership into this single report results in the following benefits:
enhances investors' understanding of the General Partner and the Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
eliminates duplicative disclosure and provides a more streamlined and readable presentation of information since a substantial portion of the Company's disclosure applies to both the General Partner and the Partnership; and
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.
We believe it is important to understand the few differences between the General Partner and the Partnership in the context of how we operate as an interrelated consolidated company. The General Partner's only material asset is its ownership of partnership interests in the Partnership. As a result, the General Partner does not conduct business itself, other than acting as the sole general partner of the Partnership and issuing public equity from time to time. The General Partner does not issue any indebtedness, but does guarantee the unsecured debt of the Partnership. The Partnership holds substantially all the assets of the business, directly or indirectly, and holds the ownership interests related to certain of the Company's investments. The Partnership conducts the operations of the business and has no publicly traded equity. Except for net proceeds from equity issuances by the General Partner, which are contributed to the Partnership in exchange for General Partner Units or Preferred Units, the Partnership generates the capital required by the business through its operations, its incurrence of indebtedness and the issuance of Limited Partner Units to third parties.
Noncontrolling interests, shareholders' equity and partners' capital are the main areas of difference between the consolidated financial statements of the General Partner and those of the Partnership. The noncontrolling interests in the Partnership's financial statements include the interests in consolidated investees not wholly owned by the Partnership. The noncontrolling interests in the General Partner's financial statements include the same noncontrolling interests at the Partnership level, as well as the common limited partnership interests in the Partnership, which are accounted for as partners' capital by the Partnership.



In order to highlight the differences between the General Partner and the Partnership, there are separate sections in this report, as applicable, that separately discuss the General Partner and the Partnership including separate financial statements, and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure of the General Partner and the Partnership, this report refers to actions or holdings as being actions or holdings of the collective Company.





TABLE OF CONTENTS
Form 10-K
Item No.
 
Page(s)
 
 
 
 
 
 
 
 
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1B.
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7
7A.
8
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9A.
9B.
 
 
 
 
 
 
 
 
10
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15
 
 
124 



IMPORTANT INFORMATION ABOUT THIS REPORT
In this Annual Report on Form 10-K (this "Report") for Duke Realty Corporation (the "General Partner") and Duke Realty Limited Partnership (the "Partnership"), the terms the "Company," "we," "us" and "our" refer to the General Partner and the Partnership, collectively, and those entities owned or controlled by the General Partner and/or the Partnership.
Cautionary Notice Regarding Forward-Looking Statements
Certain statements contained in or incorporated by reference into this Report, including, without limitation, those related to our future operations, constitute "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. The words "believe," "estimate," "expect," "anticipate," "intend," "plan," "seek," "may" and similar expressions or statements regarding future periods are intended to identify forward-looking statements.
These forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any predictions of future results, performance or achievements that we express or imply in this Report or in the information incorporated by reference into this Report. Some of the risks, uncertainties and other important factors that may affect future results include, among others: 
Changes in general economic and business conditions, including the financial condition of our tenants and the value of our real estate assets;
The General Partner's continued qualification as a real estate investment trust ("REIT") for U.S. federal income tax purposes;
Heightened competition for tenants and potential decreases in property occupancy;
Potential changes in the financial markets and interest rates;
Volatility in the General Partner's stock price and trading volume;
Our continuing ability to raise funds on favorable terms;
Our ability to successfully identify, acquire, develop and/or manage properties on terms that are favorable to us;
Potential increases in real estate construction costs;
Our ability to successfully dispose of properties on terms that are favorable to us, including, without limitation, through one or more transactions that are consistent with our previously disclosed strategic plans;
Our ability to retain our current credit ratings;
Inherent risks in the real estate business, including, but not limited to, tenant defaults, potential liability relating to environmental matters and liquidity of real estate investments; and
Other risks and uncertainties described herein, as well as those risks and uncertainties discussed from time to time in our other reports and other public filings with the Securities and Exchange Commission ("SEC").
Although we presently believe that the plans, expectations and results expressed in or suggested by the forward-looking statements are reasonable, all forward-looking statements are inherently subjective, uncertain and subject to change, as they involve substantial risks and uncertainties beyond our control. New factors emerge from time to time, and it is not possible for us to predict the nature, or assess the potential impact, of each new factor on our business. Given these uncertainties, we caution you to not place undue reliance on these forward-looking statements. We undertake no obligation to update or revise any of our forward-looking statements for events or circumstances that arise after the statement is made, except as otherwise may be required by law.

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This list of risks and uncertainties, however, is only a summary of some of the most important factors and is not intended to be exhaustive. Additional information regarding risk factors that may affect us is included under the caption "Risk Factors" in this Report, and is updated by us from time to time in Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings that we make with the SEC.
PART I
Item 1.  Business
Background
The General Partner is a self-administered and self-managed REIT, which began operations upon completion of an initial public offering in February 1986.
The Partnership was formed in October 1993, when the General Partner contributed all of its properties and related assets and liabilities, together with the net proceeds of $309.2 million from an offering of an additional 14,000,833 shares of its common stock, to the Partnership. Simultaneously, the Partnership completed the acquisition of Duke Associates, a full-service commercial real estate firm operating in the Midwest whose operations began in 1972. The General Partner is the sole general partner of the Partnership owning 98.4% of the common Partnership interests ("General Partner Units") as of December 31, 2012. The remaining 1.6% of the common Partnership interests ("Limited Partner Units" and, together with the General Partner Units, the "Common Units") are owned by limited partners. Limited Partners have the right to redeem their Limited Partner Units, subject to certain restrictions. Pursuant to the Fourth Amended and Restated Agreement of Limited Partnership, as amended (the "Partnership Agreement"), the General Partner is obligated to redeem the Limited Partner Units in shares of its common stock, unless it determines in its reasonable discretion that the issuance of shares of its common stock could cause it to fail to qualify as a REIT. Each Limited Partner Unit shall be redeemed for one share of the General Partner's common stock, or, in the event that the issuance of shares could cause the General Partner to fail to qualify as a REIT, cash equal to the fair market value of one share of the General Partner's common stock at the time of redemption, in each case, subject to certain adjustments described in the Partnership Agreement. The Limited Partner Units are not required, per the terms of the Partnership Agreement, to be redeemed in registered shares of the General Partner. The General Partner also owns preferred partnership interests in the Partnership ("Preferred Units" and, together with the Common Units, the "Units").
As of December 31, 2012, our diversified portfolio of 774 rental properties (including 126 jointly controlled in-service properties with more than 25.6 million square feet, 17 consolidated properties under development with approximately 3.6 million square feet and two jointly controlled properties under development with approximately 874,000 square feet) encompasses more than 145.6 million rentable square feet and is leased by a diverse base of approximately 3,100 tenants whose businesses include government services, manufacturing, retailing, wholesale trade, distribution, healthcare and professional services. We also own, including through ownership interests in unconsolidated joint ventures, more than 4,600 acres of land and control an additional 1,600 acres through purchase options.
Our headquarters and executive offices are located in Indianapolis, Indiana. In addition, we have 17 regional offices or significant operations in Alexandria, Virginia; Atlanta, Georgia; Baltimore, Maryland; Chicago, Illinois; Cincinnati, Ohio; Columbus, Ohio; Dallas, Texas; Houston, Texas; Minneapolis, Minnesota; Nashville, Tennessee; Orlando, Florida; Phoenix, Arizona; Raleigh, North Carolina; St. Louis, Missouri; Savannah, Georgia; Tampa, Florida; and Weston, Florida. We had more than 840 employees as of December 31, 2012.
See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for information related to our operational, asset and capital strategies.
Reportable Operating Segments
We have four reportable operating segments at December 31, 2012, the first three of which consist of the ownership and rental of (i) industrial, (ii) office and (iii) medical office real estate investments. The operations of our industrial, office and medical office properties, along with our retail properties, are collectively referred to as "Rental Operations." Our retail properties, as well as any other properties not included in our reportable segments,

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do not by themselves meet the quantitative thresholds for separate presentation as reportable segments. The fourth reportable segment consists of various real estate services such as property management, asset management, maintenance, leasing, development, general contractor and construction management to third-party property owners and joint ventures, and is collectively referred to as "Service Operations." Our reportable segments offer different products or services and are managed separately because each segment requires different operating strategies and management expertise. Our Service Operations segment also includes our taxable REIT subsidiary, a legal entity through which certain of the segment's aforementioned operations are conducted.
During 2012, one of the quantitative thresholds was triggered, whereby the assets of our medical office property operating segment exceeded 10% of total assets, which required our medical office property operating segment to be presented as a separate reportable segment. As such, our medical office properties are presented as a separate reportable segment for the year ended December 31, 2012, as well as for the comparative prior periods.
We assess and measure our overall operating results based upon an industry performance measure referred to as Funds From Operations ("FFO"), which management believes is a useful indicator of our consolidated operating performance. See Item 6, "Selected Financial Data," Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Item 8, "Financial Statements and Supplementary Data" for disclosures and financial information related to our use of FFO as an internal measure of operating performance.
See Item 6, "Selected Financial Data," Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Item 8, "Financial Statements and Supplementary Data" for financial information related to our reportable segments.
Competitive Conditions
As a fully integrated commercial real estate firm, we provide in-house leasing, management, development and construction services which we believe, coupled with our significant base of commercially zoned and unencumbered land in existing business parks, should give us a competitive advantage as a real estate operator and in future development activities.
We believe that the management of real estate opportunities and risks can be done most effectively at regional or on local levels. As a result, we intend to continue our emphasis on increasing our market share, in alignment with our asset strategy (see Item 7), and effective rents in the primary markets where we own properties. We believe that this regional focus will allow us to assess market supply and demand for real estate more effectively as well as to capitalize on the strong relationships with our tenant base. In addition, we seek to further capitalize on strong customer relationships to provide third-party construction services across the United States. As a fully integrated real estate company, we are able to arrange for or provide to our industrial, office and medical office customers not only well located and well maintained facilities, but also additional services such as build-to-suit construction, tenant finish construction, and expansion flexibility.
All of our properties are located in areas that include competitive properties. Institutional investors, other REITs or local real estate operators generally own such properties; however, no single competitor or small group of competitors is dominant in our current markets. The supply and demand of similar available rental properties may affect the rental rates we will receive on our properties. Other competitive factors include the attractiveness of the property location, the quality of the property and tenant services provided, and the reputation of the owner and operator. In addition, our Service Operations face competition from a considerable number of other real estate companies that provide comparable services, some of whom may have greater marketing and financial resources than are available to us.
Corporate Governance
Since our inception, we not only have strived to be a top-performer operationally, but also to lead in issues important to investors such as disclosure and corporate governance. The General Partner's system of governance reinforces this commitment and, as a limited partnership that has one general partner owning over 90% of the Partnership's common interest, the governance of the Partnership is necessarily linked to the corporate governance of the General Partner. Summarized below are the highlights of the General Partner's Corporate Governance initiatives. 

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Board Composition
  
• The General Partner's Board is controlled by supermajority (91.7%) of "Independent Directors," as such term is defined under the rules of the New York Stock Exchange (the "NYSE") as of January 30, 2013 and thereafter
 
 
Board Committees
  
• The General Partner's Board Committee members are all Independent Directors
 
 
Lead Director
  
• The Chairman of the General Partner's Corporate Governance Committee serves as Lead Director of the Independent Directors
 
 
Board Policies
  
  No Shareholder Rights Plan (Poison Pill)
  Code of Conduct applies to all Directors and employees of the General Partner, including the Chief Executive Officer and senior financial officers; waivers applied to executive officers require the vote of a majority of (i) the General Partner's Board of Directors or (ii) the General Partner's Corporate Governance Committee
  Orientation program for new Directors of the General Partner
  Independence of Directors of the General Partner is reviewed annually
  Independent Directors of the General Partner meet at least quarterly in executive sessions
  Independent Directors of the General Partner receive no compensation from the General Partner other than as Directors
  Equity-based compensation plans require the approval of the General Partner's shareholders
  Board effectiveness and performance is reviewed annually by the General Partner's Corporate Governance Committee
  The General Partner's Executive Compensation Committee conducts an annual review, as delegated by the Corporate Governance Committee, of the Chief Executive Officer succession plan
  Independent Directors and all Board Committees of the General Partner may retain outside advisors, as they deem appropriate
  Policy governing retirement age for Directors of the General Partner
  Prohibition on repricing of outstanding stock options of the General Partner
  Directors of the General Partner required to offer resignation upon job change
  Majority voting for election of Directors of the General Partner
  Shareholder Communications Policy

 
 
 
Ownership
 
Minimum Stock Ownership Guidelines apply to all Directors and Executive Officers of the General Partner
The General Partner's Code of Conduct (which applies to all Directors and employees of the General Partner, including the Chief Executive Officer and senior financial officers) and the Corporate Governance Guidelines are available in the Investor Relations/Corporate Governance section of the General Partner's website at www.dukerealty.com. A copy of these documents may also be obtained without charge by writing to Duke Realty Corporation, 600 East 96th Street, Suite 100, Indianapolis, Indiana 46240, Attention: Investor Relations. If we amend our Code of Conduct as it applies to the Directors, Chief Executive Officer or senior financial officers of the General Partner or grant a waiver from any provision of the Code of Conduct to any such person, we may, rather than filing a current report on Form 8-K, disclose such amendment or waiver in the Investor Relations/Corporate Governance section of the General Partner's website at www.dukerealty.com.
Recent Federal Income Tax Developments
New Tax Rates for U.S. Individuals, Estates and Trusts
On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, or the 2012 Relief Act, which, among other things, permanently extends most of the reduced rates for U.S. individuals, estates and

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trusts with respect to ordinary income, qualified dividends and capital gains that had expired on December 31, 2012. The 2012 Relief Act, however, does not extend all of the reduced rates for high-income taxpayers. Beginning January 1, 2013, in the case of married couples filing joint returns with taxable income in excess of $450,000, heads of households with taxable income in excess of $425,000 and other individuals with taxable income in excess of $400,000, the maximum rates on ordinary income will be 39.6% (as compared to 35% prior to 2013) and the maximum rates on long-term capital gains and qualified dividend income will be 20% (as compared to 15% prior to 2013). REIT dividends generally are not treated as qualified dividend income. Estates and trusts have more compressed rate schedules. Shareholders of the General Partner are urged to consult their tax advisors regarding the effect of the new tax rates and other tax provisions in the 2012 Relief Act on an investment in the General Partner's common stock.
Unearned Income Medicare Tax
Under the Health Care and Education Reconciliation Act of 2010, amending the Patient Protection and Affordable Care Act, high-income U.S. individuals, estates, and trusts will be subject to an additional 3.8% tax on net investment income in tax years beginning after December 31, 2012. For these purposes, net investment income includes dividends and gains from sales of stock. In the case of an individual, the tax will be 3.8% of the lesser of the individuals' net investment income or the excess of the individuals' modified adjusted gross income over $250,000 in the case of a married individual filing a joint return or a surviving spouse, $125,000 in the case of a married individual filing a separate return, or $200,000 in the case of a single individual. U.S. shareholders that are individuals, estates or trusts should consult their tax advisors regarding the effect, if any, of this legislation on their ownership and disposition of the General Partner's common stock.
Recent Changes in U.S. Federal Income Tax Withholding
After December 31, 2013, withholding at a rate of 30% will be required on dividends in respect of, and after December 31, 2016, withholding at a rate of 30% will be required on gross proceeds from the sale of shares of the General Partner's common stock held by or through certain foreign financial institutions (including investment funds), unless such institution enters into an agreement with the Secretary of the Treasury (unless alternative procedures apply pursuant to an applicable intergovernmental agreement between the United States and the relevant foreign government) to report, on an annual basis, information with respect to shares in, and accounts maintained by, the institution to the extent such shares or accounts are held by certain U.S. persons or by certain non-U.S. entities that are wholly or partially owned by U.S. persons. Accordingly, the entity through which the General Partner's shares are held will affect the determination of whether such withholding is required. Similarly, after December 31, 2013, dividends in respect of, and after December 31, 2016, gross proceeds from the sale of, the General Partner's shares held by an investor that is a non-financial non-U.S. entity will be subject to withholding at a rate of 30%, unless such entity either (i) certifies to the General Partner that such entity does not have any “substantial U.S. owners” or (ii) provides certain information regarding the entity's “substantial U.S. owners,” which the General Partner will in turn provide to the Secretary of the Treasury. Non-U.S. shareholders of the General Partner are encouraged to consult with their tax advisers regarding the possible implications of these rules on their investment in the General Partner's common stock.
Additional Information
For additional information regarding our investments and operations, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Item 8, "Financial Statements and Supplementary Data." For additional information about our business segments, see Item 8, "Financial Statements and Supplementary Data."
Available Information and Exchange Certifications
In addition to this Report, we file quarterly and current reports, proxy statements and other information with the SEC. All documents that are filed with the SEC are available free of charge on the General Partner's corporate website, which is www.dukerealty.com. We are not incorporating the information on the General Partner's website into this Report, and the General Partner's website and the information appearing on the General Partner's website is not included in, and is not part of, this Report. You may also read and copy any document filed at the public

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reference facilities of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 for further information about the public reference facilities. These documents also may be accessed through the SEC's Interactive Data Electronic Application ("IDEA") via the SEC's home page on the Internet (http://www.sec.gov). In addition, since some of the General Partner's securities are listed on the NYSE, you may read the General Partner's SEC filings at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
Item 1A. Risk Factors
In addition to the other information contained in this Report, you should carefully consider, in consultation with your legal, financial and other professional advisors, the risks described below, as well as the risk factors and uncertainties discussed in our other public filings with the SEC under the caption "Risk Factors" in evaluating us and our business before making a decision regarding an investment in the General Partner's securities.
The risks contained in this Report are not the only risks that we face. Additional risks that are not presently known, or that we presently deem to be immaterial, also could have a material adverse effect on our financial condition, results of operations, business and prospects. The trading price of the General Partner's securities could decline due to the materialization of any of these risks, and its shareholders and/or the Partnership's unitholders may lose all or part of their investment.
This Report also contains forward-looking statements that may not be realized as a result of certain factors, including, but not limited to, the risks described herein and in our other public filings with the SEC. Please refer to the section in this Report entitled "Cautionary Notice Regarding Forward-Looking Statements" for additional information regarding forward-looking statements.
Risks Related to Our Business
Our use of debt financing could have a material adverse effect on our financial condition.
We are subject to the risks normally associated with debt financing, including the risk that our cash flow will be insufficient to meet required principal and interest payments and the long-term risk that we will be unable to refinance our existing indebtedness, or that the terms of such refinancing will not be as favorable as the terms of existing indebtedness. Additionally, we may not be able to refinance borrowings by our unconsolidated subsidiaries on favorable terms or at all. If our debt cannot be paid, refinanced or extended, we may not be able to make distributions to shareholders and unitholders at expected levels. Further, if prevailing interest rates or other factors at the time of a refinancing result in higher interest rates or other restrictive financial covenants upon the refinancing, then such refinancing would adversely affect our cash flow and funds available for operation, development and distribution.
We are also subject to financial covenants under our existing debt instruments. Should we fail to comply with the covenants in our existing debt instruments, then we would not only be in breach under the applicable debt instruments but we would also likely be unable to borrow any further amounts under our other debt instruments, which could adversely affect our ability to fund operations. We also have incurred, and may incur in the future, indebtedness that bears interest at variable rates. Thus, if market interest rates increase, so will our interest expense, which could reduce our cash flow and our ability to make distributions to shareholders and unitholders at expected levels.
Debt financing may not be available and equity issuances could be dilutive to our shareholders and unitholders.
Our ability to execute our business strategy depends on our access to an appropriate blend of debt financing, including unsecured lines of credit and other forms of secured and unsecured debt, and equity financing, including common and preferred equity issued by the General Partner. Debt financing may not be available over a longer period of time in sufficient amounts, on favorable terms or at all. If the General Partner issues additional equity securities, instead of debt, to manage capital needs, the interests of our existing shareholders and unitholders could be diluted.

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Financial and other covenants under existing credit agreements could limit our flexibility and adversely affect our financial condition.
The terms of our various credit agreements and other indebtedness require that we comply with a number of customary financial and other covenants, such as maintaining debt service coverage and leverage ratios and maintaining insurance coverage. These covenants may limit our flexibility in our operations, and breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness even if we have satisfied our payment obligations. If we are unable to refinance our indebtedness at maturity or meet our payment obligations, the amount of our distributable cash flow would be adversely affected.
Downgrades in our credit ratings could increase our borrowing costs or reduce our access to funding sources in the credit and capital markets.
We have a significant amount of debt outstanding, consisting mostly of unsecured debt. We are currently assigned corporate credit ratings from Moody's Investors Service, Inc. and Standard and Poor's Ratings Group based on their evaluation of our creditworthiness. All of our debt ratings remain investment grade, but there can be no assurance that we will not be downgraded or that any of our ratings will remain investment grade. If our credit ratings are downgraded or other negative action is taken, we could be required, among other things, to pay additional interest and fees on outstanding borrowings under our revolving credit agreement.
Credit rating reductions by one or more rating agencies could also adversely affect our access to funding sources, the cost and other terms of obtaining funding as well as our overall financial condition, operating results and cash flow.
If we are unable to generate sufficient capital and liquidity, then we may be unable to pursue future development projects and other strategic initiatives.
To complete our ongoing and planned development projects, and to pursue our other strategic initiatives, we must continue to generate sufficient capital and liquidity to fund those activities. To generate that capital and liquidity, we rely upon funds from our existing operations, as well as funds that we raise through our capital raising activities. In the event that we are unable to generate sufficient capital and liquidity to meet our long-term needs, or if we are unable to generate capital and liquidity on terms that are favorable to us, then we may not be able to pursue development projects, acquisitions, or our other long-term strategic initiatives.
The General Partner's stock price and trading volume may be volatile, which could result in substantial losses to its shareholders and to the Partnership's unitholders, if and when they convert their Limited Partner Units to shares of the General Partner's common stock.
The market price of the General Partner's common and preferred stock could change in ways that may or may not be related to our business, our industry or our operating performance and financial condition. In addition, the trading volume in the General Partner's common stock may fluctuate and cause significant price variations to occur. Some of the factors that could negatively affect the General Partner's share price, or result in fluctuations in the price or trading volume of the General Partner's common stock, include uncertainty in the markets, general market and economic conditions, as well as those factors described in these "Risk Factors" and in other reports that we file with the SEC.
Many of these factors are beyond our control, and we cannot predict their potential effects on the price of the General Partner's common and preferred stock. If the market prices of the General Partner's common and preferred stock decline, then its shareholders and the Partnership's unitholders, respectively, may be unable to resell their shares and units upon terms that are attractive to them. We cannot assure that the market price of the General Partner's common and preferred stock will not fluctuate or decline significantly in the future. In addition, the securities markets in general may experience considerable unexpected price and volume fluctuations.


-8-


We may issue debt and equity securities which are senior to the General Partner's common stock and preferred stock as to distributions and in liquidation, which could negatively affect the value of the General Partner's common and preferred stock and the Partnership's Common Units and Preferred Units.
In the future, we may attempt to increase our capital resources by entering into debt or debt-like financing that is unsecured or secured by certain of our assets, or by issuing debt or equity securities, which could include issuances of secured or unsecured commercial paper, medium-term notes, senior notes, subordinated notes, preferred stock or common stock. In the event of our liquidation, our lenders and holders of our debt securities would receive a distribution of our available assets before distributions to the holders of the General Partner's common stock and preferred stock and the Partnership's Common Units and Preferred Units. The General Partner's preferred stock and the Partnership's Preferred Units have a preference over the General Partner's common stock and the Partnership's Common Units with respect to distributions and upon liquidation, which could further limit our ability to make distributions to our common shareholders and unitholders. Any additional preferred stock or Preferred Units that the General Partner or the Partnership may issue may have a preference over the General Partner's common stock and existing series of preferred stock, as well as the Partnership's Common Units and Preferred Units, with respect to distributions and upon liquidation.
We may be required to seek commercial credit and issue debt securities to manage our capital needs. Because our decision to incur debt and issue securities in our future offerings will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings and debt financings. Further, market conditions could require us to accept less favorable terms for the issuance of our securities in the future. Thus, our shareholders and unitholders, respectively, will bear the risk of our future offerings reducing the value of their shares of common stock and Common Units and diluting their interest in us.
Our use of joint ventures may negatively impact our jointly-owned investments.
We currently have joint ventures that are not consolidated with our financial statements. We may develop and acquire properties in joint ventures with other persons or entities when circumstances warrant the use of these structures. Our participation in joint ventures is subject to the risks that: 
We could become engaged in a dispute with any of our joint venture partners that might affect our ability to develop or operate a property;
Our joint venture partners may have different objectives than we have regarding the appropriate timing and terms of any sale or refinancing of properties;
Our joint venture partners may have competing interests in our markets that could create conflict of interest issues; and
Maturities of debt encumbering our jointly owned investments may not be able to be refinanced at all or on terms that are as favorable as the current terms.
Risks Related to the Real Estate Industry
Our net earnings available for investment or distribution to shareholders and unitholders could decrease as a result of factors related to the ownership and operation of commercial real estate that are outside of our control.
Our business is subject to the risks incident to the ownership and operation of commercial real estate, many of which involve circumstances not within our control. Such risks include the following: 
Changes in the general economic climate;
The availability of capital on favorable terms, or at all;
Increases in interest rates;
Local conditions such as oversupply of property or a reduction in demand;

-9-


Competition for tenants;
Changes in market rental rates;
Oversupply or reduced demand for space in the areas where our properties are located;
Delay or inability to collect rent from tenants who are bankrupt, insolvent or otherwise unwilling or unable to pay;
Difficulty in leasing or re-leasing space quickly or on favorable terms;
Costs associated with periodically renovating, repairing and reletting rental space;
Our ability to provide adequate maintenance and insurance on our properties;
Our ability to control variable operating costs;
Changes in government regulations; and
Potential liability under, and changes in, environmental, zoning, tax and other laws.
Further, a significant portion of our costs, such as real estate taxes, insurance and maintenance costs and our debt service payments, are generally not reduced when circumstances cause a decrease in cash flow from our properties. Any one or more of these factors could result in a reduction in our net earnings available for investment or distribution to shareholders and unitholders.
Many real estate costs are fixed, even if income from properties decreases.
Our financial results depend on leasing space in our real estate to tenants on terms favorable to us. Our income and funds available for distribution to our shareholders and unitholders will decrease if a significant number of our tenants cannot meet their lease obligations to us or we are unable to lease properties on favorable terms. In addition, if a tenant does not pay its rent, we may not be able to enforce our rights as landlord without delays and we may incur substantial legal costs. Costs associated with real estate investment, such as real estate taxes and maintenance costs, generally are not reduced when circumstances cause a reduction in income from the investment.
Our real estate development activities are subject to risks particular to development.
We continue to selectively develop new, pre-leased properties for rental operations in our existing markets when accretive returns are present. These development activities generally require various government and other approvals, which we may not receive. In addition, we also are subject to the following risks associated with development activities: 
Unsuccessful development opportunities could result in direct expenses to us;
Construction costs of a project may exceed original estimates, possibly making the project less profitable than originally estimated, or possibly unprofitable;
Time required to complete the construction of a project or to lease up the completed project may be greater than originally anticipated, thereby adversely affecting our cash flow and liquidity;
Occupancy rates and rents of a completed project may not be sufficient to make the project profitable; and
Favorable sources to fund our development activities may not be available.
We may be unsuccessful in operating completed real estate projects.
We face the risk that the real estate projects we develop or acquire will not perform in accordance with our expectations. This risk exists because of factors such as the following: 
Prices paid for acquired facilities are based upon a series of market judgments; and

-10-


Costs of any improvements required to bring an acquired facility up to standards to establish the market position intended for that facility might exceed budgeted costs.
We are exposed to the risks of defaults by tenants.
Any of our tenants may experience a downturn in their businesses that may weaken their financial condition. In the event of default or the insolvency of a significant number of our tenants, we may experience a substantial loss of rental revenue and/or delays in collecting rent and incur substantial costs in enforcing our rights as landlord. If a tenant files for bankruptcy protection, a court could allow the tenant to reject and terminate its lease with us. Our income and distributable cash flow would be adversely affected if a significant number of our tenants became unable to meet their obligations to us, became insolvent or declared bankruptcy.
We may be unable to renew leases or relet space.
When our tenants decide not to renew their leases upon their expiration, we may not be able to relet the space. Even if our tenants do renew or we are able to relet the space, the terms of renewal or reletting (including the cost of renovations, if necessary) may be less favorable than current lease terms. If we are unable to promptly renew the leases or relet the space, or if the rental rates upon such renewal or reletting are significantly lower than current rates, then our income and distributable cash flow would be adversely affected, especially if we were unable to lease a significant amount of the space vacated by tenants in our properties.
Our insurance coverage on our properties may be inadequate.
We maintain comprehensive insurance on each of our facilities, including property, liability, and environmental coverage. We believe this coverage is of the type and amount customarily obtained for real property. However, there are certain types of losses, generally of a catastrophic nature, such as hurricanes, earthquakes and floods or acts of war or terrorism that may be uninsurable or not economically insurable. We use our discretion when determining amounts, coverage limits and deductibles for insurance. These terms are determined based on retaining an acceptable level of risk at a reasonable cost. This may result in insurance coverage that in the event of a substantial loss would not be sufficient to pay the full current replacement cost of our lost investment. Inflation, changes in building codes and ordinances, environmental considerations and other factors also may make it unfeasible to use insurance proceeds to replace a facility after it has been damaged or destroyed. Under such circumstances, the insurance proceeds we receive may not be adequate to restore our economic position in a property. If an insured loss occurred, we could lose both our investment in and anticipated profits and cash flow from a property, and we would continue to be obligated on any mortgage indebtedness or other obligations related to the property. We are also subject to the risk that our insurance providers may be unwilling or unable to pay our claims when made.
Our acquisition and disposition activity may lead to long-term dilution.
Our asset strategy is to reposition our investment concentration among product types and further diversify our geographic presence. There can be no assurance that we will be able to execute the repositioning of our assets according to our strategy or that our execution will lead to improved results.
Acquired properties may expose us to unknown liability.
From time to time, we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities. As a result, if a liability were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle or contest it, which could adversely affect our results of operations and cash flow. Unknown liabilities with respect to acquired properties might include: 
liabilities for clean-up of undisclosed environmental contamination;
claims by tenants, vendors or other persons against the former owners of the properties;
liabilities incurred in the ordinary course of business; and
claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties.

-11-


We could be exposed to significant environmental liabilities as a result of conditions of which we currently are not aware.
As an owner and operator of real property, we may be liable under various federal, state and local laws for the costs of removal or remediation of certain hazardous substances released on or in our property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of the hazardous substances. In addition, we could have greater difficulty in selling real estate on which hazardous substances were present or in obtaining borrowings using such real estate as collateral. It is our general policy to have Phase I environmental audits performed for all of our properties and land by qualified environmental consultants at the time of purchase. These Phase I environmental audits have not revealed any environmental liability that would have a material adverse effect on our business. However, a Phase I environmental audit does not involve invasive procedures such as soil sampling or ground water analysis, and we cannot be sure that the Phase I environmental audits did not fail to reveal a significant environmental liability or that a prior owner did not create a material environmental condition on our properties or land which has not yet been discovered. We could also incur environmental liability as a result of future uses or conditions of such real estate or changes in applicable environmental laws.
We are exposed to the potential impacts of future climate change and climate-change related risks.
We are exposed to potential physical risks from possible future changes in climate. Our properties may be exposed to rare catastrophic weather events, such as severe storms and/or floods. If the frequency of extreme weather events increases due to climate change, our exposure to these events could increase.
We do not currently consider that we are exposed to regulatory risk related to climate change. However, we may be adversely impacted as a real estate developer in the future by stricter energy efficiency standards for buildings.
Risks Related to Our Organization and Structure
If the General Partner were to cease to qualify as a REIT, it and its shareholders would lose significant tax benefits.
The General Partner intends to continue to operate so as to qualify as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"). Qualification as a REIT provides significant tax advantages to the General Partner and its shareholders. However, in order for the General Partner to continue to qualify as a REIT, it must satisfy numerous requirements established under highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. Satisfaction of these requirements also depends on various factual circumstances not entirely within our control. The fact that the General Partner holds its assets through the Partnership further complicates the application of the REIT requirements. Even a technical or inadvertent mistake could jeopardize the General Partner's REIT status. Although we believe that the General Partner can continue to operate so as to qualify as a REIT, we cannot offer any assurance that it will continue to do so or that legislation, new regulations, administrative interpretations or court decisions will not significantly change the qualification requirements or the federal income tax consequences of qualification. If the General Partner were to fail to qualify as a REIT in any taxable year, it would have the following effects: 
The General Partner would not be allowed a deduction for distributions to shareholders and would be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates;
Unless the General Partner was entitled to relief under certain statutory provisions, it would be disqualified from treatment as a REIT for the four taxable years following the year during which it ceased to qualify as a REIT;
The General Partner's net earnings available for investment or distribution to its shareholders would decrease due to the additional tax liability for the year or years involved; and
The General Partner would no longer be required to make any distributions to shareholders in order to qualify as a REIT.

-12-


As such, the General Partner's failure to qualify as a REIT would likely have a significant adverse effect on the value of the General Partner's securities and, consequently, the Partnerhip's Units.
REIT distribution requirements limit the amount of cash we have available for other business purposes, including amounts that we need to fund our future capital needs.
To maintain its qualification as a REIT under the Code, the General Partner must annually distribute to its shareholders at least 90% of its REIT taxable income, determined without regard to the dividends-paid deduction and excluding net capital gains. The General Partner intends to continue to make distributions to its shareholders to comply with the 90% distribution requirement. However, this requirement limits our ability to accumulate capital for use for other business purposes. If we do not have sufficient cash or other liquid assets to meet the distribution requirements of the General Partner, we may have to borrow funds or sell properties on adverse terms in order to meet the distribution requirements. If the General Partner fails to make a required distribution, it would cease to qualify as a REIT.
U.S. federal income tax treatment of REITs and investments in REITs may change, which may result in the loss of our tax benefits of operating as a REIT.
The present U.S. federal income tax treatment of a REIT and an investment in a REIT may be modified by legislative, judicial or administrative action at any time. Revisions in U.S. federal income tax laws and interpretations of these laws could adversely affect us and the tax consequences of an investment in the General Partner's common shares.
We are subject to certain provisions that could discourage change-of-control transactions, which may reduce the likelihood of the General Partner's shareholders receiving a control premium for their shares.
Indiana anti-takeover legislation and certain provisions in our governing documents, as we discuss below, may discourage potential acquirers from pursuing a change-of-control transaction with us. As a result, the General Partner's shareholders may be less likely to receive a control premium for their shares.
Unissued Preferred Stock. The General Partner's charter permits its board of directors to classify unissued preferred stock by setting the rights and preferences of the shares at the time of issuance. This power enables the General Partner's board to adopt a shareholder rights plan, also known as a poison pill. Although the General Partner has repealed its previously existing poison pill and its current board of directors has adopted a policy not to issue preferred stock as an anti-takeover measure, the General Partner's board can change this policy at any time. The adoption of a poison pill would discourage a potential bidder from acquiring a significant position in the General Partner without the approval of its board.
Business-Combination Provisions of Indiana Law. The General Partner has not opted out of the business-combination provisions of the Indiana Business Corporation Law. As a result, potential bidders may have to negotiate with the General Partner's board of directors before acquiring 10% of its stock. Without securing board approval of the proposed business combination before crossing the 10% ownership threshold, a bidder would not be permitted to complete a business combination for five years after becoming a 10% shareholder. Even after the five-year period, a business combination with the significant shareholder would either be required to meet certain per share price minimums as set forth in the Indiana Business Corporation Law or to receive the approval of a majority of the disinterested shareholders.
Control-Share-Acquisition Provisions of Indiana Law. The General Partner has not opted out of the provisions of the Indiana Business Corporation Law regarding acquisitions of control shares. Therefore, those who acquire a significant block (at least 20%) of the General Partner's shares may only vote a portion of their shares unless its other shareholders vote to accord full voting rights to the acquiring person. Moreover, if the other shareholders vote to give full voting rights with respect to the control shares and the acquiring person has acquired a majority of the General Partner's outstanding shares, the other shareholders would be entitled to special dissenters' rights.
Supermajority Voting Provisions. The General Partner's charter prohibits business combinations or significant disposition transactions with a holder of 10% of its shares unless: 

-13-


The holders of 80% of the General Partner's outstanding shares of capital stock approve the transaction;
The transaction has been approved by three-fourths of those directors who served on the General Partner's board before the shareholder became a 10% owner; or
The significant shareholder complies with the "fair price" provisions of the General Partner's charter.
Among the transactions with large shareholders requiring the supermajority shareholder approval are dispositions of assets with a value greater than or equal to $1,000,000 and business combinations.
Operating Partnership Provisions. The limited partnership agreement of the Partnership contains provisions that could discourage change-of-control transactions, including a requirement that holders of at least 90% of the outstanding Common Units approve: 
Any voluntary sale, exchange, merger, consolidation or other disposition of all or substantially all of the assets of the Partnership in one or more transactions other than a disposition occurring upon a financing or refinancing of the Partnership;
The General Partner's merger, consolidation or other business combination with another entity unless after the transaction substantially all of the assets of the surviving entity are contributed to the Partnership in exchange for Common Units;
The General Partner's assignment of its interests in the Partnership other than to one of its wholly-owned subsidiaries; and
Any reclassification or recapitalization or change of outstanding shares of the General Partner's common stock other than certain changes in par value, stock splits, stock dividends or combinations.
We are dependent on key personnel.
The General Partner's executive officers and other senior officers have a significant role in the success of our Company. Our ability to retain our management group or to attract suitable replacements should any members of the management group leave our Company is dependent on the competitive nature of the employment market. The loss of services from key members of the management group or a limitation in their availability could adversely impact our financial condition and cash flow. Further, such a loss could be negatively perceived in the capital markets.
Item 1B.  Unresolved Staff Comments
We have no unresolved comments with the SEC staff regarding our periodic or current reports under the Exchange Act.
Item 2.  Properties
Product Review
As of December 31, 2012, we own interests in a diversified portfolio of 774 commercial properties encompassing more than 145.6 million net rentable square feet (including 126 jointly controlled in-service properties with more than 25.6 million square feet, 17 consolidated properties under development with approximately 3.6 million square feet and two jointly controlled properties under development with approximately 874,000 square feet).
Industrial Properties: We own interests in 493 industrial properties encompassing more than 114.5 million square feet (79% of total square feet). These properties primarily consist of bulk warehouses (industrial warehouse/distribution centers with clear ceiling heights of 20 feet or more), but also include service center properties (also known as flex buildings or light industrial, having 12-18 foot clear ceiling heights and a combination of drive-up and dock-height loading access). Of these properties, 423 buildings with more than 96.7 million square feet are consolidated and 70 buildings with more than 17.8 million square feet are jointly controlled.
Office Properties: We own interests in 196 office buildings totaling approximately 23.5 million square feet (16% of total square feet). These properties include primarily suburban office properties. Of these properties, 142

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buildings with more than 16.1 million square feet are consolidated and 54 buildings with approximately 7.4 million square feet are jointly controlled.
Medical Office Properties: We own interests in 79 medical office buildings totaling more than 6.3 million square feet (4% of total square feet). Of these properties, 77 buildings with approximately 5.6 million square feet are consolidated and two buildings with more than 732,000 square feet are jointly controlled.
Other Properties: We own interests in six retail buildings totaling more than 1.3 million square feet (1% of total square feet). Of these properties, four buildings with more than 739,000 square feet are consolidated and two buildings with more than 588,000 square feet are jointly controlled.
Land: We own, including through ownership interests in unconsolidated joint ventures, more than 4,600 acres of land and control an additional 1,600 acres through purchase options.
Property Descriptions
The following tables represent the geographic highlights of consolidated and jointly controlled in-service properties in our primary markets.
Consolidated Properties
 
 
Square Feet
 
Annual Net
Effective
Rent (1)
 
Annual Net
Effective
Rent per Square Foot (2)
 
Percent of
Annual  Net
Effective
Rent
 
Industrial
 
Office
 
Medical Office
 
Other
 
Overall
 
Percent of
Overall
 
Primary Market
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indianapolis
14,963,778

 
2,725,386

 
1,060,704

 
38,366

 
18,788,234

 
16.3
%
 
$
99,655,595

 
$
5.53

 
15.7
%
Cincinnati
9,749,144

 
3,550,407

 
318,445

 

 
13,617,996

 
11.8
%
 
69,030,323

 
5.55

 
10.9
%
South Florida
4,689,788

 
1,406,411

 
107,000

 
390,942

 
6,594,141

 
5.7
%
 
59,410,628

 
10.19

 
9.4
%
Raleigh
2,800,680

 
2,416,512

 
356,836

 
20,061

 
5,594,089

 
4.8
%
 
52,284,609

 
9.76

 
8.2
%
Atlanta
8,389,151

 
468,285

 
789,095

 

 
9,646,531

 
8.4
%
 
46,044,007

 
5.39

 
7.2
%
Chicago
10,483,990

 
126,298

 
161,443

 

 
10,771,731

 
9.3
%
 
45,561,552

 
4.37

 
7.2
%
St. Louis
3,691,755

 
2,649,209

 

 

 
6,340,964

 
5.5
%
 
37,790,242

 
7.05

 
6.0
%
Nashville
3,252,010

 
989,249

 
120,660

 

 
4,361,919

 
3.8
%
 
33,457,754

 
8.07

 
5.3
%
Other (3)
2,063,810

 

 
748,738

 
289,855

 
3,102,403

 
2.7
%
 
33,056,503

 
12.12

 
5.2
%
Dallas
7,060,095

 

 
709,377

 

 
7,769,472

 
6.7
%
 
32,964,899

 
4.83

 
5.2
%
Columbus
7,685,162

 

 
73,238

 

 
7,758,400

 
6.7
%
 
24,588,137

 
3.17

 
3.9
%
Savannah
6,984,946

 

 

 

 
6,984,946

 
6.0
%
 
20,442,445

 
3.23

 
3.2
%
Central Florida
3,360,479

 

 
252,751

 

 
3,613,230

 
3.1
%
 
20,299,717

 
5.85

 
3.2
%
Minneapolis
3,720,250

 

 

 

 
3,720,250

 
3.2
%
 
15,756,373

 
4.52

 
2.5
%
Southern California
2,389,040

 

 

 

 
2,389,040

 
2.1
%
 
12,498,272

 
5.23

 
2.0
%
Houston
1,853,611

 

 
168,850

 

 
2,022,461

 
1.8
%
 
12,389,545

 
6.16

 
1.9
%
Cleveland

 
1,058,211

 

 

 
1,058,211

 
0.9
%
 
10,134,448

 
12.79

 
1.6
%
Washington DC
78,560

 
219,464

 
100,952

 

 
398,976

 
0.3
%
 
4,389,791

 
16.12

 
0.7
%
Phoenix
1,048,965

 

 

 

 
1,048,965

 
0.9
%
 
4,284,000

 
4.31

 
0.7
%
Total
94,265,214

 
15,609,432

 
4,968,089

 
739,224

 
115,581,959

 
100.0
%
 
$
634,038,840

 
$
5.91

 
100.0
%
Percent of Overall
81.6
%
 
13.5
%
 
4.3
%
 
0.6
%
 
100.0
%
 
 
 
 
 
 
 
 
Annual Net Effective Rent per Square Foot (2)
$
3.88

 
$
13.35

 
$
21.67

 
$
24.24

 
$
5.91

 
 
 
 
 
 
 
 



-15-


Jointly Controlled Properties
 
Square Feet
 
Annual Net
Effective
Rent (1)
 
Annual Net
Effective
Rent per Square Foot (2)
 
Percent of
Annual  Net
Effective
Rent
 
Industrial
 
Office
 
Medical Office
 
Other
 
Overall
 
Percent of
Overall
 
Primary Market
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Washington DC
664,762

 
2,146,775

 

 

 
2,811,537

 
11.0
%
 
$
46,600,914

 
$
19.14

 
23.5
%
Dallas
7,770,278

 
182,700

 
458,396

 

 
8,411,374

 
32.8
%
 
33,596,265

 
4.26

 
17.0
%
Indianapolis
4,684,919

 

 

 

 
4,684,919

 
18.3
%
 
14,654,307

 
3.18

 
7.3
%
Minneapolis

 
537,018

 

 
381,922

 
918,940

 
3.6
%
 
14,442,419

 
18.36

 
7.3
%
South Florida

 
610,712

 

 

 
610,712

 
2.4
%
 
13,209,869

 
21.80

 
6.7
%
Raleigh

 
687,549

 

 

 
687,549

 
2.7
%
 
12,994,784

 
19.38

 
6.6
%
Central Florida
908,422

 
624,796

 

 

 
1,533,218

 
6.0
%
 
12,214,022

 
8.34

 
6.2
%
Columbus
1,142,400

 
704,292

 

 

 
1,846,692

 
7.2
%
 
11,457,683

 
6.43

 
5.8
%
Cincinnati
210,830

 
540,867

 

 
206,315

 
958,012

 
3.7
%
 
10,187,077

 
10.71

 
5.1
%
Phoenix
1,829,735

 

 

 

 
1,829,735

 
7.1
%
 
9,333,043

 
5.10

 
4.7
%
Atlanta

 
436,275

 

 

 
436,275

 
1.7
%
 
5,717,027

 
20.19

 
2.9
%
St. Louis

 
252,378

 

 

 
252,378

 
1.0
%
 
3,968,493

 
16.52

 
2.0
%
Houston

 
248,925

 

 

 
248,925

 
1.0
%
 
3,747,660

 
15.06

 
1.9
%
Nashville

 
180,147

 

 

 
180,147

 
0.7
%
 
2,976,335

 
16.52

 
1.5
%
Chicago

 
203,304

 

 

 
203,304

 
0.8
%
 
2,873,334

 
16.79

 
1.5
%
Total
17,211,346

 
7,355,738

 
458,396

 
588,237

 
25,613,717

 
100.0
%
 
$
197,973,232

 
$
8.20

 
100.0
%
Percent of Overall
67.2
%
 
28.7
%
 
1.8
%
 
2.3
%
 
100.0
%
 
 
 
 
 
 
 
 
Annual Net Effective Rent per Square Foot (2)
$
3.78

 
$
18.07

 
$
13.80

 
$
18.26

 
$
8.20

 
 
 
 
 
 
 
 
 

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Occupancy %
 
Consolidated Properties
 
Jointly Controlled Properties
 
Industrial
 
Office
 
Medical Office
 
Other
 
Overall
 
Industrial
 
Office
 
Medical Office
 
Other
 
Overall
Primary Market
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indianapolis
96.8
%
 
92.3
%
 
93.2
%
 
70.1
%
 
95.9
%
 
98.3
%
 

 

 

 
98.3
%
Cincinnati
94.4
%
 
82.4
%
 
98.2
%
 

 
91.4
%
 
100.0
%
 
98.7
%
 

 
100.0
%
 
99.3
%
South Florida
89.8
%
 
82.3
%
 
100.0
%
 
91.8
%
 
88.5
%
 

 
99.2
%
 

 

 
99.2
%
Raleigh
98.7
%
 
93.7
%
 
89.0
%
 
58.3
%
 
95.8
%
 

 
97.5
%
 

 

 
97.5
%
Atlanta
87.6
%
 
96.7
%
 
94.0
%
 

 
88.6
%
 

 
64.9
%
 

 

 
64.9
%
Chicago
96.8
%
 
100.0
%
 
97.2
%
 

 
96.9
%
 

 
84.2
%
 

 

 
84.2
%
St. Louis
93.6
%
 
71.9
%
 

 

 
84.5
%
 

 
95.2
%
 

 

 
95.2
%
Nashville
95.8
%
 
92.1
%
 
100.0
%
 

 
95.1
%
 

 
100.0
%
 

 

 
100.0
%
Other (3)
88.1
%
 

 
87.5
%
 
87.7
%
 
88.0
%
 

 

 

 

 

Dallas
88.0
%
 

 
86.4
%
 

 
87.8
%
 
93.5
%
 
100.0
%
 
94.9
%
 

 
93.7
%
Columbus
100.0
%
 

 
100.0
%
 

 
100.0
%
 
100.0
%
 
90.9
%
 

 

 
96.5
%
Savannah
90.6
%
 

 

 

 
90.6
%
 

 

 

 

 

Central Florida
98.0
%
 

 
69.9
%
 

 
96.0
%
 
100.0
%
 
88.9
%
 

 

 
95.5
%
Minneapolis
93.7
%
 

 

 

 
93.7
%
 

 
91.9
%
 

 
76.8
%
 
85.6
%
Southern California
100.0
%
 

 

 

 
100.0
%
 

 

 

 

 

Houston
100.0
%
 

 
92.6
%
 

 
99.4
%
 

 
100.0
%
 

 

 
100.0
%
Cleveland

 
74.9
%
 

 

 
74.9
%
 

 

 

 

 

Washington DC
91.5
%
 
45.3
%
 
100.0
%
 

 
68.2
%
 
87.6
%
 
86.3
%
 

 

 
86.6
%
Phoenix
94.8
%
 

 

 

 
94.8
%
 
100.0
%
 

 

 

 
100.0
%
Total
94.3
%
 
84.2
%
 
91.0
%
 
88.1
%
 
92.7
%
 
96.1
%
 
90.5
%
 
94.9
%
 
84.9
%
 
94.2
%
(1)
Represents the average annual base rental payments, on a straight-line basis for the term of each lease, from space leased to tenants as of December 31, 2012, excluding additional amounts paid by tenants as reimbursement for operating expenses. Joint venture properties are shown at 100% of square feet and net effective rents, without regard to our ownership percentage.
(2)
Annual net effective rent per leased square foot.
(3)
Represents properties not located in our primary markets, totaling 2.7% of the total square footage of our consolidated properties.
Item 3.  Legal Proceedings
We are not subject to any material pending legal proceedings, other than routine litigation arising in the ordinary course of business. Our management expects that these ordinary routine legal proceedings will be covered by insurance and does not expect these legal proceedings to have a material adverse effect on our financial condition, results of operations, or liquidity.
Item 4.  Mine Safety Disclosures
Not applicable.


