x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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) | |
600 East 96thStreet, Suite 100 Indianapolis, Indiana | 46240 | |
(Address of Principal Executive Offices) | (Zip Code) |
Duke Realty Corporation | Yes x | No o | Duke Realty Limited Partnership | Yes x | No o |
Duke Realty Corporation | Yes x | No o | Duke Realty Limited Partnership | Yes x | No o |
Large accelerated filer x | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer x | Smaller reporting company o |
Duke Realty Corporation | Yes o | No x | Duke Realty Limited Partnership | Yes o | No x |
Class | Outstanding Common Shares of Duke Realty Corporation at November 1, 2013 | |
Common Stock, $.01 par value per share | 325,790,455 |
• | 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. |
Page | |||
Duke Realty Corporation: | |||
Duke Realty Limited Partnership: | |||
Duke Realty Corporation and Duke Realty Limited Partnership: | |||
September 30, 2013 | December 31, 2012 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Real estate investments: | |||||||
Land and improvements | $ | 1,443,643 | $ | 1,284,081 | |||
Buildings and tenant improvements | 5,720,356 | 5,398,886 | |||||
Construction in progress | 197,472 | 234,918 | |||||
Investments in and advances to unconsolidated companies | 328,660 | 372,256 | |||||
Undeveloped land | 580,052 | 614,208 | |||||
8,270,183 | 7,904,349 | ||||||
Accumulated depreciation | (1,384,219 | ) | (1,296,396 | ) | |||
Net real estate investments | 6,885,964 | 6,607,953 | |||||
Real estate investments and other assets held-for-sale | 57,790 | 30,937 | |||||
Cash and cash equivalents | 24,112 | 33,889 | |||||
Accounts receivable, net of allowance of $3,818 and $3,374 | 20,073 | 22,283 | |||||
Straight-line rent receivable, net of allowance of $7,472 and $6,091 | 124,574 | 120,303 | |||||
Receivables on construction contracts, including retentions | 28,650 | 39,754 | |||||
Deferred financing costs, net of accumulated amortization of $52,370 and $48,218 | 38,029 | 40,083 | |||||
Deferred leasing and other costs, net of accumulated amortization of $413,227 and $372,047 | 498,025 | 497,827 | |||||
Escrow deposits and other assets | 209,622 | 167,072 | |||||
$ | 7,886,839 | $ | 7,560,101 | ||||
LIABILITIES AND EQUITY | |||||||
Indebtedness: | |||||||
Secured debt | $ | 1,158,456 | $ | 1,167,953 | |||
Unsecured debt | 3,066,755 | 2,993,217 | |||||
Unsecured line of credit | 210,000 | 285,000 | |||||
4,435,211 | 4,446,170 | ||||||
Liabilities related to real estate investments held-for-sale | 2,919 | 807 | |||||
Construction payables and amounts due subcontractors, including retentions | 78,376 | 84,679 | |||||
Accrued real estate taxes | 104,144 | 74,565 | |||||
Accrued interest | 36,439 | 59,215 | |||||
Other accrued expenses | 40,567 | 104,719 | |||||
Other liabilities | 130,537 | 121,097 | |||||
Tenant security deposits and prepaid rents | 45,702 | 42,731 | |||||
Total liabilities | 4,873,895 | 4,933,983 | |||||
Shareholders' equity: | |||||||
Preferred shares ($.01 par value); 5,000 shares authorized; 1,791 and 2,503 shares issued and outstanding | 447,683 | 625,638 | |||||
Common shares ($.01 par value); 400,000 shares authorized; 325,319 and 279,423 shares issued and outstanding | 3,253 | 2,794 | |||||
Additional paid-in capital | 4,601,224 | 3,953,497 | |||||
Accumulated other comprehensive income | 3,780 | 2,691 | |||||
Distributions in excess of net income | (2,076,299 | ) | (1,993,206 | ) | |||
Total shareholders' equity | 2,979,641 | 2,591,414 | |||||
Noncontrolling interests | 33,303 | 34,704 | |||||
Total equity | 3,012,944 | 2,626,118 | |||||
$ | 7,886,839 | $ | 7,560,101 |
Three Months Ended | Nine Months Ended | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues: | |||||||||||||||
Rental and related revenue | $ | 228,883 | $ | 199,326 | $ | 668,230 | $ | 586,570 | |||||||
General contractor and service fee revenue | 62,807 | 93,932 | 161,004 | 226,507 | |||||||||||
291,690 | 293,258 | 829,234 | 813,077 | ||||||||||||
Expenses: | |||||||||||||||
Rental expenses | 42,888 | 37,187 | 122,753 | 104,430 | |||||||||||
Real estate taxes | 30,450 | 27,303 | 90,729 | 81,505 | |||||||||||
General contractor and other services expenses | 59,392 | 87,719 | 142,925 | 209,519 | |||||||||||
Depreciation and amortization | 103,594 | 90,202 | 296,791 | 264,435 | |||||||||||
236,324 | 242,411 | 653,198 | 659,889 | ||||||||||||
Other operating activities: | |||||||||||||||
Equity in earnings (loss) of unconsolidated companies | (27 | ) | 2,280 | 50,442 | 4,056 | ||||||||||
Gain on sale of properties | — | 403 | 1,108 | 245 | |||||||||||
Gain on land sales | 3,365 | — | 3,365 | — | |||||||||||
Undeveloped land carrying costs | (2,108 | ) | (2,140 | ) | (6,837 | ) | (6,606 | ) | |||||||
Impairment charges | — | — | (3,777 | ) | — | ||||||||||
Other operating expenses | (47 | ) | (130 | ) | (150 | ) | (591 | ) | |||||||
General and administrative expenses | (10,373 | ) | (8,934 | ) | (33,225 | ) | (32,367 | ) | |||||||
(9,190 | ) | (8,521 | ) | 10,926 | (35,263 | ) | |||||||||
Operating income | 46,176 | 42,326 | 186,962 | 117,925 | |||||||||||
Other income (expenses): | |||||||||||||||
Interest and other income, net | 145 | 150 | 1,219 | 394 | |||||||||||
Interest expense | (58,100 | ) | (58,812 | ) | (176,005 | ) | (175,726 | ) | |||||||
Acquisition-related activity | (726 | ) | (954 | ) | (2,506 | ) | (2,563 | ) | |||||||
Income (loss) from continuing operations before income taxes | (12,505 | ) | (17,290 | ) | 9,670 | (59,970 | ) | ||||||||
Income tax benefit | 4,500 | 103 | 4,500 | 103 | |||||||||||
Income (loss) from continuing operations | (8,005 | ) | (17,187 | ) | 14,170 | (59,867 | ) | ||||||||
Discontinued operations: | |||||||||||||||
Income (loss) before gain on sales | 901 | (1,970 | ) | 70 | (4,699 | ) | |||||||||
Gain on sale of depreciable properties | 8,441 | 1,608 | 101,052 | 11,179 | |||||||||||
Income (loss) from discontinued operations | 9,342 | (362 | ) | 101,122 | 6,480 | ||||||||||
Net income (loss) | 1,337 | (17,549 | ) | 115,292 | (53,387 | ) | |||||||||
Dividends on preferred shares | (7,356 | ) | (11,081 | ) | (24,261 | ) | (35,356 | ) | |||||||
Adjustments for redemption of preferred shares | — | — | (5,932 | ) | (5,730 | ) | |||||||||
Net (income) loss attributable to noncontrolling interests | (48 | ) | 400 | (1,629 | ) | 1,371 | |||||||||
Net income (loss) attributable to common shareholders | $ | (6,067 | ) | $ | (28,230 | ) | $ | 83,470 | $ | (93,102 | ) | ||||
Basic net income (loss) per common share: | |||||||||||||||
Continuing operations attributable to common shareholders | $ | (0.05 | ) | $ | (0.11 | ) | $ | (0.06 | ) | $ | (0.38 | ) | |||
Discontinued operations attributable to common shareholders | 0.03 | — | 0.31 | 0.02 | |||||||||||
Total | $ | (0.02 | ) | $ | (0.11 | ) | $ | 0.25 | $ | (0.36 | ) | ||||
Diluted net income (loss) per common share: | |||||||||||||||
Continuing operations attributable to common shareholders | $ | (0.05 | ) | $ | (0.11 | ) | $ | (0.06 | ) | $ | (0.38 | ) | |||
Discontinued operations attributable to common shareholders | 0.03 | — | 0.31 | 0.02 | |||||||||||
Total | $ | (0.02 | ) | $ | (0.11 | ) | $ | 0.25 | $ | (0.36 | ) | ||||
Weighted average number of common shares outstanding | 324,895 | 270,289 | 320,810 | 265,153 | |||||||||||
Weighted average number of common shares and potential dilutive securities | 324,895 | 270,289 | 325,380 | 265,153 | |||||||||||
Comprehensive income (loss): | |||||||||||||||
Net income (loss) | $ | 1,337 | $ | (17,549 | ) | $ | 115,292 | $ | (53,387 | ) | |||||
Other comprehensive income (loss): | |||||||||||||||
Amortization of interest contracts | (116 | ) | 457 | 567 | 1,371 | ||||||||||
Other | (54 | ) | (47 | ) | 522 | (181 | ) | ||||||||
Total other comprehensive income (loss) | (170 | ) | 410 | 1,089 | 1,190 | ||||||||||
Comprehensive income (loss) | $ | 1,167 | $ | (17,139 | ) | $ | 116,381 | $ | (52,197 | ) |
2013 | 2012 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 115,292 | $ | (53,387 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation of buildings and tenant improvements | 214,118 | 193,479 | |||||
Amortization of deferred leasing and other costs | 89,359 | 86,859 | |||||
Amortization of deferred financing costs | 9,913 | 9,878 | |||||
Straight-line rent adjustment | (12,421 | ) | (15,725 | ) | |||
Impairment charges | 3,777 | — | |||||
Gain on acquisitions | (962 | ) | — | ||||
Gains on land and depreciated property sales | (105,525 | ) | (11,424 | ) | |||
Third-party construction contracts, net | 27,117 | (4,295 | ) | ||||
Other accrued revenues and expenses, net | 11,367 | (14,621 | ) | ||||
