Annual Statements Open main menu

DUKE REALTY CORP - Annual Report: 2019 (Form 10-K)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
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)
dukerealtylogoa13.jpg
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)
 
(I.R.S. Employer
Identification Number)
8711 River Crossing Boulevard
 
 
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 Class
 
Trading Symbols
 
Name of Exchange on Which Registered
Duke Realty Corporation
 
Common Stock, $0.01 par value
 
DRE
 
New York Stock Exchange
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
 No  
 
Duke Realty Limited Partnership
Yes 
 No  
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 ☐
No
 
Duke Realty Limited Partnership
Yes  
No  
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
 No  
 
Duke Realty Limited Partnership
Yes 
 No  
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted 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 such files).
Duke Realty Corporation
Yes
 No  
 
Duke Realty Limited Partnership
Yes 
 No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Duke Realty Corporation:
Large accelerated filer
Accelerated filer  
Non-accelerated filer  
Smaller reporting company  
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Duke Realty Limited Partnership:
Large accelerated filer 
 
Accelerated filer  
Non-accelerated filer  
Smaller reporting company  
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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
No  
 
Duke Realty Limited Partnership
Yes  
No  
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 $11.48 billion based on the last reported sale price on June 30, 2019.
The number of common shares of Duke Realty Corporation, $0.01 par value outstanding as of February 20, 2020 was 368,342,908.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of Duke Realty Corporation's Definitive Proxy Statement for its 2020 Annual Meeting of Shareholders (the "2020 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 2020 Proxy Statement specifically incorporated by reference pursuant to Items 10 through 14 of Part III hereof, no other portions of the 2020 Proxy Statement shall be deemed so incorporated.



EXPLANATORY NOTE
This report (the "Report") combines the annual reports on Form 10-K for the year ended December 31, 2019 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 99.2% of the common partnership interests of the Partnership ("General Partner Units") as of December 31, 2019. The remaining 0.8% 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.
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 some of 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)
 
 
 
 
 
 
 
 
1.
1A.
1B.
2.
3.
4.
 
 
 
 
 
 
 
 
5.
6.
7.
7A.
8.
9.
9A.
9B.
 
 
 
 
 
 
 
 
10.
11.
12.
13.
14.
 
 
 
 
 
 
 
 
15.
16.
Form 10-K Summary
 
129 



IMPORTANT INFORMATION ABOUT THIS REPORT
Cautionary Notice Regarding Forward-Looking Statements
Certain statements contained in or incorporated by reference into this Report on Form 10-K for the General Partner and the Partnership, 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," "strategy," "continue," "plan," "seek," "could," "may" and similar expressions or statements regarding future periods are intended to identify forward-looking statements, although not all forward-looking statements may contain such words.
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 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, or at all;
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 including construction cost increases as the result of trade disputes and tariffs on goods imported in the United States;
Our real estate asset concentration in the industrial sector and potential volatility in this sector;
Our ability to successfully dispose of properties on terms that are favorable to us;
Our ability to successfully integrate our acquired properties;
Our ability to retain our current credit ratings;
Inherent risks related to disruption of information technology networks and related systems and cyber security attacks;
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 anticipated results expressed in or suggested by the forward-looking statements contained in or incorporated by reference into this Report are reasonable, all forward-looking statements are inherently subjective, uncertain and subject to change, as they involve substantial risks and uncertainties, including those 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 not to place undue reliance on these forward-looking statements. We undertake no

-2-


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.
The above list of risks and uncertainties 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 and Partnership collectively specialize in the ownership, management and development of bulk distribution ("industrial") real estate.
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 from an offering of additional 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 99.2% of the Common Units at December 31, 2019. The remaining 0.8% of 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 Fifth 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.
At December 31, 2019, we owned or jointly controlled 519 primarily industrial properties which encompassed 155.3 million rentable square feet (including 38 unconsolidated joint venture in-service properties with 11.0 million square feet, 21 consolidated properties under development with 8.7 million square feet and one unconsolidated joint venture property under development with 133,000 square feet). Our properties are leased by a diverse base of more than 800 tenants whose businesses include e-commerce, manufacturing, retailing, wholesale trade, and distribution. We also owned, including through ownership interests in unconsolidated joint ventures (with acreage not adjusted for our percentage ownership interest), 1,380 acres of land and controlled an additional 1,000 acres through purchase options.
Our headquarters and executive offices are located in Indianapolis, Indiana. We additionally have regional offices or significant operations in 19 other geographic or metropolitan areas including Atlanta, Georgia; Chicago, Illinois; Cincinnati, Ohio; Columbus, Ohio; Dallas, Texas; Houston, Texas; Minneapolis/St. Paul, Minnesota; Nashville, Tennessee; Raleigh, North Carolina; Savannah, Georgia; Seattle, Washington; St. Louis, Missouri; Washington D.C./Baltimore, Maryland; Central Florida; New Jersey; Northern and Southern California; Pennsylvania and South Florida. We had approximately 400 employees at December 31, 2019.
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.

-3-


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, to the extent it is in markets that align 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 our many strong relationships with customers that operate on a national level. As a fully integrated real estate company, we are able to arrange for or provide to our tenants 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 of and demand for 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.
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. 

-4-


Board Composition
  
• The General Partner's board is controlled by a supermajority (92.3%) of "Independent Directors," as such term is defined under the rules of the New York Stock Exchange (the "NYSE")
• 31% of the General Partner’s board is female and its compensation and human capital committee is chaired by a female
 
 
Board Committees
  
• The General Partner's board committee members are all Independent Directors
 
 
Lead Director
  
• The Lead Director serves as the Chairman of the General Partner's corporate governance committee
 
 
Board Policies
 
- Proactively amended and restated the General Partner's Bylaws to implement proxy access
- Adopted a Board Diversity and Inclusion Policy
- No Shareholder Rights Plan (Poison Pill)
- Code of Business Ethics 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 approval 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
- Individual director evaluations are performed annually
- The General Partner's corporate governance committee conducts an annual review 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
- 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
- Human Rights Policy
- 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 Business Ethics (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, 8711 River Crossing Boulevard, Indianapolis, Indiana 46240, Attention: Investor Relations. If we amend our Code of Business Ethics as it applies to the directors and all executive officers of the General Partner or grant a waiver from any provision of the Code of Business Ethics 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.
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 - Notes to Consolidated Financial Statements - (9) Segment Reporting."


-5-


Available Information
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 access any document filed through the SEC's home page on the Internet (http://www.sec.gov).
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 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 equity and, at times, 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.


-6-


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. As a result, we would also likely be unable to borrow any further amounts under our other debt instruments and other debt obligations may be accelerated, which could adversely affect our ability to fund operations.
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 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 stock. If the market price of the General Partner's common stock declines, 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 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.



-7-


Our use of joint ventures may negatively impact our jointly-owned investments.
We have, and may continue to 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.
Our business and operations could suffer in the event of system failures or cyber security attacks.
Our systems are vulnerable to damages from any number of sources, including energy blackouts, natural disasters, terrorism, war, telecommunication failures and cyber security attacks, such as computer viruses, computer hacking, acts of vandalism or theft, malware or other malicious codes, phishing, employee error or malfeasance, or other unauthorized access. Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business. We may also incur additional costs to remedy damages caused by such disruptions. Any future significant compromise or breach of our data security, whether external or internal, or misuse of customer, associate, supplier or company data, could result in significant costs, lost sales, fines, lawsuits, and damage to our reputation. Any compromise of our security could also result in a violation of applicable privacy and other laws, unauthorized access to information of ours and others, significant legal and financial exposure, damage to our reputation, loss or misuse of the information and a loss of confidence in our security measures, which could harm our business.

We have programs in place to detect, contain and respond to data security incidents. However, the ever-evolving threats mean we and our third-party service providers and vendors must continually evaluate and adapt our respective systems and processes and overall security environment. Even the most well protected information, networks, systems and facilities remain potentially vulnerable when considering the rapid pace of change in this area. There can be no assurance that our efforts to maintain the security and integrity of our systems will be effective, or that we will be able to maintain our systems free from security breaches, system compromises, misuses of data, or other operational interruptions. Accordingly, we may be unable to prevent major security breaches or entirely mitigate the risk of other system interruptions or failures.

We could also be negatively impacted by similar disruptions to the operations of our vendors or outsourced service providers.
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, many of which 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;

-8-


Local conditions such as oversupply of property or a reduction in demand;
Competition for tenants;
Changes in market rental rates;
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.
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, insurance, maintenance costs and our debt service payments, generally are not reduced when circumstances cause a reduction in income from the investment. As a result, we may have a reduction in our net earnings available for investment or distribution to our shareholders and unitholders.
Our real estate development activities are subject to risks particular to development.
We continue to selectively develop new 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 could increase as the result of trade disputes and tariffs on goods imported in the United States;
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.




-9-


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
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.
As a result, we may develop or acquire projects that are not profitable.
Our investments are concentrated in the industrial sector and our business would be adversely affected by an economic downturn in that sector.
Our investments in real estate assets are concentrated in the industrial sector. This concentration may expose us to the risk of economic downturns in this sector to a greater extent than if our business activities were more diversified.
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 the damaged assets. Inflation, changes in building codes and ordinances, environmental considerations, acts of a governmental authority and other factors also may make it unfeasible to collect insurance proceeds to replace a facility after it has been damaged or destroyed. If an uninsured or underinsured 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.




-10-


Our acquisition and disposition activity may lead to long-term dilution.
Our asset strategy is to increase our investment concentration in coastal Tier 1 markets. There can be no assurance that we will be able to execute our strategy or that our execution of such strategy 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.
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. We have a significant investment in properties in coastal markets such as Southern California, Northern California and South Florida and have also targeted those markets for future growth. Those coastal markets have historically experienced severe weather events, such as storms and drought, as well as other natural catastrophes such as wildfires and floods. If the frequency of extreme weather and other natural events increases due to climate change, our exposure to these events could increase. We may also be adversely impacted as a real estate developer in the future by stricter energy and water efficiency standards as well as water access for our buildings.
Risks Related to Our Organization and Structure
If the General Partner were to cease to qualify as a REIT, it 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. 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

-11-


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 dividends distributed to shareholders and would be subject to federal corporate income tax (and any applicable state and local income taxes) on its taxable income at regular corporate income tax 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.
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 Partnership'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 satisfy the distribution requirement, it would cease to qualify as a REIT.
U.S. federal income tax treatment of REITs and investments in REITs may change in a manner that could adversely affect us or shareholders.
Legislative, regulatory or administrative changes could be enacted or promulgated at any time, either prospectively or with retroactive effect, and may adversely affect us and/or shareholders.
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.
Ownership Restriction. Subject to certain exceptions, the General Partner's charter provides that no person or entity may beneficially own, or be deemed to own by virtue of the applicable constructive ownership provisions of the Code, more than 9.8% (in value or by number of shares, whichever is more restrictive) of the General Partner's outstanding common stock or 9.8% in value of its outstanding stock.



-12-


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 adopt a shareholder rights plan without shareholder approval, 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: 
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.

-13-


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.

-14-


Item 2.  Properties
Product Review
As of December 31, 2019, we own interests in 519 primarily industrial properties encompassing 155.3 million net rentable square feet (including 38 unconsolidated joint venture in-service properties with 11.0 million square feet, 21 consolidated properties under development with 8.7 million square feet and one unconsolidated joint venture property under development with 133,000 square feet).
Industrial Properties: We own interests in 516 industrial properties encompassing 155.1 million square feet (99.9% of our total square feet). These properties are primarily logistics facilities with clear ceiling heights of 28 feet or more.
Non-reportable: We own interests in three Non-Reportable buildings totaling 211,000 square feet (0.1% of our total square feet).
See Consolidated Financial Statement Schedule III - Real Estate Properties and Accumulated Depreciation for a detailed listing of the Company’s properties and related encumbrances.
Land: We own, including through ownership interests in unconsolidated joint ventures (with acreage not adjusted for our percentage ownership interest), 1,380 acres of land and control an additional 1,000 acres through purchase options. Approximately 700 acres of the 860 acres of land that we directly own, are intended to be used for the development of industrial properties and can support approximately 10.8 million square feet of industrial developments. All of our approximately 520 acres of land held by unconsolidated joint ventures, are also intended to be used for the development of industrial properties. We directly own approximately 160 acres of land that we do not consider strategic and that will be sold to the extent that market conditions permit us to achieve what we believe to be acceptable sale prices.
Property Descriptions
The following tables represent the geographic highlights of consolidated and unconsolidated joint venture in-service properties in our primary markets.















-15-


Consolidated Properties
 
Square Feet
 
Annual Net
Effective
Rent (1)
 
Annual Net
Effective
Rent per Square Foot (2)
 
Percent of
Annual  Net
Effective
Rent
 
Industrial
 
Non-Reportable
 
Overall
 
Percent of Overall
 
Primary Market
 
 
 
 
 
 
 
 
 
 
 
 
 
Chicago
14,911,460

 

 
14,911,460

 
11.0
%
 
$
65,496,179

 
$
4.44

 
10.0
%
Southern California
10,449,657

 

 
10,449,657

 
7.7
%
 
64,590,310

 
6.30

 
9.8
%
South Florida
8,364,203

 

 
8,364,203

 
6.2
%
 
64,017,309

 
7.72

 
9.7
%
New Jersey
5,733,983

 

 
5,733,983

 
4.2
%
 
50,835,890

 
8.87

 
7.7
%
Atlanta
12,260,856

 

 
12,260,856

 
9.1
%
 
46,034,396

 
4.01

 
7.0
%
Dallas
10,732,386

 

 
10,732,386

 
7.9
%
 
38,442,503

 
3.74

 
5.8
%
Indianapolis
10,401,828

 

 
10,401,828

 
7.7
%
 
34,255,096

 
3.32

 
5.2
%
Houston
6,579,110

 

 
6,579,110

 
4.9
%
 
31,836,803

 
5.12

 
4.8
%
Cincinnati
9,114,047

 
91,843

 
9,205,890

 
6.8
%
 
31,274,829

 
3.74

 
4.8
%
Savannah
6,998,616

 

 
6,998,616

 
5.2
%
 
29,607,648

 
4.23

 
4.5
%
Minneapolis-St. Paul
5,143,303

 

 
5,143,303

 
3.8
%
 
26,375,585

 
5.28

 
4.0
%
Pennsylvania
5,486,824

 

 
5,486,824

 
4.0
%
 
25,048,592

 
5.58

 
3.8
%
St. Louis
5,721,945

 

 
5,721,945

 
4.2
%
 
23,797,667

 
4.16

 
3.6
%
DC-Baltimore
3,100,696

 

 
3,100,696

 
2.3
%
 
21,487,777

 
6.93

 
3.3
%
Central Florida
4,224,815

 

 
4,224,815

 
3.1
%
 
21,417,767

 
5.29

 
3.2
%
Columbus
5,319,877

 

 
5,319,877

 
3.9
%
 
19,535,183

 
3.67

 
3.0
%
Nashville
3,645,368

 

 
3,645,368

 
2.7
%
 
18,370,335

 
5.41

 
2.8
%
Raleigh
2,909,746

 

 
2,909,746

 
2.1
%
 
17,759,281

 
6.12

 
2.7
%
Seattle
1,876,360

 

 
1,876,360

 
1.4
%
 
13,749,070

 
7.33

 
2.1
%
Northern California
2,264,943

 

 
2,264,943

 
1.7
%
 
11,027,895

 
4.87

 
1.7
%
Other (3)

 
119,030

 
119,030

 
0.1
%
 
3,487,188

 
29.30

 
0.5
%
Total
135,240,023

 
210,873

 
135,450,896

 
100.0
%
 
$
658,447,303

 
$
5.03

 
100.0
%
Percent of Overall
99.8
%
 
0.2
%
 
100.0
%
 
 
 
 
 
 
 
 
Annual Net Effective Rent per Square Foot (2)
$
5.00

 
$
24.29

 
$
5.03

 
 
 
 
 
 
 
 

-16-


Unconsolidated Joint Venture Properties
 
Square Feet
 
Annual Net
Effective
Rent (1)
 
Annual Net
Effective
Rent per Square Foot (2)
 
Percent of
Annual  Net
Effective
Rent
 
Industrial
 
Percent of
Overall
 
Primary Market
 
 
 
 
 
 
 
 
 
Dallas
6,047,818

 
55.1
%
 
$
26,504,046

 
$
4.38

 
59.6
%
Indianapolis
4,717,050

 
43.0
%
 
17,045,673

 
3.95

 
38.4
%
Cincinnati
57,886

 
0.5
%
 
398,667

 
6.89

 
0.9
%
Other (3)
152,944

 
1.4
%
 
502,874

 
3.29

 
1.1
%
Total
10,975,698

 
100.0
%
 
$
44,451,260

 
$
4.21

 
100.0
%
Percent of Overall
100.0
%
 
 
 
 
 
 
 
 
Annual Net Effective Rent per Square Foot (2)
$
4.21

 
 
 
 
 
 
 
 
 
 
Occupancy %
 
Consolidated Properties
 
Unconsolidated Properties
 
Industrial
 
Non-Reportable
 
Overall
 
Industrial
 
Overall
Primary Market
 
 
 
 
 
 
 
 
 
Chicago
99.0
%
 

 
99.0
%
 

 

Southern California
98.1
%
 

 
98.1
%
 

 

South Florida
99.2
%
 

 
99.2
%
 

 

New Jersey
100.0
%
 

 
100.0
%
 

 

Atlanta
93.6
%
 

 
93.6
%
 

 

Dallas
95.7
%
 

 
95.7
%
 
100.0
%
 
100.0
%
Indianapolis
99.1
%
 

 
99.1
%
 
91.4
%
 
91.4
%
Houston
94.5
%
 

 
94.5
%
 

 

Cincinnati
91.2
%
 
55.3
%
 
90.8
%
 
100.0
%
 
100.0
%
Savannah
100.0
%
 

 
100.0
%
 

 

Minneapolis-St. Paul
97.1
%
 

 
97.1
%
 

 

Pennsylvania
81.9
%
 

 
81.9
%
 

 

St. Louis
100.0
%
 

 
100.0
%
 

 

DC-Baltimore
100.0
%
 

 
100.0
%
 

 

Central Florida
95.9
%
 

 
95.9
%
 

 

Columbus
100.0
%
 

 
100.0
%
 

 

Nashville
93.1
%
 

 
93.1
%
 

 

Raleigh
99.7
%
 

 
99.7
%
 

 

Seattle
100.0
%
 

 
100.0
%
 

 

Northern California
100.0
%
 

 
100.0
%
 

 

Other (3)

 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
Total
96.7
%
 
80.5
%
 
96.6
%
 
96.3
%
 
96.3
%
 
(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, 2019, excluding amounts paid by tenants as reimbursement for operating expenses. Unconsolidated 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.

-17-


Item 3.  Legal Proceedings
We are not subject to any pending legal proceedings, other than routine litigation arising in the ordinary course of business. We do 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.

-18-


PART II
Item 5.  Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information and Holders
     
The General Partner's common stock is listed for trading on the NYSE under the symbol "DRE." There is no established trading market for the Partnership's Common Units. As of February 20, 2020, there were 4,872 record holders of the General Partner's common stock and 83 record holders of the Partnership's Common Units. 

Stock Performance Graph
       
The following line graph compares the change in the General Partner's cumulative total shareholders' return on shares of its common stock to the cumulative total return of the Standard and Poor's 500 Stock Index ("S&P 500") and the FTSE NAREIT Equity REITs Index ("NAREIT Index") from December 31, 2014 to December 31, 2019. The graph assumes an initial investment of $100 in the common stock of the General Partner and each of the indices on December 31, 2014, and the reinvestment of all dividends. The performance graph is not necessarily indicative of future performance.

fiveyeartotalret19.jpg

This graph and the accompanying text are not “soliciting material,” are not deemed filed with the SEC and are not to be incorporated by reference in any filing by the company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Tax Characterization of Dividends
A summary of the tax characterization of the dividends paid per common share of the General Partner for the years ended December 31, 2019, 2018 and 2017 follows:
 
 
2019
 
2018
 
2017
Dividends paid per share
$
0.88

 
$
0.815

 
$
0.77

Dividends paid per share - special

 

 
0.85

Total Dividends paid per share
$
0.88

 
$
0.815

 
$
1.62

Ordinary income
80.7
%
 
78.4
%
 
23.7
%
Capital gains
19.3
%
 
21.6
%
 
76.3
%
 
100.0
%
 
100.0
%
 
100.0
%

-19-


Sales of Unregistered Securities
The General Partner did not sell any of its securities during the year ended December 31, 2019 that were not registered under the Securities Act.
Issuer Purchases of Equity Securities
From time to time, we may repurchase our securities under a repurchase program that initially was approved by the General Partner's board of directors and publicly announced in October 2001 (the "Repurchase Program").

During 2019 we did not repurchase any equity securities under the Repurchase Program.
On January 29, 2020 the General Partner's board of directors adopted a resolution that amended and restated the Repurchase Program and delegated authority to management to repurchase a maximum of $300.0 million of the General Partner's common shares, $750.0 million of the Partnership's debt securities and $500.0 million of the General Partner's preferred shares, subject to the prior notification of the Chairperson of the finance committee of the board of directors of planned repurchases within these limits.

-20-


Item 6. Selected Financial Data
The following table sets forth selected financial and operating information on a historical basis for each of the years in the five-year period ended December 31, 2019. 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 data):
 
2019
 
2018
 
2017
 
2016
 
2015
Results of Operations:
 
 
 
 
 
 
 
 
 
General Partner and Partnership
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
Rental and related revenue from continuing operations
$
855,833

 
$
785,319

 
$
686,514

 
$
641,701

 
$
658,809

General contractor and service fee revenue
117,926

 
162,551

 
94,420

 
88,810

 
133,367

Total revenues from continuing operations
$
973,759

 
$
947,870

 
$
780,934

 
$
730,511

 
$
792,176

Income from continuing operations
$
432,199

 
$
383,368

 
$
290,592

 
$
298,421

 
$
188,248

 
 
 
 
 
 
 
 
 
 
General Partner
 
 
 
 
 
 
 
 
 
Net income attributable to common shareholders
$
428,972

 
$
383,729

 
$
1,634,431

 
$
312,143

 
$
615,310

 
 
 
 
 
 
 
 
 
 
Partnership
 
 
 
 
 
 
 
 
 
Net income attributable to common unitholders
$
432,650

 
$
387,257

 
$
1,649,607

 
$
315,232

 
$
621,714

 
 
 
 
 
 
 
 
 
 
General Partner
 
 
 
 
 
 
 
 
 
Per Share Data:
 
 
 
 
 
 
 
 
 
Basic income per common share:
 
 
 
 
 
 
 
 
 
Continuing operations
$
1.18

 
$
1.06

 
$
0.80

 
$
0.84

 
$
0.53

Discontinued operations

 
0.01

 
3.78

 
0.05

 
1.24

Diluted income per common share:
 
 
 
 
 
 
 
 
 
Continuing operations
1.18

 
1.06

 
0.80

 
0.84

 
0.53

Discontinued operations

 
0.01

 
3.76

 
0.04

 
1.24

Distributions paid per common share
$
0.88

 
$
0.815

 
$
0.77

 
$
0.73

 
$
0.69

Distributions paid per common share - special
$

 
$

 
$
0.85

 
$

 
$
0.20

Weighted average common shares outstanding
362,234

 
357,569

 
355,762

 
349,942

 
345,057

Weighted average common shares and potential dilutive securities
367,339

 
363,297

 
362,011

 
357,076

 
352,197

Balance Sheet Data (at December 31):
 
 
 
 
 
 
 
 
 
Total Assets
$
8,420,562

 
$
7,804,024

 
$
7,388,196

 
$
6,772,002

 
$
6,895,515

Total Debt
2,914,765

 
2,658,501

 
2,422,891

 
2,908,477

 
3,320,141

Total Shareholders' Equity
5,018,115

 
4,658,201

 
4,532,844

 
3,465,818

 
3,181,932

Total Common Shares Outstanding
367,950

 
358,851

 
356,361

 
354,756

 
345,285

Other Data:
 
 
 
 
 
 
 
 
 
Funds from Operations attributable to common shareholders (1)
$
510,480

 
$
484,003

 
$
447,001

 
$
416,370

 
$
307,331

 
 
 
 
 
 
 
 
 
 
Partnership
 
 
 
 
 
 
 
 
 
Per Unit Data:
 
 
 
 
 
 
 
 
 
Basic income per Common Unit:
 
 
 
 
 
 
 
 
 
Continuing operations
$
1.18

 
$
1.06

 
$
0.80

 
$
0.84

 
$
0.53

Discontinued operations

 
0.01

 
3.78

 
0.05

 
1.24

Diluted income per Common Unit:
 
 
 
 
 
 
 
 
 
Continuing operations
1.18

 
1.06

 
0.80

 
0.84

 
0.53

Discontinued operations

 
0.01

 
3.76

 
0.04

 
1.24

Distributions paid per Common Unit
$
0.88

 
$
0.815

 
$
0.77

 
$
0.73

 
$
0.69

Distributions paid per Common Unit - special
$

 
$

 
$
0.85

 
$

 
$
0.20

Weighted average Common Units outstanding
365,352

 
360,859

 
359,065

 
353,423

 
348,639

Weighted average Common Units and potential dilutive securities
367,339

 
363,297

 
362,011

 
357,076

 
352,197

Balance Sheet Data (at December 31):
 
 
 
 
 
 
 
 
 
Total Assets
$
8,420,562

 
$
7,804,024

 
$
7,388,196

 
$
6,772,002

 
$
6,895,515

Total Debt
2,914,765

 
2,658,501

 
2,422,891

 
2,908,477

 
3,320,141

Total Partners' Equity
5,075,690

 
4,708,786

 
4,573,407

 
3,490,509

 
3,201,964

Total Common Units Outstanding
370,979

 
361,771

 
359,644

 
358,164

 
348,772

Other Data:
 
 
 
 
 
 
 
 
 
Funds from Operations attributable to common unitholders (1)
$
514,860

 
$
488,454

 
$
451,154

 
$
420,496

 
$
310,538


(1) Funds from operations ("FFO") is a non-GAAP measure used in the real estate industry and is computed in accordance with standards established by the National Association of Real Estate Investment Trusts ("NAREIT").  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 NAREIT FFO, which management believes is a useful indicator of consolidated operating performance. NAREIT FFO is also used by industry analysts and investors as a supplemental operating performance measure of a REIT.


-21-


NAREIT FFO is calculated as net income (loss) in accordance with GAAP excluding depreciation and amortization related to real estate, gains and losses on sales of real estate assets (including real estate assets incidental to our business) and related taxes, gains and losses from change in control, impairment charges related to real estate assets (including real estate assets incidental to our business) and similar adjustments for unconsolidated partnerships and joint ventures.

The most comparable GAAP measure is net income (loss) attributable to common shareholders or common unitholders. NAREIT 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. 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 NAREIT 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 NAREIT 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 a reconciliation of NAREIT FFO to net income attributable to common shareholders under "Year in Review" under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations." NAREIT-defined reconciling items between net income and NAREIT FFO totaled $104,227 and $(307,979) for the General Partner, and $105,264 and $(311,176) for the Partnership, in 2016 and 2015, respectively.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Business Overview
The General Partner and Partnership collectively specialize in the ownership, management and development of industrial real estate.
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.
At December 31, 2019, we: 
Owned or jointly controlled 519 primarily industrial properties, of which 497 properties with 146.4 million square feet were in service and 22 properties with 8.9 million square feet were under development. The 497 in-service properties were comprised of 459 consolidated properties with 135.5 million square feet and 38 unconsolidated joint venture properties with 11.0 million square feet. The 22 properties under development consisted of 21 consolidated properties with 8.7 million square feet and one unconsolidated joint venture property with 133,000 square feet.
Owned directly, or through ownership interests in unconsolidated joint ventures (with acreage not adjusted for our percentage ownership interest), approximately 1,380 acres of land and controlled approximately 1,000 acres through purchase options.
Our overall strategy is to continue to increase our investment in quality industrial properties primarily through development, on both a speculative and build-to-suit basis, supplemented with acquisitions in higher barrier markets with the highest growth potential.
Operational Strategy
Our operational focus is to drive profitability by maximizing cash from operations as well as NAREIT FFO through (i) maintaining property occupancy and increasing rental rates, while also keeping lease-related capital costs contained, by effectively managing our portfolio of existing properties; (ii) selectively developing new build-to-suit, substantially pre-leased and, in select markets, speculative development projects; and (iii) providing a full line of real estate services to our tenants and to third parties.

-22-


Asset Strategy
Our strategic objectives include (i) increasing our investment in quality industrial properties through development; (ii) acquiring properties primarily in coastal Tier 1 markets which we believe provide the best potential for future rental growth; and (iii) maintaining an optimal land inventory through selected strategic land acquisitions and new development activity. We are continuing to execute our asset strategy through a disciplined approach by identifying development opportunities, identifying select acquisition targets where the asset quality and pricing meet our objectives and 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 our current investment grade ratings from our credit rating agencies. As of December 31, 2019, our senior unsecured notes have been assigned a rating of Baa1 by Moody's Investors Services and BBB+ by Standard & Poor's Ratings Group and we are focused on maintaining such ratings in order to maintain access to liquidity. A securities rating is not a recommendation to buy, sell, or hold securities and is subject to revision or withdrawal at any time by the rating organization.
In support of our capital strategy, we employ an asset disposition program to sell non-strategic real estate assets, which generate proceeds that can be recycled into new property investments that better fit our growth objectives or otherwise manage our capital structure.
We continue to focus on 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; and (iii) issuing common equity as needed to maintain appropriate leverage parameters or support significant strategic developments or acquisitions. With our successes to date and continued focus on maintaining a strong balance sheet, we expect to be in a very strong position to be opportunistic in our investment opportunities.
Environmental, Social and Governance ("ESG") Strategy
We are focused on promoting our growth in a sustainable way, one that succeeds by delivering long-term value for our stakeholders. As part of our vision to continually set the standard for maximizing stakeholder value, we have a long-standing commitment to sustainable practices in environmental, social and corporate governance initiatives. On December 17, 2019, we adopted a Sustainable Development Policy intended to increase the operational efficiency of our buildings and promote sustainable design principles. We are committed to integrating innovative, sustainable building design features in alignment with U.S. Green Building Council’s® Leadership in Energy and Environmental Design (or LEED®), including constructing to LEED® criteria and achieving certification in all new developments where feasible. While we do not control most of the utility usage at our properties, we have been partnering with a third party data management provider since 2018 in order to help monitor and manage the utility usage that we do control. In 2018, we also became a member of GRESB, a leading provider of real estate ESG benchmarking and performance assessments. In 2019, as evidence of our commitment and continued progress, we increased our GRESB score significantly, and we expect to continue participating in the GRESB benchmarking assessments.

In October 2018, the Sustainability Accounting Standards Board issued the Real Estate Sustainability Accounting Standard. The standards are intended to provide a minimum set of sustainability metrics for disclosure in SEC filings, such as this Form 10-K. We understand the importance of reporting comparable, consistent and financially material sustainability metrics. Below is a chart showing our information for the applicable metrics.


-23-


Topic
Accounting Metric
Code
Our Information
Energy Management
Description of how building energy management considerations are integrated into property investment analysis and operational strategy

IF-RE-130a.5
We integrate energy usage reduction measures on all new developments, incorporating LEED certification requirements and applicable aspects of our own sustainability policies/programs. These measures include energy modeling, high efficiency equipment (HVAC and lighting), and climate zone appropriate design factors. We have an ongoing lighting retrofit program, replacing outdated light fixtures with LED high efficiency fixtures.

Water Management
Description of water management risks and discussion of strategies and practices to mitigate those risks




IF-RE-140a.4
We integrate water reduction measures on all new developments and renovation, incorporating LEED certification or applicable aspects of our own sustainability policies/programs. These measures include the use of WaterSense® fixtures for all domestic usage, xeriscaping to minimize or eliminate the need for irrigation, and water usage monitoring, where available and appropriate.  

Climate Change Adaptation
Area of properties located in 100-year flood zones, by property subsector
IF-RE-450a.1
7.0 million square feet.

In November 2019, we issued $400.0 million of senior unsecured notes with a stated interest rate of 2.88%, which mature in November 2029. These notes represent the first green bond issuance in the United States by an industrial REIT. The net proceeds will be used to finance future or refinance recently completed “Eligible Green Projects”. These projects may include green buildings, energy efficiency projects, sustainable water and wastewater management systems, renewable energy projects, clean transportation solutions and pollution prevention and control.
                                                                                                                         
In addition to our environmental initiatives, we are committed to fair compensation, fostering a dynamic and balanced work environment and providing employees with developmental opportunities to perform well and derive satisfaction from their work. Among other community service opportunities, we hold an annual day of service during which all employees are encouraged to volunteer in their local communities. We also have charitable contribution programs, such as our dollars for doers program (matching dollars for volunteer hours spent) and our matching gifts program (matching dollars for employee donations to charities). We maintain a formal and structured diversity and inclusion program and have increased diversity within our board of directors, which is now 31% female. Through all of these initiatives and others, we endeavor to make a positive impact on the communities in which we conduct business.

We strive to maintain an effective corporate governance structure and comply with applicable laws, rules, regulations and policies. Further, we have a public Corporate Responsibility Policy that formally communicates our commitments and leadership around ESG issues. Please see “Item 1-Corporate Governance” for more information regarding our governance initiatives.

-24-



Through all of our environmental, social and governance efforts, we demonstrate that operating and developing commercial real estate can be conducted with a conscious regard for the environment and community, while also benefiting our investors, employees, tenants and the communities in which we operate.