-17-


PART II
Item 5.  Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
The General Partner's common stock is listed for trading on the NYSE under the symbol "DRE." The following table sets forth the high and low sales prices of the General Partner's common stock for the periods indicated and the dividend or distribution paid per share or Common Unit by the General Partner or the Partnership, respectively, during each such period. There is no established trading market for the Partnership's Common Units. As of February 22, 2013, there were 7,640 record holders of the General Partner's common stock and 142 record holders of the Partnership's Common Units. 
 
2012
 
2011
Quarter Ended
High
 
Low
 
Dividend/Distribution
 
High
 
Low
 
Dividend/Distribution
December 31
$
15.93

 
$
12.71

 
$
0.17

 
 
$
12.77

 
$
9.29

 
$
0.17

September 30
16.00

 
13.85

 
0.17

 
 
14.83

 
9.83

 
0.17

June 30
15.31

 
13.06

 
0.17

 
 
15.63

 
13.15

 
0.17

March 31
14.85

 
11.85

 
0.17

 
 
14.34

 
12.45

 
0.17

On January 30, 2013, the General Partner declared a quarterly cash dividend or distribution of $0.17 per share or Common Unit, payable by the General Partner or the Partnership, respectively, on February 28, 2013, to common shareholders or common unitholders of record on February 13, 2013.
A summary of the tax characterization of the dividends paid per common share of the General Partner for the years ended December 31, 2012, 2011 and 2010 follows:
 
 
2012
 
2011
 
2010
Total dividends paid per share
$
0.68

 
$
0.68

 
$
0.68

Ordinary income
14.1
%
 
3.3
%
 
24.9
%
Return of capital
85.9
%
 
96.7
%
 
56.3
%
Capital gains
%
 
%
 
18.8
%
 
100.0
%
 
100.0
%
 
100.0
%
Sales of Unregistered Securities
The General Partner did not sell any of its securities during the year ended December 31, 2012 that were not registered under the Securities Act.
Issuer Purchases of Equity Securities
From time to time, we repurchase our securities under a repurchase program that initially was approved by the board of directors and publicly announced in October 2001 (the "Repurchase Program"). On April 25, 2012, the board of directors adopted a resolution that amended and restated the Repurchase Program and delegated authority to management to repurchase a maximum of $100.0 million of common shares, $300.0 million of debt securities and $150.0 million of preferred shares (the "April 2012 Resolution"). The April 2012 Resolution will expire on April 25, 2013. We did not repurchase any securities through the Repurchase Program during the year end December 31, 2012 and the maximum amounts set forth under the April 2012 Resolution for the repurchase of common shares, debt securities and preferred shares remain available as part of the Repurchase Program.
Item 6. Selected Financial Data
The following sets forth selected financial and operating information on a historical basis for each of the years in the five-year period ended December 31, 2012. The following information should be read in conjunction with Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Item 8, "Financial Statements and Supplementary Data" included in this Form 10-K (in thousands, except per share or per Common Unit):

-18-


 
2012
 
2011
 
2010
 
2009
 
2008
Results of Operations:
 
 
 
 
 
 
 
 
 
General Partner and Partnership
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
Rental and related revenue from continuing operations
$
834,369

 
$
742,883

 
$
669,543

 
$
625,410

 
$
583,014

General contractor and service fee revenue
275,071

 
521,796

 
515,361

 
449,509

 
434,624

Total revenues from continuing operations
$
1,109,440

 
$
1,264,679

 
$
1,184,904

 
$
1,074,919

 
$
1,017,638

Income (loss) from continuing operations
$
(87,786
)
 
$
(2,807
)
 
$
39,291

 
$
(233,425
)
 
$
89,529

 
 
 
 
 
 
 
 
 
 
General Partner
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to common shareholders
$
(126,145
)
 
$
31,416

 
$
(14,108
)
 
$
(333,601
)
 
$
50,408

 
 
 
 
 
 
 
 
 
 
Partnership
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to common unitholders
$
(128,418
)
 
$
32,275

 
$
(14,459
)
 
$
(344,700
)
 
$
53,665

 
 
 
 
 
 
 
 
 
 
General Partner
 
 
 
 
 
 
 
 
 
Per Share Data:
 
 
 
 
 
 
 
 
 
Basic income (loss) per common share:
 
 
 
 
 
 
 
 
 
Continuing operations
$
(0.53
)
 
$
(0.27
)
 
$
(0.18
)
 
$
(1.48
)
 
$
0.19

Discontinued operations
0.05

 
0.38

 
0.11

 
(0.19
)
 
0.14

Diluted income (loss) per common share:
 
 
 
 
 
 
 
 
 
Continuing operations
(0.53
)
 
(0.27
)
 
(0.18
)
 
(1.48
)
 
0.19

Discontinued operations
0.05

 
0.38

 
0.11

 
(0.19
)
 
0.14

Dividends paid per common share
$
0.68

 
$
0.68

 
$
0.68

 
$
0.76

 
$
1.93

Weighted average common shares outstanding
267,900

 
252,694

 
238,920

 
201,206

 
146,915

Weighted average common shares and potential dilutive securities
267,900

 
259,598

 
238,920

 
201,206

 
154,553

Balance Sheet Data (at December 31):
 
 
 
 
 
 
 
 
 
Total Assets
$
7,560,101

 
$
7,004,437

 
$
7,644,276

 
$
7,304,279

 
$
7,690,883

Total Debt
4,446,170

 
3,809,589

 
4,207,079

 
3,854,032

 
4,276,990

Total Preferred Equity
625,638

 
793,910

 
904,540

 
1,016,625

 
1,016,625

Total Shareholders' Equity
2,591,414

 
2,714,686

 
2,945,610

 
2,925,345

 
2,844,019

Total Common Shares Outstanding
279,423

 
252,927

 
252,195

 
224,029

 
148,420

Other Data:
 
 
 
 
 
 
 
 
 
Funds from Operations attributable to common shareholders (1)
$
265,204

 
$
274,616

 
$
297,955

 
$
142,597

 
$
369,698


 
 
 
 
 
 
 
 
 
Partnership
 
 
 
 
 
 
 
 
 
Per Unit Data:
 
 
 
 
 
 
 
 
 
Basic income (loss) per Common Unit:
 
 
 
 
 
 
 
 
 
Continuing operations
$
(0.53
)
 
$
(0.27
)
 
$
(0.18
)
 
$
(1.48
)
 
$
0.20

Discontinued operations
0.05

 
0.38

 
0.11

 
(0.19
)
 
0.14

Diluted income (loss) per Common Unit:
 
 
 
 
 
 
 
 
 
Continuing operations
(0.53
)
 
(0.27
)
 
(0.18
)
 
(1.48
)
 
0.20

Discontinued operations
0.05

 
0.38

 
0.11

 
(0.19
)
 
0.14

Distributions paid per Common Unit
$
0.68

 
$
0.68

 
$
0.68

 
$
0.76

 
$
1.93

Weighted average Common Units outstanding
272,729

 
259,598

 
244,870

 
207,893

 
154,534

Weighted average Common Units and potential dilutive securities
272,729

 
259,598

 
244,870

 
207,893

 
154,553

Balance Sheet Data (at December 31):
 
 
 
 
 
 
 
 
 
Total Assets
$
7,560,101

 
$
7,003,982

 
$
7,644,124

 
$
7,304,493

 
$
7,690,442

Total Debt
4,446,170

 
3,809,589

 
4,207,079

 
3,854,032

 
4,276,990

Total Preferred Equity
625,638

 
793,910

 
904,540

 
1,016,625

 
1,016,625

Total Partners' Equity
2,616,803

 
2,775,037

 
2,984,619

 
2,960,516

 
2,895,810

Total Common Units Outstanding
283,842

 
259,872

 
257,426

 
230,638

 
155,199

Other Data:
 
 
 
 
 
 
 
 
 
Funds from Operations attributable to common unitholders (1)
$
269,985

 
$
282,119

 
$
305,375

 
$
147,324

 
$
388,865

(1) In addition to net income (loss) computed in accordance with accounting principles generally accepted in the United States of America ("GAAP"), we assess and measure the overall operating results of the General Partner and the Partnership based upon Funds From Operations ("FFO"), which is an industry performance measure that management believes is a useful indicator of consolidated operating performance. FFO is used by industry analysts and investors as a supplemental operating performance measure of an equity real estate investment trust ("REIT") like Duke Realty Corporation. The National Association of Real Estate Investment Trusts ("NAREIT") created FFO as a non-GAAP supplemental measure of REIT operating performance. FFO, as defined by NAREIT, represents GAAP net income (loss), excluding extraordinary items as defined under GAAP, gains or losses from sales of previously depreciated real estate assets, impairment charges related to depreciable real estate assets, plus certain non-cash items such as real estate asset depreciation and amortization, and after similar

-19-


adjustments for unconsolidated partnerships and joint ventures. The most comparable GAAP measure is net income (loss) attributable to common shareholders or common unitholders. FFO attributable to common shareholders or common unitholders should not be considered as a substitute for net income (loss) attributable to common shareholders or common unitholders or any other measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. FFO is calculated in accordance with the definition that was adopted by the Board of Governors of NAREIT.
Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry analysts and investors have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Management believes that the use of FFO attributable to common shareholders or common unitholders, combined with net income (which remains the primary measure of performance), improves the understanding of operating results of REITs among the investing public and makes comparisons of REIT operating results more meaningful. Management believes that the use of FFO as a performance measure enables investors and analysts to readily identify the operating results of the long-term assets that form the core of a REIT's activity and assist them in comparing these operating results between periods or between different companies.
See reconciliation of FFO to GAAP net income (loss) attributable to common shareholders or common unitholders under the caption "Year in Review" under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Business Overview
The General Partner is a self-administered and self-managed REIT that began operations in 1986 and is the sole general partner of the Partnership. The Partnership is a limited partnership formed in 1993, at which time all of the properties and related assets and liabilities of the General Partner, as well as proceeds from a secondary offering of the General Partner's common shares, were contributed to the Partnership. Simultaneously, the Partnership completed the acquisition of Duke Associates, a full-service commercial real estate firm operating in the Midwest whose operations began in 1972. We operate the General Partner and the Partnership as one enterprise, and therefore, our discussion and analysis refers to the General Partner and its consolidated subsidiaries, including the Partnership, collectively.
As of December 31, 2012, we: 
Owned or jointly controlled 774 industrial, office, medical office and other properties, of which 755 properties with approximately 141.2 million square feet are in service and 19 properties with more than 4.4 million square feet are under development. The 755 in-service properties are comprised of 629 consolidated properties with approximately 115.6 million square feet and 126 jointly controlled properties with more than 25.6 million square feet. The 19 properties under development consist of 17 consolidated properties with approximately 3.6 million square feet and two jointly controlled properties with approximately 874,000 square feet.
Owned, including through ownership interests in unconsolidated joint ventures, more than 4,600 acres of land and controlled an additional 1,600 acres through purchase options.
A key component of our overall strategy is to increase our investment in quality industrial properties in both existing and select new markets, expand our medical office portfolio nationally to take advantage of demographic trends and reduce our investment in suburban office properties and other non-strategic assets.
We have four reportable operating segments at December 31, 2012, the first three of which consist of the ownership and rental of (i) industrial, (ii) office and (iii) medical office real estate investments. The operations of our industrial, office and medical office properties, along with our retail properties, are collectively referred to as "Rental Operations." Our retail properties, as well as any other properties not included in our reportable segments, do not by themselves meet the quantitative thresholds for separate presentation as a reportable segment. The fourth reportable segment consists of various real estate services such as property management, asset management, maintenance, leasing, development, general contractor and construction management to third-party property owners and joint ventures, and is collectively referred to as "Service Operations." Our reportable segments offer different products or services and are managed separately because each segment requires different operating strategies and management expertise. Our Service Operations segment also includes our taxable REIT subsidiary, a legal entity through which certain of the segment's operations are conducted.

-20-


During 2012, one of the quantitative thresholds was triggered, which required our medical office property operating segment to be presented as a separate reportable segment. As such, our medical office properties are presented as a separate reportable segment for the year ended December 31, 2012, as well as for the comparative prior periods.
Operational Strategy
Our operational focus is to drive profitability by maximizing cash from operations as well as FFO through (i) maintaining and increasing property occupancy and rental rates by effectively managing our portfolio of existing properties; (ii) selectively developing new build-to-suit, substantially pre-leased and, in limited circumstances, speculative development projects; (iii) leveraging our construction expertise to act as a general contractor or construction manager on a fee basis; and (iv) providing a full line of real estate services to our tenants and to third parties.
Asset Strategy
Our asset strategy is to reposition our investment concentration among product types and further diversify our geographic presence. Our strategic objectives include (i) increasing our investment in quality industrial properties in both existing markets and select new markets; (ii) expanding our medical office portfolio nationally to take advantage of demographic trends; (iii) increasing our asset investment in markets we believe provide the best potential for future rental growth; and (iv) reducing our investment in suburban office properties located primarily in the Midwest as well as reducing our investment in other non-strategic assets. We are executing our asset strategy through a disciplined approach by identifying acquisition and development opportunities, while continually evaluating our portfolio for disposition by regularly identifying assets that no longer meet our long-term objectives.
Capital Strategy
Our capital strategy is to maintain a strong balance sheet by actively managing the components of our capital structure, in coordination with the execution of our overall operational and asset strategies. We are focused on maintaining investment grade ratings from our credit rating agencies with the ultimate goal of further improving the key metrics that formulate our credit ratings.
In support of our capital strategy, we employ an asset disposition program to sell non-strategic real estate assets, which generates proceeds that can be recycled into new property investments that better fit our growth objectives or can be used to reduce leverage and otherwise manage our capital structure.
We continue to focus on improving our balance sheet by maintaining a balanced and flexible capital structure which includes: (i) extending and sequencing the maturity dates of our outstanding debt obligations; (ii) borrowing primarily at fixed rates by targeting a variable rate component of total debt less than 20%; and (iii) issuing common equity as needed to maintain appropriate leverage parameters or support significant strategic acquisitions. With our successes to date and continued focus on maintaining a strong balance sheet, we believe we are well-positioned for future growth.
Year in Review
There was modest overall economic improvement in certain key macroeconomic metrics, such as the national unemployment rate and the annual growth in the gross domestic product; however, the uncertainty around the November 2012 election, unresolved debt ceiling and fiscal cliff discussions, as well as persistent economic issues in Europe continued to weigh heavily on the willingness and ability of businesses to make long-term capital commitments during 2012. Those macro-economic factors produced challenges for our industry and specifically our business but, nonetheless, we improved several of our key operating metrics such as our in-service occupancy, our total leasing activity and our tenant retention rate.
Net loss attributable to the common shareholders of the General Partner for the year ended December 31, 2012, was $126.1 million, or $0.48 per share (diluted), compared to net income of $31.4 million, or $0.11 per share (diluted) for the year ended December 31, 2011. Net loss attributable to the common unitholders of the Partnership for the year ended December 31, 2012, was $128.4 million, or $0.48 per unit (diluted), compared to net income of $32.3 million, or $0.11 per unit (diluted) for the year ended December 31, 2011. For both the General Partner and the

-21-


Partnership, the net loss position in 2012, when compared to the net income generated in 2011, was primarily the result of a 79-building suburban office portfolio sale (the "Blackstone Office Disposition") in late 2011. In addition to the significantly higher gains on sale in 2011, the Blackstone Office Disposition resulted in lower operating results during 2012, as we had a significantly lower base of income-generating assets through the first half of 2012 until the proceeds from the Blackstone Office Disposition were fully re-invested in late 2012 according to plan.
FFO attributable to common shareholders of the General Partner totaled $265.2 million for the year ended December 31, 2012, compared to $274.6 million for 2011. FFO attributable to common unitholders of the Partnership totaled $270.0 million for the year ended December 31, 2012, compared to $282.1 million for 2011. For both the General Partner and the Partnership, the reduction in FFO from 2011 to 2012 was primarily due to the proceeds from the Blackstone Office Disposition not being fully deployed into income-generating assets until the second half of 2012.
In addition to net income (loss) computed in accordance with GAAP, we assess and measure the overall operating results of the General Partner and the Partnership based upon FFO, which is an industry performance measure that management believes is a useful indicator of consolidated operating performance. FFO is used by industry analysts and investors as a supplemental operating performance measure of a REIT. NAREIT created FFO as a non-GAAP supplemental measure of REIT operating performance. FFO, as defined by NAREIT, represents GAAP net income (loss), excluding extraordinary items as defined under GAAP, gains or losses from sales of previously depreciated real estate assets, impairment charges related to depreciable real estate assets, plus certain non-cash items such as real estate asset depreciation and amortization, and after similar adjustments for unconsolidated partnerships and joint ventures. The most comparable GAAP measure is net income (loss) attributable to common shareholders or common unitholders. FFO attributable to common shareholders or common unitholders should not be considered as a substitute for net income (loss) attributable to common shareholders or common unitholders or any other measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. FFO is calculated in accordance with the definition that was adopted by the Board of Governors of NAREIT.
Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry analysts and investors have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Management believes that the use of FFO attributable to common shareholders or common unitholders, combined with net income (which remains the primary measure of performance), improves the understanding of operating results of REITs among the investing public and makes comparisons of REIT operating results more meaningful. Management believes that the use of FFO as a performance measure enables investors and analysts to readily identify the operating results of the long-term assets that form the core of a REIT's activity and assist them in comparing these operating results between periods or between different companies.
The following table shows a reconciliation of net income (loss) attributable to common shareholders or common unitholders to the calculation of FFO attributable to common shareholders or common unitholders for the years ended December 31, 2012, 2011 and 2010, respectively (in thousands):

-22-


 
2012
 
2011
 
2010
Net income (loss) attributable to common shareholders of the General Partner
$
(126,145
)
 
$
31,416

 
$
(14,108
)
Add back: Net income (loss) attributable to noncontrolling interests - common limited partnership interests in the Partnership
(2,273
)
 
859

 
(351
)
Net income (loss) attributable to common unitholders of the Partnership
(128,418
)
 
32,275

 
(14,459
)
Adjustments:
 
 
 
 
 
Depreciation and amortization
379,419

 
385,679

 
360,184

Company share of joint venture depreciation and amortization
34,702

 
33,687

 
34,674

Earnings from depreciable property sales—wholly owned
(13,811
)
 
(169,431
)
 
(72,716
)
Earnings from depreciable property sales—share of joint venture
(1,907
)
 
(91
)
 
(2,308
)
Funds From Operations attributable to common unitholders of the Partnership
$
269,985

 
$
282,119

 
$
305,375

Additional General Partner Adjustments:
 
 
 
 
 
Net (income) loss attributable to noncontrolling interests - common limited partnership interests in the Partnership
2,273

 
(859
)
 
351

        Noncontrolling interest share of adjustments
(7,054
)
 
(6,644
)
 
(7,771
)
Funds From Operations attributable to common shareholders of the General Partner
$
265,204

 
$
274,616

 
$
297,955

We continued to make significant progress during 2012 in executing our stated asset strategy of increasing our investment in industrial and medical office properties and reducing our investment in suburban office properties. Additionally, we continued to improve our operational metrics, which is an indication of continued execution of our operational strategy. Highlights of our 2012 strategic activities are as follows: 
During 2012, we acquired 27 medical office properties and ten industrial properties with a total combined value of $779.7 million.
We generated $138.1 million of total net cash proceeds from the disposition of 28 wholly-owned buildings and 210 acres of wholly-owned undeveloped land.
We had development starts of $485.2 million within our consolidated properties, which were primarily comprised of industrial and medical office properties. These 2012 development starts were 86% pre-leased.
We increased our level of development investment during 2012 as compared to the last few years. The total estimated cost of our consolidated properties under construction was $468.8 million at December 31, 2012, with $225.2 million of such costs incurred through that date. The total estimated cost for jointly controlled properties under construction was $109.6 million at December 31, 2012, with $55.0 million of costs incurred through that date. The consolidated properties under construction are 84% pre-leased, while the jointly controlled properties under construction are 31% pre-leased.
The occupancy level for our in-service portfolio of consolidated properties increased from 90.8% at December 31, 2011 to 92.7% at December 31, 2012. The increase in occupancy was primarily driven by leasing up vacant space, as well as our acquisition and disposition activities.
We continued to have strong total leasing activity for our consolidated properties, with total leasing activity of 24.2 million square feet in 2012 compared to 19.7 million square feet in 2011.
Total leasing activity for our consolidated properties in 2012 included 13.6 million square feet of renewals, which represented an 83.7% retention rate, on a square foot basis, and resulted in a 1.4% increase in net effective rents.
We executed a number of significant transactions in support of our capital strategy during 2012 and January 2013 in order to optimally sequence our unsecured debt maturities, manage our overall leverage profile, and support our acquisition and development activities in alignment with our asset strategy. Highlights of our key financing activities are as follows:
In January 2013, the General Partner completed a public offering of 41.4 million common shares, at an issue price of $14.25 per share, resulting in gross proceeds of $590.0 million and, after underwriting fees

-23-


and estimated offering costs, net proceeds of approximately $571.9 million. The net proceeds from this offering were used to repay all of the outstanding borrowings under the Partnership's existing revolving credit facility, which, as the result of recent acquisitions, had an outstanding balance of $285.0 million as of December 31, 2012. The remaining proceeds will also be used to redeem all of the outstanding shares of the General Partner's 8.375% Series O Cumulative Redeemable Preferred Shares ("Series O Shares"), which are redeemable as of February 22, 2013, and for general corporate purposes.
Throughout 2012, the General Partner issued 22.7 million shares of common stock pursuant to its at the market ("ATM") equity program, generating gross proceeds of approximately $322.2 million and, after considering commissions and other costs, net proceeds of approximately $315.3 million.
In October 2012, we repaid $50.0 million of medium term notes, which had an effective interest rate of 5.45%, at their scheduled maturity date.
In September 2012, we issued $300.0 million of unsecured notes that bear interest at 3.875%, have an effective rate of 3.925%, and mature on October 15, 2022.
In August 2012, we repaid $150.0 million of senior unsecured notes, which had an effective interest rate of 6.01%, at their scheduled maturity date.
In June 2012, we issued $300.0 million of senior unsecured notes that bear interest at 4.375%, have an effective rate of 4.466%, and mature on June 15, 2022.
In March 2012, the General Partner redeemed all of the outstanding shares of its 6.950% Series M Cumulative Redeemable Preferred Shares ("Series M Shares") at a liquidation amount of $168.3 million.
We assumed nine secured loans in conjunction with our 2012 acquisitions. These assumed loans had a total face value of $96.1 million, a total fair value of $100.8 million and carry a weighted average stated interest rate of 5.56%. We used a weighted average estimated market rate of 3.50% in determining the fair value of these loans.
Throughout 2012, we repaid five secured loans at their respective maturity dates totaling $102.1 million. These loans had a weighted average stated interest rate of 6.08%.
Key Performance Indicators
Our operating results depend primarily upon rental income from our Rental Operations. The following discussion highlights the areas of Rental Operations that we consider critical drivers of future revenues.
Occupancy Analysis: As previously discussed, our ability to maintain high occupancy rates is a principal driver of maintaining and increasing rental revenue from continuing operations. The following table sets forth percent leased and average net effective rent information regarding our in-service portfolio of consolidated rental properties as of December 31, 2012 and 2011, respectively (in thousands, except percentage data):
 
Total
Square Feet
 
Percent of
Total Square Feet
 
Percent Leased*
 
Average Annual Net Effective Rent**
Type
2012
 
2011
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Industrial
94,265

 
90,383

 
81.6
%
 
81.9
%
 
94.3
%
 
92.2
%
 
$3.88
 
$3.90
Office
15,610

 
16,228

 
13.5
%
 
14.7
%
 
84.2
%
 
83.5
%
 
$13.35
 
$13.25
Medical Office
4,968

 
2,862

 
4.3
%
 
2.6
%
 
91.0
%
 
89.1
%
 
$21.67
 
$20.60
Other
739

 
823

 
0.6
%
 
0.8
%
 
88.1
%
 
89.3
%
 
$24.24
 
$23.84
Total
115,582

 
110,296

 
100.0
%
 
100.0
%
 
92.7
%
 
90.8
%
 
$5.91
 
$5.73
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Represents the percentage of total square feet leased based on executed leases and without regard to whether the leases have commenced.
** Represents average annual base rental payments per leased square foot, on a straight-line basis for the term of each lease, from space leased to tenants at the end of the most recent reporting period. This amount excludes additional amounts paid by tenants as reimbursement for operating expenses.


-24-


The increase in occupancy at December 31, 2012 compared to December 31, 2011 is primarily driven by increased leasing activity in 2012 compared to 2011. We renewed 83.7% of our expiring leases during 2012 compared to 67.4% during 2011. Acquisitions of highly occupied properties also contributed to the improvement in overall occupancy, as we acquired properties during 2012 totaling approximately 6.7 million square feet that had average occupancy on acquisition of 94.4%.
The increase in average annual net effective rent per square foot is primarily the result of a shift in product mix, as we increased our investment in Medical Office properties, which generally earn a significantly higher rent per square foot than office and industrial properties, during 2012.
Total Leasing Activity
The initial leasing of development projects or vacant space in acquired properties is referred to as first generation lease activity. The re-leasing of space that had been previously leased is referred to as second generation lease activity. The total leasing activity for our consolidated rental properties, expressed in square feet of leases signed during the period, is as follows for the years ended December 31, 2012 and 2011, respectively (in thousands):
 
2012
 
2011
New Leasing Activity - First Generation
5,628

 
3,597

New Leasing Activity - Second Generation
4,911

 
6,256

Renewal Leasing Activity
13,626

 
9,819

Total Leasing Activity
24,165

 
19,672

New Second Generation Leases
The following table sets forth the estimated costs of tenant improvements and leasing commissions, on a per square foot basis, that we are obligated to fulfill under the new second generation leases signed for our consolidated rental properties during the years ended December 31, 2012 and 2011, respectively (square feet data in thousands):
 
Square Feet of New Second Generation Leases
 
Average Term in Years
 
Estimated Tenant Improvement Cost per Square Foot
 
Leasing Commissions per Square Foot
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Industrial
3,900

 
4,512

 
7.0

 
5.3

 
$
2.65

 
$
2.11

 
$
1.55

 
$
1.33

Office
972

 
1,728

 
6.7

 
5.9

 
$
17.36

 
$
14.17

 
$
7.33

 
$
6.50

Medical Office
39

 
14

 
6.6

 
5.8

 
$
15.41

 
$
29.65

 
$
6.67

 
$
14.39

Other

 
2

 

 
3.0

 
$

 
$

 
$

 
$
1.63

Total
4,911

 
6,256

 
6.9

 
5.4

 
$
5.66

 
$
5.50

 
$
2.73

 
$
2.79

The reduction in new second generation leases in 2012 was, in large part, correlated with the increase in the lease renewal percentage for the year, as we had less vacant space available to be re-let to new tenants.








-25-


Lease Renewals
The following table summarizes our lease renewal activity within our consolidated rental properties for the years ended December 31, 2012 and 2011, respectively (square feet data in thousands):
 
Square Feet of Leases Renewed
 
Percent of Expiring Leases Renewed
 
Average Term in Years
 
Growth (Decline) in Net Effective Rents*
 
Estimated Tenant Improvement Cost per Square Foot
 
Leasing Commissions per Square Foot
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Industrial
12,168

 
7,875

 
85.4
%
 
67.6
%
 
5.2

 
3.9

 
1.0
%
 
(4.1
)%
 
$
0.42

 
$
0.78

 
$
0.80

 
$
0.76

Office
1,431

 
1,857

 
73.0
%
 
66.0
%
 
4.1

 
4.6

 
2.2
%
 
(1.4
)%
 
$
3.35

 
$
5.58

 
$
3.01

 
$
4.43

Medical Office
27

 
76

 
39.1
%
 
80.0
%
 
6.5

 
4.3

 
6.1
%
 
9.4
 %
 
$
1.59

 
$
3.32

 
$
1.14

 
$
1.46

Other

 
11

 
%
 
86.3
%
 

 
4.7

 
%
 
4.5
 %
 
$

 
$

 
$

 
$
3.06

Total
13,626

 
9,819

 
83.7
%
 
67.4
%
 
5.1

 
4.0

 
1.4
%
 
(2.7
)%
 
$
0.73

 
$
1.71

 
$
1.03

 
$
1.46

* Represents the percentage change in net effective rent between the original leases and the renewal leases. Net effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements.
We were successful in executing renewals during 2012 across all product types and markets, with our large industrial spaces having the most impact. The most significant individual renewal leases took place in our Indianapolis, Cincinnati, Chicago and Columbus industrial markets.
Lease Expirations
Our ability to maintain and improve occupancy rates, and net effective rents, primarily depends upon our continuing ability to re-lease expiring space. The following table reflects our consolidated in-service portfolio lease expiration schedule, including square footage and annualized net effective rent for expiring leases, by property type as of December 31, 2012 (in thousands, except percentage data):
 
Total Consolidated Portfolio
 
Industrial
 
Office
 
Medical Office
 
Other
Year of Expiration
Square
Feet
 
Ann. Rent
Revenue*
 
% of
Revenue
 
Square
Feet
 
Ann. Rent
Revenue*
 
Square
Feet
 
Ann. Rent
Revenue*
 
Square
Feet
 
Ann. Rent
Revenue*
 
Square
Feet
 
Ann. Rent
Revenue*
2013
11,812

 
$
62,205

 
10
%
 
10,021

 
$
37,530

 
1,634

 
$
22,035

 
141

 
$
2,421

 
16

 
$
219

2014
12,530

 
67,376

 
11
%
 
10,675

 
41,985

 
1,658

 
21,812

 
190

 
3,371

 
7

 
208

2015
11,177

 
60,882

 
9
%
 
9,333

 
37,423

 
1,760

 
21,665

 
64

 
1,299

 
20

 
495

2016
13,111

 
67,913

 
11
%
 
11,251

 
42,267

 
1,600

 
20,387

 
237

 
4,765

 
23

 
494

2017
11,609

 
66,613

 
10
%
 
9,821

 
39,427

 
1,392

 
18,401

 
272

 
5,713

 
124

 
3,072

2018
10,356

 
68,651

 
11
%
 
8,117

 
30,884

 
1,530

 
20,660

 
496

 
11,644

 
213

 
5,463

2019
8,257

 
50,560

 
8
%
 
6,671

 
24,063

 
1,154

 
15,629

 
357

 
8,517

 
75

 
2,351

2020
7,834

 
48,537

 
8
%
 
6,497

 
25,738

 
868

 
12,996

 
429

 
8,932

 
40

 
871

2021
5,652

 
35,581

 
5
%
 
4,685

 
19,538

 
577

 
6,833

 
360

 
8,503

 
30

 
707

2022
5,628

 
30,946

 
5
%
 
4,899

 
16,934

 
270

 
4,644

 
428

 
8,671

 
31

 
697

2023 and Thereafter
9,227

 
74,776

 
12
%
 
6,902

 
28,948

 
707

 
10,492

 
1,546

 
34,120

 
72

 
1,216

Total Leased
107,193

 
$
634,040

 
100
%
 
88,872

 
$
344,737

 
13,150

 
$
175,554

 
4,520

 
$
97,956

 
651

 
$
15,793

Total Portfolio Square Feet
115,582

 
 
 
 
 
94,265

 
 
 
15,610

 
 
 
4,968

 
 
 
739

 
 
Percent Leased
92.7
%
 
 
 
 
 
94.3
%
 
 
 
84.2
%
 
 
 
91.0
%
 
 
 
88.1
%
 
 
* Annualized rental revenue represents average annual base rental payments, on a straight-line basis for the term of each lease, from space leased to tenants at the end of the most recent reporting period. Annualized rental revenue excludes additional amounts paid by tenants as reimbursement for operating expenses.
Information on current market rents can be difficult to obtain, is highly subjective, and is often not directly comparable between properties. Because of this, we believe the increase or decrease in net effective rent on lease

-26-


renewals, as previously defined, is the most objective and meaningful relationship between rents on leases expiring in the near-term and current market rents.
Acquisition Activity
Our decision process in determining whether or not to acquire a target property or portfolio involves several factors, including expected rent growth, multiple yield metrics, property locations and expected demographic growth in each location, current occupancy of the target properties, tenant profile and remaining terms of the in-place leases in the target properties. We pursue both brokered and non-brokered acquisitions and it is difficult to predict which markets and product types may present acquisition opportunities. Because of the numerous factors considered in our acquisition decisions, we do not establish specific target yields for future acquisitions.
We acquired 37 properties during the year ended December 31, 2012 and 59 properties, in addition to other real estate-related assets, during the year ended December 31, 2011. The following table summarizes the acquisition price, percent leased at time of acquisition and in-place yields, by product type, for these acquisitions (in thousands, except percentage data):
 
2012 Acquisitions
 
2011 Acquisitions
Type
Acquisition Price*
 
In-Place Yield**
 
Percent Leased at Acquisition Date***
 
Acquisition Price*
 
In-Place Yield**
 
Percent Leased at Acquisition Date***
Industrial
$
265,203

 
6.6
%
 
94.9
%
 
$
516,251

 
6.6
%
 
92.7
%
Office

 
%
 
%
 
90,603

 
5.1
%
 
66.8
%
Medical Office
514,455

 
6.5
%
 
92.9
%
 
143,241

 
7.3
%
 
98.1
%
Total
$
779,658

 
6.5
%
 
94.4
%
 
$
750,095

 
6.5
%
 
91.5
%
 
 
 
 
 
 
 
 
 
 
 
 
* Includes real estate assets and net acquired lease-related intangible assets but excludes other acquired working capital assets and liabilities.
** In-place yields of completed acquisitions are calculated as the current annualized net rental payments from space leased to tenants at the date of acquisition, divided by the acquisition price of the acquired real estate. Annualized net rental payments are comprised of base rental payments, excluding additional amounts payable by tenants as reimbursement for operating expenses, less current annualized operating expenses not recovered through tenant reimbursements.
*** Represents percentage of total square feet leased based on executed leases and without regard to whether the leases have commenced, at the date of acquisition.
Disposition Activity
We regularly work to identify, consider and pursue opportunities to dispose of properties on an opportunistic basis and on a basis that is generally consistent with our strategic plans. We sold 28 buildings during the year ended December 31, 2012 and 119 buildings during the year ended December 31, 2011. The following table summarizes the sales prices, in-place yields and percent leased, by product type, of these building sales (in thousands, except percentage data):
 
2012 Dispositions
 
2011 Dispositions
 
Type
Sales Price
 
In-Place Yield*
 
Percent Leased**
 
Sales Price
 
In-Place Yield*
 
Percent Leased**
 
Industrial
$
60,913

 
8.4
%
 
79.3
%
 
$
82,903

 
6.0
%
 
69.4
%
 
Office
58,881

 
7.1
%
 
79.4
%
 
1,546,094

 
8.4
%
 
85.7
%
 
Other
11,400

 
9.0
%
 
80.5
%
 

 
%
 
%
 
Total
$
131,194

 
7.9
%
 
79.4
%
 
$
1,628,997

 
8.2
%
 
83.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* In-place yields of completed dispositions are calculated as current annualized net rental payments from space leased to tenants at the date of sale, divided by the sales price of the real estate. Annualized net rental payments are comprised of base rental payments, excluding additional amounts payable by tenants as reimbursement for operating expenses, less current annualized operating expenses not recovered through tenant reimbursements.
** Represents percentage of total square feet leased based on executed leases and without regard to whether the leases have commenced, at the date of sale.

-27-


Development
Another source of our earnings growth is our wholly-owned and joint venture development activities. We expect to generate future earnings from Rental Operations as the development properties are placed in service and leased. We increased our development activities in 2012 for industrial and medical office properties with significant pre-leasing, as well as for speculative developments, in limited circumstances, in markets that we believe will provide future growth. We believe these two product lines will be the areas of greatest future growth.
We had 4.4 million square feet of consolidated or jointly controlled properties under development with total estimated costs upon completion of $578.5 million at December 31, 2012, compared to 913,000 square feet of property under development with total estimated costs of $213.5 million at December 31, 2011. The square footage and estimated costs include both wholly-owned and joint venture development activity at 100%. The following table summarizes our properties under development as of December 31, 2012 (in thousands, except percentage data): 
Ownership Type
Square
Feet
 
Percent
Leased
 
Total
Estimated
Project
Costs
 
Total
Incurred
to Date
 
Amount
Remaining
to be Spent
Consolidated properties
3,572

 
84
%
 
$
468,847

 
$
225,222

 
$
243,625

Joint venture properties
874

 
31
%
 
109,648

 
54,994

 
54,654

Total
4,446

 
73
%
 
$
578,495

 
$
280,216

 
$
298,279

We directly own over 3,500 acres of undeveloped land, of which we intend to develop over 2,200 acres. We believe that the land we intend to develop can support over 37.0 million square feet of primarily industrial, but also office and medical office, developments.

-28-


Results of Operations
A summary of our operating results and property statistics for each of the years in the three-year period ended December 31, 2012, is as follows (in thousands, except number of properties and per share or per Common Unit data):

 
2012
 
2011
 
2010
Rental and related revenue from continuing operations
$
834,369

 
$
742,883

 
$
669,543

General contractor and service fee revenue
275,071

 
521,796

 
515,361

Operating income
160,959

 
217,984

 
184,567

General Partner
 
 
 
 
 
Net income (loss) attributable to common shareholders
$
(126,145
)
 
$
31,416

 
$
(14,108
)
Weighted average common shares outstanding
267,900

 
252,694

 
238,920

Weighted average common shares and potential dilutive securities
267,900

 
259,598

 
238,920

Partnership
 
 
 
 
 
Net income (loss) attributable to common unitholders
$
(128,418
)
 
$
32,275

 
$
(14,459
)
Weighted average Common Units outstanding
272,729

 
259,598

 
244,870

Weighted average Common Units and potential dilutive securities
272,729

 
259,598

 
244,870

General Partner and Partnership
 
 
 
 
 
Basic income (loss) per common share or Common Unit:
 
 
 
 
 
Continuing operations
$
(0.53
)
 
$
(0.27
)
 
$
(0.18
)
Discontinued operations
$
0.05

 
$
0.38

 
$
0.11

Diluted income (loss) per common share or Common Unit:
 
 
 
 
 
Continuing operations
$
(0.53
)
 
$
(0.27
)
 
$
(0.18
)
Discontinued operations
$
0.05

 
$
0.38

 
$
0.11

Number of in-service consolidated properties at end of year
629

 
616

 
669

In-service consolidated square footage at end of year
115,582

 
110,296

 
114,078

Number of in-service joint venture properties at end of year
126

 
126

 
114

In-service joint venture square footage at end of year
25,614

 
25,295

 
22,657

Comparison of Year Ended December 31, 2012 to Year Ended December 31, 2011
Rental and Related Revenue
The following table sets forth rental and related revenue from continuing operations by reportable segment, as well as total rental and related revenue from discontinued operations, for the years ended December 31, 2012 and 2011, respectively (in thousands):
 
 
2012
 
2011
Rental and Related Revenue:
 
 
 
Industrial
$
438,525

 
$
379,030

Office
267,982

 
272,807

Medical Office
98,647

 
57,673

Other
29,215

 
33,373

Total Rental and Related Revenue from Continuing Operations
$
834,369

 
$
742,883

Rental and Related Revenue from Discontinued Operations
8,284

 
194,166

Total Rental and Related Revenue from Continuing and Discontinued Operations
$
842,653

 
$
937,049

The primary reasons for the increase in rental revenue from continuing operations, with specific references to a particular segment when applicable, are summarized below:

-29-


We acquired 96 properties, of which 51 were industrial and 38 were medical office, and placed eleven developments in service from January 1, 2011 to December 31, 2012, which provided incremental revenues of $91.3 million in the year ended December 31, 2012 over 2011.
The sale of 13 office properties to an unconsolidated joint venture in the first quarter of 2011 resulted in a $10.1 million decrease in rental and related revenue from continuing operations in 2012, which partially offset the impact of newly acquired or developed properties.
The remaining increase in rental and related revenue from continuing operations is primarily due to improved results within the properties that have been in service for all of 2011 and 2012. Higher levels of occupancy primarily drove the overall improvement within these properties, as rental rates increased modestly but did not significantly contribute to the increase in revenues from continuing operations.
The overall shift of revenues and income from office properties to industrial and medical office properties is consistent with our continuing strategy to increase our asset concentration in industrial and medical office properties while reducing our overall investment in office properties.
The decrease in rental revenues from discontinued operations is primarily a result of the Blackstone Office Disposition that took place in December 2011.
Rental Expenses and Real Estate Taxes
The following table sets forth rental expenses and real estate taxes from continuing operations by reportable segment, as well as total rental expenses and real estate taxes from discontinued operations, for the years ended December 31, 2012 and 2011, respectively (in thousands): 
 
2012
 
2011
Rental Expenses:
 
 
 
Industrial
$
44,309

 
$
41,362

Office
79,467

 
77,979

Medical Office
23,026

 
17,121

Other
6,333

 
8,155

Total Rental Expenses from Continuing Operations
$
153,135

 
$
144,617

Rental Expenses from Discontinued Operations
2,255

 
60,430

Total Rental Expenses from Continuing and Discontinued Operations
$
155,390

 
$
205,047

Real Estate Taxes:
 
 
 
Industrial
$
67,041

 
$
59,353

Office
33,059

 
34,298

Medical Office
9,689

 
5,102

Other
3,854

 
3,524

Total Real Estate Tax Expense from Continuing Operations
$
113,643

 
$
102,277

Real Estate Tax Expense from Discontinued Operations
1,031

 
28,693

Total Real Estate Tax Expense from Continuing and Discontinued Operations
$
114,674

 
$
130,970

Overall, rental expenses from continuing operations increased by $8.5 million in 2012 compared to 2011. While we recognized incremental rental expenses of $9.5 million associated with the additional 96 properties acquired and eleven developments placed in service since January 1, 2011, we also sold 13 office properties to an unconsolidated joint venture in late March 2011, which resulted in a $2.8 million decrease in rental expenses from continuing operations in 2012 as compared to 2011.
Overall, real estate taxes from continuing operations increased by $11.4 million in 2012 compared to 2011. We recognized incremental real estate tax expense of $12.4 million associated with the additional 96 properties acquired and eleven developments placed in service since January 1, 2011. This increase was partially offset by a $1.6 million decrease in real estate taxes from continuing operations related to the 13 properties that were sold to an unconsolidated joint venture during the first quarter of 2011.

-30-


Service Operations
The following table sets forth the components of the Service Operations reportable segment for the years ended December 31, 2012 and 2011, respectively (in thousands): 
 
2012
 
2011
Service Operations:
 
 
 
General contractor and service fee revenue
$
275,071

 
$
521,796

General contractor and other services expenses
(254,870
)
 
(480,480
)
Total
$
20,201

 
$
41,316

Service Operations primarily consist of the leasing, property management, asset management, development, construction management and general contractor services for joint venture properties and properties owned by third parties. Service Operations are heavily influenced by the current state of the economy, as leasing and property management fees are dependent upon occupancy, while construction and development services rely on the expansion of business operations of third-party property owners and joint venture partners. A significant decrease in third-party construction volume in 2012 compared to 2011, due to some significant third-party construction jobs being completed, drove the decrease in our earnings from Service Operations. In 2012, we focused more of our internal resources on the development and leasing of properties we own rather than on replacing the third-party construction contracts that were completed.
Depreciation and Amortization Expense
Depreciation and amortization expense increased from $326.2 million in 2011 to $376.0 million in 2012 primarily due to depreciation related to additions to our continuing operations asset base from acquisition activity, which have shorter depreciable lives relative to developed properties, and developments placed in service in 2011 and 2012.
Gain on Sale of Properties - Continuing Operations
We sold 18 properties during 2011 that did not meet the criteria for inclusion in discontinued operations, recognizing total gains on sale of $68.5 million.
General and Administrative Expenses
General and administrative expenses consist of two components. The first component includes general corporate expenses and the second component includes the indirect operating costs not allocated to, or absorbed by, the development or Rental Operations of our wholly-owned properties or our Service Operations. The indirect operating costs that are either allocated to, or absorbed by, the development or Rental Operations of our wholly-owned properties, or our Service Operations, are primarily comprised of employee compensation, including related costs such as benefits and wage-related taxes, but also include other ancillary costs such as travel and information technology support. Total indirect operating costs, prior to any allocation or absorption, and general corporate expenses are collectively referred to as our overall pool of overhead costs.
Those indirect costs not allocated to or absorbed by these operations are charged to general and administrative expenses. We regularly review our total overhead cost structure relative to our leasing, development and construction volume and adjust the level of total overhead, generally through changes in our level of staffing in various functional departments, as necessary in order to control overall general and administrative expense.
General and administrative expenses increased from $43.1 million in 2011 to $46.4 million in 2012. The following table sets forth the factors that led to the increase in general and administrative expenses from 2011 to 2012 (in millions):

-31-


General and administrative expenses - 2011
$
43.1

Reduction to overall pool of overhead costs (1)
(11.0
)
Increased absorption of costs by wholly-owned development and leasing activities (2)
(14.7
)
Reduced allocation of costs to Service Operations and Rental Operations (3)
29.0

General and administrative expenses - 2012
$
46.4

 
 
(1) We reduced our total pool of overhead costs, through staff reductions and other measures, as the result of changes in our product mix and anticipated future levels of third-party construction, leasing, management and other operational activities.
(2) We increased our focus on development of wholly-owned properties, and also significantly increased our leasing activity during 2012, which resulted in an increased absorption of overhead costs. We capitalized $30.4 million and $20.0 million of our total overhead costs to leasing and development, respectively, for consolidated properties during 2012, compared to capitalizing $25.3 million and $10.4 million of such costs, respectively, for 2011. Combined overhead costs capitalized to leasing and development totaled 31.1% and 20.6% of our overall pool of overhead costs for 2012 and 2011, respectively.
(3) The reduction in the allocation of overhead costs to Service Operations and Rental Operations resulted from reduced volumes of third-party construction projects as well as due to reducing our overall investment in office properties, which are more management intensive.
Interest Expense
Interest expense allocable to continuing operations increased from $220.5 million in 2011 to $245.2 million in 2012. We had $47.4 million of interest expense allocated to discontinued operations in 2011, associated with the properties that were disposed of during 2011, compared to the allocation of only $3.1 million of interest expense to discontinued operations for 2012. Total interest expense, combined for continuing and discontinued operations, decreased from $267.8 million in 2011 to $248.3 million in 2012. The reduction in total interest expense was primarily the result of a lower weighted average borrowing rate in 2012, due to refinancing some higher rate bonds in 2011 and 2012, as well as a slight decrease in our average level of borrowings compared to 2011. Also, due to an increase in properties under development from 2011, which met the criteria for capitalization of interest and were financed in part by common equity issuances during 2012, a $5.0 million increase in capitalized interest also contributed to the decrease in total interest expense in 2012.
Acquisition-Related Activity
During 2012, we recognized approximately $4.2 million in acquisition costs, compared to $2.3 million of such costs in 2011. The increase from 2011 to 2012 is the result of acquiring a higher volume of medical office properties, where a higher level of acquisition costs are incurred than other property types, in 2012. During 2011, we also recognized a $1.1 million gain related to the acquisition of a building from one of our 50%-owned unconsolidated joint ventures.
Discontinued Operations
Subject to certain criteria, the results of operations for properties sold during the year to unrelated parties, or classified as held-for-sale at the end of the period, are required to be classified as discontinued operations. The property specific components of earnings that are classified as discontinued operations include rental revenues, rental expenses, real estate taxes, allocated interest expense and depreciation expense, as well as the net gain or loss on the disposition of properties.
The operations of 150 buildings are currently classified as discontinued operations. These 150 buildings consist of 114 office, 30 industrial, four retail, and two medical office properties. As a result, we classified operating losses, before gain on sales, of $1.5 million, $1.8 million and $7.1 million in discontinued operations for the years ended December 31, 2012, 2011 and 2010, respectively.
Of these properties, 28 were sold during 2012, 101 properties were sold during 2011 and 19 properties were sold during 2010. The gains on disposal of these properties of $13.5 million, $100.9 million and $33.1 million for the years ended December 31, 2012, 2011 and 2010, respectively, are also reported in discontinued operations. There are two properties classified as held-for-sale and included in discontinued operations at December 31, 2012.