Operating distributions received in excess of (less than) equity in earnings from unconsolidated companies | (34,411 | ) | 10,772 | ||||
Net cash provided by operating activities | 317,624 | 201,536 | |||||
Cash flows from investing activities: | |||||||
Development of real estate investments | (320,698 | ) | (176,340 | ) | |||
Acquisition of real estate investments and related intangible assets | (372,934 | ) | (321,099 | ) | |||
Acquisition of undeveloped land | (30,101 | ) | (37,166 | ) | |||
Second generation tenant improvements, leasing costs and building improvements | (60,052 | ) | (46,682 | ) | |||
Other deferred leasing costs | (26,647 | ) | (22,727 | ) | |||
Other assets | (14,725 | ) | 674 | ||||
Proceeds from land and depreciated property sales, net | 330,740 | 112,559 | |||||
Capital distributions from unconsolidated companies | 106,306 | 4,890 | |||||
Capital contributions and advances to unconsolidated companies | (38,959 | ) | (19,262 | ) | |||
Net cash used for investing activities | (427,070 | ) | (505,153 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common shares, net | 632,531 | 236,301 | |||||
Payments for redemption of preferred shares | (177,955 | ) | (168,272 | ) | |||
Proceeds from unsecured debt | 500,000 | 600,000 | |||||
Payments on unsecured debt | (426,462 | ) | (172,374 | ) | |||
Proceeds from secured debt financings | 1,933 | 13,305 | |||||
Payments on secured indebtedness including principal amortization | (112,097 | ) | (107,240 | ) | |||
Payments on lines of credit, net | (75,000 | ) | (20,293 | ) | |||
Distributions to common shareholders | (164,811 | ) | (135,083 | ) | |||
Distributions to preferred shareholders | (24,261 | ) | (31,630 | ) | |||
Contributions from (distributions to) noncontrolling interests | (2,692 | ) | 2,788 | ||||
Buyout of noncontrolling interests | — | (6,208 | ) | ||||
Change in book overdrafts | (44,225 | ) | — | ||||
Deferred financing costs | (7,292 | ) | (8,334 | ) | |||
Net cash provided by financing activities | 99,669 | 202,960 | |||||
Net decrease in cash and cash equivalents | (9,777 | ) | (100,657 | ) | |||
Cash and cash equivalents at beginning of period | 33,889 | 213,809 | |||||
Cash and cash equivalents at end of period | $ | 24,112 | $ | 113,152 | |||
Non-cash investing and financing activities: | |||||||
Assumption of indebtedness and other liabilities in real estate acquisitions | $ | 106,555 | $ | 19,992 | |||
Carrying amount of pre-existing ownership interest in acquired property | $ | 630 | $ | — | |||
Conversion of Limited Partner Units to common shares | $ | 338 | $ | 29,002 | |||
Preferred distributions declared but not paid | $ | — | $ | 3,726 |
Common Shareholders | |||||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Distributions in Excess of Net Income | Non- Controlling Interests | Total | |||||||||||||||||||||
Balance at December 31, 2012 | $ | 625,638 | $ | 2,794 | $ | 3,953,497 | $ | 2,691 | $ | (1,993,206 | ) | $ | 34,704 | $ | 2,626,118 | ||||||||||||
Net income | — | — | — | — | 113,663 | 1,629 | 115,292 | ||||||||||||||||||||
Other comprehensive income | — | — | — | 1,089 | — | — | 1,089 | ||||||||||||||||||||
Issuance of common shares | — | 451 | 632,080 | — | — | — | 632,531 | ||||||||||||||||||||
Stock-based compensation plan activity | — | 7 | 9,378 | — | (1,752 | ) | — | 7,633 | |||||||||||||||||||
Conversion of Limited Partner Units | — | 1 | 337 | — | — | (338 | ) | — | |||||||||||||||||||
Distributions to preferred shareholders | — | — | — | — | (24,261 | ) | — | (24,261 | ) | ||||||||||||||||||
Redemption of preferred shares | (177,955 | ) | — | 5,932 | — | (5,932 | ) | — | (177,955 | ) | |||||||||||||||||
Distributions to common shareholders ($0.51 per share) | — | — | — | — | (164,811 | ) | — | (164,811 | ) | ||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | (2,692 | ) | (2,692 | ) | ||||||||||||||||||
Balance at September 30, 2013 | $ | 447,683 | $ | 3,253 | $ | 4,601,224 | $ | 3,780 | $ | (2,076,299 | ) | $ | 33,303 | $ | 3,012,944 |
September 30, 2013 | December 31, 2012 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Real estate investments: | |||||||
Land and improvements | $ | 1,443,643 | $ | 1,284,081 | |||
Buildings and tenant improvements | 5,720,356 | 5,398,886 | |||||
Construction in progress | 197,472 | 234,918 | |||||
Investments in and advances to unconsolidated companies | 328,660 | 372,256 | |||||
Undeveloped land | 580,052 | 614,208 | |||||
8,270,183 | 7,904,349 | ||||||
Accumulated depreciation | (1,384,219 | ) | (1,296,396 | ) | |||
Net real estate investments | 6,885,964 | 6,607,953 | |||||
Real estate investments and other assets held-for-sale | 57,790 | 30,937 | |||||
Cash and cash equivalents | 24,112 | 33,889 | |||||
Accounts receivable, net of allowance of $3,818 and $3,374 | 20,073 | 22,283 | |||||
Straight-line rent receivable, net of allowance of $7,472 and $6,091 | 124,574 | 120,303 | |||||
Receivables on construction contracts, including retentions | 28,650 | 39,754 | |||||
Deferred financing costs, net of accumulated amortization of $52,370 and $48,218 | 38,029 | 40,083 | |||||
Deferred leasing and other costs, net of accumulated amortization of $413,227 and $372,047 | 498,025 | 497,827 | |||||
Escrow deposits and other assets | 209,622 | 167,072 | |||||
$ | 7,886,839 | $ | 7,560,101 | ||||
LIABILITIES AND EQUITY | |||||||
Indebtedness: | |||||||
Secured debt | $ | 1,158,456 | $ | 1,167,953 | |||
Unsecured debt | 3,066,755 | 2,993,217 | |||||
Unsecured line of credit | 210,000 | 285,000 | |||||
4,435,211 | 4,446,170 | ||||||
Liabilities related to real estate investments held-for-sale | 2,919 | 807 | |||||
Construction payables and amounts due subcontractors, including retentions | 78,376 | 84,679 | |||||
Accrued real estate taxes | 104,144 | 74,565 | |||||
Accrued interest | 36,439 | 59,215 | |||||
Other accrued expenses | 40,772 | 104,886 | |||||
Other liabilities | 130,537 | 121,097 | |||||
Tenant security deposits and prepaid rents | 45,702 | 42,731 | |||||
Total liabilities | 4,874,100 | 4,934,150 | |||||
Partners' equity: | |||||||
General Partner: | |||||||
Common equity (325,319 and 279,423 General Partner Units issued and outstanding) | 2,532,146 | 1,967,091 | |||||
Preferred equity (1,791 and 2,503 Preferred Units issued and outstanding) | 447,683 | 625,638 | |||||
2,979,829 | 2,592,729 | ||||||
Limited Partners' common equity (4,388 and 4,419 Limited Partner Units issued and outstanding) | 19,944 | 21,383 | |||||
Accumulated other comprehensive income | 3,780 | 2,691 | |||||
Total partners' equity | 3,003,553 | 2,616,803 | |||||
Noncontrolling interests | 9,186 | 9,148 | |||||
Total equity | 3,012,739 | 2,625,951 | |||||
$ | 7,886,839 | $ | 7,560,101 |
Three Months Ended | Nine Months Ended | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues: | |||||||||||||||
Rental and related revenue | $ | 228,883 | $ | 199,326 | $ | 668,230 | $ | 586,570 | |||||||
General contractor and service fee revenue | 62,807 | 93,932 | 161,004 | 226,507 | |||||||||||
291,690 | 293,258 | 829,234 | 813,077 | ||||||||||||
Expenses: | |||||||||||||||
Rental expenses | 42,888 | 37,187 | 122,753 | 104,430 | |||||||||||
Real estate taxes | 30,450 | 27,303 | 90,729 | 81,505 | |||||||||||
General contractor and other services expenses | 59,392 | 87,719 | 142,925 | 209,519 | |||||||||||
Depreciation and amortization | 103,594 | 90,202 | 296,791 | 264,435 | |||||||||||
236,324 | 242,411 | 653,198 | 659,889 | ||||||||||||
Other operating activities: | |||||||||||||||
Equity in earnings (loss) of unconsolidated companies | (27 | ) | 2,280 | 50,442 | 4,056 | ||||||||||
Gain on sale of properties | — | 403 | 1,108 | 245 | |||||||||||
Gain on land sales | 3,365 | — | 3,365 | — | |||||||||||
Undeveloped land carrying costs | (2,108 | ) | (2,140 | ) | (6,837 | ) | (6,606 | ) | |||||||
Impairment charges | — | — | (3,777 | ) | — | ||||||||||
Other operating expenses | (47 | ) | (130 | ) | (150 | ) | (591 | ) | |||||||
General and administrative expenses | (10,373 | ) | (8,934 | ) | (33,225 | ) | (32,367 | ) | |||||||
(9,190 | ) | (8,521 | ) | 10,926 | (35,263 | ) | |||||||||
Operating income | 46,176 | 42,326 | 186,962 | 117,925 | |||||||||||
Other income (expenses): | |||||||||||||||
Interest and other income, net | 145 | 150 | 1,219 | 394 | |||||||||||
Interest expense | (58,100 | ) | (58,812 | ) | (176,005 | ) | (175,726 | ) | |||||||
Acquisition-related activity | (726 | ) | (954 | ) | (2,506 | ) | (2,563 | ) | |||||||
Income (loss) from continuing operations before income taxes | (12,505 | ) | (17,290 | ) | 9,670 | (59,970 | ) | ||||||||
Income tax benefit | 4,500 | 103 | 4,500 | 103 | |||||||||||