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, 2019, is as follows (in thousands, except number of properties and per share or per Common Unit data):

 
2019
 
2018
 
2017
Rental and related revenue from continuing operations
$
855,833

 
$
785,319

 
$
686,514

General contractor and service fee revenue
117,926

 
162,551

 
94,420

Operating income
524,761

 
460,356

 
388,621

General Partner
 
 
 
 
 
Net income attributable to common shareholders
$
428,972

 
$
383,729

 
$
1,634,431

Weighted average common shares outstanding
362,234

 
357,569

 
355,762

Weighted average common shares and potential dilutive securities
367,339

 
363,297

 
362,011

Partnership
 
 
 
 
 
Net income attributable to common unitholders
$
432,650

 
$
387,257

 
$
1,649,607

Weighted average Common Units outstanding
365,352

 
360,859

 
359,065

Weighted average Common Units and potential dilutive securities
367,339

 
363,297

 
362,011

General Partner and Partnership
 
 
 
 
 
Basic income per common share or Common Unit:
 
 
 
 
 
Continuing operations
$
1.18

 
$
1.06

 
$
0.80

Discontinued operations
$

 
$
0.01

 
$
3.78

Diluted income per common share or Common Unit:
 
 
 
 
 
Continuing operations
$
1.18

 
$
1.06

 
$
0.80

Discontinued operations
$

 
$
0.01

 
$
3.76

Number of in-service consolidated properties at end of year
459

 
462

 
451

In-service consolidated square footage at end of year
135,451

 
133,047

 
128,396

Number of in-service unconsolidated joint venture properties at end of year
38

 
39

 
42

In-service unconsolidated joint venture square footage at end of year
10,976

 
11,101

 
11,183


-25-


Year in Review
Overall, the economy performed well, with estimated growth in the United States gross domestic product of 2.3% for 2019. There continued to be positive momentum in some key areas, such as labor and consumer spending, but the overall economic environment was also negatively impacted by trade war concerns, gulf tensions and geopolitical matters. Short term and long term interest rates trended down for most of 2019 with the 10 year Treasury rate fluctuating from 1.5% to 2.8% and ending the year at 1.9%, down from 2.7% at the end of 2018. The continued growth of e-commerce and supply chain modernization has continued to be a significant positive factor for the industrial real estate sector, especially in high demand and land-constrained markets, while the issues facing some traditional retail operators have not significantly impacted our business. Under these conditions we were able to execute our asset and capital strategies for the year and had a successful 2019.
Net income attributable to the common shareholders of the General Partner for the year ended December 31, 2019, was $429.0 million, compared to net income of $383.7 million for the year ended December 31, 2018. Net income attributable to the common unitholders of the Partnership for the year ended December 31, 2019, was $432.7 million, compared to net income of $387.3 million for the year ended December 31, 2018. The increase in net income in 2019 for the General Partner and the Partnership, when compared to 2018, was primarily the result of new industrial properties being placed in service, improved operational performance in our existing industrial portfolio and gains on property sales, which were partially offset by the impact of the accounting requirement in 2019 to immediately expense certain internal direct lease costs that were previously capitalizable.
NAREIT FFO attributable to common shareholders of the General Partner totaled $510.5 million for the year ended December 31, 2019, compared to $484.0 million for 2018. NAREIT FFO attributable to common unitholders of the Partnership totaled $514.9 million for the year ended December 31, 2019, compared to $488.5 million for 2018. The increase to NAREIT FFO from 2018 for the General Partner and the Partnership was driven by the same factors that led to the increased net income attributable to common shareholders in 2019 with the exception of gains on property sales.
The following table shows a reconciliation of net income attributable to common shareholders or common unitholders to the calculation of NAREIT FFO attributable to common shareholders or common unitholders for the years ended December 31, 2019, 2018 and 2017, respectively (in thousands):
 
2019
 
2018
 
2017
Net income attributable to common shareholders of the General Partner
$
428,972

 
$
383,729

 
$
1,634,431

Add back: Net income attributable to noncontrolling interests - common limited partnership interests in the Partnership
3,678

 
3,528

 
15,176

Net income attributable to common unitholders of the Partnership
432,650

 
387,257

 
1,649,607

Adjustments:
 
 
 
 
 
Depreciation and amortization
327,223

 
312,217

 
299,472

Company share of unconsolidated joint venture depreciation and amortization
10,083

 
9,146

 
9,674

Partnership share of gains on property sales
(235,098
)
 
(208,780
)
 
(1,466,599
)
Gains on land sales
(7,445
)
 
(10,334
)
 
(9,244
)
Income tax expense triggered by sales of real estate assets
8,686

 
8,828

 
17,660

Impairment charges

 

 
4,481

Gains on sales of real estate assets—share of unconsolidated joint ventures
(21,239
)
 
(12,094
)
 
(53,897
)
        Impairment charges - unconsolidated joint venture

 
2,214

 

NAREIT FFO attributable to common unitholders of the Partnership
$
514,860

 
$
488,454

 
$
451,154

Additional General Partner Adjustments:
 
 
 
 
 
Net income attributable to noncontrolling interests - common limited partnership interests in the Partnership
(3,678
)
 
(3,528
)
 
(15,176
)
        Noncontrolling interest share of adjustments
(702
)
 
(923
)
 
11,023

NAREIT FFO attributable to common shareholders of the General Partner
$
510,480

 
$
484,003

 
$
447,001

See Item 6. "Selected Financial Data" for additional information regarding the NAREIT FFO definition.

-26-



In accordance with our strategic plan, we continue to increase our investment in high-quality industrial properties, with build-to-suit developments across all of our markets and most of our speculative development focused in the markets we believe have the best long-term growth potential. Additionally, we continued to maintain high occupancy levels through 2019 and quickly lease a significant portion of our speculative development projects. Highlights of our 2019 strategic and operational activities are as follows: 
We generated $432.7 million of total net cash proceeds from the disposition of 28 consolidated buildings and 110 acres of wholly owned undeveloped land.
We acquired six industrial properties during the year ended December 31, 2019 totaling $217.1 million.
We started new development projects with expected total costs of $1.09 billion, which included $8.2 million of expected total costs for a development project started within one unconsolidated joint venture. The development projects started in 2019 were, in aggregate, 54.6% leased at December 31, 2019.
We placed 19 newly completed wholly owned development projects in service, which totaled 7.3 million square feet with total costs of $578.4 million. These properties were 79.3% leased at December 31, 2019.
The total estimated cost of our properties under construction at December 31, 2019, with costs for unconsolidated properties shown at 100%, totaled $1.06 billion, with $541.1 million of such costs already incurred. The total estimated cost for one unconsolidated joint venture property under construction at December 31, 2019 was $8.2 million, with $5.2 million of such costs already incurred. The consolidated properties under construction were 55.1% pre-leased, while the unconsolidated joint venture property under construction was 100% pre-leased.
Income from continuing operations before income taxes was $440.9 million and $392.2 million for the twelve months ended December 31, 2019 and 2018, respectively.
Same-property net operating income, on a cash basis, as defined hereafter under "Supplemental Performance Measures", increased by 4.7% for the twelve months ended December 31, 2019, as compared to the same period in 2018.
As the result of leasing up space in speculative developments throughout 2019, the percentage of total square feet leased for our in-service portfolio of consolidated properties increased from 96.4% at December 31, 2018 to 96.6% at December 31, 2019.
Total leasing activity for our consolidated properties totaled 24.3 million square feet in 2019 compared to 24.1 million square feet in 2018. The mix in leasing activity between renewals and the leasing of new developments was generally consistent with 2018.
Total leasing activity for our consolidated properties in 2019 included 10.9 million square feet of lease renewals, which represented a 79.1% retention rate on a square foot basis. New second generation and renewal leases, on a combined basis, executed for consolidated properties during the year resulted in a 27.3% increase to net effective rents ("net effective rents" is defined hereafter in the "Key Performance Indicators" section) when compared to the previous leases of the same space.
We utilized the capital generated from dispositions during the year to reduce debt and to fund our development activities. Highlights of our key financing activities are as follows:

During 2019, the General Partner issued 8.0 million common shares pursuant to its at the market ("ATM") equity programs, generating gross proceeds of $266.3 million and, after deducting commissions and other costs, net proceeds of $263.3 million.
In November 2019, we issued $400.0 million of senior unsecured notes, which bear interest at a stated interest rate of 2.88% and mature on November 15, 2029. In connection with this offering, we settled the outstanding forward starting interest rate swaps, which were designated hedges for this offering, for a cash

-27-


payment of $35.6 million. When including the impact of interest rate swap amortization from accumulated other comprehensive loss ("AOCL"), the effective interest rate on these notes was 3.96%.

In October 2019, we redeemed $250.0 million of senior unsecured notes, which had a scheduled maturity date of February 2021 and bore a stated interest rate of 3.88% and an effective rate of 3.91%. We recognized a loss on debt extinguishment of $6.3 million, which included a prepayment premium and the write-off of unamortized deferred financing costs.

In August 2019, we issued $175.0 million of senior unsecured notes that bear interest at a stated interest rate of 3.38%, have an effective interest rate of 2.80%, and mature on December 15, 2027.

During 2019, we repaid three fixed rate secured loans, totaling $41.7 million, which had a weighted average stated interest rate of 7.76%.
Supplemental Performance Measures

In addition to NAREIT FFO we use (i) Property Level Net Operating Income - Cash Basis ("PNOI") and (ii) Same-Property Net Operating Income - Cash Basis ("SPNOI") as supplemental non-GAAP performance measures. Management believes that the use of PNOI and SPNOI 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. The most comparable GAAP measure to PNOI and SPNOI is income from continuing operations before income taxes.

PNOI and SPNOI each exclude expenses that materially impact our overall results of operations and, therefore, should not be considered as a substitute for income from continuing operations before income taxes, or any other measures derived in accordance with GAAP. Furthermore, these metrics may not be comparable to other similarly titled measures of other companies.

Property Level Net Operating Income - Cash Basis
PNOI is comprised of rental revenues from continuing operations less rental expenses and real estate taxes from continuing operations, along with certain other adjusting items. As a performance metric that consists of only the cash-based revenues and expenses directly related to ongoing real estate rental operations, PNOI is narrower in scope than NAREIT FFO.
PNOI, as we calculate it, may not be directly comparable to similarly titled, but differently calculated, measures for other REITs. We believe that PNOI is another useful supplemental performance measure, as it is an input in many REIT valuation models and it provides a means by which to evaluate the performance of the properties within our Rental Operations segments. The operations of our industrial properties, as well as our non-reportable Rental Operations (our residual non-industrial properties that have not yet been sold, referred to throughout as "Non-Reportable"), are collectively referred to as "Rental Operations."
The major factors influencing PNOI are occupancy levels, acquisitions and sales, development properties that achieve stabilized operations, rental rate increases or decreases, and the recoverability of operating expenses.
Note 9 to the consolidated financial statements included in Part IV, Item 15 of this Report shows a calculation of our PNOI for the years ended December 31, 2019, 2018 and 2017 and provides a reconciliation of PNOI for our Rental Operations segments to income from continuing operations before income taxes.
Same-Property Net Operating Income - Cash Basis
We also evaluate the performance of our properties, including our share of properties we jointly control, on a "same-property" basis, using a metric referred to as SPNOI. We view SPNOI as a useful supplemental performance measure because it improves comparability between periods by eliminating the effects of changes in the composition of our portfolio.

-28-


On an individual property basis, SPNOI is generally computed in a consistent manner as PNOI.
Effective January 1, 2018, we define our "same-property" population once a year at the beginning of the current calendar year and include buildings that were stabilized (the term "stabilized" means properties that have reached 90% leased or that have been in-service for at least one year since development completion or acquisition) as of January 1 of the prior calendar year. The "same-property" pool is also adjusted to remove properties that were sold subsequent to the beginning of the current calendar year. As such, the "same-property" population for the period ended December 31, 2019 includes all properties that we owned or jointly controlled at January 1, 2019, which had both been owned or jointly controlled and had reached stabilization by January 1, 2018, and have not been sold.

A reconciliation of income from continuing operations before income taxes to SPNOI is presented as follows (in thousands, except percentage data):
 
 
Three Months Ended December 31,
Percent
 
Twelve Months Ended December 31,
Percent
 
 
2019
 
2018
Change
 
2019
 
2018
Change
Income from continuing operations before income taxes
 
$
89,664

 
$
63,124

 
 
$
440,885

 
$
392,196


  Share of SPNOI from unconsolidated joint ventures
 
4,368

 
4,171

 
 
17,066

 
16,186

 
  PNOI excluded from the "same-property" population
 
(29,160
)
 
(15,812
)
 
 
(98,562
)
 
(49,543
)
 
  Earnings from Service Operations
 
(937
)
 
(3,482
)
 
 
(6,360
)
 
(8,642
)
 
  Rental Operations revenues and expenses excluded from PNOI
 
(9,111
)
 
(14,538
)
 
 
(46,516
)
 
(60,683
)
 
  Non-Segment Items
 
77,337

 
94,011

 
 
215,218

 
209,032

 
SPNOI
 
$
132,161

 
$
127,474

3.7
%
 
$
521,731

 
$
498,546

4.7
%
The composition of the line items titled "Rental Operations revenues and expenses excluded from PNOI" and "Non-Segment Items" from the table above are shown in greater detail in Note 9 to the consolidated financial statements included in Part IV, Item 15 of this Report.

We believe that the factors that impact SPNOI are generally the same as those that impact PNOI. The following table details the number of properties, square feet, average commencement occupancy and average cash rental rate for the properties included in SPNOI for the respective periods:
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2019
 
2018
 
2019
 
2018
Number of properties
 
422
 
422
 
422
 
422
Square feet (in thousands) (1)
 
114,640
 
114,640
 
114,640
 
114,640
Average commencement occupancy percentage (2)
 
98.2%
 
98.6%
 
98.5%
 
98.3%
Average rental rate - cash basis (3)
 
$4.62
 
$4.49
 
$4.57
 
$4.43
(1) Includes the total square feet of the consolidated properties that are in the "same-property" population as well as 4.5 million square feet of space for unconsolidated joint ventures, which represents our ratable share of the 9.1 million total square feet of space for buildings owned by unconsolidated joint ventures that are in the "same-property" population.
(2) Commencement occupancy represents the percentage of total square feet where the leases have commenced.
(3) Represents the average annualized contractual rent per square foot for the three and twelve months ended December 31, 2019 and 2018 for tenants in occupancy in properties in the "same-property" population. Cash rent does not include the tenant's obligation to pay property operating expenses and real estate taxes. If a tenant was within a free rent period, its rent would equal zero for purposes of this metric.

-29-


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 to be critical drivers of future revenues.
Occupancy Analysis
Our ability to maintain high occupancy rates is a principal driver of maintaining and increasing rental revenue. The following table sets forth percent leased and average net effective rent information regarding our in-service portfolio of rental properties at December 31, 2019 and 2018, respectively:
 
Total Square Feet
(in thousands)
 
Percent of
Total Square Feet
 
Percent Leased*
 
Average Annual Net Effective Rent**
Type
2019
 
2018
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Industrial
135,240

 
132,836

 
99.8
%
 
99.8
%
 
96.7
%
 
96.4
%
 
$5.00
 
$4.72
Non-Reportable Rental Operations
211

 
211

 
0.2
%
 
0.2
%
 
80.5
%
 
80.8
%
 
$24.29
 
$24.20
Total Consolidated
135,451

 
133,047

 
100.0
%
 
100.0
%
 
96.6
%
 
96.4
%
 
$5.03
 
$4.74
Unconsolidated Joint Ventures
10,976

 
11,101

 
 
 
 
 
96.3
%
 
94.7
%
 
$4.21
 
$4.09
Total Including Unconsolidated Joint Ventures
146,427

 
144,148

 
 
 
 
 
96.6
%
 
96.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Represents the percentage of total square feet leased based on executed leases and without regard to whether the leases have commenced.
** Average annual net effective rent 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.
The increase in occupancy at December 31, 2019 within our industrial portfolio, when compared to December 31, 2018, primarily resulted from leasing up recently delivered speculative developments while renewing or backfilling existing leases to maintain the occupancy level within our existing base of properties.
Vacancy Activity
The following table sets forth vacancy activity, shown in square feet, from our in-service rental properties for the year ended December 31, 2019 (in thousands):
 
Consolidated Properties
 
Unconsolidated Joint Venture Properties
 
Total Including Unconsolidated Joint Venture Properties
Vacant square feet at December 31, 2018
4,847

 
591

 
5,438

  Acquisitions
162

 

 
162

  Vacant space in completed developments
2,783

 
645

 
3,428

  Dispositions
(573
)
 
(249
)
 
(822
)
  Expirations
4,969

 
419

 
5,388

  Early lease terminations
835

 
24

 
859

  Property structural changes/other
(220
)
 

 
(220
)
  Leasing of previously vacant space
(8,263
)
 
(1,024
)
 
(9,287
)
Vacant square feet at December 31, 2019
4,540

 
406

 
4,946

 

-30-


Total Leasing Activity

The initial leasing of development projects or vacant space in acquired properties is referred to as first generation lease activity. Our ability to maintain and improve occupancy rates and net effective rents primarily depends upon our continuing ability to re-lease expiring space. The leasing of such space that we have previously held under lease to a tenant is referred to as second generation lease activity. Second generation lease activity may be in the form of renewals of existing leases or new second generation leases of previously leased space. The total leasing activity for our consolidated and unconsolidated rental properties, expressed in square feet of leases signed, is as follows for the years ended December 31, 2019 and 2018 (in thousands):
 
2019
 
2018
New Leasing Activity - First Generation Industrial
9,779

 
7,902

New Leasing Activity - Second Generation Industrial
3,639

 
4,925

Renewal Leasing Activity - Industrial
10,916

 
11,267

Non-Reportable Rental Operations Leasing Activity
13

 
5

Total Consolidated Leasing Activity
24,347

 
24,099

Unconsolidated Joint Venture Leasing Activity
1,874

 
3,949

Total Including Unconsolidated Joint Venture Leasing Activity
26,221

 
28,048

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 second generation industrial leases signed for our rental properties, during the years ended December 31, 2019 and 2018:
 
Square Feet of Leases
(in thousands)
 
Percent of Expiring Leases Renewed
 
Average Term in Years
 
Estimated Tenant Improvement Cost per Square Foot
 
Leasing Costs per Square Foot
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Consolidated - New Second Generation
3,639

 
4,925

 


 


 
7.2

 
6.6

 
$
3.45

 
$
1.91

 
$
3.76

 
$
1.97

Unconsolidated Joint Ventures - New Second Generation
233

 
329

 


 


 
6.7

 
7.3

 
$
1.28

 
$
1.94

 
$
2.44

 
$
2.41

Total - New Second Generation
3,872

 
5,254

 


 


 
7.2

 
6.6

 
$
3.36

 
$
1.91

 
$
3.69

 
$
2.00

Consolidated - Renewal
10,916

 
11,267

 
79.1
%
 
81.7
%
 
5.1

 
5.4

 
$
0.75

 
$
0.62

 
$
1.41

 
$
1.27

Unconsolidated Joint Ventures - Renewal
828

 
660

 
66.4
%
 
71.5
%
 
5.2

 
5.2

 
$
0.68

 
$
0.39

 
$
1.91

 
$
1.57

Total - Renewal
11,744

 
11,927

 
78.1
%
 
81.1
%
 
5.1

 
5.3

 
$
0.75

 
$
0.61

 
$
1.45

 
$
1.29

Growth in average annual net effective rents for new second generation and renewal leases, on a combined basis, for our consolidated and unconsolidated rental properties, is as follows for the years ended December 31, 2019 and 2018:
 
2019
 
2018
Ownership Type
 
 
 
Consolidated properties
27.3
%
 
24.2
%
Unconsolidated joint venture properties
37.9
%
 
33.4
%

-31-


Lease Expirations
The table below reflects our consolidated in-service portfolio lease expiration schedule, at December 31, 2019 (in thousands, except percentage data and number of leases):
 
Total Consolidated Portfolio
 
Industrial
 
Non-Reportable
Year of
Expiration
Square
Feet
 
Annual Rental
Revenue*
 
Number of Leases
 
Square
Feet
 
Annual Rental
Revenue*
 
Square
Feet
 
Annual Rental
Revenue*
2020
7,167

 
$
34,374

 
107

 
7,165

 
$
34,351

 
2

 
$
23

2021
12,419

 
58,114

 
141

 
12,419

 
58,114

 

 

2022
19,046

 
81,178

 
150

 
19,029

 
80,986

 
17

 
192

2023
13,182

 
66,008

 
139

 
13,162

 
65,731

 
20

 
277

2024
15,065

 
76,264

 
139

 
15,060

 
76,202

 
5

 
62

2025
12,899

 
64,826

 
96

 
12,897

 
64,801

 
2

 
25

2026
9,608

 
44,608

 
48

 
9,608

 
44,608

 

 

2027
7,390

 
34,103

 
29

 
7,385

 
34,046

 
5

 
57

2028
7,951

 
52,354

 
29

 
7,832

 
48,867

 
119

 
3,487

2029
8,434

 
45,475

 
27

 
8,434

 
45,475

 

 

2030 and Thereafter
17,751

 
101,142

 
48

 
17,751

 
101,142

 

 

Total Leased
130,912

 
$
658,446

 
953

 
130,742

 
$
654,323

 
170

 
$
4,123

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Portfolio Square Feet
135,451

 
 
 
 
 
135,240

 
 
 
211

 
 
Percent Leased
96.6
%
 
 
 
 
 
96.7
%
 
 
 
80.5
%
 
 
* 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.
Building Acquisitions
Our decision process in determining whether or not to acquire a property or portfolio of properties involves several factors, including expected rent growth, multiple yield metrics, property locations and expected demographic growth in each location, current occupancy of the properties, tenant profile and remaining terms of the in-place leases in the properties. We pursue both brokered and non-brokered acquisitions, and it is difficult to predict which markets may present acquisition opportunities that align with our strategy. Because of the numerous factors considered in our acquisition decisions, we do not establish specific target yields for future acquisitions.
We acquired six buildings during the year ended December 31, 2019 and nine buildings during the year ended December 31, 2018. 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):
 
2019 Acquisitions
 
2018 Acquisitions
Type
Acquisition Price*
 
In-Place Yield**
 
Percent Leased at Acquisition Date***
 
Acquisition Price*
 
In-Place Yield**
 
Percent Leased at Acquisition Date***
Industrial
$
217,106

 
4.1
%
 
88.4
%
 
$
352,617

 
4.2
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
* Includes fair value of real estate assets and net acquired lease-related intangible assets, including above or below market leases, 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.


-32-


Building Dispositions

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 consolidated buildings during the year ended December 31, 2019 and 15 consolidated buildings during the year ended December 31, 2018. The following table summarizes the sales prices, in-place yields and percent leased, by product type, of these buildings (in thousands, except percentage data):
 
2019 Dispositions
 
2018 Dispositions
 
Type
Sales Price
 
In-Place Yield*
 
Percent Leased**
 
Sales Price
 
In-Place Yield*
 
Percent Leased**
 
Industrial
$
425,767

 
5.6
%
 
91.4
%
 
$
384,137

 
5.8
%
 
97.3
%
 
Non-Reportable Rental Operations

 
%
 
%
 
121,077

 
4.2
%
 
80.1
%
 
Total
$
425,767

 
5.6
%
 
91.4
%
 
$
505,214

 
5.4
%
 
95.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* In-place yields of completed dispositions are calculated as annualized net operating income from space leased to tenants at the date of sale on a lease-up basis, including full rent from all executed leases, even if currently in a free rent period, divided by the sales price. Annualized net operating income is comprised of base rental payments, excluding reimbursement of 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.
Development
Another source of our earnings growth is our consolidated and unconsolidated joint venture development activities. We expect to generate future earnings from Rental Operations as the development properties are placed in service and leased.
We had 8.9 million square feet of property under development with total estimated costs upon completion of $1.06 billion at December 31, 2019 compared to 9.5 million square feet with total estimated costs upon completion of $814.1 million at December 31, 2018. The square footage and estimated costs include both consolidated properties and unconsolidated joint venture development activity at 100%. The following table summarizes our properties under development at December 31, 2019 (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
8,724

 
55
%
 
$
1,046,935

 
$
535,863

 
$
511,072

Unconsolidated joint venture properties
133

 
100
%
 
8,181

 
5,235

 
2,946

Total
8,857

 
56
%
 
$
1,055,116

 
$
541,098

 
$
514,018










   

-33-


Comparison of Year Ended December 31, 2019 to Year Ended December 31, 2018
Rental and Related Revenue

The following table sets forth rental and related revenue from continuing and discontinued operations (in thousands):
 
 
2019
 
2018
Rental and related revenue:
 
 
 
Industrial
$
848,806

 
$
775,713

Non-Reportable Rental Operations and non-segment revenues
7,027

 
9,606

Total rental and related revenue from continuing operations
$
855,833

 
$
785,319

Rental and related revenue from discontinued operations

 
117

Total rental and related revenue from continuing and discontinued operations
$
855,833

 
$
785,436

The primary reasons for the increase in rental and related revenue from continuing operations were:
We acquired 15 properties and placed 37 developments in service from January 1, 2018 to December 31, 2019, which provided incremental revenues from continuing operations of $65.8 million in the year ended December 31, 2019 when compared to 2018.
Increased rental rates and, to a lesser extent, occupancy within our "same-property" portfolio, as well as the lease up of properties that were placed in service prior to January 1, 2018 but were not in the "same-property" portfolio, also contributed to the increase to rental and related revenue from continuing operations. Average rental rates and commencement occupancy in our "same-property" portfolio both increased from the year ended December 31, 2018.
The sale of 43 in-service properties since January 1, 2018, which did not meet the criteria to be classified within discontinued operations, resulted in a decrease of $21.3 million to rental and related revenue from continuing operations in the year ended December 31, 2019, as compared to 2018, which partially offset the aforementioned increases to rental and related revenue from continuing operations.
Rental Expenses and Real Estate Taxes
The following table sets forth rental expenses and real estate taxes from continuing and discontinued operations (in thousands): 
 
2019
 
2018
Rental expenses:
 
 
 
Industrial
$
74,083

 
$
67,259

Non-Reportable Rental Operations and non-segment expenses
1,501

 
4,177

Total rental expenses from continuing operations
$
75,584

 
$
71,436

Rental expenses from discontinued operations

 
(8
)
Total rental expenses from continuing and discontinued operations
$
75,584

 
$
71,428

Real estate taxes:
 
 
 
Industrial
$
128,887

 
$
122,788

Non-Reportable Rental Operations and non-segment expenses
633

 
2,481

Total real estate tax expense from continuing operations
$
129,520

 
$
125,269

Real estate tax expense from discontinued operations

 
17

Total real estate tax expense from continuing and discontinued operations
$
129,520

 
$
125,286


-34-



Overall, rental expenses from continuing operations increased by $4.1 million in 2019 compared to 2018. The increase to rental expenses was primarily the result of acquisitions and developments placed in service from January 1, 2018 to December 31, 2019, partially offset by the impact of property sales that did not meet the criteria to be classified within discontinued operations.

Overall, real estate tax expense from continuing operations increased by $4.3 million in 2019 compared to 2018. The increase to real estate taxes was mainly the result of acquisitions and developments placed in service from January 1, 2018 to December 31, 2019 and increased real estate taxes levied by the related taxing authority. The increases were partially offset by the impact of an accounting requirement that became effective in 2019, which no longer allows reporting revenues and expenses for real estate taxes paid by tenants directly to taxing authorities, as well as the impact of property sales that did not meet the criteria to be classified within discontinued operations.
Service Operations
The following table sets forth the components of net earnings from the Service Operations reportable segment for the years ended December 31, 2019 and 2018, respectively (in thousands): 
 
2019
 
2018
Service Operations:
 
 
 
General contractor and service fee revenue
$
117,926

 
$
162,551

General contractor and other services expenses
(111,566
)
 
(153,909
)
Net earnings from Service Operations
$
6,360

 
$
8,642


Service Operations primarily consist of the leasing, property management, asset management, development, construction management and general contractor services for unconsolidated 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.

Net earnings from service operations decreased as the result of lower third party general contractor construction volume during 2019.
Depreciation and Amortization
Depreciation and amortization expense from continuing operations was $327.2 million and $312.2 million for the years ended December 31, 2019 and 2018, respectively. The increase in depreciation and amortization expense for the year ended December 31, 2019 was primarily the result of continued growth in our portfolio through development and acquisition.
Equity in Earnings of Unconsolidated Joint Ventures
Equity in earnings of unconsolidated joint ventures represents our ownership share of net income from investments in unconsolidated joint ventures that generally own and operate rental properties. Equity in earnings of unconsolidated joint ventures was $31.4 million and $21.4 million for the years ended December 31, 2019 and 2018, respectively.
In 2019, we recorded equity in earnings of $19.4 million related to our share of the gain on sale of five unconsolidated joint venture buildings and equity in earnings of $1.3 million representing our share of gains on involuntary conversion from insurance recoveries related to storm damage in one unconsolidated joint venture.
In 2018, we recorded equity in earnings of $12.1 million related to our share of the gain on sale of six unconsolidated joint venture buildings, as well as the gain on sale of our ownership interest in one unconsolidated joint venture and equity in earnings of $3.9 million representing our share of gains on involuntary conversion from insurance recoveries related to storm damage in one unconsolidated joint venture, partially offset by a $2.2 million impairment charge for one unconsolidated joint venture.

-35-


Gain on Sale of Properties - Continuing Operations
We sold 28 properties during 2019 that were classified in continuing operations, recognizing total gains on sale of $234.7 million. These properties did not meet the criteria to be classified within discontinued operations.
We sold 15 properties during 2018 that were classified in continuing operations, recognizing total gains on sale of $205.0 million. These properties did not meet the criteria to be classified within discontinued operations.
Gain on Sale of Land
Gain on sale of land was $7.4 million and $10.3 million for the years ended December 31, 2019 and 2018, respectively. We sold 110 acres of undeveloped land in 2019 compared to 187 acres of undeveloped land in 2018.
Non-Incremental Costs Related to Successful Leases
As the result of adoption of the new lease standard on January 1, 2019 (see Note 2 to the consolidated financial statements included in Part IV, Item 15 of this Report), $12.4 million of non-incremental costs related to successful leases were expensed during 2019. As we have adopted the standard on a prospective basis, there was no adjustment to non-incremental costs previously capitalized for 2018.
General and Administrative Expenses
General and administrative expenses consist of two components. The first component includes general corporate expenses, and the second component represents the indirect operating costs not allocated to, or absorbed by, either the development, leasing and operation of our consolidated properties or our Service Operations. Such indirect operating costs 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 were $60.9 million and $56.2 million for the years ended December 31, 2019 and 2018, respectively. The following table sets forth the factors that led to the increase in general and administrative expenses from 2018 to 2019 (in millions):
General and administrative expenses - 2018
$
56.2

Decrease to overall pool of overhead costs
(3.3
)
Decreased absorption of costs by consolidated leasing and development activities (1)
5.4

Decreased allocation of costs to Rental Operations and Service Operations
2.6

General and administrative expenses - 2019
$
60.9

(1) We capitalized $6.8 million and $24.2 million of our total overhead costs to leasing and development, respectively, for consolidated properties during 2019, compared to capitalizing $19.0 million and $29.8 million of such costs, respectively, for 2018. Combined overhead costs capitalized to leasing and development totaled 22.8% and 35.1% of our overall pool of overhead costs for 2019 and 2018, respectively. The decrease in overhead costs capitalized to leasing was primarily due to $12.4 million of previously capitalizable internal costs that were immediately expensed due to the adoption of a new lease accounting requirement in 2019 (see Note 2 to the consolidated financial statements included in Part IV, Item 15 of this Report) and presented separately in the line item "Non-incremental costs related to successful leases" on the Consolidated Statements of Operations.

-36-


Interest Expense
Interest expense allocable to continuing operations was $89.8 million and $85.0 million for the years ended December 31, 2019 and 2018, respectively. The increase in interest expense from continuing operations for the year ended December 31, 2019 was largely the result of increased overall borrowings, partially offset by lower average interest rates.
We capitalized $26.5 million and $27.2 million of interest costs during 2019 and 2018, respectively.
Debt Extinguishment
During 2019, we redeemed $250.0 million of unsecured notes, which had a stated interest rate of 3.88%. We recognized a loss on debt extinguishment of $6.3 million, which included a prepayment premium and the write-off of unamortized deferred financing costs.
During 2018, we repaid three secured loans, totaling $227.1 million, which had a weighted average stated interest rate of 7.62%. We also repaid $7.0 million of unsecured debt, which had a stated interest rate of 6.26%. We recognized a total loss on debt extinguishment of $388,000 from these transactions including a prepayment premium and the write-off of unamortized deferred financing costs.
Comparison of Year Ended December 31, 2018 to Year Ended December 31, 2017
Rental and Related Revenue

The following table sets forth rental and related revenue from continuing and discontinued operations (in thousands):
 
2018
 
2017
Rental and related revenue:
 
 
 
Industrial
$
775,713

 
$
661,226

Non-Reportable Rental Operations and non-segment revenues
9,606

 
25,288

Total rental and related revenue from continuing operations
$
785,319

 
$
686,514

Rental and related revenue from discontinued operations
117

 
87,185

Total rental and related revenue from continuing and discontinued operations
$
785,436

 
$
773,699

The primary reasons for the increase in rental and related revenue from continuing operations were:
The acquisition of 36 properties and placing of 41 developments in service from January 1, 2017 to December 31, 2018 provided combined incremental revenues of $106.4 million in the year ended December 31, 2018 when compared to 2017.
Increased occupancy and rental rates within our "same-property" portfolio also contributed to the increase to rental and related revenue from continuing operations. Average commencement occupancy and rental rates in our "same-property" portfolio both increased, as compared to 2017.
Expense reimbursements increased primarily due to increased real estate taxes in our existing properties, as compared to 2017.
The above items contributing to the increase to rental and related revenue from continuing operations were partially offset by the sale of 28 in-service properties since January 1, 2017, which did not meet the criteria to be classified within discontinued operations, and resulted in a $35.7 million decrease in rental and related revenue from continuing operations in the year ended December 31, 2018 when compared to 2017.

Rental and related revenue from discontinued operations for the year ended December 31, 2018 decreased compared to 2017 as the result of the properties classified within discontinued operations being sold throughout 2017.


-37-


Rental Expenses and Real Estate Taxes
The following table sets forth rental expenses and real estate taxes from continuing and discontinued operations (in thousands): 
 
2018
 
2017
Rental expenses:
 
 
 
Industrial
$
67,259

 
$
58,186

Non-Reportable Rental Operations and non-segment expenses
4,177

 
4,738

Total rental expenses from continuing operations
$
71,436

 
$
62,924

Rental expenses from discontinued operations
(8
)
 
18,233

Total rental expenses from continuing and discontinued operations
$
71,428

 
$
81,157

Real estate taxes:
 
 
 
Industrial
$
122,788

 
$
105,068

Non-Reportable Rental Operations and non-segment expenses
2,481

 
3,896

Total real estate tax expense from continuing operations
$
125,269

 
$
108,964

Real estate tax expense from discontinued operations
17

 
9,869

Total real estate tax expense from continuing and discontinued operations
$
125,286

 
$
118,833


Overall, rental expenses from continuing operations increased by $8.5 million in 2018 compared to 2017. The increase to rental expenses was primarily the result of acquisitions and developments placed in service from January 1, 2017 to December 31, 2018, partially offset by the impact of property sales that did not meet the criteria to be classified within discontinued operations.

Real estate tax expense from continuing operations increased by $16.3 million in 2018 compared to 2017. The increase to real estate taxes was mainly the result of acquisitions and developments placed in services from January 1, 2017 to December 31, 2018 and an increase in real estate taxes on our existing base of properties. These increases to real estate tax expense were partially offset by the impact of property sales that did not meet the criteria to be classified within discontinued operations.

The decreases in both rental expenses and real estate tax expense from discontinued operations were a result of the properties classified within discontinued operations being sold throughout 2017.
Service Operations
The following table sets forth the components of net earnings from the Service Operations reportable segment for the years ended December 31, 2018 and 2017, respectively (in thousands): 
 
2018
 
2017
Service Operations:
 
 
 
General contractor and service fee revenue
$
162,551

 
$
94,420

General contractor and other services expenses
(153,909
)
 
(89,457
)
Net earnings from Service Operations
$
8,642

 
$
4,963


Net earnings from service operations increased as the result of a higher volume of third party construction projects during 2018.


-38-


Depreciation and Amortization

Depreciation and amortization expense from continuing operations was $312.2 million and $273.6 million for the years ended December 31, 2018 and 2017, respectively. The increase in depreciation and amortization was primarily the result of properties acquired and the developments placed in service from January 1, 2017 to December 31, 2018. The impact of acquired properties and developments placed in service was partially offset by property dispositions that did not meet the criteria to be classified within discontinued operations.