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Comparison of Year Ended December 31, 2011 to Year Ended December 31, 2010
Rental and Related Revenue
The following table sets forth rental and related revenue from continuing operations by reportable segment, as well as total rental and related revenue from discontinued operations, for the years ended December 31, 2011 and 2010, respectively (in thousands):
 
2011
 
2010
Rental and Related Revenue:
 
 
 
Industrial
$
379,030

 
$
280,538

Office
272,807

 
313,712

Medical Office
57,673

 
44,287

Other
33,373

 
31,006

Total Rental and Related Revenue from Continuing Operations
$
742,883

 
$
669,543

Rental and Related Revenue from Discontinued Operations
194,166

 
248,024

Total Rental and Related Revenue from Continuing and Discontinued Operations
$
937,049

 
$
917,567

The primary reasons for the increase in rental revenue from continuing operations, with specific references to a particular segment when applicable, are summarized below:
We acquired 108 properties, of which 87 were industrial, and placed nine developments in service from January 1, 2010 to December 31, 2011, which provided incremental revenues of $79.8 million in the year ended December 31, 2011 over 2010.
We consolidated 106 industrial buildings as a result of acquiring our joint venture partner's 50% interest in Dugan Realty, L.L.C. ("Dugan") on July 1, 2010. The consolidation of these buildings resulted in an increase of $37.2 million in rental and related revenue for the year ended December 31, 2011, as compared to the same period in 2010.
We sold 23 office properties to an unconsolidated joint venture in 2010 and the first quarter of 2011, resulting in a $55.2 million decrease in rental and related revenue from continuing operations in 2011.
The remaining increase in rental and related revenues is primarily due to improved results within the properties that have been in service for all of 2010 and 2011. Although rental rates declined slightly on our lease renewals, the effect was not significant to revenues and improved occupancy drove the overall improvement within these properties.











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Rental Expenses and Real Estate Taxes
The following table sets forth rental expenses and real estate taxes from continuing operations by reportable segment, as well as total rental expenses and real estate taxes from discontinued operations, for the years ended December 31, 2011 and 2010, respectively (in thousands): 
 
2011
 
2010
Rental Expenses:
 
 
 
Industrial
$
41,362

 
$
28,033

Office
77,979

 
88,378

Medical Office
17,121

 
12,780

Other
8,155

 
5,675

Total Rental Expenses from Continuing Operations
$
144,617

 
$
134,866

Rental Expenses from Discontinued Operations
60,430

 
72,146

Total Rental Expenses from Continuing and Discontinued Operations
$
205,047

 
$
207,012

Real Estate Taxes:
 
 
 
Industrial
$
59,353

 
$
42,303

Office
34,298

 
39,420

Medical Office
5,102

 
3,330

Other
3,524

 
3,553

Total Real Estate Tax Expense from Continuing Operations
$
102,277

 
$
88,606

Real Estate Tax Expense from Discontinued Operations
28,693

 
35,266

Total Real Estate Tax Expense from Continuing and Discontinued Operations
$
130,970

 
$
123,872

We recognized incremental rental expenses of $16.2 million associated with the additional 108 properties acquired (of which 87 were industrial) and nine developments placed in service since January 1, 2010. The July 1, 2010 consolidation of 106 industrial buildings in Dugan also resulted in a $5.3 million increase in rental expense for industrial properties. The aforementioned increases were partially offset by a decrease of $12.5 million related to 23 properties that were sold to an unconsolidated joint venture during 2010 and the first quarter of 2011.
We recognized incremental real estate taxes of $12.8 million associated with the additional 108 properties acquired and nine developments placed in service since January 1, 2010. The July 1, 2010 consolidation of 106 industrial buildings in Dugan resulted in incremental real estate taxes of $6.2 million. The aforementioned increases were partially offset by a decrease of $7.8 million related to 23 properties that were sold to an unconsolidated joint venture during 2010 and the first quarter of 2011. The remaining increases were the result of increased taxes on our properties that have been in service for all of 2010 and 2011.
Service Operations
The following table sets forth the components of the Service Operations reportable segment for the years ended December 31, 2011 and 2010, respectively (in thousands): 
 
2011
 
2010
Service Operations:
 
 
 
General contractor and service fee revenue
$
521,796

 
$
515,361

General contractor and other services expenses
(480,480
)
 
(486,865
)
Total
$
41,316

 
$
28,496

The increase in earnings from Service Operations was due to increased profitability on third-party construction activities performed during 2011 compared to 2010, as overall construction volume was relatively consistent between the years.



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Depreciation and Amortization Expense
Depreciation and amortization expense increased from $276.0 million in 2010 to $326.2 million in 2011 primarily as the result of acquisition activity, where depreciation expense is accelerated relative to developed properties, in 2010 and 2011.
Equity in Earnings of Unconsolidated Companies
Equity in earnings represents our ownership share of net income or loss from investments in unconsolidated companies that generally own and operate rental properties. Equity in earnings decreased from $8.0 million in 2010 to $4.6 million in 2011. The decrease was largely due to the consolidation of 106 properties upon the acquisition of our partner's 50% interest in Dugan on July 1, 2010.
Gain on Sale of Properties - Continuing Operations
Gains on sales of properties classified in continuing operations increased from $39.7 million in 2010 to $68.5 million in 2011. We sold 18 properties during 2011 that did not meet the criteria for inclusion in discontinued operations, compared to 17 of such properties in 2010. Of the properties sold in 2011 and 2010, 13 and seven properties, respectively, were sold to a 20%-owned joint venture. The combined gain on sale of these properties was $62.1 million and $31.9 million in 2011 and 2010, respectively.
Impairment Charges
Impairment charges classified in continuing operations include the impairment of undeveloped land and buildings, investments in unconsolidated subsidiaries and other real estate related assets. The increase from $9.8 million in 2010 to $12.9 million in 2011 is primarily due to the following activity: 
In 2011, we recognized $12.9 million of impairment charges related to parcels of land, which we intend to sell, where recent market activity led us to determine that a decline in fair value had occurred.
In 2010, we sold approximately 60 acres of land, in two separate transactions, which resulted in impairment charges of $9.8 million. These sales were opportunistic in nature and we had not identified or actively marketed this land for disposition, as it was previously intended to be held for development.
General and Administrative Expenses
General and administrative expenses increased from $41.3 million in 2010 to $43.1 million in 2011. The following table sets forth the factors that led to the increase in general and administrative expenses from 2010 to 2011 (in millions):
General and administrative expenses - 2010
$
41.3

Increase to overall pool of overhead costs (1)
5.7

Increased absorption of costs by wholly-owned development and leasing activities (2)
(3.7
)
Increased allocation of costs to Service Operations and Rental Operations
(0.2
)
General and administrative expenses - 2011
$
43.1

 
 
(1) The increase to our overall pool of overhead costs from 2010 is largely due to increased severance pay related to overhead reductions that took place near the end of 2011.
(2) Our total leasing activity increased and we also increased wholly owned development activities from 2010. We capitalized $25.3 million and $10.4 million of our total overhead costs to leasing and development, respectively, for consolidated properties during 2011, compared to capitalizing $23.5 million and $8.5 million of such costs, respectively, for 2010. Combined overhead costs capitalized to leasing and development totaled 20.6% and 19.1% of our overall pool of overhead costs for 2011 and 2010, respectively.
Interest Expense
Interest expense from continuing operations increased from $186.4 million in 2010 to $220.5 million in 2011. The increase was primarily a result of increased average outstanding debt during 2011 compared to 2010, which was driven by our acquisition activities as well as other uses of capital. A $7.2 million decrease in the capitalization of

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interest costs, the result of developed properties no longer meeting the criteria for interest capitalization, also contributed to the increase in interest expense.
Gain (Loss) on Debt Transactions
There were no gains or losses on debt transactions during 2011.
During 2010, through a cash tender offer and open market transactions, we repurchased certain of our outstanding series of unsecured notes scheduled to mature in 2011 and 2013. In total, we paid $292.2 million for unsecured notes that had a face value of $279.9 million. We recognized a net loss on extinguishment of $16.3 million after considering the write-off of unamortized deferred financing costs, discounts and other accounting adjustments.
Acquisition-Related Activity
During 2011, we recognized approximately $2.3 million in acquisition costs, compared to $1.9 million of such costs in 2010. During 2011, we also recognized a $1.1 million gain related to the acquisition of a building from one of our 50%-owned unconsolidated joint ventures, compared to a $57.7 million gain in 2010 on the acquisition of our joint venture partner's 50% interest in Dugan.
Critical Accounting Policies
The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Our estimates, judgments and assumptions are inherently subjective and based on the existing business and market conditions, and are therefore continually evaluated based upon available information and experience. Note 2 to the Consolidated Financial Statements includes further discussion of our significant accounting policies. Our management has assessed the accounting policies used in the preparation of our financial statements and discussed them with our Audit Committee and independent auditors. The following accounting policies are considered critical based upon materiality to the financial statements, degree of judgment involved in estimating reported amounts and sensitivity to changes in industry and economic conditions:
Accounting for Joint Ventures: We analyze our investments in joint ventures to determine if the joint venture is a variable interest entity (a "VIE") and would require consolidation. We (i) evaluate the sufficiency of the total equity at risk, (ii) review the voting rights and decision-making authority of the equity investment holders as a group, and whether there are any guaranteed returns, protection against losses, or capping of residual returns within the group and (iii) establish whether activities within the venture are on behalf of an investor with disproportionately few voting rights in making this VIE determination. To the extent that we (i) are the sole entity that has the power to direct the activities of the VIE and (ii) have the obligation or rights to absorb the VIE's losses or receive its benefits, then we would be determined to be the primary beneficiary of the VIE and would consolidate it. At each reporting period, we re-assess our conclusions as to which, if any, party within the VIE is considered the primary beneficiary. To the extent that our joint ventures do not qualify as VIEs, we further assess each partner's substantive participating rights to determine if the venture should be consolidated.
We have equity interests in unconsolidated joint ventures that own and operate rental properties and hold land for development. To the extent applicable, we consolidate those joint ventures that are considered to be VIE's where we are the primary beneficiary. For non-variable interest entities, we consolidate those joint ventures that we control through majority ownership interests or where we are the managing entity and our partner does not have substantive participating rights. Control is further demonstrated by the ability of the general partner to manage day-to-day operations, refinance debt and sell the assets of the joint venture without the consent of the limited partner and inability of the limited partner to replace the general partner. We use the equity method of accounting for those joint ventures where we do not have control over operating and financial policies. Under the equity method of accounting, our investment in each joint venture is included on our balance sheet; however, the assets and liabilities of the joint ventures for which we use the equity method are not included on our balance sheet.
To the extent that we contribute assets to a joint venture, our investment in the joint venture is recorded at our cost basis in the assets that were contributed to the joint venture. To the extent that our cost basis is different than the

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basis reflected at the joint venture level, the basis difference is amortized over the life of the related asset and included in our share of equity in earnings of the joint venture. We recognize gains on the contribution or sale of real estate to joint ventures, relating solely to the outside partner's interest, to the extent the economic substance of the transaction is a sale.
Cost Capitalization: Direct and certain indirect costs, including interest, clearly associated with the development, construction, leasing or expansion of real estate investments are capitalized as a cost of the property.
We capitalize interest and direct and indirect project costs associated with the initial construction of a property up to the time the property is substantially complete and ready for its intended use. We believe the completion of the building shell is the proper basis for determining substantial completion. The interest rate used to capitalize interest is based upon our average borrowing rate on existing debt.
We also capitalize direct and indirect costs, including interest costs, on vacant space during extended lease-up periods after construction of the building shell has been completed if costs are being incurred to ready the vacant space for its intended use. If costs and activities incurred to ready the vacant space cease, then cost capitalization is also discontinued until such activities are resumed. Once necessary work has been completed on a vacant space, project costs are no longer capitalized. We cease capitalization of all project costs on extended lease-up periods after the shorter of a one-year period after the completion of the building shell or when the property attains 90% occupancy. In addition, all leasing commissions paid to third parties for new leases or lease renewals are capitalized.
In assessing the amount of indirect costs to be capitalized, we first allocate payroll costs, on a department-by-department basis, among activities for which capitalization is warranted (i.e., construction, development and leasing) and those for which capitalization is not warranted (i.e., property management, maintenance, acquisitions and dispositions and general corporate functions). To the extent the employees of a department split their time between capitalizable and non-capitalizable activities, the allocations are made based on estimates of the actual amount of time spent in each activity. Once the payroll costs are allocated, the non-payroll costs of each department are allocated among the capitalizable and non-capitalizable activities in the same proportion as payroll costs.
To ensure that an appropriate amount of costs are capitalized, the amount of capitalized costs that are allocated to a specific project are limited to amounts using standards we developed. These standards consist of a percentage of the total development costs of a project and a percentage of the total gross lease amount payable under a specific lease. These standards are derived after considering the amounts that would be allocated if the personnel in the departments were working at full capacity. The use of these standards ensures that overhead costs attributable to downtime or to unsuccessful projects or leasing activities are not capitalized.
Impairment of Real Estate Assets: We evaluate our real estate assets, with the exception of those that are classified as held-for-sale, for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. If such an evaluation is considered necessary, we compare the carrying amount of that real estate asset, or asset group, with the expected undiscounted cash flows that are directly associated with, and that are expected to arise as a direct result of, the use and eventual disposition of that asset, or asset group. Our estimate of the expected future cash flows used in testing for impairment is based on, among other things, our estimates regarding future market conditions, rental rates, occupancy levels, costs of tenant improvements, leasing commissions and other tenant concessions, assumptions regarding the residual value of our properties at the end of our anticipated holding period and the length of our anticipated holding period and is, therefore, subjective by nature. These assumptions could differ materially from actual results. If our strategy changes or if market conditions otherwise dictate a reduction in the holding period and an earlier sale date, an impairment loss could be recognized and such loss could be material. To the extent the carrying amount of a real estate asset, or asset group, exceeds the associated estimate of undiscounted cash flows, an impairment loss is recorded to reduce the carrying value of the asset to its fair value.
The determination of the fair value of real estate assets is also highly subjective, especially in markets where there is a lack of recent comparable transactions. We primarily utilize the income approach to estimate the fair value of our income producing real estate assets. To the extent that the assumptions used in testing long-lived assets for

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impairment differ from those of a marketplace participant, the assumptions are modified in order to estimate the fair value of a real estate asset when an impairment charge is measured. In addition to determining future cash flows, which make the estimation of a real estate asset's undiscounted cash flows highly subjective, the selection of the discount rate and exit capitalization rate used in applying the income approach is also highly subjective.
To the extent applicable marketplace data is available, we generally use the market approach in estimating the fair value of undeveloped land that is determined to be impaired.
Real estate assets that are classified as held-for-sale are reported at the lower of their carrying value or their fair value, less estimated costs to sell.
Acquisition of Real Estate Property and Related Assets: We allocate the purchase price of acquired properties to tangible and identified intangible assets based on their respective fair values, using all pertinent information available at the date of acquisition. The allocation to tangible assets (buildings, tenant improvements and land) is based upon management's determination of the value of the property as if it were vacant. This “as-if vacant” value is estimated using an income, or discounted cash flow, approach that relies upon internally determined assumptions that we believe are consistent with current market conditions for similar properties. The most important assumptions in determining the allocation of the purchase price to tangible assets are the exit capitalization rate, discount rate, estimated market rents, and hypothetical expected lease-up periods. The purchase price of real estate assets is also allocated to intangible assets consisting of the above or below market component of in-place leases and the value of in-place leases. 
The value allocable to the above or below market component of an acquired in-place lease is determined based upon the present value (using a discount rate which reflects the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be received pursuant to the lease over its remaining term and (ii) management's estimate of the amounts that would be received using fair market rates over the remaining term of the lease. The amounts allocated to above market leases are included in deferred leasing and other costs in the balance sheet and below market leases are included in other liabilities in the balance sheet; both are amortized to rental income over the remaining terms of the respective leases.
Factors considered in determining the value allocable to in-place leases include estimates, during hypothetical expected lease-up periods, of space that is actually leased at the time of acquisition, of lost rent at market rates, fixed operating costs that will be recovered from tenants, and theoretical leasing commissions required to execute similar leases. These intangible assets are included in deferred leasing and other costs in the balance sheet and are amortized over the remaining term of the existing lease, or the anticipated life of the customer relationship, as applicable.
We record assets acquired in step acquisitions at their full fair value and record a gain or loss for the difference between the fair value and the carrying value of our existing equity interest. Additionally, contingencies arising from a business combination are recorded at fair value if the acquisition date fair value can be determined during the measurement period.
Valuation of Receivables: We are subject to tenant defaults and bankruptcies that could affect the collection of rent due under leases or of outstanding receivables. In order to mitigate these risks, we perform credit reviews and analyses on major existing tenants and prospective tenants before leases are executed. We have established the following procedures and policies to evaluate the collectability of outstanding receivables and record allowances:
We maintain a tenant "watch list" containing a list of significant tenants for which the payment of receivables and future rent may be at risk. Various factors such as late rent payments, lease or debt instrument defaults, and indications of a deteriorating financial position are considered when determining whether to include a tenant on the watch list.
As a matter of policy, we reserve the entire receivable balance, including straight-line rent, of any tenant with an amount outstanding over 90 days.

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Straight-line rent receivables for any tenant on the watch list or any other tenant identified as a potential long-term risk, regardless of the status of current rent receivables, are reviewed and reserved as necessary.
Construction Contracts: We recognize income on construction contracts where we serve as a general contractor on the percentage of completion method. Using this method, profits are recorded on the basis of our estimates of the overall profit and percentage of completion of individual contracts. A portion of the estimated profits is recognized based upon our estimates of the percentage of completion of the construction contract. To the extent that a fixed-price contract is estimated to result in a loss, the loss is recorded immediately. Cumulative revenues recognized may be less or greater than cumulative costs and profits billed at any point in time during a contract's term. This revenue recognition method involves inherent risks relating to profit and cost estimates with those risks reduced through approval and monitoring processes.
With regard to critical accounting policies, management has discussed the following with the Audit Committee: 
Criteria for identifying and selecting our critical accounting policies;
Methodology in applying our critical accounting policies; and
Impact of the critical accounting policies on our financial statements.
The Audit Committee has reviewed the critical accounting policies identified by management.
Liquidity and Capital Resources
Sources of Liquidity
We expect to meet our short-term liquidity requirements over the next twelve months, including payments of dividends and distributions as well as the capital expenditures needed to maintain our current real estate assets, primarily through working capital, net cash provided by operating activities and proceeds received from real estate dispositions. At December 31, 2012 we held $33.9 million of cash and we had $285.0 million of outstanding borrowings on the Partnership's $850.0 million unsecured line of credit.
In addition to our existing sources of liquidity, we expect to meet long-term liquidity requirements, such as scheduled mortgage and unsecured debt maturities, property acquisitions, financing of development activities and other capital improvements, through multiple sources of capital including operating cash flow, proceeds from property dispositions and accessing the public debt and equity markets.
In January 2013, the General Partner completed a public offering of 41.4 million common shares, at an issue price of $14.25 per share, resulting in gross proceeds of $590.0 million and, after underwriting fees and estimated offering costs, net proceeds of approximately $571.9 million. A portion of the net proceeds from this offering were used to repay all of the outstanding borrowings under the Partnership's existing revolving credit facility, which had an outstanding balance of $285.0 million as of December 31, 2012, and the remaining proceeds will be used to redeem all of the General Partner's outstanding Series O Shares, which are redeemable as of February 22, 2013, and for general corporate purposes.
Rental Operations
Cash flows from Rental Operations is our primary source of liquidity and provides a stable cash flow to fund operational expenses. We believe that this cash-based revenue stream is substantially aligned with revenue recognition (except for periodic straight-line rental income accruals and amortization of above or below market rents) as cash receipts from the leasing of rental properties are generally received in advance of, or a short time following, the actual revenue recognition.
We are subject to a number of risks related to general economic conditions, including reduced occupancy, tenant defaults and bankruptcies and potential reduction in rental rates upon renewal or re-letting of properties, any of which would result in reduced cash flow from operations.


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Unsecured Debt and Equity Securities
Our unsecured line of credit as of December 31, 2012 is described as follows (in thousands): 
Description
Borrowing
Capacity
 
Maturity
Date
 
Outstanding Balance
at December 31, 2012
Unsecured Line of Credit – Partnership
$
850,000

 
December 2015
 
$
285,000

All amounts that were outstanding on the line of credit at December 31, 2012 were repaid in January 2013 with proceeds from the General Partner's common equity offering.
The Partnership's unsecured line of credit has a borrowing capacity of $850.0 million with the interest rate on borrowings of LIBOR plus 1.25% (equal to 1.47% for borrowings as of December 31, 2012) and a maturity date of December 2015. Subject to certain conditions, the terms also include an option to increase the facility by up to an additional $400.0 million, for a total of up to $1.25 billion. This line of credit provides us with an option to obtain borrowings from financial institutions that participate in the line at rates that may be lower than the stated interest rate, subject to certain restrictions.
This line of credit contains financial covenants that require us to meet certain financial ratios and defined levels of performance, including those related to fixed charge coverage, unsecured interest expense coverage and debt-to-asset value (with asset value being defined in the Partnership's unsecured line of credit agreement). As of December 31, 2012, we were in compliance with all covenants under this line of credit.
At December 31, 2012, we had on file with the SEC an automatic shelf registration statement on Form S-3 relating to the offer and sale, from time to time, of an indeterminate amount of debt and equity securities (including guarantees of the Partnership's debt securities by the General Partner). Equity securities are offered and sold by the General Partner and the net proceeds of such offerings are contributed to the Partnership in exchange for additional General Partner Units or Preferred Units. From time to time, we expect to issue additional securities under this automatic shelf registration statement to fund the repayment of long-term debt upon maturity and for other general corporate purposes.
On February 11, 2010, the General Partner entered into an at the market equity program that allowed it to issue new common shares, from time to time, with an aggregate offering price of up to $150.0 million. The General Partner fully utilized this program during the first three months of 2012, issuing approximately 10.8 million common shares, resulting in gross proceeds of $150.0 million. The General Partner paid approximately $3.0 million in commissions related to the sales of these common shares and, after considering those commissions and other costs, generated net proceeds of approximately $147.0 million from the offerings.
On May 7, 2012, the General Partner entered into a new at the market equity program that allows it to issue new common shares, from time to time, with an aggregate offering price of up to $200.0 million. Through December 31, 2012, the General Partner has issued approximately 11.9 million common shares under this program, resulting in gross proceeds of approximately $172.2 million. The General Partner paid approximately $3.4 million in commissions related to the sales of these common shares and, after considering those commissions and other costs, generated net proceeds of approximately $168.3 million from the offerings.
The indentures (and related supplemental indentures) governing our outstanding series of notes also require us to comply with financial ratios and other covenants regarding our operations. We were in compliance with all such covenants as of December 31, 2012.
Sale of Real Estate Assets
We regularly work to identify, consider and pursue opportunities to dispose of non-strategic properties on an opportunistic basis and on a basis that is generally consistent with our strategic plans. Our ability to dispose of such properties on favorable terms, or at all, is dependent upon a number of factors including the availability of credit to potential buyers to purchase properties at prices that we consider acceptable. Although we believe that we have demonstrated our ability to generate significant liquidity through the disposition of non-strategic properties,

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potential future adverse changes to general market and economic conditions could negatively impact our further ability to dispose of such properties.
Transactions with Unconsolidated Entities
Transactions with unconsolidated partnerships and joint ventures also provide a source of liquidity. From time to time we will sell properties to unconsolidated entities, while retaining a continuing interest in that entity, and receive proceeds commensurate to those interests that we do not own. Additionally, unconsolidated entities will from time to time obtain debt financing and will distribute to us, and our joint venture partners, all or a portion of the proceeds from such debt financing.

Uses of Liquidity
Our principal uses of liquidity include the following:
 
property investment;
leasing/capital costs;
dividends and distributions to shareholders and unitholders;
long-term debt maturities;
opportunistic repurchases of outstanding debt and preferred stock; and
other contractual obligations.
Property Investment
We continue to pursue an asset repositioning strategy that involves increasing our investment concentration in industrial and medical office properties while reducing our investment concentration in suburban office properties. Pursuant to this strategy, we evaluate development and acquisition opportunities based upon market outlook, including general economic conditions, supply and long-term growth potential. Our ability to make future property investments, along with being dependent upon identifying suitable acquisition and development opportunities, is also dependent upon our continued access to our longer-term sources of liquidity, including issuances of debt or equity securities as well as generating cash flow by disposing of selected properties.
Leasing/Capital Costs
Tenant improvements and leasing commissions related to the initial leasing of newly completed or vacant space in acquired properties are referred to as first generation expenditures. Such expenditures are included within development of real estate investments and other deferred leasing costs in our Consolidated Statements of Cash Flows.
Tenant improvements and leasing costs to re-let rental space that had been previously under lease to tenants are referred to as second generation expenditures. Building improvements that are not specific to any tenant but serve to improve integral components of our real estate properties are also second generation expenditures.
One of our principal uses of our liquidity is to fund the second generation leasing/capital expenditures of our real estate investments. As illustrated in the tables below, we have significantly reduced such expenditures in 2012 as a direct result of repositioning our investment concentration in office properties in accordance with our asset strategy.
The following is a summary of our second generation capital expenditures by type of expenditure (in thousands):
 
 
2012
 
2011
 
2010
Second generation tenant improvements
$
26,643

 
$
50,079

 
$
36,676

Second generation leasing costs
31,059

 
38,130

 
39,090

Building improvements
6,182

 
11,055

 
12,957

Total
$
63,884

 
$
99,264

 
$
88,723



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The following is a summary of our second generation capital expenditures by reportable operating segment (in thousands):
 
2012
 
2011
 
2010
Industrial
$
33,095

 
$
34,872

 
$
23,271

Office
30,092

 
63,933

 
65,203

Medical Office
641

 
410

 
183

Non-reportable Rental Operations segments
56

 
49

 
66

Total
$
63,884

 
$
99,264

 
$
88,723

Both our first and second generation expenditures vary significantly between leases on a per square foot basis, dependent upon several factors including the product type, the nature of a tenant's operations, the specific physical characteristics of each individual property as well as the market in which the property is located. Second generation expenditures related to the 79 suburban office buildings that were sold in the Blackstone Office Disposition in December 2011 totaled $26.2 million in 2011 and $20.2 million in 2010.
Dividends and Distributions
The General Partner is required to meet the distribution requirements of the Internal Revenue Code of 1986, as amended (the "Code"), in order to maintain its REIT status. Because depreciation is a non-cash expense, cash flow will typically be greater than operating income. We paid dividends or distributions of $0.68 per common share or Common Unit for each of the years ended December 31, 2012, 2011 and 2010. We expect to continue to distribute at least an amount equal to our taxable earnings, to meet the requirements to maintain the General Partner's REIT status, and additional amounts as determined by the General Partner's board of directors. Distributions are declared at the discretion of the General Partner's board of directors and are subject to actual cash available for distribution, our financial condition, capital requirements and such other factors as the General Partner's board of directors deems relevant.
At December 31, 2012 the General Partner had four series of preferred stock outstanding. The annual dividend rates on the General Partner's preferred shares range between 6.5% and 8.375% and are paid in arrears quarterly. In January 2013, the General Partner called for redemption all of its outstanding Series O Shares. The redemption date is February 22, 2013 and the cash redemption price is $178.0 million. As a result of this redemption, the General Partner will reduce its future quarterly dividend commitments by $3.7 million.
In March 2012, the General Partner redeemed all of its Series M Shares for a total payment of $168.3 million, thus reducing its future quarterly dividend commitments by $2.9 million.
In July 2011, the General Partner redeemed all of its 7.25% Series N Cumulative Redeemable Preferred Shares ("Series N Shares") for a total payment of $108.6 million, thus reducing its future quarterly dividend commitments by $2.0 million.
Debt Maturities
Debt outstanding at December 31, 2012 had a face value totaling $4.4 billion with a weighted average interest rate of 5.86% and with maturity dates ranging between 2013 and 2028. Of this total amount, we had $3.0 billion of unsecured debt, $1.2 billion of secured debt and $285.0 million outstanding on the Partnership's unsecured line of credit at December 31, 2012. Scheduled principal amortization and maturities of such debt totaled $360.4 million for the year ended December 31, 2012.





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The following is a summary of the scheduled future amortization and maturities of our indebtedness at December 31, 2012 (in thousands, except percentage data): 
 
Future Repayments
 
Weighted Average
Year
Scheduled
Amortization
 
Maturities
 
Total
 
Interest Rate of
Future Repayments
2013
$
17,921

 
$
529,811

 
$
547,732

 
6.24%
2014
16,659

 
314,904

 
331,563

 
6.14%
2015
14,999

 
664,946

 
679,945

 
4.53%
2016
12,591

 
532,249

 
544,840

 
6.09%
2017
10,100

 
556,511

 
566,611

 
5.90%
2018
7,937

 
300,000

 
307,937

 
6.08%
2019
6,936

 
518,438

 
525,374

 
7.97%
2020
5,381

 
250,000

 
255,381

 
6.73%
2021
3,416

 
9,047

 
12,463

 
5.59%
2022
3,611

 
600,000

 
603,611

 
4.20%
2023
3,817

 

 
3,817

 
5.60%
Thereafter
10,361

 
50,000

 
60,361

 
7.02%
 
$
113,729

 
$
4,325,906

 
$
4,439,635

 
5.86%
We anticipate generating capital to fund our debt maturities by using undistributed cash generated from our Rental Operations and property dispositions, and by raising additional capital from future debt or equity transactions, such as our January 2013 common offering.
Repurchases of Outstanding Debt and Preferred Stock
The General Partner paid $168.3 million in March 2012 to redeem its Series M Shares at par value.
In January 2013, the General Partner called for redemption all 711,820 of its outstanding Series O Shares. The redemption date is February 22, 2013 and the cash redemption price for the Series O Shares is $178.0 million, or $250.00 per share.
To the extent that it supports our overall capital strategy, we may purchase certain of our outstanding unsecured debt prior to its stated maturity or the General Partner may redeem or repurchase certain of its outstanding series of preferred stock.
Guarantee Obligations
We are subject to various guarantee obligations in the normal course of business and, in most cases, do not anticipate these obligations to result in significant cash payments.
We are, however, subject to a joint and several guarantee of the loan agreement of the 3630 Peachtree joint venture. A contingent liability in the amount of $17.3 million, which represents our maximum remaining future exposure under the guarantee, is included within other liabilities in our Consolidated Balance Sheet as of December 31, 2012 based on the probability of us being required to pay this obligation to the lender.








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Historical Cash Flows
Cash and cash equivalents were $33.9 million and $213.8 million at December 31, 2012 and 2011, respectively. The following highlights significant changes in net cash associated with our operating, investing and financing activities (in thousands): 
 
Years Ended December 31,
 
2012
 
2011
 
2010
General Partner
 
 
 
 
 
Net Cash Provided by Operating Activities
$
299,157

 
$
337,537

 
$
391,156

Net Cash Provided by (Used for) Investing Activities
(967,616
)
 
750,935

 
(288,790
)
Net Cash Provided by (Used for) Financing Activities
488,539

 
(893,047
)
 
(231,304
)
 
 
 
 
 
 
Partnership
 
 
 
 
 
Net Cash Provided by Operating Activities
$
299,256

 
$
337,572

 
$
390,776

Net Cash Provided by (Used for) Investing Activities
(967,616
)
 
750,935

 
(288,790
)
Net Cash Provided by (Used for) Financing Activities
488,423

 
(893,100
)
 
(231,106
)
Operating Activities
Cash flows from operating activities provide the cash necessary to meet normal operational requirements of our Rental Operations and Service Operations activities. The receipt of rental income from Rental Operations continues to provide the primary source of our revenues and operating cash flows.
The decrease in cash flows from operations from 2011 to 2012, noted in the table above, was primarily due to the overall reduction in rental revenues from discontinued operations, which was driven by the disposition of a significant portion of our office properties in December 2011. This overall change in product mix correspondingly drove a $35.4 million decrease in cash outflows for second generation capital expenditures (classified within investing activities) during 2012.
The decrease in net cash provided by operating activities from 2010 to 2011 is, in large part, due to a $10.9 million increase in cash outflows from third-party construction contracts as well as a $14.7 million increase in cash paid for interest. Our third-party construction activities were profitable, in the aggregate, during 2011 and the net cash outflows during the year were the result of the timing of cash receipts and payments.
Investing Activities
Investing activities are one of the primary uses of our liquidity. Development and acquisition activities typically generate additional rental revenues and provide cash flows for operational requirements. Highlights of significant cash sources and uses are as follows: 
Real estate development costs totaled $264.8 million for the year ended December 31, 2012, compared to $162.1 million and $119.4 million for the years ended December 31, 2011 and 2010, respectively. We have increased our development activities in 2012 for industrial and medical office properties.
During 2012, we paid cash of $665.5 million for real estate acquisitions, compared to $544.8 million in 2011 and $488.5 million in 2010. In addition, we paid cash of $64.9 million for undeveloped land in 2012, compared to $14.1 million in 2011 and $14.4 million in 2010. The increase in land acquisitions in 2012 is the result of land acquired for specific development projects that commenced shortly after acquisition.
Sales of land and depreciated property provided $138.1 million in net proceeds in 2012, compared to $1.57 billion in 2011 and $499.5 million in 2010.
We received capital distributions (as a result of the sale of properties or refinancing) from unconsolidated subsidiaries of $5.2 million in 2012, $59.3 million in 2011 and $22.1 million in 2010.
During 2012, we contributed or advanced $28.5 million to fund development activities within unconsolidated companies, compared to $34.6 million in 2011 and $53.2 million in 2010.


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Financing Activities
The following items highlight significant capital transactions:
Throughout 2012, the General Partner issued 22.7 million shares of common stock for net proceeds of $315.3 million. The General Partner had no common stock issuances in 2011. In June 2010, the General Partner issued 26.5 million shares of common stock for net proceeds of $298.1 million.
In March 2012, the General Partner redeemed all of the outstanding shares of its Series M Shares for a total payment of $168.3 million. In July 2011, the General Partner redeemed all of the outstanding shares of its Series N Shares for a total payment of $108.6 million.
Throughout 2011 and 2010, the General Partner completed open market repurchases of approximately 80,000 shares and 4.5 million shares, respectively, of its Series O Shares. The General Partner paid $2.1 million in 2011 for shares that had a face value of $2.0 million, compared to $118.8 million in 2010 for shares that had a face value of $112.1 million.
In September 2012, we issued $300.0 million of senior unsecured notes that bear interest at 3.875% and mature on October 15, 2022. In June 2012, we issued $300.0 million of senior unsecured notes that bear interest at 4.375% and mature on June 15, 2022. We had no senior unsecured note issuances in 2011. In April 2010, we issued $250.0 million of senior unsecured notes that bear interest at an effective rate of 6.75% and mature in March 2020.
In October 2012, we repaid $50.0 million of medium term notes, which had an effective interest rate of 5.45%, at their scheduled maturity date. In August 2012, we repaid $150.0 million of senior unsecured notes, which had an effective interest rate of 6.01%, at their scheduled maturity date. In July 2012, one of our consolidated subsidiaries repaid $21.0 million of variable rate unsecured debt, which bore interest at a rate of LIBOR plus 0.85%, at its scheduled maturity. In December 2011, we repaid the remaining $167.6 million of our 3.75% Exchangeable Notes, which had an effective interest rate of 5.62%, at their scheduled maturity date. In August and March 2011, we also repaid $122.5 million and $42.5 million, respectively, of unsecured notes with an effective rate of 5.69% and 6.96%, respectively, at their scheduled maturity dates. In January 2010, we repaid $99.8 million of senior unsecured notes with an effective interest rate of 5.37% at their scheduled maturity date.
During 2010, through a cash tender offer and open market transactions, we repurchased certain of our outstanding series of unsecured notes scheduled to mature in 2011 and 2013. In total, we paid $292.2 million for unsecured notes that had a face value of $279.9 million.
Throughout the year ended December 31, 2012, we repaid five secured loans totaling $102.1 million, which had a weighted average stated interest rate of 6.08%, at their maturity dates. This compares to payoffs of $12.8 million in 2011, comprised of four individually insignificant secured loans, and $195.4 million in 2010, which was secured debt that we assumed upon the July 2010 acquisition of our joint venture partner's 50% interest in Dugan.
We increased net borrowings on the Partnership's $850.0 million line of credit by $285.0 million for the year ended December 31, 2012, compared to a decrease of $175.0 million in 2011 and an increase of $175.0 million in 2010.
We paid cash dividends or distributions of $0.68 per common share or per Common Unit in each of the years ended December 31, 2012, 2011 and 2010.
Credit Ratings
We are currently assigned investment grade corporate credit ratings on our senior unsecured notes from Moody's Investors Service and Standard and Poor's Ratings Group. Our senior unsecured notes have been assigned ratings of BBB- and Baa2 by Standard and Poor's Ratings Group and Moody's Investors Service, respectively.
Our preferred shares carry ratings of BB and Baa3 from Standard and Poor's Ratings Group and Moody's Investors Service, respectively.
The ratings of our senior unsecured notes and preferred shares could change based upon, among other things, the impact that prevailing economic conditions may have on our results of operations and financial condition.

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Financial Instruments
We are exposed to capital market risk, such as changes in interest rates. In order to reduce the volatility relating to interest rate risk, we may enter into interest rate hedging arrangements from time to time. We do not utilize derivative financial instruments for trading or speculative purposes.
Off Balance Sheet Arrangements
Investments in Unconsolidated Companies
We have equity interests in unconsolidated partnerships and limited liability companies that primarily own and operate rental properties and hold land for development. These unconsolidated joint ventures are primarily engaged in the operations and development of industrial, office and medical office real estate properties. The equity method of accounting (see Critical Accounting Policies) is used for these investments in which we have the ability to exercise significant influence, but not control, over operating and financial policies. As a result, the assets and liabilities of these entities are not included on our balance sheet.
Our investments in and advances to unconsolidated subsidiaries represent approximately 5% of our total assets as of December 31, 2012 and 2011, respectively. We believe that these investments provide several benefits to us, including increased market share, tenant and property diversification and an additional source of capital to fund real estate projects.
The following table presents summarized financial information for unconsolidated companies for the years ended December 31, 2012 and 2011, respectively (in thousands, except percentage data):
 
Joint Ventures
 
2012
 
2011
Land, buildings and tenant improvements, net
$
1,991,823

 
$
2,051,412

Construction in progress
61,663

 
12,208

Undeveloped land
175,143

 
177,742

Other assets
289,173

 
309,409

 
$
2,517,802

 
$
2,550,771

Indebtedness
$
1,314,502

 
$
1,317,554

Other liabilities
70,519

 
71,241

 
1,385,021

 
1,388,795

Owners' equity
1,132,781

 
1,161,976

 
$
2,517,802

 
$
2,550,771

Rental revenue
$
291,534


$
272,937

Gain on sale of properties
$
6,792


$
2,304

Net income
$
3,125


$
10,709

Total square feet
26,487

 
25,569

Percent leased*
92.15
%
 
90.42
%
 *Represents the percentage of total square feet leased based on executed leases and without regard to whether the leases have commenced.
We do not have any relationships with unconsolidated entities or financial partnerships ("special purpose entities") that have been established solely for the purpose of facilitating off-balance sheet arrangements.







-46-


Contractual Obligations
At December 31, 2012, we were subject to certain contractual payment obligations as described in the following table:
 
Payments due by Period (in thousands)
Contractual Obligations
Total
 
2013
 
2014
 
2015
 
2016
 
2017
 
Thereafter
Long-term debt (1)
$
5,370,074

 
$
777,490

 
$
552,693

 
$
582,411

 
$
710,802

 
$
692,959

 
$
2,053,719

Line of credit (2)
303,597

 
6,365

 
6,365

 
290,867

 

 

 

Share of unconsolidated joint ventures' debt (3)
484,823

 
136,231

 
64,963

 
90,999

 
23,801

 
106,059

 
62,770

Ground leases
206,487

 
3,692

 
3,769

 
3,788

 
3,814

 
3,835

 
187,589

Operating leases
10,174

 
2,638

 
2,667

 
1,858

 
1,720

 
699

 
592

Development and construction backlog costs (4)
309,239

 
301,425

 
7,814

 

 

 

 

Other
1,807

 
514

 
394

 
397

 
401

 
101

 

Total Contractual Obligations
$
6,686,201

 
$
1,228,355

 
$
638,665

 
$
970,320

 
$
740,538

 
$
803,653

 
$
2,304,670

(1)
Our long-term debt consists of both secured and unsecured debt and includes both principal and interest. Interest expense for variable rate debt was calculated using the interest rates as of December 31, 2012.
(2)
Our unsecured line of credit consists of an operating line of credit that matures December 2015. Interest expense for our unsecured line of credit was calculated using the most recent stated interest rate that was in effect.
(3)
Our share of unconsolidated joint venture debt includes both principal and interest. Interest expense for variable rate debt was calculated using the interest rate at December 31, 2012.
(4)
Represents estimated remaining costs on the completion of owned development projects and third-party construction projects.
Related Party Transactions
We provide property and asset management, leasing, construction and other tenant related services to unconsolidated companies in which we have equity interests. For the years ended December 31, 2012, 2011 and 2010, respectively, we earned management fees of $11.0 million, $10.1 million and $7.6 million, leasing fees of $3.4 million, $4.4 million and $2.7 million and construction and development fees of $4.7 million, $6.7 million and $10.3 million from these companies, prior to elimination. We recorded these fees based on contractual terms that approximate market rates for these types of services, and we have eliminated our ownership percentages of these fees in the consolidated financial statements.
Commitments and Contingencies
We have guaranteed the repayment of $83.8 million of economic development bonds issued by various municipalities in connection with certain commercial developments. We will be required to make payments under our guarantees to the extent that incremental taxes from specified developments are not sufficient to pay the bond debt service. Management does not believe that it is probable that we will be required to make any significant payments in satisfaction of these guarantees.
We also have guaranteed the repayment of secured and unsecured loans of five of our unconsolidated subsidiaries. At December 31, 2012, the maximum guarantee exposure for these loans was approximately $247.1 million. Included in our total guarantee exposure is a joint and several guarantee of the loan agreement of the 3630 Peachtree joint venture, which had a carrying amount of $17.3 million on the balance sheet at December 31, 2012.
We lease certain land positions with terms extending to October 2105, with a total obligation of $206.5 million. No payments on these ground leases, which are classified as operating leases, are material in any individual year.
We are subject to various legal proceedings and claims that arise in the ordinary course of business. In the opinion of management, the amount of any ultimate liability with respect to these actions will not materially affect our consolidated financial statements or results of operations.
We own certain parcels of land that are subject to special property tax assessments levied by quasi municipal entities. To the extent that such special assessments are fixed and determinable, the discounted value of the full

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assessment is recorded as a liability. We have $12.5 million of such special assessment liabilities, which are included within other liabilities on our consolidated balance sheet as of December 31, 2012.
Item 7A.  Quantitative and Qualitative Disclosure About Market Risks
We are exposed to interest rate changes primarily as a result of our line of credit and long-term borrowings. Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve our objectives, we borrow primarily at fixed rates. We do not enter into derivative or interest rate transactions for speculative purposes. We have two outstanding swaps, which fix the rates on two of our variable rate loans and are not significant to our Financial Statements at December 31, 2012.
Our interest rate risk is monitored using a variety of techniques. The table below presents the principal amounts (in thousands) of the expected annual maturities, weighted average interest rates for the average debt outstanding in the specified period, fair values (in thousands) and other terms required to evaluate the expected cash flows and sensitivity to interest rate changes.
 
2013
 
2014
 
2015
 
2016
 
2017
 
Thereafter
 
Total
 
Fair Value
Fixed rate secured debt
$
119,549

 
$
78,186

 
$
142,056

 
$
391,794

 
$
102,017

 
$
309,404

 
$
1,143,006

 
$
1,251,477

Weighted average interest rate
5.72%
 
5.63%
 
5.42%
 
5.85%
 
5.96%
 
7.43%
 
 
 
 
Variable rate secured debt
$
1,218

 
$
1,285

 
$
663

 
$
676

 
$
12,071

 
$
2,499

 
$
18,412

 
$
18,386

Weighted average interest rate
1.20%
 
1.18%
 
2.06%
 
2.09%
 
3.51%
 
0.20%
 
 
 
 
Fixed rate unsecured debt
$
426,965

 
$
252,092

 
$
252,226

 
$
152,370

 
$
452,523

 
$
1,457,041

 
$
2,993,217

 
$
3,336,386

Weighted average interest rate
6.40%
 
6.33%
 
7.49%
 
6.71%
 
5.95%
 
5.86%
 
 
 
 
Unsecured line of credit
$

 
$

 
$
285,000

 
$

 
$

 
$

 
$
285,000

 
$
285,632

Rate at December 31, 2012
N/A
 
N/A
 
1.47%
 
N/A
 
N/A
 
N/A
 
 
 
 
As the table incorporates only those exposures that exist as of December 31, 2012, it does not consider those exposures or positions that could arise after that date. As a result, the ultimate impact of interest rate fluctuations will depend on future exposures that arise, our hedging strategies at that time to the extent we are party to interest rate derivatives, and interest rates. Interest expense on our unsecured line of credit will be affected by fluctuations in LIBOR indices as well as changes in our credit rating. The interest rate at such point in the future as we may renew, extend or replace our unsecured line of credit will be heavily dependent upon the state of the credit environment.
At December 31, 2012, the face value of our unsecured debt was $3.0 billion and we estimated the fair value of that unsecured debt to be $3.3 billion. At December 31, 2011, the face value of our unsecured notes was $2.6 billion and our estimate of the fair value of that debt was $2.8 billion.
Item 8.  Financial Statements and Supplementary Data
The financial statements and supplementary data are included under Item 15 of this Report.
Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There was no change or disagreement with our accountants related to our accounting and financial disclosures.