Income (loss) from continuing operations | (8,005 | ) | (17,187 | ) | 14,170 | (59,867 | ) | ||||||||
Discontinued operations: | |||||||||||||||
Income (loss) before gain on sales | 901 | (1,970 | ) | 70 | (4,699 | ) | |||||||||
Gain on sale of depreciable properties | 8,441 | 1,608 | 101,052 | 11,179 | |||||||||||
Income (loss) from discontinued operations | 9,342 | (362 | ) | 101,122 | 6,480 | ||||||||||
Net income (loss) | 1,337 | (17,549 | ) | 115,292 | (53,387 | ) | |||||||||
Distributions on Preferred Units | (7,356 | ) | (11,081 | ) | (24,261 | ) | (35,356 | ) | |||||||
Adjustments for redemption of Preferred Units | — | — | (5,932 | ) | (5,730 | ) | |||||||||
Net income attributable to noncontrolling interests | (140 | ) | (59 | ) | (487 | ) | (365 | ) | |||||||
Net income (loss) attributable to common unitholders | $ | (6,159 | ) | $ | (28,689 | ) | $ | 84,612 | $ | (94,838 | ) | ||||
Basic net income (loss) per Common Unit: | |||||||||||||||
Continuing operations attributable to common unitholders | $ | (0.05 | ) | $ | (0.11 | ) | $ | (0.06 | ) | $ | (0.38 | ) | |||
Discontinued operations attributable to common unitholders | 0.03 | — | 0.31 | 0.02 | |||||||||||
Total | $ | (0.02 | ) | $ | (0.11 | ) | $ | 0.25 | $ | (0.36 | ) | ||||
Diluted net income (loss) per Common Unit: | |||||||||||||||
Continuing operations attributable to common unitholders | $ | (0.05 | ) | $ | (0.11 | ) | $ | (0.06 | ) | $ | (0.38 | ) | |||
Discontinued operations attributable to common unitholders | 0.03 | — | 0.31 | 0.02 | |||||||||||
Total | $ | (0.02 | ) | $ | (0.11 | ) | $ | 0.25 | $ | (0.36 | ) | ||||
Weighted average number of Common Units outstanding | 329,283 | 274,800 | 325,203 | 270,095 | |||||||||||
Weighted average number of Common Units and potential dilutive securities | 329,283 | 274,800 | 325,380 | 270,095 | |||||||||||
Comprehensive income (loss): | |||||||||||||||
Net income (loss) | $ | 1,337 | $ | (17,549 | ) | $ | 115,292 | $ | (53,387 | ) | |||||
Other comprehensive income (loss): | |||||||||||||||
Amortization of interest contracts | (116 | ) | 457 | 567 | 1,371 | ||||||||||
Other | (54 | ) | (47 | ) | 522 | (181 | ) | ||||||||
Total other comprehensive income (loss) | (170 | ) | 410 | 1,089 | 1,190 | ||||||||||
Comprehensive income (loss) | $ | 1,167 | $ | (17,139 | ) | $ | 116,381 | $ | (52,197 | ) |
2013 | 2012 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 115,292 | $ | (53,387 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation of buildings and tenant improvements | 214,118 | 193,479 | |||||
Amortization of deferred leasing and other costs | 89,359 | 86,859 | |||||
Amortization of deferred financing costs | 9,913 | 9,878 | |||||
Straight-line rent adjustment | (12,421 | ) | (15,725 | ) | |||
Impairment charges | 3,777 | — | |||||
Gain on acquisitions | (962 | ) | — | ||||
Gains on land and depreciated property sales | (105,525 | ) | (11,424 | ) | |||
Third-party construction contracts, net | 27,117 | (4,295 | ) | ||||
Other accrued revenues and expenses, net | 11,405 | (14,582 | ) | ||||
Operating distributions received in excess of (less than) equity in earnings from unconsolidated companies | (34,411 | ) | 10,772 | ||||
Net cash provided by operating activities | 317,662 | 201,575 | |||||
Cash flows from investing activities: | |||||||
Development of real estate investments | (320,698 | ) | (176,340 | ) | |||
Acquisition of real estate investments and related intangible assets | (372,934 | ) | (321,099 | ) | |||
Acquisition of undeveloped land | (30,101 | ) | (37,166 | ) | |||
Second generation tenant improvements, leasing costs and building improvements | (60,052 | ) | (46,682 | ) | |||
Other deferred leasing costs | (26,647 | ) | (22,727 | ) | |||
Other assets | (14,725 | ) | 674 | ||||
Proceeds from land and depreciated property sales, net | 330,740 | 112,559 | |||||
Capital distributions from unconsolidated companies | 106,306 | 4,890 | |||||
Capital contributions and advances to unconsolidated companies | (38,959 | ) | (19,262 | ) | |||
Net cash used for investing activities | (427,070 | ) | (505,153 | ) | |||
Cash flows from financing activities: | |||||||
Contributions from the General Partner | 632,531 | 236,301 | |||||
Payments for redemption of Preferred Units | (177,955 | ) | (168,272 | ) | |||
Proceeds from unsecured debt | 500,000 | 600,000 | |||||
Payments on unsecured debt | (426,462 | ) | (172,374 | ) | |||
Proceeds from secured debt financings | 1,933 | 13,305 | |||||
Payments on secured indebtedness including principal amortization | (112,097 | ) | (107,240 | ) | |||
Payments on lines of credit, net | (75,000 | ) | (20,293 | ) | |||
Distributions to common unitholders | (167,092 | ) | (137,662 | ) | |||
Distributions to preferred unitholders | (24,261 | ) | (31,630 | ) | |||
Contributions from (distributions to) noncontrolling interests | (449 | ) | 5,311 | ||||
Buyout of noncontrolling interests | — | (6,208 | ) | ||||
Change in book overdrafts | (44,225 | ) | — | ||||
Deferred financing costs | (7,292 | ) | (8,334 | ) | |||
Net cash provided by financing activities | 99,631 | 202,904 | |||||
Net decrease in cash and cash equivalents | (9,777 | ) | (100,674 | ) | |||
Cash and cash equivalents at beginning of period | 33,889 | 213,826 | |||||
Cash and cash equivalents at end of period | $ | 24,112 | $ | 113,152 | |||
Non-cash investing and financing activities: | |||||||
Assumption of indebtedness and other liabilities in real estate acquisitions | $ | 106,555 | $ | 19,992 | |||
Carrying amount of pre-existing ownership interest in acquired property | $ | 630 | $ | — | |||
Conversion of Limited Partner Units to common shares of the General Partner | $ | 338 | $ | 29,002 | |||
Preferred distributions declared but not paid | $ | — | $ | 3,726 |
Common Unitholders | |||||||||||||||||||||||||||
Limited | Accumulated | ||||||||||||||||||||||||||
General Partner | Partners' | Other | Total | ||||||||||||||||||||||||
Common Equity | Preferred Equity | Common Equity | Comprehensive Income | Partners' Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||
Balance at December 31, 2012 | $ | 1,967,091 | $ | 625,638 | $ | 21,383 | $ | 2,691 | $ | 2,616,803 | $ | 9,148 | $ | 2,625,951 | |||||||||||||
Net income | 89,402 | 24,261 | 1,142 | — | 114,805 | 487 | 115,292 | ||||||||||||||||||||
Other comprehensive income | — | — | — | 1,089 | 1,089 | — | 1,089 | ||||||||||||||||||||
Capital contribution from the General Partner | 632,531 | — | — | — | 632,531 | — | 632,531 | ||||||||||||||||||||
Stock-based compensation plan activity | 7,633 | — | — | — | 7,633 | — | 7,633 | ||||||||||||||||||||
Conversion of Limited Partner Units to common shares of the General Partner | 338 | — | (338 | ) | — | — | — | — | |||||||||||||||||||
Distributions to Preferred Unitholders | — | (24,261 | ) | — | — | (24,261 | ) | — | (24,261 | ) | |||||||||||||||||
Redemption of Preferred Units | — | (177,955 | ) | — | — | (177,955 | ) | — | (177,955 | ) | |||||||||||||||||
Distributions to Partners ($0.51 per Common Unit) | (164,849 | ) | — | (2,243 | ) | — | (167,092 | ) | — | (167,092 | ) | ||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | (449 | ) | (449 | ) | ||||||||||||||||||
Balance at September 30, 2013 | $ | 2,532,146 | $ | 447,683 | $ | 19,944 | $ | 3,780 | $ | 3,003,553 | $ | 9,186 | $ | 3,012,739 |
Carrying Value | Maximum Loss Exposure | ||||||
Investment in unconsolidated companies | $ | 44.6 | $ | 44.6 | |||
Guarantee obligations (1) | $ | (20.3 | ) | $ | (141.9 | ) |
(1) | We are party to guarantees of the third-party debt of these joint ventures, and our maximum loss exposure is equal to the maximum monetary obligation pursuant to the guarantee agreements. We have also recorded a liability for our probable future obligation under a guarantee to the lender of one of these ventures, which is included within the carrying value of our guarantee obligations. Pursuant to an agreement with the lender, we may make partner loans to this joint venture that will reduce our maximum guarantee obligation on a dollar-for-dollar basis. The carrying value of our recorded guarantee obligations is included in other liabilities in our Consolidated Balance Sheets. |
Real estate assets | $ | 422,538 | |
Lease related intangible assets | 58,826 | ||
Total acquired assets | 481,364 | ||
Secured debt | 103,638 | ||
Below market lease liability | 1,469 | ||
Other liabilities | 1,448 | ||
Total assumed liabilities | 106,555 | ||
Fair value of acquired net assets | $ | 374,809 |
Low | High | ||||
Discount rate | 6.60 | % | 9.67 | % | |
Exit capitalization rate | 5.10 | % | 7.67 | % | |
Lease-up period (months) | 12 | 24 | |||
Net rental rate per square foot – Industrial | $2.95 | $8.28 | |||