Equity in Earnings of Unconsolidated Joint Ventures
Equity in earnings of unconsolidated joint ventures was $21.4 million and $63.3 million for the years ended December 31, 2018 and 2017, respectively.
In 2018, we recorded equity in earnings of $12.1 million related to our share of the gain on sale of six unconsolidated joint venture buildings, as well as the gain on sale of our ownership interest in one unconsolidated joint venture and equity in earnings of $3.9 million representing our share of gains on involuntary conversion from insurance recoveries related to storm damage in one unconsolidated joint venture, partially offset by a $2.2 million impairment charge for one unconsolidated joint venture.
In 2017, we recorded $53.9 million to equity in earnings of unconsolidated joint ventures as the result of the gains on sale of our ownership interests in four unconsolidated joint ventures, as well as our share of the gain on the sale of one property from an unconsolidated joint venture. These transactions included $47.5 million in gains from the sale of our ownership interests in two joint ventures in connection with the sale of our medical office portfolio (the "Medical Office Portfolio Disposition").
Promote Income
We recognized $20.0 million of promote income from the sale of our interest in one of our unconsolidated joint ventures, as part of the Medical Office Portfolio Disposition, during the year ended December 31, 2017. We did not recognize any promote income during the year ended December 31, 2018.
Gain on Sale of Properties - Continuing Operations

We sold 15 properties during 2018 that were classified in continuing operations, recognizing total gains on sale of $205.0 million. These properties did not meet the criteria to be classified within discontinued operations.
We sold 17 properties during 2017 that were classified in continuing operations, recognizing total gains on sale of $113.7 million. These properties did not meet the criteria to be classified within discontinued operations.

Gain on Sale of Land
Gain on sale of land was $10.3 million and $9.2 million for the years ended December 31, 2018 and 2017, respectively. We sold 187 acres of undeveloped land in 2018 compared to 166 acres of undeveloped land in 2017.

-39-


General and Administrative Expenses
General and administrative expenses were $56.2 million and $54.9 million for the years ended December 31, 2018 and 2017, respectively. The following table sets forth the factors that led to the increase in general and administrative expenses from 2017 to 2018 (in millions):
General and administrative expenses - 2017
$
54.9

Decrease to overall pool of overhead costs
(0.8
)
Decreased absorption of costs by wholly owned development and leasing activities (1)
1.8

Decreased allocation of costs to Service Operations and Rental Operations
0.3

General and administrative expenses - 2018
$
56.2


(1) We capitalized $19.0 million and $29.8 million of our total overhead costs to leasing and development, respectively, for consolidated properties during 2018, compared to capitalizing $19.1 million and $31.5 million of such costs, respectively, for 2017. Combined overhead costs capitalized to leasing and development totaled 35.1% and 36.2% of our overall pool of overhead costs for 2018 and 2017, respectively.
Interest Expense
Interest expense allocable to continuing operations was $85.0 million and $87.0 million for the years ended December 31, 2018 and 2017, respectively. The decrease in interest expense from continuing operations was largely the result of higher capitalization of interest due to an overall increase in development activities. We capitalized $27.2 million of interest costs during 2018 compared to $18.9 million during 2017. No interest expense was classified within discontinued operations in 2018.
During 2017, $14.7 million of interest expense was classified within discontinued operations.
Debt Extinguishment
During 2018, we repaid three secured loans, totaling $227.1 million, which had a weighted average stated interest rate of 7.62%. We also repaid $7.0 million of unsecured debt, which had a stated interest rate of 6.26%. We recognized a total loss on debt extinguishment of $388,000 from these transactions including a prepayment premium and the write-off of unamortized deferred financing costs.
During 2017, we repaid our $250.0 million variable rate term loan, which had a scheduled maturity date of January 2019 and bore interest at LIBOR plus 1.00%. We also repaid $285.6 million of senior unsecured notes with a scheduled maturity date of January 2018 and $128.7 million of senior unsecured notes with a scheduled maturity date of March 2020. We recognized a total loss on debt extinguishment of $26.1 million from these transactions during the year ended 2017, which included prepayment premiums and the write-off of unamortized deferred financing costs.
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 gain or loss on the disposition of the properties and related income tax expense.
The Medical Office Portfolio Disposition in 2017 was comprised of 81 medical office properties which were classified as discontinued operations for the year ended December 31, 2017. As a result, we classified operating income before gain on sales and income taxes of $18.4 million and gain on sales of properties of $1.36 billion in discontinued operations for the year ended December 31, 2017. The related income tax impact, totaling $12.5 million for the year ended December 31, 2017, was also reported in discontinued operations. There were no properties classified as held-for-sale and included in discontinued operations at December 31, 2018.
Discontinued operations is further discussed in Note 7 to the consolidated financial statements included in Part IV, Item 15 of this Report.


-40-


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:
Cost Capitalization: Direct and certain indirect costs, including interest, clearly associated with the development, construction 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 capitalize all such costs through the completion of the building shell. 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.
Effective on January 1, 2019, with the adoption of Accounting Standards Codification ("ASC") Topic 842, Leases ("ASC 842"), only costs that are directly incremental to executing a lease 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 and development and leasing) and those for which capitalization is not warranted (i.e., property management, maintenance, acquisitions, dispositions, non-incremental leasing costs 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 construction and development costs that are allocated to a specific project are limited to amounts using standards we developed. These standards are based on a percentage of the total development costs of a project. 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 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

-41-


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 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, estimated market rents and the fair value of the underlying land.
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 lease up periods, related to space that is actually leased at the time of acquisition. These estimates include (i) lost rent at market rates, (ii) fixed operating costs that will be recovered from tenants and (iii) 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.
To the extent that we gain control of real estate properties that are accounted for as asset acquisitions, as opposed to business combinations, we accumulate the costs of pre-existing equity interest and the consideration paid for additional interest acquired and do not remeasure our pre-existing equity interest. Generally contingencies arising from an asset acquisition are only recognized when the contingency is paid or becomes payable.

-42-


To the extent that we gain control of a property acquired that meets the definition of a business, we account for the acquisition in accordance with the guidance for 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.
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 12 months, including payments of dividends and distributions and the capital expenditures needed to maintain our current real estate assets, primarily through working capital and net cash provided by operating activities. We had no outstanding borrowings on the Partnership's $1.20 billion unsecured line of credit, had $110.9 million of cash on hand and held $1.7 million of restricted cash for future like kind exchange transactions at December 31, 2019. At December 31, 2019, we also held $110.0 million of notes receivable from the 2017 Medical Office Portfolio Disposition, which matured and was paid in full in January 2020.
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.
Rental Operations
Cash flows from Rental Operations is our primary source of liquidity and provides a stable source of cash flow to fund operational expenses. We believe that this cash-based revenue stream is substantially aligned with revenue recognition (except for items such as 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.
Unsecured Debt and Equity Securities
Our unsecured line of credit at December 31, 2019 is described as follows (in thousands): 
Description
Borrowing
Capacity
 
Maturity
Date
 
Outstanding Balance at December 31, 2019
Unsecured Line of Credit – Partnership
$
1,200,000

 
January 2022
 
$

The Partnership's unsecured line of credit has a borrowing capacity of $1.20 billion, with an interest rate on borrowings of LIBOR plus 0.875% and a maturity date of January 2022, with options to extend until January 30, 2023. Subject to certain conditions, the terms also include an option to increase the facility by up to an additional $800.0 million, for a total of up to $2.00 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). At December 31, 2019, we were in compliance with all covenants under this line of credit.

-43-


In 2017, the Alternative Reference Rates Committee ("ARRC") proposed that the Secured Overnight Funding Rate ("SOFR") replace LIBOR. ARRC also proposed that the transition to SOFR from LIBOR take place by the end of 2021. As the Partnership's unsecured line of credit agreement has provisions that allow for automatic transition to a new rate, the Partnership has no other material debt arrangements that are indexed to LIBOR, and has settled all outstanding interest rate swaps in November 2019, we believe that the transition will not have a material impact on our consolidated financial statements.
At December 31, 2019, 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 August 1, 2019, the General Partner and the Partnership terminated the equity distribution agreement for the ATM equity program with an aggregate offering price of up to $200.0 million. Prior to the termination, the General Partner issued 1.8 million common shares in 2019 pursuant to its previous ATM equity program, resulting in net proceeds of $56.3 million after paying total compensation of $568,000 to the applicable sales agents. On August 2, 2019, the General Partner and the Partnership entered into a new equity distribution agreement to sell shares of the General Partner’s common stock, $0.01 par value per share, from time to time, up to an aggregate offering price of $400.0 million. Pursuant to the new ATM equity program, the General Partner issued a total of 6.2 million common shares during 2019, resulting in net proceeds of $207.3 million after paying total compensation of $2.1 million to the applicable sales agents. Of the total activity in 2019 under the new ATM program, 1.4 million common shares were issued during the three months ended December 31, 2019, resulting in net proceeds of $47.7 million after paying total compensation of $482,000 to the applicable sales agents. Other fees related to all 2019 issuances, totaling $325,000, were also paid during 2019. The issuances resulted in net proceeds of $263.3 million under both ATM programs during 2019.

In November 2019, we issued $400.0 million of senior unsecured notes that bear interest at a stated interest rate of 2.88%, have an effective interest rate of 3.96% when including the impact of interest rate swap amortization from AOCL, and mature on November 15, 2029, for gross proceeds of $399.9 million.

In August 2019, we issued $175.0 million of senior unsecured notes that bear interest at a stated interest rate of 3.38%, have an effective interest of 2.80%, and mature on December 15, 2027, for gross proceeds of $182.3 million.
The Partnership has issued debt securities pursuant to certain indentures and related supplemental indentures, which also require us to comply with financial ratios and other covenants regarding our operations. We were in compliance with all such covenants, as well as applicable covenants under our unsecured line of credit, at December 31, 2019.
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, potential future adverse changes to general market and economic conditions could negatively impact our further ability to dispose of such properties.
Sales of land and depreciable properties provided $432.7 million in net proceeds in 2019, compared to $511.4 million in 2018 and $2.52 billion in 2017. We also held $110.0 million of notes receivable related to the Medical Office Portfolio Disposition at December 31, 2019, which matured and was paid in full in January 2020.

-44-


Transactions with Unconsolidated Joint Ventures
Transactions with unconsolidated joint ventures also provide a source of liquidity. From time to time we will sell properties to unconsolidated joint ventures, while retaining a continuing interest in that entity, and receive proceeds commensurate to those interests that we do not own. Additionally, unconsolidated joint ventures will from time to time obtain debt financing or sell properties and will then distribute to us, and our joint venture partners, all or a portion of the proceeds from such transactions. During 2019, our share of sale and capital distributions from unconsolidated joint ventures totaled $26.3 million.
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
other contractual obligations.
Property Investment
Our overall strategy is to continue to increase our investment in quality industrial properties, primarily through development, on both a speculative and build-to-suit basis, supplemented with acquisitions in higher barrier markets with the highest growth potential. Pursuant to this strategy, we evaluate development and acquisition opportunities based upon our market outlook, including general economic conditions, supply and long-term growth potential. Our ability to make future property investments is dependent upon identifying suitable acquisition and development opportunities, and 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 lease-related costs pertaining to our initial leasing of newly completed space, or vacant space in acquired properties, are referred to as first generation expenditures. Such first generation expenditures for tenant improvements are included within "development of real estate investments" in our Consolidated Statements of Cash Flows, while such expenditures for capitalizable lease-related costs are included within "other deferred leasing costs."
Cash expenditures related to the construction of a building's shell, as well as the associated site improvements, are also included within "development of real estate investments" in our Consolidated Statements of Cash Flows.
Tenant improvements and leasing costs to renew or re-let rental space that we previously leased to tenants for second generation leases 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 the principal uses of our liquidity is to fund the second generation leasing/capital expenditures of our real estate investments.

-45-


The following table summarizes our second generation capital expenditures by type of expenditure, as well as capital expenditures for the development of real estate investments and for other deferred leasing costs (in thousands):
 
 
2019
 
2018
 
2017
Second generation tenant improvements
$
12,165

 
$
18,797

 
$
15,239

Second generation leasing costs
22,879

 
24,899

 
22,712

Building improvements
12,505

 
9,778

 
14,603

Total second generation capital expenditures
$
47,549

 
$
53,474

 
$
52,554

Development of real estate investments
$
446,801

 
$
577,383

 
$
549,563

Other deferred leasing costs
$
38,509

 
$
39,380

 
$
30,208


We had consolidated properties under development with an expected total cost of $1.05 billion at December 31, 2019, compared to projects with an expected cost of $709.7 million and $642.1 million at December 31, 2018 and 2017, respectively.

The capital expenditures in the table above include the capitalization of internal overhead costs. We capitalized $6.8 million, $19.0 million and $19.1 million of overhead costs related to leasing activities, including both first and second generation leases, during the years ended December 31, 2019, 2018 and 2017, respectively. We capitalized $24.2 million, $29.8 million and $31.5 million of overhead costs related to development activities, including both development and tenant improvement projects on first and second generation space, during the years ended December 31, 2019, 2018 and 2017, respectively. Combined overhead costs capitalized to leasing and development totaled 22.8%, 35.1% and 36.2% of our overall pool of overhead costs at December 31, 2019, 2018 and 2017, respectively. The decrease in the overhead costs capitalized to leasing for 2019 was primarily due to the expense impact of internal costs related to successful leasing which were not capitalizable as a result of the adoption of the new lease standard on January 1, 2019 (see Note 2 to the consolidated financial statements included in Part IV, Item 15 of this Report) and was included in the line item "Non-incremental costs related to successful leases" on the Consolidated Statement of Operations and Comprehensive Income for 2019.

Further discussion of the capitalization of overhead costs can be found in the year-to-year comparisons of general and administrative expenses and Critical Accounting Policies sections of this Item 7.

In addition to the capitalization of overhead costs, the totals for development of real estate assets in the table above include the capitalization of $26.5 million, $27.2 million and $18.9 million of interest costs in the years ended December 31, 2019, 2018 and 2017, respectively.
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 and the market in which the property is located.
Dividend and Distribution Requirements
The General Partner is required to meet the distribution requirements of the Code in order to maintain its REIT status. We paid regular dividends or distributions of $0.88, $0.815 and $0.77 per common share or Common Unit for the years ended December 31, 2019, 2018 and 2017, respectively. We also paid a special dividend of $0.85 per common share or Common Unit during the fourth quarter of 2017 as a result of the significant taxable gains on asset sales completed in that year.
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.

-46-


Debt Maturities
Debt outstanding at December 31, 2019 had a face value totaling $2.93 billion with a weighted average interest rate of 3.73% and maturities at various dates through 2029. Of this total amount, we had $2.90 billion of unsecured debt, $34.1 million of secured debt and no outstanding borrowings on our unsecured line of credit at December 31, 2019. Scheduled principal amortization, maturities and early repayments of such debt totaled $325.5 million for the year ended December 31, 2019.
The following table is a summary of the scheduled future amortization and maturities of our indebtedness at December 31, 2019 (in thousands, except percentage data): 
 
Future Repayments
 
 
Year
Scheduled
Amortization
 
Maturities
 
Total
 
Weighted Average
Interest Rate of
Future Repayments
2020
$
3,883

 
$

 
$
3,883

 
5.62%
2021
3,416

 
9,047

 
12,463

 
5.62%
2022
3,611

 
600,000

 
603,611

 
4.20%
2023
3,817

 
250,000

 
253,817

 
3.75%
2024
4,036

 
300,000

 
304,036

 
3.92%
2025
3,938

 

 
3,938

 
5.57%
2026
2,029

 
375,000

 
377,029

 
3.37%
2027
358

 
475,000

 
475,358

 
3.18%
2028

 
500,000

 
500,000

 
4.45%
2029

 
400,000

 
400,000

 
2.88%
Thereafter

 

 

 
N/A
 
$
25,088

 
$
2,909,047

 
$
2,934,135

 
3.73%

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.
Repayments of Outstanding Debt
To the extent that it supports our overall capital strategy, we may purchase or redeem some of our outstanding unsecured notes prior to their stated maturities.
During 2019, we repaid three fixed rate secured loans, totaling $41.7 million, which had a weighted average stated interest rate of 7.76%.
In October 2019, we redeemed $250.0 million of unsecured notes that were scheduled to mature in February 2021.
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.

-47-


Historical Cash Flows
Cash, cash equivalents and restricted cash were $121.4 million, $25.5 million and $193.6 million at December 31, 2019, 2018, and 2017, respectively. The following table highlights significant changes in net cash associated with our operating, investing and financing activities (in thousands): 
 
Years Ended December 31,
 
2019
 
2018
 
2017
General Partner
 
 
 
 
 
Net cash provided by operating activities
$
505,898

 
$
484,407

 
$
450,204

Net cash (used for) provided by investing activities
(555,074
)
 
(594,430
)
 
775,912

Net cash provided by (used for) financing activities
145,090

 
(58,087
)
 
(1,089,526
)

 
 
 
 
 
Partnership
 
 
 
 
 
Net cash provided by operating activities
$
505,898

 
$
484,407

 
$
450,204

Net cash (used for) provided by investing activities
(555,074
)
 
(594,430
)
 
775,912

Net cash provided by (used for) financing activities
145,090

 
(58,087
)
 
(1,089,526
)
      
Operating Activities
Cash flows from operating activities provide the cash necessary to meet our operational requirements and the receipt of rental income from Rental Operations continues to be our primary source of operating cash flows. The increase to net cash provided by operating activities, compared to 2018, was due to the timing of cash receipts and cash payments on third party construction projects as well as increased cash flows from our Rental Operations. These increases in operating cash flows were partially offset by increased cash paid for interest and income taxes as well as the timing of working capital.
The increase to cash flow provided by operating activities between 2017 and 2018 was the result of higher cash flows from rental operations and lower cash paid for interest, partially offset by a $20.0 million promote payment received in connection with the Medical Office Portfolio Disposition during 2017.
Investing Activities
Highlights of significant cash sources and uses are as follows:
Real estate development costs were $446.8 million, $577.4 million, and $549.6 million during 2019, 2018, and 2017, respectively.
We paid cash of $598.4 million, $592.4 million and $1.23 billion, for real estate and undeveloped land acquisitions during 2019, 2018 and 2017, respectively.
Sales of land and property generated net proceeds of $432.7 million, $511.4 million and $2.52 billion during 2019, 2018 and 2017, respectively.
During 2019, we received repayments of $162.6 million on notes receivable from property sales, compared to $154.1 million and $3.7 million in 2018 and 2017, respectively.
Second generation tenant improvements, leasing costs and building improvements totaled $47.5 million, $53.5 million and $52.6 million during 2019, 2018 and 2017, respectively.
We receive capital distributions from unconsolidated joint ventures, either as the result of selling our ownership interests in certain unconsolidated joint ventures or from our share of the proceeds from property sales from unconsolidated joint ventures. In 2019, we received $26.3 million in capital distributions from unconsolidated joint ventures, primarily related to the sale of three properties within three of our unconsolidated joint ventures. We received $23.1 million in capital distributions from unconsolidated joint ventures during 2018, primarily related to the sale of six properties within three of our unconsolidated joint ventures. We received $125.0 million in capital distributions from unconsolidated joint ventures during 2017, primarily related to selling our interests in two unconsolidated joint ventures in connection with the Medical Office Portfolio Disposition.
We made capital contributions and advances to unconsolidated joint ventures in the amounts of $34.5 million, $5.9 million and $10.3 million during 2019, 2018 and 2017, respectively.

-48-


Financing Activities
The following items highlight significant capital transactions:
During 2019, the General Partner issued 8.0 million common shares pursuant to its ATM equity programs for net proceeds of $263.3 million, compared to 990,400 shares of common stock for net proceeds of $28.4 million in 2018. The General Partner did not issue any shares of common stock pursuant to its ATM equity programs during 2017.
We issued $575.0 million, $450.0 million and $300.0 million of senior unsecured notes during 2019, 2018 and 2017, respectively. The 2019 unsecured debt issuances consist of $175.0 million of senior unsecured notes issued in August 2019 for gross proceeds of $182.3 million and $400.0 million of senior unsecured notes issued in November 2019 with a corresponding cash payment of $35.6 million for termination of the five forward starting interest rate swaps entered in 2018 and 2019.
During 2019, the Partnership paid cash of $255.8 million for the early redemption of $250.0 million of senior unsecured notes that were scheduled to mature in February 2021. During 2018, the Partnership repaid $7.0 million of unsecured debt. In 2017, the Partnership paid cash of $689.6 million to execute the repayment of a $250.0 million variable rate term loan, which was prepayable without penalty, and the early redemption of $414.3 million of senior unsecured notes.
During 2019, the Partnership repaid three secured loans for $41.7 million compared to repayments of three secured loans for $227.1 million in 2018 and eight secured loans for $66.5 million in 2017.
We decreased net borrowings on the Partnership's unsecured line of credit by $30.0 million in 2019, increased net borrowings by $30.0 million in 2018 and decreased net borrowings by $48.0 million in 2017.
We paid regular cash dividends or distributions of $0.88, $0.815 and $0.77 per common share or per Common Unit during the years ended December 31, 2019, 2018 and 2017, respectively.
We paid a special dividend of $0.85 per common share or Common Unit during the fourth quarter of 2017. We did not pay special dividends in 2019 or 2018.
Changes in book cash overdrafts are classified as financing activities within our consolidated Statements of Cash Flows. Book cash overdrafts were $14.4 million, $14.3 million and $36.3 million at December 31, 2019, 2018 and 2017, respectively.
In 2019, we paid off a special assessment bond for $9.9 million, which was reflected within Other Financing Activities on our Consolidated Statements of Cash Flows. We did not make similar significant repayments during 2018 or 2017.

Impact of Changes in Credit Ratings on Our Liquidity

We are currently assigned investment grade corporate credit ratings on our senior unsecured notes from Moody's Investors Service and Standard & Poor's Ratings Group. Our senior unsecured notes have been assigned a rating of Baa1 by Moody's Investors Service, upgraded in 2016 from Baa2. In addition, our senior unsecured notes have been assigned a rating of BBB+ by Standard & Poor's Ratings Group, upgraded in 2016 from BBB. A securities rating is not a recommendation to buy, sell, or hold securities and is subject to revision or withdrawal at any time by the rating organization.

The ratings of our senior unsecured notes could change based upon, among other things, the impact that prevailing economic conditions may have on our results of operations and financial condition. 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.

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.


-49-


Off-Balance Sheet Arrangements
Investments in Unconsolidated Joint Ventures
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 operation and development of industrial real estate properties. These investments provide us with increased market share and tenant and property diversification. The equity method of accounting 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 joint ventures represented approximately 2% and 1% of our total assets at December 31, 2019 and December 31, 2018, 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 joint ventures for the years ended December 31, 2019 and 2018, respectively (in thousands, except percentage data):
 
2019
 
2018
Land, buildings and tenant improvements, net
$
305,888

 
$
328,959

Construction in progress
7,747

 
43,892

Undeveloped land
29,518

 
28,247

Other assets
75,909

 
88,448

 
$
419,062

 
$
489,546

Indebtedness
$
129,700

 
$
209,584

Other liabilities
24,208

 
38,172

 
153,908

 
247,756

Owners' equity
265,154

 
241,790

 
$
419,062

 
$
489,546

Rental revenue
$
59,905


$
60,446

Gain on sale of properties
$
24,099


$
25,879

Net income
$
40,134


$
44,372

Total square feet
11,109

 
13,002

Percent leased*
96.30
%
 
90.49
%
 *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 joint ventures or financial partnerships that have been established solely for the purpose of facilitating off-balance sheet arrangements.

Contractual Obligations

At December 31, 2019, we were subject to certain contractual payment obligations as described in the following table:
 
Payments due by Period (in thousands)
Contractual Obligations
Total
 
2020
 
2021
 
2022
 
2023
 
2024
 
Thereafter
Long-term debt (1)
$
3,612,027

 
$
113,599

 
$
120,036

 
$
704,381

 
$
331,658

 
$
377,123

 
$
1,965,230

Unsecured line of credit (2)
5,630

 
1,830

 
1,825

 
1,825

 
150

 

 

Share of unconsolidated joint ventures' debt (3)
73,431

 
1,997

 
29,680

 
1,345

 
1,345

 
1,345

 
37,719

Operating leases (4)
125,550

 
10,463

 
5,282

 
5,033

 
4,760

 
4,220

 
95,792

Development and construction backlog costs (5)
455,631

 
450,846

 
4,785

 

 

 

 

Total Contractual Obligations
$
4,272,269

 
$
578,735

 
$
161,608

 
$
712,584

 
$
337,913

 
$
382,688

 
$
2,098,741

  
(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 rate at December 31, 2019.

-50-


(2)
Represents fees on our unsecured line of credit, which has a contractual maturity date in January 2022, with two six-month extension options, which we may exercise at our discretion.
(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, 2019.
(4)
Due to a new accounting standard effective January 1, 2019, as a lessee we are required to record both a right-of-use asset and lease liability for our ground and office space leases that we expect to approximate the present value of our future minimum lease payments at December 31, 2019. See Note 2 to the Consolidated Financial Statements for additional information.
(5)
Represents estimated remaining costs on the completion of owned development projects and third-party construction projects.
   
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 and may enter into derivative financial instruments such as interest rate swaps in order to mitigate our interest rate risk on a related financial instrument. We do not enter into derivative or interest rate transactions for speculative purposes.
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 and fair values (in thousands).
 
2020
 
2021
 
2022
 
2023
 
2024
 
Thereafter
 
Total
 
Fair Value
Long-Term Debt:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed rate secured debt
$
3,583

 
$
12,163

 
$
3,311

 
$
3,517

 
$
3,736

 
$
5,925

 
$
32,235

 
$
34,547

Weighted average interest rate
5.98
%
 
5.73
%
 
6.06
%
 
6.06
%
 
6.06
%
 
6.08
%
 
5.93
%
 
 
Variable rate secured debt
$
300

 
$
300

 
$
300

 
$
300

 
$
300

 
$
400

 
$
1,900

 
$
1,900

Weighted average interest rate
1.39
%
 
1.39
%
 
1.39
%
 
1.39
%
 
1.39
%
 
1.39
%
 
1.39
%
 
 
Fixed rate unsecured debt
$

 
$

 
$
600,000

 
$
250,000

 
$
300,000

 
$
1,750,000

 
$
2,900,000

 
$
3,045,485

Weighted average interest rate
N/A

 
N/A

 
4.20
%
 
3.72
%
 
3.90
%
 
3.51
%
 
3.71
%
 
 
As the above table incorporates only those exposures that existed at December 31, 2019, 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, to the extent we have outstanding borrowings, will be affected by fluctuations in the LIBOR indices or applicable replacement rates 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, 2019, the face value of our unsecured debt was $2.90 billion and we estimated the fair value of that unsecured debt to be $3.05 billion.  At December 31, 2018, the face value of our unsecured debt was $2.58 billion and we estimated the fair value of that unsecured debt to be $2.55 billion. 

Item 8.  Financial Statements and Supplementary Data
The financial statements and supplementary data are included under Item 15 of this Report and are incorporated herein by reference.
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.

-51-


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 independent 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 control over financial reporting during the quarter ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In August 2019, the General Partner completed implementation of the first phase of a new enterprise resource planning (ERP) system, which is designed to replace certain internal financial and operating systems. In connection with the ERP implementation, in August 2019, we updated the processes and controls that comprise our internal control over financial reporting, as necessary, to accommodate related changes to our accounting procedures and business processes.
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 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

-52-


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.
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 independent 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 control over financial reporting during the quarter ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
In August 2019, the Partnership completed implementation of the first phase of a new enterprise resource planning (ERP) system, which is designed to replace certain internal financial and operating systems. In connection with the ERP implementation, in August 2019, we updated the processes and controls that comprise our internal control over financial reporting, as necessary, to accommodate related changes to our accounting procedures and business processes.

Item 9B.  Other Information
There was no information required to be disclosed in a report on Form 8-K during the fourth quarter of 2019 for which no Form 8-K was filed.
Our discussion of federal income tax considerations in Exhibit 99.1 attached hereto, which is incorporated herein by reference, supersedes and replaces, in its entirety, (i) the disclosure under the heading “Federal Income Tax Considerations” in the prospectus dated July 25, 2019, which is a part of our Registration Statement on Form S-3 (File No. 333-232816), as amended or supplemented, (ii) the disclosure under the heading “Federal Income Tax Considerations” in the prospectus dated April 30, 2018, which is a part of our Registration Statement on Form S-3 (File No. 333-224538), as amended or supplemented, and (iii) similarly titled sections in the prospectuses contained in our other Registration Statements on Form S-3 (File Nos. 333-128132, 333-108556, 333-70678, 333-59138, 333-51344, 333-39498, 333-35008, 333-85009, 333-82063, 333-66919, 333-50081, 333-26833, 333-24289, and 033-64659), as amended or supplemented. Our updated discussion addresses recent tax law changes.
PART III
Item 10.  Directors, Executive Officers and Corporate Governance
The following is a summary of the executive officers of the General Partner:
James B. Connor, age 61.  Mr. Connor was named the General Partner's Chairman and Chief Executive Officer, commencing April 26, 2017, and joined the General Partner's Board of Directors in 2015. Prior to being named Chairman and Chief Executive Officer, Mr. Connor held various senior management positions with the General Partner, including President and Chief Executive Officer from January 1, 2016 to April 25, 2017, Senior Executive Vice President and Chief Operating Officer of the General Partner from 2013 to 2015, Senior Regional Executive Vice President of the General Partner from 2011 to 2013, Executive Vice President of the General Partner Midwest region from 2003 to 2011, and Senior Vice President between 1998 and 2003. 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. In 2019, Mr. Connor joined the Board of Trustees of EPR Properties, a publicly traded REIT. Mr. Connor also serves on the Board of Trustees of Roosevelt University and is a member of the Advisory Board of Directors of the Marshall Bennett Institute of Real Estate at Roosevelt

-53-


University. In addition, Mr. Connor is a member of the Executive Board of Governors of NAREIT and a member of The Real Estate Round Table. Mr. Connor also serves as a director of the Central Indiana Corporate Partnership.
Mark A. Denien, age 52. Mr. Denien was appointed Executive Vice President and Chief Financial Officer of the General Partner on May 17, 2013. Prior to being named Executive Vice President and Chief Financial Officer, Mr. Denien was Senior Vice President and Chief Accounting Officer of the General Partner from 2009 to 2013, and prior to that, served as Senior Vice President, Corporate Controller with the General Partner. Prior to joining the General Partner in 2005, Mr. Denien spent 16 years with KPMG LLP. Mr. Denien serves as a director of Goodwill Industries of Central Indiana, Inc.
Steven W. Schnur, age 46. Mr. Schnur has served as Executive Vice President and Chief Operating Officer of the General Partner since September 2019. Prior to being named Executive Vice President and Chief Operating Officer, Mr. Schnur served as Senior Regional Executive Vice President of the General Partner from May 2017 until September 2019; Executive Vice President, Central Region from January 2015 until May 2017; Senior Regional, Senior Vice President from August 2014 until January 2015; Senior Vice President, Midwest Region from December 2013 until August 2014; and Senior Vice President, Chicago from October 2004 until December 2013. Mr. Schnur began his career with the General Partner as a Vice President, Leasing in September 2003. Prior to that, Mr. Schnur was Director of Real Estate for Opus North Corporation.
Nicholas C. Anthony, age 54. Mr. Anthony was appointed Executive Vice President and Chief Investment Officer on June 17, 2013. His responsibilities include overseeing the General Partner's acquisition and disposition activity, as well as the overall management of its joint venture business. Prior to being named Executive Vice President and Chief Investment Officer, Mr. Anthony held various senior management positions with the General Partner including Senior Vice President, Capital Transactions and Joint Ventures from 2010 until 2013. Mr. Anthony began his career with the General Partner in 1989 as a staff accountant.
Ann C. Dee, age 60. Ms. Dee was appointed Executive Vice President, General Counsel and Corporate Secretary on June 17, 2013. Prior to being named Executive Vice President, General Counsel and Corporate Secretary, Ms. Dee held the position of Senior Vice President, General Counsel and Corporate Secretary from January 1, 2013 until June 17, 2013 and the position of Deputy General Counsel and Senior Vice President from June 23, 2008 until January 1, 2013. Ms. Dee joined the General Partner in 1996 as a Corporate Attorney. Prior to joining the General Partner, Ms. Dee practiced law with law firms in Indianapolis, Indiana and Columbus, Ohio. Ms. Dee serves as a member of the Board of the Indiana Repertory Theatre and the Indianapolis Chamber Orchestra.
Peter D. Harrington, age 56. Mr. Harrington was named the General Partner's Executive Vice President, Construction on July 1, 2016. Prior to being named Executive Vice President, Construction, Mr. Harrington held various senior management positions with the General Partner including Senior Vice President, Construction from 2003 to June 30, 2016; Vice President of Construction from 1998 until 2003; and Manager of Preconstruction Services from 1993 to 1998. Prior to joining the General Partner in 1993, Mr. Harrington was employed with Miller-Valentine Group in Dayton, Ohio from 1987 through 1993 as a Project Coordinator and Project Manager. Mr. Harrington serves as a board member for the Indiana council for Economics Education, an academic outreach center within the Department of Agricultural Economics at Purdue University.
All other information required by this item will be included in the General Partner's 2020 proxy statement (the "2020 Proxy Statement") for the General Partner's Annual Meeting of Shareholders to be held on April 29, 2020, and is incorporated herein by reference. In addition, the General Partner's Code of Business Ethics (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, 8711 River Crossing Boulevard, Indianapolis, Indiana 46240, Attention: Investor Relations.

-54-


Item 11.  Executive Compensation
The information required by Item 11 of this Report will be included in our 2020 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 2020 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 2020 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 2020 Proxy Statement, which information is incorporated herein by this reference.

-55-


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:
 
 
 
Duke Realty Limited Partnership:
 
 
 
Duke Realty Corporation:
 
 
 
 
 
Duke Realty Limited Partnership:
 
 
 
 
 
Duke Realty Corporation and Duke Realty Limited Partnership:
 
 
2.    Consolidated Financial Statement Schedules
Duke Realty Corporation and Duke Realty Limited Partnership:
    Schedule III – Real Estate and Accumulated Depreciation
 3.    Exhibits
The exhibits required to be filed with this Report pursuant to Item 601 of Regulation S-K are listed on pages 123 to 126 of this Report and are incorporated herein by reference. 


-56-


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, 2019 based on the control criteria established in a report entitled Internal Control – Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, we have concluded that, as of December 31, 2019, 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/ James B. Connor
James B. Connor
Chairman and Chief Executive Officer
 
/s/ Mark A. Denien
Mark A. Denien
Executive Vice President and Chief Financial Officer


-57-


Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Duke Realty Corporation:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Duke Realty Corporation and subsidiaries (the "Company") as of December 31, 2019 and 2018, 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, 2019, and the related notes and financial statement schedule III - real estate and accumulated depreciation (collectively, the consolidated financial statements). We also have audited the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, 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 the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. 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.
Definition and Limitations of Internal Control Over Financial Reporting
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.


-58-


Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of real estate assets for potential impairment
As discussed in Notes 2 and 7 to the consolidated financial statements, real estate assets, less accumulated depreciation as of December 31, 2019, was $6,512,916 thousand, or 77.3% of total assets. The Company evaluates its real estate assets for potential impairment whenever changes in circumstances indicate that the value of real estate assets may not be recoverable, and on at least an annual basis.
We identified the evaluation of real estate assets for potential impairment as a critical audit matter. The Company’s assumptions regarding the changes in property operating forecasts, forecasted rental rates and market conditions, involve a high degree of auditor judgment. The key assumptions included occupancy levels, rental rates, capitalization rates and anticipated holding periods when evaluating real estate assets for potential impairment.
The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company’s process to evaluate real estate assets for potential impairment, including controls related to operating forecasts, forecasted rental rates, and certain market conditions. We performed sensitivity analyses over the capitalization rate assumption, based on third-party market data, to assess its impact on the Company’s determination of whether a triggering event had occurred. We compared the Company’s historical property operating forecasts to actual results to assess the Company’s ability to accurately forecast occupancy levels and rental rates. We compared the Company’s historical hold period for similar assets to the holding period assumed in the Company’s analysis. We inquired of Company officials and inspected documents such as meeting minutes of the investment committee to evaluate the likelihood that it was more-likely-than not that a property would be sold before the end of its previously estimated holding period. We performed an independent assessment of changes in property operating metrics and market conditions related to individual real estate assets and compared the results of our assessment to the Company’s analysis.