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Item 9A.  Controls and Procedures
Controls and Procedures (General Partner)
We conducted an evaluation of the effectiveness of the design and operation of our "disclosure controls and procedures" as of the end of the period covered by this Report. The controls evaluation was done under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer.
Attached as exhibits to this Report are certifications of our Chief Executive Officer and Chief Financial Officer, which are required in accordance with Rule 13a-14 of the Securities Exchange Act of 1934. This Controls and Procedures section includes the information concerning the controls evaluation referred to in the certifications and it should be read in conjunction with the certifications for a more complete understanding of the topics presented.
Disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act") are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.
Based on the disclosure controls and procedures evaluation referenced above, our Chief Executive Officer and Chief Financial Officer have concluded that as of the end of the period covered by this Report, our disclosure controls and procedures were effective.
Management's annual report on internal control over financial reporting and the audit report of our registered public accounting firm are included in Item 15 of Part IV under the headings "Management's Report on Internal Control" and "Report of Independent Registered Public Accounting Firm," respectively, and are incorporated herein by reference.
There were no changes in our internal controls over financial reporting during the quarter ended December 31, 2012, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Controls and Procedures (Partnership)
We conducted an evaluation of the effectiveness of the design and operation of our "disclosure controls and procedures" as of the end of the period covered by this Report. The controls evaluation was done under the supervision and with the participation of management, including the General Partner's Chief Executive Officer and Chief Financial Officer.
Attached as exhibits to this Report are certifications of the General Partner's Chief Executive Officer and Chief Financial Officer, which are required in accordance with Rule 13a-14 of the Securities Exchange Act of 1934. This Controls and Procedures section includes the information concerning the controls evaluation referred to in the certifications and it should be read in conjunction with the certifications for a more complete understanding of the topics presented.
Disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act") are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management, including the General Partner's principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

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Based on the disclosure controls and procedures evaluation referenced above, the General Partner's Chief Executive Officer and Chief Financial Officer have concluded that as of the end of the period covered by this Report, our disclosure controls and procedures were effective.
Management's annual report on internal control over financial reporting and the audit report of our registered public accounting firm are included in Item 15 of Part IV under the headings "Management's Report on Internal Control" and "Report of Independent Registered Public Accounting Firm," respectively, and are incorporated herein by reference.
There were no changes in our internal controls over financial reporting during the quarter ended December 31, 2012, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Item 9B.  Other Information
There was no information required to be disclosed in a report on Form 8-K during the fourth quarter of 2012 for which no Form 8-K was filed.
PART III
Item 10.  Directors and Executive Officers of the Registrant
The following is a summary of the executive officers of the General Partner as of January 1, 2013:
Dennis D. Oklak, age 59. Mr. Oklak joined the General Partner in 1986. He has held various senior executive positions within the General Partner and was promoted to Chief Executive Officer of the General Partner and joined the General Partner's Board of Directors in 2004. In 2005, Mr. Oklak was appointed Chairman of the General Partner's Board of Directors. Mr. Oklak serves on the Executive Board of the National Association of Real Estate Investment Trusts, or "NAREIT," the Board of Trustees of the Urban Land Institute and is a member of the Real Estate Roundtable. Mr. Oklak serves as Co-Chairman of the Central Indiana Corporate Partnership, the Board of Trustees of the Crossroads of America Council of the Boy Scouts of America Foundation and the Dean's Advisory Board for Ball State University's Miller College of Business. From 2003 to 2009, Mr. Oklak was a member of the board of directors of publicly-traded recreational vehicle manufacturer, Monaco Coach Corporation. Mr. Oklak has served as a director of the General Partner since 2004.
Christie B. Kelly, age 51. Ms. Kelly was appointed as Executive Vice President and Chief Financial Officer of the General Partner in 2009. Ms. Kelly has over 25 years of experience ranging from financial planning and strategic development to senior leadership roles in financial management, mergers and acquisitions, information technology and investment banking. Prior to joining the General Partner, Ms. Kelly served as Senior Vice President of the Global Real Estate Group at Lehman Brothers from 2007 to 2009. Previously, Ms. Kelly was employed by General Electric Company from 1983 to 2007 and served in numerous finance and operational leadership roles, including Business Development Leader for Mergers and Acquisitions for GE Real Estate from 2003 to 2007. Ms. Kelly serves on the Board of Directors of the Butler University College of Business as well as on the Board of Directors of the National Bank of Indianapolis Corporation.
Steven R. Kennedy, age 56. Mr. Kennedy has served as Executive Vice President, Construction since 2004. From 1986 until 2004, he served in various capacities in the construction group, most recently as Senior Vice President.
James B. Connor, age 54.  Mr. Connor was appointed Senior Regional Executive Vice President of the General Partner in 2011.  His responsibilities include managing and leading the business units in Minneapolis, St. Louis, Chicago, Indianapolis, Cincinnati, Columbus and Cleveland.  Prior to being named Senior Regional Executive Vice President, Mr. Connor held various senior management positions with the General Partner, including Executive Vice President of the General Partner's Midwest region, a position he held between 2003 and 2010.  Prior to joining the General Partner in 1998, Mr. Connor held numerous executive and brokerage positions with Cushman & Wakefield, most recently serving as Senior Managing Director for the Midwest area. Mr. Connor serves on the Advisory Board of the Marshall Bennett Institute of Real Estate at Roosevelt University in Chicago as well as on the Editorial Board of the Illinois Real Estate Journal.

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James D. Bremner, age 57. Mr. Bremner has served as the Company's President, Healthcare since 2007 when the Company acquired Bremner Healthcare Real Estate (formerly known as Bremner & Wiley), a national healthcare development and management firm that Mr. Bremner founded in 1987. Prior to and concurrently with founding his own firm, Mr. Bremner was a broker with Revel Companies, a commercial real estate firm, from 1980 until 1996. Mr. Bremner is on the Board of Trustees of HealthcareLease Properties Real Estate Investment Trust, a Canadian public REIT listed on the Toronto Stock Exchange that owns a portfolio of senior housing and care facilities located in the United States and Canada. Mr. Bremner also serves as a director of Denison, Inc. a private parking management company located in Indianapolis, Indiana, and the Board of Trustees of The Children's Museum of Indianapolis.
All other information required by this item will be included in the General Partner's 2013 proxy statement (the "2013 Proxy Statement") for the General Partner's Annual Meeting of Shareholders to be held on April 24, 2013, and is incorporated herein by reference. Certain information with respect to our executive officers required by this item is included in the discussion entitled "Executive Officer of the Registrant" after Item 4 of Part I of this Report. In addition, the General Partner's Code of Conduct (which applies to each of our associates, officers and directors) and the General Partner's Corporate Governance Guidelines are available in the investor information/corporate governance section of our website at www.dukerealty.com. A copy of these documents may also be obtained without charge by writing to Duke Realty Corporation, 600 East 96th Street, Suite 100, Indianapolis, Indiana 46240, Attention: Investor Relations.
Item 11.  Executive Compensation
The information required by Item 11 of this Report will be included in our 2013 Proxy Statement, which information is incorporated herein by this reference.
Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by Item 12 of this Report will be included in our 2013 Proxy Statement, which information is incorporated herein by this reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required to be furnished pursuant to Item 13 of this Report will be included in our 2013 Proxy Statement, which information is incorporated herein by this reference.
Item 14. Principal Accountant Fees and Services
The information required to be furnished pursuant to Item 14 of this Report will be included in our 2013 Proxy Statement, which information is incorporated herein by this reference.

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PART IV
Item 15.  Exhibits and Financial Statement Schedules 
(a)
The following documents are filed as part of this Annual Report:
1.    Consolidated Financial Statements
The following Consolidated Financial Statements, together with the Management's Report on Internal Control and the Report of Independent Registered Public Accounting Firm are listed below:
 
Duke Realty Corporation:
 
Management's Report on Internal Control
 
Report of Independent Registered Public Accounting Firm
 
Duke Realty Limited Partnership:
 
Management's Report on Internal Control
 
Report of Independent Registered Public Accounting Firm
 
Duke Realty Corporation:
 
Consolidated Balance Sheets, December 31, 2012 and 2011
 
Consolidated Statements of Operations and Comprehensive Income, Years Ended December 31, 2012, 2011 and 2010
 
Consolidated Statements of Cash Flows, Years Ended December 31, 2012, 2011 and 2010
 
Consolidated Statements of Changes in Equity, Years Ended December 31, 2012, 2011 and 2010
 
Duke Realty Limited Partnership:
 
Consolidated Balance Sheets, December 31, 2012 and 2011
 
Consolidated Statements of Operations and Comprehensive Income, Years Ended December 31, 2012, 2011 and 2010
 
Consolidated Statements of Cash Flows, Years Ended December 31, 2012, 2011 and 2010
 
Consolidated Statements of Changes in Equity, Years Ended December 31, 2012, 2011 and 2010
 
Duke Realty Corporation and Duke Realty Limited Partnership:
 
Notes to Consolidated Financial Statements
 
2.    Consolidated Financial Statement Schedules
Duke Realty Corporation and Duke Realty Limited Partnership:
Schedule III – Real Estate and Accumulated Depreciation
 3.    Exhibits
The following exhibits are filed with this Form 10-K or incorporated herein by reference to the listed document previously filed with the SEC. Previously unfiled documents are noted with an asterisk (*). 
 

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Number
 
Description
 
 
3.1(i)
 
Fourth Amended and Restated Articles of Incorporation of the General Partner (filed as Exhibit 3.1 to the General Partner's Current Report on Form 8-K as filed with the SEC on July 30, 2009, and incorporated herein by this reference).
 
 
3.1(ii)
 
Amendment to the Fourth Amended and Restated Articles of Incorporation of the General Partner (filed as Exhibit 3.1 to the General Partner's Current Report on Form 8-K as filed with the SEC on July 22, 2011, and incorporated herein by this reference).
 
 
 
3.1(iii)
 
Second Amendment to the Fourth Amended and Restated Articles of Incorporation of the General Partner (filed as Exhibit 3.1 to the General Partner's Current Report on Form 8-K as filed with the SEC on March 9, 2012, and incorporated herein by this reference).
 
 
 
3.2
 
Fourth Amended and Restated Bylaws of the General Partner (filed as Exhibit 3.2 to the General Partner's Current Report on Form 8-K as filed with the SEC on July 30, 2009, and incorporated herein by this reference).
 
 
3.3
 
Certificate of Limited Partnership of the Partnership, dated September 17, 1993 (filed as Exhibit 3.1(i) to the Partnership's Annual Report on Form 10-K for the year ended December 31, 2006 as filed with the SEC on March 13, 2007, and incorporated herein by this reference).

 
 
 
3.4(i)
 
Fourth Amended and Restated Agreement of Limited Partnership of the Partnership (filed as Exhibit 3.1 to the Partnership's Current Report on Form 8-K as filed with the SEC on November 3, 2009, and incorporated herein by this reference).

 
 
 
3.4(ii)
 
Amendment to Fourth Amended and Restated Agreement of Limited Partnership of the Partnership (filed as Exhibit 3.1 to the Partnership's Current Report on Form 8-K as filed with the SEC on July 22, 2011, and incorporated herein by this reference).
 
 
 
3.4(iii)
 
Second Amendment to Fourth Amended and Restated Agreement of Limited Partnership of the Partnership (filed as Exhibit 3.1 to the Partnership's Current Report on Form 8-K as filed with the SEC on March 9, 2012 and incorporated herein by this reference).
 
 
 
4.1(i)
 
Indenture, dated September 19, 1995, between the Partnership and The First National Bank of Chicago, Trustee (filed as Exhibit 4.1 to the General Partner's Current Report on Form 8-K as filed with the SEC on September 22, 1995, and incorporated herein by this reference).
4.1(ii)
 
Thirteenth Supplemental Indenture, dated May 22, 2003, between the Partnership and Bank One Trust Company, N.A., Trustee (filed as Exhibit 4 to the Partnership's Current Report on Form 8-K as filed with the SEC on May 22, 2003, and incorporated herein by this reference).
 
 
4.1(iii)
 
Seventeenth Supplemental Indenture, dated August 16, 2004, between the Partnership and J.P. Morgan Trust Company, National Association, Trustee (filed as Exhibit 4 to the Partnership's Current Report on Form 8-K as filed with the SEC on August 18, 2004, and incorporated herein by this reference).
 
 
4.1(iv)
 
Nineteenth Supplemental Indenture, dated as of March 1, 2006, by and between the Partnership and J.P. Morgan Trust Company, National Association (successor in interest to Bank One Trust Company, N.A.), including the form of global note evidencing the 5.5% Senior Notes Due 2016 (filed as Exhibit 4.1 to the Partnership's Current Report on Form 8-K as filed with the SEC on March 3, 2006, and incorporated herein by this reference).
 
 
4.1(v)
 
Twentieth Supplemental Indenture, dated as of July 24, 2006, by and between the Partnership and J.P. Morgan Trust Company, National Association (successor in interest to The First National Bank of Chicago), modifying certain financial covenants contained in Sections 1004 and 1005 of the Indenture, dated September 19, 1995, between the Partnership and The First National Bank of Chicago, Trustee (filed as Exhibit 4.1 to the Partnership's Current Report on Form 8-K as filed with the SEC on July 28, 2006, and incorporated herein by this reference).
 
 
4.2(i)
 
Indenture, dated as of July 28, 2006, by and between the Partnership and J.P. Morgan Trust Company, National Association (filed as Exhibit 4.1 to the General Partner's automatic shelf registration statement on Form S-3 as filed with the SEC on July 31, 2006, and incorporated herein by this reference).
 
 
4.2(ii)
 
Second Supplemental Indenture, dated as of August 24, 2006, by and between the Partnership and J.P. Morgan Trust Company, National Association, including the form of global note evidencing the 5.95% Senior Notes Due 2017 (filed as Exhibit 4.2 to the Partnership's Current Report on Form 8-K as filed with the SEC on August 30, 2006, and incorporated herein by this reference).


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4.2(iii)
 
Third Supplemental Indenture, dated as of September 11, 2007, by and between the Partnership and The Bank of New York Trust Company, N.A. (as successor to J.P. Morgan Trust Company, National Association), including the form of global note evidencing the 6.50% Senior Notes Due 2018 (incorporated by reference to Exhibit 4.1 to the Partnership's Current Report on Form 8-K as filed with the SEC on September 11, 2007, and incorporated herein by this reference).
 
 
4.2(iv)
 
Fourth Supplemental Indenture, dated as of May 8, 2008, by and between the Partnership and The Bank of New York Trust Company, N.A. (as successor to J.P. Morgan Trust Company, National Association), including the form of global note evidencing the 6.25% Senior Notes due 2013 (incorporated by reference to Exhibit 4.1 to the Partnership's Current Report on Form 8-K as filed with the SEC on May 8, 2008, and incorporated herein by this reference).
 
 
4.2(v)
 
Fifth Supplemental Indenture, dated as of August 11, 2009, by and between the Partnership and The Bank of New York Mellon Trust Company, N.A. (as successor to J.P. Morgan Trust Company, National Association), including the form of global note evidencing the 7.375% Senior Notes Due 2015 (filed as Exhibit 4.1 to the Partnership's Current Report on Form 8-K as filed with the SEC on August 11, 2009, and incorporated herein by this reference).
 
 
4.2(vi)
 
Sixth Supplemental Indenture, dated as of August 11, 2009, by and between the Partnership and The Bank of New York Mellon Trust Company, N.A. (as successor to J.P. Morgan Trust Company, National Association), including the form of global note evidencing the 8.25% Senior Notes Due 2019 (filed as Exhibit 4.2 to the Partnership's Current Report on Form 8-K as filed with the SEC on August 11, 2009, and incorporated herein by this reference).
 
 
4.2(vii)
 
Seventh Supplemental Indenture, dated as of April 1, 2010, by and between the Partnership and J.P. Morgan Trust Company, National Association, including the form of global note evidencing the 6.75% Senior Notes due 2020 (filed as Exhibit 4.1 to the Partnership's Current Report on Form 8-K as filed with the SEC on April 1, 2010, and incorporated herein by this reference).
 
 
4.2(viii)
 
Eighth Supplemental Indenture, dated June 11, 2012, by and between the Partnership and The Bank of New York Mellon Trust, N.A. (as successor to J.P. Morgan Trust Company, National Association), including the form of global note evidencing the 4.375% Senior Notes Due 2022 (filed as Exhibit 4.1 to the General Partner's Current Report on Form 8-K as filed with the SEC on June 11, 2012, and incorporated herein by this reference).
 
 
 
4.2(ix)
 
Ninth Supplemental Indenture, dated September 19, 2012, by and between the Partnership and The Bank of New York Mellon Trust, N.A. (as successor to J.P. Morgan Trust Company, National Association), including the form of global note evidencing the 3.875% Senior Notes Due 2022 (filed as Exhibit 4.1 to the General Partner's Current Report on Form 8-K as filed with the SEC on September 19, 2012, and incorporated herein by this reference).
 
 
 
10.1
 
Promissory Note of Duke Realty Services Limited Partnership (filed as Exhibit 10.3 to the General Partner's Registration Statement on Form S-2 as filed with the SEC on June 8, 1993, and incorporated herein by this reference).
 
 
10.2(i)
 
Amended and Restated 2005 Long-Term Incentive Plan of the General Partner (filed as Appendix A to the General Partner's Definitive Proxy Statement on Schedule 14A, dated March 18, 2009 as filed with the SEC on March 18, 2009, and incorporated herein by this reference).#
 
 
10.2(ii)
 
2009 Amendment to the General Partner's Amended and Restated 2005 Long-Term Incentive Plan (filed as Exhibit 10.2 to the General Partner's Quarterly Report on Form 10-Q as filed with the SEC on May 6, 2010, and incorporated herein by this reference).#
 
 
10.2(iii)
 
2010 Amendment to the General Partner's Amended and Restated 2005 Long-Term Incentive Plan (filed as Exhibit 10.1 to the General Partner's Current Report on Form 8-K as filed with the SEC on May 4, 2010, and incorporated herein by this reference).#
 
 
10.2(iv)
 
2011 Amendment to the General Partner's Amended and Restated 2005 Long-Term Incentive Plan (filed as Exhibit 10.2 to the General Partner's Quarterly Report on Form 10-Q as filed with the SEC on August 5, 2011, and incorporated herein by this reference).#
 
 
 
10.3(i)
 
Form of 2005 Long-Term Incentive Plan Award Certificate for Restricted Stock Units.# *

 
 
10.3(ii)
 
Form of 2005 Long-Term Incentive Plan Stock Option Award Certificate (filed as Exhibit 99.4 to the General Partner's Current Report on Form 8-K, filed with the SEC on May 3, 2005, and incorporated herein by this reference).#
 
 
 
10.3(iii)
 
Form of 2005 Long-Term Incentive Plan Restricted Stock Unit Award Certificate for Non-Employee Directors (filed as Exhibit 99.6 to the General Partner's Current Report on Form 8-K, filed with the SEC on May 3, 2005, and incorporated herein by this reference).#


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10.4(i)
 
The General Partner's 2000 Performance Share Plan, Amended and Restated as of January 30, 2008, a sub-plan of the 2005 Long-Term Incentive Plan. # *
 
 
10.4(ii)
 
Amendment to the Award Certificate under the General Partner's 2000 Performance Share Plan. # *
 
 
 
10.5(i)

 
The General Partner's 2010 Performance Share Plan, a sub-plan of the 2005 Long-Term Incentive Plan. # *
 
 
 
10.5(ii)
 
Award Certificate under the General Partner's 2010 Performance Share Plan. # *
 
 
 
10.6
 
The General Partner's 2005 Shareholder Value Plan, Amended and Restated as of January 30, 2008, a sub-plan of the 2005 Long-Term Incentive Plan.# *

 
 
 
10.7
 
The General Partner's 2005 Dividend Increase Unit Replacement Plan Amended and Restated as of January 30, 2008, a sub-plan of the 2005 Long-Term Incentive Plan.# *
 
 
 
10.8
 
The General Partner's 2011 Non-Employee Directors Compensation Plan, a sub-plan of the 2005 Long-Term Incentive Plan (filed as Exhibit 10.2 to the General Partner's Quarterly Report on Form 10-Q, filed with the SEC on May 6, 2011, and incorporated herein by this reference).#
 
 
 
10.9
 
Form of Forfeiture Agreement/Performance Unit Award Certificate (filed as Exhibit 99.2 to the General Partner's Current Report on Form 8-K as filed with the SEC on December 9, 2005, and incorporated herein by this reference).#
 
 
 
10.10(i)
 
1995 Key Employee Stock Option Plan of the General Partner (filed as Exhibit 10.13 to the General Partner's Annual Report on Form 10-K for the year ended December 31, 1995 as filed with the SEC on February 21, 1996, and incorporated herein by this reference).#
 
 
 
10.10(ii)
 
Amendment One to the 1995 Key Employees' Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.19 to the General Partner's Annual Report on Form 10-K405 for the year ended December 31, 2001 as filed with the SEC on March 15, 2002, and incorporated herein by this reference).#
 
 
 
10.10(iii)
 
Amendment Two to the 1995 Key Employees' Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.20 to the General Partner's Annual Report on Form 10-K405 for the year ended December 31, 2001 as filed with the SEC on March 15, 2002, and incorporated herein by this reference).#
 
 
 
10.10(iv)
 
Amendment Three to the 1995 Key Employees' Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.21 to the General Partner's Annual Report on Form 10-K405 for the year ended December 31, 2001 as filed with the SEC on March 15, 2002, and incorporated herein by this reference).#
 
 
 
10.10(v)
 
Amendment Four to the 1995 Key Employees' Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.22 to the General Partner's Annual Report on Form 10-K405 for the year ended December 31, 2001 as filed with the SEC on March 15, 2002, and incorporated herein by this reference).#
 
 
 
10.10(vi)
 
Amendment Five to the 1995 Key Employees' Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.23 to the General Partner's Annual Report on Form 10-K405 for the year ended December 31, 2001 as filed with the SEC on March 15, 2002, and incorporated herein by this reference).#
 
 
 
10.10(vii)
 
Amendment Six to the 1995 Key Employees' Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.24 to the General Partner's Annual Report on Form 10-K405 for the year ended December 31, 2001 as filed with the SEC on March 15, 2002, and incorporated herein by this reference).#
 
 
10.10(viii)
 
Amendment Seven to the 1995 Key Employees' Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.1 to the General Partner's Quarterly Report on Form 10-Q as filed with the SEC on November 13, 2002, and incorporated herein by this reference).#
 
 
10.10(ix)
 
Amendment Eight to the 1995 Key Employees' Stock Option Plan of Duke Realty Investments, Inc. (filed as part of Appendix B of the General Partner's Definitive Proxy Statement on Schedule 14A, filed with the SEC on March 16, 2005, and incorporated herein by this reference).#

 
 
 
10.10(x)
 
Amendment Nine to the 1995 Key Employees' Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.3 to the General Partner's Quarterly Report on Form 10-Q as filed with the SEC on October 9, 2005, and incorporated herein by this reference).#
 
 
10.10(xi)
 
Amendment Ten to the 1995 Key Employees' Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.4 to the General Partner's Quarterly Report on Form 10-Q as filed with the SEC on November 8, 2006, and incorporated herein by this reference).#
 
 
 
10.10(xii)
 
Amendment Eleven to the 1995 Key Employees' Stock Option Plan of Duke Realty Investments, Inc. (filed as Exhibit 10.2 to the General Partner's Current Report on Form 8-K as filed with the SEC on May 4, 2010, and incorporated herein by this reference).#

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10.11(i)
 
Dividend Increase Unit Plan of Duke Realty Services Limited Partnership (filed as Exhibit 10.25 to the General Partner's Annual Report on Form 10-K405 for the year ended December 31, 2001 as filed with the SEC on March 15, 2002, and incorporated herein by this reference).#
 
 
10.11(ii)
 
Amendment One to the Dividend Increase Unit Plan of Duke Realty Services Limited Partnership (filed as Exhibit 10.26 to the General Partner's Annual Report on Form 10-K405 for the year ended December 31, 2001 as filed with the SEC on March 15, 2002, and incorporated herein by this reference).#
 
 
10.11(iii)
 
Amendment Two to the Dividend Increase Unit Plan of Duke Realty Services Limited Partnership (filed as Exhibit 10.27 to the General Partner's Annual Report on Form 10-K405 for the year ended December 31, 2001 as filed with the SEC on March 15, 2002, and incorporated herein by this reference).#
 
 
10.11(iv)
 
Amendment Three to the Dividend Increase Unit Plan of Duke Realty Services Limited Partnership (filed as Exhibit 10.5 to the General Partner's Quarterly Report on Form 10-Q as filed with the SEC on November 13, 2002, and incorporated herein by this reference).#
10.11(v)
 
Amendment Four to the Dividend Increase Unit Plan of Duke Realty Services Limited Partnership (filed as Exhibit 10.30 to the General Partner's Annual Report on Form 10-K for the year ended December 31, 2004 as filed with the SEC on March 4, 2005, and incorporated herein by this reference).#
 
 
10.12(i)
 
1999 Directors' Stock Option and Dividend Increase Unit Plan of Duke Realty Investments, Inc. (filed as Annex F to the prospectus in the General Partner's Registration Statement on Form S-4 as filed with the SEC on May 4, 1999, and incorporated herein by this reference).#
 
 
10.12(ii)
 
Amendment One to the 1999 Directors' Stock Option and Dividend Increase Unit Plan of Duke Realty Investments, Inc. (filed as part of Appendix C of the General Partner's Definitive Proxy Statement on Schedule 14A as filed with the SEC on March 15, 2001, and incorporated herein by this reference).#

 
 
10.12(iii)
 
Amendment Two to the 1999 Directors' Stock Option and Dividend Increase Unit Plan of Duke Realty Investments, Inc. (filed as part of Appendix B of the General Partner's Definitive Proxy Statement on Schedule 14A as filed with the SEC on March 16, 2005, and incorporated herein by this reference).#
 
 
10.13(i)
 
Executives' Deferred Compensation Plan of Duke Realty Services Limited Partnership, Amended and Restated as of December 5, 2007.# *
 
 
10.13(ii)
 
Amendment Number One to the Executives' Deferred Compensation Plan of Duke Realty Services Limited Partnership, Amended and Restated as of December 5, 2007.# *
10.14
 
Directors' Deferred Compensation Plan of Duke Realty Corporation, Amended and Restated as of January 30, 2008.# *
 
 
10.15(i)
 
Form of Letter Agreement Regarding Executive Severance, dated December 13, 2007, between the General Partner and the following executive officers: Dennis D. Oklak, Steven R. Kennedy and James B. Connor (filed as Exhibit 10.23 to the General Partner's Annual Report on Form 10-K for the year ended December 31, 2007, filed with the SEC on February 29, 2008, and incorporated herein by this reference).#

 
 
10.15(ii)

 
First Amendment to Letter Agreement Regarding Executive Severance, dated December 13, 2007, between the General Partner and the following executive officers: Dennis D. Oklak, Steven R. Kennedy and James B. Connor.# *
 
 
10.15(iii)
 
Second Amendment to Letter Agreement Regarding Executive Severance, dated December 13, 2007, between the General Partner and the following executive officers: Dennis D. Oklak, Steven R. Kennedy and James B. Connor.# *
 
 
10.15(iv)
 
Third Amendment to Letter Agreement Regarding Executive Severance, dated December 13, 2007, between the General Partner and the following executive officers: Dennis D. Oklak, Steven R. Kennedy and James B. Connor.# *
 
 
10.16(i)
 
Form of Letter Agreement Regarding Executive Severance, dated May 7, 2009, between the General Partner and Christie B. Kelly (filed as Exhibit 10.1 to the General Partner's Quarterly Report on Form 10-Q, filed with the SEC on May 8, 2009, and incorporated herein by this reference).#
 
 
 
10.16(ii)
 
First Amendment to Letter Agreement Regarding Executive Severance, dated May 7, 2009, between the General Partner and Christie B. Kelly. # *
 
 
 
10.16(iii)
 
Second Amendment to Letter Agreement Regarding Executive Severance, dated May 7, 2009, between the General Partner and Christie B. Kelly. # *


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10.17
 
Seventh Amended and Restated Revolving Credit Agreement, dated November 18, 2011, among the Partnership, the General Partner, J.P. Morgan Securities LLC, Wells Fargo Securities, LLC, JP Morgan Chase Bank, N.A. and the several banks, financial institutions and other entities from time to time parties thereto as lenders (filed as Exhibit 10.1 to DRLP's Current Report on Form 8-K, filed with the SEC on November 22, 2011, and incorporated herein by this reference).
 
 
10.18
 
Equity Distribution Agreement, dated May 7, 2012, by and among the General Partner, the Partnership, Morgan Stanley & Co. LLC, UBS Securities LLC, J. P. Morgan Securities LLC and Credit Suisse (USA) LLC (filed as Exhibit 1.1 to the General Partner's Current Report on Form 8-K as filed with the SEC on May 7, 2012, and incorporated herein by this reference).
 
 
 
10.19
 
Terms Agreement, dated January 10, 2013, by and among the General Partner, Morgan Stanley & Co. LLC and UBS Securities LLC (filed as Exhibit 1.1 to the General Partner's Current Report on Form 8-K as filed with the SEC on January 15, 2013, and incorporated herein by this reference).
 
 
 
12.1
 
Statement of Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Dividends of the General Partner.*
 
 
 
12.2
 
Statement of Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Distributions of the Partnership.*
 
 
 
21.1
 
List of the Company's Subsidiaries.*
 
 
 
23.1
 
Consent of KPMG LLP relating to the General Partner.*
 
 
 
23.2
 
Consent of KPMG LLP relating to the Partnership.*
 
 
 
24.1
 
Executed Powers of Attorney of certain directors.*
 
 
 
31.1
 
Rule 13a-14(a) Certification of the Chief Executive Officer of the General Partner.*
 
 
 
31.2
 
Rule 13a-14(a) Certification of the Chief Financial Officer of the General Partner.*
 
 
 
31.3
 
Rule 13a-14(a) Certification of the Chief Executive Officer for the Partnership.*
 
 
 
31.4
 
Rule 13a-14(a) Certification of the Chief Financial Officer for the Partnership.*
 
 
 
32.1
 
Section 1350 Certification of the Chief Executive Officer of the General Partner. * **
 
 
 
32.2
 
Section 1350 Certification of the Chief Financial Officer of the General Partner. * **
 
 
 
32.3
 
Section 1350 Certification of the Chief Executive Officer for the Partnership. * **
 
 
 
32.4
 
Section 1350 Certification of the Chief Financial Officer for the Partnership. * **
99.1
 
Selected Quarterly Financial Information.*
 
 
101
 
The following materials from the General Partner's and the Partnership's Annual Report on Form 10-K for the year ended December 31, 2012 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Statements of Changes in Equity and (v) the Notes to Consolidated Financial Statements.
# Represents management contract or compensatory plan or arrangement.
* Filed herewith.
** The certifications attached as Exhibits 32.1, 32.2, 32.3 and 32.4 accompany this Report and are "furnished" to the Securities and Exchange Commission pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed "filed" by the General Partner or the Partnership, respectively, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
We will furnish to any security holder, upon written request, copies of any exhibit incorporated by reference, for a fee of 15 cents per page, to cover the costs of furnishing the exhibits. Written requests should include a representation that the person making the request was the beneficial owner of securities entitled to vote at the Annual Meeting of Shareholders. 

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(b)
Exhibits
The exhibits required to be filed with this Report pursuant to Item 601 of Regulation S-K are listed under "Exhibits" in Part IV, Item 15(a)(3) of this Report and are incorporated herein by reference. 
(c)
Financial Statement Schedule
The Financial Statement Schedule required to be filed with this Report is listed under "Consolidated Financial Statement Schedules" in Part IV, Item 15(a)(2) of this Report, and is incorporated herein by reference.

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Management's Report on Internal Control
We, as management of Duke Realty Corporation and its subsidiaries (the "General Partner"), are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Pursuant to the rules and regulations of the Securities and Exchange Commission, internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:
 
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets of the company;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.
Management has evaluated the effectiveness of its internal control over financial reporting as of December 31, 2012 based on the control criteria established in a report entitled Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, we have concluded that, as of December 31, 2012, our internal control over financial reporting is effective based on these criteria.
The independent registered public accounting firm of KPMG LLP, as auditors of the General Partner's consolidated financial statements, has also issued an audit report on the General Partner's internal control over financial reporting.
 
/s/     Dennis D. Oklak
Dennis D. Oklak
Chairman and Chief Executive Officer
 
/s/     Christie B. Kelly
Christie B. Kelly
Executive Vice President and Chief Financial Officer


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Report of Independent Registered Public Accounting Firm
The Shareholders and Directors of
Duke Realty Corporation:
We have audited the accompanying consolidated balance sheets of Duke Realty Corporation and Subsidiaries (the "Company") as of December 31, 2012 and 2011, and the related consolidated statements of operations and comprehensive income, cash flows, and changes in equity for each of the years in the three-year period ended December 31, 2012. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule III. We also have audited the Company's internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these consolidated financial statements and the financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management's report on internal control. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule and an opinion on the Company's internal control over financial reporting based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Duke Realty Corporation and Subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2012, in conformity with U.S generally accepted accounting principles. Also in our opinion, the related financial statement schedule III, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also, in our opinion, Duke Realty Corporation and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
/s/ KPMG LLP
 
Indianapolis, Indiana
February 22, 2013


-60-


Management's Report on Internal Control
We, as management of Duke Realty Limited Partnership and its subsidiaries (the "Partnership"), are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Pursuant to the rules and regulations of the Securities and Exchange Commission, internal control over financial reporting is a process designed by, or under the supervision of the principal executive and principal financial officers, or persons performing similar functions, of Duke Realty Corporation (the "General Partner"), and effected by the General Partner's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:
 
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets of the Partnership;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the General Partner; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Partnership's assets that could have a material effect on the financial statements.
Management has evaluated the effectiveness of its internal control over financial reporting as of December 31, 2012 based on the control criteria established in a report entitled Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, we have concluded that, as of December 31, 2012, our internal control over financial reporting is effective based on these criteria.
The independent registered public accounting firm of KPMG LLP, as auditors of the Partnership's consolidated financial statements, has also issued an audit report on the Partnership's internal control over financial reporting.
 
/s/     Dennis D. Oklak
Dennis D. Oklak
Chairman and Chief Executive Officer
of the General Partner
 
/s/     Christie B. Kelly
Christie B. Kelly
Executive Vice President and Chief Financial Officer
of the General Partner



-61-



Report of Independent Registered Public Accounting Firm
The Partners of
Duke Realty Limited Partnership:
We have audited the accompanying consolidated balance sheets of Duke Realty Limited Partnership and Subsidiaries (the "Partnership") as of December 31, 2012 and 2011, and the related consolidated statements of operations and comprehensive income, cash flows, and changes in equity for each of the years in the three-year period ended December 31, 2012. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule III. We also have audited the Partnership's internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Partnership's management is responsible for these consolidated financial statements and the financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management's report on internal control. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule and an opinion on the Partnership's internal control over financial reporting based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Duke Realty Limited Partnership and Subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2012, in conformity with U.S generally accepted accounting principles. Also in our opinion, the related financial statement schedule III, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also, in our opinion, Duke Realty Limited Partnership and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
/s/ KPMG LLP
 
Indianapolis, Indiana
February 22, 2013

-62-


DUKE REALTY CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31,
(in thousands, except per share amounts)
 
 
2012
 
2011
ASSETS
 
 
 
Real estate investments:
 
 
 
Land and improvements
$
1,284,081

 
$
1,202,872

Buildings and tenant improvements
5,398,886

 
4,766,793

Construction in progress
234,918

 
44,259

Investments in and advances to unconsolidated companies
372,256

 
364,859

Undeveloped land
614,208

 
622,635

 
7,904,349

 
7,001,418

Accumulated depreciation
(1,296,396
)
 
(1,108,650
)
Net real estate investments
6,607,953

 
5,892,768

 
 
 
 
Real estate investments and other assets held-for-sale
30,937

 
55,580

 
 
 
 
Cash and cash equivalents
33,889

 
213,809

Accounts receivable, net of allowance of $3,374 and $3,597
22,283

 
22,255

Straight-line rent receivable, net of allowance of $6,091 and $7,447
120,303

 
105,900

Receivables on construction contracts, including retentions
39,754

 
40,247

Deferred financing costs, net of accumulated amortization of $48,218 and $59,109
40,083

 
42,268

Deferred leasing and other costs, net of accumulated amortization of $372,047 and $292,334
497,827

 
460,881

Escrow deposits and other assets
167,072

 
170,729

 
$
7,560,101

 
$
7,004,437

LIABILITIES AND EQUITY
 
 
 
Indebtedness:
 
 
 
Secured debt
$
1,167,953

 
$
1,173,233

Unsecured notes
2,993,217

 
2,616,063

Unsecured lines of credit
285,000

 
20,293

 
4,446,170

 
3,809,589

 
 
 
 
Liabilities related to real estate investments held-for-sale
807

 
975

 
 
 
 
Construction payables and amounts due subcontractors, including retentions
84,679

 
55,775

Accrued real estate taxes
74,565

 
69,272

Accrued interest
59,215

 
58,904

Other accrued expenses
57,881

 
60,174

Other liabilities
167,935

 
131,735

Tenant security deposits and prepaid rents
42,731

 
38,355

Total liabilities
4,933,983

 
4,224,779

Shareholders' equity:
 
 
 
Preferred shares ($.01 par value); 5,000 shares authorized; 2,503 and 3,176 shares issued and outstanding
625,638

 
793,910

Common shares ($.01 par value); 400,000 shares authorized; 279,423 and 252,927 shares issued and outstanding
2,794

 
2,529

Additional paid-in capital
3,953,497

 
3,594,588

Accumulated other comprehensive income
2,691

 
987

Distributions in excess of net income
(1,993,206
)
 
(1,677,328
)
Total shareholders' equity
2,591,414

 
2,714,686

Noncontrolling interests
34,704

 
64,972

Total equity
2,626,118

 
2,779,658

 
$
7,560,101

 
$
7,004,437

See accompanying Notes to Consolidated Financial Statements.

-63-


DUKE REALTY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income
For the Years Ended December 31,
(in thousands, except per share amounts)
 
 
2012
 
2011
 
2010
Revenues:
 
 
 
 
 
Rental and related revenue
$
834,369

 
$
742,883

 
$
669,543

General contractor and service fee revenue
275,071

 
521,796

 
515,361

 
1,109,440

 
1,264,679

 
1,184,904

Expenses:
 
 
 
 
 
Rental expenses
153,135

 
144,617

 
134,866

Real estate taxes
113,643

 
102,277

 
88,606

General contractor and other services expenses
254,870

 
480,480

 
486,865

Depreciation and amortization
375,965

 
326,226

 
276,045

 
897,613

 
1,053,600

 
986,382

Other operating activities:
 
 
 
 
 
Equity in earnings of unconsolidated companies
4,674

 
4,565

 
7,980

Gain on sale of properties
344

 
68,549

 
39,662

Undeveloped land carrying costs
(8,829
)
 
(8,934
)
 
(9,203
)
Impairment charges

 
(12,931
)
 
(9,834
)
Other operating expenses
(633
)
 
(1,237
)
 
(1,231
)
General and administrative expenses
(46,424
)
 
(43,107
)
 
(41,329
)
 
(50,868
)
 
6,905

 
(13,955
)
Operating income
160,959

 
217,984

 
184,567

Other income (expenses):
 
 
 
 
 
Interest and other income, net
514

 
658

 
534

Interest expense
(245,170
)
 
(220,455
)
 
(186,407
)
Loss on debt transactions

 

 
(16,349
)
Acquisition-related activity
(4,192
)
 
(1,188
)
 
55,820

Income (loss) from continuing operations before income taxes
(87,889
)
 
(3,001
)
 
38,165

Income tax benefit
103

 
194

 
1,126

Income (loss) from continuing operations
(87,786
)
 
(2,807
)
 
39,291

Discontinued operations:
 
 
 
 
 
Loss before gain on sales
(1,549
)
 
(1,766
)
 
(7,083
)
Gain on sale of depreciable properties
13,467

 
100,882

 
33,054

Income from discontinued operations
11,918

 
99,116

 
25,971

Net income (loss)
(75,868
)
 
96,309

 
65,262

Dividends on preferred shares
(46,438
)
 
(60,353
)
 
(69,468
)
Adjustments for redemption/repurchase of preferred shares
(5,730
)
 
(3,796
)
 
(10,438
)
Net (income) loss attributable to noncontrolling interests
1,891

 
(744
)
 
536

Net income (loss) attributable to common shareholders
$
(126,145
)
 
$
31,416

 
$
(14,108
)
Basic net income (loss) per common share:
 
 
 
 
 
Continuing operations attributable to common shareholders
$
(0.53
)
 
$
(0.27
)
 
$
(0.18
)
Discontinued operations attributable to common shareholders
0.05

 
0.38

 
0.11

Total
$
(0.48
)
 
$
0.11

 
$
(0.07
)
Diluted net income (loss) per common share:
 
 
 
 
 
Continuing operations attributable to common shareholders
$
(0.53
)
 
$
(0.27
)
 
$
(0.18
)
Discontinued operations attributable to common shareholders
0.05

 
0.38

 
0.11

Total
$
(0.48
)
 
$
0.11

 
$
(0.07
)
Weighted average number of common shares outstanding
267,900

 
252,694

 
238,920

Weighted average number of common shares and potential dilutive securities
267,900

 
259,598

 
238,920

 
 
 
 
 
 
Comprehensive income (loss):
 
 
 
 
 
Net income (loss)
$
(75,868
)
 
$
96,309

 
$
65,262

Other comprehensive income:
 
 
 
 
 
Derivative instrument activity
1,704

 
2,419

 
4,198

Other comprehensive income
1,704

 
2,419

 
4,198

Comprehensive income (loss)
$
(74,164
)
 
$
98,728

 
$
69,460

See accompanying Notes to Consolidated Financial Statements.

-64-


DUKE REALTY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended December 31,
(in thousands)
 
 
2012
 
2011
 
2010
Cash flows from operating activities:
 
 
 
 
 
Net income (loss)
$
(75,868
)
 
$
96,309

 
$
65,262

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
Depreciation of buildings and tenant improvements
262,825

 
267,222

 
271,058

Amortization of deferred leasing and other costs
116,594

 
118,457

 
89,126

Amortization of deferred financing costs
13,321

 
14,530

 
13,897

Straight-line rent adjustment
(19,546
)
 
(23,877
)
 
(15,233
)
Impairment charges

 
12,931

 
9,834

Loss on debt extinguishment

 

 
16,349

Gain on acquisitions

 
(1,057
)
 
(57,715
)
Earnings from land and depreciated property sales
(13,811
)
 
(169,431
)
 
(72,716
)
Third-party construction contracts, net
(10,837
)
 
(17,352
)
 
(6,449
)
Other accrued revenues and expenses, net
13,300

 
24,001

 
68,892

Operating distributions received in excess of equity in earnings from unconsolidated companies
13,179

 
15,804

 
8,851

Net cash provided by operating activities
299,157

 
337,537

 
391,156

Cash flows from investing activities:
 
 
 
 
 
Development of real estate investments
(264,755
)
 
(162,070
)
 
(119,404
)
Acquisition of real estate investments and related intangible assets, net of cash acquired
(665,527
)
 
(544,816
)
 
(488,539
)
Acquisition of undeveloped land
(64,944
)
 
(14,090
)
 
(14,404
)
Second generation tenant improvements, leasing costs and building improvements
(63,884
)
 
(99,264
)
 
(88,723
)
Other deferred leasing costs
(27,772
)
 
(26,311
)
 
(38,905
)
Other assets
4,504

 
747

 
(7,260
)
Proceeds from land and depreciated property sales, net
138,118

 
1,572,093

 
499,520

Capital distributions from unconsolidated companies
5,157

 
59,252

 
22,119

Capital contributions and advances to unconsolidated companies
(28,513
)
 
(34,606
)
 
(53,194
)
Net cash provided by (used for) investing activities
(967,616
)
 
750,935

 
(288,790
)
Cash flows from financing activities:
 
 
 
 
 
Proceeds from issuance of common shares, net
315,295

 

 
298,004

Payments for redemption/repurchase of preferred shares
(168,272
)
 
(110,726
)
 
(118,787
)
Proceeds from unsecured debt issuance
600,000

 

 
250,000

Payments on and repurchases of unsecured debt
(222,846
)
 
(334,432
)
 
(392,597
)
Proceeds from secured debt financings
13,336

 

 
4,158

Payments on secured indebtedness including principal amortization
(117,287
)
 
(29,025
)
 
(207,060
)
Borrowings (payments) on lines of credit, net
264,707

 
(172,753
)
 
177,276

Distributions to common shareholders
(181,892
)
 
(171,814
)
 
(162,015
)
Distributions to preferred shareholders
(46,438
)
 
(60,353
)
 
(69,468
)
Contributions from (distributions to) noncontrolling interests, net
2,179

 
(5,292
)
 
(5,741
)
Buyout of noncontrolling interests
(6,208
)
 

 

Book overdrafts
45,272

 

 

Deferred financing costs
(9,307
)
 
(8,652
)
 
(5,074
)
Net cash provided by (used for) financing activities
488,539

 
(893,047
)
 
(231,304
)
Net increase (decrease) in cash and cash equivalents
(179,920
)
 
195,425

 
(128,938
)
Cash and cash equivalents at beginning of year
213,809

 
18,384

 
147,322

Cash and cash equivalents at end of year
$
33,889

 
$
213,809

 
$
18,384

Non-cash investing and financing activities:
 
 
 
 
 
Assumption of indebtedness and other liabilities in real estate acquisitions
$
112,754

 
$
177,082

 
$
527,464

Contribution of properties to, net of debt assumed by, unconsolidated companies
$

 
$
53,293

 
$
41,609

Investments and advances related to acquisition of previously unconsolidated companies
$

 
$
5,987

 
$
184,140

Assumption of indebtedness by buyer in real estate dispositions
$

 
$
24,914

 
$

Conversion of Limited Partner Units to common shares
$
29,213

 
$
3,130

 
$
(8,055
)
Issuance of Limited Partner Units for acquisition
$

 
$
28,357

 
$

See accompanying Notes to Consolidated Financial Statements.

-65-


DUKE REALTY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
(in thousands, except per share data)
 
 
Common Shareholders
 
 
 
 
 
Preferred
Stock
 
Common
Stock
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Distributions
in Excess of
Net Income
 
Non-
Controlling
Interests
 
Total
Balance at December 31, 2009
$
1,016,625

 
$
2,240

 
$
3,267,196

 
$
(5,630
)
 
$
(1,355,086
)
 
$
42,515

 
$
2,967,860

Net income

 

 

 

 
65,798

 
(536
)
 
65,262

Other comprehensive income

 

 

 
4,198

 

 

 
4,198

Issuance of common shares

 
265

 
297,801

 

 

 

 
298,066

Stock based compensation plan activity

 
3

 
13,056

 

 
(2,531
)
 

 
10,528

Conversion of Limited Partner Units

 
14

 
(8,069
)
 

 

 
8,055

 

Distributions to preferred shareholders

 

 

 

 
(69,468
)
 

 
(69,468
)
Repurchase of preferred shares
(112,085
)
 

 
3,736

 

 
(10,438
)
 

 
(118,787
)
Distributions to common shareholders ($0.68 per share)

 

 

 

 
(162,015
)
 

 
(162,015
)
Distributions to noncontrolling interests

 

 

 

 

 
(5,741
)
 
(5,741
)
Balance at December 31, 2010
$
904,540

 
$
2,522

 
$
3,573,720

 
$
(1,432
)
 
$
(1,533,740
)
 
$
44,293

 
$
2,989,903

Net income

 

 

 

 
95,565

 
744

 
96,309

Other comprehensive income

 

 

 
2,419

 

 

 
2,419

Issuance of Limited Partner Units for acquisition

 

 

 

 

 
28,357

 
28,357

Stock based compensation plan activity

 
4

 
14,041

 

 
(3,190
)
 

 
10,855

Conversion of Limited Partner Units

 
3

 
3,127

 

 

 
(3,130
)
 

Distributions to preferred shareholders

 

 

 

 
(60,353
)
 

 
(60,353
)
Redemption/repurchase of preferred shares
(110,630
)
 

 
3,700

 

 
(3,796
)
 

 
(110,726
)
Distributions to common shareholders ($0.68 per share)

 

 

 

 
(171,814
)
 

 
(171,814
)
Distributions to noncontrolling interests

 

 

 

 

 
(5,292
)
 
(5,292
)
Balance at December 31, 2011
$
793,910

 
$
2,529

 
$
3,594,588

 
$
987

 
$
(1,677,328
)
 
$
64,972

 
$
2,779,658

Net loss

 

 

 

 
(73,977
)
 
(1,891
)
 
(75,868
)
Other comprehensive income

 

 

 
1,704

 

 

 
1,704

Issuance of common shares

 
227

 
314,596

 

 

 

 
314,823

Stock based compensation plan activity

 
13

 
9,395

 

 
(2,976
)
 

 
6,432

Conversion of Limited Partner Units

 
25

 
29,188

 

 

 
(29,213
)
 

Distributions to preferred shareholders

 

 

 

 
(46,438
)
 

 
(46,438
)
Redemption of preferred shares
(168,272
)
 

 
5,730

 

 
(5,730
)
 

 
(168,272
)
Distributions to common shareholders ($0.68 per share)

 

 

 

 
(181,892
)
 

 
(181,892
)
Contributions from noncontrolling interests, net

 

 

 

 

 
2,179

 
2,179

Buyout of noncontrolling interests

 

 

 

 
(4,865
)
 
(1,343
)
 
(6,208
)
Balance at December 31, 2012
$
625,638

 
$
2,794

 
$
3,953,497

 
$
2,691

 
$
(1,993,206
)
 
$
34,704

 
$
2,626,118

See accompanying Notes to Consolidated Financial Statements.