Net rental rate per square foot – Medical Office | $18.00 | $18.00 |
Book Value at 12/31/12 | Book Value at 9/30/13 | Fair Value at 12/31/12 | Issuances and Assumptions | Payments/Payoffs | Adjustments to Fair Value | Fair Value at 9/30/13 | |||||||||||||||||||||
Fixed rate secured debt | $ | 1,149,541 | $ | 1,139,262 | $ | 1,251,477 | $ | 103,638 | $ | (110,946 | ) | $ | (23,801 | ) | $ | 1,220,368 | |||||||||||
Variable rate secured debt | 18,412 | 19,194 | 18,386 | 1,933 | (1,151 | ) | 27 | 19,195 | |||||||||||||||||||
Unsecured debt | 2,993,217 | 3,066,755 | 3,336,386 | 500,000 | (426,462 | ) | (135,936 | ) | 3,273,988 | ||||||||||||||||||
Unsecured line of credit | 285,000 | 210,000 | 285,632 | — | (75,000 | ) | 403 | 211,035 | |||||||||||||||||||
Total | $ | 4,446,170 | $ | 4,435,211 | $ | 4,891,881 | $ | 605,571 | $ | (613,559 | ) | $ | (159,307 | ) | $ | 4,724,586 |
Description | Maximum Capacity | Maturity Date | Outstanding Balance at September 30, 2013 | ||||||
Unsecured Line of Credit - Partnership | $ | 850,000 | December 2015 | $ | 210,000 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Management fees | $ | 2,246 | $ | 2,796 | $ | 6,872 | $ | 8,251 | |||||||
Leasing fees | 310 | 622 | 1,432 | 2,856 | |||||||||||
Construction and development fees | 681 | 1,860 | 3,258 | 3,615 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
General Partner | |||||||||||||||
Net income (loss) attributable to common shareholders | $ | (6,067 | ) | $ | (28,230 | ) | $ | 83,470 | $ | (93,102 | ) | ||||
Less: Dividends on participating securities | (650 | ) | (680 | ) | (2,024 | ) | (2,388 | ) | |||||||
Basic net income (loss) attributable to common shareholders | (6,717 | ) | (28,910 | ) | 81,446 | (95,490 | ) | ||||||||
Noncontrolling interest in earnings of common unitholders | — | — | 1,142 | — | |||||||||||
Diluted net income (loss) attributable to common shareholders | $ | (6,717 | ) | $ | (28,910 | ) | $ | 82,588 | $ | (95,490 | ) | ||||
Weighted average number of common shares outstanding | 324,895 | 270,289 | 320,810 | 265,153 | |||||||||||
Weighted average Limited Partner Units outstanding | — | — | 4,393 | — | |||||||||||
Other potential dilutive shares | — | — | 177 | — | |||||||||||
Weighted average number of common shares and potential dilutive securities | 324,895 | 270,289 | 325,380 | 265,153 | |||||||||||
Partnership | |||||||||||||||
Net income (loss) attributable to common unitholders | $ | (6,159 | ) | $ | (28,689 | ) | $ | 84,612 | $ | (94,838 | ) | ||||
Less: Distributions on participating securities | (650 | ) | (680 | ) | (2,024 | ) | (2,388 | ) | |||||||
Basic and diluted net income (loss) attributable to common unitholders | $ | (6,809 | ) | $ | (29,369 | ) | $ | 82,588 | $ | (97,226 | ) | ||||
Weighted average number of Common Units outstanding | 329,283 | 274,800 | 325,203 | 270,095 | |||||||||||
Other potential dilutive units | — | — | 177 | — | |||||||||||
Weighted average number of Common Units and potential dilutive securities | 329,283 | 274,800 | 325,380 | 270,095 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
General Partner | |||||||||||||||
Noncontrolling interest in loss of common unitholders | $ | (92 | ) | $ | (459 | ) | $ | — | $ | (1,736 | ) | ||||
Weighted average Limited Partner Units outstanding | 4,388 | 4,511 | — | 4,942 | |||||||||||
General Partner and Partnership | |||||||||||||||
Other potential dilutive shares or units: | |||||||||||||||
Anti-dilutive outstanding potential shares or units under fixed stock option and other stock-based compensation plans | 1,373 | 1,763 | 1,373 | 1,763 | |||||||||||
Outstanding participating securities | 3,866 | 4,045 | 3,866 | 4,045 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenues | ||||||||||||||||
Rental Operations: | ||||||||||||||||
Industrial | $ | 123,749 | $ | 107,345 | $ | 357,777 | $ | 321,524 | ||||||||
Office | 66,691 | 65,290 | 198,890 | 194,038 | ||||||||||||
Medical Office | 35,093 | 21,108 | 101,733 | 59,336 | ||||||||||||
Non-reportable Rental Operations | 1,765 | 1,429 | 5,807 | 5,276 | ||||||||||||
Service Operations | 62,807 | 93,932 | 161,004 | 226,507 | ||||||||||||
Total segment revenues | 290,105 | 289,104 | 825,211 | 806,681 | ||||||||||||
Other revenue | 1,585 | 4,154 | 4,023 | 6,396 | ||||||||||||
Consolidated revenue from continuing operations | 291,690 | 293,258 | 829,234 | 813,077 | ||||||||||||
Discontinued operations | 3,912 | 9,774 | 18,419 | 32,868 | ||||||||||||
Consolidated revenue | $ | 295,602 | $ | 303,032 | $ | 847,653 | $ | 845,945 | ||||||||
Reconciliation of Funds From Operations | ||||||||||||||||
Net earnings excluding depreciation and Non-Segment Items: | ||||||||||||||||
Industrial | $ | 92,052 | $ | 79,803 | $ | 266,044 | $ | 240,605 | ||||||||
Office | 38,842 | 37,193 | 116,385 | 113,425 | ||||||||||||
Medical Office | 23,533 | 13,756 | 67,976 | 38,842 | ||||||||||||
Non-reportable Rental Operations | 1,150 | 806 | 3,853 | 3,644 | ||||||||||||
Service Operations | 3,415 | 6,213 | 18,079 | 16,988 | ||||||||||||
158,992 | 137,771 | 472,337 | 413,504 | |||||||||||||
Non-Segment Items: | ||||||||||||||||
Interest expense | (58,100 | ) | (58,812 | ) | (176,005 | ) | (175,726 | ) | ||||||||
Impairment charges on non-depreciable properties | — | — | (3,777 | ) | — | |||||||||||
Interest and other income, net | 145 | 150 | 1,219 | 394 | ||||||||||||
Other operating expenses | (47 | ) | (130 | ) | (150 | ) | (591 | ) | ||||||||
General and administrative expenses | (10,373 | ) | (8,934 | ) | (33,225 | ) | (32,367 | ) | ||||||||
Gain on land sales | 3,365 | — | 3,365 | — | ||||||||||||
Undeveloped land carrying costs | (2,108 | ) | (2,140 | ) | (6,837 | ) | (6,606 | ) | ||||||||
Acquisition-related activity | (726 | ) | (954 | ) | (2,506 | ) | (2,563 | ) | ||||||||
Income tax benefit | 4,500 | 103 | 4,500 | 103 | ||||||||||||
Other non-segment income | (32 | ) | 3,278 | 490 | 4,119 | |||||||||||
Net income attributable to noncontrolling interests - consolidated entities not wholly owned by the Partnership | (140 | ) | (59 | ) | (487 | ) | (365 | ) | ||||||||
Joint venture items | 6,945 | 8,997 | 22,212 | 27,999 | ||||||||||||
Dividends on preferred shares/Preferred Units | (7,356 | ) | (11,081 | ) | (24,261 | ) | (35,356 | ) | ||||||||
Adjustments for redemption of preferred shares/Preferred Units | — | — | (5,932 | ) | (5,730 | ) | ||||||||||
Discontinued operations | 1,745 | 2,967 | 6,756 | 11,204 | ||||||||||||
FFO attributable to common unitholders of the Partnership | 96,810 | 71,156 | 257,699 | 198,019 | ||||||||||||
Net (income) loss attributable to noncontrolling interests - common limited partnership interests in the Partnership | 92 | 459 | (1,142 | ) | 1,736 | |||||||||||
Noncontrolling interest share of FFO adjustments | (1,384 | ) | (1,638 | ) | (2,339 | ) | (5,358 | ) | ||||||||
FFO attributable to common shareholders of the General Partner | 95,518 | 69,977 | 254,218 | 194,397 | ||||||||||||
Depreciation and amortization on continuing operations | (103,594 | ) | (90,202 | ) | (296,791 | ) | (264,435 | ) | ||||||||
Depreciation and amortization on discontinued operations | (844 | ) | (4,937 | ) | (6,686 | ) | (15,903 | ) | ||||||||
Company's share of joint venture adjustments | (7,127 | ) | (8,782 | ) | (20,730 | ) | (26,008 | ) | ||||||||
Gains on depreciated property sales on continuing operations | — | 403 | 1,108 | 245 | ||||||||||||
Gains on depreciated property sales on discontinued operations | 8,441 | 1,608 | 101,052 | 11,179 | ||||||||||||
Gains on depreciated property sales - share of joint venture | 155 | 2,065 | 48,960 | 2,065 | ||||||||||||
Noncontrolling interest share of FFO adjustments | 1,384 | 1,638 | 2,339 | 5,358 | ||||||||||||
Net income (loss) attributable to common shareholders of the General Partner | $ | (6,067 | ) | $ | (28,230 | ) | $ | 83,470 | $ | (93,102 | ) | |||||
Add back: Net income (loss) attributable to noncontrolling interests - common limited partnership interests in the Partnership | (92 | ) | (459 | ) | 1,142 | (1,736 | ) | |||||||||
Net income (loss) attributable to common unitholders of the Partnership | $ | (6,159 | ) | $ | (28,689 | ) | $ | 84,612 | $ | (94,838 | ) |
September 30, 2013 | December 31, 2012 | ||||||
Assets | |||||||
Rental Operations: | |||||||
Industrial | $ | 4,293,447 | $ | 3,836,721 | |||
Office | 1,672,180 | 1,683,314 | |||||
Medical Office | 1,270,802 | 1,202,929 | |||||
Non-reportable Rental Operations | 84,619 | 175,197 | |||||
Service Operations | 154,672 | 162,219 | |||||
Total segment assets | 7,475,720 | 7,060,380 | |||||
Non-segment assets | 411,119 | 499,721 | |||||
Consolidated assets | $ | 7,886,839 | $ | 7,560,101 |