/s/ KPMG LLP
 
We have served as the Company’s auditor since 1986.

 
Indianapolis, Indiana
February 25, 2020

-59-


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, 2019 based on the control criteria established in a report entitled Internal Control – Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, we have concluded that, as of December 31, 2019, 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/ James B. Connor
James B. Connor
Chairman and Chief Executive Officer
of the General Partner
 
/s/ Mark A. Denien
Mark A. Denien
Executive Vice President and Chief Financial Officer
of the General Partner



-60-


Report of Independent Registered Public Accounting Firm
To the Unitholders of Duke Realty Limited Partnership and the Board of Directors of Duke Realty Corporation:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Duke Realty Limited Partnership and subsidiaries (the "Partnership") as of December 31, 2019 and 2018, 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, 2019, and the related notes and financial statement schedule III - real estate and accumulated depreciation (collectively, the consolidated financial statements). We also have audited the Partnership's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Partnership as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Partnership’s management is responsible for these consolidated financial statements, 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 the Partnership’s consolidated financial statements and an opinion on the Partnership’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. 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.
Definition and Limitations of Internal Control Over Financial Reporting
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.

-61-


Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of real estate assets for potential impairment
As discussed in Notes 2 and 7 to the consolidated financial statements, real estate assets, less accumulated depreciation as of December 31, 2019, was $6,512,916 thousand, or 77.3% of total assets. The Partnership evaluates its real estate assets for potential impairment whenever changes in circumstances indicate that the value of real estate assets may not be recoverable, and on at least an annual basis.
We identified the evaluation of real estate assets for potential impairment as a critical audit matter. The Partnership’s assumptions regarding the changes in property operating forecasts, forecasted rental rates and market conditions, involve a high degree of auditor judgment. The key assumptions included occupancy levels, rental rates, capitalization rates and anticipated holding periods when evaluating real estate assets for potential impairment.
The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Partnership’s process to evaluate real estate assets for potential impairment, including controls related to operating forecasts, forecasted rental rates, and certain market conditions. We performed sensitivity analyses over the capitalization rate assumption, based on third-party market data, to assess its impact on the Partnership’s determination of whether a triggering event had occurred. We compared the Partnership’s historical property operating forecasts to actual results to assess the Partnership’s ability to accurately forecast occupancy levels and rental rates. We compared the Partnership’s historical hold period for similar assets to the holding period assumed in the Partnership’s analysis. We inquired of Partnership officials and inspected documents such as meeting minutes of the investment committee to evaluate the likelihood that it was more-likely-than not that a property would be sold before the end of its previously estimated holding period. We performed an independent assessment of changes in property operating metrics and market conditions related to individual real estate assets and compared the results of our assessment to the Partnership’s analysis.

/s/ KPMG LLP
 
We have served as the Partnership’s auditor since 1994.
 
Indianapolis, Indiana
February 25, 2020

-62-


DUKE REALTY CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31,
(in thousands, except per share amounts)
 
 
2019
 
2018
ASSETS
 
 
 
Real estate investments:
 
 
 
Real estate assets
$
7,993,377

 
$
7,248,346

Construction in progress
550,926

 
477,162

Investments in and advances to unconsolidated joint ventures
133,074

 
110,795

Undeveloped land
254,537

 
360,816

 
8,931,914

 
8,197,119

Accumulated depreciation
(1,480,461
)
 
(1,344,176
)
Net real estate investments
7,451,453

 
6,852,943

 
 
 
 
Real estate investments and other assets held-for-sale
18,463

 
1,082

 
 
 
 
Cash and cash equivalents
110,891

 
17,901

Accounts receivable
20,349

 
14,254

Straight-line rent receivable
129,344

 
109,334

Receivables on construction contracts, including retentions
25,607

 
41,215

Deferred leasing and other costs, net of accumulated amortization of $203,857 and $200,744
320,444

 
313,799

Restricted cash held in escrow for like-kind exchange
1,673

 

Notes receivable from property sales
110,000

 
272,550

Other escrow deposits and other assets
232,338

 
180,946

 
$
8,420,562

 
$
7,804,024

LIABILITIES AND EQUITY
 
 
 
Indebtedness:
 
 
 
Secured debt, net of deferred financing costs of $164 and $238
$
34,023

 
$
79,563

Unsecured debt, net of deferred financing costs of $19,258 and $26,062
2,880,742

 
2,548,938

Unsecured line of credit

 
30,000

 
2,914,765

 
2,658,501

 
 
 
 
Liabilities related to real estate investments held-for-sale
887

 

 
 
 
 
Construction payables and amounts due subcontractors, including retentions
68,840

 
92,288

Accrued real estate taxes
69,042

 
73,358

Accrued interest
14,181

 
16,153

Other liabilities
223,680

 
205,433

Tenant security deposits and prepaid rents
48,907

 
45,048

Total liabilities
3,340,302

 
3,090,781

Shareholders' equity:
 
 
 
Common shares ($0.01 par value); 600,000 shares authorized; 367,950 and 358,851 shares issued and outstanding, respectively
3,680

 
3,589

Additional paid-in capital
5,525,463

 
5,244,375

Accumulated other comprehensive loss
(35,036
)
 
(4,676
)
Distributions in excess of net income
(475,992
)
 
(585,087
)
Total shareholders' equity
5,018,115

 
4,658,201

Noncontrolling interests
62,145

 
55,042

Total equity
5,080,260

 
4,713,243

 
$
8,420,562

 
$
7,804,024

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)
 
2019
 
2018
 
2017
Revenues:
 
 
 
 
 
Rental and related revenue
$
855,833

 
$
785,319

 
$
686,514

General contractor and service fee revenue
117,926

 
162,551

 
94,420

 
973,759

 
947,870

 
780,934

Expenses:
 
 
 
 
 
Rental expenses
75,584

 
71,436

 
62,924

Real estate taxes
129,520

 
125,269

 
108,964

General contractor and other services expenses
111,566

 
153,909

 
89,457

Depreciation and amortization
327,223

 
312,217

 
273,561

 
643,893

 
662,831

 
534,906

Other operating activities:
 
 
 
 
 
Equity in earnings of unconsolidated joint ventures
31,406

 
21,444

 
63,310

Promote income

 

 
20,007

Gain on sale of properties
234,653

 
204,988

 
113,669

Gain on land sales
7,445

 
10,334

 
9,244

Other operating expenses
(5,318
)
 
(5,231
)
 
(4,212
)
Impairment charges

 

 
(4,481
)
Non-incremental costs related to successful leases
(12,402
)
 

 

General and administrative expenses
(60,889
)
 
(56,218
)
 
(54,944
)
 
194,895

 
175,317

 
142,593

Operating income
524,761

 
460,356

 
388,621

Other income (expenses):
 
 
 
 
 
Interest and other income, net
9,941

 
17,234

 
14,721

Interest expense
(89,756
)
 
(85,006
)
 
(87,003
)
Loss on debt extinguishment
(6,320
)
 
(388
)
 
(26,104
)
Gain on involuntary conversion
2,259

 

 

Income from continuing operations before income taxes
440,885

 
392,196

 
290,235

Income tax (expense) benefit
(8,686
)
 
(8,828
)
 
357

Income from continuing operations
432,199

 
383,368

 
290,592

Discontinued operations:
 
 
 
 
 
Income before gain on sales and income taxes

 
108

 
18,436

Gain on sale of properties
445

 
3,792

 
1,357,778

Income tax expense

 

 
(12,465
)
Income from discontinued operations
445

 
3,900

 
1,363,749

Net income
432,644

 
387,268

 
1,654,341

Net income attributable to noncontrolling interests
(3,672
)
 
(3,539
)
 
(19,910
)
Net income attributable to common shareholders
$
428,972

 
$
383,729

 
$
1,634,431

Basic net income per common share:
 
 
 
 
 
Continuing operations attributable to common shareholders
$
1.18

 
$
1.06

 
$
0.80

Discontinued operations attributable to common shareholders

 
0.01

 
3.78

Total
$
1.18

 
$
1.07

 
$
4.58

Diluted net income per common share:
 
 
 
 
 
Continuing operations attributable to common shareholders
$
1.18

 
$
1.06

 
$
0.80

Discontinued operations attributable to common shareholders

 
0.01

 
3.76

Total
$
1.18

 
$
1.07

 
$
4.56

Weighted average number of common shares outstanding
362,234

 
357,569

 
355,762

Weighted average number of common shares and potential dilutive securities
367,339

 
363,297

 
362,011

Comprehensive income:
 
 
 
 
 
Net income
$
432,644

 
$
387,268

 
$
1,654,341

Other comprehensive loss:
 
 
 
 
 
Unrealized losses on interest rate swap contracts
(30,893
)
 
(4,676
)
 

Amortization of interest rate swap contracts
533

 

 
(682
)
Total other comprehensive loss
(30,360
)
 
(4,676
)
 
(682
)
Comprehensive income
$
402,284

 
$
382,592

 
$
1,653,659

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)
 
 
2019
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
 
Net income
$
432,644

 
$
387,268

 
$
1,654,341

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation of buildings and tenant improvements
272,422

 
256,250

 
242,606

Amortization of deferred leasing and other costs
54,801

 
55,967

 
56,866

Amortization of deferred financing costs
6,536

 
5,867

 
5,402

Straight-line rental income and expense, net
(21,197
)
 
(24,605
)
 
(16,051
)
Impairment charges

 

 
4,481

Loss on debt extinguishment
6,320

 
388

 
26,104

Gain on involuntary conversion
(2,259
)
 

 

Gains on land and property sales
(242,543
)
 
(219,114
)
 
(1,480,691
)
Third-party construction contracts, net
9,254

 
(15,400
)
 
1,000

Other accrued revenues and expenses, net
8,476

 
47,711

 
3,104

Equity in earnings in excess of operating distributions received from unconsolidated joint ventures
(18,556
)
 
(9,925
)
 
(46,958
)
Net cash provided by operating activities
505,898

 
484,407

 
450,204

Cash flows from investing activities:
 
 
 
 
 
Development of real estate investments
(446,801
)
 
(577,383
)
 
(549,563
)
Acquisition of buildings and related intangible assets
(210,224
)
 
(348,107
)
 
(982,598
)
Acquisition of land and other real estate assets
(388,202
)
 
(244,262
)
 
(243,846
)
Second generation tenant improvements, leasing costs and building improvements
(47,549
)
 
(53,474
)
 
(52,554
)
Other deferred leasing costs
(38,509
)
 
(39,380
)
 
(30,208
)
Other assets
(10,777
)
 
(14,535
)
 
(6,960
)
Proceeds from the repayments of notes receivable from property sales
162,550

 
154,107

 
3,650

Proceeds from land and property sales, net
432,662

 
511,391

 
2,523,358

Capital distributions from unconsolidated joint ventures
26,272

 
23,133

 
124,956

Capital contributions and advances to unconsolidated joint ventures
(34,496
)
 
(5,920
)
 
(10,323
)
Net cash (used for) provided by investing activities
(555,074
)
 
(594,430
)
 
775,912

Cash flows from financing activities:
 
 
 
 
 
Proceeds from issuance of common shares, net
272,761

 
34,913

 
13,383

Proceeds from unsecured debt
582,284

 
450,000

 
300,000

Payments on unsecured debt
(255,812
)
 
(7,190
)
 
(692,137
)
Payments on secured indebtedness including principal amortization
(45,515
)
 
(232,234
)
 
(72,648
)
(Repayments) borrowings on line of credit, net
(30,000
)
 
30,000

 
(48,000
)
Distributions to common shareholders - regular
(318,702
)
 
(291,502
)
 
(273,999
)
Distributions to common shareholders - special

 

 
(302,833
)
Distributions to noncontrolling interests, net
(2,648
)
 
(2,456
)
 
(11,882
)
Tax payments on stock-based compensation awards
(6,825
)
 
(8,459
)
 
(14,946
)
Change in book cash overdrafts
138

 
(22,088
)
 
22,924

Cash settlement of interest rate swaps
(35,569
)
 

 

Other financing activities
(10,183
)
 

 

Deferred financing costs
(4,839
)
 
(9,071
)
 
(8,931
)
Redemption of Limited Partner Units

 

 
(457
)
Net cash provided by (used for) financing activities
145,090

 
(58,087
)
 
(1,089,526
)
Net increase (decrease) in cash, cash equivalents and restricted cash
95,914

 
(168,110
)
 
136,590

Cash, cash equivalents and restricted cash at beginning of year
25,517

 
193,627

 
57,037

Cash, cash equivalents and restricted cash at end of year
$
121,431

 
$
25,517

 
$
193,627

Non-cash activities:
 
 
 
 
 
Liabilities and right-of-use assets - operating leases
$
40,467

 
$

 
$

Carrying amount of pre-existing ownership interest in acquired property
$

 
$
5,034

 
$

Non-cash property contribution from noncontrolling interests
$

 
$
3,200

 
$

Notes receivable from buyers in property sales
$

 
$

 
$
404,846

Conversion of Limited Partner Units to common shares
$
1,624

 
$
(269
)
 
$
1,847

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
 
 
 
 
 
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, 2016
$
3,548

 
$
5,192,011

 
$
682

 
$
(1,730,423
)
 
$
27,475

 
$
3,493,293

Net income

 

 

 
1,634,431

 
19,910

 
1,654,341

Other comprehensive loss

 

 
(682
)
 

 

 
(682
)
Issuance of common shares
5

 
13,378

 

 

 

 
13,383

Stock-based compensation plan activity
10

 
(1,555
)
 

 
(3,212
)
 
7,971

 
3,214

Conversion of Limited Partner Units
1

 
1,846

 

 

 
(1,847
)
 

Redemption of Limited Partner Units

 
(364
)
 

 

 
(93
)
 
(457
)
Distributions to common shareholders - regular ($0.77 per share)

 

 

 
(273,999
)
 

 
(273,999
)
Distributions to common shareholders - special ($0.85 per share)

 

 

 
(302,833
)
 

 
(302,833
)
Distributions to noncontrolling interests

 

 

 

 
(11,882
)
 
(11,882
)
Balance at December 31, 2017
$
3,564

 
$
5,205,316

 
$

 
$
(676,036
)
 
$
41,534

 
$
4,574,378

Net income

 

 

 
383,729

 
3,539

 
387,268

Other comprehensive loss

 

 
(4,676
)
 

 

 
(4,676
)
Issuance of common shares
12

 
34,901

 

 

 

 
34,913

Contributions from noncontrolling interests

 

 

 

 
3,475

 
3,475

Stock-based compensation plan activity
8

 
4,432

 

 
(1,278
)
 
8,956

 
12,118

Conversion of Limited Partner Units
5

 
(274
)
 

 

 
269

 

Distributions to common shareholders - regular ($0.815 per share)

 

 

 
(291,502
)
 

 
(291,502
)
Distributions to noncontrolling interests

 

 

 

 
(2,731
)
 
(2,731
)
Balance at December 31, 2018
$
3,589

 
$
5,244,375

 
$
(4,676
)
 
$
(585,087
)
 
$
55,042

 
$
4,713,243

Net income

 

 

 
428,972

 
3,672

 
432,644

Other comprehensive loss

 

 
(30,360
)
 

 

 
(30,360
)
Issuance of common shares
83

 
272,678

 

 

 

 
272,761

Contributions from noncontrolling interests

 

 

 

 
312

 
312

Stock-based compensation plan activity
7

 
6,787

 

 
(1,175
)
 
7,703

 
13,322

Conversion of Limited Partner Units
1

 
1,623

 

 

 
(1,624
)
 

Distributions to common shareholders - regular ($0.88 per share)

 

 

 
(318,702
)
 

 
(318,702
)
Distributions to noncontrolling interests

 

 

 

 
(2,960
)
 
(2,960
)
Balance at December 31, 2019
$
3,680

 
$
5,525,463

 
$
(35,036
)
 
$
(475,992
)
 
$
62,145

 
$
5,080,260

See accompanying Notes to Consolidated Financial Statements.

-66-


DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31,
(in thousands)
 
 
2019
 
2018
ASSETS
 
 
 
Real estate investments:
 
 
 
Real estate assets
$
7,993,377

 
$
7,248,346

Construction in progress
550,926

 
477,162

Investments in and advances to unconsolidated joint ventures
133,074

 
110,795

Undeveloped land
254,537

 
360,816

 
8,931,914

 
8,197,119

Accumulated depreciation
(1,480,461
)
 
(1,344,176
)
Net real estate investments
7,451,453

 
6,852,943

 
 
 
 
Real estate investments and other assets held-for-sale
18,463

 
1,082

 
 
 
 
Cash and cash equivalents
110,891

 
17,901

Accounts receivable
20,349

 
14,254

Straight-line rent receivable
129,344

 
109,334

Receivables on construction contracts, including retentions
25,607

 
41,215

Deferred leasing and other costs, net of accumulated amortization of $203,857 and $200,744
320,444

 
313,799

Restricted cash held in escrow for like-kind exchange
1,673

 

Notes receivable from property sales
110,000

 
272,550

Other escrow deposits and other assets
232,338

 
180,946

 
$
8,420,562

 
$
7,804,024

LIABILITIES AND EQUITY
 
 
 
Indebtedness:
 
 
 
Secured debt, net of deferred financing costs of $164 and $238
$
34,023

 
$
79,563

Unsecured debt, net of deferred financing costs of $19,258 and $26,062
2,880,742

 
2,548,938

Unsecured line of credit

 
30,000

 
2,914,765

 
2,658,501

 
 
 
 
Liabilities related to real estate investments held-for-sale
887

 

 
 
 
 
Construction payables and amounts due subcontractors, including retentions
68,840

 
92,288

Accrued real estate taxes
69,042

 
73,358

Accrued interest
14,181

 
16,153

Other liabilities
223,680

 
205,433

Tenant security deposits and prepaid rents
48,907

 
45,048

Total liabilities
3,340,302

 
3,090,781

Partners’ equity:
 
 
 
Common equity (367,950 and 358,851 General Partner Units issued and outstanding, respectively)
5,053,151

 
4,662,877

Limited Partners' common equity (3,029 and 2,920 Limited Partner Units issued and outstanding, respectively)
57,575

 
50,585

Accumulated other comprehensive loss
(35,036
)
 
(4,676
)
     Total partners' equity
5,075,690

 
4,708,786

Noncontrolling interests
4,570

 
4,457

     Total equity
5,080,260

 
4,713,243

 
$
8,420,562

 
$
7,804,024


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)
 
2019
 
2018
 
2017
Revenues:
 
 
 
 
 
Rental and related revenue
$
855,833

 
$
785,319

 
$
686,514

General contractor and service fee revenue
117,926

 
162,551

 
94,420

 
973,759

 
947,870

 
780,934

Expenses:
 
 
 
 
 
Rental expenses
75,584

 
71,436

 
62,924

Real estate taxes
129,520

 
125,269

 
108,964

General contractor and other services expenses
111,566

 
153,909

 
89,457

Depreciation and amortization
327,223

 
312,217

 
273,561

 
643,893

 
662,831

 
534,906

Other operating activities:
 
 
 
 
 
Equity in earnings of unconsolidated joint ventures
31,406

 
21,444

 
63,310

Promote income

 

 
20,007

Gain on sale of properties
234,653

 
204,988

 
113,669

Gain on land sales
7,445

 
10,334

 
9,244

Other operating expenses
(5,318
)
 
(5,231
)
 
(4,212
)
Impairment charges

 

 
(4,481
)
Non-incremental costs related to successful leases
(12,402
)
 

 

General and administrative expenses
(60,889
)
 
(56,218
)
 
(54,944
)
 
194,895

 
175,317

 
142,593

Operating income
524,761

 
460,356

 
388,621

Other income (expenses):
 
 
 
 
 
Interest and other income, net
9,941

 
17,234

 
14,721

Interest expense
(89,756
)
 
(85,006
)
 
(87,003
)
Loss on debt extinguishment
(6,320
)
 
(388
)
 
(26,104
)
Gain on involuntary conversion
2,259

 

 

Income from continuing operations before income taxes
440,885

 
392,196

 
290,235

Income tax (expense) benefit
(8,686
)
 
(8,828
)
 
357

Income from continuing operations
432,199

 
383,368

 
290,592

Discontinued operations:
 
 
 
 
 
Income before gain on sales and income taxes

 
108

 
18,436

Gain on sale of properties
445

 
3,792

 
1,357,778

Income tax expense

 

 
(12,465
)
Income from discontinued operations
445

 
3,900

 
1,363,749

Net income
432,644

 
387,268

 
1,654,341

Net loss (income) attributable to noncontrolling interests
6

 
(11
)
 
(4,734
)
Net income attributable to common unitholders
$
432,650

 
$
387,257

 
$
1,649,607

Basic net income per Common Unit:
 
 
 
 
 
Continuing operations attributable to common unitholders
$
1.18

 
$
1.06

 
$
0.80

Discontinued operations attributable to common unitholders

 
0.01

 
3.78

Total
$
1.18

 
$
1.07

 
$
4.58

Diluted net income per Common Unit:
 
 
 
 
 
Continuing operations attributable to common unitholders
$
1.18

 
$
1.06

 
$
0.80

Discontinued operations attributable to common unitholders

 
0.01

 
3.76

Total
$
1.18

 
$
1.07

 
$
4.56

Weighted average number of Common Units outstanding
365,352

 
360,859

 
359,065

Weighted average number of Common Units and potential dilutive securities
367,339

 
363,297

 
362,011

Comprehensive income:
 
 
 
 
 
Net income
$
432,644

 
$
387,268

 
$
1,654,341

Other comprehensive loss:
 
 
 
 
 
Unrealized losses on interest rate swap contracts
(30,893
)
 
(4,676
)
 

Amortization of interest rate swap contracts
533

 

 
(682
)
Total other comprehensive loss
(30,360
)
 
(4,676
)
 
(682
)
Comprehensive income
$
402,284

 
$
382,592

 
$
1,653,659

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)
 
 
2019
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
 
Net income
$
432,644

 
$
387,268

 
$
1,654,341

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

Depreciation of buildings and tenant improvements
272,422

 
256,250

 
242,606

Amortization of deferred leasing and other costs
54,801

 
55,967

 
56,866

Amortization of deferred financing costs
6,536

 
5,867

 
5,402

Straight-line rental income and expense, net
(21,197
)
 
(24,605
)
 
(16,051
)
Impairment charges

 

 
4,481

Loss on debt extinguishment
6,320

 
388

 
26,104

Gain on involuntary conversion
(2,259
)
 

 

Gains on land and property sales
(242,543
)
 
(219,114
)
 
(1,480,691
)
Third-party construction contracts, net
9,254

 
(15,400
)
 
1,000

Other accrued revenues and expenses, net
8,476

 
47,711

 
3,104

Equity in earnings in excess of operating distributions received from unconsolidated joint ventures
(18,556
)
 
(9,925
)
 
(46,958
)
Net cash provided by operating activities
505,898

 
484,407

 
450,204

Cash flows from investing activities:
 
 
 
 
 
Development of real estate investments
(446,801
)
 
(577,383
)
 
(549,563
)
Acquisition of buildings and related intangible assets
(210,224
)
 
(348,107
)
 
(982,598
)
Acquisition of land and other real estate assets
(388,202
)
 
(244,262
)
 
(243,846
)
Second generation tenant improvements, leasing costs and building improvements
(47,549
)
 
(53,474
)
 
(52,554
)
Other deferred leasing costs
(38,509
)
 
(39,380
)
 
(30,208
)
Other assets
(10,777
)
 
(14,535
)
 
(6,960
)
Proceeds from the repayments of notes receivable from property sales
162,550

 
154,107

 
3,650

Proceeds from land and property sales, net
432,662

 
511,391

 
2,523,358

Capital distributions from unconsolidated joint ventures
26,272

 
23,133

 
124,956

Capital contributions and advances to unconsolidated joint ventures
(34,496
)
 
(5,920
)
 
(10,323
)
Net cash (used for) provided by investing activities
(555,074
)
 
(594,430
)
 
775,912

Cash flows from financing activities:
 
 
 
 
 
Contributions from the General Partner
272,761

 
34,913

 
13,383

Proceeds from unsecured debt
582,284

 
450,000

 
300,000

Payments on unsecured debt
(255,812
)
 
(7,190
)
 
(692,137
)
Payments on secured indebtedness including principal amortization
(45,515
)
 
(232,234
)
 
(72,648
)
(Repayments) borrowings on line of credit, net
(30,000
)
 
30,000

 
(48,000
)
Distributions to common unitholders - regular
(321,469
)
 
(294,233
)
 
(276,539
)
Distributions to common unitholders - special

 

 
(305,628
)
Contributions from (distributions to) noncontrolling interests, net
119

 
275

 
(6,547
)
Tax payments on stock-based compensation awards
(6,825
)
 
(8,459
)
 
(14,946
)
Change in book cash overdrafts
138

 
(22,088
)
 
22,924

Cash settlement of interest rate swaps
(35,569
)
 

 

Other financing activities
(10,183
)
 

 

Deferred financing costs
(4,839
)
 
(9,071
)
 
(8,931
)
Redemption of Limited Partner Units

 

 
(457
)
Net cash provided by (used for) financing activities
145,090

 
(58,087
)
 
(1,089,526
)
Net increase (decrease) in cash, cash equivalents and restricted cash
95,914

 
(168,110
)
 
136,590

Cash, cash equivalents and restricted cash at beginning of year
25,517

 
193,627

 
57,037

Cash, cash equivalents and restricted cash at end of year
$
121,431

 
$
25,517

 
$
193,627

Non-cash activities:
 
 
 
 
 
Liabilities and right-of-use assets - operating leases
$
40,467

 
$

 
$

Carrying amount of pre-existing ownership interest in acquired property
$

 
$
5,034

 
$

Non-cash property contribution from noncontrolling interests
$

 
$
3,200

 
$

Notes receivable from buyers in property sales
$

 
$

 
$
404,846

Conversion of Limited Partner Units to common shares of the General Partner
$
1,624

 
$
(269
)
 
$
1,847

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
 
 
 
 
 
General
 
Limited
 
Accumulated
 
 
 
 
 
 
 
Partner
 
Partners'
 
Other
 
Total
 
 
 
 
 
Common
 
Common
 
Comprehensive
 
  Partners'
 
Noncontrolling
 
Total
 
Equity
 
Equity
 
Income (Loss)
 
Equity
 
Interests
 
Equity
Balance at December 31, 2016
$
3,465,136

 
$
24,691

 
$
682

 
$
3,490,509

 
$
2,784

 
$
3,493,293

Net income
1,634,431

 
15,176

 

 
1,649,607

 
4,734

 
1,654,341

Other comprehensive loss

 

 
(682
)
 
(682
)
 

 
(682
)
Capital contribution from the General Partner
13,383

 

 

 
13,383

 

 
13,383

Stock-based compensation plan activity
(4,757
)
 
7,971

 

 
3,214

 

 
3,214

Conversion of Limited Partner Units
1,847

 
(1,847
)
 

 

 

 

Redemption of Limited Partner Units
(364
)
 
(93
)
 

 
(457
)
 

 
(457
)
Distributions to Partners - regular ($0.77 per Common Unit)
(273,999
)
 
(2,540
)
 

 
(276,539
)
 

 
(276,539
)
Distributions to Partners - special ($0.85 per Common Unit)
(302,833
)
 
(2,795
)
 

 
(305,628
)
 

 
(305,628
)
Distributions to noncontrolling interests

 

 

 

 
(6,547
)
 
(6,547
)
Balance at December 31, 2017
$
4,532,844

 
$
40,563

 
$

 
$
4,573,407

 
$
971

 
$
4,574,378

Net income
383,729

 
3,528

 

 
387,257

 
11

 
387,268

Other comprehensive loss

 

 
(4,676
)
 
(4,676
)
 

 
(4,676
)
Capital contribution from the General Partner
34,913

 

 

 
34,913

 

 
34,913

Stock-based compensation plan activity
3,162

 
8,956

 

 
12,118

 

 
12,118

Contributions from noncontrolling interests

 

 

 

 
3,475

 
3,475

Conversion of Limited Partner Units
(269
)
 
269

 

 

 

 

Distributions to Partners - regular ($0.815 per Common Unit)
(291,502
)
 
(2,731
)
 

 
(294,233
)
 

 
(294,233
)
Balance at December 31, 2018
$
4,662,877

 
$
50,585

 
$
(4,676
)
 
$
4,708,786

 
$
4,457

 
$
4,713,243

Net income
428,972

 
3,678

 

 
432,650

 
(6
)
 
432,644

Other comprehensive loss

 

 
(30,360
)
 
(30,360
)
 

 
(30,360
)
Capital contribution from the General Partner
272,761

 

 

 
272,761

 

 
272,761

Stock-based compensation plan activity
5,619

 
7,703

 

 
13,322

 

 
13,322

Contributions from noncontrolling interests

 

 

 

 
312

 
312

Conversion of Limited Partner Units
1,624

 
(1,624
)
 

 

 

 

Distributions to Partners - regular ($0.88 per Common Unit)
(318,702
)
 
(2,767
)
 

 
(321,469
)
 

 
(321,469
)
Distributions to noncontrolling interests

 

 

 

 
(193
)
 
(193
)
Balance at December 31, 2019
$
5,053,151

 
$
57,575

 
$
(35,036
)
 
$
5,075,690

 
$
4,570

 
$
5,080,260

See accompanying Notes to Consolidated Financial Statements.







-70-

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


 
(1)
The Company

The General Partner was formed in 1985, and we believe that it qualifies as a REIT under the provisions of the Code. 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. 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 approximately 99.2% of the Common Units at December 31, 2019. The remaining 0.8% of 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 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.
As of December 31, 2019, we owned and operated a portfolio primarily consisting of industrial properties and provided real estate services to third-party owners.
Substantially all of our Rental Operations (see Note 9) are conducted through the Partnership. We conduct our Service Operations (see Note 9) 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)
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 (to the extent applicable), are not consolidated and are reflected as investments in unconsolidated joint ventures under the equity method of reporting.

Due to the fact that the Limited Partners do not have kick out rights, or substantive participating rights, the Partnership is a VIE. Because the General Partner holds majority ownership and exercises control over every aspect of the Partnership's operations, the General Partner has been determined as the primary beneficiary of the Partnership and, therefore, consolidates the Partnership.

The assets and liabilities of the General Partner and the Partnership are substantially the same, as the General Partner does not have any significant assets other than its investment in the Partnership.

-71-

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


Reclassifications

Certain amounts in the accompanying consolidated financial statements have been reclassified to conform to the 2019 consolidated financial statement presentation.
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. 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, including interest, clearly associated with the development, construction or expansion of real estate investments are capitalized as a cost of the property. Direct costs include all leasing commissions paid to third parties for new leases or lease renewals. We capitalize a portion of our indirect costs associated with our construction and development 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.
Effective on January 1, 2019, only costs that are incremental to executing a lease are capitalizable. Prior to January 1, 2019, we capitalized a portion of our indirect costs associated with our leasing efforts based on the amount of time spent on leasing activities.
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. 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

-72-

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


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. 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
In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business. ASU 2017-01 provides guidance to determine when an acquisition meets the definition of a business or should be accounted for as an asset acquisition, resulting in more acquisitions being accounted for as asset acquisitions as opposed to business combinations. Transaction costs are capitalized for asset acquisitions while they are expensed as incurred for business combinations. ASU 2017-01 requires that when substantially all of the fair value of an acquisition is concentrated in a single identifiable asset or a group of similar identifiable assets it does not meet the definition of a business. ASU 2017-01 also revised the definition of a business to include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create an output. We early adopted ASU 2017-01 prospectively as of January 1, 2017 as permitted under the standard, which has not had a material impact to the consolidated financial statements.
As a result of adoption of ASU 2017-01, our acquisitions of properties have been accounted for as asset acquisitions as they have not met the definition of a business. Transaction costs related to asset acquisitions are capitalized. To the extent that an acquired property meets the definition of a business, we expense acquisition related costs immediately as period costs.
To the extent that we gain control of real estate properties that are accounted for as asset acquisitions, as opposed to business combinations, we accumulate the costs of pre-existing equity interest and consideration paid for additional interest acquired and we do not remeasure our pre-existing equity interest. Generally contingencies arising from an asset acquisition are only recognized when the contingency is paid or becomes payable.
We allocate the purchase price of asset acquisitions that meet the definition of a business to tangible and identified intangible assets based on their respective fair values, using all pertinent information available at the date of acquisition. Capitalized acquisition costs are also included in the total cost basis of acquired properties that are asset acquisitions. 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, estimated market rents and the fair value of the underlying land. 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.

-73-

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


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.

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 limited partners (or similar owning entities) that lack substantive participating or kick out rights, 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 own interests in a VIE and we (i) have the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) have the obligation or rights to absorb losses or receive benefits that could potentially be significant to the VIE, then we would be determined to be the primary beneficiary and would consolidate the VIE. To the extent that we own interests in a VIE, then at each reporting period, we re-assess our conclusions as to which, if any, party within the VIE is considered the primary beneficiary. Consolidated joint ventures that are VIEs are not significant in any period presented in these consolidated financial statements.

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 the 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 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.

When circumstances indicate there may have been a reduction in the value of an equity investment, we evaluate whether the loss in value is other than temporary. If we conclude it is other than temporary, we recognize an impairment charge to reflect the equity investment at fair value.

There were no unconsolidated joint ventures, in which we have any recognized assets or liabilities or have retained any economic exposure to loss at December 31, 2019 that met the criteria to be considered VIEs.




-74-

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


Cash Equivalents

Investments with an original maturity of three months or less are classified as cash equivalents.

Valuation of Receivables

Upon the adoption of ASC 842 on January 1, 2019, our determination of the adequacy of our allowances for tenant receivables includes a binary assessment of whether or not the amounts due under a tenant’s lease agreement are probable of collection. For such amounts that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For such amounts that are deemed not probable of collection, revenue is recorded as the lesser of (i) the amount which would be recognized on a straight-line basis or (ii) cash that has been received from the tenant, with any tenant and deferred rent receivable balances charged as a direct write-off against rental income in the period of the change in the collectability determination.