-66-


DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31,
(in thousands)
 
 
2012
 
2011
ASSETS
 
 
 
Real estate investments:
 
 
 
Land and improvements
$
1,284,081

 
$
1,202,872

Buildings and tenant improvements
5,398,886

 
4,766,793

Construction in progress
234,918

 
44,259

Investments in and advances to unconsolidated companies
372,256

 
364,859

Undeveloped land
614,208

 
622,635

 
7,904,349

 
7,001,418

Accumulated depreciation
(1,296,396
)
 
(1,108,650
)
Net real estate investments
6,607,953

 
5,892,768

 
 
 
 
Real estate investments and other assets held-for-sale
30,937

 
55,580

 
 
 
 
Cash and cash equivalents
33,889

 
213,826

Accounts receivable, net of allowance of $3,374 and $3,597
22,283

 
22,255

Straight-line rent receivable, net of allowance of $6,091 and $7,447
120,303

 
105,900

Receivables on construction contracts, including retentions
39,754

 
40,247

Deferred financing costs, net of accumulated amortization of $48,218 and $59,109
40,083

 
42,268

Deferred leasing and other costs, net of accumulated amortization of $372,047 and $292,334
497,827

 
460,881

Escrow deposits and other assets
167,072

 
170,257

 
$
7,560,101

 
$
7,003,982

LIABILITIES AND EQUITY
 
 
 
Indebtedness:
 
 
 
Secured debt
$
1,167,953

 
$
1,173,233

Unsecured notes
2,993,217

 
2,616,063

Unsecured lines of credit
285,000

 
20,293

 
4,446,170

 
3,809,589

 
 
 
 
Liabilities related to real estate investments held-for-sale
807

 
975

 
 
 
 
Construction payables and amounts due subcontractors, including retentions
84,679

 
55,775

Accrued real estate taxes
74,565

 
69,272

Accrued interest
59,215

 
58,904

Other accrued expenses
58,048

 
59,795

Other liabilities
167,935

 
131,735

Tenant security deposits and prepaid rents
42,731

 
38,355

Total liabilities
4,934,150

 
4,224,400

Partners’ equity:
 
 
 
       General Partner:
 
 
 
     Common equity (279,423 and 252,927 General Partner Units issued and outstanding)
1,967,091

 
1,923,886

     Preferred equity (2,503 and 3,176 Preferred Units issued and outstanding)
625,638

 
793,910

 
2,592,729

 
2,717,796

    Limited Partners' common equity (4,419 and 6,945 Limited Partner Units issued and outstanding)
21,383

 
56,254

     Accumulated other comprehensive income
2,691

 
987

     Total partners' equity
2,616,803

 
2,775,037

Noncontrolling interests
9,148

 
4,545

     Total equity
2,625,951

 
2,779,582

 
$
7,560,101

 
$
7,003,982


See accompanying Notes to Consolidated Financial Statements.


-67-


DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income
For the Years Ended December 31,
(in thousands, except per unit amounts)
 
2012
 
2011
 
2010
Revenues:
 
 
 
 
 
Rental and related revenue
$
834,369

 
$
742,883

 
$
669,543

General contractor and service fee revenue
275,071

 
521,796

 
515,361

 
1,109,440

 
1,264,679

 
1,184,904

Expenses:
 
 
 
 
 
Rental expenses
153,135

 
144,617

 
134,866

Real estate taxes
113,643

 
102,277

 
88,606

General contractor and other services expenses
254,870

 
480,480

 
486,865

Depreciation and amortization
375,965

 
326,226

 
276,045

 
897,613

 
1,053,600

 
986,382

Other operating activities:
 
 
 
 
 
Equity in earnings of unconsolidated companies
4,674

 
4,565

 
7,980

Gain on sale of properties
344

 
68,549

 
39,662

Undeveloped land carrying costs
(8,829
)
 
(8,934
)
 
(9,203
)
Impairment charges

 
(12,931
)
 
(9,834
)
Other operating expenses
(633
)
 
(1,237
)
 
(1,231
)
General and administrative expenses
(46,424
)
 
(43,107
)
 
(41,329
)
 
(50,868
)
 
6,905

 
(13,955
)
Operating income
160,959

 
217,984

 
184,567

Other income (expenses):
 
 
 
 
 
Interest and other income, net
514

 
658

 
534

Interest expense
(245,170
)
 
(220,455
)
 
(186,407
)
Loss on debt transactions

 

 
(16,349
)
Acquisition-related activity
(4,192
)
 
(1,188
)
 
55,820

Income (loss) from continuing operations before income taxes
(87,889
)
 
(3,001
)
 
38,165

Income tax benefit
103

 
194

 
1,126

Income (loss) from continuing operations
(87,786
)
 
(2,807
)
 
39,291

Discontinued operations:
 
 
 
 
 
Loss before gain on sales
(1,549
)
 
(1,766
)
 
(7,083
)
Gain on sale of depreciable properties
13,467

 
100,882

 
33,054

Income from discontinued operations
11,918

 
99,116

 
25,971

Net income (loss)
(75,868
)
 
96,309

 
65,262

Distributions on Preferred Units
(46,438
)
 
(60,353
)
 
(69,468
)
Adjustments for redemption/repurchase of Preferred Units
(5,730
)
 
(3,796
)
 
(10,438
)
Net (income) loss attributable to noncontrolling interests
(382
)
 
115

 
185

Net income (loss) attributable to common unitholders
$
(128,418
)
 
$
32,275

 
$
(14,459
)
Basic net income (loss) per Common Unit:
 
 
 
 
 
Continuing operations attributable to common unitholders
$
(0.53
)
 
$
(0.27
)
 
$
(0.18
)
Discontinued operations attributable to common unitholders
0.05

 
0.38

 
0.11

Total
$
(0.48
)
 
$
0.11

 
$
(0.07
)
Diluted net income (loss) per Common Unit:
 
 
 
 
 
Continuing operations attributable to common unitholders
$
(0.53
)
 
$
(0.27
)
 
$
(0.18
)
Discontinued operations attributable to common unitholders
0.05

 
0.38

 
0.11

Total
$
(0.48
)
 
$
0.11

 
$
(0.07
)
Weighted average number of Common Units outstanding
272,729

 
259,598

 
244,870

Weighted average number of Common Units and potential dilutive securities
272,729

 
259,598

 
244,870

 
 
 
 
 
 
Comprehensive income (loss):
 
 
 
 
 
 Net income (loss)
$
(75,868
)
 
$
96,309

 
$
65,262

Other comprehensive income:
 
 
 
 
 
Derivative instrument activity
1,704

 
2,419

 
4,198

Other comprehensive income
1,704

 
2,419

 
4,198

Comprehensive income (loss)
$
(74,164
)
 
$
98,728

 
$
69,460

See accompanying Notes to Consolidated Financial Statements.

-68-


DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended December 31,
(in thousands)
 
 
2012
 
2011
 
2010
Cash flows from operating activities:
 
 
 
 
 
Net income (loss)
$
(75,868
)
 
$
96,309

 
$
65,262

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

Depreciation of buildings and tenant improvements
262,825

 
267,222

 
271,058

Amortization of deferred leasing and other costs
116,594

 
118,457

 
89,126

Amortization of deferred financing costs
13,321

 
14,530

 
13,897

Straight-line rent adjustment
(19,546
)
 
(23,877
)
 
(15,233
)
Impairment charges

 
12,931

 
9,834

Loss on debt extinguishment

 

 
16,349

Gain on acquisitions

 
(1,057
)
 
(57,715
)
Earnings from land and depreciated property sales
(13,811
)
 
(169,431
)
 
(72,716
)
Third-party construction contracts, net
(10,837
)
 
(17,352
)
 
(6,449
)
Other accrued revenues and expenses, net
13,399

 
24,036

 
68,512

Operating distributions received in excess of equity in earnings from unconsolidated companies
13,179

 
15,804

 
8,851

Net cash provided by operating activities
299,256

 
337,572

 
390,776

Cash flows from investing activities:
 
 
 
 
 
Development of real estate investments
(264,755
)
 
(162,070
)
 
(119,404
)
Acquisition of real estate investments and related intangible assets, net of cash acquired
(665,527
)
 
(544,816
)
 
(488,539
)
Acquisition of undeveloped land
(64,944
)
 
(14,090
)
 
(14,404
)
Second generation tenant improvements, leasing costs and building improvements
(63,884
)
 
(99,264
)
 
(88,723
)
Other deferred leasing costs
(27,772
)
 
(26,311
)
 
(38,905
)
Other assets
4,504

 
747

 
(7,260
)
Proceeds from land and depreciated property sales, net
138,118

 
1,572,093

 
499,520

Capital distributions from unconsolidated companies
5,157

 
59,252

 
22,119

Capital contributions and advances to unconsolidated companies
(28,513
)
 
(34,606
)
 
(53,194
)
Net cash provided by (used for) investing activities
(967,616
)
 
750,935

 
(288,790
)
Cash flows from financing activities:
 
 
 
 
 
Contributions from the General Partner
315,295

 

 
298,066

Payments for redemption/repurchase of Preferred Units
(168,272
)
 
(110,726
)
 
(118,787
)
Proceeds from unsecured debt issuance
600,000

 

 
250,000

Payments on and repurchases of unsecured debt
(222,846
)
 
(334,432
)
 
(392,597
)
Proceeds from secured debt financings
13,336

 

 
4,158

Payments on secured indebtedness including principal amortization
(117,287
)
 
(29,025
)
 
(207,060
)
Borrowings (payments) on lines of credit, net
264,707

 
(172,753
)
 
177,276

Distributions to common unitholders
(185,299
)
 
(176,593
)
 
(165,881
)
Distributions to preferred unitholders
(46,438
)
 
(60,353
)
 
(69,468
)
Contributions from (distributions to) noncontrolling interests, net
5,470

 
(566
)
 
(1,739
)
Buyout of noncontrolling interests
(6,208
)
 

 

Book overdrafts
45,272

 

 

Deferred financing costs
(9,307
)
 
(8,652
)
 
(5,074
)
Net cash provided by (used for) financing activities
488,423

 
(893,100
)
 
(231,106
)
Net increase (decrease) in cash and cash equivalents
(179,937
)
 
195,407

 
(129,120
)
Cash and cash equivalents at beginning of year
213,826

 
18,419

 
147,539

Cash and cash equivalents at end of year
$
33,889

 
$
213,826

 
$
18,419

Non-cash investing and financing activities:
 
 
 
 
 
Assumption of indebtedness and other liabilities for real estate acquisitions
$
112,754

 
$
177,082

 
$
527,464

Contribution of properties to, net of debt assumed by, unconsolidated companies
$

 
$
53,293

 
$
41,609

Investments and advances related to acquisition of previously unconsolidated companies
$

 
$
5,987

 
$
184,140

Assumption of indebtedness by buyer in real estate dispositions
$

 
$
24,914

 
$

Conversion of Limited Partner Units to common shares of the General Partner
$
29,213

 
$
3,130

 
$
(8,055
)
Issuance of Limited Partner Units for acquisition
$

 
$
28,357

 
$

See accompanying Notes to Consolidated Financial Statements.



-69-


DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
(in thousands, except per unit data) 
 
Common Unitholders
 
 
 
 
 
 
 
Limited
 
Accumulated
 
 
 
 
 
 
 
General Partner
 
Partners'
 
Other
 
Total
 
 
 
 
 
Common
 
Preferred
 
Common
 
Comprehensive
 
  Partners'
 
Noncontrolling
 
Total
 
Equity
 
Equity
 
Equity
 
Income (Loss)
 
Equity
 
Interests
 
Equity
Balance at December 31, 2009
$
1,918,329

 
$
1,016,625

 
$
31,192

 
$
(5,630
)
 
$
2,960,516

 
$
7,150

 
$
2,967,666

Net income (loss)
(3,670
)
 
69,468

 
(351
)
 

 
65,447

 
(185
)
 
65,262

Other comprehensive income

 

 

 
4,198

 
4,198

 

 
4,198

Capital Contribution from the General Partner
298,066

 

 

 

 
298,066

 

 
298,066

Stock based compensation plan activity
10,528

 

 

 

 
10,528

 

 
10,528

Conversion of Limited Partner Units to common shares of the General Partner
(8,055
)
 

 
8,055

 

 

 

 

Distributions to Preferred Unitholders

 
(69,468
)
 

 

 
(69,468
)
 

 
(69,468
)
Repurchase of Preferred Units
(6,702
)
 
(112,085
)
 

 

 
(118,787
)
 

 
(118,787
)
Distributions to Partners ($0.68 per Common Unit)
(161,879
)
 

 
(4,002
)
 

 
(165,881
)
 

 
(165,881
)
Distributions to noncontrolling interests

 

 

 

 

 
(1,739
)
 
(1,739
)
Balance at December 31, 2010
$
2,046,617

 
$
904,540

 
$
34,894

 
$
(1,432
)
 
$
2,984,619

 
$
5,226

 
$
2,989,845

Net income (loss)
35,212

 
60,353

 
859

 

 
96,424

 
(115
)
 
96,309

Other comprehensive income

 

 

 
2,419

 
2,419

 

 
2,419

Issuance of Limited Partner Units for acquisition

 

 
28,357

 

 
28,357

 

 
28,357

Stock based compensation plan activity
10,890

 

 

 

 
10,890

 

 
10,890

Conversion of Limited Partner Units to common shares of the General Partner
3,130

 

 
(3,130
)
 

 

 

 

Distributions to Preferred Unitholders

 
(60,353
)
 

 

 
(60,353
)
 

 
(60,353
)
Redemption/repurchase of Preferred Units
(96
)
 
(110,630
)
 

 

 
(110,726
)
 

 
(110,726
)
Distributions to Partners ($0.68 per Common Unit)
(171,867
)
 

 
(4,726
)
 

 
(176,593
)
 

 
(176,593
)
Distributions to noncontrolling interests

 

 

 

 

 
(566
)
 
(566
)
Balance at December 31, 2011
$
1,923,886

 
$
793,910

 
$
56,254

 
$
987

 
$
2,775,037

 
$
4,545

 
$
2,779,582

Net loss
(120,415
)
 
46,438

 
(2,273
)
 

 
(76,250
)
 
382

 
(75,868
)
Other comprehensive income

 

 

 
1,704

 
1,704

 

 
1,704

Capital Contribution from the General Partner
314,823

 

 

 

 
314,823

 

 
314,823

Stock based compensation plan activity
6,457

 

 

 

 
6,457

 

 
6,457

Conversion of Limited Partner Units to common shares of the General Partner
29,213

 

 
(29,213
)
 

 

 

 

Distributions to Preferred Unitholders

 
(46,438
)
 

 

 
(46,438
)
 

 
(46,438
)
Redemption of Preferred Units

 
(168,272
)
 

 

 
(168,272
)
 

 
(168,272
)
Distributions to Partners ($0.68 per Common Unit)
(182,008
)
 

 
(3,291
)
 

 
(185,299
)
 

 
(185,299
)
Contributions from noncontrolling interests, net

 

 

 

 

 
5,470

 
5,470

Buyout of noncontrolling interests
(4,865
)
 

 
(94
)
 

 
(4,959
)
 
(1,249
)
 
(6,208
)
Balance at December 31, 2012
$
1,967,091

 
$
625,638

 
$
21,383

 
$
2,691

 
$
2,616,803

 
$
9,148

 
$
2,625,951

See accompanying Notes to Consolidated Financial Statements.









-70-

DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 
(1)
The Company
Duke Realty Corporation (the "General Partner") was formed in 1985 and we believe that it qualifies as a real estate investment trust ("REIT") under the provisions of the Internal Revenue Code of 1986, as amended (the "Code"). Duke Realty Limited Partnership (the "Partnership") was formed on October 4, 1993, when the General Partner contributed all of its properties and related assets and liabilities, together with the net proceeds from an offering of additional shares of its common stock, to the Partnership. Unless otherwise indicated, the notes to the consolidated financial statements apply to both the General Partner and the Partnership. The terms "Company," "we," "us" and "our" refer to the General Partner and the Partnership, collectively, and those entities owned or controlled by the General Partner and/or the Partnership.
The General Partner is the sole general partner of the Partnership, owning approximately 98.4% of the common partnership interests of the Partnership ("General Partner Units") at December 31, 2012. The remaining 1.6% of the common partnership interests ("Limited Partner Units" and, together with the General Partner Units, the "Common Units") are owned by limited partners. As the sole general partner of the Partnership, the General Partner has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Partnership. The General Partner and the Partnership are operated as one enterprise. The management of the General Partner consists of the same members as the management of the Partnership. As the sole general partner with control of the Partnership, the General Partner consolidates the Partnership for financial reporting purposes, and the General Partner does not have any significant assets other than its investment in the Partnership. Therefore, the assets and liabilities of the General Partner and the Partnership are substantially the same.
Limited Partners have the right to redeem their Limited Partner Units, subject to certain restrictions. Pursuant to the Fourth Amended and Restated Agreement of Limited Partnership, as amended (the "Partnership Agreement"), the General Partner is obligated to redeem the Limited Partner Units in shares of its common stock, unless it determines in its reasonable discretion that the issuance of shares of its common stock could cause it to fail to qualify as a REIT. Each Limited Partner Unit shall be redeemed for one share of the General Partner's common stock, or, in the event that the issuance of shares could cause the General Partner to fail to qualify as a REIT, cash equal to the fair market value of one share of the General Partner's common stock at the time of redemption, in each case, subject to certain adjustments described in the Partnership Agreement. The Limited Partner Units are not required, per the terms of the Partnership Agreement, to be redeemed in registered shares of the General Partner. The General Partner also owns preferred partnership interests in the Partnership ("Preferred Units").
We own and operate a portfolio primarily consisting of industrial and office properties and provide real estate services to third-party owners. Substantially all of our Rental Operations (see Note 8) are conducted through the Partnership. We conduct our Service Operations (see Note 8) through Duke Realty Services, LLC, Duke Realty Services Limited Partnership and Duke Construction Limited Partnership ("DCLP"), which are consolidated entities that are 100% owned by a combination of the General Partner and the Partnership. DCLP is owned through a taxable REIT subsidiary.
(2)
The Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include our accounts and the accounts of our majority-owned or controlled subsidiaries. The equity interests in these controlled subsidiaries not owned by us are reflected as noncontrolling interests in the consolidated financial statements. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements. Investments in entities that we do not control, and variable interest entities ("VIEs") in which we are not the primary beneficiary, are not consolidated and are reflected as investments in unconsolidated companies under the equity method of reporting.
Reclassifications
Certain amounts in the accompanying consolidated financial statements for 2011 and 2010 have been reclassified to conform to the 2012 consolidated financial statement presentation.

-71-

DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Real Estate Investments
Rental real property, including land, land improvements, buildings and tenant improvements, are included in real estate investments and are generally stated at cost. Wholly-owned properties that are accounted for as direct financing leases, and which are not material for separate presentation, are also included within real estate investments. Construction in process and undeveloped land are included in real estate investments and are stated at cost. Real estate investments also include our equity interests in unconsolidated joint ventures that own and operate rental properties and hold land for development.
Depreciation
Buildings and land improvements are depreciated on the straight-line method over their estimated lives not to exceed 40 and 15 years, respectively, for properties that we develop, and not to exceed 30 and 10 years, respectively, for acquired properties. Tenant improvement costs are depreciated using the straight-line method over the shorter of the useful life of the asset or term of the related lease.
Cost Capitalization
Direct and certain indirect costs clearly associated with the development, construction, leasing or expansion of real estate investments are capitalized as a cost of the property. In addition, all leasing commissions paid to third parties for new leases or lease renewals are capitalized. We capitalize a portion of our indirect costs associated with our construction, development and leasing efforts. In assessing the amount of direct and indirect costs to be capitalized, allocations are made based on estimates of the actual amount of time spent in each activity. We do not capitalize any costs attributable to downtime or to unsuccessful projects.
We capitalize direct and indirect project costs associated with the initial construction of a property up to the time the property is substantially complete and ready for its intended use. In addition, we capitalize costs, including real estate taxes, insurance, and utilities, that have been allocated to vacant space based on the square footage of the portion of the building not held available for immediate occupancy during the extended lease-up periods after construction of the building shell has been completed if costs are being incurred to ready the vacant space for its intended use. If costs and activities incurred to ready the vacant space cease, then cost capitalization is also discontinued until such activities are resumed. Once necessary work has been completed on a vacant space, project costs are no longer capitalized.
We cease capitalization of all project costs on extended lease-up periods when significant activities have ceased, which does not exceed the shorter of a one-year period after the completion of the building shell or when the property attains 90% occupancy.
Impairment
We evaluate our real estate assets, with the exception of those that are classified as held-for-sale, for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. If such an evaluation is considered necessary, we compare the carrying amount of that real estate asset, or asset group, with the expected undiscounted cash flows that are directly associated with, and that are expected to arise as a direct result of, the use and eventual disposition of that asset, or asset group. Our estimate of the expected future cash flows used in testing for impairment is based on, among other things, our estimates regarding future market conditions, rental rates, occupancy levels, costs of tenant improvements, leasing commissions and other tenant concessions, assumptions regarding the residual value of our properties at the end of our anticipated holding period and the length of our anticipated holding period and is, therefore, subjective by nature. These assumptions could differ materially from actual results. If our strategy changes or if market conditions otherwise dictate a reduction in the holding period and an earlier sale date, an impairment loss could be recognized and such loss could be material. To the extent the carrying amount of a real estate asset, or asset group, exceeds the associated estimate of undiscounted cash flows, an impairment loss is recorded to reduce the carrying value of the asset to its fair value.
The determination of the fair value of real estate assets is also highly subjective, especially in markets where there is a lack of recent comparable transactions. We primarily utilize the income approach to estimate the fair value of

-72-

DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


our income producing real estate assets. We utilize marketplace participant assumptions to estimate the fair value of a real estate asset when an impairment charge is required to be measured. The estimation of future cash flows, as well as the selection of the discount rate and exit capitalization rate used in applying the income approach, are highly subjective measures in estimating fair value.
Real estate assets classified as held-for-sale are reported at the lower of their carrying value or their fair value, less estimated costs to sell. Once a property is designated as held-for-sale, no further depreciation expense is recorded.
Purchase Accounting
We expense acquisition related costs immediately as period costs. We record assets acquired in step acquisitions at their full fair value and record a gain or loss, within acquisition-related activity in our consolidated Statements of Operations, for the difference between the fair value and the carrying value of our existing equity interest. Additionally, contingencies arising from a business combination are recorded at fair value if the acquisition date fair value can be determined during the measurement period.
We allocate the purchase price of acquired properties to tangible and identified intangible assets based on their respective fair values, using all pertinent information available at the date of acquisition. The allocation to tangible assets (buildings, tenant improvements and land) is based upon management's determination of the value of the property as if it were vacant. This “as-if vacant” value is estimated using an income, or discounted cash flow, approach that relies upon internally determined assumptions that we believe are consistent with current market conditions for similar properties. The most important assumptions in determining the allocation of the purchase price to tangible assets are the exit capitalization rate, discount rate, estimated market rents, and hypothetical expected lease-up periods. The purchase price of real estate assets is also allocated to intangible assets consisting of the above or below market component of in-place leases and the value of in-place leases. 
The value allocable to the above or below market component of an acquired in-place lease is determined based upon the present value (using a discount rate which reflects the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be received pursuant to the lease over its remaining term and (ii) management's estimate of the amounts that would be received using fair market rates over the remaining term of the lease. The amounts allocated to above market leases are included in deferred leasing and other costs in the balance sheet and below market leases are included in other liabilities in the balance sheet; both are amortized to rental income over the remaining terms of the respective leases.
Factors considered in determining the value allocable to in-place leases include estimates, during hypothetical expected lease-up periods, of space that is actually leased at the time of acquisition, of lost rent at market rates, fixed operating costs that will be recovered from tenants, and theoretical leasing commissions required to execute similar leases. These intangible assets are included in deferred leasing and other costs in the balance sheet and are depreciated over the remaining term of the existing lease, or the anticipated life of the customer relationship, as applicable.
 Joint Ventures
We have equity interests in unconsolidated joint ventures that primarily own and operate rental properties or hold land for development. We consolidate those joint ventures that are considered to be VIEs where we are the primary beneficiary. We analyze our investments in joint ventures to determine if the joint venture is considered a VIE and would require consolidation. We (i) evaluate the sufficiency of the total equity investment at risk, (ii) review the voting rights and decision-making authority of the equity investment holders as a group, and whether there are any guaranteed returns, protection against losses, or capping of residual returns within the group and (iii) establish whether activities within the venture are on behalf of an investor with disproportionately few voting rights in making this VIE determination.
To the extent that we (i) are the sole entity that has the power to direct the activities of the VIE and (ii) have the obligation or rights to absorb the VIE's losses or receive its benefits, then we would be determined to be the primary beneficiary of the VIE and would consolidate it. At each reporting period, we re-assess our conclusions as to which, if any, party within the VIE is considered the primary beneficiary.

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DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


During the second quarter of 2012, we provided additional subordinated financial support to one of our unconsolidated joint ventures in the form of member loans. We determined this to be a reconsideration event and re-evaluated our previous conclusion that this joint venture was not a VIE. Upon such reconsideration, we determined that the fair value of the total equity investment at risk was not sufficient to meet the overall capital requirements of the joint venture, and we therefore concluded that this venture now meets the applicable criteria to be considered a VIE. However, for the reasons described below, we have determined there is no individual primary beneficiary for this joint venture.
During the third quarter of 2012, an unconsolidated venture that was previously determined to be a VIE sold its sole property, retired its outstanding debt and distributed substantially all of its remaining assets.
After the aforementioned reconsideration events, there are three unconsolidated joint ventures at December 31, 2012 that we have determined meet the criteria to be considered VIEs. These three unconsolidated joint ventures were formed with the sole purpose of developing, constructing, leasing, marketing and selling or operating properties. The business activities of these unconsolidated joint ventures have been financed through a combination of equity contributions, partner/member loans, and third-party debt that is guaranteed by a combination of us and the other partner/member of each entity. All significant decisions for these unconsolidated joint ventures, including those decisions that most significantly impact each venture's economic performance, require unanimous approval of each joint venture's partners or members. In certain cases, these decisions also require lender approval. Unanimous approval requirements for these unconsolidated joint ventures include entering into new leases, setting annual operating budgets, selling underlying properties, and incurring additional indebtedness. Because no single entity exercises control over the decisions that most significantly affect each joint venture's economic performance, we determined there to be no individual primary beneficiary and that the equity method of accounting is appropriate.
The following is a summary of the carrying value in our consolidated balance sheet, as well as our maximum loss exposure under guarantees for the three unconsolidated subsidiaries that we have determined to be VIEs as of December 31, 2012 and 2011, respectively (in millions):
 
Carrying Value
Maximum Loss
Exposure
 
December 31, 2012

December 31, 2011

December 31, 2012

December 31, 2011

Investment in Unconsolidated Companies
$
54.7

$
33.5

$
54.7

$
33.5

Guarantee Obligations (1)
$
(23.3
)
$
(17.7
)
$
(144.8
)
$
(57.0
)
 
(1)
We are party to guarantees of the third-party debt of these joint ventures and our maximum loss exposure is equal to the maximum monetary obligation pursuant to the guarantee agreements. We have also recorded a liability for our probable future obligation under a guarantee to the lender of one of these ventures, which is included within the carrying value of our guarantee obligations. Pursuant to an agreement with the lender, we may make partner loans to this joint venture that will reduce our maximum guarantee obligation on a dollar-for-dollar basis. The carrying value of our recorded guarantee obligations is included in other liabilities in our Consolidated Balance Sheets.
To the extent that our joint ventures do not qualify as VIEs, they are consolidated if we control them through majority ownership interests or if we are the managing entity (general partner or managing member) and our partner does not have substantive participating rights. Control is further demonstrated by our ability to unilaterally make significant operating decisions, refinance debt and sell the assets of the joint venture without the consent of the non-managing entity and the inability of non-managing entity to remove us from our role as the managing entity. Consolidated joint ventures that are not VIEs are not significant in any period presented in these consolidated financial statements.
We use the equity method of accounting for those joint ventures where we exercise significant influence but do not have control. Under the equity method of accounting, our investment in each joint venture is included on our balance sheet; however, the assets and liabilities of the joint ventures for which we use the equity method are not included on our balance sheet.
To the extent that we contribute assets to a joint venture, our investment in the joint venture is recorded at our cost basis in the assets that were contributed to the joint venture. To the extent that our cost basis is different than the

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DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


basis reflected at the joint venture level, the basis difference is amortized over the life of the related asset and included in our share of equity in net income of the joint venture. We recognize gains on the contribution or sale of real estate to joint ventures, relating solely to the outside partner's interest, to the extent the economic substance of the transaction is a sale.
Cash Equivalents
Investments with an original maturity of three months or less are classified as cash equivalents.
Valuation of Receivables
We reserve the entire receivable balance, including straight-line rent, of any tenant with an amount outstanding over 90 days. Additional reserves are recorded for more current amounts, as applicable, where we have determined collectability to be doubtful. Straight-line rent receivables for any tenant with long-term risk, regardless of the status of current rent receivables, are reviewed and reserved as necessary.
Deferred Costs
Costs incurred in connection with obtaining financing are deferred and are amortized to interest expense over the term of the related loan. All direct and indirect costs, including estimated internal costs, associated with the leasing of real estate investments owned by us are capitalized and amortized over the term of the related lease. We include lease incentive costs, which are payments made on behalf of a tenant to sign a lease, in deferred leasing costs and amortize them on a straight-line basis over the respective lease terms as a reduction of rental revenues. We include as lease incentives amounts funded to construct tenant improvements owned by the tenant. Unamortized costs are charged to expense upon the early termination of the lease or upon early payment of the financing.
Convertible Debt Accounting
Our 3.75% Exchangeable Senior Notes ("Exchangeable Notes") were issued in November 2006 and had an exchange rate of 20.47 common shares per $1,000 principal amount of the notes, representing an exchange price of $48.85 per common share. We repaid the Exchangeable Notes at the first contractual redemption date in December 2011. We accounted for the debt and equity components of our Exchangeable Notes separately, with the value assigned to the debt component equal to the estimated fair value of debt with similar contractual cash flows, but without the conversion feature, resulting in the debt being recorded at a discount. The resulting debt discount was amortized over the period from its issuance through the date of repayment as additional non-cash interest expense.
Interest expense was recognized on the Exchangeable Notes at an effective rate of 5.62%. The increase to interest expense (in thousands) on the Exchangeable Notes, which led to a corresponding decrease to net income, for the years ended December 31, 2011 and 2010 is summarized as follows: 
 
2011
 
2010
Interest expense on Exchangeable Notes, excluding effect of accounting for convertible debt
$
5,769

 
$
7,136

Effect of accounting for convertible debt
2,090

 
2,474

Total interest expense on Exchangeable Notes
$
7,859

 
$
9,610

Noncontrolling Interests
Noncontrolling interests relate to the minority ownership interests in the Partnership and interests in consolidated property partnerships that are not wholly-owned by the General Partner or the Partnership. Noncontrolling interests are subsequently adjusted for additional contributions, distributions to noncontrolling holders and the noncontrolling holders' proportionate share of the net earnings or losses of each respective entity. We report noncontrolling interests as a component of total equity.
When a Unit is redeemed (Note 1), the change in ownership is treated as an equity transaction by the General Partner and there is no effect on its earnings or net assets.


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DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Revenue Recognition
Rental and Related Revenue
The timing of revenue recognition under an operating lease is determined based upon ownership of the tenant improvements. If we are the owner of the tenant improvements, revenue recognition commences after the improvements are completed and the tenant takes possession or control of the space. If we determine that the tenant allowances or improvements we are funding are lease incentives, then we commence revenue recognition when possession or control of the space is turned over to the tenant. Rental income from leases is recognized on a straight-line basis.
We record lease termination fees when a tenant has executed a definitive termination agreement with us and the payment of the termination fee is not subject to any material conditions that must be met or waived before the fee is due to us.
General Contractor and Service Fee Revenue
Management fees are based on a percentage of rental receipts of properties managed and are recognized as the rental receipts are collected. Maintenance fees are based upon established hourly rates and are recognized as the services are performed. Construction management and development fees represent fee-based third-party contracts and are recognized as earned based on the percentage of completion method.
We recognize income on construction contracts where we serve as a general contractor on the percentage of completion method. Using this method, profits are recorded based on our estimates of the percentage of completion of individual contracts, commencing when the work performed under the contracts reaches a point where the final costs can be estimated with reasonable accuracy. The percentage of completion estimates are based on a comparison of the contract expenditures incurred to the estimated final costs. Changes in job performance, job conditions and estimated profitability may result in revisions to costs and income and are recognized in the period in which the revisions are determined.
Receivables on construction contracts were in a net under-billed position of $16.0 million and $10.6 million at December 31, 2012 and 2011, respectively.
Property Sales
Gains on sales of all properties are recognized in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 360-20. The specific timing of the sale of a building is measured against various criteria in FASB ASC 360-20 related to the terms of the transactions and any continuing involvement in the form of management or financial assistance from the seller associated with the properties. We make judgments based on the specific terms of each transaction as to the amount of the total profit from the transaction that we recognize considering factors such as continuing ownership interest we may have with the buyer ("partial sales") and our level of future involvement with the property or the buyer that acquires the assets. If the full accrual sales criteria are not met, we defer gain recognition and account for the continued operations of the property by applying the finance, installment or cost recovery methods, as appropriate, until the full accrual sales criteria are met. Estimated future costs to be incurred after completion of each sale are included in the determination of the gain on sales.
To the extent that a property has had operations prior to sale, and that we do not have continuing involvement with the property, gains from sales of depreciated property are included in discontinued operations and the proceeds from the sale of these held-for-rental properties are classified in the investing activities section of the Consolidated Statements of Cash Flows.
Rental properties that do not meet the criteria for presentation as discontinued operations are classified as gain on sale of properties in the Consolidated Statements of Operations.


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DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Net Income (Loss) Per Common Share or Common Unit
Basic net income (loss) per common share or Common Unit is computed by dividing net income (loss) attributable to common shareholders or common unitholders, less dividends or distributions on share-based awards expected to vest (referred to as "participating securities" and primarily composed of unvested restricted stock units), by the weighted average number of common shares or Common Units outstanding for the period.
Diluted net income (loss) per common share is computed by dividing the sum of basic net income (loss) attributable to common shareholders and the noncontrolling interest in earnings allocable to Limited Partner Units (to the extent the Limited Partner Units are dilutive), by the sum of the weighted average number of common shares outstanding and, to the extent they are dilutive, Units outstanding and any potential dilutive securities for the period. Diluted net income (loss) per Common Unit is computed by dividing the basic net income (loss) attributable to common unitholders by the sum of the weighted average number of Common Units outstanding and any potential dilutive securities for the period.
The following table reconciles the components of basic and diluted net income (loss) per common share or Common Unit (in thousands): 
 
2012
 
2011
 
2010
General Partner
 
 
 
 
 
Net income (loss) attributable to common shareholders
$
(126,145
)
 
$
31,416

 
$
(14,108
)
Less: Dividends on participating securities
(3,075
)
 
(3,243
)
 
(2,513
)
Basic net income (loss) attributable to common shareholders
(129,220
)
 
28,173

 
(16,621
)
Noncontrolling interest in earnings of common unitholders

 
859

 

Diluted net income (loss) attributable to common shareholders
$
(129,220
)
 
$
29,032

 
$
(16,621
)
Weighted average number of common shares outstanding
267,900

 
252,694

 
238,920

Weighted average Limited Partner Units outstanding

 
6,904

 

Other potential dilutive shares

 

 

Weighted average number of common shares and potential dilutive securities
267,900

 
259,598

 
238,920

 
 
 
 
 
 
Partnership
 
 
 
 
 
Net income (loss) attributable to common unitholders
$
(128,418
)
 
$
32,275

 
$
(14,459
)
Less: Distributions on participating securities
(3,075
)
 
(3,243
)
 
(2,513
)
Basic and diluted net loss attributable to common unitholders
$
(131,493
)
 
$
29,032

 
$
(16,972
)
Weighted average number of Common Units outstanding
272,729

 
259,598

 
244,870

Other potential dilutive units

 

 

Weighted average number of Common Units and potential dilutive securities
272,729

 
259,598

 
244,870

 
The Limited Partner Units are anti-dilutive to the General Partner for the years ended December 31, 2012 and 2010, as a result of the net loss for these periods. In addition, substantially all potential shares related to our stock-based compensation plans are anti-dilutive for all years presented and potential shares related to our Exchangeable Notes, which were repaid in December 2011, were anti-dilutive for the years ended December 31, 2011 and 2010. The following table summarizes the data that is excluded from the computation of net income (loss) per common share or Common Unit as a result of being anti-dilutive (in thousands): 
 
2012
 
2011
 
2010
General Partner
 
 
 
 
 
Noncontrolling interest in loss of common unitholders
$
(2,273
)
 
$

 
$
(351
)
Weighted average Limited Partner Units outstanding
4,829

 

 
5,950

General Partner and Partnership
 
 
 
 
 
Other potential dilutive shares or units:
 
 
 
 
 
Anti-dilutive outstanding potential shares or units under fixed stock option and other stock-based compensation plans
1,859

 
1,677

 
1,779

Anti-dilutive potential shares under the Exchangeable Notes

 
3,140

 
3,890

Outstanding participating securities
4,099

 
4,780

 
4,331



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DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Federal Income Taxes
General Partner
The General Partner has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. To qualify as a REIT, the General Partner must meet a number of organizational and operational requirements, including a requirement to distribute at least 90% of its REIT taxable income to its shareholders. Management intends to continue to adhere to these requirements and to maintain the General Partner's REIT status. As a REIT, the General Partner is entitled to a tax deduction for the dividends it pays to shareholders. Accordingly, the General Partner generally will not be subject to federal income taxes as long as it currently distributes to shareholders an amount equal to or in excess of its taxable income. The General Partner is also generally subject to federal income taxes on any taxable income that is not currently distributed to its shareholders. If the General Partner fails to qualify as a REIT in any taxable year, it will be subject to federal income taxes and may not be able to qualify as a REIT for four subsequent taxable years.
REIT qualification reduces, but does not eliminate, the amount of state and local taxes we pay. In addition, our financial statements include the operations of taxable corporate subsidiaries that are not entitled to a dividends paid deduction and are subject to federal, state and local income taxes. As a REIT, the General Partner may also be subject to certain federal excise taxes if it engages in certain types of transactions.
The following table reconciles the General Partner's net income (loss) to taxable income (loss) before the dividends paid deduction, and subject to the 90% distribution requirement, for the years ended December 31, 2012, 2011 and 2010 (in thousands): 
 
2012
 
2011
 
2010
Net income (loss)
$
(75,868
)
 
$
96,309

 
$
65,262

Book/tax differences
148,456

 
(12,885
)
 
74,065

Taxable income before the dividends paid deduction
72,588

 
83,424

 
139,327

Less: capital gains

 

 
(62,403
)
Adjusted taxable income subject to the 90% distribution requirement
$
72,588

 
$
83,424

 
$
76,924

The General Partner's dividends paid deduction is summarized below (in thousands): 
 
2012
 
2011
 
2010
Total Cash dividends paid
$
228,330

 
$
232,203

 
$
231,446

Less: Return of capital
(152,677
)
 
(144,208
)
 
(86,630
)
Dividends paid deduction
75,653

 
87,995

 
144,816

Less: Capital gain distributions

 

 
(62,403
)
Dividends paid deduction attributable to adjusted taxable income subject to the 90% distribution requirement
$
75,653

 
$
87,995

 
$
82,413

A summary of the tax characterization of the dividends paid by the General Partner for the years ended December 31, 2012, 2011 and 2010 follows:
 
2012
 
2011
 
2010
Common Shares
 
 
 
 
 
Ordinary income
14.1
%
 
3.3
%
 
24.9
%
Return of capital
85.9
%
 
96.7
%
 
56.3
%
Capital gains
%
 
%
 
18.8
%
 
100.0
%
 
100.0
%
 
100.0
%
Preferred Shares
 
 
 
 
 
Ordinary income
100.0
%
 
100.0
%
 
57.0
%
Capital gains
%
 
%
 
43.0
%
 
100.0
%
 
100.0
%
 
100.0
%


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DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Partnership
For the Partnership, the allocated share of income and loss other than the operations of its taxable REIT subsidiary is included in the income tax returns of its partners; accordingly the only federal income taxes included in the accompanying consolidated financial statements of the Partnership are in connection with its taxable REIT subsidiary.
Deferred Tax Assets
Refinements to our operating strategy in 2009 caused us to reduce our projections of taxable income in our taxable REIT subsidiary. As the result of these changes in our projections, we determined that it was more likely than not that the taxable REIT subsidiary would not generate sufficient taxable income to realize any of its deferred tax assets. Accordingly, a full valuation allowance was established for our deferred tax assets in 2009, which we have continued to maintain through December 31, 2012 as we still believe the taxable REIT subsidiary will not generate sufficient taxable income to realize any of its deferred tax assets. Income taxes are not material to our operating results or financial position.
Cash Paid for Income Taxes
We paid state and local income taxes of $580,000 and $340,000 in 2012 and 2011, respectively. We received income tax refunds, net of federal and state income tax payments, of $19.7 million in 2010. Our taxable REIT subsidiary has no significant net deferred income tax or unrecognized tax benefit items.
Fair Value Measurements
We follow the framework established under accounting standard FASB ASC 820 for measuring fair value of non-financial assets and liabilities that are not required or permitted to be measured at fair value on a recurring basis but only in certain circumstances, such as a business combination.
 Assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities to which we have access.
Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates and yield curves that are observable at commonly quoted intervals.
Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity's own assumptions, as there is little, if any, related market activity.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
Use of Estimates
The preparation of the financial statements requires management to make a number of estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. The most significant estimates, as discussed within our Summary of Significant Accounting Policies, pertain to the critical assumptions utilized in testing real estate assets for impairment, estimating the fair value of real estate assets when an impairment event has taken place and allocating the purchase price of acquired properties to tangible and intangible assets based on their respective fair values. Actual results could differ from those estimates.