Held for Sale at September 30, 2013 | Sold in 2013 | Sold in 2012 | Total | ||||
Office | 4 | 2 | 10 | 16 | |||
Industrial | 1 | 5 | 17 | 23 | |||
Medical Office | 1 | 3 | 0 | 4 | |||
Retail | 0 | 1 | 1 | 2 | |||
6 | 11 | 28 | 45 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues | $ | 3,912 | $ | 9,774 | $ | 18,419 | $ | 32,868 | |||||||
Operating expenses | (1,398 | ) | (3,985 | ) | (6,993 | ) | (12,623 | ) | |||||||
Depreciation and amortization | (844 | ) | (4,937 | ) | (6,686 | ) | (15,903 | ) | |||||||
Operating income | 1,670 | 852 | 4,740 | 4,342 | |||||||||||
Interest expense | (769 | ) | (2,822 | ) | (4,670 | ) | (9,041 | ) | |||||||
Income (loss) before gain on sales | 901 | (1,970 | ) | 70 | (4,699 | ) | |||||||||
Gain on sale of depreciable properties | 8,441 | 1,608 | 101,052 | 11,179 | |||||||||||
Income (loss) from discontinued operations | $ | 9,342 | $ | (362 | ) | $ | 101,122 | $ | 6,480 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Loss from continuing operations attributable to common shareholders | $ | (15,285 | ) | $ | (27,874 | ) | $ | (16,286 | ) | $ | (99,463 | ) | |||
Income (loss) from discontinued operations attributable to common shareholders | 9,218 | (356 | ) | 99,756 | 6,361 | ||||||||||
Net income (loss) attributable to common shareholders | $ | (6,067 | ) | $ | (28,230 | ) | $ | 83,470 | $ | (93,102 | ) |
September 30, 2013 | |||
Real estate investment, net | $ | 49,821 | |
Other assets | 7,969 | ||
Total assets held-for-sale | $ | 57,790 | |
Accrued expenses | $ | 1,536 | |
Other liabilities | 1,383 | ||
Total liabilities held-for-sale | $ | 2,919 |
Class of stock/units | Quarterly Amount per Share or Unit | Record Date | Payment Date | ||
Common | $0.17 | November 14, 2013 | November 29, 2013 | ||
Preferred (per depositary share or unit): | |||||
Series J | $0.414063 | November 14, 2013 | November 29, 2013 | ||
Series K | $0.406250 | November 14, 2013 | November 29, 2013 | ||
Series L | $0.412500 | November 14, 2013 | November 29, 2013 |
• | Changes in general economic and business conditions, including the financial condition of our tenants and the value of our real estate assets; |
• | The General Partner's continued qualification as a real estate investment trust ("REIT") for U.S. federal income tax purposes; |
• | Heightened competition for tenants and potential decreases in property occupancy; |
• | Potential changes in the financial markets and interest rates; |
• | Volatility in the General Partner's stock price and trading volume; |
• | Our continuing ability to raise funds on favorable terms; |
• | Our ability to successfully identify, acquire, develop and/or manage properties on terms that are favorable to us; |
• | Potential increases in real estate construction costs; |
• | Our ability to successfully dispose of properties on terms that are favorable to us, including, without limitation, through one or more transactions that are consistent with our previously disclosed strategic plans; |
• | Our ability to retain our current credit ratings; |
• | Inherent risks in the real estate business, including, but not limited to, tenant defaults, potential liability relating to environmental matters and liquidity of real estate investments; and |
• | Other risks and uncertainties described herein, as well as those risks and uncertainties discussed from time to time in our other reports and other public filings with the SEC. |
• | Owned or jointly controlled 771 industrial, office, medical office and other properties, of which 753 properties with more than 147.0 million square feet were in service and 18 properties with approximately 2.3 million square feet were under development. The 753 in-service properties were comprised of 645 consolidated properties with approximately 124.8 million square feet and 108 jointly controlled unconsolidated properties with more than 22.2 million square feet. The 18 properties under development consisted of 17 consolidated properties with approximately 2.0 million square feet and one jointly controlled unconsolidated property with more than 273,000 square feet. |
• | Owned, including through ownership interests in unconsolidated joint ventures, more than 4,400 acres of land and controlled more than 1,600 acres through purchase options. |
Total Square Feet | Percent of Total Square Feet | Percent Leased* | Average Annual Net Effective Rent** | ||||||||||||||||||
Type | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||
Industrial | 103,310 | 91,808 | 82.8 | % | 81.9 | % | 94.7 | % | 94.0 | % | $3.91 | $3.89 | |||||||||
Office | 15,950 | 15,741 | 12.8 | % | 14.0 | % | 87.2 | % | 84.1 | % | $13.40 | $13.27 | |||||||||
Medical Office | 5,172 | 3,756 | 4.1 | % | 3.4 | % | 93.4 | % | 91.7 | % | $21.93 | $21.01 | |||||||||
Other | 348 | 739 | 0.3 | % | 0.7 | % | 83.7 | % | 89.4 | % | $19.80 | $24.12 | |||||||||
Total | 124,780 | 112,044 | 100.0 | % | 100.0 | % | 93.7 | % | 92.5 | % | $5.82 | $5.79 | |||||||||
*Represents the percentage of total square feet leased based on executed leases and without regard to whether the leases have commenced. | |||||||||||||||||||||
**Represents average annual base rental payments per leased square foot, on a straight-line basis for the term of each lease, from space leased to tenants at the end of the most recent reporting period. This amount excludes additional amounts paid by tenants as reimbursement for operating expenses. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2013 | 2012 | 2013 | 2012 | ||||
New Leasing Activity - First Generation | 1,461 | 902 | 3,307 | 4,058 | |||
New Leasing Activity - Second Generation | 1,759 | 1,074 | 6,088 | 4,153 | |||
Renewal Leasing Activity | 2,143 | 5,083 | 7,015 | 9,089 | |||
Total Leasing Activity | 5,363 | 7,059 | 16,410 | 17,300 |
Square Feet of New Second Generation Leases Signed | Average Term in Years | Estimated Tenant Improvement Cost per Square Foot | Leasing Commissions per Square Foot | ||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||
Three Months | |||||||||||||||||
Industrial | 1,462 | 817 | 4.6 | 5.5 | $1.72 | $4.70 | $1.28 | $1.86 | |||||||||
Office | 293 | 253 | 6.0 | 5.9 | $14.21 | $18.71 | $6.80 | $6.96 | |||||||||
Medical Office | 4 | 4 | 4.2 | 5.8 | $10.00 | $20.00 | $2.80 | $7.93 | |||||||||
Total | 1,759 | 1,074 | 4.9 | 5.6 | $3.82 | $8.05 | $2.20 | $3.08 | |||||||||
Nine Months | |||||||||||||||||
Industrial | 5,125 | 3,343 | 5.0 | 7.1 | $2.18 | $2.61 | $1.42 | $1.50 | |||||||||
Office | 931 | 783 | 6.7 | 6.6 | $16.97 | $15.98 | $7.34 | $7.35 | |||||||||
Medical Office | 32 | 27 | 4.6 | 7.1 | $10.05 | $13.20 | $1.43 | $6.12 | |||||||||
Total | 6,088 | 4,153 | 5.2 | 7.0 | $4.48 | $5.20 | $2.32 | $2.63 |
Square Feet of Leases Renewed | Percent of Expiring Leases Renewed | Average Term in Years | Growth (Decline) in Net Effective Rents* | Estimated Tenant Improvement Cost per Square Foot | Leasing Commissions per Square Foot | ||||||||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||||||
Three Months | |||||||||||||||||||||||||||||||||||||||
Industrial | 1,459 | 4,907 | 51.8 | % | 93.8 | % | 4.2 | 6.5 | 8.6 | % | 0.2 | % | $ | 0.92 | $ | 0.41 | $ | 1.18 | $ | 0.90 | |||||||||||||||||||
Office | 669 | 169 | 78.5 | % | 47.9 | % | 5.0 | 2.4 | (2.7 | )% | 8.2 | % | $ | 7.21 | $ | 2.42 | $ | 5.28 | $ | 1.78 | |||||||||||||||||||
Medical Office | 15 | 7 | 61.2 | % | 48.4 | % | 4.0 | 2.8 | 2.5 | % | 5.3 | % | $ | 4.25 | $ | 4.43 | $ | 2.04 | $ | 1.15 | |||||||||||||||||||
Total | 2,143 | 5,083 | 58.0 | % | 90.8 | % | 4.4 | 6.4 | 1.8 | % | 1.0 | % | $ | 2.91 | $ | 0.48 | $ | 2.47 | $ | 0.93 | |||||||||||||||||||
Nine Months | |||||||||||||||||||||||||||||||||||||||
Industrial | 5,461 | 8,007 | 54.7 | % | 84.2 | % | 4.3 | 5.8 | 3.4 | % | 0.5 | % | $ | 0.68 | $ | 0.40 | $ | 0.85 | $ | 0.93 | |||||||||||||||||||
Office | 1,524 | 1,057 | 81.7 | % | 70.7 | % | 4.8 | 4.1 | (1.2 | )% | 2.5 | % | $ | 5.53 | $ | 3.27 | $ | 4.70 | $ | 3.06 | |||||||||||||||||||
Medical Office | 30 | 25 | 27.3 | % | 43.4 | % | 4.0 | 6.7 | 1.7 | % | 6.3 | % | $ | 4.96 | $ | 1.70 | $ | 3.74 | $ | 1.13 | |||||||||||||||||||
Total | 7,015 | 9,089 | 58.7 | % | 82.2 | % | 4.4 | 5.6 | 1.1 | % | 1.2 | % | $ | 1.75 | $ | 0.74 | $ | 1.70 | $ | 1.18 | |||||||||||||||||||
* Represents the percentage change in net effective rent between the original leases and the renewal leases. Net effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. |
Total Consolidated Portfolio | Industrial | Office | Medical Office | Other | |||||||||||||||||||||||||||||||||
Year of Expiration | Square Feet | Ann. Rent Revenue* | % of Revenue | Square Feet | Ann. Rent Revenue* | Square Feet | Ann. Rent Revenue* | Square Feet | Ann. Rent Revenue* | Square Feet | Ann. Rent Revenue* | ||||||||||||||||||||||||||