Deferred Costs

Deferred Financing Costs

Costs incurred in connection with obtaining financing are deferred and are amortized to interest expense over the term of the related loan. The costs for issuing debt, other than lines of credit, are presented on the consolidated balance sheets as a direct deduction from the debt's carrying value, while debt issuance costs related to the Partnership's unsecured line of credit are presented as assets in the consolidated balance sheets, as part of other escrow deposits and other assets.
Lease Related Costs and Acquired Lease-Related Intangible Assets
Effective on January 1, 2019, only costs that are directly incremental to executing a lease are capitalized. Prior to January 1, 2019, all direct and indirect costs, including estimated internal costs, associated with the leasing of real estate investments owned by us were capitalized and amortized over the term of the related lease.
Acquired lease-related intangible assets consist of above market lease assets and the value allocable to in-place leases. Above market lease assets are amortized as a reduction to rental income over the remaining terms of the respective leases. In-place lease intangible assets are amortized on a straight-line basis and included within depreciation and amortization in the consolidated statements of operations and comprehensive income.
Deferred leasing costs and acquired lease-related intangible assets at December 31, 2019 and 2018, excluding amounts classified as held-for-sale, were as follows (in thousands):
 
2019
 
2018
Deferred leasing costs
$
333,706

 
$
307,486

Acquired lease-related intangible assets
190,595

 
207,057

 
$
524,301

 
$
514,543

 
 
 
 
Accumulated amortization - deferred leasing costs
$
(109,843
)
 
$
(101,403
)
Accumulated amortization - acquired lease-related intangible assets
(94,014
)
 
(99,341
)
Total
$
320,444

 
$
313,799


Amounts recorded related to amortization expense for in-place leases for the years ended December 31, 2019, 2018 and 2017 totaled $22.0 million, $25.0 million and $27.2 million, respectively. Charges to rental income related to the amortization of above market lease assets for the years ended December 31, 2019, 2018 and 2017 totaled $703,000, $777,000 and $913,000, respectively.

-75-

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


The expected future amortization, or charge to rental income, of acquired lease-related intangible assets is summarized in the table below (in thousands):
Year
Amortization Expense
 
Charge to Rental Income
2020
$
18,989

 
$
639

2021
16,063

 
367

2022
13,192

 
353

2023
11,246

 
353

2024
8,690

 
59

Thereafter
26,630

 

 
$
94,810

 
$
1,771


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 Common Unit of the Partnership 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.

Revenue Recognition

On January 1, 2018, we concurrently adopted ASC 606, Revenue from Contracts with Customers ("ASC 606") and ASC 610-20, Other Income: Gains and Losses from the De-recognition of Non-financial Assets ("ASC 610-20") using a modified retrospective ("cumulative effect") method of adoption. ASC 606 has superseded nearly all existing GAAP revenue recognition guidance, although its scope excludes lease contracts, which represent our primary source of revenue. The standard’s core principle is that a company will recognize revenue when it satisfies performance obligations, by transferring promised goods or services to customers, in an amount that reflects the consideration to which the company expects to be entitled in exchange for fulfilling those performance obligations.

There was no cumulative adjustment recognized to beginning retained earnings as of January 1, 2018 as the result of adopting ASC 606 and ASC 610-20.

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.

-76-

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


General Contractor and Service Fee Revenue

Effective on January 1, 2018, general contractor and service fee revenues, as presented on the Consolidated Statements of Operations, are accounted for within the scope of ASC 606. General contractor and service fee revenues are comprised primarily of construction and development related revenues earned from third parties while acting in capacity of a developer, as a general contractor or a construction manager. There are other ancillary streams of revenue included in general contractor and service fee revenues (see Note 9), such as management fees earned from unconsolidated joint ventures, which are not significant.

Our construction arrangements are typically structured with only one performance obligation, which generally represents an obligation either to construct a new building or to construct fixtures in an existing building, and these single performance obligations are satisfied over time as construction progresses. We recognize revenue as we satisfy such performance obligations using the percentage of completion method, which is an input method allowed under ASC 606. 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. We believe the percentage of completion method is a faithful depiction of the transfer of goods and services as changes in job performance and estimated profitability, which result in revisions to costs and income and are recognized in the period in which the revisions are determined, have not historically been significant. We typically receive regular progress payments on the majority of our construction arrangements and such arrangements generally have an original duration of less than one year. As the result of the relatively short duration of our construction arrangements, we have elected to apply the optional disclosure exemptions, included in ASC 606, related to our remaining performance obligations for our in-process construction projects, for which any future variable consideration is not material. 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. To the extent that a fixed-price contract is estimated to result in a loss, the loss is recorded immediately.

Opening and closing balances of construction receivables are presented separately on the Consolidated Balance Sheets. Under billed and over billed receivables on construction contracts totaled $16.5 million and $159,000, respectively, at December 31, 2019 and $29.1 million and $161,000, respectively, at December 31, 2018. Over billed receivables are included in other liabilities in the Consolidated Balance Sheets. We generally do not have any contract assets associated with our construction arrangements.

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.
Property Sales

Only disposals representing a strategic shift in operations (for example, a disposal of a major geographic area or a major line of business) should be presented as discontinued operations in accordance with ASC 205-20, without consideration of significant continuing involvement. The Medical Office Portfolio Disposition during 2017 has met the criteria under ASC 205-20 for all of the consolidated in-service properties within the portfolio to be classified within discontinued operations (see Note 7).

Effective on January 1, 2018, gains on sales of properties, including partial sales, of non-financial assets (and in-substance non-financial assets) to non-customers are recognized in accordance with ASC 610-20, while the sale of non-financial assets with customers are governed by ASC 606. The only difference in the treatment of sales to customers and non-customers is the presentation in the Consolidated Statements of Operations (revenue and expense is reported when the sale is to a customer and net gain or loss is reported when the sale is to a non-customer). Based on the nature of our business, our property sales generally represent transactions with non-customers. In the typical course of our business, sales of non-financial assets represent only one performance

-77-

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


obligation and are recognized when an enforceable contract is in place, collectability is ensured and control is transferred to the buyer.

Under ASC 610-20 we are required to recognize a full gain or loss in a partial sale of non-financial assets, to the extent control is not retained. Any noncontrolling interest retained by the seller would, accordingly, be measured at fair value. We have primarily disposed of property and land in all cash transactions with no contingencies and no future involvement in the operations, and therefore, the adoption of ASC 610-20 has not significantly impacted the recognition of property and land sales.
Net Income Per Common Share or Common Unit
Basic net income per common share or Common Unit is computed by dividing net income 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 per common share is computed by dividing the sum of net income attributable to common shareholders and the noncontrolling interest in earnings allocable to Limited Partner Units (to the extent the Limited Partner Units are dilutive), less dividends or distributions on participating securities that are anti-dilutive, by the sum of the weighted average number of common shares outstanding and, to the extent they are dilutive, weighted average number of Limited Partner Units outstanding and any potential dilutive securities for the period. Diluted net income per Common Unit is computed by dividing the net income attributable to common unitholders, less dividends or distributions on participating securities that are anti-dilutive, 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 per common share or Common Unit (in thousands): 
 
2019
 
2018
 
2017
General Partner
 
 
 
 
 
Net income attributable to common shareholders
$
428,972

 
$
383,729

 
$
1,634,431

Less: Dividends on participating securities
(1,487
)
 
(1,675
)
 
(3,981
)
Basic net income attributable to common shareholders
427,485

 
382,054

 
1,630,450

Add back dividends on dilutive participating securities
1,487

 
1,675

 
3,981

Noncontrolling interest in earnings of common unitholders
3,678

 
3,528

 
15,176

Diluted net income attributable to common shareholders
$
432,650

 
$
387,257

 
$
1,649,607

Weighted average number of common shares outstanding
362,234

 
357,569

 
355,762

Weighted average Limited Partner Units outstanding
3,118

 
3,290

 
3,303

Other potential dilutive shares
1,987

 
2,438

 
2,946

Weighted average number of common shares and potential dilutive securities
367,339

 
363,297

 
362,011

 
 
 
 
 
 
Partnership
 
 
 
 
 
Net income attributable to common unitholders
$
432,650

 
$
387,257

 
$
1,649,607

Less: Distributions on participating securities
(1,487
)
 
(1,675
)
 
(3,981
)
Basic net income attributable to common unitholders
$
431,163

 
$
385,582

 
$
1,645,626

Add back distributions on dilutive participating securities
1,487

 
1,675

 
3,981

Diluted net income attributable to common unitholders
$
432,650

 
$
387,257

 
$
1,649,607

Weighted average number of Common Units outstanding
365,352

 
360,859

 
359,065

Other potential dilutive units
1,987

 
2,438

 
2,946

Weighted average number of Common Units and potential dilutive securities
367,339

 
363,297

 
362,011


There have been no participating securities that are anti-dilutive for the years ended December 31, 2019, 2018, and 2017.

-78-

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 Code, 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, however, 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 to taxable income before the dividends paid deduction, and subject to the 90% distribution requirement, for the years ended December 31, 2019, 2018 and 2017 (in thousands): 
 
2019
 
2018
 
2017
Net income
$
432,644

 
$
387,268

 
$
1,654,341

Book/tax differences
(118,481
)
 
(97,079
)
 
(1,073,552
)
Taxable income before the dividends paid deduction
314,163

 
290,189

 
580,789

Less: capital gains
(61,531
)
 
(63,151
)
 
(441,577
)
Adjusted taxable income subject to the 90% distribution requirement
$
252,632

 
$
227,038

 
$
139,212


The General Partner's dividends paid deduction is summarized below (in thousands): 
 
2019
 
2018
 
2017
Cash dividends paid
$
318,702

 
$
291,502

 
$
576,832

Cash dividends declared and paid in subsequent year that apply to current year
7,500

 
9,286

 
7,901

Cash dividends declared and paid in current year that apply to previous year
(9,286
)
 
(7,901
)
 

Dividends paid deduction
316,916

 
292,887

 
584,733

Less: Capital gain distributions
(61,531
)
 
(63,151
)
 
(441,577
)
Dividends paid deduction attributable to adjusted taxable income subject to the 90% distribution requirement
$
255,385

 
$
229,736

 
$
143,156


Our tax return for the year ended December 31, 2019 has not been filed. The taxability information presented for our dividends paid in 2019 is based upon management’s estimate. Consequently, the taxability of dividends is subject to change. A summary of the tax characterization of the dividends paid by the General Partner for the years ended December 31, 2019, 2018 and 2017 is as follows:
 
2019
 
2018
 
2017
Common Shares
 
 
 
 
 
Ordinary income
80.7
%
 
78.4
%
 
23.7
%
Capital gains
19.3
%
 
21.6
%
 
76.3
%
 
100.0
%
 
100.0
%
 
100.0
%


-79-

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
A valuation allowance is in place for substantially all of the deferred tax assets of the taxable REIT subsidiary for all periods presented.  Based primarily on the projections of taxable income pursuant to our current operating strategy, management believes that it is more likely than not that the taxable REIT subsidiary will not generate sufficient taxable income to realize these deferred tax assets.  Income taxes are not material to our operating results or financial position. Our taxable REIT subsidiary has no significant net deferred income tax positions or unrecognized tax benefit items.
Cash Paid for Income Taxes
We paid federal, state and local income taxes, net of income tax refunds, of $7.8 million, $3.7 million and $21.0 million in 2019, 2018 and 2017, respectively.
Fair Value Measurements
We estimate fair value using available market information and valuation methodologies. 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.
Assets or liabilities measured at fair value on a recurring basis primarily consist of derivative financial instruments (see Note 13). We were not party to any derivative financial instruments at December 31, 2019. In previous periods, we determined the fair value of derivative instruments using standard market conventions and techniques such as discounted cash flow analysis, option pricing models and termination cost at each balance sheet date. We recognized all derivatives at fair value within the line items Other Assets or Other Liabilities on our Consolidated Balance Sheet. We incorporated credit valuation adjustments to appropriately reflect nonperformance risk for us and the respective counter-party in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we considered the impact of netting and any applicable credit enhancements, such as mutual puts.

-80-

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


We determined that the majority of the inputs used to value our derivatives fell within Level 2 of the fair value hierarchy. Although the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of our derivatives.
In addition to the acquired properties discussed in Note 4, assets measured at fair value on a non-recurring basis in the Consolidated Financial Statements consisted of real estate assets, both buildings and undeveloped land, which were determined to be impaired and recorded at fair value as discussed in Note 7. The table below aggregates the total fair value of these impaired assets as determined during the years ended December 31, 2019, 2018 and 2017, respectively, by the levels in the fair value hierarchy (in thousands):
 
 
2019
 
2018
 
2017
 
 
Level 1

Level 2

Level 3

 
Level 1

Level 2

Level 3

 
Level 1

Level 2

Level 3

Real estate assets
 


$

 


$

 


$
14,299



Derivative Financial Instruments

We periodically enter into certain interest rate protection agreements to effectively convert or cap floating rate debt to a fixed rate, and to hedge anticipated future financing transactions, both of which qualify for cash flow hedge accounting treatment. We do not utilize derivative financial instruments for trading or speculative purposes.

In August 2017, the FASB issued ASU 2017-12, Targeted improvements to accounting for hedging activities ("ASU 2017-12"). ASU 2017-12 eliminates the current requirement to separately recognize periodic hedge ineffectiveness and requires the entire effect of the hedging instrument and hedged item to be presented in the same income statement line item. ASU 2017-12 was effective for public entities on January 1, 2019 on a modified retrospective approach with early adoption permitted after the issuance. We early adopted ASU 2017-12 effective October 1, 2018 and such adoption did not have a material impact on the consolidated financial statements.

If a derivative qualifies as a cash flow hedge, the gain or loss on the derivative is recorded in accumulated other comprehensive income or loss and subsequently reclassified into interest expense in the same period during which the hedged forecasted transaction affects earnings. For all hedging relationships, we formally document the hedging relationship and its risk-management objective and strategy for undertaking the hedge, the hedging instrument, the hedged item, the nature of the risk being hedged and how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively.

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. Actual results could differ from those estimates.

New Accounting Pronouncements

Recently Adopted Accounting Pronouncement
Leases
On January 1, 2019, we adopted the new lease standard, ASC 842, utilizing the available election to adopt on a prospective basis. ASC 842 has superseded all previous GAAP guidance for accounting for leases.

-81-

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


As part of adoption, we elected the package of practical expedients available for implementation, which included: (i) relief from re-assessing whether an expired or existing contract meets the definition of a lease, (ii) relief from re-assessing the classification of expired or existing leases at the adoption date and (iii) allowing previously capitalized initial direct leasing costs to continue to be amortized. Due in large part to electing these practical expedients, the adoption of ASC 842 did not result in recording a cumulative adjustment to the opening balance of distributions in excess of net income.
Lessor Accounting
Our primary business is the development, acquisition, and operation of industrial real estate properties that are held for investment and leased to tenants. Due to electing the package of practical expedients that allow for relief from re-assessing the classification of existing leases at the adoption date, as well as based on the characteristics of our underlying assets and leases, all of our leases are classified as operating leases. We manage residual risk through investing in properties that we believe will appreciate in value over time. We also perform a credit analysis for tenants prior to leases being executed, and on an ongoing basis, to ensure collectability is probable prior to recognizing lease revenues on an accrual basis. For lessors, the accounting under ASC 842 remains largely unchanged with the notable exception that ASC 842 requires that lessors expense certain initial direct costs, which were capitalizable under prior leasing standards, as incurred. Under the new standard, only the incremental costs of signing a lease are capitalizable. As the result of this change, we recognized $12.4 million of expense for internal costs related to successful leases for the year ended December 31, 2019, presented separately in the line item "Non-Incremental Costs Related to Successful Leases" on the Consolidated Statements of Operations and Comprehensive Income, which previously would have been capitalized. For the year ended December 31, 2018 we capitalized $12.3 million of internal lease related costs which would have been expensed had ASC 842 been effective.
ASC 842 also requires lessors to exclude certain lessor costs, such as real estate taxes and insurance, that are paid directly by lessees to third parties from rental revenue and the associated rental expense. Lessor costs that are paid by the lessor and reimbursed by the lessee continue to be recorded through rental revenue and the associated rental expense.
ASC 842 provides lessors an additional practical expedient to not separate rental recovery revenue related to lease-related services from the associated rental revenue related to the lease when certain criteria are met. The lease-related services provided to our tenants include property management, common area maintenance ("CAM") and utilities. We assessed the applicable criteria, concluding that the timing and straight-line pattern of transfer to the lessees for rental recovery revenue from our lease-related services and revenue from the underlying leases are the same and that lease classification does not change, and elected to apply this additional practical expedient.
Our leases generally include scheduled rent increases, but do not include variable payments based on indexes. Our rental revenue is primarily based on fixed, non-cancelable leases. Our variable rental revenue primarily consists of amounts recovered from lessees for property tax, insurance and CAM.
All revenues related to lease and lease-related services are included in, and comprise substantially all of, the caption "Rental and Related Revenue" on the Consolidated Statements of Operations and Comprehensive Income. The components of Rental and Related Revenue for the years ended December 31, 2019, 2018 and 2017 are as follows (in thousands and including discontinued operations):
 
2019
 
2018
 
2017
Rental revenue - fixed payments
$
645,759

 
$
587,187

 
$
585,064

Rental revenue - variable payments (1)
210,074

 
198,249

 
188,635

Rental and related revenue
$
855,833

 
$
785,436

 
$
773,699

(1) Primarily includes tenant recoveries for real estate taxes, insurance and CAM.

-82-

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


The future minimum rents due to us under non-cancelable operating leases are as follows (in thousands):
Year
December 31, 2019
2020
$
641,578

2021
640,615

2022
577,591

2023
507,101

2024
439,324

Thereafter
1,954,723

 
$
4,760,932


Lessee Accounting
ASC 842 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification determines whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use ("ROU") asset and a lease liability for all leases with a term of greater than 12 months regardless of classification.
As of December 31, 2019, our lease arrangements primarily consisted of office and ground leases. Adoption of the practical expedients resulted in the continued classification of our leases as operating leases. Expense recognized on these leases for the year ended December 31, 2019 was not material.
For these arrangements, we recognized a ROU asset and a corresponding lease liability at the January 1, 2019 adoption date of ASC 842, representing the discounted value of future lease payments required under our lease arrangements. A $40.5 million ROU asset, net of pre-existing lease related accruals, was included in Other Escrow Deposits and Other Assets, and a corresponding lease liability of $46.9 million was included in Other Liabilities on our Consolidated Balance Sheets as of December 31, 2019. In determining these amounts we elected an available practical expedient that allows us, as a lessee, to not separate lease and non-lease components.
The following table summarizes the future operating lease payments (in thousands) to be made under our non-cancellable lease arrangements:
Year
December 31, 2019
 
Year
December 31, 2018
2020
$
8,299

 
2019
$
6,487

2021
3,864

 
2020
7,594

2022
3,655

 
2021
2,987

2023
3,431

 
2022
2,255

2024
2,865

 
2023
1,949

Thereafter
84,119

 
Thereafter
85,523

Total undiscounted operating lease payments
$
106,233

 
Total undiscounted operating lease payments
$
106,795

Less: imputed interest
59,331

 
 
 
Present value of operating lease payments
$
46,902

 
 
 

The weighted average remaining lease term for our lease arrangements, on a combined basis as of December 31, 2019, was 31.4 years. The weighted average discount rate for our lease arrangements as of December 31, 2019 was 4.47%. As the discount rates implied in our lease arrangements are not readily determinable, we utilized our current credit ratings and credit yields observed from market traded securities with similar credit ratings to form a reasonable basis to establish secured borrowing rates when determining the present value of future lease payments.

-83-

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


(3)
Restricted Cash

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash ("ASU 2016-18"). ASU 2016-18 requires entities to show the changes in the total of cash, cash equivalents and restricted cash in the statement of cash flows. As a result, entities will no longer present transfers between cash, cash equivalents and restricted cash in the statement of cash flows. We adopted this standard on January 1, 2018, on a retrospective basis, and the adoption did not have a material impact on our consolidated financial statements.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows (in thousands):
 
December 31, 2019
 
December 31, 2018
Cash and cash equivalents
$
110,891

 
$
17,901

Restricted cash held in escrow for like-kind exchange
1,673

 

Restricted cash included in other escrow deposits and other assets
8,867

 
7,616

Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows
$
121,431

 
$
25,517


Restricted cash held in escrow for like-kind exchange on the Consolidated Balance Sheets includes cash received from the property dispositions but restricted only for qualifying like-kind exchange transactions.

(4)
Acquisitions and Dispositions

Acquisitions and dispositions for the periods presented were completed in accordance with our strategy to reposition our investment concentration among the markets in which we operate and to increase our overall investments in quality industrial projects. Transaction costs related to asset acquisitions are capitalized and transaction costs related to business combinations and dispositions are expensed.

2019 Acquisitions

We paid cash of $210.2 million for asset acquisitions during the year ended December 31, 2019.

We acquired six properties during the year ended December 31, 2019. We determined that these six properties did not meet the definition of a business and, accordingly, we accounted for them as asset acquisitions as opposed to business combinations.

The following table summarizes amounts recognized for each major class of assets (in thousands) for these acquisitions during the year ended December 31, 2019:
Real estate assets
$
205,390

Lease related intangible assets
11,716

Fair value of acquired net assets
$
217,106



The leases in the acquired properties had a weighted average remaining life at acquisition of approximately 6.5 years.


-84-

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


2018 Acquisitions

We paid cash of $348.1 million for asset acquisitions during the year ended December 31, 2018.

We acquired nine properties during the year ended December 31, 2018. We determined that these nine properties did not meet the definition of a business and, accordingly, we accounted for them as asset acquisitions as opposed to business combinations.

The following table summarizes amounts recognized for each major class of assets and liability (in thousands) for these acquisitions during the year ended December 31, 2018:
Real estate assets
$
328,126

Lease related intangible assets
24,996

Total acquired assets
353,122

Below market lease liability
505

Fair value of acquired net assets
$
352,617


The leases in the acquired properties had a weighted average remaining life at acquisition of approximately 11.3 years.

2017 Acquisitions
     
We paid cash of $982.6 million for acquisitions of 28 properties during the year ended December 31, 2017. We determined that these 28 properties did not meet the revised definition of a business as the result of adopting ASU 2017-01 and, accordingly, they were treated as asset acquisitions as opposed to business combinations.

The following table summarizes amounts recognized for each major class of asset and liability (in thousands) for these acquisitions during the year ended December 31, 2017:
Real estate assets
$
945,844

Lease related intangible assets
46,807

Total acquired assets
$
992,651

Below market lease liability
1,483

Fair value of acquired net assets
$
991,168


During 2017 we acquired a portfolio of real estate assets from Bridge Development Partners LLC (the "Bridge Portfolio") located in Northern New Jersey, Southern California and South Florida, for a total purchase price of $578.4 million. The Bridge Portfolio includes ten industrial buildings (included in the table above) totaling 3.4 million square feet, which were 68.9% leased at the time of acquisition, as well as 43 acres of undeveloped land.

The leases in the acquired properties had a weighted average remaining life at acquisition of approximately 8.7 years.


-85-

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


Fair Value Measurements
We determine the fair value of the individual components of real estate asset acquisitions primarily through calculating the "as-if vacant" value of a building, using an income approach, which relies significantly upon internally determined assumptions. We have determined that these estimates primarily rely on Level 3 inputs, which are unobservable inputs based on our own assumptions. The most significant assumptions used in calculating the "as-if vacant" value for acquisition activity during 2019 and 2018, respectively, are as follows:
 
2019
 
2018
 
Low
High
 
Low
High
Exit capitalization rate
4.23%
5.32%
 
3.80%
4.91%
Net rental rate per square foot
$5.90
$15.60
 
$6.50
$10.20

Capitalized acquisition costs were insignificant and the fair value of the six properties acquired during the year ended December 31, 2019 was substantially the same as the cost of acquisition.
Dispositions
Dispositions of buildings (see Note 7 for the number of buildings sold in each year, as well as for their classification between continuing and discontinued operations) and undeveloped land generated net cash proceeds of $432.7 million, $511.4 million and $2.52 billion in 2019, 2018 and 2017, respectively.
In September 2019, we completed the sale of 18 non-strategic industrial properties for $217.5 million in proceeds and recorded a gain on sale of $146.3 million. These properties totaled 4.1 million square feet and were located in primarily Midwest markets.
Dispositions during the year ended December 31, 2017 included 85 consolidated properties sold as part of the Medical Office Portfolio Disposition to a subsidiary of Healthcare Trust of America, Inc. ("HTA"), as well as certain other buyers, for a total sales price of $2.78 billion and a gain on sale of $1.39 billion. The Medical Office Portfolio Disposition was executed in connection with our strategy to focus solely on the industrial real estate product type.
A portion of the sale price for the Medical Office Portfolio Disposition was financed through either unsecured notes, or first mortgage interests in a portion of the sold properties, that we provided to HTA and other buyers, totaling $400.0 million. We concluded that the value, and the rate of interest, for these financial instruments would approximate fair value as computed using an income approach and that this determination of fair value was primarily based upon Level 3 inputs. We collected the same amount of principal on notes receivable in the amount of $145.0 million for both 2019 and 2018. We held the remaining $110.0 million of notes receivable as of December 31, 2019 which matured and was paid in full in January 2020.
In connection with the Medical Office Portfolio Disposition, during the year ended December 31, 2017 we received $105.3 million for the sale of our interest in two unconsolidated joint ventures whose underlying assets were comprised of medical office properties, which was reflected within Capital Distributions from Unconsolidated Joint Ventures within the Consolidated Statements of Cash Flows. We recorded $47.5 million of income related to the sale of our interests in these unconsolidated joint ventures within equity in earnings of unconsolidated joint ventures in the Consolidated Statements of Operations and Comprehensive Income. In connection with the sale of our interest in one of these unconsolidated joint ventures, we also recorded promote income (additional incentive-based cash distributions from the joint venture, in excess of our ownership interest) of $20.0 million from the sale of our interest, which was reflected as a separate line item in the Consolidated Statements of Operations and Comprehensive Income and reflected within net cash provided by operating activities within the Consolidated Statements of Cash Flows. In connection with the sale, we recorded income tax expense totaling $17.7 million including $12.5 million classified within discontinued operations and $5.2 million classified within continuing operations in the Consolidated Statements of Operations and Comprehensive Income.
All other dispositions were not individually material.

-86-

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


(5)
Related Party Transactions

We provide property management, asset management, leasing, construction and other tenant-related services to unconsolidated joint ventures 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 have eliminated our ownership percentage of these fees in the consolidated financial statements. The following table summarizes the fees earned from these joint ventures, prior to elimination, for the years ended December 31, 2019, 2018 and 2017, respectively (in thousands): 
 
2019
 
2018
 
2017
Management fees
$
1,736

 
$
1,813

 
$
2,422

Leasing fees
1,544

 
2,113

 
1,158

Construction and development fees
5,056

 
5,248

 
6,940



-87-

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


(6)
Investments in Unconsolidated Joint Ventures
Summarized Financial Information
As of December 31, 2019, we had equity interests in nine unconsolidated joint ventures that primarily own and operate rental properties and hold land for development.
Combined summarized financial information for the unconsolidated joint ventures at December 31, 2019 and 2018, and for the years ended December 31, 2019, 2018 and 2017, are as follows (in thousands):
 
2019
 
2018
 
2017
Rental revenue
$
59,905

 
$
60,446

 
$
71,424

Gain on sale of properties - continuing operations
$
24,099

 
$
25,879

 
$
4,986

Net income
$
40,134

 
$
44,372

 
$
20,673

 
 
 
 
 
 
Equity in earnings of unconsolidated joint ventures (1)
$
31,406

 
$
21,444

 
$
63,310

 
 
 
 
 
 
Land, buildings and tenant improvements, net
$
305,888

 
$
328,959

 
 
Construction in progress
7,747

 
43,892

 
 
Undeveloped land
29,518

 
28,247

 
 
Other assets
75,909

 
88,448

 
 
 
$
419,062

 
$
489,546

 
 
 
 
 
 
 
 
Indebtedness
$
129,700

 
$
209,584

 
 
Other liabilities
24,208

 
38,172

 
 
 
153,908

 
247,756

 
 
Owners' equity
265,154

 
241,790

 
 
 
$
419,062

 
$
489,546

 
 
 
 
 
 
 
 
Investments in and advances to unconsolidated joint ventures (2)
$
133,074

 
$
110,795

 
 


(1) During 2017, we sold our interests in certain joint ventures, including the interests in the joint ventures sold in connection with the Medical Office Portfolio Disposition (see Note 4) for which we recognized a gain of $47.5 million. The gains recognized in connection with our sales of these ownership interests, which are classified within equity in earnings of unconsolidated joint ventures on the Consolidated Statements of Operations and Comprehensive Income, are not reflected in the summarized financial information for the underlying unconsolidated joint ventures.
(2) Differences between the net investment in our unconsolidated joint ventures and our underlying equity in the net assets of the ventures are primarily a result of previous impairments related to our investment in the unconsolidated joint ventures, basis differences associated with the sales of properties to joint ventures in which we retained an ownership interest and loans we have made to the joint ventures. These adjustments have resulted in an aggregate difference reducing our investments in unconsolidated joint ventures by $2.5 million and $11.4 million as of December 31, 2019 and 2018, respectively. Differences between historical cost basis and the basis reflected at the joint venture level (other than loans and impairments) are typically depreciated over the life of the related asset.
The scheduled principal payments of long term debt for the unconsolidated joint ventures, at our ratable ownership percentage, for each of the next five years and thereafter as of December 31, 2019 are as follows (in thousands):
Year
Future Repayments
2020
$

2021
27,735

2022
122

2023
126

2024
131

Thereafter
36,736

 
$
64,850





-88-

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


    
(7)
Real Estate Assets, Discontinued Operations, Assets Held-for-Sale and Impairments

Real Estate Assets
Real estate assets, excluding assets held-for-sale, consisted of the following (in thousands):
 
December 31, 2019
 
December 31, 2018
Buildings and tenant improvements
$
5,295,336

 
$
4,980,003

Land and improvements
2,532,541

 
2,268,343

Other real estate investments (1)
165,500

 

Real estate assets
$
7,993,377

 
$
7,248,346



(1) Includes real estate assets that we intend to redevelop within a relatively short time frame that are under leaseback to the seller(s) and generating income.

Discontinued Operations

All of the properties sold during the year ended December 31, 2017 and included in discontinued operations are medical office properties. Because of the size of the Medical Office Portfolio Disposition, and the fact that it represented our exit from the medical office product type, we determined that the disposition represented a strategic shift that would have a major effect on our operations and financial results. As such, the consolidated in-service properties in this portfolio met the criteria to be classified within discontinued operations. As the result of its classification within discontinued operations, operating results pertaining to the properties classified within discontinued operations were reclassified to discontinued operations for all periods presented in our Consolidated Statements of Operations and Comprehensive Income.

The following table illustrates the number of sold or held-for-sale properties included in, or excluded from, discontinued operations:
 
 
Held-for-Sale at December 31, 2019
 
Sold in 2019
 
Sold in 2018
 
Sold in 2017
 
Total
Industrial
 

 

 

 

 

Non-Reportable Rental Operations
 

 

 

 
81

 
81

  Total properties included in discontinued operations
 

 

 

 
81

 
81

Properties excluded from discontinued operations
 
1

 
28

 
15

 
17

 
61

  Total properties sold or classified as held-for-sale
 
1

 
28

 
15

 
98

 
142



Properties sold in 2017 but excluded from discontinued operations included four properties under development, which were disposed as part of the Medical Office Portfolio Disposition, as these properties did not meet the criteria to be included in discontinued operations.

For the properties that were classified in discontinued operations, we allocated 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. There were no additional properties classified as discontinued operations during the years ended December 31, 2019 and 2018 and, as such, no interest expense was allocated to discontinued operations during those periods.


-89-

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


The following table illustrates the operational results of the buildings reflected in discontinued operations for the years ended December 31, 2019, 2018 and 2017, respectively (in thousands):
 
 
2019
 
2018
 
2017
Revenues
$

 
$
117

 
$
87,185

Operating expenses

 
(9
)
 
(28,102
)
Depreciation and amortization

 

 
(25,911
)
Operating income

 
108

 
33,172

Interest expense

 

 
(14,736
)
Income before gain on sales and income taxes

 
108

 
18,436

Gain on sale of depreciable properties
445

 
3,792

 
1,357,778

Income from discontinued operations before income taxes
445

 
3,900

 
1,376,214

Income tax expense

 

 
(12,465
)
Income from discontinued operations
$
445

 
$
3,900

 
$
1,363,749


Income tax expense included in discontinued operations relates to the sale of certain properties owned by our taxable REIT subsidiary. The amounts classified in discontinued operations for the years ended December 31, 2019 and 2018 were comprised of true-up activity related to properties sold in previous years that were classified as discontinued operations.

There were no capital expenditures for properties classified within discontinued operations for the years ended December 31, 2019 and 2018. Capital expenditures on a cash basis for the year ended December 31, 2017 were $20.9 million for properties classified within discontinued operations.

Allocation of Noncontrolling Interests - General Partner

The following table illustrates the General Partner's share of the income attributable to common shareholders from continuing operations and discontinued operations, reduced by the allocation of income between continuing and discontinued operations to noncontrolling interests, for the years ended December 31, 2019, 2018 and 2017, respectively (in thousands):
 
2019
 
2018
 
2017
Income from continuing operations attributable to common shareholders
$
428,531

 
$
379,865

 
$
288,075

Income from discontinued operations attributable to common shareholders
441

 
3,864

 
1,346,356

Net income attributable to common shareholders
$
428,972

 
$
383,729

 
$
1,634,431



Allocation of Noncontrolling Interests - Partnership

Substantially all of the income from discontinued operations for all periods presented in the Partnership's Consolidated Statements of Operations and Comprehensive Income is attributable to the common unitholders.


-90-

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


Assets Held-for-Sale

At December 31, 2019, one in-service property was classified as held-for-sale, but did not meet the criteria to be classified within discontinued operations. The following table illustrates aggregate balance sheet information for all properties and land held-for-sale (in thousands):
 
Held-for-Sale Properties Included in Continuing Operations
 
December 31, 2019
 
December 31, 2018
Land and improvements
$
4,561

 
$

 
Buildings and tenant improvements
18,840

 

 
Undeveloped land

 
1,966

 
Accumulated depreciation
(7,132
)
 
(884
)
 
Deferred leasing and other costs, net
2,100

 

 
Other assets
94

 

 
Total assets held-for-sale
$
18,463

 
$
1,082

 
 
 
 
 
 
Total liabilities held-for-sale
$
887

 
$

 


Impairment Charges

The following table illustrates impairment charges recognized during the years ended December 31, 2019, 2018 and 2017, respectively (in thousands):
 
2019
 
2018
 
2017
Impairment charges - land
$

 
$

 
$
3,622

Impairment charges - building

 

 
859

Impairment charges
$

 
$

 
$
4,481



Primarily as the result of changes in our intended use for certain of our undeveloped land holdings, we recognized impairment charges of $3.6 million for the year ended December 31, 2017. The various land holdings written down to fair value totaled 12 acres for the year ended December 31, 2017. The fair value of the land upon which we recognized impairment charges was estimated based on asset-specific offers to purchase, comparable transactions and, in certain cases, estimates made by national and local independent real estate brokers who were familiar with the land parcels subject to evaluation as well as with conditions in the specific markets where the various land parcels are located. In all cases when estimates from brokers were utilized, members of our senior management who were responsible for the individual markets where the land parcels are located, and members of the Company’s accounting and financial management team, reviewed the broker’s estimates for factual accuracy and reasonableness. In all cases, we were ultimately responsible for all valuation estimates made in determining the extent of the impairment. Our valuation estimates primarily relied upon Level 3 inputs.

(8)
Indebtedness

All debt is issued directly or indirectly by the Partnership. The General Partner does not have any indebtedness, but does guarantee some of the unsecured debt of the Partnership.