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DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(3)
Significant Acquisitions and Dispositions
Acquisitions and dispositions during the years ended December 31, 2012, 2011 and 2010 were completed in accordance with our strategy to reposition our investment concentration among product types and further diversify our geographic presence. With the exception of certain properties that have been sold or classified as held for sale, the results of operations for all acquired properties have been included in continuing operations within our consolidated financial statements since their respective dates of acquisition.
2012 Acquisitions
We acquired 37 operating properties during the year ended December 31, 2012. These acquisitions consisted of three industrial properties near Chicago, Illinois, two industrial properties in Columbus, Ohio, one industrial property in Southern California, two industrial properties in Northern California, one industrial property in Atlanta, Georgia, one industrial property in Houston, Texas and 27 medical office properties in various markets. The following table summarizes our allocation of the fair value of amounts recognized for each major class of asset and liability (in thousands) for these acquisitions:
 
 
Real estate assets
$
668,149

Lease-related intangible assets
111,509

Other assets
5,714

Total acquired assets
785,372

Secured debt
100,826

Other liabilities
11,928

Total assumed liabilities
112,754

Fair value of acquired net assets
$
672,618

The leases in the acquired properties had a weighted average remaining life at acquisition of approximately 8.8 years.
2010 and 2011 Acquisitions of Premier Portfolio
We purchased twelve industrial and four office buildings, as well as other real estate assets, during the year ended December 31, 2011. These purchases completed our acquisition of a portfolio of buildings in South Florida (the "Premier Portfolio"), which was placed under contract in 2010, and resulted in cash payments to the sellers of $27.4 million, the assumption of secured loans with a face value of $124.4 million and the issuance to the sellers of 2.1 million Units with a fair value at issuance of $28.4 million (Note 11). These Units were converted to shares of the General Partner in early 2012, after a mandatory one-year holding period.
On December 30, 2010, we purchased 38 industrial buildings, one office building and other real estate assets within the Premier Portfolio.
The following table summarizes our allocation of the fair value of amounts recognized for each major class of assets and liabilities related to the 55 properties and other real estate assets from the Premier Portfolio that have been purchased through December 31, 2011 (in thousands): 

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DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 
Acquired During Year Ended December 31, 2011
 
Acquired During Year Ended December 31, 2010
 
Total

Real estate assets
$
153,656

 
$
249,960

 
$
403,616

Lease-related intangible assets
25,445

 
31,091

 
56,536

Other assets
2,571

 
1,801

 
4,372

Total acquired assets
181,672

 
282,852

 
464,524

Secured debt
125,003

 
158,238

 
283,241

Other liabilities
4,284

 
4,075

 
8,359

Total assumed liabilities
129,287

 
162,313

 
291,600

Fair value of acquired net assets
$
52,385

 
$
120,539

 
$
172,924

The leases in the acquired properties had a weighted average remaining life at acquisition of approximately 3.5 years.
Other 2011 Acquisitions
In addition to our acquisition of the remaining properties in the Premier portfolio, we also acquired 43 properties during the year ended December 31, 2011. These acquisitions consisted of twelve bulk industrial properties in Chicago, Illinois, six bulk industrial properties in Raleigh, North Carolina, three bulk industrial properties in Dallas, Texas, three bulk industrial properties in Minneapolis, Minnesota, two bulk industrial properties in Southern California, one bulk industrial property in Phoenix, Arizona, one bulk industrial property in Savannah, Georgia, one bulk industrial property in Indianapolis, Indiana, one office property in Raleigh, North Carolina, one office property in Indianapolis, Indiana, one office property in Atlanta, Georgia and eleven medical office properties in various markets. The following table summarizes our allocation of the fair value of amounts recognized for each major class of assets and liabilities (in thousands) for these acquisitions:
Real estate assets
$
503,556

Lease-related intangible assets
70,994

Other assets
879

Total acquired assets
575,429

Secured debt
40,072

Other liabilities
8,300

Total assumed liabilities
48,372

Fair value of acquired net assets
$
527,057

The leases in the acquired properties had a weighted average remaining life at acquisition of approximately 6.7 years.
2010 Acquisition of Remaining Interest in Dugan Realty, L.L.C.
On July 1, 2010, we acquired our joint venture partner's 50% interest in Dugan Realty, L.L.C. ("Dugan"), a real estate joint venture that we had previously accounted for using the equity method, for a payment of $166.7 million. Dugan held $28.1 million of cash at the time of acquisition, which resulted in a net cash outlay of $138.6 million. As the result of this transaction we obtained all of Dugan's membership interests.
At the date of acquisition, Dugan owned 106 industrial buildings totaling 20.8 million square feet and 63 net acres of undeveloped land located in Midwest and Southeast markets. Dugan had a secured loan with a face value of $195.4 million due in October 2010 and a secured loan with a face value of $87.6 million due in October 2012, which were both repaid at their scheduled maturity dates (see Note 7).
The following table summarizes our allocation of the fair value of amounts recognized for each major class of assets and liabilities (in thousands):

-81-

DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Real estate assets
$
502,418

Lease-related intangible assets
107,155

Other assets
28,658

Total acquired assets
638,231

Secured debt
285,376

Other liabilities
20,243

Total assumed liabilities
305,619

Fair value of acquired net assets (represents 100% interest)
$
332,612

We previously managed and performed other ancillary services for Dugan's properties and, as a result, Dugan had no employees of its own and no separately recognizable brand identity. As such, we determined that the consideration paid to the seller, plus the fair value of the incremental share of the assumed liabilities, represented the fair value of the additional interest in Dugan that we acquired, and that no goodwill or other non-real estate related intangible assets were required to be recognized through the transaction. Accordingly, we also determined that the fair value of the acquired ownership interest in Dugan equaled the fair value of our existing ownership interest.
In conjunction with acquiring our partner's ownership interest in Dugan, we derecognized a $50.0 million liability related to a put option held by our partners. The put liability was originally recognized in October 2000, in connection with a sale of industrial properties and undeveloped land to Dugan, at which point our joint venture partner was given an option to put up to $50.0 million of its interest in Dugan to us in exchange for the General Partner's common stock or cash (at our option). Our gain on acquisition, considering the derecognition of the put liability, was calculated as follows (in thousands):
 
Fair value of existing interest (represents 50% interest)
$
166,306

Less:
 
Carrying value of investment in Dugan
158,591

Put option liability derecognized
(50,000
)
 
108,591

 
 
Gain on acquisition
$
57,715

Other 2010 Acquisitions
In addition to the 39 Premier Portfolio properties acquired in 2010 as discussed above, and the acquisition of our partner's ownership interest in Dugan, we also acquired 13 additional properties during the year ended December 31, 2010. These acquisitions consisted of three bulk industrial properties in Houston, Texas, two bulk industrial and two office properties in South Florida, two bulk industrial properties in Chicago, Illinois, one bulk industrial property in Phoenix, Arizona, one bulk industrial property in Nashville, Tennessee, one bulk industrial property in Columbus, Ohio, and one medical office property in Charlotte, North Carolina.
The following table summarizes our allocation of the fair value of amounts recognized for each major class of assets and liabilities (in thousands): 
Real estate assets
$
254,014

Lease-related intangible assets
71,844

Other assets
3,652

Total acquired assets
329,510

Secured and unsecured debt
63,458

Other liabilities
5,645

Total assumed liabilities
69,103

Fair value of acquired net assets
$
260,407


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DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Fair Value Measurements
The fair value estimates used in allocating the aggregate purchase price of each acquisition among the individual components of real estate assets and liabilities were determined primarily through calculating the "as-if vacant" value of each building, using the income approach, and relied significantly upon internally determined assumptions. We have determined these estimates to have been primarily based upon Level 3 inputs, which are unobservable inputs based on our own assumptions. The range of most significant assumptions utilized in making the lease-up and future disposition estimates used in calculating the "as-if vacant" value of each building acquired during 2012 and 2011 are as follows: 
 
2012
 
2011
 
Low
High
 
Low
High
Discount rate
7.13%
10.78%
 
6.40%
11.10%
Exit capitalization rate
5.75%
8.88%
 
4.80%
10.00%
Lease-up period (months)
6
36
 
9
36
Net rental rate per square foot - Industrial
$2.75
$7.62
 
$2.75
$6.70
Net rental rate per square foot - Office
$—
$—
 
$8.61
$16.00
Net rental rate per square foot - Medical Office
$13.20
$26.14
 
$13.75
$27.62
Acquisition-Related Activity
The acquisition-related activity in our consolidated Statements of Operations includes transaction costs for completed acquisitions, which are expensed as incurred, as well as gains or losses related to acquisitions where we had a pre-existing ownership interest. Acquisition-related activity for the years ended December 31, 2012, 2011 and 2010 includes transaction costs of $4.2 million, $2.3 million and $1.9 million, respectively.
Dispositions
We disposed of income-producing real estate assets and undeveloped land and received net proceeds of $138.1 million, $1.57 billion and $499.5 million in 2012, 2011 and 2010, respectively.
Included in the building dispositions in 2011 is the sale of substantially all of our wholly-owned suburban office real estate properties in Atlanta, Chicago, Columbus, Dallas, Minneapolis, Orlando and Tampa, consisting of 79 buildings that had an aggregate of 9.8 million square feet to affiliates of Blackstone Real Estate Partners. The sales price was approximately $1.06 billion which, after settlement of certain working capital items and the payment of applicable transaction costs, was received in a combination of approximately $1.02 billion in cash and the assumption by the buyer of mortgage debt with a face value of approximately $24.9 million.
Also included in the building dispositions in 2011 is the sale of 13 suburban office buildings, totaling over 2.0 million square feet, to an existing 20%-owned unconsolidated joint venture. These buildings were sold to the unconsolidated joint venture for an agreed value of $342.8 million, of which our 80% share of proceeds totaled $273.7 million. Included in the building dispositions in 2010 is the sale of seven suburban office buildings, totaling over 1.0 million square feet, to the same 20%-owned joint venture. These buildings were sold to the unconsolidated joint venture for an agreed value of $173.9 million, of which our 80% share of proceeds totaled $139.1 million.
All other dispositions were not individually material.
(4)
Related Party Transactions
We provide property management, asset management, leasing, construction and other tenant related services to unconsolidated companies in which we have equity interests. We recorded the corresponding fees based on contractual terms that approximate market rates for these types of services and we have eliminated our ownership percentage of these fees in the consolidated financial statements. The following table summarizes the fees earned from these companies, prior to elimination, for the years ended December 31, 2012, 2011 and 2010, respectively (in thousands): 

-83-


 
2012
 
2011
 
2010
Management fees
$
11,018

 
$
10,090

 
$
7,620

Leasing fees
3,411

 
4,417

 
2,700

Construction and development fees
4,739

 
6,711

 
10,257

(5)
Investments in Unconsolidated Companies
As of December 31, 2012, we had equity interests in 20 unconsolidated joint ventures that primarily own and operate rental properties and hold land for development.
Combined summarized financial information for the unconsolidated companies as of December 31, 2012 and 2011, and for the years ended December 31, 2012, 2011 and 2010, are as follows (in thousands):
 
 
2012
 
2011
 
2010
Rental revenue
$
291,534

 
$
272,937

 
$
228,378

Net income
$
3,125

 
$
10,709

 
$
19,202

 
 
 
 
 
 
Land, buildings and tenant improvements, net
$
1,991,823

 
$
2,051,412

 
 
Construction in progress
61,663

 
12,208

 
 
Undeveloped land
175,143

 
177,742

 
 
Other assets
289,173

 
309,409

 
 
 
$
2,517,802

 
$
2,550,771

 
 
 
 
 
 
 
 
Indebtedness
$
1,314,502

 
$
1,317,554

 
 
Other liabilities
70,519

 
71,241

 
 
 
1,385,021

 
1,388,795

 
 
Owners' equity
1,132,781

 
1,161,976

 
 
 
$
2,517,802

 
$
2,550,771

 
 
Dugan (Note 3) generated $42.5 million in revenues and $6.4 million of net income in the six months of 2010 prior to its July 1 consolidation.
Our share of the scheduled principal payments of long term debt for the unconsolidated joint ventures for each of the next five years and thereafter as of December 31, 2012 are as follows (in thousands):
Year
Future Repayments
2013
$
119,387

2014
51,757

2015
69,834

2016
14,948

2017
101,922

Thereafter
54,562

 
$
412,410








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DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(6)
Discontinued Operations and Assets Held for Sale
The following table illustrates the number of properties in discontinued operations:
 
Held For Sale at December 31, 2012
 
Sold in 2012
 
Sold in 2011
 
Sold in 2010
 
Total
Office
0
 
10
 
93
 
11
 
114
Industrial
0
 
17
 
7
 
6
 
30
Medical Office
2
 
0
 
0
 
0
 
2
Retail
0
 
1
 
1
 
2
 
4
 
2
 
28
 
101
 
19
 
150
We allocate interest expense to discontinued operations and have included such interest expense in computing income from discontinued operations. Interest expense allocable to discontinued operations includes interest on any secured debt for properties included in discontinued operations and an allocable share of our consolidated unsecured interest expense for unencumbered properties. The allocation of unsecured interest expense to discontinued operations was based upon the gross book value of the unencumbered real estate assets included in discontinued operations as it related to the total gross book value of our unencumbered real estate assets.
The following table illustrates the operations of the buildings reflected in discontinued operations for the years ended December 31, 2012, 2011 and 2010, respectively (in thousands):
 
 
2012
 
2011
 
2010
Revenues
$
8,284

 
$
194,166

 
$
248,024

Operating expenses
(3,286
)
 
(89,123
)
 
(107,412
)
Depreciation and amortization
(3,454
)
 
(59,453
)
 
(84,139
)
Operating income
1,544

 
45,590

 
56,473

Interest expense
(3,093
)
 
(47,356
)
 
(63,556
)
Loss before gain on sales
(1,549
)
 
(1,766
)
 
(7,083
)
Gain on sale of depreciable properties
13,467

 
100,882

 
33,054

Income from discontinued operations
$
11,918

 
$
99,116

 
$
25,971

Dividends or distributions on preferred shares or Preferred Units and adjustments for the redemption or repurchase of preferred shares or Preferred Units are allocated entirely to continuing operations for both the General Partner and the Partnership.
Allocation of Noncontrolling Interests - General Partner
The following table illustrates the General Partner's share of the income (loss) attributable to common shareholders from continuing operations and discontinued operations, reduced by the allocation of income or loss between continuing and discontinued operations to the Limited Partner Units, for the years ended December 31, 2012, 2011 and 2010, respectively (in thousands):
 
2012
 
2011
 
2010
Loss from continuing operations attributable to common shareholders
$
(137,852
)
 
$
(65,064
)
 
$
(39,448
)
Income from discontinued operations attributable to common shareholders
11,707

 
96,480

 
25,340

Net income (loss) attributable to common shareholders
$
(126,145
)
 
$
31,416

 
$
(14,108
)
Allocation of Noncontrolling Interests - Partnership
The income from discontinued operations for all periods presented in the Partnership's Consolidated Statements of Operations and Comprehensive Income is entirely attributable to the common unitholders.



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DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Properties Held for Sale
At December 31, 2012, we classified two in-service properties as held-for-sale, while at December 31, 2011, we classified 13 in-service properties as held-for-sale. The following table illustrates aggregate balance sheet information of these held-for-sale properties (in thousands):
 
December 31, 2012
 
December 31, 2011
Real estate investment, net
$
24,994

 
$
49,735

Other assets
5,943

 
5,845

Total assets held-for-sale
$
30,937

 
$
55,580

 
 
 
 
Accrued expenses
$
94

 
$
254

Other liabilities
713

 
721

Total liabilities held-for-sale
$
807

 
$
975

(7)
Indebtedness
All debt is held directly or indirectly by the Partnership. The General Partner itself does not have any indebtedness, but does guarantee the unsecured debt of the Partnership.
Indebtedness at December 31, 2012 and 2011 consists of the following (in thousands):
 
 
Maturity Date
 
Weighted Average Interest Rate
 
Weighted Average Interest Rate
 
 
 
 
 
 
2012
 
2011
 
2012
 
2011
Fixed rate secured debt
2013 to 2027
 
6.19
%
 
6.25
%
 
$
1,149,541

 
$
1,167,188

Variable rate secured debt
2014 to 2025
 
2.01
%
 
0.21
%
 
18,412

 
6,045

Fixed rate unsecured debt
2013 to 2028
 
6.17
%
 
6.56
%
 
2,993,217

 
2,616,063

Unsecured lines of credit
2015
 
1.47
%
 
1.14
%
 
285,000

 
20,293

 
 
 
 
 
 
 
$
4,446,170

 
$
3,809,589

Secured Debt
As of December 31, 2012, our secured debt was collateralized by rental properties with a carrying value of $2.0 billion and by letters of credit in the amount of $5.3 million.
The fair value of our fixed rate secured debt as of December 31, 2012 was $1.3 billion. Because our fixed rate secured debt is not actively traded in any marketplace, we utilized a discounted cash flow methodology to determine its fair value. Accordingly, we calculated fair value by applying an estimate of the current market rate to discount the debt's remaining contractual cash flows. Our estimate of a current market rate, which is the most significant input in the discounted cash flow calculation, is intended to replicate debt of similar maturity and loan-to-value relationship. The estimated rates ranged from 3.20% to 4.70%, depending on the attributes of the specific loans. The current market rates we utilized were internally estimated; therefore, we have concluded that our determination of fair value for our fixed rate secured debt was primarily based upon Level 3 inputs.
We assumed nine secured loans in conjunction with our acquisition activity in 2012. These assumed loans had a total face value of $96.1 million and fair value of $100.8 million. These assumed loans carry a weighted average stated interest rate of 5.56% and a weighted average remaining term at acquisition of 2.4 years. We used an estimated market rate of 3.50% in determining the fair value of these loans.
In June 2012, a newly formed subsidiary, consolidated by both the General Partner and the Partnership, borrowed $13.3 million on a secured note bearing interest at a variable rate of LIBOR plus 2.50% (equal to 2.71% for outstanding borrowings as of December 31, 2012) and maturing June 29, 2017.
During the year ended December 31, 2012, we repaid five secured loans at their maturity dates totaling $102.1 million. These loans had a weighted average stated interest rate of 6.08%.

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DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


We assumed 13 secured loans in conjunction with our acquisition activity in 2011. These acquired secured loans had a total face value of $162.4 million and fair value of $165.1 million. The assumed loans carry a weighted average stated interest rate of 5.75% and a weighted remaining term upon acquisition of 5.5 years. We used estimated market rates ranging between 3.50% and 5.81% in determining the fair value of the loans.
Unsecured Notes
We took the following actions during 2012 and 2011 as it pertains to our unsecured indebtedness:
In October 2012, we repaid $50.0 million of medium term notes, which had an effective interest rate of 5.45%, at their scheduled maturity date.
In September 2012, we issued $300.0 million of unsecured notes that bear interest at 3.875%, have an effective rate of 3.925%, and mature on October 15, 2022.
In August 2012, we repaid $150.0 million of senior unsecured notes, which had an effective interest rate of 6.01%, at their scheduled maturity date.
In July 2012, one of our consolidated subsidiaries repaid $21.0 million of variable rate unsecured debt, which bore interest at a rate of LIBOR plus 0.85%, at its scheduled maturity date.
In June 2012, we issued $300.0 million of senior unsecured notes that bear interest at 4.375%, have an effective rate of 4.466% and mature on June 15, 2022.
In December 2011, we repaid $167.6 million of our 3.75% Exchangeable Notes at their scheduled maturity date. Due to accounting requirements, which required us to record interest expense on this debt at a similar rate as could have been obtained for non-convertible debt, this debt had an effective interest rate of 5.62%.
In August 2011, we repaid $122.5 million of senior unsecured notes, which had an effective interest rate of 5.69%, at their scheduled maturity date.
In March 2011, we repaid $42.5 million of senior unsecured notes, which had an effective interest rate of 6.96%, at their scheduled maturity date.
At December 31, 2012, all of our unsecured notes bear interest at fixed rates. We utilized broker estimates in estimating the fair value of our fixed rate unsecured debt. Our unsecured notes are thinly traded and, in certain cases, the broker estimates were not based upon comparable transactions. The broker estimates took into account any recent trades within the same series of our fixed rate unsecured debt, comparisons to recent trades of other series of our fixed rate unsecured debt, trades of fixed rate unsecured debt from companies with profiles similar to ours, as well as overall economic conditions. We reviewed these broker estimates for reasonableness and accuracy, considering whether the estimates were based upon market participant assumptions within the principal and most advantageous market and whether any other observable inputs would be more accurate indicators of fair value than the broker estimates. We concluded that the broker estimates were representative of fair value. We have determined that our estimation of the fair value of our fixed rate unsecured debt was primarily based upon Level 3 inputs, as defined. The estimated trading values of our fixed rate unsecured debt, depending on the maturity and coupon rates, ranged from 101.00% to 129.00% of face value.
The indentures (and related supplemental indentures) governing our outstanding series of notes also require us to comply with financial ratios and other covenants regarding our operations. We were in compliance with all such covenants as of December 31, 2012.
 Unsecured Line of Credit
Our unsecured line of credit as of December 31, 2012 is described as follows (in thousands):
 
 
 
 
 
 
Outstanding Balance at 
Description
Maximum Capacity
 
Maturity Date
 
December 31, 2012
Unsecured Line of Credit – Partnership
$
850,000

 
December 2015
 
$
285,000

The Partnership's unsecured line of credit has an interest rate on borrowings of LIBOR plus 1.25% (equal to 1.47% for borrowings as of December 31, 2012) and a maturity date of December 2015. Subject to certain conditions, the

-87-

DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


terms also include an option to increase the facility by up to an additional $400.0 million, for a total of up to $1.25 billion.
This line of credit provides us with an option to obtain borrowings from financial institutions that participate in the line at rates that may be lower than the stated interest rate, subject to certain restrictions.
This line of credit contains financial covenants that require us to meet certain financial ratios and defined levels of performance, including those related to total fixed charge coverage, unsecured interest expense coverage and debt-to-asset value (with asset value being defined in the Partnership's unsecured line of credit agreement). As of December 31, 2012, we were in compliance with all covenants under this line of credit.
To the extent that there are outstanding borrowings, we utilize a discounted cash flow methodology in order to estimate the fair value of our unsecured line of credit. The net present value of the difference between future contractual interest payments and future interest payments based on our estimate of a current market rate represents the difference between the book value and the fair value. Our estimate of a current market rate is based upon the rate, considering current market conditions and our specific credit profile, at which we estimate we could obtain similar borrowings. The current market rate of 1.61% that we utilized was internally estimated, therefore, we have concluded that our determination of fair value for our unsecured line of credit was primarily based upon Level 3 inputs.
Through July 2012, a consolidated subsidiary had an unsecured line of credit that allowed for borrowings up to $30.0 million and bore interest at a rate of LIBOR plus 0.85%. This unsecured line of credit was used to fund development activities within the consolidated subsidiary and the outstanding balance of $20.3 million was repaid at its maturity in July 2012.
Changes in Fair Value
As all of our fair value debt disclosures relied primarily on Level 3 inputs, the following table summarizes the book value and changes in the fair value of our debt for the year ended December 31, 2012 (in thousands): 
 
Book Value at
 
Book Value at
 
Fair Value at
 
Issuances
 
 
 
Adjustments
 
Fair Value at
 
December 31, 2011
 
December 31, 2012
 
December 31, 2011
 
and
Assumptions
 
Payoffs
 
to Fair
Value
 
December 31, 2012
Fixed rate secured debt
$
1,167,188

 
$
1,149,541

 
$
1,256,331

 
$
100,826

 
$
(116,319
)
 
$
10,639

 
$
1,251,477

Variable rate secured debt
6,045

 
18,412

 
6,045

 
13,336

 
(968
)
 
(27
)
 
18,386

Unsecured notes
2,616,063

 
2,993,217

 
2,834,610

 
600,000

 
(222,846
)
 
124,622

 
3,336,386

Unsecured lines of credit
20,293

 
285,000

 
20,244

 
285,000

 
(20,293
)
 
681

 
285,632

Total
$
3,809,589

 
$
4,446,170

 
$
4,117,230

 
$
999,162

 
$
(360,426
)
 
$
135,915

 
$
4,891,881

 
Scheduled Maturities and Interest Paid
At December 31, 2012, the scheduled amortization and maturities of all indebtedness, excluding fair value and other accounting adjustments, for the next five years and thereafter were as follows (in thousands):
 
Year
Amount
2013
$
547,732

2014
331,563

2015
679,945

2016
544,840

2017
566,611

Thereafter
1,768,944

 
$
4,439,635

The amount of interest paid in 2012, 2011 and 2010 was $246.1 million, $261.2 million and $246.5 million, respectively. The amount of interest capitalized in 2012, 2011 and 2010 was $9.4 million, $4.3 million and $11.5 million, respectively.

-88-

DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(8)
Segment Reporting
We have four reportable operating segments at December 31, 2012, the first three of which consist of the ownership and rental of (i) industrial, (ii) office and (iii) medical office real estate investments. The operations of our industrial, office and medical office properties, along with our retail properties, are collectively referred to as "Rental Operations." Our retail properties, as well as any other properties not included in our reportable segments, do not by themselves meet the quantitative thresholds for separate presentation as a reportable segment. The fourth reportable segment consists of various real estate services such as property management, asset management, maintenance, leasing, development, general contracting and construction management to third-party property owners and joint ventures, and is collectively referred to as "Service Operations." Our reportable segments offer different products or services and are managed separately because each segment requires different operating strategies and management expertise.
During 2012, one of the quantitative thresholds was triggered, which required our medical office property operating segment to be presented as a separate reportable segment. As such, our medical office properties are presented as a separate reportable segment for the years ended December 31, 2012, 2011 and 2010.
Other revenue consists of other operating revenues not identified with one of our operating segments. Interest expense and other non-property specific revenues and expenses are not allocated to individual segments in determining our performance measure.
We assess and measure the overall operating results of the General Partner and the Partnership primarily based upon Funds From Operations ("FFO"), which is an industry performance measure that management believes is a useful indicator of consolidated operating performance. FFO is used by industry analysts and investors as a supplemental operating performance measure of a REIT. The National Association of Real Estate Investment Trusts ("NAREIT") created FFO as a non-GAAP supplemental measure of REIT operating performance. FFO, as defined by NAREIT, represents GAAP net income (loss), excluding extraordinary items as defined under GAAP, gains or losses from sales of previously depreciated real estate assets, impairment charges related to depreciable real estate assets, plus certain non-cash items such as real estate asset depreciation and amortization, and after similar adjustments for unconsolidated partnerships and joint ventures. The most comparable GAAP measure is net income (loss) attributable to common shareholders or common unitholders. FFO attributable to common shareholders or common unitholders should not be considered as a substitute for net income (loss) attributable to common shareholders or common unitholders or any other measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. FFO is calculated in accordance with the definition that was adopted by the Board of Governors of NAREIT.
Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry analysts and investors have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Management believes that the use of FFO attributable to common shareholders or common unitholders, combined with net income (which remains the primary measure of performance), improves the understanding of operating results of REITs among the investing public and makes comparisons of REIT operating results more meaningful. Management believes that the use of FFO as a performance measure enables investors and analysts to readily identify the operating results of the long-term assets that form the core of a REIT's activity and assist them in comparing these operating results between periods or between different companies.
We do not allocate certain income and expenses ("Non-Segment Items," as shown in the table below) to our operating segments. Thus, the operational performance measure presented here on a segment-level basis represents net earnings, excluding depreciation expense and the Non-Segment Items not allocated, and is not meant to present FFO as defined by NAREIT.
 The following table shows (i) the revenues for each of the reportable segments and (ii) a reconciliation of FFO attributable to common shareholders or common unitholders to net income (loss) attributable to common shareholders or common unitholders for the years ended December 31, 2012, 2011 and 2010 (in thousands):

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DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 
2012
 
2011
 
2010
Revenues
 
 
 
 
 
Rental Operations:
 
 
 
 
 
Industrial
$
438,525

 
$
379,030

 
$
280,538

Office
267,982

 
272,807

 
313,712

Medical Office
98,647

 
57,673

 
44,287

Non-reportable Rental Operations
21,794

 
21,829

 
19,912

General contractor and service fee revenue ("Service Operations")
275,071

 
521,796

 
515,361

Total Segment Revenues
1,102,019

 
1,253,135

 
1,173,810

Other Revenue
7,421

 
11,544

 
11,094

Consolidated Revenue from continuing operations
1,109,440

 
1,264,679

 
1,184,904

Discontinued Operations
8,284

 
194,166

 
248,024

Consolidated Revenue
$
1,117,724

 
$
1,458,845

 
$
1,432,928

Reconciliation of Funds From Operations
 
 
 
 
 
Net earnings excluding depreciation and Non-Segment Items
 
 
 
 
 
Industrial
$
327,175

 
$
278,315

 
$
210,202

Office
155,456

 
160,530

 
185,914

Medical Office
65,932

 
35,450

 
28,177

Non-reportable Rental Operations
15,300

 
15,563

 
13,646

Service Operations
20,201

 
41,316

 
28,496

 
584,064

 
531,174

 
466,435

Non-Segment Items:
 
 
 
 
 
Interest expense
(245,170
)
 
(220,455
)
 
(186,407
)
Impairment charges on non-depreciable properties

 
(12,931
)
 
(9,834
)
Interest and other income
514

 
658

 
534

Other operating expenses
(633
)
 
(1,237
)
 
(1,231
)
General and administrative expenses
(46,424
)
 
(43,107
)
 
(41,329
)
Undeveloped land carrying costs
(8,829
)
 
(8,934
)
 
(9,203
)
Loss on debt transactions

 

 
(16,349
)
Acquisition-related activity
(4,192
)
 
(1,188
)
 
55,820

Income tax benefit
103

 
194

 
1,126

Other non-segment income
3,728

 
6,131

 
8,132

Net (income) loss attributable to noncontrolling interests - consolidated entities not wholly owned by the Partnership
(382
)
 
115

 
185

Joint venture items
37,469

 
38,161

 
40,346

Dividends on preferred shares/Preferred Units
(46,438
)
 
(60,353
)
 
(69,468
)
Adjustments for redemption/repurchase of preferred shares/Preferred Units
(5,730
)
 
(3,796
)
 
(10,438
)
Discontinued operations
1,905

 
57,687

 
77,056

FFO attributable to common unitholders of the Partnership
269,985

 
282,119

 
305,375

Net (income) loss attributable to noncontrolling interests - common limited partnership interests in the Partnership
2,273

 
(859
)
 
351

Noncontrolling interest share of FFO adjustments
(7,054
)
 
(6,644
)
 
(7,771
)
FFO attributable to common shareholders of the General Partner
265,204

 
274,616

 
297,955

Depreciation and amortization on continuing operations
(375,965
)
 
(326,226
)
 
(276,045
)
Depreciation and amortization on discontinued operations
(3,454
)
 
(59,453
)
 
(84,139
)
Company's share of joint venture adjustments
(34,702
)
 
(33,687
)
 
(34,674
)
Earnings from depreciated property sales on continuing operations
344

 
68,549

 
39,662

Earnings from depreciated property sales on discontinued operations
13,467

 
100,882

 
33,054

Earnings from depreciated property sales - share of joint venture
1,907

 
91

 
2,308

Noncontrolling interest share of FFO adjustments
7,054

 
6,644

 
7,771

Net income (loss) attributable to common shareholders of the General Partner
$
(126,145
)
 
$
31,416

 
$
(14,108
)
Add back: Net income (loss) attributable to noncontrolling interests - common limited partnership interests in the Partnership
(2,273
)
 
859

 
(351
)
Net income (loss) attributable to common unitholders of the Partnership
$
(128,418
)
 
$
32,275

 
$
(14,459
)






-90-

DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 The assets for each of the reportable segments as of December 31, 2012 and 2011 are as follows (in thousands):
 
December 31, 2012
 
December 31, 2011
Assets
 
 
 
Rental Operations:
 
 
 
Industrial
$
3,836,721

 
$
3,586,250

Office
1,683,314

 
1,742,196

Medical Office
1,202,929

 
580,177

Non-reportable Rental Operations
175,197

 
209,056

Service Operations
162,219

 
167,382

Total Segment Assets
7,060,380

 
6,285,061

Non-Segment Assets - Partnership
499,721

 
718,921

Consolidated Assets - Partnership
$
7,560,101

 
$
7,003,982

Non-Segment Assets - General Partner

 
455

Consolidated Assets - General Partner
$
7,560,101

 
$
7,004,437

Tenant improvements and leasing costs to re-let rental space that had been previously under lease to tenants are referred to as second generation expenditures. Building improvements that are not specific to any tenant but serve to improve integral components of our real estate properties are also second generation expenditures. In addition to revenues and FFO, we also review our second generation capital expenditures in measuring the performance of our individual Rental Operations segments. We review these expenditures to determine the costs associated with re-leasing vacant space and maintaining the condition of our properties. Our second generation capital expenditures by segment are summarized as follows for the years ended December 31, 2012, 2011 and 2010 (in thousands):
 
2012
 
2011
 
2010
Second Generation Capital Expenditures
 
 
 
 
 
Industrial
$
33,095

 
$
34,872

 
$
23,271

Office
30,092

 
63,933

 
65,203

Medical Office
641

 
410

 
183

Non-reportable Rental Operations segments
56

 
49

 
66

Total
$
63,884

 
$
99,264

 
$
88,723

 
(9)
Leasing Activity
Future minimum rents due to us under non-cancelable operating leases at December 31, 2012 are as follows (in thousands):
Year
Amount
2013
$
667,886

2014
628,433

2015
564,516

2016
499,342

2017
426,569

Thereafter
1,630,698

 
$
4,417,444

In addition to minimum rents, certain leases require reimbursements of specified operating expenses that amounted to $174.2 million, $190.8 million and $190.0 million for the years ended December 31, 2012, 2011 and 2010, respectively.
(10)
Employee Benefit Plans
We maintain a 401(k) plan for full-time employees. We had historically made matching contributions up to an amount equal to three percent of the employee's salary and may also make annual discretionary contributions. We temporarily suspended the Company's matching program beginning in July 2009; however, it was reinstated in January 2011 with matching contributions up to an amount equal to two percent of the employee's salary. Also, a discretionary contribution was declared at the end of 2012, 2011 and 2010. The total expense recognized for this

-91-

DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


plan was $2.2 million, $2.5 million and $1.3 million for the years ended December 31, 2012, 2011 and 2010, respectively.
 
We make contributions to a contributory health and welfare plan as necessary to fund claims not covered by employee contributions. The total expense we recognized related to this plan was $7.5 million, $9.5 million and $10.4 million for 2012, 2011 and 2010, respectively. These expense amounts include estimates based upon the historical experience of claims incurred but not reported as of year-end.
(11)
Shareholders' Equity of the General Partner and Partners' Capital of the Partnership
General Partner
The General Partner periodically uses the public equity markets to fund the development and acquisition of additional rental properties or to pay down debt. The proceeds of these offerings are contributed to the Partnership in exchange for an additional interest in the Partnership.
Throughout 2012, the General Partner issued 22.7 million shares of common stock pursuant to its at the market equity program, generating gross proceeds of approximately $322.2 million and, after considering commissions and other costs, net proceeds of approximately $315.3 million. The General Partner paid $6.4 million in commissions related to the sale of these common shares. The proceeds from these offerings were used for acquisitions, general corporate purposes and redemption of preferred shares and fixed rate secured debt.
In March 2012, the General Partner redeemed all of the outstanding shares of its 6.950% Series M Cumulative Redeemable Preferred Shares at a liquidation amount of $168.3 million. Offering costs of $5.7 million were included as a reduction to net loss attributable to common shareholders in conjunction with the redemption of these shares.
In July 2011, the General Partner redeemed all of the outstanding shares of its 7.250% Series N Cumulative Redeemable Preferred Shares at a liquidation amount of $108.6 million. Offering costs of $3.6 million were included as a reduction to net income attributable to common shareholders in conjunction with the redemption of these shares.
In February 2011, the General Partner repurchased 80,000 shares of its 8.375% Series O Cumulative Redeemable Preferred Shares ("Series O Shares"). The Series O Shares that were repurchased had a total redemption value of $2.0 million and were repurchased for $2.1 million. An adjustment of approximately $163,000, which included a ratable portion of original issuance costs, was included as a reduction to net income attributable to common shareholders.
In conjunction with the acquisition of the Premier Portfolio (Note 3), we issued 2.1 million Units with a fair value at issuance of $28.4 million, which were included in noncontrolling interests until early 2012 when the Units were converted after a mandatory one-year holding period.
In June 2010, the General Partner issued 26.5 million shares of common stock for net proceeds of approximately $298.1 million. The proceeds from this offering were used for acquisitions, general corporate purposes and repurchases of preferred shares and fixed rate unsecured debt.
Throughout 2010, pursuant to the share repurchase plan approved by its board of directors, the General Partner repurchased 4.5 million shares of its Series O Shares. The preferred shares that were repurchased had a total face value of approximately $112.1 million, and were repurchased for $118.8 million. An adjustment of approximately $10.4 million, which included a ratable portion of issuance costs, increased the net loss attributable to common shareholders. All shares repurchased were retired prior to December 31, 2010.
The following series of preferred shares were outstanding as of December 31, 2012 (in thousands, except percentage data):
 

-92-

DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Description
Shares
Outstanding
 
Dividend
Rate
 
Optional
Redemption
Date
 
Liquidation
Preference
Series J Preferred
396
 
6.625
%
 
August 29, 2008
 
$99,058
Series K Preferred
598
 
6.500
%
 
February 13, 2009
 
$149,550
Series L Preferred
796
 
6.600
%
 
November 30, 2009
 
$199,075
Series O Preferred
712
 
8.375
%
 
February 22, 2013
 
$177,955
All series of preferred shares require cumulative distributions and have no stated maturity date (although the General Partner may redeem all such preferred shares on or following their optional redemption dates at its option, in whole or in part).
 
Partnership
For each share of common stock or preferred stock that the General Partner issues, the Partnership issues a corresponding General Partner Unit or Preferred Unit, as applicable, to the General Partner in exchange for the contribution of the proceeds from the stock issuance. Similarly, when the General Partner redeems or repurchases shares of its common stock or preferred stock, the Partnership redeems the corresponding Common Units or Preferred Units help by the General Partner at the same price.
(12)
Stock Based Compensation
We are authorized to issue up to 10.5 million shares of the General Partner's common stock under our stock based employee and non-employee compensation plans.
Fixed Stock Option Plans
On June 7, 2010, we completed a one-time stock option exchange program, which was approved by the General Partner's shareholders at its annual meeting, to allow the majority of our employees to surrender for cancellation their outstanding stock options in exchange for a lesser number of restricted stock units ("RSUs") based on both the fair value of the options and the RSUs at the time of the exchange. As a result of the program, 4.4 million options were surrendered and cancelled and 1.2 million RSUs were granted.
The total compensation cost for the new RSUs, which is equal to the unamortized compensation expense associated with the related eligible unvested options surrendered, will be recognized over the applicable vesting period of the new RSUs. As the fair value of the RSUs granted was less than the fair value of the eligible options surrendered in exchange for the RSUs, each measured on June 7, 2010, there was no incremental expense recognized through the exchange program. The most significant assumption used in estimating the fair value of the surrendered options was the assumption for expected volatility, which was 70%. The volatility assumption was made based on both historical experience and our best estimate of future volatility. The assumption for dividend yield was 5% while the assumptions for expected term and risk-free rate varied based upon the remaining contractual lives of the surrendered options.
Compensation expense recognized for fixed stock option plans was insignificant during the years ended December 31, 2012, 2011 and 2010.
Restricted Stock Units
Under our 2005 Long-Term Incentive Plan and our 2005 Non-Employee Directors Compensation Plan (collectively, the "Compensation Plans") approved by the General Partner's shareholders in April 2005, RSUs may be granted to non-employee directors, executive officers and selected management employees. A RSU is economically equivalent to a share of the General Partner's common stock.
RSUs granted to employees generally vest 20% per year over five years, have contractual lives of five years and are payable in shares of our common stock with a new share of such common stock issued upon each RSU's vesting. RSUs granted to existing non-employee directors vest 100% over one year, and have contractual lives of one year.

-93-

DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


RSUs granted on June 7, 2010 in exchange for stock options will vest, depending on the original terms of the surrendered options, over either two or three years.
To the extent that a recipient of a RSU grant is not determined to be retirement eligible, as defined by the Compensation Plans, we recognize expense on a straight-line basis over their vesting periods. Expense is recognized immediately at the date of grant to the extent a recipient is retirement eligible and expense is accelerated to the extent that a participant will become retirement eligible prior to the end of the contractual life of granted RSUs.
The following table summarizes transactions for our RSUs, excluding dividend equivalents, for 2012
Restricted Stock Units
Number of
RSUs
 
Weighted
Average
Grant Date
Fair Value
RSUs at December 31, 2011
3,503,400

 
$11.59
Granted
877,009

 
$13.81
Vested
(1,647,900
)
 
$11.69
Forfeited
(51,744
)
 
$11.84
RSUs at December 31, 2012
2,680,765

 
$12.26
Compensation cost recognized for RSUs totaled $11.5 million, $11.2 million and $9.0 million for the years ended December 31, 2012, 2011 and 2010, respectively.
As of December 31, 2012, there was $14.1 million of total unrecognized compensation expense related to nonvested RSUs granted under the Plan, which is expected to be recognized over a weighted average period of 2.8 years.
(13)
Financial Instruments
We are exposed to capital market risk, such as changes in interest rates. In an effort to manage interest rate risk, we may enter into interest rate hedging arrangements from time to time. We do not utilize derivative financial instruments for trading or speculative purposes.
The effectiveness of our hedges is evaluated throughout their lives using the hypothetical derivative method under which the change in fair value of the actual swap designated as the hedging instrument is compared to the change in fair value of a hypothetical swap. We had no material interest rate derivatives, when considering the fair value of the hedging instruments, in any period presented.
(14)
Commitments and Contingencies
We have guaranteed the repayment of $83.8 million of economic development bonds issued by various municipalities in connection with certain commercial developments. We will be required to make payments under our guarantees to the extent that incremental taxes from specified developments are not sufficient to pay the bond debt service. Management does not believe that it is probable that we will be required to make any significant payments in satisfaction of these guarantees.
We also have guaranteed the repayment of secured and unsecured loans of five of our unconsolidated subsidiaries. At December 31, 2012, the maximum guarantee exposure for these loans was approximately $247.1 million. Included in our total guarantee exposure is a joint and several guarantee of the loan agreement of the 3630 Peachtree joint venture, which had a carrying amount of $17.3 million on the balance sheet at December 31, 2012.
We lease certain land positions with terms extending to October 2105, with a total obligation of $206.5 million. No payments on these ground leases, which are classified as operating leases, are material in any individual year.
We are subject to various legal proceedings and claims that arise in the ordinary course of business. In the opinion of management, the amount of any ultimate liability with respect to these actions will not materially affect our consolidated financial statements or results of operations. 

-94-

DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





We own certain parcels of land that are subject to special property tax assessments levied by quasi municipal entities. To the extent that such special assessments are fixed and determinable, the discounted value of the full assessment is recorded as a liability. We have $12.5 million of such special assessment liabilities, which are included within other liabilities on our consolidated balance sheet as of December 31, 2012.
(15)
Subsequent Events
Declaration of Dividends/Distributions
The General Partner's board of directors declared the following dividends/distributions at its regularly scheduled board meeting held on January 30, 2013:
Class of stock/units
Quarterly
Amount per Share or Unit
 
Record Date
 
Payment Date
Common
$
0.170000

 
February 13, 2013
 
February 28, 2013
Preferred (per depositary share):
 
 
 
 
 
      Series J
$
0.414063

 
February 13, 2013
 
February 28, 2013
      Series K
$
0.406250

 
February 13, 2013
 
February 28, 2013
      Series L
$
0.412500

 
February 13, 2013
 
February 28, 2013
Common Stock Issuance
In January 2013, the General Partner completed a public offering of 41.4 million common shares, at an issue price of $14.25 per share, resulting in gross proceeds of $590.0 million and, after underwriting fees and estimated offering costs, net proceeds of approximately $571.9 million. A portion of the net proceeds from this offering were used to repay all of the outstanding borrowings under the Partnership's existing revolving credit facility, which had an outstanding balance of $285.0 million as of December 31, 2012, and the remaining proceeds will be used to redeem all of the General Partner's outstanding Series O Shares, which are redeemable as of February 22, 2013 and for general corporate purposes.
Preferred Series O Redemption Notice
In January 2013, the General Partner called for redemption all 711,820 of its outstanding Series O Shares. The redemption date is February 22, 2013 and the cash redemption price for the Series O Shares is $178.0 million, or $250.00 per share.

-95-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
Abilene, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medical Mall of Abilene
 
Medical Office

 
675

 
8,504

 

 
675

 
8,504

 
9,179

 
79

1990
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Arlington, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Baylor Ortho Hosp-Arlington
 
Medical Office
15,683

 
584

 
9,623

 
12,189

 
1,816

 
20,580

 
22,396

 
2,688

2009
2009
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aurora, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
535 Exchange
 
Industrial

 
386

 
920

 
269

 
386

 
1,189

 
1,575

 
564

1984
1999
 
525 North Enterprise Street
 
Industrial

 
342

 
1,678

 
110

 
342

 
1,788

 
2,130

 
777

1984
1999
 
615 North Enterprise Street
 
Industrial

 
468

 
2,408

 
741

 
468

 
3,149

 
3,617

 
1,326

1984
1999
 
3737 East Exchange
 
Industrial

 
598

 
2,543

 
504

 
598

 
3,047

 
3,645

 
1,270

1985
1999
 
880 North Enterprise Street
 
Industrial
3,729

 
1,150

 
5,314

 
912

 
1,150

 
6,226

 
7,376

 
2,403

2000
2000
 
Meridian Office Service Center
 
Industrial

 
567

 
1,083

 
1,688

 
567

 
2,771

 
3,338

 
1,307

2001
2001
 
Genera Corporation
 
Industrial
3,139

 
1,957

 
3,827

 
25

 
1,957

 
3,852

 
5,809

 
1,504

2004
2004
 
Butterfield 550
 
Industrial
13,319

 
9,185

 
10,795

 
6,044

 
9,188

 
16,836

 
26,024

 
2,928

2008
2008
 
940 N. Enterprise
 
Industrial

 
2,674

 
6,962

 
1,134

 
2,674

 
8,096

 
10,770

 
88

1998
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Austell, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hartman Business Center V
 
Industrial

 
2,640

 
21,471

 

 
2,640

 
21,471

 
24,111

 
530

2008
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Baltimore, Maryland
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5901 Holabird Ave
 
Industrial

 
3,345

 
4,220

 
3,349

 
3,345

 
7,569

 
10,914

 
2,585

2008
2008
 
5003 Holabird Ave
 
Industrial

 
6,488

 
9,162

 
1,885

 
6,488

 
11,047

 
17,535

 
2,521

2008
2008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Batavia, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mercy Hospital Clermont MOB
 
Medical Office

 

 
6,948

 
1,552

 

 
8,500

 
8,500

 
1,383

2006
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Baytown, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cedar Crossing
 
Industrial
10,508

 
9,323

 
5,934

 

 
9,323

 
5,934

 
15,257

 
2,058

2005
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bloomington, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hampshire Dist Center North
 
Industrial

 
779

 
4,474

 
1,315

 
779

 
5,789

 
6,568

 
2,145

1979
1997
 
Hampshire Dist Center South
 
Industrial

 
901

 
5,010

 
514

 
900

 
5,525

 
6,425

 
2,178

1979
1997
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Blue Ash, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lake Forest Place
 
Office

 
1,953

 
18,315

 
6,834

 
1,953

 
25,149

 
27,102

 
10,769

1985
1996
 
Northmark Bldg 1
 
Office

 
1,452

 
2,561

 
1,347

 
1,452

 
3,908

 
5,360

 
1,373

1987
2004
 
Westlake Center
 
Office

 
2,459

 
14,096

 
5,357

 
2,459

 
19,453

 
21,912

 
8,571

1981
1996
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bolingbrook, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

-96-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
555 Joliet Road
 
Industrial
5,988

 
2,184

 
9,263

 
859

 
2,332

 
9,974

 
12,306

 
3,103

2002
2002
 
Dawes Transportation
 
Industrial

 
3,050

 
4,453

 
16

 
3,050

 
4,469

 
7,519

 
1,903

2005
2005
 
Chapco Carton Company
 
Industrial
2,746

 
917

 
4,527

 
91

 
917

 
4,618

 
5,535

 
1,296

1999
2002
 
Crossroads 1
 
Industrial

 
1,418

 
5,794

 
444

 
1,418

 
6,238

 
7,656

 
584

1998
2010
 
Crossroads 3
 
Industrial

 
1,330

 
4,497

 
61

 
1,330

 
4,558

 
5,888

 
491

2000
2010
 
370 Crossroads Parkway
 
Industrial

 
2,409

 
5,324

 
126

 
2,409

 
5,450

 
7,859

 
436

1989
2011
 
605 Crossroads Parkway
 
Industrial

 
3,656

 
8,856

 
127

 
3,656

 
8,983

 
12,639

 
993

1998
2011
 
335 Crossroads Parkway
 
Industrial

 
2,574

 
8,384

 

 
2,574

 
8,384

 
10,958

 

1997
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Boynton Beach, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gateway Center 1
 
Industrial
6,735

 
4,271

 
6,153

 
75

 
4,271

 
6,228

 
10,499

 
669

2002
2010
 
Gateway Center 2
 
Industrial
4,432

 
2,006

 
5,030

 
8

 
2,006

 
5,038

 
7,044

 
503

2002
2010
 
Gateway Center 3
 
Industrial
3,748

 
2,381

 
3,371

 
7

 
2,381

 
3,378

 
5,759

 
392

2002
2010
 
Gateway Center 4
 
Industrial
3,087

 
1,800

 
2,815

 
12

 
1,800

 
2,827

 
4,627

 
367

2000
2010
 
Gateway Center 5
 
Industrial
2,391

 
1,238

 
2,027

 
624

 
1,238

 
2,651

 
3,889

 
203

2000
2010
 
Gateway Center 6
 
Industrial
2,266

 
1,238

 
1,940

 
566

 
1,238

 
2,506

 
3,744

 
221

2000
2010
 
Gateway Center 7
 
Industrial
3,320

 
1,800

 
2,925

 
7

 
1,800

 
2,932

 
4,732

 
345

2000
2010
 
Gateway Center 8
 
Industrial
9,839

 
4,781

 
10,352

 
547

 
4,781

 
10,899

 
15,680

 
846

2004
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Braselton, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Braselton II
 
Industrial

 
1,365

 
8,706

 
2,049

 
1,884

 
10,236

 
12,120

 
3,632

2001
2001
 
625 Braselton Pkwy
 
Industrial
17,970

 
9,855

 
21,466

 
4,889

 
11,062

 
25,148

 
36,210

 
6,622

2006
2005
 
1350 Braselton Parkway
 
Industrial

 
8,227

 
8,874

 
5,193

 
8,227

 
14,067

 
22,294

 
3,770

2008
2008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brentwood, Tennessee
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brentwood South Bus Ctr I
 
Industrial

 
1,065

 
5,209

 
1,435

 
1,065

 
6,644

 
7,709

 
2,419

1987
1999
 
Brentwood South Bus Ctr II
 
Industrial

 
1,065

 
2,577

 
1,515

 
1,065

 
4,092

 
5,157

 
1,504

1987
1999
 
Brentwood South Bus Ctr III
 
Industrial

 
848

 
3,518

 
1,107

 
848

 
4,625

 
5,473

 
1,528

1989
1999
 
Creekside Crossing I
 
Office

 
1,900

 
7,042

 
1,740

 
1,901

 
8,781

 
10,682

 
3,927

1998
1998
 
Creekside Crossing II
 
Office

 
2,087

 
6,566

 
2,109

 
2,087

 
8,675

 
10,762

 
3,317

2000
2000
 
Creekside Crossing III
 
Office

 
2,969

 
7,420

 
2,596

 
2,969

 
10,016

 
12,985

 
2,671

2006
2006
 
Creekside Crossing IV
 
Office

 
2,966

 
6,989

 
4,980

 
2,877

 
12,058

 
14,935

 
3,510

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bridgeton, Missouri
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DukePort I
 
Industrial

 
2,124

 
5,374

 
345

 
2,124

 
5,719

 
7,843

 
644

1996
2010
 
DukePort II
 
Industrial

 
1,470

 
2,922

 
32

 
1,470

 
2,954

 
4,424

 
403

1997
2010
 
DukePort V
 
Industrial

 
600

 
2,918

 
39

 
600

 
2,957

 
3,557

 
260

1998
2010
 
DukePort VI
 
Industrial

 
1,664

 
6,145

 
117

 
1,664

 
6,262

 
7,926

 
689

1999
2010
 
DukePort VII
 
Industrial

 
834

 
4,102

 
22

 
834

 
4,124

 
4,958

 
480

1999
2010
 
DukePort IX
 
Industrial

 
2,475

 
5,740

 
271

 
2,475

 
6,011

 
8,486

 
590

2001
2010

-97-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brooklyn Park, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7300 Northland Drive
 
Industrial

 
700

 
5,655

 
347

 
703

 
5,999

 
6,702

 
2,239

1999
1998
 
Crosstown North Bus. Ctr. 1
 
Industrial
3,465

 
835

 
4,852

 
1,392

 
1,286

 
5,793

 
7,079

 
2,271

1998
1999
 
Crosstown North Bus. Ctr. 2
 
Industrial

 
449

 
2,455

 
808

 
599

 
3,113

 
3,712

 
1,162

1998
1999
 
Crosstown North Bus. Ctr. 4
 
Industrial
4,916

 
2,079

 
5,830

 
1,711

 
2,397

 
7,223

 
9,620

 
2,664

1999
1999
 
Crosstown North Bus. Ctr. 5
 
Industrial
3,089

 
1,079

 
4,278

 
729

 
1,354

 
4,732

 
6,086

 
1,909

2000
2000
 
Crosstown North Bus. Ctr. 6
 
Industrial

 
788

 
1,402

 
2,367

 
1,031

 
3,526

 
4,557

 
1,286

2000
2000
 
Crosstown North Bus. Ctr. 10
 
Industrial
4,066

 
2,757

 
4,423

 
1,088

 
2,723

 
5,545

 
8,268

 
2,676

2005
2005
 
Crosstown North Bus. Ctr. 12
 
Industrial
7,075

 
4,564

 
8,254

 
830

 
4,564

 
9,084

 
13,648

 
2,708

2005
2005
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brownsburg, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ortho Indy West-MOB
 
Medical Office

 

 
9,817

 
1,592

 
865

 
10,544

 
11,409

 
1,186

2008
2008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Burr Ridge, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Burr Ridge Medical Center
 
Medical Office

 
5,392

 
31,506

 
774

 
5,392

 
32,280

 
37,672

 
1,289

2010
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carmel, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hamilton Crossing I
 
Industrial

 
833

 
2,695

 
3,163

 
845

 
5,846

 
6,691

 
2,815

2000
1993
 
Hamilton Crossing II
 
Office

 
313

 
491

 
1,714

 
313

 
2,205

 
2,518

 
868

1997
1997
 
Hamilton Crossing III
 
Office

 
890

 
7,341

 
2,595

 
890

 
9,936

 
10,826

 
3,759

2000
2000
 
Hamilton Crossing IV
 
Office

 
515

 
4,790

 
838

 
598

 
5,545

 
6,143

 
2,101

1999
1999
 
Hamilton Crossing VI
 
Office

 
1,044

 
12,778

 
1,313

 
1,068

 
14,067

 
15,135

 
4,418

2004
2004
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carol Stream, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carol Stream IV
 
Industrial
9,832

 
3,204

 
14,869

 
1,289

 
3,204

 
16,158

 
19,362

 
5,781

2004
2003
 
Carol Stream I
 
Industrial

 
1,095

 
3,438

 

 
1,095

 
3,438

 
4,533

 
443

1998
2010
 
Carol Stream III
 
Industrial

 
1,556

 
6,331

 

 
1,556

 
6,331

 
7,887

 
616

2002
2010
 
250 Kehoe Blvd, Carol Stream
 
Industrial

 
1,715

 
7,560

 

 
1,715

 
7,560

 
9,275

 
358

2008
2011
 
720 Center Avenue
 
Industrial

 
4,031

 
20,735

 
6

 
4,031

 
20,741

 
24,772

 
1,300

1999
2011
 
189-199 Easy Street
 
Industrial

 
1,075

 
3,739

 

 
1,075

 
3,739

 
4,814

 
160

1995
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cary, North Carolina
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
200 Regency Forest Drive
 
Office

 
1,230

 
12,014

 
2,916

 
1,461

 
14,699

 
16,160

 
5,122

1999
1999
 
100 Regency Forest Drive
 
Office

 
1,538

 
9,328

 
2,989

 
1,644

 
12,211

 
13,855

 
4,177

1997
1999
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cedar Park, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cedar Park MOB I
 
Medical Office

 
576

 
15,666

 
435

 
576

 
16,101

 
16,677

 
1,021

2007
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cedartown, Georgia
 
 
 
 
 
 
 
 
 
 

-98-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
Harbin Clinic Cedartown MOB
 
Medical Office

 
755

 
3,121

 

 
755

 
3,121

 
3,876

 
39

2007
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Celebration, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Celebration Medical Plaza
 
Medical Office
13,300

 
558

 
17,335

 

 
558

 
17,335

 
17,893

 
259

2006
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Chantilly, Virginia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15002 Northridge Dr.
 