Remainder of 2013 | 3,162 | $ | 15,381 | 2 | % | 2,913 | $ | 12,150 | 209 | $ | 2,610 | 40 | $ | 621 | — | $ | — | ||||||||||||||||||||
2014 | 11,541 | 57,859 | 9 | % | 9,910 | 37,535 | 1,506 | 18,117 | 121 | 2,087 | 4 | 120 | |||||||||||||||||||||||||
2015 | 11,743 | 62,650 | 9 | % | 9,905 | 38,944 | 1,767 | 22,260 | 63 | 1,270 | 8 | 176 | |||||||||||||||||||||||||
2016 | 14,529 | 75,353 | 11 | % | 12,397 | 45,773 | 1,869 | 24,297 | 244 | 4,926 | 19 | 357 | |||||||||||||||||||||||||
2017 | 13,244 | 71,575 | 11 | % | 11,445 | 44,435 | 1,451 | 19,772 | 275 | 5,659 | 73 | 1,709 | |||||||||||||||||||||||||
2018 | 12,885 | 80,822 | 12 | % | 10,253 | 39,565 | 1,963 | 26,244 | 592 | 13,541 | 77 | 1,472 | |||||||||||||||||||||||||
2019 | 11,163 | 58,275 | 9 | % | 9,538 | 33,671 | 1,327 | 17,325 | 289 | 7,046 | 9 | 233 | |||||||||||||||||||||||||
2020 | 10,773 | 62,202 | 9 | % | 9,280 | 37,369 | 977 | 14,691 | 508 | 9,920 | 8 | 222 | |||||||||||||||||||||||||
2021 | 7,119 | 42,497 | 6 | % | 5,959 | 23,853 | 806 | 10,317 | 341 | 8,055 | 13 | 272 | |||||||||||||||||||||||||
2022 | 5,664 | 31,106 | 5 | % | 4,917 | 16,721 | 276 | 4,679 | 450 | 9,287 | 21 | 419 | |||||||||||||||||||||||||
2023 and Thereafter | 15,029 | 122,773 | 17 | % | 11,309 | 52,441 | 1,751 | 25,997 | 1,910 | 43,543 | 59 | 792 | |||||||||||||||||||||||||
Total Leased | 116,852 | $ | 680,493 | 100 | % | 97,826 | $ | 382,457 | 13,902 | $ | 186,309 | 4,833 | $ | 105,955 | 291 | $ | 5,772 | ||||||||||||||||||||
Total Portfolio Square Feet | 124,780 | 103,310 | 15,950 | 5,172 | 348 | ||||||||||||||||||||||||||||||||
Percent Leased | 93.7 | % | 94.7 | % | 87.2 | % | 93.4 | % | 83.7 | % | |||||||||||||||||||||||||||
* 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. |
Year-to-Date 2013 Acquisitions | Full Year 2012 Acquisitions | ||||||||||||||||||
Type | Acquisition Price* | In-Place Yield** | Percent Leased at Acquisition Date*** | Acquisition Price* | In-Place Yield** | Percent Leased at Acquisition Date*** | |||||||||||||
Industrial | $ | 459,395 | 6.2 | % | 100.0 | % | $ | 265,203 | 6.6 | % | 94.9 | % | |||||||
Medical Office | 20,500 | 6.9 | % | 82.3 | % | 514,455 | 6.5 | % | 92.9 | % | |||||||||
Total | $ | 479,895 | 6.3 | % | 99.7 | % | $ | 779,658 | 6.5 | % | 94.4 | % | |||||||
* Includes 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. |
Year-to-Date 2013 Dispositions | Full Year 2012 Dispositions | |||||||||||||||||||
Type | Sales Price | In-Place Yield* | Percent Leased** | Sales Price | In-Place Yield* | Percent Leased** | ||||||||||||||
Industrial | $ | 14,160 | 7.3 | % | 54.3 | % | $ | 60,913 | 8.4 | % | 79.3 | % | ||||||||
Office | 27,500 | 8.0 | % | 95.5 | % | 58,881 | 7.1 | % | 79.4 | % | ||||||||||
Medical Office | 76,050 | 5.7 | % | 77.3 | % | — | — | % | — | % | ||||||||||
Other | 188,000 | 5.0 | % | 89.8 | % | 11,400 | 9.0 | % | 80.5 | % | ||||||||||
Total | $ | 305,710 | 5.6 | % | 79.4 | % | $ | 131,194 | 7.9 | % | 79.4 | % | ||||||||
* In-place yields of completed dispositions are calculated as current annualized net rental payments from space leased to tenants at the date of sale, divided by the sales price of the real estate. Annualized net rental payments are comprised of base rental payments, excluding additional amounts payable by tenants as reimbursement for operating expenses, less current annualized operating expenses not recovered through tenant reimbursements. | ||||||||||||||||||||
** Represents percentage of total square feet leased based on executed leases and without regard to whether the leases have commenced, at the date of sale. |
Ownership Type | Square Feet | Percent Leased | Total Estimated Project Costs | Total Incurred to Date | Amount Remaining to be Spent | |||||||||||
Consolidated properties | 1,980 | 83% | $ | 347,367 | $ | 168,786 | $ | 178,581 | ||||||||
Joint venture properties | 273 | 100% | 88,169 | 68,992 | 19,177 | |||||||||||
Total | 2,253 | 85% | $ | 435,536 | $ | 237,778 | $ | 197,758 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income (loss) attributable to common shareholders of the General Partner | $ | (6,067 | ) | $ | (28,230 | ) | $ | 83,470 | $ | (93,102 | ) | ||||
Add back: Net income (loss) attributable to noncontrolling interests - common limited partnership interests in the Partnership | (92 | ) | (459 | ) | 1,142 | (1,736 | ) | ||||||||
Net income (loss) attributable to common unitholders of the Partnership | (6,159 | ) | (28,689 | ) | 84,612 | (94,838 | ) | ||||||||
Adjustments: | |||||||||||||||
Depreciation and amortization | 104,438 | 95,139 | 303,477 | 280,338 | |||||||||||
Company share of joint venture depreciation and amortization | 7,127 | 8,782 | 20,730 | 26,008 | |||||||||||
Gains on depreciable property sales—wholly owned | (8,441 | ) | (2,011 | ) | (102,160 | ) | (11,424 | ) | |||||||
Gains on depreciable property sales—share of joint venture | (155 | ) | (2,065 | ) | (48,960 | ) | (2,065 | ) | |||||||
Funds From Operations attributable to common unitholders of the Partnership | $ | 96,810 | $ | 71,156 | $ | 257,699 | $ | 198,019 | |||||||
Additional General Partner Adjustments: | |||||||||||||||
Net (income) loss attributable to noncontrolling interests - common limited partnership interests in the Partnership | 92 | 459 | (1,142 | ) | 1,736 | ||||||||||
Noncontrolling interest share of adjustments | (1,384 | ) | (1,638 | ) | (2,339 | ) | (5,358 | ) | |||||||
Funds From Operations attributable to common shareholders of the General Partner | $ | 95,518 | $ | 69,977 | $ | 254,218 | $ | 194,397 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Rental and related revenue from continuing operations | $ | 228,883 | $ | 199,326 | $ | 668,230 | $ | 586,570 | |||||||
General contractor and service fee revenue | 62,807 | 93,932 | 161,004 | 226,507 | |||||||||||
Operating income | 46,176 | 42,326 | 186,962 | 117,925 | |||||||||||
General Partner | |||||||||||||||
Net income (loss) attributable to common shareholders | $ | (6,067 | ) | $ | (28,230 | ) | $ | 83,470 | $ | (93,102 | ) | ||||
Weighted average common shares outstanding | 324,895 | 270,289 | 320,810 | 265,153 | |||||||||||
Weighted average common shares and potential dilutive securities | 324,895 | 270,289 | 325,380 | 265,153 | |||||||||||
Partnership | |||||||||||||||
Net income (loss) attributable to common unitholders | $ | (6,159 | ) | $ | (28,689 | ) | $ | 84,612 | $ | (94,838 | ) | ||||
Weighted average Common Units outstanding | 329,283 | 274,800 | 325,203 | 270,095 | |||||||||||
Weighted average Common Units and potential dilutive securities | 329,283 | 274,800 | 325,380 | 270,095 | |||||||||||
General Partner and Partnership | |||||||||||||||
Basic income (loss) per common share or Common Unit: | |||||||||||||||
Continuing operations | $ | (0.05 | ) | $ | (0.11 | ) | $ | (0.06 | ) | $ | (0.38 | ) | |||
Discontinued operations | $ | 0.03 | $ | — | $ | 0.31 | $ | 0.02 | |||||||
Diluted income (loss) per common share or Common Unit: | |||||||||||||||
Continuing operations | $ | (0.05 | ) | $ | (0.11 | ) | $ | (0.06 | ) | $ | (0.38 | ) | |||
Discontinued operations | $ | 0.03 | $ | — | $ | 0.31 | $ | 0.02 | |||||||
Number of in-service consolidated properties at end of period | 645 | 616 | 645 | 616 | |||||||||||
In-service consolidated square footage at end of period | 124,780 | 112,044 | 124,780 | 112,044 | |||||||||||
Number of in-service joint venture properties at end of period | 108 | 125 | 108 | 125 | |||||||||||
In-service joint venture square footage at end of period | 22,224 | 25,238 | 22,224 | 25,238 |
Three Months Ended September 30, | |||||||
2013 | 2012 | ||||||
Rental and related revenue: | |||||||
Industrial | $ | 123,749 | $ | 107,345 | |||
Office | 66,691 | 65,290 | |||||
Medical Office | 35,093 | 21,108 | |||||
Other | 3,350 | 5,583 | |||||
Total rental and related revenue from continuing operations | $ | 228,883 | $ | 199,326 |
Three Months Ended September 30, | |||||||
2013 | 2012 | ||||||
Rental expenses: | |||||||
Industrial | $ | 12,856 | $ | 11,325 | |||
Office | 19,867 | 19,789 | |||||
Medical Office | 8,643 | 5,180 | |||||
Other | 1,522 | 893 | |||||
Total rental expenses from continuing operations | $ | 42,888 | $ | 37,187 | |||
Real estate taxes: | |||||||
Industrial | $ | 18,841 | $ | 16,217 | |||
Office | 7,982 | 8,308 | |||||
Medical Office | 2,917 | 2,172 | |||||
Other | 710 | 606 | |||||
Total real estate tax expense from continuing operations | $ | 30,450 | $ | 27,303 |
Three Months Ended September 30, | |||||||
2013 | 2012 | ||||||
Service Operations: | |||||||
General contractor and service fee revenue | $ | 62,807 | $ | 93,932 | |||