-91-

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


Indebtedness at December 31, 2019 and 2018 consists of the following (in thousands):

 
 
Maturity Date
 
Weighted Average Interest Rate
 
Weighted Average Interest Rate
 
 
 
 
 
 
2019
 
2018
 
2019
 
2018
Fixed rate secured debt
2021 to 2027
 
5.92
%
 
6.91
%
 
$
32,287

 
$
77,601

Variable rate secured debt
2025
 
1.39
%
 
1.72
%
 
1,900

 
2,200

Unsecured debt
2022 to 2029
 
3.71
%
 
3.92
%
 
2,900,000

 
2,575,000

Unsecured line of credit
2022
 
%
 
3.39
%
 

 
30,000

 
 
 
 
 
 
 
$
2,934,187

 
$
2,684,801

Less: Deferred financing costs
 
 
 
 
 
 
19,422

 
26,300

Total indebtedness as reported on consolidated balance sheets
 
 
 
 
 
 
$
2,914,765

 
$
2,658,501



Secured Debt

At December 31, 2019, our secured debt was collateralized by rental properties with a carrying value of $99.0 million and by a letter of credit in the amount of $1.9 million.

The fair value of our fixed rate secured debt at December 31, 2019 was $34.5 million. 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 market rates for all of our current fixed rate secured debt is between 3.10% and 3.30%, based 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.

During 2019, we repaid three fixed rate secured loans, totaling $41.7 million, which had a weighted average stated interest rate of 7.76%.

During 2018, we repaid three loans, totaling $227.1 million, which had a weighted average stated rate of 7.62%.

Unsecured Debt
At December 31, 2019, all of our unsecured debt bore interest at fixed rates and primarily consisted of unsecured notes that are publicly traded. 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. The estimated trading values of our fixed rate unsecured debt, depending on the maturity and coupon rates, ranged from 100.00% 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 financial covenants at December 31, 2019.

-92-

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


We took the following actions during 2019 and 2018 as it pertains to our unsecured indebtedness:
In November 2019, we issued $400.0 million of senior unsecured notes that bear interest at a stated interest rate of 2.88%, have an effective interest rate of 3.96% when including the impact of interest rate swap amortization from AOCL, and mature on November 15, 2029.
In October 2019, we redeemed $250.0 million of senior unsecured notes that had a scheduled maturity date of February 2021 and bore a stated interest rate of 3.88% and an effective rate of 3.91%. We recognized a loss on debt extinguishment of $6.3 million, which included a prepayment premium and the write-off of unamortized deferred financing costs.
In August 2019, we issued $175.0 million of senior unsecured notes bearing interest at a stated interest rate of 3.38% and maturing on December 15, 2027, at 104.16% par value, resulting in an effective interest rate of 2.80%. Proceeds from the unsecured notes offering were primarily used to repay the borrowings under the unsecured line of credit. The notes were issued as additional notes under an indenture pursuant to which we previously issued $300.0 million senior unsecured notes due 2027 in December 2017. These notes have substantially identical terms.
In September 2018, we issued $450.0 million of senior unsecured notes that bear interest at a stated interest rate of 4.00%, have an effective interest rate of 4.13%, and mature on September 15, 2028. A portion of these proceeds were used to repay two of the secured loans noted above, totaling $223.9 million with a weighted average stated interest rate of 7.63% and a maturity date of March 10, 2019.
Unsecured Line of Credit
Our unsecured line of credit at December 31, 2019 is described as follows (in thousands):
 
 
 
 
 
 
Outstanding Balance at 
Description
Borrowing Capacity
 
Maturity Date
 
December 31, 2019
Unsecured Line of Credit – Partnership
$
1,200,000

 
January 30, 2022
 
$


The Partnership's unsecured line of credit has an interest rate on borrowings of LIBOR plus 0.875% and a maturity date of January 30, 2022, with options to extend until January 30, 2023. Subject to certain conditions, the terms also include an option to increase the facility by up to an additional $800.0 million, for a total of up to $2.00 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). At December 31, 2019, we were in compliance with all financial covenants under this line of credit.
To the extent there are outstanding borrowings, we utilize a discounted cash flow methodology in order to estimate the fair value of outstanding borrowings on our unsecured line of credit. To the extent that credit spreads have changed since the origination of the 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 would represent the difference between the book value and the fair value. This 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. As our credit spreads have not changed appreciably, we believe that the contractual interest rate and the current market rate on any outstanding borrowings on the line of credit are the same. The current market rate is internally estimated and therefore is primarily based upon a Level 3 input.

-93-

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


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, 2019 (in thousands): 
 
Book Value at 12/31/2018
 
Book Value at 12/31/2019
 
Fair Value at 12/31/2018
 
Issuances and
Assumptions
 
Payments/Payoffs
 
Adjustments
to Fair Value
 
Fair Value at 12/31/2019
Fixed rate secured debt
$
77,601

 
$
32,287

 
$
80,238

 
$

 
$
(45,215
)
 
$
(476
)
 
$
34,547

Variable rate secured debt
2,200

 
1,900

 
2,200

 

 
(300
)
 

 
1,900

Unsecured debt
2,575,000

 
2,900,000

 
2,549,963

 
575,000

 
(250,000
)
 
170,522

 
3,045,485

Unsecured line of credit
30,000

 

 
30,000

 

 
(30,000
)
 

 

Total
$
2,684,801

 
$
2,934,187

 
$
2,662,401

 
$
575,000

 
$
(325,515
)
 
$
170,046

 
$
3,081,932

Less: Deferred financing costs
26,300

 
19,422

 
 
 
 
 
 
 
 
 
 
Total indebtedness as reported on the consolidated balance sheets
$
2,658,501

 
$
2,914,765

 
 
 
 
 
 
 
 
 
 

 

Scheduled Maturities and Interest Paid
At December 31, 2019, the scheduled amortization and maturities of all indebtedness, excluding fair value adjustment, for the next five years and thereafter were as follows (in thousands):
 
Year
Amount
2020
$
3,883

2021
12,463

2022
603,611

2023
253,817

2024
304,036

Thereafter
1,756,325

 
$
2,934,135


The amount of interest paid in 2019, 2018 and 2017 was $111.8 million, $108.2 million and $121.0 million, respectively. The amount of interest capitalized in 2019, 2018 and 2017 was $26.5 million, $27.2 million and $18.9 million, respectively.
(9)
Segment Reporting
Reportable Segments
During the year ended December 31, 2017, we completed the Medical Office Portfolio Disposition, which resulted in all of our in-service medical office properties being classified within discontinued operations, with the exception of a property that did not meet the criteria for classification as held-for-sale at December 31, 2019. As a result of this transaction, beginning the second quarter of 2017, our medical office properties were no longer presented as a separate reportable segment, with substantially all such operating results being classified within discontinued operations. The remaining medical office property included in continuing operations no longer meets the quantitative thresholds for separate presentation, and is classified as part of our Non-Reportable Rental Operations. Properties that are not included in our reportable segments, because they do not by themselves meet the quantitative thresholds for separate presentation as a reportable segment, are generally referred to as Non-Reportable Rental Operations. Our Non-Reportable Rental Operations primarily include our remaining office properties and medical office property at December 31, 2019.

As of December 31, 2019, we had two reportable operating segments, the first consisting of the ownership and rental of industrial real estate investments. Our ongoing investments in new real estate investments are determined largely upon anticipated geographic trends in supply and demand for industrial buildings, as well as the real estate

-94-

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


needs of our major tenants that operate on a national level. Our strategic initiatives and our allocation of resources have been historically based upon allocation among product types, which was consistent with our designation of reportable segments, and after having sold nearly all of our office and medical office properties we intend to increase our investment in industrial properties and treat them as a single operating and reportable segment. The operations of our industrial properties, as well as our Non-Reportable Rental Operations, are collectively referred to as "Rental Operations."

Our second 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." The Service Operations segment is identified as one single operating segment because the lowest level of financial results reviewed by our chief operating decision maker are the results for the Service Operations segment in total. Further, our reportable segments 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.

Revenues by Reportable Segment
The following table shows the revenues for each of the reportable segments, as well as a reconciliation to consolidated revenues, for the years ended December 31, 2019, 2018 and 2017 (in thousands):
 
2019
 
2018
 
2017
Revenues
 
 
 
 
 
Rental Operations:
 
 
 
 
 
Industrial
$
848,806

 
$
775,713

 
$
661,226

Non-Reportable Rental Operations
5,794

 
7,862

 
24,101

Service Operations
117,926

 
162,551

 
94,420

Total segment revenues
972,526

 
946,126

 
779,747

Other revenue
1,233

 
1,744

 
1,187

Consolidated revenue from continuing operations
973,759

 
947,870

 
780,934

Discontinued operations

 
117

 
87,185

Consolidated revenue
$
973,759

 
$
947,987

 
$
868,119


Supplemental Performance Measure
PNOI is the non-GAAP supplemental performance measure that we use to evaluate the performance of, and to allocate resources among, the real estate investments in the reportable and operating segments that comprise our Rental Operations. PNOI for our Rental Operations segments is comprised of rental revenues from continuing operations less rental expenses and real estate taxes from continuing operations, along with certain other adjusting items (collectively referred to as "Rental Operations revenues and expenses excluded from PNOI," as shown in the following table). Additionally, we do not allocate interest expense, depreciation expense and certain other non-property specific revenues and expenses (collectively referred to as "Non-Segment Items," as shown in the following table) to our individual operating segments.
We evaluate the performance of our Service Operations reportable segment using net income or loss, as allocated to that segment ("Earnings from Service Operations").

-95-

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


The following table shows a reconciliation of our segment-level measures of profitability to consolidated income from continuing operations before income taxes, for the years ended December 31, 2019, 2018 and 2017 (in thousands and excluding discontinued operations):
 
 
2019
 
2018
 
2017
PNOI
 
 
 
 
 
 
Industrial
 
$
599,416

 
$
526,627

 
$
439,404

Non-Reportable Rental Operations
 
3,811

 
5,276

 
4,887

PNOI, excluding all sold properties
 
603,227

 
531,903

 
444,291

PNOI from sold properties included in continuing operations
 
14,894

 
32,453

 
49,652

PNOI, continuing operations
 
618,121

 
564,356

 
493,943

 
 
 
 
 
 
 
Earnings from Service Operations
 
6,360

 
8,642

 
4,963

 
 
 
 
 
 
 
Rental Operations revenues and expenses excluded from PNOI:
Straight-line rental income and expense, net
 
21,573

 
24,604

 
15,520

Revenues related to lease buyouts
 
1,235

 
23

 
10,816

Amortization of lease concessions and above and below market rents
 
7,802

 
2,332

 
(3,667
)
Intercompany rents and other adjusting items
 
1,012

 
1,271

 
1,004

Non-Segment Items:
 
 
 
 
 
 
Equity in earnings of unconsolidated joint ventures
 
31,406

 
21,444

 
63,310

Promote income
 

 

 
20,007

Interest expense
 
(89,756
)
 
(85,006
)
 
(87,003
)
Depreciation and amortization expense
 
(327,223
)
 
(312,217
)
 
(273,561
)
Gain on sale of properties
 
234,653

 
204,988

 
113,669

Impairment charges
 

 

 
(4,481
)
Interest and other income, net
 
9,941

 
17,234

 
14,721

General and administrative expenses
 
(60,889
)
 
(56,218
)
 
(54,944
)
Gain on land sales
 
7,445

 
10,334

 
9,244

Other operating expenses
 
(5,318
)
 
(5,231
)
 
(4,212
)
Loss on extinguishment of debt
 
(6,320
)
 
(388
)
 
(26,104
)
Gain on involuntary conversion
 
2,259

 

 

Non-incremental costs related to successful leases
 
(12,402
)
 

 

Other non-segment revenues and expenses, net
 
986

 
(3,972
)
 
(2,990
)
Income from continuing operations before income taxes
 
$
440,885

 
$
392,196

 
$
290,235


The most comparable GAAP measure to PNOI is income from continuing operations before income taxes. PNOI excludes expenses that materially impact our overall results of operations and, therefore, should not be considered as a substitute for income from continuing operations before income taxes or any other measures derived in accordance with GAAP. Furthermore, PNOI may not be comparable to other similarly titled measures of other companies.
Assets by Reportable Segment
 The assets for each of the reportable segments at December 31, 2019 and 2018 were as follows (in thousands):
 
December 31, 2019
 
December 31, 2018
Assets
 
 
 
Rental Operations:
 
 
 
Industrial
$
7,843,302

 
$
7,155,505

Non-Reportable Rental Operations
39,700

 
43,496

Service Operations
150,882

 
132,483

Total segment assets
8,033,884

 
7,331,484

Non-segment assets
386,678

 
472,540

Consolidated assets
$
8,420,562

 
$
7,804,024




-96-

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


In addition to revenues and PNOI, 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 are included within "second generation tenant improvements, leasing costs and building improvements" in our consolidated statements of Cash Flows and are primarily attributable to the industrial segment for the years ended December 31, 2019, 2018 and 2017.

(10)
Employee Benefit Plans
We maintain a 401(k) plan for our eligible employees. We make matching contributions of 50% of the employee salary deferral contributions up to 6% of eligible compensation and may also make annual discretionary contributions. A discretionary contribution was declared at the end of 2019, 2018 and 2017. The total expense recognized for this plan was $2.1 million, $1.8 million and $2.0 million for the years ended December 31, 2019, 2018 and 2017, respectively.
(11)
Shareholders' Equity of the General Partner and Partners' Capital of the Partnership
General Partner
The General Partner has an ATM equity program that allows it to issue and sell its common shares through sales agents from time to time. Actual sales under the ATM equity program depend on a variety of factors to be determined by the General Partner, including, among others, market conditions, the trading price of the General Partner’s common stock, determinations by the General Partner of the appropriate sources of funding and potential uses of funding available.
In August 2019, the General Partner terminated its previous equity distribution agreement for the ATM equity program and entered into a new equity distribution agreement to sell shares of its common stock, $0.01 par value per share, from time to time, up to an aggregate offering price of $400.0 million.
During 2019, the General Partner issued 8.0 million common shares pursuant to its ATM equity programs, generating gross proceeds of $266.3 million and, after deducting commissions and other costs, net proceeds of $263.3 million. The proceeds from these offerings were contributed to the Partnership and used to fund development activities.
During 2018, the General Partner issued 990,400 common shares pursuant to its ATM equity program, generating gross proceeds of approximately $29.0 million and, after deducting commissions and other costs, net proceeds of approximately $28.4 million. The proceeds from these offerings were contributed to the Partnership and used to fund development activities.
During 2017, the General Partner did not issue any common shares pursuant to its ATM equity programs.

Partnership

For each common share or preferred share that the General Partner issues, the Partnership issues a corresponding Common 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 common shares or preferred shares, the Partnership redeems the corresponding Common Units or Preferred Units held by the General Partner at the same price.
(12)
Stock Based Compensation
We are authorized to issue up to 10.6 million shares of the General Partner's common stock under our stock-based employee and non-employee compensation plans.

-97-

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


Restricted Stock Units ("RSUs")
Under our 2015 Long-Term Incentive Plan, which was approved by the General Partner's shareholders in April 2015, and our 2015 Non-Employee Directors Compensation Plan (collectively, the "Compensation Plans"), RSUs may be granted to non-employee directors, executive officers and selected employees. A RSU is economically equivalent to a share of the General Partner's common stock and RSUs are valued based on the market price of the General Partner's common stock on the date of the award.
RSUs granted to employees from 2015 to 2019 vest ratably in most cases over a three-year period, 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 employees prior to 2015 vest ratably over a five-year period and are payable in the same manner. RSUs granted to existing non-employee directors vest 100% over one year and have contractual lives of one year.
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 the vesting period. 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 2019
Restricted Stock Units
Number of
RSUs
 
Weighted
Average
Grant-Date
Fair Value
RSUs at December 31, 2018
956,403

 
$23.36
Granted
392,345

 
$29.98
Vested
(590,364
)
 
$22.15
Forfeited
(10,204
)
 
$27.60
RSUs at December 31, 2019
748,180

 
$27.73


Compensation cost recognized for RSUs totaled $11.0 million, $11.9 million and $11.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.

As of December 31, 2019, there was $6.0 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 1.7 years.

The total intrinsic value (which is equal to the value of a share of the General Partner's common stock on the date of vesting) of RSUs vested during the years ended December 31, 2019, 2018 and 2017 was $17.7 million, $18.3 million and $19.3 million, respectively.

The weighted average grant-date fair value of RSUs granted during 2018 and 2017 was $25.38 and $25.42, respectively.

The weighted average grant-date fair value of nonvested RSUs as of December 31, 2017 was $20.79.
(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.
 
In 2018, we entered into two forward starting interest rate swaps with notional amounts of $200.0 million. In 2019, we entered into three additional forward starting interest rate swaps with notional amounts of $150.0 million. We entered into these interest rate swap contracts to hedge our exposure to the changes in the interest rates on an anticipated debt offering in late 2019. These forward starting swaps were appropriately designated as cash flow

-98-


hedges, with any changes in fair value recorded in AOCL. We determined the fair values of these interest rate swaps by using standard market conventions and techniques such as discounted cash flow analysis, option pricing models and termination cost at each balance sheet date. The inputs used to value these interest rate swaps fall within Level 2 of the fair value hierarchy.

In November 2019, we issued $400.0 million of 2.88% senior unsecured notes due 2029 (see Note 8) and terminated all of the forward starting interest rate swaps, resulting in a cash payment of $35.6 million to the counter parties, which was recorded in AOCL and is being recognized through interest expense over the term of the notes. The remaining unamortized amount as of December 31, 2019 was $35.0 million.

(14)
Commitments and Contingencies
The Partnership has guaranteed the repayment of $22.0 million of economic development bonds issued by various municipalities in connection with certain commercial developments. We may 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.
The Partnership also has guaranteed the repayment of loans associated with one of our unconsolidated joint ventures. At December 31, 2019, the maximum guarantee exposure for these loans was approximately $55.4 million.

We lease certain land positions with terms extending to December 31, 2065, with a total future payment obligation of $90.2 million at December 31, 2019. No payments on these ground leases, which are classified as operating leases, are material in any individual year.

In addition to ground leases, we are party to other operating leases as part of conducting our business, including leases of office space from third parties, with a total future payment obligation of $35.4 million at December 31, 2019. No future payments on these 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 is not expected to 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 assessment is recorded as a liability. We have $1.0 million of such special assessment liabilities, which are included within other liabilities on our Consolidated Balance Sheets as of December 31, 2019.

-99-

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





(15)
Selected Interim Financial Information (unaudited)
The tables below are the Company's selected quarterly information for the years ended December 31, 2019 and 2018 (in thousands, except per common share or per Common Unit data):
 
 
Quarter Ended
2019
 
December 31
 
September 30
 
June 30
 
March 31
 
 
 
 
 
 
 
 
 
Rental and related revenue
 
$217,387
 
$215,374
 
$213,107
 
$209,965
General contractor and service fee revenue
 
$13,088
 
$25,955
 
$23,919
 
$54,964
 
 
 
 
 
 
 
 
 
General Partner
 
 
 
 
 
 
 
 
Net income attributable to common shareholders
 
$86,802
 
$226,566
 
$71,053
 
$44,551
Basic income per common share
 
$0.24
 
$0.62
 
$0.20
 
$0.12
Diluted income per common share
 
$0.23
 
$0.62
 
$0.20
 
$0.12
Weighted average common shares
 
367,603
 
362,416
 
359,681
 
359,139
Weighted average common shares and potential dilutive securities
 
372,464
 
367,271
 
362,926
 
362,362
 
 
 
 
 
 
 
 
 
Partnership
 
 
 
 
 
 
 
 
Net income attributable to common unitholders
 
$87,509
 
$228,534
 
$71,674
 
$44,933
Basic income per Common Unit
 
$0.24
 
$0.62
 
$0.20
 
$0.12
Diluted income per Common Unit
 
$0.23
 
$0.62
 
$0.20
 
$0.12
Weighted average Common Units
 
370,725
 
365,558
 
362,826
 
362,204
Weighted average Common Units and potential dilutive securities
 
372,464
 
367,271
 
362,926
 
362,362
 
 
 
 
 
 
 
 
 
2018
 
December 31
 
September 30
 
June 30
 
March 31
 
 
 
 
 
 
 
 
 
Rental and related revenue
 
$202,858
 
$196,912
 
$192,093
 
$193,456
General contractor and service fee revenue
 
$67,999
 
$34,986
 
$18,465
 
$41,101
 
 
 
 
 
 
 
 
 
General Partner
 
 
 
 
 
 
 
 
Net income attributable to common shareholders
 
$63,896
 
$53,025
 
$193,845
 
$72,963
Basic income per common share
 
$0.18
 
$0.15
 
$0.54
 
$0.20
Diluted income per common share
 
$0.18
 
$0.15
 
$0.54
 
$0.20
Weighted average common shares
 
358,561
 
357,898
 
357,054
 
356,740
Weighted average common shares and potential dilutive securities
 
362,536
 
361,410
 
362,741
 
360,400
 
 
 
 
 
 
 
 
 
Partnership
 
 
 
 
 
 
 
 
Net income attributable to common unitholders
 
$64,422
 
$53,520
 
$195,669
 
$73,646
Basic income per Common Unit
 
$0.18
 
$0.15
 
$0.54
 
$0.20
Diluted income per Common Unit
 
$0.18
 
$0.15
 
$0.54
 
$0.20
Weighted average Common Units
 
361,672
 
361,200
 
360,447
 
360,095
Weighted average Common Units and potential dilutive securities
 
362,536
 
361,410
 
362,741
 
360,400


-100-

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


(16)
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 29, 2020:
Class of stock/units
Quarterly
Amount per Share or Unit
 
Record Date
 
Payment Date
Common
$
0.235

 
February 14, 2020
 
February 28, 2020


Issuance of Senior Unsecured Notes

In February 2020, we issued $325.0 million of senior unsecured notes that bear a stated interest rate of 3.05%, have an effective interest rate of 3.19%, and mature on March 1, 2050. Proceeds from the unsecured notes offering will primarily be used to redeem $300.0 million of 4.38% senior unsecured notes due 2022.

-101-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
Atlanta, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Airport Distribution 3781
 
Industrial

 
4,064

 
11,383

 
331

 
4,064

 
11,714

 
15,778

 
2,763

2002
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aurora, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Meridian Business 880
 
Industrial

 
963

 
4,625

 
1,420

 
963

 
6,045

 
7,008

 
2,964

2000
2000
 
4220 Meridian Parkway
 
Industrial

 
970

 
3,512

 
26

 
970

 
3,538

 
4,508

 
1,349

2004
2004
 
Butterfield 2805
 
Industrial

 
9,185

 
10,795

 
5,907

 
9,272

 
16,615

 
25,887

 
9,694

2008
2008
 
Meridian Business 940
 
Industrial

 
2,674

 
6,923

 
2,237

 
2,674

 
9,160

 
11,834

 
2,594

1998
2012
 
Butterfield 4000
 
Industrial

 
3,132

 
12,639

 
70

 
3,132

 
12,709

 
15,841

 
2,502

2016
2016
 
Butterfield 2850
 
Industrial

 
11,317

 
18,305

 
130

 
11,317

 
18,435

 
29,752

 
4,243

2016
2016
 
Butterfield 4200
 
Industrial

 
5,777

 
13,108

 
2,762

 
5,967

 
15,680

 
21,647

 
3,731

2016
2016
 
Butterfield 2865
 
Industrial

 
28,151

 
41,112

 
14

 
28,151

 
41,126

 
69,277

 
7,342

2017
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Austell, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hartman Business 7545
 
Industrial

 
2,640

 
21,471

 
29

 
2,640

 
21,500

 
24,140

 
6,918

2008
2012
 
240 The Bluffs
 
Industrial

 
6,138

 
15,447

 
3,078

 
6,138

 
18,525

 
24,663

 
696

2018
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Baltimore, Maryland
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Chesapeake Commerce 5901
 
Industrial

 
3,345

 
1,355

 
3,957

 
3,365

 
5,292

 
8,657

 
3,269

2008
2008
 
Chesapeake Commerce 5003
 
Industrial

 
6,488

 
7,087

 
3,620

 
6,546

 
10,649

 
17,195

 
5,510

2008
2008
 
Chesapeake Commerce 2010
 
Industrial

 
37,557

 
38,011

 
36

 
37,727

 
37,877

 
75,604

 
17,001

2014
2014
 
Chesapeake Commerce 5501
 
Industrial

 
13,724

 
8,043

 
4,518

 
13,782

 
12,503

 
26,285

 
5,118

2014
2014
 
Chesapeake Commerce 1500
 
Industrial

 
8,289

 
10,268

 
105

 
8,333

 
10,329

 
18,662

 
2,881

2016
2016
 
Chesapeake Commerce 5900
 
Industrial

 
5,567

 
6,100

 
870

 
5,567

 
6,970

 
12,537

 
1,275

2017
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Batavia, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
S Afton Industrial Park 3001
 
Industrial

 
5,729

 
20,720

 

 
5,729

 
20,720

 
26,449

 
718

2019
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Baytown, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4570 E. Greenwood
 
Industrial

 
9,323

 
5,934

 

 
9,323

 
5,934

 
15,257

 
4,937

2005
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bloomingdale, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Morgan Business Center 400
 
Industrial

 
18,385

 
44,455

 
520

 
18,385

 
44,975

 
63,360

 
4,591

2017
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bolingbrook, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
250 East Old Chicago Road
 
Industrial

 
3,050

 
4,038

 
142

 
3,050

 
4,180

 
7,230

 
3,282

2005
2005
 
Crossroads 2
 
Industrial

 
1,418

 
5,482

 
921

 
1,418

 
6,403

 
7,821

 
2,608

1998
2010
 
Crossroads 375
 
Industrial

 
1,330

 
4,371

 
523

 
1,330

 
4,894

 
6,224

 
1,959

2000
2010
 
Crossroads Parkway 370
 
Industrial

 
2,409

 
4,236

 
881

 
2,409

 
5,117

 
7,526

 
1,879

1989
2011
 
Crossroads Parkway 605
 
Industrial

 
3,656

 
7,587

 
2,559

 
3,656

 
10,146

 
13,802

 
2,849

1998
2011
 
Crossroads Parkway 335
 
Industrial

 
2,574

 
8,342

 
779

 
2,574

 
9,121

 
11,695

 
2,678

1997
2012


-102-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Boynton Beach, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gateway Center 1103
 
Industrial

 
4,271

 
5,313

 
1,752

 
4,271

 
7,065

 
11,336

 
3,015

2002
2010
 
Gateway Center 3602
 
Industrial

 
2,006

 
4,584

 
216

 
2,006

 
4,800

 
6,806

 
1,682

2002
2010
 
Gateway Center 3402
 
Industrial

 
2,381

 
3,218

 
763

 
2,381

 
3,981

 
6,362

 
1,506

2002
2010
 
Gateway Center 2055
 
Industrial

 
1,800

 
2,583

 
192

 
1,800

 
2,775

 
4,575

 
1,060

2000
2010
 
Gateway Center 2045
 
Industrial

 
1,238

 
1,541

 
1,174

 
1,238

 
2,715

 
3,953

 
1,293

2000
2010
 
Gateway Center 2035
 
Industrial

 
1,238

 
1,304

 
699

 
1,238

 
2,003

 
3,241

 
772

2000
2010
 
Gateway Center 2025
 
Industrial

 
1,800

 
2,658

 
217

 
1,800

 
2,875

 
4,675

 
1,112

2000
2010
 
Gateway Center 1926
 
Industrial

 
4,781

 
9,900

 
2,043

 
4,781

 
11,943

 
16,724

 
4,839

2004
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Braselton, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Braselton Business 920
 
Industrial

 
1,365

 
7,713

 
5,003

 
1,529

 
12,552

 
14,081

 
5,956

2001
2001
 
625 Braselton Pkwy
 
Industrial

 
9,855

 
21,010

 
5,895

 
11,062

 
25,698

 
36,760

 
15,089

2006
2005
 
1350 Braselton Parkway
 
Industrial

 
8,227

 
8,856

 
5,360

 
8,227

 
14,216

 
22,443

 
10,428

2008
2008
 
1380 Jesse Cronic Rd
 
Industrial

 
8,519

 
17,534

 

 
8,519

 
17,534

 
26,053

 
991

2019
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brentwood, Tennessee
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brentwood South Business 7104
 
Industrial

 
1,065

 
4,410

 
1,802

 
1,065

 
6,212

 
7,277

 
3,234

1987
1999
 
Brentwood South Business 7106
 
Industrial

 
1,065

 
1,844

 
1,950

 
1,065

 
3,794

 
4,859

 
1,976

1987
1999
 
Brentwood South Business 7108
 
Industrial

 
848

 
3,233

 
1,460

 
848

 
4,693

 
5,541

 
2,529

1989
1999
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bridgeton, Missouri
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DukePort 13870
 
Industrial

 
2,124

 
5,316

 
720

 
2,124

 
6,036

 
8,160

 
2,739

1996
2010
 
DukePort 13890
 
Industrial

 
1,470

 
2,701

 
184

 
1,470

 
2,885

 
4,355

 
1,383

1997
2010
 
DukePort 4730
 
Industrial

 
600

 
2,690

 
463

 
600

 
3,153

 
3,753

 
1,100

1998
2010
 
DukePort 13269
 
Industrial

 
1,664

 
5,752

 
416

 
1,664

 
6,168

 
7,832

 
2,740

1999
2010
 
DukePort 4745
 
Industrial

 
834

 
3,622

 
371

 
834

 
3,993

 
4,827

 
1,360

1999
2010
 
DukePort 13201
 
Industrial

 
2,475

 
5,459

 
2,105

 
2,475

 
7,564

 
10,039

 
3,092

2001
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brooklyn Park, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7300 Northland Drive
 
Industrial

 
700

 
5,289

 
673

 
703

 
5,959

 
6,662

 
3,076

1999
1998
 
Crosstown North 9201
 
Industrial

 
835

 
4,433

 
1,536

 
1,121

 
5,683

 
6,804

 
2,978

1998
1999
 
Crosstown North 8400
 
Industrial

 
2,079

 
4,926

 
2,308

 
2,233

 
7,080

 
9,313

 
3,506

1999
1999
 
Crosstown North 9100
 
Industrial

 
1,079

 
3,743

 
1,005

 
1,166

 
4,661

 
5,827

 
2,286

2000
2000
 
Crosstown North 9200
 
Industrial

 
2,723

 
2,674

 
2,706

 
2,723

 
5,380

 
8,103

 
3,248

2005
2005
 
Crosstown North 7601
 
Industrial

 
4,564

 
7,472

 
1,228

 
4,564

 
8,700

 
13,264

 
4,849

2005
2005
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brookshire, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Katy 90
 
Industrial

 
23,245

 
50,678

 
(62
)
 
23,245

 
50,616

 
73,861

 
4,572

2018
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


-103-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
Buena Park, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6280 Artesia Boulevard
 
Industrial

 
28,582

 
5,010

 
504

 
28,582

 
5,514

 
34,096

 
622

2005
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carol Stream, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carol Stream 815
 
Industrial

 
3,037

 
11,210

 
2,029

 
3,037

 
13,239

 
16,276

 
5,487

2004
2003
 
Carol Stream 640
 
Industrial

 
1,095

 
3,200

 
454

 
1,095

 
3,654

 
4,749

 
1,437

1998
2010
 
Carol Stream 370
 
Industrial

 
1,556

 
5,960

 
822

 
1,569

 
6,769

 
8,338

 
2,418

2002
2010
 
250 Kehoe Boulevard
 
Industrial

 
1,715

 
7,552

 
250

 
1,715

 
7,802

 
9,517

 
2,446

2008
2011
 
Carol Stream 720
 
Industrial

 
4,031

 
17,759

 
1,019

 
4,751

 
18,058

 
22,809

 
5,799

1999
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carteret, New Jersey
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
900 Federal Blvd.
 