Office

 
2,082

 
1,663

 
1,817

 
2,082

 
3,480

 
5,562

 
1,106

2007
2007
 
15004 Northridge Dr.
 
Office

 
2,366

 
1,920

 
2,168

 
2,366

 
4,088

 
6,454

 
917

2007
2007
 
15006 Northridge Dr.
 
Office

 
2,920

 
2,139

 
2,339

 
2,920

 
4,478

 
7,398

 
1,182

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charlotte, North Carolina
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Morehead Medical Plaza I
 
Medical Office
33,051

 
191

 
39,047

 
73

 
191

 
39,120

 
39,311

 
3,468

2006
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Chillicothe, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adena Health Pavilion
 
Medical Office

 

 
14,428

 
96

 

 
14,524

 
14,524

 
4,590

2006
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cincinnati, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
311 Elm
 
Office

 
339

 
5,163

 
1,338

 

 
6,840

 
6,840

 
4,900

1986
1993
 
Blue Ash Office Center VI
 
Office

 
518

 
2,400

 
727

 
518

 
3,127

 
3,645

 
1,284

1989
1997
 
Towers of Kenwood
 
Office

 
4,891

 
41,231

 
3,881

 
4,891

 
45,112

 
50,003

 
13,983

1989
2003
 
8790 Governor's Hill
 
Office

 
400

 
4,193

 
1,450

 
408

 
5,635

 
6,043

 
2,865

1985
1993
 
8600/8650 Governor's Hill Dr.
 
Office

 
1,220

 
16,873

 
7,275

 
1,245

 
24,123

 
25,368

 
12,817

1986
1993
 
8230 Kenwood Commons
 
Office
2,506

 
638

 
3,879

 
1,205

 
638

 
5,084

 
5,722

 
3,427

1986
1993
 
8280 Kenwood Commons
 
Office
1,494

 
638

 
2,590

 
798

 
638

 
3,388

 
4,026

 
2,019

1986
1993
 
Kenwood Medical Office Bldg.
 
Office

 

 
7,663

 
100

 

 
7,763

 
7,763

 
2,819

1999
1999
 
Pfeiffer Place
 
Office

 
3,608

 
10,349

 
3,183

 
3,608

 
13,532

 
17,140

 
3,835

2001
2001
 
Pfeiffer Woods
 
Office

 
1,450

 
12,033

 
2,125

 
2,131

 
13,477

 
15,608

 
5,391

1998
1999
 
Remington Park Building A
 
Office

 
560

 
1,403

 
306

 
560

 
1,709

 
2,269

 
1,244

1982
1997
 
Remington Park Building B
 
Office

 
560

 
1,121

 
392

 
560

 
1,513

 
2,073

 
1,026

1982
1997
 
Triangle Office Park
 
Office
1,215

 
1,018

 
9,934

 
2,375

 
1,018

 
12,309

 
13,327

 
8,128

1985
1993
 
World Park Bldg 8
 
Industrial

 
1,095

 
2,641

 
301

 
1,095

 
2,942

 
4,037

 
292

1989
2010
 
World Park Bldg 9
 
Industrial

 
335

 
1,825

 
113

 
335

 
1,938

 
2,273

 
217

1989
2010
 
World Park Bldg 11
 
Industrial

 
674

 
2,032

 
57

 
674

 
2,089

 
2,763

 
199

1989
2010
 
World Park Bldg 14
 
Industrial

 
668

 
3,617

 
149

 
668

 
3,766

 
4,434

 
395

1989
2010
 
World Park Bldg 15
 
Industrial

 
488

 
1,991

 
16

 
488

 
2,007

 
2,495

 
347

1990
2010
 
World Park Bldg 16
 
Industrial

 
525

 
2,096

 
1

 
525

 
2,097

 
2,622

 
229

1989
2010
 
World Park Bldg 17
 
Industrial

 
1,133

 
5,648

 

 
1,133

 
5,648

 
6,781

 
573

1994
2010
 
World Park Bldg 18
 
Industrial

 
1,268

 
5,200

 

 
1,268

 
5,200

 
6,468

 
496

1997
2010
 
World Park Bldg 28
 
Industrial

 
870

 
5,316

 
42

 
870

 
5,358

 
6,228

 
502

1998
2010
 
World Park Bldg 29
 
Industrial

 
1,605

 
10,220

 
5

 
1,605

 
10,225

 
11,830

 
932

1998
2010

-99-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
World Park Bldg 30
 
Industrial

 
2,492

 
11,964

 
447

 
2,492

 
12,411

 
14,903

 
1,252

1999
2010
 
World Park Bldg 31
 
Industrial

 
533

 
2,531

 
354

 
533

 
2,885

 
3,418

 
270

1998
2010
 
Western Ridge
 
Medical Office

 
1,894

 
8,028

 
764

 
1,915

 
8,771

 
10,686

 
867

2010
2010
 
Western Ridge MOB II
 
Medical Office

 
1,020

 
3,544

 
44

 
1,020

 
3,588

 
4,608

 
237

2011
2011
 
Good Samaritan Clifton
 
Medical Office
5,694

 
50

 
8,442

 

 
50

 
8,442

 
8,492

 
74

1992
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Clayton, Missouri
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
101 South Hanley
 
Office

 
6,150

 
38,183

 
7,701

 
6,150

 
45,884

 
52,034

 
13,412

1986
2002
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Columbus, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4343 Easton Commons Ground
 
Grounds

 
796

 

 

 
796

 

 
796

 

n/a
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

-100-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
Coppell, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Freeport X
 
Industrial
15,290

 
8,198

 
16,900

 
3,258

 
8,198

 
20,158

 
28,356

 
9,666

2004
2004
 
Point West VI
 
Industrial
16,390

 
10,181

 
17,905

 
5,749

 
10,181

 
23,654

 
33,835

 
6,456

2008
2008
 
Point West VII
 
Industrial
13,613

 
6,785

 
13,668

 
6,555

 
7,201

 
19,807

 
27,008

 
5,373

2008
2008
 
Samsung Pkg Lot-PWT7
 
Grounds

 
306

 

 
61

 
367

 

 
367

 
149

n/a
2009
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corona, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1283 Sherborn Street
 
Industrial

 
8,677

 
16,778

 
40

 
8,677

 
16,818

 
25,495

 
1,191

2005
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dallas, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Baylor Administration Building
 
Medical Office

 
50

 
14,435

 
100

 
150

 
14,435

 
14,585

 
1,838

2009
2009
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Davenport, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Park 27 Distribution Center I
 
Industrial

 
2,449

 
6,107

 
33

 
2,449

 
6,140

 
8,589

 
2,970

2003
2003
 
Park 27 Distribution Center II
 
Industrial

 
4,374

 
8,218

 
4,948

 
4,415

 
13,125

 
17,540

 
4,062

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Davie, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westport Business Park 1
 
Industrial
2,099

 
1,200

 
1,317

 
59

 
1,200

 
1,376

 
2,576

 
160

1991
2011
 
Westport Business Park 2
 
Industrial
1,779

 
1,088

 
818

 
39

 
1,088

 
857

 
1,945

 
109

1991
2011
 
Westport Business Park 3
 
Industrial
5,315

 
2,363

 
6,353

 
475

 
2,363

 
6,828

 
9,191

 
496

1991
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deerfield Township, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deerfield Crossing A
 
Office

 
1,493

 
10,952

 
2,048

 
1,493

 
13,000

 
14,493

 
4,937

1999
1999
 
Deerfield Crossing B
 
Office

 
1,069

 
9,517

 
973

 
1,069

 
10,490

 
11,559

 
3,264

2001
2001
 
Governor's Pointe 4770
 
Office

 
586

 
7,422

 
1,165

 
596

 
8,577

 
9,173

 
5,326

1986
1993
 
Governor's Pointe 4705
 
Office

 
719

 
5,680

 
3,941

 
928

 
9,412

 
10,340

 
5,118

1988
1993
 
Governor's Pointe 4605
 
Office

 
630

 
15,757

 
4,482

 
838

 
20,031

 
20,869

 
10,458

1990
1993
 
Governor's Pointe 4660
 
Office

 
385

 
3,922

 
379

 
385

 
4,301

 
4,686

 
1,805

1997
1997
 
Governor's Pointe 4680
 
Office

 
1,115

 
6,088

 
1,718

 
1,115

 
7,806

 
8,921

 
3,210

1998
1998
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deer Park, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
801 Seaco Court
 
Industrial

 
2,331

 
5,159

 

 
2,331

 
5,159

 
7,490

 
86

2006
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Duluth, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2775 Premiere Parkway
 
Industrial
6,477

 
560

 
4,507

 
434

 
565

 
4,936

 
5,501

 
1,714

1997
1999
 
3079 Premiere Parkway
 
Industrial
9,705

 
776

 
4,844

 
2,301

 
783

 
7,138

 
7,921

 
2,517

1998
1999
 
2855 Premiere Parkway
 
Industrial
6,168

 
765

 
3,182

 
1,092

 
770

 
4,269

 
5,039

 
1,425

1999
1999
 
6655 Sugarloaf
 
Industrial
13,336

 
1,651

 
6,985

 
1,065

 
1,659

 
8,042

 
9,701

 
2,270

1998
2001
 
6650 Sugarloaf Parkway
 
Office
5,300

 
1,573

 
4,240

 
298

 
1,573

 
4,538

 
6,111

 
446

2004
2011
 
2450 Meadowbrook Parkway
 
Industrial

 
383

 
1,622

 
32

 
383

 
1,654

 
2,037

 
210

1989
2010

-101-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
2500 Meadowbrook Parkway
 
Industrial

 
405

 
1,918

 
70

 
405

 
1,988

 
2,393

 
193

1987
2010
 
2625 Pinemeadow Court
 
Industrial

 
861

 
4,025

 
43

 
861

 
4,068

 
4,929

 
811

1994
2010
 
2660 Pinemeadow Court
 
Industrial

 
540

 
2,302

 
27

 
540

 
2,329

 
2,869

 
316

1996
2010
 
2450 Satellite Boulevard
 
Industrial

 
556

 
2,497

 
67

 
556

 
2,564

 
3,120

 
416

1994
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Durham, North Carolina
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1805 T.W. Alexander Drive
 
Industrial

 
4,110

 
11,795

 
115

 
4,110

 
11,910

 
16,020

 
1,345

2000
2011
 
1757 T.W. Alexander Drive
 
Industrial
9,066

 
2,998

 
9,095

 

 
2,998

 
9,095

 
12,093

 
493

2007
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Eagan, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Apollo Industrial Ctr I
 
Industrial
3,524

 
866

 
4,300

 
1,844

 
880

 
6,130

 
7,010

 
2,635

1997
1997
 
Apollo Industrial Ctr II
 
Industrial
1,579

 
474

 
2,332

 
259

 
474

 
2,591

 
3,065

 
855

2000
2000
 
Apollo Industrial Ctr III
 
Industrial
3,777

 
1,432

 
6,107

 
25

 
1,432

 
6,132

 
7,564

 
2,013

2000
2000
 
Silver Bell Commons
 
Industrial

 
1,807

 
5,539

 
2,408

 
1,941

 
7,813

 
9,754

 
3,116

1999
1999
 
Trapp Road Commerce Center I
 
Industrial
2,283

 
671

 
3,841

 
504

 
700

 
4,316

 
5,016

 
1,719

1996
1998
 
Trapp Road Commerce Center II
 
Industrial
4,013

 
1,250

 
5,946

 
1,416

 
1,266

 
7,346

 
8,612

 
2,684

1998
1998
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earth City, Missouri
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rider Trail
 
Office

 
2,615

 
9,807

 
3,834

 
2,615

 
13,641

 
16,256

 
5,588

1987
1997
 
3300 Pointe 70
 
Office

 
1,186

 
6,031

 
2,921

 
1,186

 
8,952

 
10,138

 
3,936

1989
1997
 
Corporate Center, Earth City
 
Industrial

 
783

 
1,287

 
2,179

 
783

 
3,466

 
4,249

 
1,232

2000
2000
 
Corporate Trail Distribution
 
Industrial

 
2,850

 
6,163

 
2,239

 
2,875

 
8,377

 
11,252

 
2,711

2006
2006
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
East Point, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Camp Creek Bldg 1400
 
Office
5,490

 
561

 
2,480

 
1,533

 
581

 
3,993

 
4,574

 
1,297

1988
2001
 
Camp Creek Bldg 1800
 
Office
4,597

 
462

 
2,468

 
835

 
477

 
3,288

 
3,765

 
1,060

1989
2001
 
Camp Creek Bldg 2000
 
Office
5,002

 
395

 
2,249

 
1,184

 
475

 
3,353

 
3,828

 
1,013

1989
2001
 
Camp Creek Bldg 2400
 
Industrial
3,043

 
296

 
1,369

 
830

 
316

 
2,179

 
2,495

 
746

1988
2001
 
Camp Creek Bldg 2600
 
Industrial
4,505

 
364

 
2,014

 
1,273

 
1,127

 
2,524

 
3,651

 
846

1990
2001
 
3201 Centre Parkway
 
Industrial
20,424

 
4,406

 
9,512

 
3,181

 
5,026

 
12,073

 
17,099

 
4,175

2004
2004
 
Camp Creek Bldg 1200
 
Office

 
1,334

 
738

 
1,103

 
1,351

 
1,824

 
3,175

 
847

2005
2005
 
3900 North Commerce
 
Industrial
5,129

 
1,059

 
2,966

 
59

 
1,098

 
2,986

 
4,084

 
976

2005
2005
 
3909 North Commerce
 
Industrial

 
5,687

 
10,192

 
12,583

 
9,032

 
19,430

 
28,462

 
8,382

2006
2006
 
4200 North Commerce
 
Industrial
11,684

 
2,065

 
7,076

 
194

 
2,156

 
7,179

 
9,335

 
1,792

2006
2006
 
Camp Creek Building 1000
 
Office

 
1,537

 
2,459

 
1,151

 
1,557

 
3,590

 
5,147

 
2,048

2006
2006
 
3000 Centre Parkway
 
Industrial

 
1,163

 
1,223

 
1,136

 
1,191

 
2,331

 
3,522

 
753

2007
2007
 
1500 Centre Parkway
 
Office

 
1,683

 
5,564

 
3,352

 
1,730

 
8,869

 
10,599

 
3,106

2008
2008
 
1100 Centre Parkway
 
Office

 
1,309

 
4,881

 
485

 
1,342

 
5,333

 
6,675

 
1,029

2008
2008
 
4800 N. Commerce Dr. (Site Q)
 
Industrial

 
2,476

 
4,650

 
1,526

 
2,541

 
6,111

 
8,652

 
1,319

2008
2008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

-102-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
Elk Grove Village, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1717 Busse Road
 
Industrial
14,051

 
3,602

 
19,016

 

 
3,602

 
19,016

 
22,618

 
970

2004
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ellabell, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1086 Orafold Pkwy
 
Industrial
9,751

 
2,042

 
13,104

 
190

 
2,046

 
13,290

 
15,336

 
2,607

2006
2008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Escanaba, Michigan
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Marquette General
 
Medical Office

 
14

 
9,618

 
12

 
14

 
9,630

 
9,644

 
168

2012
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Evansville, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
St. Mary's Heart Institute
 
Medical Office

 

 
20,946

 
1,559

 

 
22,505

 
22,505

 
5,870

2006
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fairfax, Virginia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair Oaks MOB
 
Medical Office

 
808

 
28,570

 

 
808

 
28,570

 
29,378

 
411

2009
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fairfield, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Union Centre Industrial Park 2
 
Industrial

 
5,635

 
8,709

 
1,832

 
5,635

 
10,541

 
16,176

 
2,587

2008
2008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fishers, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exit 5 Building 1
 
Industrial

 
822

 
2,618

 
440

 
822

 
3,058

 
3,880

 
1,250

1999
1999
 
Exit 5 Building 2
 
Industrial

 
749

 
3,003

 
1,032

 
749

 
4,035

 
4,784

 
1,553

2000
2000
 
St. Vincent Northeast MOB
 
Medical Office

 

 
23,101

 
4,568

 
4,235

 
23,434

 
27,669

 
7,019

2008
2008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Flower Mound, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lakeside Ranch Bldg 20
 
Industrial

 
9,861

 
20,994

 
340

 
9,861

 
21,334

 
31,195

 
1,616

2007
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Worth, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Riverpark Bldg 700
 
Industrial

 
3,975

 
10,766

 
32

 
3,975

 
10,798

 
14,773

 
922

2007
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin, Tennessee
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aspen Grove Business Ctr I
 
Industrial

 
936

 
5,923

 
3,455

 
936

 
9,378

 
10,314

 
4,331

1996
1999
 
Aspen Grove Business Ctr II
 
Industrial

 
1,151

 
6,272

 
877

 
1,151

 
7,149

 
8,300

 
2,531

1996
1999
 
Aspen Grove Business Ctr III
 
Industrial

 
970

 
5,352

 
688

 
970

 
6,040

 
7,010

 
2,110

1998
1999
 
Aspen Grove Business Center IV
 
Industrial

 
492

 
2,234

 
575

 
492

 
2,809

 
3,301

 
674

2002
2002
 
Aspen Grove Business Ctr V
 
Industrial

 
943

 
5,084

 
2,593

 
943

 
7,677

 
8,620

 
3,346

1996
1999
 
Aspen Grove Flex Center II
 
Industrial

 
240

 
1,059

 
483

 
240

 
1,542

 
1,782

 
119

1999
1999
 
Aspen Grove Office Center I
 
Office

 
950

 
5,581

 
2,814

 
950

 
8,395

 
9,345

 
2,924

1999
1999
 
Aspen Grove Flex Center I
 
Industrial

 
301

 
1,061

 
813

 
301

 
1,874

 
2,175

 
607

1999
1999
 
Aspen Grove Flex Center III
 
Industrial

 
327

 
856

 
1,089

 
327

 
1,945

 
2,272

 
547

2001
2001
 
Aspen Grove Flex Center IV
 
Industrial

 
205

 
821

 
242

 
205

 
1,063

 
1,268

 
303

2001
2001

-103-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
Aspen Corporate Center 100
 
Office

 
723

 
2,358

 
162

 
723

 
2,520

 
3,243

 
562

2004
2004
 
Aspen Corporate Center 200
 
Office

 
1,306

 
1,649

 
1,655

 
1,306

 
3,304

 
4,610

 
1,601

2006
2006
 
Aspen Corporate Center 300
 
Office

 
1,451

 
2,050

 
1,902

 
1,460

 
3,943

 
5,403

 
937

2008
2008
 
Aspen Corporate Center 400
 
Office

 
1,833

 
2,621

 
2,514

 
1,833

 
5,135

 
6,968

 
1,813

2007
2007
 
Aspen Grove Office Center II
 
Office

 
2,320

 
8,177

 
3,800

 
2,320

 
11,977

 
14,297

 
4,467

2007
2007
 
Brentwood South Bus Ctr IV
 
Industrial

 
569

 
2,046

 
1,400

 
705

 
3,310

 
4,015

 
1,437

1990
1999
 
Brentwood South Bus Ctr V
 
Industrial

 
445

 
1,885

 
235

 
445

 
2,120

 
2,565

 
763

1990
1999
 
Brentwood South Bus Ctr VI
 
Industrial
1,069

 
489

 
1,110

 
684

 
489

 
1,794

 
2,283

 
639

1990
1999
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Park, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
O'Hare Distribution Ctr
 
Industrial

 
3,900

 
2,702

 
1,163

 
3,900

 
3,865

 
7,765

 
724

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ft. Wayne, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Parkview Ambulatory Svcs - MOB
 
Medical Office

 
937

 
10,661

 
4,420

 
937

 
15,081

 
16,018

 
2,901

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Garden City, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aviation Court Land
 
Grounds

 
1,509

 

 

 
1,509

 

 
1,509

 
132

n/a
2006
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Garner, North Carolina
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
600 Greenfield North
 
Industrial

 
597

 
3,049

 
17

 
597

 
3,066

 
3,663

 
258

2006
2011

-104-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
700 Greenfield North
 
Industrial

 
468

 
2,664

 
12

 
468

 
2,676

 
3,144

 
224

2007
2011
 
800 Greenfield North
 
Industrial

 
438

 
5,872

 
67

 
438

 
5,939

 
6,377

 
309

2004
2011
 
900 Greenfield North
 
Industrial

 
422

 
6,532

 
202

 
422

 
6,734

 
7,156

 
394

2007
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Geneva, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1800 Averill Road
 
Industrial

 
3,189

 
11,890

 
(13
)
 
3,189

 
11,877

 
15,066

 
597

2000
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodyear, Arizona
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodyear One
 
Industrial

 
5,142

 
4,942

 
1,873

 
5,142

 
6,815

 
11,957

 
2,190

2008
2008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grand Prairie, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grand Lakes I
 
Industrial

 
8,106

 
10,679

 
1,309

 
8,040

 
12,054

 
20,094

 
3,928

2006
2006
 
Grand Lakes II
 
Industrial

 
11,853

 
16,714

 
8,392

 
11,853

 
25,106

 
36,959

 
8,166

2008
2008
 
Pioneer 161 Building
 
Industrial

 
7,381

 
17,628

 

 
7,381

 
17,628

 
25,009

 
1,328

2008
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grove City, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SouthPointe Building A
 
Industrial

 
844

 
5,606

 
6

 
844

 
5,612

 
6,456

 
680

1995
2010
 
SouthPointe Building B
 
Industrial

 
790

 
5,284

 

 
790

 
5,284

 
6,074

 
637

1996
2010
 
SouthPointe Building C
 
Industrial

 
754

 
6,418

 

 
754

 
6,418

 
7,172

 
607

1996
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Groveport, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6600 Port Road
 
Industrial

 
2,725

 
21,768

 
2,131

 
3,213

 
23,411

 
26,624

 
9,417

1998
1997
 
Groveport Commerce Center #437
 
Industrial
4,414

 
1,049

 
6,759

 
1,420

 
1,065

 
8,163

 
9,228

 
2,942

1999
1999
 
Groveport Commerce Center #168
 
Industrial
2,311

 
510

 
2,831

 
1,295

 
510

 
4,126

 
4,636

 
1,450

2000
2000
 
Groveport Commerce Center #345
 
Industrial
4,391

 
1,045

 
6,123

 
1,453

 
1,045

 
7,576

 
8,621

 
2,852

2000
2000
 
Groveport Commerce Center #667
 
Industrial
9,287

 
4,420

 
14,172

 
360

 
4,420

 
14,532

 
18,952

 
6,387

2005
2005
 
Rickenbacker 936
 
Industrial

 
5,680

 
23,872

 

 
5,680

 
23,872

 
29,552

 
1,753

2008
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hamilton, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bethesda Specialty Hospital
 
Medical Office
4,444

 
1,499

 
4,990

 
98

 
1,499

 
5,088

 
6,587

 
229

2000
2012
 
Bethesda Imaging/ED
 
Medical Office
2,810

 
751

 
3,411

 
2

 
751

 
3,413

 
4,164

 
142

2006
2012
 
Bethesda Sleep Center
 
Medical Office
1,944

 
501

 
2,220

 

 
501

 
2,220

 
2,721

 
81

2008
2012
 
Bethesda Condo 1
 
Medical Office
510

 

 
664

 

 

 
664

 
664

 
23

2004
2012
 
Bethesda Condo 2
 
Medical Office
2,482

 

 
3,478

 
247

 

 
3,725

 
3,725

 
120

2008
2012
 
3090 McBride Road
 
Medical Office
1,008

 
375

 
1,208

 

 
375

 
1,208

 
1,583

 
52

2008
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hazelwood, Missouri
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lindbergh Distribution Center
 
Industrial

 
8,200

 
10,305

 
3,525

 
8,491

 
13,539

 
22,030

 
3,499

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hebron, Kentucky
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

-105-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
Southpark Building 4
 
Industrial

 
779

 
3,113

 
1,339

 
779

 
4,452

 
5,231

 
1,881

1994
1994
 
CR Services
 
Industrial

 
1,085

 
4,054

 
1,409

 
1,085

 
5,463

 
6,548

 
2,606

1994
1994
 
Hebron Building 1
 
Industrial

 
8,855

 
10,961

 
392

 
8,855

 
11,353

 
20,208

 
4,163

2006
2006
 
Hebron Building 2
 
Industrial

 
6,790

 
9,037

 
3,859

 
6,813

 
12,873

 
19,686

 
3,687

2007
2007
 
Skyport Building 1
 
Industrial

 
1,057

 
6,219

 

 
1,057

 
6,219

 
7,276

 
790

1997
2010
 
Skyport Building 2
 
Industrial

 
1,400

 
9,333

 

 
1,400

 
9,333

 
10,733

 
1,059

1998
2010
 
Skyport Building 3
 
Industrial

 
2,016

 
9,114

 
223

 
2,016

 
9,337

 
11,353

 
1,173

2000
2010
 
Skyport Building 4
 
Industrial

 
473

 
2,979

 
42

 
473

 
3,021

 
3,494

 
599

1999
2010
 
Skyport Building 5
 
Industrial

 
2,878

 
7,408

 
581

 
2,878

 
7,989

 
10,867

 
1,398

2006
2010
 
Southpark Building 1
 
Industrial

 
553

 
1,801

 
89

 
553

 
1,890

 
2,443

 
295

1990
2010
 
Southpark Building 3
 
Industrial

 
755

 
3,982

 
18

 
755

 
4,000

 
4,755

 
433

1991
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hillsdale, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4160 Madison Street
 
Industrial

 
1,069

 
866

 
50

 
1,069

 
916

 
1,985

 
135

1974
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Holly Springs, North Carolina
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REX Holly Springs MOB
 
Medical Office

 
11

 
7,724

 
126

 
11

 
7,850

 
7,861

 
347

2011
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hopkins, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cornerstone Business Center
 
Industrial
2,473

 
1,469

 
8,360

 
716

 
1,454

 
9,091

 
10,545

 
3,669

1996
1997
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Houston, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Point North One
 
Industrial

 
3,125

 
3,420

 
2,169

 
3,125

 
5,589

 
8,714

 
1,935

2008
2008
 
Westland I
 
Industrial

 
4,183

 
4,837

 
3,147

 
4,233

 
7,934

 
12,167

 
2,449

2008
2008
 
Westland II
 
Industrial

 
3,439

 
8,890

 
226

 
3,246

 
9,309

 
12,555

 
831

2011
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hutchins, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Duke Intermodal I
 
Industrial
9,438

 
5,290

 
9,242

 
2,554

 
5,290

 
11,796

 
17,086

 
3,162

2006
2006
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Independence, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate Plaza I
 
Office

 
2,116

 
13,116

 
(1,841
)
 
2,116

 
11,275

 
13,391

 
6,897

1989
1996
 
Corporate Plaza II
 
Office

 
1,841

 
11,336

 
791

 
1,841

 
12,127

 
13,968

 
6,821

1991
1996
 
Freedom Square I
 
Office

 
595

 
3,454

 
(1,575
)
 
595

 
1,879

 
2,474

 
1,772

1980
1996
 
Freedom Square II
 
Office

 
1,746

 
11,368

 
(1,441
)
 
1,746

 
9,927

 
11,673

 
6,151

1987
1996
 
Freedom Square III
 
Office

 
701

 
5,178

 
(1,089
)
 
701

 
4,089

 
4,790

 
2,201

1997
1997
 
Oak Tree Place
 
Office

 
703

 
4,256

 
978

 
703

 
5,234

 
5,937

 
2,203

1995
1997
 
Park Center Plaza I
 
Office

 
2,193

 
10,517

 
3,223

 
2,193

 
13,740

 
15,933

 
5,619

1998
1998
 
Park Center Plaza II
 
Office

 
2,190

 
10,799

 
2,897

 
2,190

 
13,696

 
15,886

 
5,346

1999
1999
 
Park Center Plaza III
 
Office

 
2,190

 
10,595

 
3,456

 
2,190

 
14,051

 
16,241

 
5,806

2000
2000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

-106-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
Indianapolis, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6061 Guion Rd
 
Industrial

 
274

 
1,770

 
355

 
274

 
2,125

 
2,399

 
1,027

1974
1995
 
8071 Township Line Road
 
Medical Office

 

 
2,279

 
994

 

 
3,273

 
3,273

 
620

2007
2007
 
Franklin Township POB
 
Medical Office

 

 
3,197

 
55

 
10

 
3,242

 
3,252

 
454

2009
2009
 
St. Francis US31 &Southport Rd
 
Medical Office

 

 
3,547

 
37

 
11

 
3,573

 
3,584

 
552

2009
2009
 
St. Vincent Max Simon MOB
 
Medical Office

 
3,209

 
11,575

 
704

 
3,209

 
12,279

 
15,488

 
988

2007
2011
 
Park 100 Bldg 31
 
Industrial

 
64

 
354

 
154

 
64

 
508

 
572

 
135

1978
2005
 
Park 100 Building 96
 
Industrial
7,827

 
1,171

 
13,804

 
113

 
1,424

 
13,664

 
15,088

 
6,502

1997
1995
 
Park 100 Building 98
 
Industrial

 
273

 
7,495

 
2,729

 
273

 
10,224

 
10,497

 
5,611

1995
1994
 
Park 100 Building 100
 
Industrial

 
103

 
1,931

 
842

 
103

 
2,773

 
2,876

 
1,360

1995
1995
 
Park 100 Building 102
 
Office

 
182

 
1,087

 
424

 
182

 
1,511

 
1,693

 
414

1982
2005
 
Park 100 Building 109
 
Industrial

 
240

 
1,654

 
498

 
246

 
2,146

 
2,392

 
1,472

1985
1986
 
Park 100 Building 116
 
Office

 
341

 
2,864

 
580

 
348

 
3,437

 
3,785

 
2,122

1988
1988
 
Park 100 Building 118
 
Office

 
226

 
1,919

 
1,142

 
230

 
3,057

 
3,287

 
1,590

1988
1993
 
Park 100 Building 122
 
Industrial

 
284

 
3,154

 
1,158

 
290

 
4,306

 
4,596

 
2,268

1990
1993
 
Park 100 Building 124
 
Office

 
227

 
2,193

 
732

 
227

 
2,925

 
3,152

 
829

1992
2002
 
Park 100 Building 127
 
Industrial

 
96

 
1,485

 
672

 
96

 
2,157

 
2,253

 
991

1995
1995
 
Park 100 Building 141
 
Industrial
1,961

 
1,120

 
2,562

 
273

 
1,120

 
2,835

 
3,955

 
936

2005
2005
 
Hewlett-Packard Land Lease
 
Grounds

 
252

 

 

 
252

 

 
252

 
65

n/a
2003
 
Park 100 Bldg 121 Land Lease
 
Grounds

 
5

 

 

 
5

 

 
5

 
1

n/a
2003
 
Hewlett Packard Land Lse-62
 
Grounds

 
45

 

 

 
45

 

 
45

 
12

n/a
2003
 
West 79th St. Parking Lot LL
 
Grounds

 
350

 

 
699

 
1,049

 

 
1,049

 
324

n/a
2006
 
Park Fletcher Building 33
 
Industrial

 
1,237

 
5,264

 
594

 
1,237

 
5,858

 
7,095

 
1,552

1997
2006
 
Park Fletcher Building 34
 
Industrial

 
1,331

 
5,427

 
667

 
1,331

 
6,094

 
7,425

 
1,667

1997
2006
 
Park Fletcher Building 35
 
Industrial

 
380

 
1,422

 
134

 
380

 
1,556

 
1,936

 
431

1997
2006
 
Park Fletcher Building 36
 
Industrial

 
476

 
2,328

 
68

 
476

 
2,396

 
2,872

 
642

1997
2006
 
Park Fletcher Building 37
 
Industrial

 
286

 
653

 
9

 
286

 
662

 
948

 
218

1998
2006
 
Park Fletcher Building 38
 
Industrial

 
1,428

 
5,927

 
137

 
1,428

 
6,064

 
7,492

 
1,554

1999
2006
 
Park Fletcher Building 39
 
Industrial

 
570

 
2,054

 
292

 
570

 
2,346

 
2,916

 
643

1999
2006
 
Park Fletcher Building 40
 
Industrial

 
761

 
2,997

 
514

 
761

 
3,511

 
4,272

 
887

1999
2006
 
Park Fletcher Building 41
 
Industrial

 
952

 
4,131

 
295

 
952

 
4,426

 
5,378

 
980

2001
2006
 
Park Fletcher Building 42
 
Industrial

 
2,095

 
8,273

 
121

 
2,095

 
8,394

 
10,489

 
1,880

2001
2006
 
One Parkwood Crossing
 
Office

 
1,018

 
9,171

 
1,913

 
1,018

 
11,084

 
12,102

 
4,954

1989
1995
 
Three Parkwood Crossing
 
Office

 
1,377

 
7,256

 
1,603

 
1,316

 
8,920

 
10,236

 
3,942

1997
1997
 
Four Parkwood Crossing
 
Office

 
1,489

 
10,591

 
1,188

 
1,537

 
11,731

 
13,268

 
4,932

1998
1998
 
Five Parkwood Crossing
 
Office

 
1,485

 
10,151

 
2,045

 
1,528

 
12,153

 
13,681

 
3,788

1999
1999
 
Six Parkwood Crossing
 
Office

 
1,960

 
12,999

 
1,883

 
1,960

 
14,882

 
16,842

 
4,946

2000
2000
 
Seven Parkwood Crossing
 
Office

 
1,877

 
4,121

 
1,189

 
1,877

 
5,310

 
7,187

 
325

2000
2011
 
Eight Parkwood Crossing
 
Office

 
6,435

 
15,340

 
776

 
6,435

 
16,116

 
22,551

 
6,983

2003
2003
 
Nine Parkwood Crossing
 
Office

 
6,046

 
13,182

 
2,646

 
6,047

 
15,827

 
21,874

 
4,308

2005
2005

-107-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
One West
 
Office
14,328

 
5,361

 
16,182

 
5,003

 
5,361

 
21,185

 
26,546

 
3,969

2007
2007
 
PWW Granite City Lease
 
Grounds

 
1,846

 
856

 
143

 
1,989

 
856

 
2,845

 
372

2008
2009
 
One West Parking Garage
 
Grounds

 

 
1,616

 

 

 
1,616

 
1,616

 
57

2007
2011
 
River Road Building I
 
Office

 
856

 
6,180

 
2,397

 
856

 
8,577

 
9,433

 
4,617

1998
1998
 
River Road Building II
 
Office

 
1,827

 
8,416

 
3,069

 
1,886

 
11,426

 
13,312

 
2,381

2008
2008
 
Woodland Corporate Park I
 
Office

 
290

 
3,414

 
1,377

 
320

 
4,761

 
5,081

 
1,879

1998
1998
 
Woodland Corporate Park II
 
Office

 
271

 
2,914

 
2,050

 
297

 
4,938

 
5,235

 
1,655

1999
1999
 
Woodland Corporate Park III
 
Office

 
1,227

 
3,359

 
420

 
1,227

 
3,779

 
5,006

 
1,253

2000
2000
 
Woodland Corporate Park V
 
Office

 
768

 
9,985

 
93

 
768

 
10,078

 
10,846

 
3,705

2003
2003
 
Woodland Corporate Park VI
 
Office

 
2,145

 
10,163

 
4,289

 
2,145

 
14,452

 
16,597

 
3,506

2008
2008
 
3200 North Elizabeth
 
Industrial

 
360

 
787

 

 
360

 
787

 
1,147

 
99

1973
2010
 
Georgetown Rd. Bldg 1
 
Industrial

 
468

 
2,108

 
136

 
468

 
2,244

 
2,712

 
274

1987
2010
 
Georgetown Rd. Bldg 2
 
Industrial

 
465

 
2,187

 
173

 
465

 
2,360

 
2,825

 
225

1987
2010
 
Georgetown Rd. Bldg 3
 
Industrial

 
408

 
1,036

 
72

 
408

 
1,108

 
1,516

 
113

1987
2010
 
North Airport Park Bldg 2
 
Industrial

 
1,800

 
4,998

 
111

 
1,800

 
5,109

 
6,909

 
617

1997
2010
 
Park 100 Building 39
 
Industrial

 
628

 
2,284

 
26

 
628

 
2,310

 
2,938

 
275

1987
2010
 
Park 100 Building 48
 
Industrial

 
690

 
1,730

 
374

 
690

 
2,104

 
2,794

 
196

1984
2010
 
Park 100 Building 49
 
Industrial

 
364

 
1,687

 
159

 
364

 
1,846

 
2,210

 
176

1982
2010
 
Park 100 Building 50
 
Industrial

 
327

 
786

 
39

 
327

 
825

 
1,152

 
80

1982
2010
 
Park 100 Building 52
 
Industrial

 
216

 
189

 

 
216

 
189

 
405

 
26

1983
2010
 
Park 100 Building 53
 
Industrial

 
338

 
1,513

 
113

 
338

 
1,626

 
1,964

 
177

1984
2010
 
Park 100 Building 54
 
Industrial

 
354

 
1,416

 
117

 
354

 
1,533

 
1,887

 
146

1984
2010
 
Park 100 Building 57
 
Industrial

 
616

 
1,183

 
157

 
616

 
1,340

 
1,956

 
117

1984
2010
 
Park 100 Building 58
 
Industrial

 
642

 
2,265

 
102

 
642

 
2,367

 
3,009

 
287

1984
2010
 
Park 100 Building 59
 
Industrial

 
411

 
1,460

 
70

 
411

 
1,530

 
1,941

 
157

1985
2010
 
Park 100 Building 60
 
Industrial

 
382

 
1,526

 
51

 
382

 
1,577

 
1,959

 
177

1985
2010
 
Park 100 Building 62
 
Industrial

 
616

 
718

 
36

 
616

 
754

 
1,370

 
254

1986
2010
 
Park 100 Building 63
 
Industrial

 
388

 
1,058

 

 
388

 
1,058

 
1,446

 
161

1987
2010
 
Park 100 Building 64
 
Industrial

 
389

 
1,078

 
4

 
389

 
1,082

 
1,471

 
129

1987
2010
 
Park 100 Building 66
 
Industrial

 
424

 
1,439

 
7

 
424

 
1,446

 
1,870

 
294

1987
2010
 
Park 100 Building 67
 
Industrial

 
338

 
710

 
165

 
338

 
875

 
1,213

 
79

1987
2010
 
Park 100 Building 68
 
Industrial

 
338

 
1,225

 
26

 
338

 
1,251

 
1,589

 
137

1987
2010

-108-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
Park 100 Building 79
 
Industrial

 
358

 
1,781

 
53

 
358

 
1,834

 
2,192

 
173

1988
2010
 
Park 100 Building 80
 
Industrial

 
358

 
1,920

 
36

 
358

 
1,956

 
2,314

 
271

1988
2010
 
Park 100 Building 83
 
Industrial

 
427

 
1,488

 
4

 
427

 
1,492

 
1,919

 
201

1989
2010
 
Park 100 Building 84
 
Industrial

 
427

 
2,096

 
4

 
427

 
2,100

 
2,527

 
332

1989
2010
 
Park 100 Building 87
 
Industrial

 
1,136

 
7,008

 
379

 
1,136

 
7,387

 
8,523

 
951

1989
2010
 
Park 100 Building 97
 
Industrial

 
1,070

 
4,993

 
196

 
1,070

 
5,189

 
6,259

 
484

1994
2010
 
Park 100 Building 110
 
Office

 
376

 
1,706

 
25

 
376

 
1,731

 
2,107

 
169

1987
2010
 
Park 100 Building 111
 
Industrial

 
633

 
3,134

 
214

 
633

 
3,348

 
3,981

 
489

1987
2010
 
Park 100 Building 112
 
Industrial

 
356

 
878

 
18

 
356

 
896

 
1,252

 
122

1987
2010
 
Park 100 Building 128
 
Industrial
9,872

 
1,152

 
16,581

 
18

 
1,152

 
16,599

 
17,751

 
2,893

1996
2010
 
Park 100 Building 129
 
Industrial
5,127

 
1,280

 
9,062

 
305

 
1,280

 
9,367

 
10,647

 
812

2000
2010
 
Park 100 Building 131
 
Industrial
5,860

 
1,680

 
10,874

 

 
1,680

 
10,874

 
12,554

 
986

1997
2010
 
Park 100 Building 133
 
Industrial

 
104

 
1,157

 

 
104

 
1,157

 
1,261

 
99

1997
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Itasca, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
751 Expressway
 
Industrial

 
1,208

 
2,424

 
(23
)
 
1,208

 
2,401

 
3,609

 
148

1978
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Katy, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Christus St. Catherine Plaza 1
 
Medical Office

 
47

 
9,092

 
27

 
47

 
9,119

 
9,166

 
558

2001
2011
 
Christus St. Catherine Plaza 2
 
Medical Office

 
122

 
12,009

 
44

 
122

 
12,053

 
12,175

 
625

2004
2011
 
Christus St. Catherine Plaza 3
 
Medical Office

 
131

 
9,963

 
14

 
131

 
9,977

 
10,108

 
747

2006
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kissimmee, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kissimmee Medical Plaza
 
Medical Office
10,875

 
763

 
18,221

 

 
763

 
18,221

 
18,984

 
214

2009
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kyle, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Seton Hays MOB I
 
Medical Office

 
165

 
11,736

 
3,359

 
165

 
15,095

 
15,260

 
1,476

2009
2009
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lafayette, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
St. Elizabeth 3920 Building A
 
Medical Office

 
165

 
8,968

 
2,003

 
165

 
10,971

 
11,136

 
1,096

2009
2009
 
St. Elizabeth 3900 Building B
 
Medical Office

 
146

 
10,070

 
1,084

 
146

 
11,154

 
11,300

 
1,127

2009
2009
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
La Miranda, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trojan Way
 
Industrial

 
23,503

 
33,342

 
92

 
23,503

 
33,434

 
56,937

 
910

2002
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LaPorte, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayport Container Lot
 
Grounds

 
3,334

 

 

 
3,334

 

 
3,334

 

n/a
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Las Cruces, New Mexico
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mountain View Medical Plaza
 
Medical Office
12,703

 
430

 
20,298

 

 
430

 
20,298

 
20,728

 
330

2003
2012

-109-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lawrenceville, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weyerhaeuser BTS
 
Industrial
8,793

 
3,974

 
3,101

 
22

 
3,982

 
3,115

 
7,097

 
2,069

2004
2004
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lebanon, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lebanon Building 4
 
Industrial
10,985

 
305

 
8,959

 
113

 
177

 
9,200

 
9,377

 
3,457

2000
1997
 
Lebanon Building 9
 
Industrial
10,659

 
554

 
6,675

 
770

 
554

 
7,445

 
7,999

 
2,760

1999
1999
 
Lebanon Building 12
 
Industrial
25,219

 
5,163

 
12,851

 
664

 
5,163

 
13,515

 
18,678

 
6,186

2003
2003
 
Lebanon Building 13
 
Industrial
9,697

 
561

 
6,473

 
255

 
1,901

 
5,388

 
7,289

 
2,848

2003
2003
 
Lebanon Building 14
 
Industrial
19,511

 
2,813

 
11,496

 
1,446

 
2,813

 
12,942

 
15,755

 
3,730

2005
2005
 
Lebanon Building 1(Amer Air)
 
Industrial

 
312

 
3,799

 
10

 
312

 
3,809

 
4,121

 
411

1996
2010
 
Lebanon Building 2
 
Industrial

 
948

 
19,037

 
144

 
948

 
19,181

 
20,129

 
1,718

2007
2010
 
Lebanon Building 6
 
Industrial
12,964

 
699

 
8,446

 

 
699

 
8,446

 
9,145

 
1,060

1998
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lebanon, Tennessee
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Park 840 Logistics Cnt. Bldg 653
 
Industrial

 
6,776

 
10,954

 
3,925

 
6,776

 
14,879

 
21,655

 
5,219

2006
2006
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lockbourne, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Creekside XXII
 
Industrial

 
2,868

 
17,032

 
117

 
2,868

 
17,149

 
20,017

 
722

2008
2012
 
Creekside XIV
 
Industrial

 
1,947

 
12,630

 

 
1,947

 
12,630

 
14,577

 
685

2005
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Longview, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Longview MOB
 
Medical Office
15,270

 
403

 
26,792

 

 
403

 
26,792

 
27,195

 
408

2003
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lynwood, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Century Distribution Center
 
Industrial

 
16,847

 
18,689

 
31

 
16,847

 
18,720

 
35,567

 
1,713

2007
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Manteca, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
600 Spreckels Ave
 
Industrial

 
4,851

 
19,703

 

 
4,851

 
19,703

 
24,554

 
225

1999
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maryland Heights, Missouri
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Riverport Tower
 
Office

 
3,549

 
27,655

 
8,195

 
3,549

 
35,850

 
39,399

 
16,280

1991
1997
 
Riverport Distribution
 
Industrial

 
242

 
2,217

 
1,132

 
242

 
3,349

 
3,591

 
1,541

1990
1997
 
14000 Riverport Dr
 
Industrial

 
1,197

 
8,590

 
427

 
1,197

 
9,017

 
10,214

 
3,840

1992
1997
 
13900 Riverport Dr
 
Office

 
2,285

 
9,473

 
891

 
2,285

 
10,364

 
12,649

 
4,166

1999
1999
 
Riverport I
 
Industrial

 
900

 
2,583

 
559

 
900

 
3,142

 
4,042

 
1,442

1999
1999
 
Riverport II
 
Industrial

 
1,238

 
4,152

 
743

 
1,238

 
4,895

 
6,133

 
1,846

2000
2000
 
Riverport III
 
Industrial

 
1,269

 
1,907

 
2,375

 
1,269

 
4,282

 
5,551

 
1,655

2001
2001
 
Riverport IV
 
Industrial

 
1,864

 
3,362

 
1,736

 
1,864

 
5,098

 
6,962

 
1,438

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

-110-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
McDonough, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
120 Declaration Dr
 
Industrial

 
615

 
8,377

 
393

 
615

 
8,770

 
9,385

 
2,992

1997
1999
 
250 Declaration Dr
 
Industrial
19,328

 
2,273

 
11,552

 
2,802

 
2,312

 
14,315

 
16,627

 
4,167

2001
2001
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
McKinney, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Baylor McKinney MOB I
 
Medical Office

 
313

 
18,762

 
311

 
313

 
19,073

 
19,386

 
404

2012
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Melrose Park, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Melrose Business Center
 
Industrial

 
5,907

 
17,578

 
(18
)
 
5,907

 
17,560

 
23,467

 
1,487

2000
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mendota Heights, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Enterprise Industrial Center
 
Industrial

 
864

 
4,918

 
673

 
864

 
5,591

 
6,455

 
2,316

1979
1997
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mequon, Wisconsin
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Seton Professional Building
 
Medical Office

 
733

 
13,281

 

 
733

 
13,281

 
14,014

 
189

1994
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Middletown, Delaware
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
560 Merrimac Ave.
 