General contractor and other services expenses | (59,392 | ) | (87,719 | ) | |||
Total | $ | 3,415 | $ | 6,213 |
General and administrative expenses - three-month period ended September 30, 2012 | $ | 8.9 | |
Increase to overall pool of overhead costs | 1.9 | ||
Increased absorption of costs by wholly owned leasing and development activities (1) | (3.5 | ) | |
Reduced allocation of costs to Service Operations and Rental Operations (2) | 3.1 | ||
General and administrative expenses - three-month period ended September 30, 2013 | $ | 10.4 |
Nine Months Ended September 30, | |||||||
2013 | 2012 | ||||||
Rental and related revenue: | |||||||
Industrial | $ | 357,777 | $ | 321,524 | |||
Office | 198,890 | 194,038 | |||||
Medical Office | 101,733 | 59,336 | |||||
Other | 9,830 | 11,672 | |||||
Total rental and related revenue from continuing operations | $ | 668,230 | $ | 586,570 |
• | We acquired 52 properties, of which 24 were industrial and 28 were medical office, and placed 17 developments in service from January 1, 2012 to September 30, 2013, which provided incremental revenues of $75.6 million in the nine months ended September 30, 2013, as compared to the same period in 2012. |
• | The remaining increase in rental and related revenue from continuing operations was primarily due to increased rental expense recoveries that were attributable to an increase in snow removal costs, as the first quarter of 2012 was a significantly milder winter for many of our markets than was the first quarter of 2013, as well as due to an increase in recoverable repair and maintenance costs. Increased occupancy and rental rates within our existing base of properties also contributed, to a lesser extent, to the remaining increase in rental and related revenue from continuing operations. |
Nine Months Ended September 30, | |||||||
2013 | 2012 | ||||||
Rental expenses: | |||||||
Industrial | $ | 36,856 | $ | 31,347 | |||
Office | 58,161 | 56,279 | |||||
Medical Office | 24,079 | 14,428 | |||||
Other | 3,657 | 2,376 | |||||
Total rental expenses from continuing operations | $ | 122,753 | $ | 104,430 | |||
Real estate taxes: | |||||||
Industrial | $ | 54,877 | $ | 49,572 | |||
Office | 24,344 | 24,334 | |||||
Medical Office | 9,678 | 6,066 | |||||
Other | 1,830 | 1,533 | |||||
Total real estate tax expense from continuing operations | $ | 90,729 | $ | 81,505 |
Nine Months Ended September 30, | |||||||
2013 | 2012 | ||||||
Service Operations: | |||||||
General contractor and service fee revenue | $ | 161,004 | $ | 226,507 | |||
General contractor and other services expenses | (142,925 | ) | (209,519 | ) | |||
Total | $ | 18,079 | $ | 16,988 |
General and administrative expenses - nine-month period ended September 30, 2012 | $ | 32.4 | |
Increase to overall pool of overhead costs | 0.3 | ||
Increased absorption of costs by wholly owned leasing and development activities (1) | (6.4 | ) | |
Reduced allocation of costs to Service Operations and Rental Operations (2) | 6.9 | ||
General and administrative expenses - nine-month period ended September 30, 2013 | $ | 33.2 |
• | property investment; |
• | leasing/capital costs; |
• | dividends and distributions to shareholders and unitholders; |
• | long-term debt maturities; |
• | opportunistic repurchases of outstanding debt and preferred stock; and |
• | other contractual obligations. |
Nine Months Ended September 30, | |||||||
2013 | 2012 | ||||||
Second generation tenant improvements | $ | 28,524 | $ | 19,245 | |||
Second generation leasing costs | 28,284 | 24,078 | |||||
Building improvements | 3,244 | 3,359 | |||||
Total second generation capital expenditures | $ | 60,052 | $ | 46,682 | |||
Development of real estate investments | $ | 320,698 | $ | 176,340 | |||
Other deferred leasing costs | $ | 26,647 | $ | 22,727 |
Nine Months Ended September 30, | |||||||
2013 | 2012 | ||||||
Industrial | $ | 25,077 | $ | 23,544 | |||
Office | 33,585 | 22,678 | |||||
Medical Office | 1,251 | 434 | |||||
Non-reportable segments | 139 | 26 | |||||
Total | $ | 60,052 | $ | 46,682 |
Future Repayments | ||||||||||||||
Year | Scheduled Amortization | Maturities | Total | Weighted Average Interest Rate of Future Repayments | ||||||||||
Remainder of 2013 | $ | 3,970 | $ | 5,422 | $ | 9,392 | 5.97 | % | ||||||
2014 | 16,952 | 350,406 | 367,358 | 6.18 | % | |||||||||
2015 | 15,074 | 653,346 | 668,420 | 4.91 | % | |||||||||
2016 | 12,666 | 532,261 | 544,927 | 6.09 | % | |||||||||
2017 | 10,139 | 558,129 | 568,268 | 5.89 | % | |||||||||
2018 | 7,937 | 550,000 | 557,937 | 4.05 | % | |||||||||
2019 | 6,936 | 518,438 | 525,374 | 7.97 | % | |||||||||
2020 | 5,381 | 250,000 | 255,381 | 6.73 | % | |||||||||
2021 | 3,416 | 9,047 | 12,463 | 5.59 | % | |||||||||
2022 | 3,611 | 600,000 | 603,611 | 4.20 | % | |||||||||
2023 | 3,817 | 250,000 | 253,817 | 3.75 | % | |||||||||
Thereafter | 10,361 | 50,000 | 60,361 | 7.02 | % | |||||||||
$ | 100,260 | $ | 4,327,049 | $ | 4,427,309 | 5.52 | % |
Nine Months Ended September 30, | |||||||
2013 | 2012 | ||||||
General Partner | |||||||
Net Cash Provided by Operating Activities | $ | 317.6 | $ | 201.5 | |||
Net Cash Used for Investing Activities | $ | (427.1 | ) | $ | (505.2 | ) | |
Net Cash Provided by Financing Activities | $ | 99.7 | $ | 203.0 | |||
Partnership | |||||||
Net Cash Provided by Operating Activities | $ | 317.7 | $ | 201.6 | |||
Net Cash Used for Investing Activities | $ | (427.1 | ) | $ | (505.2 | ) | |
Net Cash Provided by Financing Activities | $ | 99.6 | $ | 202.9 |
• | During the nine months ended September 30, 2013, we paid cash of $372.9 million for real estate acquisitions and $30.1 million for undeveloped land acquisitions, compared to $321.1 million and $37.2 million, respectively, for real estate and undeveloped land acquisitions in the same period in 2012. |
• | Real estate development costs increased to $320.7 million for the nine months ended September 30, 2013 from $176.3 million for the same period in 2012 as a result of increasing our development activities. |
• | Sales of land and depreciated property provided $330.7 million in net proceeds for the nine months ended September 30, 2013, compared to $112.6 million for the same period in 2012. |
• | For the nine months ended September 30, 2013, we received $106.3 million in capital distributions, of which $89.5 million represented our share of the net proceeds from the sales by two of our unconsolidated joint ventures of 17 office properties and one industrial property, while $16.8 million represented our share of the net proceeds from a secured loan originated by another of our unconsolidated joint ventures. For the same period in 2012, we received a $4.9 million capital distribution, which represented our share of the net proceeds from the sale by one of our unconsolidated joint ventures of its sole property. |
• | During the nine months ended September 30, 2013, the General Partner issued 45.1 million common shares for net proceeds of $632.5 million, compared to 16.9 million common shares for net proceeds of $236.3 million during the nine months ended September 30, 2012. |
• | In February 2013, the General Partner redeemed all of the outstanding shares of its Series O Shares for a total payment of $178.0 million. In March 2012, the General Partner redeemed all of the outstanding shares of its 6.950% Series M Cumulative Redeemable Preferred Shares for a total payment of $168.3 million. |
• | In March 2013, we issued $250.0 million of senior unsecured notes that bear interest at 3.625%, have an effective interest rate of 3.72%, and mature on April 15, 2023. Additionally, in May 2013, we issued and fully drew down on a term loan with an aggregate commitment of $250.0 million that bears interest at a variable rate of LIBOR plus 1.35% and matures May 14, 2018. In June 2012, we issued $300.0 million of senior unsecured notes that bear interest at 4.375% and mature in June 2022. In September 2012, we issued an additional $300.0 million of unsecured notes that bear interest at 3.875% and mature in October 2022. |
• | During the nine months ended September 30, 2013, we repaid two unsecured notes with a weighted average stated rate of 5.68% at their maturity dates totaling $425.0 million. In July 2012, one of our consolidated subsidiaries repaid $21.0 million of variable rate unsecured debt, which bore interest at a rate of LIBOR plus 0.85%, at its scheduled maturity. In August 2012, we repaid $150.0 million of senior unsecured notes, which had an effective interest rate of 6.01%, at their scheduled maturity date. |
• | During the nine months ended September 30, 2013 and 2012, we repaid $100.1 million and $95.8 million, respectively, of secured loans with the proceeds obtained from the issuance of senior unsecured debt as described above. |