Industrial

 
2,088

 
24,712

 
7

 
2,088

 
24,719

 
26,807

 
2,384

2017
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Chino, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13799 Monte Vista
 
Industrial

 
14,046

 
8,236

 
2,230

 
14,046

 
10,466

 
24,512

 
5,349

2013
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cincinnati, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
311 Elm Street - Leasehold Improvements
 
Other

 

 
4,760

 
2,018

 

 
6,778

 
6,778

 
6,556

1986
1993
 
Kenwood Commons 8230
 
Office
623

 
638

 
42

 
1,342

 
638

 
1,384

 
2,022

 
689

1986
1993
 
Kenwood Commons 8280
 
Office
1,277

 
638

 
282

 
1,643

 
638

 
1,925

 
2,563

 
874

1986
1993
 
World Park 5389
 
Industrial

 
1,133

 
5,550

 
1,168

 
1,133

 
6,718

 
7,851

 
2,126

1994
2010
 
World Park 5232
 
Industrial

 
1,268

 
5,104

 
120

 
1,268

 
5,224

 
6,492

 
1,858

1997
2010
 
World Park 5399
 
Industrial

 
870

 
5,251

 
787

 
870

 
6,038

 
6,908

 
2,220

1998
2010
 
World Park 5265
 
Industrial

 
2,492

 
11,905

 
4,632

 
2,492

 
16,537

 
19,029

 
5,731

1999
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
City of Industry, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
825 Ajax Ave
 
Industrial

 
38,930

 
27,627

 
8,133

 
38,930

 
35,760

 
74,690

 
3,257

2017
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
College Station, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Baylor College Station MOB
 
Medical Office

 
5,551

 
33,770

 
4,146

 
5,551

 
37,916

 
43,467

 
13,389

2013
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Columbus, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RGLP Intermodal North 9224
 
Industrial

 
1,550

 
19,873

 
885

 
1,550

 
20,758

 
22,308

 
2,438

2016
2016
 
RGLP Intermodal S 9799
 
Industrial

 
13,065

 
44,159

 

 
13,065

 
44,159

 
57,224

 
2,461

2018
2018


-104-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
Coppell, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Freeport X
 
Industrial

 
2,145

 
12,784

 
3,641

 
2,145

 
16,425

 
18,570

 
6,487

2004
2004
 
Point West 400
 
Industrial

 
10,181

 
12,803

 
9,024

 
10,475

 
21,533

 
32,008

 
11,729

2008
2008
 
Point West 240
 
Industrial

 
6,785

 
11,700

 
8,143

 
7,519

 
19,109

 
26,628

 
12,371

2008
2008
 
Point West 120
 
Industrial

 
3,267

 
8,695

 
1,024

 
3,267

 
9,719

 
12,986

 
3,464

2015
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corona, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1283 Sherborn Street
 
Industrial

 
8,677

 
16,753

 
66

 
8,677

 
16,819

 
25,496

 
7,865

2005
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cranbury, New Jersey
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
311 Half Acre Road
 
Industrial

 
6,600

 
14,636

 

 
6,600

 
14,636

 
21,236

 
4,242

2004
2013
 
315 Half Acre Road
 
Industrial

 
14,100

 
30,084

 

 
14,100

 
30,084

 
44,184

 
8,605

2004
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Davenport, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Park 27 Distribution 210
 
Industrial

 
1,143

 
5,052

 
592

 
1,198

 
5,589

 
6,787

 
2,325

2003
2003
 
Park 27 Distribution 220
 
Industrial

 
4,374

 
5,066

 
5,850

 
4,502

 
10,788

 
15,290

 
5,540

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Davie, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westport Business Park 2555
 
Industrial

 
1,200

 
1,276

 
81

 
1,200

 
1,357

 
2,557

 
742

1991
2011
 
Westport Business Park 2501
 
Industrial

 
1,088

 
779

 
245

 
1,088

 
1,024

 
2,112

 
591

1991
2011
 
Westport Business Park 2525
 
Industrial

 
2,363

 
5,791

 
1,267

 
2,363

 
7,058

 
9,421

 
2,392

1991
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deer Park, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
801 Seaco Court
 
Industrial

 
2,331

 
4,673

 
632

 
2,331

 
5,305

 
7,636

 
1,709

2006
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Des Moines, Washington
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21202 24th Ave South
 
Industrial

 
18,720

 
36,496

 
43

 
18,720

 
36,539

 
55,259

 
1,736

2018
2018
 
21402 24th Ave South
 
Industrial

 
18,970

 
31,048

 
969

 
18,970

 
32,017

 
50,987

 
1,401

2018
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Duluth, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sugarloaf 2775
 
Industrial

 
560

 
4,298

 
1,211

 
560

 
5,509

 
6,069

 
2,681

1997
1999
 
Sugarloaf 3079
 
Industrial

 
776

 
4,536

 
3,623

 
776

 
8,159

 
8,935

 
3,956

1998
1999
 
Sugarloaf 2855
 
Industrial

 
765

 
2,618

 
1,860

 
765

 
4,478

 
5,243

 
2,202

1999
1999
 
Sugarloaf 6655
 
Industrial

 
1,651

 
6,804

 
1,748

 
1,651

 
8,552

 
10,203

 
4,025

1998
2001
 
2625 Pinemeadow Court
 
Industrial

 
861

 
3,107

 
676

 
861

 
3,783

 
4,644

 
1,211

1994
2010
 
2660 Pinemeadow Court
 
Industrial

 
540

 
2,234

 
302

 
540

 
2,536

 
3,076

 
1,321

1996
2010
 
2450 Satellite Boulevard
 
Industrial

 
556

 
1,897

 
451

 
556

 
2,348

 
2,904

 
963

1994
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DuPont, Washington
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2700 Center Drive
 
Industrial

 
34,413

 
37,943

 
520

 
34,582

 
38,294

 
72,876

 
13,472

2013
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Durham, North Carolina
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Centerpoint Raleigh 1805
 
Industrial

 
4,110

 
10,343

 
5,060

 
4,110

 
15,403

 
19,513

 
5,319

2000
2011
 
Centerpoint Raleigh 1757
 
Industrial

 
2,998

 
8,722

 
14

 
2,998

 
8,736

 
11,734

 
2,728

2007
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


-105-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
Eagan, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Apollo 920
 
Industrial

 
866

 
3,234

 
2,076

 
895

 
5,281

 
6,176

 
2,915

1997
1997
 
Apollo 940
 
Industrial

 
474

 
2,092

 
808

 
474

 
2,900

 
3,374

 
1,397

2000
2000
 
Apollo 950
 
Industrial

 
1,432

 
5,988

 
127

 
1,432

 
6,115

 
7,547

 
3,008

2000
2000
 
2015 Silver Bell Road
 
Industrial

 
1,740

 
4,180

 
2,864

 
1,740

 
7,044

 
8,784

 
3,767

1999
1999
 
Trapp 1279
 
Industrial

 
671

 
3,441

 
969

 
691

 
4,390

 
5,081

 
2,198

1996
1998
 
Trapp 1245
 
Industrial

 
1,250

 
5,424

 
1,657

 
1,250

 
7,081

 
8,331

 
3,735

1998
1998
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earth City, Missouri
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate Trail 3655
 
Industrial

 
2,850

 
4,597

 
2,526

 
2,875

 
7,098

 
9,973

 
4,311

2006
2006
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
East Point, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Camp Creek 2400
 
Industrial

 
296

 
627

 
2,310

 
300

 
2,933

 
3,233

 
1,336

1988
2001
 
Camp Creek 2600
 
Industrial

 
364

 
824

 
1,680

 
368

 
2,500

 
2,868

 
1,265

1990
2001
 
Camp Creek 3201
 
Industrial

 
1,937

 
7,426

 
4,202

 
1,937

 
11,628

 
13,565

 
5,007

2004
2004
 
Camp Creek 3900
 
Industrial

 
1,059

 
2,919

 
2,372

 
1,220

 
5,130

 
6,350

 
2,883

2005
2005
 
Camp Creek 3909
 
Industrial

 
5,687

 
1,309

 
26,522

 
15,168

 
18,350

 
33,518

 
15,463

2014
2006
 
Camp Creek 4200
 
Industrial

 
2,065

 
7,037

 
3,677

 
2,438

 
10,341

 
12,779

 
6,199

2006
2006
 
Camp Creek 3000
 
Industrial

 
1,163

 
1,020

 
1,479

 
1,258

 
2,404

 
3,662

 
1,640

2007
2007
 
Camp Creek 4800
 
Industrial

 
2,476

 
3,906

 
2,252

 
2,740

 
5,894

 
8,634

 
3,367

2008
2008
 
Camp Creek 4100
 
Industrial

 
3,130

 
9,115

 
554

 
3,327

 
9,472

 
12,799

 
3,283

2013
2013
 
Camp Creek 3700
 
Industrial

 
1,878

 
3,842

 
100

 
1,883

 
3,937

 
5,820

 
1,716

2014
2014
 
Camp Creek 4909
 
Industrial

 
7,807

 
14,321

 
3,778

 
7,851

 
18,055

 
25,906

 
4,124

2016
2016
 
Camp Creek 3707
 
Industrial

 
7,282

 
20,538

 
3

 
7,282

 
20,541

 
27,823

 
3,926

2017
2017
 
Camp Creek 4505
 
Industrial

 
4,505

 
9,697

 
3,639

 
4,505

 
13,336

 
17,841

 
1,294

2017
2017
 
Site S Parking Lot
 
Grounds

 
4,469

 

 
303

 
4,772

 

 
4,772

 
343

n/a
2018
 
Camp Creek 4900
 
Industrial

 
3,244

 
7,758

 

 
3,244

 
7,758

 
11,002

 
344

2019
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Easton, Pennsylvania
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
33 Logistics Park 1610
 
Industrial

 
24,752

 
55,500

 
1,884

 
24,762

 
57,374

 
82,136

 
13,964

2016
2016
 
33 Logistics Park 1611
 
Industrial

 
17,979

 
20,882

 
1,968

 
17,979

 
22,850

 
40,829

 
4,264

2017
2017
 
33 Logistics Park 1620
 
Industrial

 
29,786

 
33,023

 
913

 
29,850

 
33,872

 
63,722

 
3,173

2018
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Edwardsville, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lakeview Commerce 3965
 
Industrial

 
4,561

 
18,593

 
248

 
4,561

 
18,841

 
23,402

 
7,132

2006
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Elk Grove Village, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1717 Busse Road
 
Industrial
9,803

 
3,602

 
19,016

 
37

 
3,602

 
19,053

 
22,655

 
6,175

2004
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ellenwood, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2529 Old Anvil Block
 
Industrial

 
4,664

 
9,265

 
446

 
4,664

 
9,711

 
14,375

 
2,913

2014
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


-106-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
Fairfield, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Union Centre Industrial 6019
 
Industrial

 
5,635

 
6,576

 
2,706

 
5,635

 
9,282

 
14,917

 
5,233

2008
2008
 
Union Centre Industrial 5855
 
Industrial

 
3,009

 
15,387

 
2,063

 
3,009

 
17,450

 
20,459

 
2,720

2016
2016
 
Fairfield Logistics Ctr 7940
 
Industrial

 
4,679

 
8,237

 
736

 
4,689

 
8,963

 
13,652

 
549

2018
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fishers, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exit 5 9998
 
Industrial

 
581

 
2,561

 
1,032

 
581

 
3,593

 
4,174

 
1,932

1999
1999
 
Exit 5 9888
 
Industrial

 
555

 
2,498

 
1,614

 
555

 
4,112

 
4,667

 
2,204

2000
2000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Flower Mound, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lakeside Ranch 550
 
Industrial

 
9,861

 
19,299

 
515

 
9,861

 
19,814

 
29,675

 
9,619

2007
2011
 
Lakeside Ranch 1001
 
Industrial

 
5,662

 
23,061

 

 
5,662

 
23,061

 
28,723

 
756

2019
2019
 
Lakeside Ranch 350
 
Industrial

 
3,665

 
10,105

 

 
3,665

 
10,105

 
13,770

 

2019
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fontana, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14970 Jurupa Ave
 
Grounds

 
17,306

 

 

 
17,306

 

 
17,306

 
767

n/a
2016
 
7953 Cherry Ave
 
Industrial

 
6,704

 
12,521

 
824

 
6,704

 
13,345

 
20,049

 
1,877

2017
2017
 
9988 Redwood Ave
 
Industrial

 
7,755

 
16,326

 
695

 
7,755

 
17,021

 
24,776

 
2,724

2016
2017
 
11250 Poplar Ave
 
Industrial

 
18,138

 
33,586

 

 
18,138

 
33,586

 
51,724

 
4,419

2016
2017
 
16171 Santa Ana Ave
 
Industrial

 
13,681

 
13,331

 
25

 
13,681

 
13,356

 
27,037

 
916

2018
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Lauderdale, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interstate 95 2200
 
Industrial

 
9,332

 
13,401

 
2,123

 
9,332

 
15,524

 
24,856

 
1,708

2017
2017
 
Interstate 95 2100
 
Industrial

 
10,948

 
18,681

 

 
10,948

 
18,681

 
29,629

 
1,892

2017
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Worth, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Riverpark 3300
 
Industrial

 
3,975

 
10,633

 
662

 
3,975

 
11,295

 
15,270

 
5,899

2007
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin, Tennessee
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aspen Grove Business 277
 
Industrial

 
936

 
2,919

 
4,208

 
936

 
7,127

 
8,063

 
3,667

1996
1999
 
Aspen Grove Business 320
 
Industrial

 
1,151

 
5,824

 
1,630

 
1,151

 
7,454

 
8,605

 
3,881

1996
1999
 
Aspen Grove Business 305
 
Industrial

 
970

 
4,677

 
1,083

 
970

 
5,760

 
6,730

 
2,961

1998
1999
 
Aspen Grove Business 400
 
Industrial

 
492

 
1,677

 
1,223

 
492

 
2,900

 
3,392

 
1,073

2002
2002
 
Brentwood South Business 119
 
Industrial

 
569

 
1,063

 
1,523

 
569

 
2,586

 
3,155

 
1,304

1990
1999
 
Brentwood South Business 121
 
Industrial

 
445

 
1,563

 
462

 
445

 
2,025

 
2,470

 
1,021

1990
1999
 
Brentwood South Business 123
 
Industrial

 
489

 
962

 
1,356

 
489

 
2,318

 
2,807

 
1,179

1990
1999
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Park, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11501 West Irving Park Road
 
Industrial

 
3,900

 
2,702

 
1,590

 
3,900

 
4,292

 
8,192

 
1,922

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fullerton, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
500 Burning Tree Rd
 
Industrial

 
7,336

 
4,435

 

 
7,336

 
4,435

 
11,771

 
605

1991
2018


-107-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
700 Burning Tree Rd
 
Industrial

 
5,001

 
4,915

 

 
5,001

 
4,915

 
9,916

 
415

1991
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Garden City, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aviation Court Land
 
Grounds

 
1,509

 

 

 
1,509

 

 
1,509

 
264

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

 
597

 
2,456

 
536

 
598

 
2,991

 
3,589

 
1,020

2006
2011


-108-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
Greenfield North 700
 
Industrial

 
468

 
2,054

 
295

 
469

 
2,348

 
2,817

 
763

2007
2011
 
Greenfield North 800
 
Industrial

 
438

 
5,772

 
447

 
440

 
6,217

 
6,657

 
1,799

2004
2011
 
Greenfield North 900
 
Industrial

 
422

 
5,792

 
1,442

 
425

 
7,231

 
7,656

 
2,041

2007
2011
 
Greenfield North 1000
 
Industrial

 
1,897

 
6,026

 
14

 
1,897

 
6,040

 
7,937

 
1,531

2016
2016
 
Greenfield North 1001
 
Industrial

 
2,517

 
5,494

 
2,401

 
2,517

 
7,895

 
10,412

 
1,069

2017
2017
 
N. Greenfield Pkwy Ground DCLP
 
Grounds

 
189

 
222

 
10

 
189

 
232

 
421

 
180

n/a
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Geneva, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1800 Averill Road
 
Industrial

 
3,189

 
11,582

 
7,640

 
4,778

 
17,633

 
22,411

 
5,018

2013
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gibsonton, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tampa Regional Ind Park 13111
 
Industrial

 
10,547

 
8,662

 
1,964

 
10,547

 
10,626

 
21,173

 
1,872

2017
2017
 
Tampa Regional Ind Park 13040
 
Industrial

 
13,184

 
13,475

 
592

 
13,184

 
14,067

 
27,251

 
1,191

2018
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Glendale Heights, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
990 North Avenue
 
Industrial

 
12,144

 
5,933

 
1,813

 
12,324

 
7,566

 
19,890

 
522

2018
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grand Prairie, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grand Lakes 4003
 
Industrial

 
8,106

 
9,124

 
15,357

 
9,595

 
22,992

 
32,587

 
10,210

2006
2006
 
Grand Lakes 3953
 
Industrial

 
11,853

 
11,851

 
13,364

 
11,853

 
25,215

 
37,068

 
13,590

2008
2008
 
1803 W. Pioneer Parkway
 
Industrial

 
7,381

 
15,389

 
45

 
7,381

 
15,434

 
22,815

 
7,576

2008
2011
 
Grand Lakes 4053
 
Industrial

 
2,468

 
6,599

 
1,214

 
2,468

 
7,813

 
10,281

 
689

2018
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Groveport, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Groveport Commerce Center 6200
 
Industrial

 
1,049

 
5,123

 
2,797

 
1,049

 
7,920

 
8,969

 
4,302

1999
1999
 
Groveport Commerce Center 6300
 
Industrial

 
510

 
2,395

 
2,309

 
510

 
4,704

 
5,214

 
2,191

2000
2000
 
Groveport Commerce Center 6295
 
Industrial

 
435

 
5,435

 
2,234

 
435

 
7,669

 
8,104

 
3,746

2000
2000
 
Groveport Commerce Center 6405
 
Industrial

 
4,420

 
10,322

 
992

 
4,420

 
11,314

 
15,734

 
7,408

2005
2005
 
RGLP North 2842
 
Industrial

 
5,680

 
23,853

 
6

 
5,680

 
23,859

 
29,539

 
7,083

2008
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hazelwood, Missouri
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lindbergh Distribution 5801
 
Industrial

 
8,200

 
9,304

 
3,775

 
8,491

 
12,788

 
21,279

 
6,657

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hebron, Kentucky
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hebron 2305
 
Industrial

 
8,855

 
10,797

 
19,323

 
9,511

 
29,464

 
38,975

 
18,215

2006
2006
 
Hebron 2285
 
Industrial

 
6,790

 
6,730

 
4,992

 
6,813

 
11,699

 
18,512

 
6,842

2007
2007
 
Skyport 2350
 
Industrial

 
1,057

 
5,784

 
92

 
1,057

 
5,876

 
6,933

 
2,017

1997
2010
 
Skyport 2250
 
Industrial

 
1,400

 
8,771

 
535

 
1,400

 
9,306

 
10,706

 
3,232

1998
2010
 
Skyport 2245
 
Industrial

 
2,016

 
8,305

 
1,118

 
2,016

 
9,423

 
11,439

 
3,144

2000
2010
 
Skyport 2265
 
Industrial

 
2,878

 
6,038

 
973

 
2,878

 
7,011

 
9,889

 
3,917

2006
2010


-109-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
Southpark 1990
 
Industrial

 
366

 
8,344

 

 
366

 
8,344

 
8,710

 
1,257

2016
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hialeah, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Countyline Corporate Park 3740
 
Industrial

 
18,934

 
11,560

 
45

 
18,934

 
11,605

 
30,539

 
1,470

2018
2018
 
Countyline Corporate Park 3780
 
Industrial

 
21,445

 
22,144

 
27

 
21,445

 
22,171

 
43,616

 
1,926

2018
2018
 
Countyline Corporate Park 3760
 
Industrial

 
32,802

 
52,633

 
48

 
32,802

 
52,681

 
85,483

 
3,949

2018
2018
 
Countyline Corporate Park 3840
 
Industrial

 
15,906

 
15,453

 
240

 
15,906

 
15,693

 
31,599

 
1,131

2018
2018
 
Countyline Corporate Park 3850
 
Industrial

 
18,270

 
17,567

 

 
18,270

 
17,567

 
35,837

 
360

2019
2019
 
Countyline Corporate Park 3870
 
Industrial

 
17,605

 
17,336

 

 
17,605

 
17,336

 
34,941

 
267

2019
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hialeah Gardens, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Miami Ind Logistics Ctr 15002
 
Industrial

 
10,671

 
14,071

 
2,324

 
10,671

 
16,395

 
27,066

 
2,300

2017
2017
 
Miami Ind Logistics Ctr 14802
 
Industrial

 
10,800

 
14,236

 
3,556

 
10,800

 
17,792

 
28,592

 
2,188

2017
2017
 
Miami Ind Logistics Ctr 10701
 
Industrial

 
13,048

 
17,204

 
2,611

 
13,048

 
19,815

 
32,863

 
3,039

2017
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hopkins, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cornerstone 401
 
Industrial

 
1,454

 
7,623

 
2,604

 
1,454

 
10,227

 
11,681

 
5,427

1996
1997
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Houston, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Point North 8210
 
Industrial

 
3,125

 
2,178

 
2,675

 
3,125

 
4,853

 
7,978

 
3,128

2008
2008
 
Point North 8120
 
Industrial

 
4,210

 
2,108

 
4,548

 
4,581

 
6,285

 
10,866

 
2,323

2013
2013
 
Point North 8111
 
Industrial

 
3,957

 
15,093

 
642

 
3,957

 
15,735

 
19,692

 
3,971

2014
2014
 
Point North 8411
 
Industrial

 
5,333

 
6,946

 
1,974

 
5,333

 
8,920

 
14,253

 
2,799

2015
2015
 
Westland 8323
 
Industrial

 
4,183

 
2,574

 
3,657

 
4,417

 
5,997

 
10,414

 
3,834

2008
2008
 
Westland 13788
 
Industrial

 
3,246

 
8,338

 
969

 
3,246

 
9,307

 
12,553

 
4,213

2011
2011
 
Gateway Northwest 20710
 
Industrial

 
7,204

 
8,028

 
4,167

 
7,204

 
12,195

 
19,399

 
3,680

2014
2014
 
Gateway Northwest 20702
 
Industrial

 
2,981

 
3,122

 
1,426

 
2,981

 
4,548

 
7,529

 
1,641

2014
2014
 
Gateway Northwest 20502
 
Industrial

 
2,987

 
5,342

 
21

 
2,987

 
5,363

 
8,350

 
1,416

2016
2016
 
22008 N Berwick Drive
 
Industrial

 
2,981

 
4,949

 
873

 
2,981

 
5,822

 
8,803

 
1,008

2002
2015
 
Gateway Northwest 20510
 
Industrial

 
6,787

 
11,501

 
792

 
6,787

 
12,293

 
19,080

 
1,250

2018
2018
 
Point North Three
 
Industrial

 
6,503

 
10,357

 

 
6,503

 
10,357

 
16,860

 
427

2019
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Huntley, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14100 Weber Drive
 
Industrial

 
7,539

 
34,069

 
58

 
7,539

 
34,127

 
41,666

 
5,632

2015
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hutchins, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
801 Wintergreen Road
 
Industrial

 
5,290

 
9,115

 
2,683

 
5,290

 
11,798

 
17,088

 
7,363

2006
2006
 
Prime Pointe 1005
 
Industrial

 
5,865

 
19,420

 
59

 
5,865

 
19,479

 
25,344

 
3,481

2016
2016
 
Prime Pointe 1015
 
Industrial

 
8,356

 
16,319

 
2,443

 
8,356

 
18,762

 
27,118

 
1,628

2018
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indianapolis, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Park 100 5550
 
Industrial

 
1,171

 
12,611

 
675

 
1,424

 
13,033

 
14,457

 
7,792

1997
1995


-110-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
Park 100 Bldg 121 Land Lease
 
Grounds

 
3

 

 

 
3

 

 
3

 

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

 
350

 

 
699

 
1,049

 

 
1,049

 
786

n/a
2006
 
North Airport Park 7750
 
Industrial

 
1,800

 
4,329

 
768

 
1,800

 
5,097

 
6,897

 
1,878

1997
2010
 
Park 100 5010
 
Industrial

 
690

 
1,687

 
674

 
690

 
2,361

 
3,051

 
1,065

1984
2010
 
Park 100 5134
 
Industrial

 
642

 
2,014

 
198

 
642

 
2,212

 
2,854

 
862

1984
2010


-111-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
Park 100 5302
 
Industrial

 
427

 
1,257

 
459

 
427

 
1,716

 
2,143

 
853

1989
2010
 
Park 100 5303
 
Industrial

 
427

 
1,737

 
372

 
427

 
2,109

 
2,536

 
860

1989
2010
 
Park 100 7225
 
Industrial

 
1,152

 
13,349

 
824

 
1,152

 
14,173

 
15,325

 
4,648

1996
2010
 
Park 100 4925
 
Industrial

 
1,280

 
8,588

 
2,410

 
1,280

 
10,998

 
12,278

 
3,797

2000
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kutztown, Pennsylvania
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
West Hills 9645
 
Industrial

 
15,340

 
47,981

 
623

 
15,340

 
48,604

 
63,944

 
11,906

2014
2014
 
West Hills 9677
 
Industrial

 
5,218

 
13,029

 
68

 
5,218

 
13,097

 
18,315

 
3,113

2015
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
La Miranda, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16501 Trojan Way
 
Industrial

 
23,503

 
30,945

 
125

 
23,503

 
31,070

 
54,573

 
9,143

2002
2012
 
16301 Trojan Way
 
Industrial

 
39,645

 
22,164

 
7

 
39,645

 
22,171

 
61,816

 
1,683

2018
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lancaster, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lancaster 2820
 
Industrial

 
9,786

 
22,270

 

 
9,786

 
22,270

 
32,056

 
1,983

2018
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LaPorte, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayport Container Lot
 
Grounds

 
3,334

 

 
1,041

 
4,375

 

 
4,375

 

n/a
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lawrenceville, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
175 Alcovy Industrial Road
 
Industrial

 
1,480

 
2,935

 
73

 
1,487

 
3,001

 
4,488

 
1,131

2004
2004
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lebanon, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lebanon Park 185
 
Industrial

 
177

 
8,664

 
1,534

 
177

 
10,198

 
10,375

 
5,403

2000
1997
 
Lebanon Park 322
 
Industrial

 
340

 
6,230

 
1,578

 
340

 
7,808

 
8,148

 
3,913

1999
1999
 
Lebanon Park 400
 
Industrial

 
1,517

 
11,158

 
944

 
1,517

 
12,102

 
13,619

 
5,125

2003
2003
 
Lebanon Park 420
 
Industrial

 
561

 
3,776

 
750

 
561

 
4,526

 
5,087

 
2,022

2003
2003
 
Lebanon Park 500
 
Industrial

 
2,813

 
10,741

 
2,941

 
2,813

 
13,682

 
16,495

 
7,234

2005
2005
 
Lebanon Park 210
 
Industrial

 
312

 
3,568

 
211

 
312

 
3,779

 
4,091

 
1,495

1996
2010
 
Lebanon Park 311
 
Industrial

 
699

 
7,847

 
1,016

 
699

 
8,863

 
9,562

 
3,376

1998
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lebanon, Tennessee
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Park 840 West 14840
 
Industrial

 
6,776

 
8,449

 
6,061

 
6,776

 
14,510

 
21,286

 
9,472

2006
2006
 
Park 840 East 1009
 
Industrial

 
7,731

 
14,854

 
1,412

 
7,852

 
16,145

 
23,997

 
7,503

2013
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Linden, New Jersey
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Legacy Commerce Center 801
 
Industrial

 
22,134

 
23,645

 
3,852

 
22,134

 
27,497

 
49,631

 
6,476

2014
2014
 
Legacy Commerce Center 301
 
Industrial

 
6,933

 
8,575

 
168

 
6,933

 
8,743

 
15,676

 
1,975

2015
2015
 
Legacy Commerce Center 901
 
Industrial

 
25,935

 
19,806

 
2,301

 
25,937

 
22,105

 
48,042

 
4,280

2016
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lithia Springs, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2601 Skyview Drive
 
Industrial

 
4,282

 
9,534

 
58

 
4,282

 
9,592

 
13,874

 
1,639

2016
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


-112-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
Lockport, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lockport 16328
 
Industrial

 
3,339

 
17,446

 
460

 
3,339

 
17,906

 
21,245

 
2,118

2016
2017
 
Lockport 16410
 
Industrial

 
2,677

 
16,117

 
285

 
2,677

 
16,402

 
19,079

 
1,879

2016
2017
 
Lockport 16508
 
Industrial

 
4,520

 
17,472

 
2,517

 
4,520

 
19,989

 
24,509

 
2,086

2017
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lockbourne, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Creekside 2120
 
Industrial

 
2,868

 
15,406

 
823

 
2,868

 
16,229

 
19,097

 
4,910

2008
2012
 
Creekside 4555
 
Industrial

 
1,947

 
11,453

 
326

 
1,947

 
11,779

 
13,726

 
3,477

2005
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Logan Township, New Jersey
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1130 Commerce Boulevard
 
Industrial

 
3,770

 
18,699

 
1,607

 
3,770

 
20,306

 
24,076

 
5,110

2002
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long Beach, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3700 Cover Street
 
Industrial

 
7,280

 
6,954

 

 
7,280

 
6,954

 
14,234

 
2,633

2012
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lynwood, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2700 East Imperial Highway
 
Industrial

 
16,847

 
17,865

 
56

 
16,847

 
17,921

 
34,768

 
6,524

1999
2011
 
11600 Alameda Street
 
Industrial

 
10,705

 
10,979

 
1,308

 
10,958

 
12,034

 
22,992

 
1,234

2017
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Manteca, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
600 Spreckels Avenue
 
Industrial

 
4,851

 
18,985

 
317

 
4,851

 
19,302

 
24,153

 
5,555

1999
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maple Grove, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Arbor Lakes 10500
 
Industrial

 
4,803

 
9,891

 
1,335

 
4,912

 
11,117

 
16,029

 
517

2018
2018
 
Arbor Lakes 10501
 
Industrial

 
5,363

 
17,713

 

 
5,363

 
17,713

 
23,076

 
612

2019
2019
 
Park 81 10750
 
Industrial

 
3,971

 
9,414

 

 
3,971

 
9,414

 
13,385

 
164

2019
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maryland Heights, Missouri
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Riverport 3128
 
Industrial

 
733

 
1,492

 
2,875

 
733

 
4,367

 
5,100

 
2,066

2001
2001
 
Riverport 3101
 
Industrial

 
1,864

 
3,072

 
2,250

 
1,864

 
5,322

 
7,186

 
3,293

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
McDonough, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liberty Distribution 120
 
Industrial

 
615

 
8,117

 
1,351

 
615

 
9,468

 
10,083

 
5,111

1997
1999
 
Liberty Distribution 250
 
Industrial

 
2,273

 
10,910

 
6,909

 
3,428

 
16,664

 
20,092

 
7,105

2001
2001
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mechanicsburg, Pennsylvania
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
500 Independence Avenue
 
Industrial

 
4,494

 
15,007

 
512

 
4,499

 
15,514

 
20,013

 
3,673

2008
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Melrose Park, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1600 North 25th Avenue
 
Industrial

 
5,907

 
17,516

 
275

 
5,907

 
17,791

 
23,698

 
6,356

2000
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Miami, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9601 NW 112 Avenue
 
Industrial

 
11,626

 
14,651

 
8

 
11,626

 
14,659

 
26,285

 
4,230

2003
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


-113-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
Minooka, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Midpoint Distribution 801
 
Industrial

 
6,282

 
33,196

 
627

 
6,282

 
33,823

 
40,105

 
9,227

2008
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Modesto, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1000 Oates Court
 
Industrial

 
10,115

 
16,944

 
215

 
10,115

 
17,159

 
27,274

 
6,435

2002
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Monroe Twp., New Jersey
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
773 Cranbury South River Road
 
Industrial

 
3,001

 
36,527

 
112

 
3,001

 
36,639

 
39,640

 
4,089

2016
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Moreno Valley, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17791 Perris Boulevard
 
Industrial

 
67,806

 
74,531

 
81

 
67,806

 
74,612

 
142,418

 
7,117

2014
2017
 
15810 Heacock Street
 
Industrial

 
9,727

 
18,882

 
799

 
9,727

 
19,681

 
29,408

 
1,616

2017
2017
 
24975 Nandina Ave
 
Industrial

 
13,322

 
17,214

 

 
13,322

 
17,214

 
30,536

 
278

2019
2019
 
24960 San Michele
 
Industrial

 
8,336

 
13,779

 

 
8,336

 
13,779

 
22,115

 
701

2019
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Morgans Point, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Barbours Cut 1200
 
Industrial

 
1,482

 
8,209

 
90

 
1,482

 
8,299

 
9,781

 
3,621

2004
2010
 
Barbours Cut 1000
 
Industrial

 
1,447

 
8,471

 
168

 
1,447

 
8,639

 
10,086

 
3,756

2005
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Morrisville, North Carolina
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Perimeter Park 3000
 
Industrial

 
482

 
1,982

 
1,666

 
491

 
3,639

 
4,130

 
1,811

1989
1999
 
Perimeter Park 2900
 
Industrial

 
235

 
1,314

 
1,699

 
241

 
3,007

 
3,248

 
1,489

1990
1999
 
Perimeter Park 2800
 
Industrial

 
777

 
4,151

 
1,395

 
791

 
5,532

 
6,323

 
2,922

1992
1999
 
Perimeter Park 2700
 
Industrial

 
662

 
1,081

 
2,330

 
662

 
3,411

 
4,073

 
1,513

2001
2001
 
Woodlake 100
 
Industrial

 
633

 
3,183

 
2,080

 
1,132

 
4,764

 
5,896

 
2,329

1994
1999
 
Woodlake 101
 
Industrial

 
615

 
3,868

 
541

 
615

 
4,409

 
5,024

 
2,192

1997
1999
 
Woodlake 200
 
Industrial

 
357

 
3,688

 
897

 
357

 
4,585

 
4,942

 
2,293

1999
1999
 
Woodlake 501
 
Industrial

 
640

 
5,477

 
529

 
640

 
6,006

 
6,646

 
3,007

1999
1999
 
Woodlake 1000
 
Industrial

 
514

 
2,768

 
549

 
514

 
3,317

 
3,831

 
1,406

1996
2002
 
Woodlake 1200
 
Industrial

 
740

 
4,155

 
629

 
740

 
4,784

 
5,524

 
2,078

1996
2002
 
Woodlake 400
 
Industrial

 
390

 
1,055

 
454

 
390

 
1,509

 
1,899

 
607

2004
2004
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Myerstown, Pennsylvania
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Central Logistics Park 53
 
Industrial

 
24,251

 
24,366

 
1,986

 
24,661

 
25,942

 
50,603

 
2,511

2018
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Naperville, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1835 Jefferson
 
Industrial

 
2,209

 
7,921

 
462

 
2,213

 
8,379

 
10,592

 
3,250

2005
2003
 
175 Ambassador Drive
 
Industrial

 
4,778

 
11,252

 
11

 
4,778

 
11,263

 
16,041

 
4,589

2006
2010
 
1860 West Jefferson
 
Industrial

 
7,016

 
35,581

 
88

 
7,016

 
35,669

 
42,685

 
12,873

2000
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nashville, Tennessee
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Airpark East 800
 
Industrial

 
1,564

 
2,129

 
1,593

 
1,564

 
3,722

 
5,286

 
1,720

2002
2002
 
Nashville Business 3300
 
Industrial

 
936

 
4,773

 
1,899

 
936

 
6,672

 
7,608

 
3,314

1997
1999


-114-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
Nashville Business 3438
 
Industrial

 
5,659

 
8,165

 
2,184

 
5,659

 
10,349

 
16,008

 
6,379

2005
2005
 
Four-Forty Business 700
 
Industrial

 
938

 
6,354

 
714

 
938

 
7,068

 
8,006

 
3,589

1997
1999
 
Four-Forty Business 684
 
Industrial

 
1,812

 
6,561

 
2,532

 
1,812

 
9,093

 
10,905

 
4,527

1998
1999
 
Four-Forty Business 782
 
Industrial

 
1,522

 
4,820

 
1,825

 
1,522

 
6,645

 
8,167

 
3,357

1997
1999
 
Four-Forty Business 784
 
Industrial

 
471

 
2,153

 
1,749

 
471

 
3,902

 
4,373

 
2,087

1999
1999
 
Four-Forty Business 701
 
Industrial

 
1,108

 
4,763

 
115

 
1,108

 
4,878

 
5,986

 
1,585

1996
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Newark, New Jersey
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
429 Delancy Street
 
Industrial

 
60,393

 
44,803

 

 
60,393

 
44,803

 
105,196

 

2019
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Northlake, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Northlake Distribution 635
 
Industrial

 
5,721

 
9,008

 
1,134

 
5,721

 
10,142

 
15,863

 
4,266

2002
2002
 
Northlake Distribution 599
 
Industrial

 
5,382

 
5,685

 
3,568

 
5,382

 
9,253

 
14,635

 
4,883

2006
2006
 
200 Champion Way
 
Industrial

 
3,554

 
11,528

 
829

 
3,554

 
12,357

 
15,911

 
3,600

1997
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Orange, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
210 W Baywood Ave
 
Industrial

 
5,066

 
4,515

 
1,741

 
5,066

 
6,256

 
11,322

 
322

1989
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Orlando, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2502 Lake Orange
 
Industrial

 
2,331

 
3,235

 
348

 
2,331

 
3,583

 
5,914

 
1,472

2003
2003


-115-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
Parksouth Distribution 2500
 
Industrial

 
565

 
4,360

 
2,057

 
570

 
6,412

 
6,982

 
3,136

1996
1999
 
Parksouth Distribution 2490
 
Industrial

 
493

 
4,170

 
981

 
498

 
5,146

 
5,644

 
2,777

1997
1999
 
Parksouth Distribution 2491
 
Industrial

 
593

 
3,150

 
1,349

 
597

 
4,495

 
5,092

 
2,170

1998
1999
 
Parksouth Distribution 9600
 
Industrial

 
649

 
4,111

 
1,224

 
653

 
5,331

 
5,984

 
2,829

1997
1999
 
Parksouth Distribution 9550
 
Industrial

 
1,030

 
4,207

 
3,233

 
1,035

 
7,435

 
8,470

 
3,313

1999
1999
 
Parksouth Distribution 2481
 
Industrial

 
725

 
2,245

 
1,479

 
730

 
3,719

 
4,449

 
1,824

2000
2000
 
Parksouth Distribution 9592
 
Industrial

 
623

 
1,646

 
155

 
623

 
1,801

 
2,424

 
781

2003
2003
 
Crossroads Business Park 301
 
Industrial

 
2,803

 
2,804

 
4,149

 
2,803

 
6,953

 
9,756

 
3,529

2006
2006
 
Crossroads Business Park 601
 
Industrial

 
2,701

 
3,571

 
2,073

 
2,701

 
5,644

 
8,345

 
2,798

2007
2007
 
7133 Municipal Drive
 
Industrial

 
5,817

 
6,820

 
12

 
5,817

 
6,832

 
12,649

 
604

2018
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Otsego, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gateway North 6301
 
Industrial

 
1,543

 
6,515

 
6,009

 
2,783

 
11,284

 
14,067

 
1,868

2015
2015
 
Gateway North 6651
 
Industrial

 
3,667

 
16,249

 
129

 
3,748

 
16,297

 
20,045

 
3,232

2015
2015
 
Gateway North 6701
 
Industrial

 
3,266

 
11,653

 
186

 
3,374

 
11,731

 
15,105

 
2,805

2014
2014
 
Gateway North 6651 Exp Land
 
Grounds

 
1,521

 

 

 
1,521

 

 
1,521

 
341

n/a
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pasadena, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interport 13001
 
Industrial

 
5,715

 
30,961

 
736

 
5,715

 
31,697

 
37,412

 
7,953

2007
2013
 
Bayport 4035
 
Industrial

 
3,772

 
10,255

 
113

 
3,772

 
10,368

 
14,140

 
1,138

2008
2017
 
Bayport 4331
 
Industrial

 
7,638

 
30,213

 
85

 
7,638

 
30,298

 
37,936

 
3,548

2008
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Perris, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3500 Indian Avenue
 
Industrial

 
16,210

 
27,759

 
8,884

 
18,716

 
34,137

 
52,853

 
8,157

2015
2015
 
3300 Indian Avenue
 
Industrial

 
39,012

 
43,280

 
1,885

 
39,006

 
45,171

 
84,177

 
9,295

2017
2017
 
4323 Indian Ave
 
Industrial

 
20,525

 
30,125

 

 
20,525

 
30,125

 
50,650

 
1,279

2019
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plymouth, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Waterford Innovation Center
 
Industrial

 
2,689

 
9,897

 
43

 
2,689

 
9,940

 
12,629

 
1,314

2017
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pomona, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1589 E 9th St.
 