Industrial

 
12,320

 
62,039

 
302

 
12,320

 
62,341

 
74,661

 
517

2012
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Milwaukee, Wisconsin
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Water Tower Medical Commons
 
Medical Office

 
1,024

 
43,728

 

 
1,024

 
43,728

 
44,752

 
487

2007
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mishawaka, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SJRMC Edison Lakes MOB
 
Medical Office

 

 
31,951

 
5,787

 
60

 
37,678

 
37,738

 
4,058

2009
2009
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Modesto, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1000 Oates Court
 
Industrial
14,927

 
10,115

 
18,397

 

 
10,115

 
18,397

 
28,512

 

2002
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Moosic, Pennsylvania
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shoppes at Montage
 
Retail

 
21,347

 
37,902

 
3,120

 
21,347

 
41,022

 
62,369

 
15,592

2007
2009
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Morgans Point, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Barbours Cut I
 
Industrial

 
1,482

 
8,209

 

 
1,482

 
8,209

 
9,691

 
828

2004
2010
 
Barbours Cut II
 
Industrial

 
1,447

 
8,471

 

 
1,447

 
8,471

 
9,918

 
855

2005
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Morrisville, North Carolina
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
507 Airport Blvd
 
Industrial

 
1,327

 
7,143

 
1,876

 
1,351

 
8,995

 
10,346

 
3,194

1993
1999
 
5151 McCrimmon Pkwy
 
Office

 
1,318

 
7,075

 
3,260

 
1,342

 
10,311

 
11,653

 
3,613

1995
1999
 
2600 Perimeter Park Dr
 
Industrial

 
975

 
4,997

 
1,440

 
991

 
6,421

 
7,412

 
2,331

1997
1999
 
5150 McCrimmon Pkwy
 
Office

 
1,739

 
12,073

 
1,699

 
1,773

 
13,738

 
15,511

 
4,962

1998
1999

-111-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
2400 Perimeter Park Drive
 
Office

 
760

 
5,417

 
1,932

 
778

 
7,331

 
8,109

 
2,346

1999
1999
 
3000 Perimeter Park Dr (Met 1)
 
Industrial

 
482

 
2,453

 
1,323

 
491

 
3,767

 
4,258

 
1,426

1989
1999
 
2900 Perimeter Park Dr (Met 2)
 
Industrial

 
235

 
1,875

 
1,359

 
264

 
3,205

 
3,469

 
1,298

1990
1999
 
2800 Perimeter Park Dr (Met 3)
 
Industrial

 
777

 
4,494

 
1,130

 
843

 
5,558

 
6,401

 
2,006

1992
1999
 
1100 Perimeter Park Drive
 
Office

 
777

 
5,472

 
2,469

 
794

 
7,924

 
8,718

 
2,637

1990
1999
 
1500 Perimeter Park Drive
 
Office

 
1,148

 
10,080

 
1,942

 
1,177

 
11,993

 
13,170

 
3,979

1996
1999
 
1600 Perimeter Park Drive
 
Office

 
1,463

 
9,195

 
2,445

 
1,513

 
11,590

 
13,103

 
4,466

1994
1999
 
1800 Perimeter Park Drive
 
Office

 
907

 
5,221

 
1,803

 
993

 
6,938

 
7,931

 
2,649

1994
1999
 
2000 Perimeter Park Drive
 
Office

 
788

 
5,099

 
1,096

 
842

 
6,141

 
6,983

 
2,382

1997
1999
 
1700 Perimeter Park Drive
 
Office

 
1,230

 
8,838

 
2,993

 
1,260

 
11,801

 
13,061

 
4,392

1997
1999
 
5200 East Paramount Parkway
 
Office

 
1,748

 
9,093

 
1,475

 
1,797

 
10,519

 
12,316

 
186

1999
1999
 
2700 Perimeter Park
 
Industrial

 
662

 
1,250

 
1,920

 
662

 
3,170

 
3,832

 
952

2001
2001
 
5200 West Paramount
 
Office

 
1,831

 
12,608

 
1,831

 
1,831

 
14,439

 
16,270

 
6,083

2001
2001
 
2450 Perimeter Park Drive
 
Office

 
669

 
2,259

 
3

 
669

 
2,262

 
2,931

 
632

2002
2002
 
3800 Paramount Parkway
 
Office

 
2,657

 
5,241

 
3,663

 
2,657

 
8,904

 
11,561

 
2,694

2006
2006
 
Lenovo BTS I
 
Office

 
1,439

 
16,961

 
1,518

 
1,439

 
18,479

 
19,918

 
5,401

2006
2006
 
Lenovo BTS II
 
Office

 
1,725

 
16,809

 
1,996

 
1,725

 
18,805

 
20,530

 
4,929

2007
2007
 
5221 Paramount Parkway
 
Office

 
1,661

 
13,600

 
3,005

 
1,661

 
16,605

 
18,266

 
3,146

2008
2008
 
2250 Perimeter Park
 
Office

 
2,290

 
6,981

 
2,436

 
2,290

 
9,417

 
11,707

 
2,955

2008
2008
 
Perimeter One
 
Office

 
5,880

 
13,565

 
9,295

 
5,880

 
22,860

 
28,740

 
8,606

2007
2007
 
The Market at Perimeter Park
 
Retail

 
1,149

 
1,688

 
413

 
1,149

 
2,101

 
3,250

 
428

2009
2009
 
100 Innovation
 
Industrial

 
633

 
3,748

 
681

 
633

 
4,429

 
5,062

 
1,633

1994
1999
 
101 Innovation
 
Industrial

 
615

 
3,958

 
148

 
615

 
4,106

 
4,721

 
1,383

1997
1999
 
200 Innovation
 
Industrial

 
357

 
4,036

 
311

 
357

 
4,347

 
4,704

 
1,494

1999
1999
 
501 Innovation
 
Industrial

 
640

 
5,571

 
176

 
640

 
5,747

 
6,387

 
1,931

1999
1999
 
1000 Innovation
 
Industrial

 
514

 
2,927

 
231

 
514

 
3,158

 
3,672

 
873

1996
2002
 
1200 Innovation
 
Industrial

 
740

 
4,406

 
362

 
740

 
4,768

 
5,508

 
1,308

1996
2002
 
400 Innovation
 
Industrial

 
908

 
1,240

 
387

 
908

 
1,627

 
2,535

 
776

2004
2004
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Munster, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hammond Clinic Specialty Ctr. (3)
 
Medical Office

 

 
12,954

 

 

 
12,954

 
12,954

 

1986
2011
 
HC Family Wellness Center (3)
 
Medical Office

 

 
3,568

 

 

 
3,568

 
3,568

 

1999
2011
 
Franciscan Physician Hosp. OPC (3)
 
Medical Office

 

 
4,564

 

 

 
4,564

 
4,564

 

1998
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Murfreesboro, Tennessee
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Middle Tenn Med Ctr - MOB
 
Medical Office

 

 
20,564

 
4,976

 
7

 
25,533

 
25,540

 
4,433

2008
2008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Naperville, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1835 Jefferson
 
Industrial

 
3,180

 
7,959

 
5

 
3,184

 
7,960

 
11,144

 
2,350

2005
2003
 
175 Ambassador Dr
 
Industrial

 
4,778

 
11,252

 
11

 
4,778

 
11,263

 
16,041

 
1,308

2006
2010

-112-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
1860 W. Jefferson
 
Industrial
18,510

 
7,016

 
35,581

 
9

 
7,016

 
35,590

 
42,606

 
1,487

2000
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nashville, Tennessee
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Airpark East-800 Commerce Dr.
 
Industrial
2,295

 
1,564

 
2,578

 
1,065

 
1,564

 
3,643

 
5,207

 
1,057

2002
2002
 
Riverview Office Building
 
Office

 
847

 
4,840

 
2,036

 
847

 
6,876

 
7,723

 
2,330

1983
1999
 
Nashville Business Center I
 
Industrial

 
936

 
5,943

 
1,280

 
936

 
7,223

 
8,159

 
2,680

1997
1999
 
Nashville Business Center II
 
Industrial

 
5,659

 
10,206

 
845

 
5,659

 
11,051

 
16,710

 
4,057

2005
2005
 
Four-Forty Business Center I
 
Industrial

 
938

 
6,438

 
125

 
938

 
6,563

 
7,501

 
2,236

1997
1999
 
Four-Forty Business Center III
 
Industrial

 
1,812

 
7,323

 
1,253

 
1,812

 
8,576

 
10,388

 
3,069

1998
1999
 
Four-Forty Business Center IV
 
Industrial

 
1,522

 
5,242

 
615

 
1,522

 
5,857

 
7,379

 
2,047

1997
1999
 
Four-Forty Business Center V
 
Industrial

 
471

 
2,236

 
718

 
471

 
2,954

 
3,425

 
1,031

1999
1999
 
Four-Forty Business Center II
 
Industrial
2,711

 
1,108

 
4,829

 

 
1,108

 
4,829

 
5,937

 
369

1996
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Niles, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Howard 220
 
Industrial
7,271

 
4,920

 
2,320

 
9,615

 
7,761

 
9,094

 
16,855

 
2,303

2008
2004
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Norfolk, Virginia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1400 Sewells Point Rd
 
Industrial
1,885

 
1,463

 
5,723

 
575

 
1,463

 
6,298

 
7,761

 
1,118

1983
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Northlake, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Northlake I
 
Industrial
7,897

 
5,721

 
9,123

 
835

 
5,721

 
9,958

 
15,679

 
2,548

2002
2002
 
Northlake III-Grnd Whse
 
Industrial
5,536

 
5,382

 
5,708

 
253

 
5,382

 
5,961

 
11,343

 
1,973

2006
2006
 
200 Champion Way
 
Industrial

 
3,554

 
12,262

 

 
3,554

 
12,262

 
15,816

 
655

1997
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oak Brook, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2000 York Rd
 
Office

 
2,625

 
15,814

 
377

 
2,625

 
16,191

 
18,816

 
12,016

1986
2005
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Orlando, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Southcenter I-Brede/Allied BTS
 
Industrial

 
3,094

 
3,867

 
117

 
3,094

 
3,984

 
7,078

 
1,852

2003
2003

-113-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
Parksouth Distribution Ctr. B
 
Industrial

 
565

 
4,479

 
551

 
570

 
5,025

 
5,595

 
1,721

1996
1999
 
Parksouth Distribution Ctr. A
 
Industrial

 
493

 
4,340

 
745

 
498

 
5,080

 
5,578

 
1,641

1997
1999
 
Parksouth Distribution Ctr. D
 
Industrial

 
593

 
4,075

 
558

 
597

 
4,629

 
5,226

 
1,658

1998
1999
 
Parksouth Distribution Ctr. E
 
Industrial

 
649

 
4,433

 
684

 
677

 
5,089

 
5,766

 
1,796

1997
1999
 
Parksouth Distribution Ctr. F
 
Industrial

 
1,030

 
4,767

 
1,758

 
1,232

 
6,323

 
7,555

 
2,368

1999
1999
 
Parksouth Distribution Ctr. H
 
Industrial

 
725

 
3,020

 
525

 
754

 
3,516

 
4,270

 
1,113

2000
2000
 
Parksouth Distribution Ctr. C
 
Industrial

 
598

 
1,769

 
1,695

 
674

 
3,388

 
4,062

 
1,060

2003
2001
 
Parksouth-Benjamin Moore BTS
 
Industrial

 
708

 
2,070

 
62

 
1,129

 
1,711

 
2,840

 
745

2003
2003
 
Crossroads VII
 
Industrial

 
2,803

 
5,891

 
3,212

 
2,803

 
9,103

 
11,906

 
3,328

2006
2006
 
Crossroads VIII
 
Industrial

 
2,701

 
4,817

 
1,914

 
2,701

 
6,731

 
9,432

 
1,720

2007
2007
 
E Orlando Med Surgery Plaza
 
Medical Office
9,058

 
683

 
14,011

 

 
683

 
14,011

 
14,694

 
177

2009
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Otsego, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gateway North 1
 
Industrial

 
2,243

 
3,959

 
1,244

 
2,287

 
5,159

 
7,446

 
1,352

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pembroke Pines, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pembroke Gardens
 
Retail

 
26,067

 
87,897

 
6,021

 
24,866

 
95,119

 
119,985

 
26,624

2007
2009
 
PNC Ground Lease-Nursery Site
 
Grounds

 
1,752

 

 

 
1,752

 

 
1,752

 
49

n/a
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Phoenix, Arizona
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Estrella Buckeye
 
Industrial
3,898

 
1,796

 
5,889

 
212

 
1,796

 
6,101

 
7,897

 
1,107

1996
2010
 
Riverside Business Center
 
Industrial

 
5,349

 
13,154

 
885

 
5,349

 
14,039

 
19,388

 
1,862

2007
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plainfield, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Edward Plainfield MOB I
 
Medical Office

 

 
8,770

 
1,451

 

 
10,221

 
10,221

 
2,953

2006
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plainfield, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plainfield Building 1
 
Industrial
15,870

 
1,104

 
11,151

 
456

 
1,104

 
11,607

 
12,711

 
4,080

2000
2000
 
Plainfield Building 2
 
Industrial
15,400

 
1,387

 
7,863

 
3,218

 
2,868

 
9,600

 
12,468

 
4,452

2000
2000
 
Plainfield Building 3
 
Industrial
16,796

 
2,016

 
9,098

 
2,587

 
2,016

 
11,685

 
13,701

 
2,970

2002
2002
 
Plainfield Building 5
 
Industrial
12,115

 
2,726

 
6,488

 
983

 
2,726

 
7,471

 
10,197

 
2,640

2004
2004
 
Plainfield Building 8
 
Industrial
20,720

 
4,527

 
11,088

 
1,034

 
4,527

 
12,122

 
16,649

 
3,086

2006
2006
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plano, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Baylor Plano MOB
 
Medical Office

 
16

 
28,375

 
3,036

 
49

 
31,378

 
31,427

 
3,172

2009
2009

-114-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plantation, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Royal Palm I
 
Office

 
10,209

 
30,829

 
322

 
10,209

 
31,151

 
41,360

 
5,678

2001
2010
 
Royal Palm II
 
Office

 
8,935

 
30,011

 
1,025

 
8,935

 
31,036

 
39,971

 
4,794

2007
2010
 
Crossroads Business Park 1
 
Office
10,870

 
3,735

 
11,407

 
515

 
3,735

 
11,922

 
15,657

 
1,254

1997
2011
 
Crossroads Business Park 2
 
Office
14,424

 
2,610

 
12,018

 
542

 
2,610

 
12,560

 
15,170

 
1,446

1998
2011
 
Crossroads Business Park 3
 
Office
16,625

 
3,938

 
13,136

 
2,913

 
3,938

 
16,049

 
19,987

 
1,097

1999
2011
 
Crossroads Business Park 4
 
Office
9,814

 
3,037

 
11,462

 
568

 
3,037

 
12,030

 
15,067

 
843

2001
2011
 
Crossroads Bus. Pk.-So. Trust
 
Grounds

 
864

 

 

 
864

 

 
864

 
9

n/a
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plymouth, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicine Lake Indus. Center
 
Industrial

 
1,145

 
5,893

 
1,873

 
1,145

 
7,766

 
8,911

 
3,251

1970
1997
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pompano Beach, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic Business Center 1
 
Industrial

 
3,165

 
8,949

 
873

 
3,165

 
9,822

 
12,987

 
733

2000
2010
 
Atlantic Business Center 2
 
Industrial
5,758

 
2,663

 
8,751

 
657

 
2,663

 
9,408

 
12,071

 
744

2001
2010
 
Atlantic Business Center 3
 
Industrial
5,711

 
2,764

 
8,553

 

 
2,764

 
8,553

 
11,317

 
778

2001
2010
 
Atlantic Business Center 4A
 
Industrial
4,246

 
1,804

 
6,259

 
18

 
1,804

 
6,277

 
8,081

 
592

2002
2010
 
Atlantic Business Center 4B
 
Industrial
4,458

 
1,834

 
5,531

 
18

 
1,834

 
5,549

 
7,383

 
491

2002
2010
 
Atlantic Business Center 5A
 
Industrial
4,468

 
1,980

 
6,139

 

 
1,980

 
6,139

 
8,119

 
549

2002
2010
 
Atlantic Business Center 5B
 
Industrial
3,902

 
1,995

 
6,257

 

 
1,995

 
6,257

 
8,252

 
471

2004
2010
 
Atlantic Business Center 6A
 
Industrial
4,530

 
1,999

 
6,256

 

 
1,999

 
6,256

 
8,255

 
556

2004
2010
 
Atlantic Business Center 6B
 
Industrial
4,582

 
1,988

 
6,337

 

 
1,988

 
6,337

 
8,325

 
563

2002
2010
 
Atlantic Business Center 7A
 
Industrial
3,245

 
2,194

 
4,319

 

 
2,194

 
4,319

 
6,513

 
425

2005
2010
 
Atlantic Business Center 7B
 
Industrial
3,944

 
2,066

 
6,925

 

 
2,066

 
6,925

 
8,991

 
569

2004
2010
 
Atlantic Business Center 8
 
Industrial
4,710

 
1,616

 
3,785

 
20

 
1,616

 
3,805

 
5,421

 
369

2005
2010
 
Atlantic Business Center 9
 
Industrial
2,931

 
1,429

 
2,329

 

 
1,429

 
2,329

 
3,758

 
202

2006
2010
 
Copans Business Park 3
 
Industrial
4,445

 
1,710

 
3,892

 
77

 
1,710

 
3,969

 
5,679

 
364

1989
2010
 
Copans Business Park 4
 
Industrial
4,003

 
1,781

 
3,435

 
38

 
1,781

 
3,473

 
5,254

 
327

1989
2010
 
Park Central Business Park 1
 
Office
6,329

 
1,613

 
4,982

 
611

 
1,613

 
5,593

 
7,206

 
787

1985
2010
 
Park Central Business Park 2
 
Industrial
1,227

 
634

 
556

 
14

 
634

 
570

 
1,204

 
104

1982
2010
 
Park Central Business Park 3
 
Industrial
1,466

 
638

 
1,031

 

 
638

 
1,031

 
1,669

 
101

1982
2010
 
Park Central Business Park 4
 
Industrial
1,637

 
938

 
1,076

 
64

 
938

 
1,140

 
2,078

 
100

1985
2010
 
Park Central Business Park 5
 
Industrial
2,014

 
1,125

 
1,442

 
22

 
1,125

 
1,464

 
2,589

 
135

1986
2010

-115-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
Park Central Business Park 6
 
Industrial
2,050

 
1,088

 
1,068

 
73

 
1,088

 
1,141

 
2,229

 
175

1986
2010
 
Park Central Business Park 7
 
Industrial
2,068

 
979

 
950

 

 
979

 
950

 
1,929

 
171

1986
2010
 
Park Central Business Park 10
 
Industrial
3,684

 
1,688

 
2,299

 
(4
)
 
1,688

 
2,295

 
3,983

 
311

1999
2010
 
Park Central Business Park 11
 
Industrial
5,892

 
3,098

 
3,607

 
(58
)
 
3,098

 
3,549

 
6,647

 
474

1995
2010
 
Pompano Commerce Ctr I
 
Industrial

 
3,250

 
5,425

 
308

 
3,250

 
5,733

 
8,983

 
832

2010
2010
 
Pompano Commerce Ctr III
 
Industrial

 
3,250

 
5,704

 

 
3,250

 
5,704

 
8,954

 
883

2010
2010
 
Sample 95 Business Park 1
 
Industrial
7,084

 
3,300

 
6,423

 
43

 
3,300

 
6,466

 
9,766

 
518

1999
2010
 
Sample 95 Business Park 2
 
Industrial
9,784

 
2,963

 
6,367

 

 
2,963

 
6,367

 
9,330

 
499

1999
2011
 
Sample 95 Business Park 3
 
Industrial
8,389

 
3,713

 
4,465

 
144

 
3,713

 
4,609

 
8,322

 
417

1999
2011
 
Sample 95 Business Park 4
 
Industrial

 
1,688

 
5,408

 
63

 
1,688

 
5,471

 
7,159

 
536

1999
2010
 
Copans Business Park 1
 
Industrial

 
1,856

 
3,236

 
546

 
1,856

 
3,782

 
5,638

 
310

1989
2011
 
Copans Business Park 2
 
Industrial

 
1,988

 
3,660

 
140

 
1,988

 
3,800

 
5,788

 
415

1989
2011
 
Park Central Business Park 8-9
 
Industrial
7,675

 
4,136

 
6,870

 
228

 
4,136

 
7,098

 
11,234

 
795

1998
2011
 
Park Central Business Park 12
 
Industrial
9,022

 
2,696

 
6,499

 
42

 
2,696

 
6,541

 
9,237

 
705

1998
2011
 
Park Central Business Park 14
 
Industrial
2,680

 
1,635

 
2,910

 
63

 
1,635

 
2,973

 
4,608

 
231

1996
2011
 
Park Central Business Park 15
 
Industrial
2,052

 
1,500

 
2,150

 
20

 
1,500

 
2,170

 
3,670

 
174

1998
2011
 
Park Central Business Park 33
 
Industrial
3,765

 
2,438

 
3,397

 
117

 
2,438

 
3,514

 
5,952

 
401

1997
2011
 
Atlantic Business Ctr. 10-KFC
 
Grounds

 
772

 

 

 
772

 

 
772

 
9

n/a
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Port Wentworth, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
318 Grange Road
 
Industrial
1,470

 
957

 
4,157

 
98

 
957

 
4,255

 
5,212

 
817

2001
2006
 
246 Grange Road
 
Industrial
5,091

 
1,191

 
8,294

 
7

 
1,191

 
8,301

 
9,492

 
1,922

2006
2006
 
100 Ocean Link Way-Godley Rd
 
Industrial
9,193

 
2,306

 
13,389

 
81

 
2,336

 
13,440

 
15,776

 
2,942

2006
2006
 
500 Expansion Blvd
 
Industrial
3,950

 
649

 
6,282

 
81

 
649

 
6,363

 
7,012

 
973

2006
2008
 
400 Expansion Blvd
 
Industrial
9,058

 
1,636

 
14,506

 
19

 
1,636

 
14,525

 
16,161

 
2,334

2007
2008
 
605 Expansion Blvd
 
Industrial
5,337

 
1,615

 
7,456

 
25

 
1,615

 
7,481

 
9,096

 
1,248

2007
2008
 
405 Expansion Blvd
 
Industrial
2,062

 
535

 
3,543

 

 
535

 
3,543

 
4,078

 
629

2008
2009
 
600 Expansion Blvd
 
Industrial
5,904

 
1,248

 
10,387

 

 
1,248

 
10,387

 
11,635

 
1,796

2008
2009
 
602 Expansion Blvd
 
Industrial

 
1,840

 
12,181

 
27

 
1,859

 
12,189

 
14,048

 
1,905

2009
2009
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Raleigh, North Carolina
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Crabtree Overlook
 
Office

 
2,164

 
15,288

 
882

 
2,164

 
16,170

 
18,334

 
5,084

2001
2001
 
WakeMed Brier Creek Healthplex
 
Medical Office

 
10

 
6,653

 
(373
)
 
10

 
6,280

 
6,290

 
256

2011
2011
 
WakeMed Raleigh Medical Park
 
Medical Office

 
15

 
12,078

 
363

 
15

 
12,441

 
12,456

 
228

2012
2012

-116-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
Walnut Creek Business Park I
 
Industrial

 
419

 
1,780

 
662

 
442

 
2,419

 
2,861

 
718

2001
2001
 
Walnut Creek Business Park II
 
Industrial

 
456

 
2,318

 
437

 
487

 
2,724

 
3,211

 
841

2001
2001
 
Walnut Creek Business Park III
 
Industrial

 
679

 
2,927

 
1,372

 
719

 
4,259

 
4,978

 
1,117

2001
2001
 
Walnut Creek Business Park IV
 
Industrial

 
2,038

 
1,843

 
1,452

 
2,083

 
3,250

 
5,333

 
1,616

2004
2004
 
Walnut Creek Business Park V
 
Industrial

 
1,718

 
3,302

 
602

 
1,718

 
3,904

 
5,622

 
1,180

2008
2008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rome, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Harbin Cancer Center
 
Medical Office

 
718

 
14,032

 

 
718

 
14,032

 
14,750

 
176

2010
2012
 
Harbin Clinic Heart Center
 
Medical Office

 
2,556

 
10,363

 

 
2,556

 
10,363

 
12,919

 
93

1994
2012
 
Harbin Clinic 1825 MarthaBerry (3)
 
Medical Office

 

 
28,714

 

 

 
28,714

 
28,714

 
161

1960
2012
 
Harbin Clinic Rome Dialysis
 
Medical Office

 
190

 
765

 

 
190

 
765

 
955

 
10

2005
2012
 
Harbin Specialty Center
 
Medical Office

 
2,203

 
14,764

 

 
2,203

 
14,764

 
16,967

 
168

2007
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Romeoville, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Park 55 Bldg. 1
 
Industrial
7,438

 
6,433

 
7,857

 
1,076

 
6,433

 
8,933

 
15,366

 
3,054

2005
2005
 
Crossroads 2
 
Industrial
6,144

 
2,938

 
9,826

 
161

 
2,938

 
9,987

 
12,925

 
1,046

1999
2010
 
Crossroads 5
 
Industrial

 
5,296

 
6,199

 
221

 
5,296

 
6,420

 
11,716

 
1,625

2009
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Roseville, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
I-35 Business Center 1
 
Industrial

 
1,655

 
6,048

 
22

 
1,655

 
6,070

 
7,725

 
349

1998
2011
 
I-35 Business Center 2
 
Industrial

 
1,373

 
4,220

 
31

 
1,373

 
4,251

 
5,624

 
244

2000
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Roswell, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North Fulton Medical Plaza
 
Medical Office

 
291

 
10,908

 
57

 
291

 
10,965

 
11,256

 
137

2012
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ruston, Louisiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Green Clinic
 
Medical Office

 
919

 
15,185

 

 
919

 
15,185

 
16,104

 
211

1984
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Antonio, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Christus Santa Rosa MOB
 
Medical Office

 
4,310

 
15,201

 
55

 
4,310

 
15,256

 
19,566

 
834

2006
2011
 
Christus Santa Rosa Hospital
 
Medical Office
10,238

 
5,267

 
10,660

 
186

 
5,267

 
10,846

 
16,113

 
765

2005
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sandy Springs, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Center Pointe I & II
 
Medical Office

 
9,697

 
19,026

 
21,398

 
9,707

 
40,414

 
50,121

 
10,458

2010
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

-117-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
Savannah, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
198 Gulfstream
 
Industrial
5,324

 
549

 
3,805

 
154

 
549

 
3,959

 
4,508

 
762

1997
2006
 
194 Gulfstream
 
Industrial
173

 
412

 
2,514

 
15

 
412

 
2,529

 
2,941

 
471

1998
2006
 
190 Gulfstream
 
Industrial
730

 
689

 
4,916

 

 
689

 
4,916

 
5,605

 
1,230

1999
2006
 
250 Grange Road
 
Industrial
2,678

 
928

 
8,648

 
7

 
928

 
8,655

 
9,583

 
1,940

2002
2006
 
248 Grange Road
 
Industrial
1,141

 
664

 
3,496

 
8

 
664

 
3,504

 
4,168

 
792

2002
2006
 
163 Portside Court
 
Industrial
20,034

 
8,433

 
8,366

 
20

 
8,433

 
8,386

 
16,819

 
3,344

2004
2006
 
151 Portside Court
 
Industrial
2,254

 
966

 
7,155

 
73

 
966

 
7,228

 
8,194

 
1,295

2003
2006
 
175 Portside Court
 
Industrial
11,322

 
4,300

 
15,696

 
153

 
4,301

 
15,848

 
20,149

 
4,070

2005
2006
 
150 Portside Court
 
Industrial

 
3,071

 
23,001

 
1,295

 
3,071

 
24,296

 
27,367

 
6,090

2001
2006


-118-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
235 Jimmy Deloach Parkway
 
Industrial

 
1,074

 
8,442

 
44

 
1,074

 
8,486

 
9,560

 
1,926

2001
2006
 
239 Jimmy Deloach Parkway
 
Industrial

 
1,074

 
7,141

 
37

 
1,074

 
7,178

 
8,252

 
1,647

2001
2006
 
246 Jimmy Deloach Parkway
 
Industrial
3,094

 
992

 
5,383

 
64

 
992

 
5,447

 
6,439

 
1,260

2006
2006
 
200 Ocean Link Way
 
Industrial
6,001

 
878

 
10,021

 
90

 
883

 
10,106

 
10,989

 
1,730

2006
2008
 
2509 Dean Forest Rd - Westport
 
Industrial

 
2,392

 
8,303

 
75

 
2,393

 
8,377

 
10,770

 
791

2008
2011
 
276 Jimmy Deloach Land
 
Grounds

 
2,267

 

 
3

 
2,270

 

 
2,270

 
312

n/a
2006
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sea Brook, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayport Logistics Center
 
Industrial

 
2,629

 
13,284

 

 
2,629

 
13,284

 
15,913

 
1,384

2009
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sebring, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sebring Medical Pavilion
 
Medical Office

 
514

 
6,870

 

 
514

 
6,870

 
7,384

 
84

2008
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Seven Hills, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rock Run North
 
Office

 
837

 
5,250

 
(2,314
)
 
837

 
2,936

 
3,773

 
2,305

1984
1996
 
Rock Run Center
 
Office

 
1,046

 
6,467

 
(2,794
)
 
1,046

 
3,673

 
4,719

 
3,001

1985
1996
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shakopee, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MN Valley West
 
Industrial

 
1,496

 
6,309

 

 
1,496

 
6,309

 
7,805

 
365

2000
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sharonville, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mosteller Distribution Ctr. II
 
Industrial

 
828

 
3,579

 
1,478

 
408

 
5,477

 
5,885

 
2,345

1997
1997
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Snellville, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New Hampton Place
 
Medical Office

 
27

 
6,076

 
512

 
27

 
6,588

 
6,615

 
500

2011
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
St. John, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hammond Clinic St. John (3)
 
Medical Office

 

 
2,791

 

 

 
2,791

 
2,791

 

1996
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
St. Louis Park, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Chilies Ground Lease
 
Grounds

 
921

 

 
157

 
1,078

 

 
1,078

 
88

n/a
1998
 
Olive Garden Ground Lease
 
Grounds

 
921

 

 
114

 
1,035

 

 
1,035

 
105

n/a
1998
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
St. Louis, Missouri
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lakeside Crossing Building One
 
Industrial

 
547

 
832

 
684

 
431

 
1,632

 
2,063

 
389

2002
2002
 
Lakeside Crossing Building II
 
Industrial

 
732

 
1,964

 
47

 
731

 
2,012

 
2,743

 
1,290

2003
2003
 
Lakeside Crossing Building III
 
Industrial

 
1,784

 
3,467

 
374

 
1,502

 
4,123

 
5,625

 
1,246

2002
2002
 
Laumeier I
 
Office

 
1,384

 
7,823

 
5,044

 
1,220

 
13,031

 
14,251

 
5,712

1987
1995
 
Laumeier II
 
Office

 
1,421

 
7,899

 
2,629

 
1,258

 
10,691

 
11,949

 
5,220

1988
1995
 
Laumeier IV
 
Office

 
1,029

 
6,142

 
1,775

 
1,029

 
7,917

 
8,946

 
3,057

1987
1998

-119-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
530 Maryville Centre
 
Office

 
2,219

 
13,993

 
3,420

 
2,219

 
17,413

 
19,632

 
7,079

1990
1997
 
550 Maryville Centre
 
Office

 
1,996

 
12,244

 
2,595

 
1,996

 
14,839

 
16,835

 
6,735

1988
1997
 
635-645 Maryville Centre
 
Office

 
3,048

 
16,842

 
4,306

 
3,048

 
21,148

 
24,196

 
8,311

1987
1997
 
655 Maryville Centre
 
Office

 
1,860

 
13,067

 
2,359

 
1,860

 
15,426

 
17,286

 
6,299

1994
1997
 
540 Maryville Centre
 
Office

 
2,219

 
13,658

 
2,789

 
2,219

 
16,447

 
18,666

 
7,165

1990
1997
 
520 Maryville Centre
 
Office

 
2,404

 
13,937

 
1,558

 
2,404

 
15,495

 
17,899

 
5,822

1999
1999
 
625 Maryville Centre
 
Office

 
2,509

 
10,935

 
1,559

 
2,509

 
12,494

 
15,003

 
4,217

1996
2002
 
Westport Center I
 
Industrial

 
1,707

 
4,453

 
1,127

 
1,707

 
5,580

 
7,287

 
2,563

1998
1998
 
Westport Center II
 
Industrial

 
914

 
1,924

 
425

 
914

 
2,349

 
3,263

 
1,197

1998
1998
 
Westport Center III
 
Industrial

 
1,206

 
2,651

 
885

 
1,206

 
3,536

 
4,742

 
1,548

1999
1999
 
Westport Center V
 
Industrial

 
493

 
1,274

 
119

 
493

 
1,393

 
1,886

 
559

2000
2000
 
Westport Place
 
Office

 
1,990

 
5,471

 
2,180

 
1,990

 
7,651

 
9,641

 
3,965

2000
2000
 
Westmark
 
Office

 
1,497

 
9,119

 
2,844

 
1,342

 
12,118

 
13,460

 
5,687

1987
1995
 
Westview Place
 
Office

 
669

 
7,238

 
4,554

 
669

 
11,792

 
12,461

 
6,101

1988
1995
 
Woodsmill Commons II (400)
 
Office

 
1,718

 
7,096

 
1,229

 
1,718

 
8,325

 
10,043

 
2,643

1985
2003
 
Woodsmill Commons I (424)
 
Office

 
1,836

 
6,631

 
1,324

 
1,836

 
7,955

 
9,791

 
2,444

1985
2003
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stafford, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stafford Distribution Center
 
Industrial

 
3,502

 
4,824

 
3,321

 
3,502

 
8,145

 
11,647

 
2,616

2008
2008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sterling, Virginia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22800 Davis Drive
 
Office

 
2,550

 
11,250

 
31

 
2,550

 
11,281

 
13,831

 
2,204

1989
2006
 
22714 Glenn Drive
 
Industrial

 
3,973

 
3,871

 
1,046

 
3,973

 
4,917

 
8,890

 
1,364

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Suffolk, Virginia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
101 Industrial Dr, Bldg. A
 
Industrial

 
1,558

 
8,230

 
24

 
1,558

 
8,254

 
9,812

 
1,177

2007
2007
 
103 Industrial Dr
 
Industrial

 
1,558

 
8,230

 

 
1,558

 
8,230

 
9,788

 
1,177

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Summerville, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Harbin Clinic Summerville Dial
 
Medical Office

 
195

 
1,182

 

 
195

 
1,182

 
1,377

 
25

2007
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sumner, Washington
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sumner Transit
 
Industrial
15,559

 
16,032

 
5,935

 
278

 
16,032

 
6,213

 
22,245

 
2,254

2005
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sunrise, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sawgrass - Building B
 
Office

 
1,211

 
4,263

 
2,627

 
1,211

 
6,890

 
8,101

 
2,040

1999
2001
 
Sawgrass - Building A
 
Office

 
1,147

 
3,862

 
457

 
1,147

 
4,319

 
5,466

 
1,410

2000
2001
 
Sawgrass Pointe I
 
Office

 
3,484

 
20,567

 
8,769

 
3,484

 
29,336

 
32,820

 
12,131

2002
2002
 
Sawgrass Pointe II
 
Office

 
3,481

 
11,973

 
(41
)
 
3,481

 
11,932

 
15,413

 
3,674

2009
2009
 
VA Outpatient
 
Medical Office

 
5,132

 
20,887

 

 
5,132

 
20,887

 
26,019

 
247

2008
2012

-120-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Suwanee, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
90 Horizon Drive
 
Industrial

 
180

 
1,274

 
105

 
180

 
1,379

 
1,559

 
117

2001
2010
 
225 Horizon Drive
 
Industrial

 
457

 
2,089

 

 
457

 
2,089

 
2,546

 
207

1990
2010
 
250 Horizon Drive
 
Industrial

 
1,625

 
6,490

 
31

 
1,625

 
6,521

 
8,146

 
699

1997
2010
 
70 Crestridge Drive
 
Industrial

 
956

 
3,657

 
119

 
956

 
3,776

 
4,732

 
460

1998
2010
 
2780 Horizon Ridge
 
Industrial

 
1,143

 
5,834

 
95

 
1,143

 
5,929

 
7,072

 
614

1997
2010
 
2800 Vista Ridge Drive
 
Industrial

 
1,557

 
2,651

 
116

 
1,557

 
2,767

 
4,324

 
508

1995
2010
 
25 Crestridge Drive
 
Industrial

 
723

 
2,736

 
28

 
723

 
2,764

 
3,487

 
288

1999
2010
 
Genera Corp. BTS
 
Industrial

 
1,505

 
4,958

 

 
1,505

 
4,958

 
6,463

 
596

2006
2010
 
1000 Northbrook Parkway
 
Industrial

 
756

 
4,034

 
276

 
756

 
4,310

 
5,066

 
501

1986
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tampa, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fairfield Distribution Ctr I
 
Industrial
1,573

 
483

 
2,568

 
202

 
487

 
2,766

 
3,253

 
935

1998
1999
 
Fairfield Distribution Ctr II
 
Industrial
2,901

 
530

 
4,848

 
272

 
534

 
5,116

 
5,650

 
1,730

1998
1999
 
Fairfield Distribution Ctr III
 
Industrial
1,565

 
334

 
2,745

 
134

 
338

 
2,875

 
3,213

 
985

1999
1999
 
Fairfield Distribution Ctr IV
 
Industrial
1,675

 
600

 
1,591

 
1,290

 
604

 
2,877

 
3,481

 
1,071

1999
1999
 
Fairfield Distribution Ctr V
 
Industrial
1,746

 
488

 
2,620

 
263

 
488

 
2,883

 
3,371

 
959

2000
2000
 
Fairfield Distribution Ctr VI
 
Industrial
2,612

 
555

 
3,603

 
854

 
555

 
4,457

 
5,012

 
1,303

2001
2001
 
Fairfield Distribution Ctr VII
 
Industrial
1,500

 
394

 
1,853

 
791

 
394

 
2,644

 
3,038

 
773

2001
2001
 
Fairfield Distribution Ctr VIII
 
Industrial
1,857

 
1,082

 
2,071

 
420

 
1,082

 
2,491

 
3,573

 
957

2004
2004
 
Eagle Creek Business Ctr. I
 
Industrial

 
3,705

 
3,072

 
1,040

 
3,705

 
4,112

 
7,817

 
2,176

2006
2006
 
Eagle Creek Business Ctr. II
 
Industrial

 
2,354

 
2,272

 
969

 
2,354

 
3,241

 
5,595

 
1,527

2007
2007
 
Eagle Creek Business Ctr. III
 
Industrial

 
2,332

 
2,237

 
1,731

 
2,332

 
3,968

 
6,300

 
1,343

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Waco, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hillcrest MOB 1
 
Medical Office

 
812

 
25,050

 

 
812

 
25,050

 
25,862

 
368

2009
2012
 
Hillcrest MOB 2
 
Medical Office

 
657

 
12,243

 

 
657

 
12,243

 
12,900

 
168

2009
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
West Chester, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Centre Pointe I
 
Office

 
2,501

 
7,441

 
899

 
2,501

 
8,340

 
10,841

 
2,308

2000
2004
 
Centre Pointe II
 
Office

 
2,056

 
8,106

 
988

 
2,056

 
9,094

 
11,150

 
2,337

2001
2004
 
Centre Pointe III
 
Office

 
2,048

 
7,105

 
2,050

 
2,048

 
9,155

 
11,203

 
2,442

2002
2004
 
Centre Pointe IV
 
Office

 
2,013

 
8,715

 
1,540

 
2,932

 
9,336

 
12,268

 
3,431

2005
2005
 
Centre Pointe VI
 
Office

 
2,759

 
8,266

 
3,994

 
2,759

 
12,260

 
15,019

 
3,194

2008
2008
 
World Park at Union Centre 10
 
Industrial

 
2,150

 
5,503

 
7,408

 
2,151

 
12,910

 
15,061

 
5,199

2006
2006
 
World Park at Union Centre 11
 
Industrial

 
2,592

 
6,923

 
47

 
2,592

 
6,970

 
9,562

 
3,121

2004
2004
 
World Park at Union Centre 1
 
Industrial

 
300

 
3,008

 
137

 
300

 
3,145

 
3,445

 
487

1998
2010
 
World Park at Union Centre 2
 
Industrial

 
287

 
2,338

 
203

 
287

 
2,541

 
2,828

 
214

1999
2010
 
World Park at Union Centre 3
 
Industrial

 
1,125

 
6,042

 

 
1,125

 
6,042

 
7,167

 
567

1998
2010

-121-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2012
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/12
 
 
 
 
 
Name
 
Building Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
World Park at Union Centre 4
 
Industrial

 
335

 
2,040

 
185

 
335

 
2,225

 
2,560

 
201

1999
2010
 
World Park at Union Centre 5
 
Industrial

 
482

 
2,528

 
15

 
482

 
2,543

 
3,025

 
286

1999
2010
 
World Park at Union Centre 6
 
Industrial

 
1,219

 
6,415

 
211

 
1,219

 
6,626

 
7,845

 
618

1999
2010
 
World Park at Union Centre 7
 
Industrial

 
1,918

 
5,230

 
299

 
1,918

 
5,529

 
7,447

 
757

2005
2010
 
World Park at Union Centre 8
 
Industrial

 
1,160

 
6,134

 

 
1,160

 
6,134

 
7,294

 
650

1999
2010
 
World Park at Union Centre 9
 
Industrial

 
1,189

 
6,172

 
(3
)
 
1,189

 
6,169

 
7,358

 
725

2001
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
West Chicago, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1250 Carolina Drive
 
Industrial

 
1,246

 
4,173

 
124

 
1,246

 
4,297

 
5,543

 
285

1990
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
West Jefferson, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restoration Hardware BTS
 
Industrial

 
6,454

 
24,812

 
2,443

 
6,510

 
27,199

 
33,709

 
5,208

2008
2008
 
15 Commerce Parkway
 
Industrial

 
10,439

 
27,143

 
56

 
10,439

 
27,199

 
37,638

 
2,241

2011
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
West Palm Beach, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Park of Commerce 1
 
Industrial

 
1,635

 
2,486

 
148

 
1,635

 
2,634

 
4,269

 
299

2010
2010
 
Park of Commerce 3
 
Industrial

 
2,160

 
4,340

 
160

 
2,320

 
4,340

 
6,660

 
454

2010
2010
 
Airport Center 1
 
Industrial
5,125

 
2,437

 
6,212

 

 
2,437

 
6,212

 
8,649

 
607

2002
2010
 
Airport Center 2
 
Industrial
3,753

 
1,706

 
4,632

 

 
1,706

 
4,632

 
6,338

 
446

2002
2010
 
Airport Center 3
 
Industrial
3,745

 
1,500

 
4,750

 
121

 
1,500

 
4,871

 
6,371

 
443

2002
2010
 
Park of Commerce 4
 
Grounds
5,739

 
5,934

 

 

 
5,934

 

 
5,934

 
9

n/a
2011
 
Park of Commerce 5
 
Grounds
6,041

 
6,308

 

 

 
6,308

 

 
6,308

 
8

n/a
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Whitestown, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AllPoints Anson Bldg 14
 
Industrial

 
2,127

 
8,155

 

 
2,127

 
8,155

 
10,282

 
596

2007
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Zionsville, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Marketplace at Anson
 
Retail

 
2,147

 
2,584

 
2,314

 
2,147

 
4,898

 
7,045

 
1,249

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accum. Depr. on Improvements of Undeveloped Land
 
 

 

 

 

 

 

 

 
20,457

 
 
 
Eliminations
 
 

 

 

 
(2,299
)
 
6

 
(2,305
)
 
(2,299
)
 
(2,801
)
 
 
 
 
 
 
1,167,953

 
1,260,609

 
4,785,308

 
662,333

 
1,285,675

 
5,422,575

 
6,708,250

 
1,296,685

 
 
(1)
The tax basis (in thousands) of our real estate assets at December 31, 2012 was approximately $7,056,492 for federal income tax purposes.
(2)
Depreciation of real estate is computed using the straight-line method over 40 years for buildings and 15 years for land improvements for properties that we develop, 30 years for buildings and 10 years for land improvements for properties that we acquire, and shorter periods based on lease terms (generally 3 to 10 years) for tenant improvements.
(3)
We hold legal title to these buildings but, for accounting purposes, are treated as direct financing leases. Due to being immaterial for separate presentation, we have classified these buildings within real estate investments and have included them in this schedule.

-122-



 
 
Real Estate Assets
 
Accumulated Depreciation
 
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
Balance at beginning of year
 
$
6,038,107

 
$
7,032,889

 
$
6,390,119

 
$
1,127,595

 
$
1,406,437

 
$
1,311,733

Acquisitions
 
658,917

 
669,631

 
449,530

 
 
 
 
 
 
Construction costs and tenant improvements
 
211,460

 
184,533

 
162,301

 
 
 
 
 
 
Depreciation expense
 
 
 
 
 
 
 
262,825

 
267,222

 
271,058

Consolidation of previously unconsolidated properties
 

 
5,988

 
530,573

 
 
 
 
 
 
 
 
6,908,484

 
7,893,041

 
7,532,523

 
1,390,420

 
1,673,659

 
1,582,791

Deductions during year:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of real estate sold or contributed
 
(157,630
)
 
(1,774,576
)
 
(421,325
)
 
(51,131
)
 
(465,353
)
 
(97,699
)
Write-off of fully amortized assets
 
(42,604
)
 
(80,358
)
 
(78,309
)
 
(42,604
)
 
(80,711
)
 
(78,655
)
Balance at end of year
 
$
6,708,250

 
$
6,038,107

 
$
7,032,889

 
$
1,296,685

 
$
1,127,595

 
$
1,406,437





See Accompanying Notes to Independent Auditors' Report

-123-


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
DUKE REALTY CORPORATION
 
 
 
February 22, 2013
By:
/s/    Dennis D. Oklak
 
 
Dennis D. Oklak
 
 
Chairman and Chief Executive Officer
 
 
 
 
By:
/s/    Christie B. Kelly
 
 
Christie B. Kelly
 
 
Executive Vice President and Chief Financial Officer
 
 
 
 
By:
/s/    Mark A. Denien
 
 
Mark A. Denien
 
 
Senior Vice President and Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 

-124-


 
 
 
 
 
Signature
 
Date
 
Title
 
 
 
 
 
/s/ Thomas J. Baltimore, Jr.*
 
1/30/2013
 
Director
Thomas J. Baltimore, Jr.
 
 
 
 
 
 
 
 
 
/s/ William Cavanaugh III*
 
1/30/2013
 
Director
William Cavanaugh III
 
 
 
 
 
 
 
 
 
/s/ Alan H. Cohen*
 
1/30/2013
 
Director
Alan H. Cohen
 
 
 
 
 
 
 
 
 
/s/ Ngaire E. Cuneo*
 
1/30/2013
 
Director
Ngaire E. Cuneo
 
 
 
 
 
 
 
 
 
/s/ Charles R. Eitel*
 
1/30/2013
 
Director
Charles R. Eitel
 
 
 
 
 
 
 
 
 
/s/ Martin C. Jischke, PhD*
 
1/30/2013
 
Director
Martin C. Jischke, PhD
 
 
 
 
 
 
 
 
 
/s/ Melanie R. Sabelhaus*
 
1/30/2013
 
Director
Melanie R. Sabelhaus
 
 
 
 
 
 
 
 
 
/s/ Peter M. Scott III*
 
1/30/2013
 
Director
Peter M. Scott III
 
 
 
 
 
 
 
 
 
/s/ Jack R. Shaw*
 
1/30/2013
 
Director
Jack R. Shaw
 
 
 
 
 
 
 
 
 
/s/ Lynn C. Thurber*
 
1/30/2013
 
Director
Lynn C. Thurber
 
 
 
 
 
 
 
 
 
/s/ Robert J. Woodward, Jr.*
 
1/30/2013
 
Director
Robert J. Woodward, Jr.
 
 
 
 

*
 
By Dennis D. Oklak, Attorney-in-Fact
 
/s/ Dennis D. Oklak

-125-