Industrial

 
7,386

 
14,745

 
359

 
7,386

 
15,104

 
22,490

 
2,066

2016
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Perth Amboy, New Jersey
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ePort 960
 
Industrial

 
14,425

 
23,463

 
2,014

 
14,425

 
25,477

 
39,902

 
2,408

2017
2017
 
ePort 980
 
Industrial

 
43,778

 
87,019

 
133

 
43,778

 
87,152

 
130,930

 
8,387

2017
2017
 
ePort 1000
 
Industrial

 
19,726

 
41,229

 
1,040

 
19,726

 
42,269

 
61,995

 
3,796

2017
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


-116-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
Plainfield, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plainfield 1551
 
Industrial

 
1,097

 
7,772

 
10,867

 
1,097

 
18,639

 
19,736

 
6,942

2000
2000
 
Plainfield 1581
 
Industrial

 
1,094

 
7,279

 
2,313

 
1,094

 
9,592

 
10,686

 
4,660

2000
2000
 
Plainfield 2209
 
Industrial

 
2,016

 
8,717

 
2,740

 
2,016

 
11,457

 
13,473

 
4,815

2002
2002
 
Plainfield 1390
 
Industrial

 
998

 
5,817

 
1,278

 
998

 
7,095

 
8,093

 
2,820

2004
2004
 
Plainfield 2425
 
Industrial

 
4,527

 
10,908

 
1,924

 
4,527

 
12,832

 
17,359

 
6,589

2006
2006
 
Home Depot trailer parking lot
 
Grounds

 
310

 

 

 
310

 

 
310

 

2018
2018
 
AllPoints Midwest Bldg. 1
 
Industrial

 
6,692

 
51,152

 
1,866

 
6,692

 
53,018

 
59,710

 
7,568

2008
2016
 
AllPoints Midwest Bldg. 4
 
Industrial

 
4,111

 
9,943

 
22

 
4,053

 
10,023

 
14,076

 
4,858

2012
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pompano Beach, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic Business 1700
 
Industrial

 
3,165

 
8,821

 
1,877

 
3,165

 
10,698

 
13,863

 
3,879

2000
2010
 
Atlantic Business 1800
 
Industrial

 
2,663

 
8,417

 
1,229

 
2,663

 
9,646

 
12,309

 
3,720

2001
2010
 
Atlantic Business 1855
 
Industrial

 
2,764

 
8,162

 
204

 
2,764

 
8,366

 
11,130

 
2,853

2001
2010
 
Atlantic Business 2022
 
Industrial

 
1,804

 
5,885

 
41

 
1,804

 
5,926

 
7,730

 
2,007

2002
2010
 
Atlantic Business 1914
 
Industrial

 
1,834

 
5,339

 
31

 
1,834

 
5,370

 
7,204

 
1,847

2002
2010
 
Atlantic Business 2003
 
Industrial

 
1,980

 
5,918

 
1,233

 
1,980

 
7,151

 
9,131

 
2,998

2002
2010
 
Atlantic Business 1901
 
Industrial

 
1,995

 
6,217

 
588

 
1,995

 
6,805

 
8,800

 
2,593

2004
2010
 
Atlantic Business 2200
 
Industrial

 
1,999

 
6,012

 
852

 
1,999

 
6,864

 
8,863

 
2,476

2004
2010
 
Atlantic Business 2100
 
Industrial

 
1,988

 
6,130

 
36

 
1,988

 
6,166

 
8,154

 
2,096

2002
2010
 
Atlantic Business 2201
 
Industrial

 
2,194

 
4,050

 
209

 
2,194

 
4,259

 
6,453

 
1,555

2005
2010
 
Atlantic Business 2101
 
Industrial

 
2,066

 
6,682

 
85

 
2,066

 
6,767

 
8,833

 
2,306

2004
2010
 
Atlantic Business 2103
 
Industrial

 
1,616

 
3,634

 
162

 
1,616

 
3,796

 
5,412

 
1,404

2005
2010
 
Copans Business Park 1571
 
Industrial

 
1,710

 
3,646

 
259

 
1,710

 
3,905

 
5,615

 
1,421

1989
2010
 
Copans Business Park 1521
 
Industrial

 
1,781

 
3,101

 
434

 
1,781

 
3,535

 
5,316

 
1,350

1989
2010
 
Park Central 3250
 
Industrial

 
1,688

 
1,997

 
116

 
1,688

 
2,113

 
3,801

 
926

1999
2010
 
Park Central 3760
 
Industrial

 
3,098

 
2,567

 
1,634

 
3,098

 
4,201

 
7,299

 
1,714

1995
2010
 
Pompano Commerce Center 2901
 
Industrial

 
3,250

 
4,872

 
888

 
3,250

 
5,760

 
9,010

 
3,511

2010
2010
 
Pompano Commerce Center 3101
 
Industrial

 
2,905

 
4,670

 
486

 
2,916

 
5,145

 
8,061

 
1,661

2015
2015
 
Pompano Commerce Center 2951
 
Industrial

 
3,250

 
5,704

 
63

 
3,250

 
5,767

 
9,017

 
3,590

2010
2010
 
Pompano Commerce Center 3151
 
Industrial

 
2,897

 
3,939

 
1,249

 
2,908

 
5,177

 
8,085

 
1,330

2015
2015
 
Sample 95 Business Park 3101
 
Industrial

 
3,300

 
6,115

 
370

 
3,300

 
6,485

 
9,785

 
2,353

1999
2010
 
Sample 95 Business Park 3001
 
Industrial

 
2,963

 
6,135

 
198

 
2,963

 
6,333

 
9,296

 
2,239

1999
2011
 
Sample 95 Business Park 3035
 
Industrial

 
3,713

 
4,288

 
362

 
3,713

 
4,650

 
8,363

 
1,944

1999
2011
 
Sample 95 Business Park 3135
 
Industrial

 
1,688

 
5,030

 
852

 
1,688

 
5,882

 
7,570

 
2,190

1999
2010


-117-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
Copans Business Park 1551
 
Industrial

 
1,856

 
3,146

 
1,323

 
1,856

 
4,469

 
6,325

 
2,036

1989
2011
 
Copans Business Park 1501
 
Industrial

 
1,988

 
3,367

 
266

 
1,988

 
3,633

 
5,621

 
1,315

1989
2011
 
Park Central 1700
 
Industrial

 
4,136

 
6,407

 
913

 
4,136

 
7,320

 
11,456

 
2,830

1998
2011
 
Park Central 2101
 
Industrial

 
2,696

 
5,798

 
967

 
2,696

 
6,765

 
9,461

 
2,491

1998
2011
 
Park Central 3300
 
Industrial

 
1,635

 
2,846

 
405

 
1,635

 
3,251

 
4,886

 
1,238

1996
2011
 
Park Central 100
 
Industrial

 
1,500

 
1,992

 
1,006

 
1,500

 
2,998

 
4,498

 
1,303

1998
2011
 
Park Central 1300
 
Industrial

 
2,438

 
3,021

 
2,301

 
2,438

 
5,322

 
7,760

 
2,268

1997
2011
 
Copans 95 1731
 
Industrial

 
3,511

 
5,889

 

 
3,511

 
5,889

 
9,400

 
73

2019
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Port Wentworth, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100 Logistics Way
 
Industrial
5,410

 
2,306

 
11,043

 
2,272

 
2,336

 
13,285

 
15,621

 
4,950

2006
2006
 
500 Expansion Boulevard
 
Industrial
2,465

 
649

 
5,842

 
224

 
649

 
6,066

 
6,715

 
1,933

2006
2008
 
400 Expansion Boulevard
 
Industrial

 
1,636

 
13,186

 
795

 
1,636

 
13,981

 
15,617

 
4,152

2007
2008
 
605 Expansion Boulevard
 
Industrial

 
1,615

 
6,852

 
76

 
1,615

 
6,928

 
8,543

 
2,152

2007
2008
 
405 Expansion Boulevard
 
Industrial

 
535

 
3,192

 
125

 
535

 
3,317

 
3,852

 
950

2008
2009
 
600 Expansion Boulevard
 
Industrial

 
1,248

 
9,392

 
33

 
1,248

 
9,425

 
10,673

 
2,641

2008
2009
 
602 Expansion Boulevard
 
Industrial

 
1,840

 
10,981

 
78

 
1,859

 
11,040

 
12,899

 
3,014

2009
2009
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Raleigh, North Carolina
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Walnut Creek 540
 
Industrial

 
419

 
1,651

 
833

 
419

 
2,484

 
2,903

 
1,113

2001
2001
 
Walnut Creek 4000
 
Industrial

 
456

 
2,078

 
450

 
456

 
2,528

 
2,984

 
1,163

2001
2001
 
Walnut Creek 3080
 
Industrial

 
679

 
2,766

 
1,546

 
679

 
4,312

 
4,991

 
1,811

2001
2001
 
Walnut Creek 3070
 
Industrial

 
913

 
1,187

 
1,511

 
913

 
2,698

 
3,611

 
1,037

2004
2004
 
Walnut Creek 3071
 
Industrial

 
1,718

 
2,746

 
657

 
1,718

 
3,403

 
5,121

 
2,004

2008
2008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rancho Cucamonga, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9189 Utica Ave
 
Industrial

 
5,794

 
12,646

 
265

 
5,794

 
12,911

 
18,705

 
1,921

2016
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rancho Dominguez, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18700 Laurel Park Rd
 
Industrial

 
8,080

 
2,987

 
282

 
8,264

 
3,085

 
11,349

 
466

1971
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redlands, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2300 W. San Bernadino Ave
 
Industrial

 
20,031

 
18,770

 
1,308

 
20,031

 
20,078

 
40,109

 
7,264

2001
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Richmond, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2041 Factory Street
 
Industrial

 
8,132

 
22,266

 

 
8,132

 
22,266

 
30,398

 
681

2000
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


-118-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
Romeoville, Illinois
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
875 W. Crossroads Parkway
 
Industrial

 
6,433

 
7,274

 
2,084

 
6,433

 
9,358

 
15,791

 
5,855

2005
2005
 
Crossroads 1255
 
Industrial

 
2,938

 
9,297

 
2,919

 
2,938

 
12,216

 
15,154

 
4,665

1999
2010
 
Crossroads 801
 
Industrial

 
5,296

 
6,184

 
305

 
5,296

 
6,489

 
11,785

 
6,264

2009
2010
 
1341-1343 Enterprise Drive
 
Industrial

 
3,076

 
12,660

 
462

 
3,076

 
13,122

 
16,198

 
2,700

2015
2015
 
50-56 N. Paragon
 
Industrial

 
3,985

 
5,433

 
1,212

 
3,985

 
6,645

 
10,630

 
1,128

2017
2017
 
Airport Logistics Center I
 
Industrial

 
9,133

 
17,187

 

 
9,133

 
17,187

 
26,320

 
309

2019
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Roseville, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2215 Highway 36 West
 
Industrial

 
1,655

 
5,931

 
1,429

 
1,655

 
7,360

 
9,015

 
2,792

1998
2011
 
2420 Long Lake Road
 
Industrial

 
1,373

 
4,135

 
1,043

 
1,373

 
5,178

 
6,551

 
1,853

2000
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Leandro, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1919 Williams Street
 
Industrial

 
27,739

 
2,038

 

 
27,739

 
2,038

 
29,777

 

1985
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Savannah, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
198 Gulfstream
 
Industrial

 
549

 
3,650

 
975

 
549

 
4,625

 
5,174

 
1,484

1997
2006
 
194 Gulfstream
 
Industrial

 
412

 
2,359

 
244

 
412

 
2,603

 
3,015

 
941

1998
2006
 
190 Gulfstream
 
Industrial

 
689

 
4,134

 
372

 
689

 
4,506

 
5,195

 
1,671

1999
2006
 
250 Grange Road
 
Industrial

 
884

 
7,776

 
27

 
884

 
7,803

 
8,687

 
2,844

2002
2006
 
248 Grange Road
 
Industrial

 
613

 
3,180

 
8

 
613

 
3,188

 
3,801

 
1,198

2002
2006
 
318 Grange Road
 
Industrial

 
880

 
4,131

 
916

 
880

 
5,047

 
5,927

 
1,731

2001
2006
 
246 Grange Road
 
Industrial
2,901

 
1,124

 
7,486

 
734

 
1,124

 
8,220

 
9,344

 
2,792

2006
2006
 
163 Portside Court
 
Industrial

 
8,433

 
7,746

 
62

 
8,433

 
7,808

 
16,241

 
5,707

2004
2006
 
151 Portside Court
 
Industrial

 
966

 
7,117

 
755

 
916

 
7,922

 
8,838

 
2,976

2003
2006
 
175 Portside Court
 
Industrial
6,137

 
4,300

 
13,344

 
2,673

 
5,782

 
14,535

 
20,317

 
6,374

2005
2006



-119-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset 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

 
7,201

 
1,340

 
1,147

 
8,468

 
9,615

 
3,211

2001
2006
 
239 Jimmy Deloach Parkway
 
Industrial

 
1,074

 
6,424

 
717

 
1,074

 
7,141

 
8,215

 
2,638

2001
2006
 
246 Jimmy Deloach Parkway
 
Industrial
1,763

 
992

 
4,878

 
85

 
936

 
5,019

 
5,955

 
1,903

2006
2006
 
200 Logistics Way
 
Industrial
3,808

 
878

 
9,274

 
365

 
883

 
9,634

 
10,517

 
3,009

2006
2008
 
2509 Dean Forest Road
 
Industrial

 
2,392

 
6,040

 
2,411

 
2,914

 
7,929

 
10,843

 
2,925

2008
2011
 
276 Jimmy Deloach Parkway
 
Industrial

 
6,772

 
6,405

 

 
6,772

 
6,405

 
13,177

 
135

2019
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sea Brook, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bayport Logistics 5300
 
Industrial

 
2,629

 
13,284

 
191

 
2,629

 
13,475

 
16,104

 
6,154

2009
2010
 
Bayport Logistics 5801
 
Industrial

 
5,116

 
7,663

 
157

 
5,116

 
7,820

 
12,936

 
2,107

2015
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shakopee, Minnesota
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3880 4th Avenue East
 
Industrial

 
1,496

 
6,102

 
67

 
1,522

 
6,143

 
7,665

 
2,081

2000
2011
 
Gateway South 2301
 
Industrial

 
2,648

 
11,898

 
6

 
2,648

 
11,904

 
14,552

 
1,814

2016
2016
 
Gateway South 2101
 
Industrial

 
4,273

 
16,716

 

 
4,273

 
16,716

 
20,989

 
2,173

2017
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sharonville, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mosteller 11400
 
Industrial

 
408

 
2,705

 
3,573

 
408

 
6,278

 
6,686

 
2,814

1997
1997
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
South Brunswick, New Jersey
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10 Broadway Road
 
Industrial

 
15,168

 
13,916

 
1,226

 
15,168

 
15,142

 
30,310

 
2,309

2017
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
St. Peters, Missouri
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premier 370 Bus Park 2001
 
Industrial

 
8,709

 
25,696

 

 
8,709

 
25,696

 
34,405

 
4,017

2017
2017
 
Premier 370 Bus Park 2000
 
Industrial

 
4,361

 
11,998

 

 
4,361

 
11,998

 
16,359

 
1,670

2017
2017
 
Premier 370 Bus Park 1000
 
Industrial

 
4,563

 
9,805

 
719

 
4,563

 
10,524

 
15,087

 
1,484

2017
2017
 
Premier 370 Bus Park 4000
 
Industrial

 
15,773

 
72,935

 

 
15,773

 
72,935

 
88,708

 
2,795

2019
2019
 
Premier 370 Bus Park 1001
 
Industrial

 
6,362

 
12,408

 

 
6,362

 
12,408

 
18,770

 
622

2019
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stafford, Texas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10225 Mula Road
 
Industrial

 
3,502

 
2,656

 
3,393

 
3,502

 
6,049

 
9,551

 
3,324

2008
2008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sterling, Virginia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TransDulles Centre 22601
 
Industrial

 
1,700

 
5,001

 
602

 
1,700

 
5,603

 
7,303

 
1,804

2004
2016
 
TransDulles Centre 22620
 
Industrial

 
773

 
1,957

 
15

 
773

 
1,972

 
2,745

 
642

1999
2016
 
TransDulles Centre 22626
 
Industrial

 
1,544

 
3,874

 
176

 
1,544

 
4,050

 
5,594

 
1,306

1999
2016
 
TransDulles Centre 22633
 
Industrial

 
702

 
1,657

 
47

 
702

 
1,704

 
2,406

 
592

2004
2016
 
TransDulles Centre 22635
 
Industrial

 
1,753

 
4,182

 
16

 
1,753

 
4,198

 
5,951

 
1,374

1999
2016
 
TransDulles Centre 22645
 
Industrial

 
1,228

 
3,411

 
124

 
1,228

 
3,535

 
4,763

 
1,127

2005
2016
 
TransDulles Centre 22714
 
Industrial

 
3,973

 
3,535

 
1,251

 
3,973

 
4,786

 
8,759

 
2,583

2007
2007
 
TransDulles Centre 22750
 
Industrial

 
2,068

 
5,018

 
299

 
2,068

 
5,317

 
7,385

 
1,761

2003
2016
 
TransDulles Centre 22815
 
Industrial

 
7,685

 
5,713

 
374

 
7,685

 
6,087

 
13,772

 
2,183

2000
2016
 
TransDulles Centre 22825
 
Industrial

 
1,758

 
4,951

 
131

 
1,758

 
5,082

 
6,840

 
1,631

1997
2016
 
TransDulles Centre 22879
 
Industrial

 
2,828

 
8,425

 
170

 
2,828

 
8,595

 
11,423

 
2,783

1989
2016

-120-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
TransDulles Centre 22880
 
Industrial

 
2,311

 
4,922

 
10

 
2,311

 
4,932

 
7,243

 
1,687

1998
2016
 
TransDulles Centre 46213
 
Industrial

 
5,912

 
3,965

 
720

 
5,912

 
4,685

 
10,597

 
1,585

2015
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sumner, Washington
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13501 38th Street East
 
Industrial

 
16,032

 
5,914

 
501

 
16,032

 
6,415

 
22,447

 
5,547

2005
2007
 
4800 E Valley Highway
 
Industrial

 
12,567

 
21,838

 

 
12,567

 
21,838

 
34,405

 
1,086

2004
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Suwanee, Georgia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Horizon Business 90
 
Industrial

 
180

 
1,169

 
292

 
180

 
1,461

 
1,641

 
491

2001
2010
 
Horizon Business 225
 
Industrial

 
457

 
2,056

 
706

 
457

 
2,762

 
3,219

 
997

1990
2010
 
Horizon Business 250
 
Industrial

 
1,625

 
6,354

 
1,180

 
1,625

 
7,534

 
9,159

 
3,087

1997
2010
 
Horizon Business 70
 
Industrial

 
956

 
3,441

 
942

 
956

 
4,383

 
5,339

 
1,566

1998
2010
 
Horizon Business 2780
 
Industrial

 
1,143

 
5,724

 
2,159

 
1,143

 
7,883

 
9,026

 
2,361

1997
2010
 
Horizon Business 25
 
Industrial

 
723

 
2,545

 
1,851

 
723

 
4,396

 
5,119

 
1,772

1999
2010
 
Horizon Business 2790
 
Industrial

 
1,505

 
4,958

 

 
1,505

 
4,958

 
6,463

 
2,262

2006
2010
 
1000 Northbrook Parkway
 
Industrial

 
756

 
3,612

 
628

 
756

 
4,240

 
4,996

 
1,931

1986
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tampa, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fairfield Distribution 8640
 
Industrial

 
483

 
2,359

 
1,017

 
487

 
3,372

 
3,859

 
1,418

1998
1999
 
Fairfield Distribution 4720
 
Industrial

 
530

 
4,624

 
954

 
534

 
5,574

 
6,108

 
2,814

1998
1999
 
Fairfield Distribution 4758
 
Industrial

 
334

 
2,658

 
769

 
338

 
3,423

 
3,761

 
1,527

1999
1999
 
Fairfield Distribution 8600
 
Industrial

 
600

 
1,185

 
2,235

 
604

 
3,416

 
4,020

 
1,662

1999
1999
 
Fairfield Distribution 4901
 
Industrial

 
488

 
2,425

 
1,136

 
488

 
3,561

 
4,049

 
1,482

2000
2000
 
Fairfield Distribution 4727
 
Industrial

 
555

 
3,348

 
1,239

 
555

 
4,587

 
5,142

 
2,177

2001
2001
 
Fairfield Distribution 4701
 
Industrial

 
394

 
1,350

 
1,595

 
394

 
2,945

 
3,339

 
1,284

2001
2001
 
Fairfield Distribution 4661
 
Industrial

 
444

 
1,640

 
879

 
444

 
2,519

 
2,963

 
995

2004
2004
 
Eagle Creek Business 8701
 
Industrial

 
3,705

 
2,331

 
2,708

 
3,705

 
5,039

 
8,744

 
3,968

2006
2006
 
Eagle Creek Business 8651
 
Industrial

 
2,354

 
1,661

 
1,895

 
2,354

 
3,556

 
5,910

 
2,526

2007
2007
 
Eagle Creek Business 8601
 
Industrial

 
2,332

 
2,229

 
1,771

 
2,332

 
4,000

 
6,332

 
3,255

2007
2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Teterboro, New Jersey
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Catherine Street
 
Industrial

 
14,376

 
18,788

 

 
14,376

 
18,788

 
33,164

 
2,584

2016
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tracy, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1400 Pescadero Avenue
 
Industrial

 
9,633

 
39,644

 

 
9,633

 
39,644

 
49,277

 
11,613

2008
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
West Chester, Ohio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
World Park Union Centre 9287
 
Industrial

 
2,150

 
827

 
7,934

 
2,151

 
8,760

 
10,911

 
4,709

2006
2006
 
World Park Union Centre 9271
 
Industrial

 
557

 
5,923

 
481

 
557

 
6,404

 
6,961

 
2,407

2004
2004
 
World Park Union Centre 9266
 
Industrial

 
1,125

 
5,951

 
398

 
1,125

 
6,349

 
7,474

 
2,212

1998
2010
 
World Park Union Centre 9451
 
Industrial

 
1,219

 
6,201

 
725

 
1,219

 
6,926

 
8,145

 
2,356

1999
2010

-121-


Duke Realty Corporation and Duke Realty Limited Partnership
Real Estate and Accumulated Depreciation
December 31, 2019
(in thousands)
 
Schedule III
 
 
 
 
 
 
Initial Cost
 
Cost Capitalized
Subsequent to
Development or Acquisition
 
Gross Book Value 12/31/2019
 
 
 
 
 
Name
 
Asset Type
Encumbrances
 
Land
 
Buildings
 
 
Land/Land Imp
 
Bldgs/TI
 
Total (1)
 
Accum. Depr. (2)
Year Constructed/Renovated
Year Acquired
 
World Park Union Centre 5443
 
Industrial

 
1,918

 
4,760

 
642

 
1,918

 
5,402

 
7,320

 
2,755

2005
2010
 
World Park Union Centre 9107
 
Industrial

 
1,160

 
5,985

 
1,347

 
1,160

 
7,332

 
8,492

 
2,678

1999
2010
 
World Park Union Centre 9245
 
Industrial

 
1,189

 
5,783

 
966

 
1,189

 
6,749

 
7,938

 
2,501

2001
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
West Palm Beach, Florida
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Park of Commerce 5655
 
Industrial

 
1,635

 
1,728

 
260

 
1,635

 
1,988

 
3,623

 
787

2010
2010
 
Park of Commerce 5720
 
Industrial

 
2,160

 
3,633

 
853

 
2,320

 
4,326

 
6,646

 
1,527

2010
2010
 
Airport Center 1701
 
Industrial

 
2,437

 
5,851

 
750

 
2,437

 
6,601

 
9,038

 
2,381

2002
2010
 
Airport Center 1805
 
Industrial

 
1,706

 
4,453

 
383

 
1,706

 
4,836

 
6,542

 
1,821

2002
2010
 
Airport Center 1865
 
Industrial

 
1,500

 
4,176

 
773

 
1,500

 
4,949

 
6,449

 
1,628

2002
2010
 
Park of Commerce #4
 
Grounds

 
5,934

 

 

 
5,934

 

 
5,934

 
46

n/a
2011
 
Park of Commerce #5
 
Grounds

 
6,308

 

 

 
6,308

 

 
6,308

 
44

n/a
2011
 
Turnpike Crossing 1315
 
Industrial

 
7,390

 
5,762

 
352

 
7,390

 
6,114

 
13,504

 
1,787

2016
2016
 
Turnpike Crossing 1333
 
Industrial

 
6,255

 
4,560

 
975

 
6,255

 
5,535

 
11,790

 
1,527

2016
2016
 
Turnpike Crossing 6747
 
Industrial

 
10,607

 
7,112

 
2,786

 
10,607

 
9,898

 
20,505

 
1,572

2017
2017
 
Turnpike Crossing 6729
 
Industrial

 
8,576

 
7,506

 
282

 
8,576

 
7,788

 
16,364

 
671

2018
2018
 
Turnpike Crossing 6711
 
Industrial

 
8,328

 
7,386

 

 
8,328

 
7,386

 
15,714

 
132

2019
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Whitestown, Indiana
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AllPoints Anson Building 14
 
Industrial

 
2,127

 
7,528

 
1,008

 
2,127

 
8,536

 
10,663

 
3,726

2007
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wind Gap, Pennsylvania
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1380 Jacobsburg Road
 
Industrial

 
15,500

 
25,247

 

 
15,500

 
25,247

 
40,747

 
1,446

2017
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wood-Ridge, New Jersey
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 Ethel Boulevard
 
Industrial

 
18,776

 
18,089

 

 
18,776

 
18,089

 
36,865

 
633

2019
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accum. Depr. on Improvements of Undeveloped Land
 
 

 

 

 

 

 

 

 
5,121

 
 
 
Eliminations
 
 

 

 

 
(23
)
 
(20
)
 
(3
)
 
(23
)
 
(14
)
 
 
 
Properties held-for-sale

 
 
 
 
 
 
 
 
 
 
(4,561
)
 
(18,840
)
 
(23,401
)
 
(7,132
)
 
 
 
 
 
 
34,187

 
2,505,632

 
4,705,734

 
639,912

 
2,532,541

 
5,295,336

 
7,827,877

 
1,480,461

 
 
(1)
The tax basis (in thousands) of our real estate assets at December 31, 2019 was approximately $7,289,109 (unaudited) for federal income tax purposes.
(2)
Depreciation of real estate is computed using the straight-line method not to exceed 40 years for buildings and 15 years for land improvements for properties that we develop, and not to exceed 30 years for buildings and 10 years for land improvements for properties that we acquire. Tenant improvements are depreciated over shorter periods based on lease terms (generally 3 to 10 years).


-122-



 
 
Real Estate Assets
 
Accumulated Depreciation
 
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Balance at beginning of year
 
$
7,248,346

 
$
6,612,229

 
$
6,523,281

 
$
1,345,060

 
$
1,196,458

 
$
1,302,210

Acquisitions
 
205,390

 
327,318

 
945,912

 
 
 
 
 
 
Construction costs and tenant improvements
 
635,173

 
683,284

 
716,627

 
 
 
 
 
 
Depreciation expense
 
 
 
 
 
 
 
272,422

 
256,250

 
242,606

Cost of real estate sold or contributed
 
(176,603
)
 
(336,327
)
 
(1,538,680
)
 
(68,861
)
 
(69,490
)
 
(314,306
)
Impairment allowance
 

 

 
(859
)
 
 
 
 
 
 
Write-off of fully depreciated assets
 
(61,028
)
 
(38,158
)
 
(34,052
)
 
(61,028
)
 
(38,158
)
 
(34,052
)
Balance at end of year including held-for-sale
 
$
7,851,278

 
$
7,248,346

 
$
6,612,229

 
$
1,487,593

 
$
1,345,060

 
$
1,196,458

Properties held-for-sale
 
(23,401
)
 

 
(18,662
)
 
(7,132
)
 
(884
)
 
(2,553
)
Balance at end of year excluding held-for-sale

 
$
7,827,877

 
$
7,248,346

 
$
6,593,567

 
$
1,480,461

 
$
1,344,176

 
$
1,193,905

Other real estate investments
 
165,500

 
 
 
 
 
 
 
 
 
 
Real estate assets
 
$
7,993,377

 
 
 
 
 
 
 
 
 
 




See Accompanying Notes to Independent Auditors' Report

-123-


Item 16.  Form 10-K Summary
Not applicable.


-124-


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 (*). 
Number
 
Description
 
 
3.1
 
 
 
3.2
 
 
 
3.3
 
 
 
 
3.4(i)
 
 
 
 
3.4(ii)
 
 
 
 
3.4(iii)
 
 
 
 
3.4(iv)
 
 
 
 
3.4(v)
 
 
 
 
3.4(vi)
 
 
 
 
4.1
 
 
 
 
4.2(i)
 

-125-


4.3(iii)
 
 
 
 
4.3(iv)
 
 
 
 
4.3(v)
 
 
 
 
4.3(vi)
 
 
 
 
4.3(vii)
 
 
 
 
4.3(viii)
 
 
 
 
4.3(ix)
 
 
 
 
4.4
 
 
 
 
10.1(i)
 
 
 
10.1(ii)
 
 
 
10.1(iii)
 
 
 
 
10.1(iv)
 
 
 
10.2(i)
 
 
 
 
10.2(ii)
 
 
 
 
10.3(i)
 
 
 
 

-126-


10.3(ii)
 
 
 
 
10.3(iii)
 
 
 
 
10.3(iv)
 
 
 
 
10.4
 
 
 
 
10.5(i)
 
 
 
10.5(ii)
 
 
 
 
10.6
 
 
 
 
10.7
 
 
 
 
10.8
 
 
 
 
10.9
 
 
 
 
10.10
 
 
 
 
10.11
 
 
 
 

-127-


21.1
 
 
 
 
23.1
 
 
 
 
23.2
 
 
 
 
24.1
 
 
 
 
31.1
 
 
 
 
31.2
 
 
 
 
31.3
 
 
 
 
31.4
 
 
 
 
32.1
 
 
 
 
32.2
 
 
 
 
32.3
 
 
 
 
32.4
 
 
 
 
99.1
 
 
 
 
101.Def
 
Definition Linkbase Document
 
 
 
101.Pre
 
Presentation Linkbase Document
 
 
 
101.Lab
 
Labels Linkbase Document
 
 
 
101.Cal
 
Calculation Linkbase Document
 
 
 
101.Sch
 
Schema Document
 
 
 
101.Ins
 
Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
 
 
 
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)
# 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.













-128-


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
 
 
 
 
/s/ James B. Connor
 
 
James B. Connor
 
 
Chairman and Chief Executive Officer
 
 
(Principal Executive Officer)
 
 
 
 
/s/ Mark A. Denien
 
 
Mark A. Denien
 
 
Executive Vice President and Chief Financial Officer
 
 
(Principal Financial and Accounting Officer)
 
 
 
 
 
 
 
DUKE REALTY LIMITED PARTNERSHIP
 
 
By: DUKE REALTY CORPORATION, its general partner
 
 
 
 
/s/ James B. Connor
 
 
James B. Connor
 
 
Chairman and Chief Executive Officer of the General Partner
 
 
(Principal Executive Officer)
 
 
 
 
/s/ Mark A. Denien
 
 
Mark A. Denien
 
 
Executive Vice President and Chief Financial Officer of the General Partner
 
 
(Principal Financial and Accounting Officer)
 
 
 
 
 
Date:
February 25, 2020
 
 
 
 














-129-


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
 
 
 
 
 
Signature
 
Date
 
Title
 
 
 
 
 
/s/ James B. Connor
 
2/25/2020
 
Chairman and Chief Executive Officer
(Principal Executive Officer)
James B. Connor
 
 
 
 
 
 
 
 
 
/s/ Mark A. Denien
 
2/25/2020
 
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Mark A. Denien
 
 
 
 
 
 
 
 
 
/s/ John P. Case*
 
2/25/2020
 
Director
John P. Case
 
 
 
 
 
 
 
 
 
/s/ Ngaire E. Cuneo*
 
2/25/2020
 
Director
Ngaire E. Cuneo
 
 
 
 
 
 
 
 
 
/s/ Charles R. Eitel*
 
2/25/2020
 
Director
Charles R. Eitel
 
 
 
 
 
 
 
 
 
/s/ Tamara D. Fischer*
 
2/25/2020
 
Director
Tamara D. Fischer*
 
 
 
 
 
 
 
 
 
/s/ Norman K. Jenkins*
 
2/25/2020
 
Director
Norman K. Jenkins

 
 
 
 
 
 
 
 
 
/s/ Melanie R. Sabelhaus*
 
2/25/2020
 
Director
Melanie R. Sabelhaus
 
 
 
 
 
 
 
 
 
/s/ Peter M. Scott III*
 
2/25/2020
 
Director
Peter M. Scott III
 
 
 
 
 
 
 
 
 
/s/ David P. Stockert*
 
2/25/2020
 
Director
David P. Stockert
 
 
 
 
 
 
 
 
 
/s/ Chris T. Sultemeier*
 
2/25/2020
 
Director
Chris T. Sultemeier
 
 
 
 
 
 
 
 
 
/s/ Michael E. Szymanczyk*
 
2/25/2020
 
Director
Michael E. Szymanczyk
 
 
 
 
 
 
 
 
 
/s/ Warren M.Thompson*
 
2/25/2020
 
Director
Warren M. Thompson
 
 
 
 

-130-


 
 
 
 
 
/s/ Lynn C. Thurber*
 
2/25/2020
 
Director
Lynn C. Thurber
 
 
 
 
 
 
 
 
 

*
 
By James B. Connor, Attorney-in-Fact
 
/s/ James B. Connor

-131-