• | For the nine months ended September 30, 2013, we decreased net borrowings on the Partnership's unsecured line of credit by $75.0 million, compared to no net change in borrowings for the same period in 2012. |
• | Changes in book overdrafts are classified as financing activities within our Consolidated Statements of Cash Flows. Book overdrafts were $1.0 million at September 30, 2013, compared to $45.3 million at December 31, 2012. We had no book overdrafts at September 30, 2012. |
• | In June 2012, a newly formed subsidiary, consolidated by both the General Partner and the Partnership, borrowed $13.3 million on a secured note bearing interest at a variable rate of LIBOR plus 2.5% and maturing in June 2017. |
Remainder of 2013 | 2014 | 2015 | 2016 | 2017 | Thereafter | Face Value | Fair Value | ||||||||||||||||||||||||
Fixed rate secured debt | $ | 8,784 | $ | 113,903 | $ | 205,452 | $ | 391,802 | $ | 102,016 | $ | 309,403 | $ | 1,131,360 | $ | 1,220,368 | |||||||||||||||
Weighted average interest rate | 5.99 | % | 5.92 | % | 5.30 | % | 5.85 | % | 5.96 | % | 7.43 | % | |||||||||||||||||||
Variable rate secured debt | $ | 105 | $ | 1,363 | $ | 742 | $ | 755 | $ | 13,729 | $ | 2,500 | $ | 19,194 | $ | 19,195 | |||||||||||||||
Weighted average interest rate | 3.43 | % | 1.22 | % | 2.13 | % | 2.15 | % | 3.41 | % | 0.20 | % | |||||||||||||||||||
Fixed rate unsecured debt | $ | 503 | $ | 252,092 | $ | 252,226 | $ | 152,370 | $ | 452,523 | $ | 1,707,041 | $ | 2,816,755 | $ | 3,023,988 | |||||||||||||||
Weighted average interest rate | 6.26 | % | 6.33 | % | 7.49 | % | 6.71 | % | 5.95 | % | 5.54 | % | |||||||||||||||||||
Variable rate unsecured notes | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 250,000 | $ | 250,000 | $ | 250,000 | |||||||||||||||
Rate at September 30, 2013 | N/A | N/A | N/A | N/A | N/A | 1.54 | % | ||||||||||||||||||||||||
Unsecured line of credit | $ | — | $ | — | $ | 210,000 | $ | — | $ | — | $ | — | $ | 210,000 | $ | 211,035 | |||||||||||||||
Rate at September 30, 2013 | N/A | N/A | 1.43 | % | N/A | N/A | N/A |
3.1(i) | Fourth Amended and Restated Articles of Incorporation of the General Partner (filed as Exhibit 3.1 to the General Partner's Current Report on Form 8-K as filed with the SEC on July 30, 2009, and incorporated herein by this reference). | ||
3.1(ii) | Amendment to the Fourth Amended and Restated Articles of Incorporation of the General Partner (filed as Exhibit 3.1 to the General Partner's Current Report on Form 8-K as filed with the SEC on July 22, 2011, and incorporated herein by this reference). | ||
3.1(iii) | Second Amendment to the Fourth Amended and Restated Articles of Incorporation of the General Partner (filed as Exhibit 3.1 to the General Partner's Current Report on Form 8-K as filed with the SEC on March 9, 2012, and incorporated herein by this reference). | ||
3.1(iv) | Third amendment to the Fourth Amended and Restated Articles of Incorporation of the General Partner (filed as Exhibit 3.1 to the combined Current Report on Form 8-K of the General Partner and the Partnership as filed with the SEC on February 26, 2013, and incorporated herein by this reference). | ||
3.2 | Fourth Amended and Restated Bylaws of the General Partner (filed as Exhibit 3.2 to the General Partner's Current Report on Form 8-K as filed with the SEC on July 30, 2009, and incorporated herein by this reference). | ||
3.3 | Certificate of Limited Partnership of the Partnership, dated September 17, 1993 (filed as Exhibit 3.1(i) to the Partnership's Annual Report on Form 10-K for the year ended December 31, 2006 as filed with the SEC on March 13, 2007, and incorporated herein by this reference). | ||
3.4(i) | Fourth Amended and Restated Agreement of Limited Partnership of the Partnership (filed as Exhibit 3.1 to the Partnership's Current Report on Form 8-K as filed with the SEC on November 3, 2009, and incorporated herein by this reference). | ||
3.4(ii) | Amendment to Fourth Amended and Restated Agreement of Limited Partnership of the Partnership (filed as Exhibit 3.1 to the Partnership's Current Report on Form 8-K as filed with the SEC on July 22, 2011, and incorporated herein by this reference). | ||
3.4(iii) | Second Amendment to Fourth Amended and Restated Agreement of Limited Partnership of the Partnership (filed as Exhibit 3.1 to the Partnership's Current Report on Form 8-K as filed with the SEC on March 9, 2012 and incorporated herein by this reference). | ||
3.4(iv) | Third Amendment to Fourth Amended and Restated Agreement of Limited Partnership of the Partnership (filed as Exhibit 3.2 to the combined Current Report on Form 8-K of the General Partner and the Partnership as filed with the SEC on February 26, 2013, and incorporated herein by this reference). | ||
10.1 | Form of Letter Agreement Regarding Executive Severance, dated July 30, 2013, between the General Partner and Mark A. Denien.#* | ||
11.1 | Statement Regarding Computation of Earnings.*** | ||
12.1 | Statement of Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Dividends of the General Partner.* | ||
12.2 | Statement of Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Distributions of the Partnership.* | ||
31.1 | Rule 13a-14(a) Certification of the Chief Executive Officer of the General Partner.* | ||
31.2 | Rule 13a-14(a) Certification of the Chief Financial Officer of the General Partner.* | ||
31.3 | Rule 13a-14(a) Certification of the Chief Executive Officer for the Partnership.* | ||
31.4 | Rule 13a-14(a) Certification of the Chief Financial Officer for the Partnership.* | ||
32.1 | Section 1350 Certification of the Chief Executive Officer of the General Partner.** | ||
32.2 | Section 1350 Certification of the Chief Financial Officer of the General Partner.** | ||
32.3 | Section 1350 Certification of the Chief Executive Officer for the Partnership.** | ||
32.4 | Section 1350 Certification of the Chief Financial Officer for the Partnership.** | ||
101 | The following materials from the General Partner's and the Partnership's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Income, (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Statements of Changes in Equity, and (v) the Notes to Consolidated Financial Statements. |
# | Represents management contract or compensatory plan or arrangement. |
* | Filed herewith. |
** | The certifications attached as Exhibits 32.1, 32.2, 32.3 and 32.4 accompany this Quarterly Report on Form 10-Q 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. |
*** | Data required by Financial Accounting Standards Board Auditing Standards Codification No. 260 is provided in Note 9 to the Consolidated Financial Statements included in this report. |
DUKE REALTY CORPORATION | ||
/s/ Dennis D. Oklak | ||
Dennis D. Oklak | ||
Chairman and Chief Executive Officer | ||
/s/ Mark A. Denien | ||
Mark A. Denien | ||
Executive Vice President and Chief Financial Officer | ||
DUKE REALTY LIMITED PARTNERSHIP | ||
By: DUKE REALTY CORPORATION, its general partner | ||
/s/ Dennis D. Oklak | ||
Dennis D. Oklak | ||
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 | ||
Date: | November 1, 2013 | |
A. | If you voluntarily terminate your employment by the Company, you will be entitled to separation payments totaling an amount equal to your annual base pay in effect on the last day of the calendar year immediately preceding the calendar year in which your employment is terminated (the “Compensation Year”). The amount of any cash bonus, performance bonus, or equity-based or long-term incentive bonus received by you during or with respect to the Compensation Year will not be included as base pay. For example, if on December 31 of the Compensation Year you were being paid a base salary at the annual rate of $150,000, and in February of the year your employment terminated you received a cash bonus of $50,000 for the Compensation Year, your separation payments would total $150,000. These payments will be made to you in equal monthly installments over twelve (12) months beginning not later than sixty (60) days following your separation. The Company will withhold from any amounts payable to you all legally required federal, state, city and local taxes. |
C. | If the Company terminates your employment for any reason other than For Cause, and there has been no Change of Control as defined below, your termination will be considered a separation for “Other Than Cause.” You agree that a change in your status or position or duties with the Company that does not involve either a demotion or a reduction in base salary or annual incentive bonus targets will not constitute a termination of your employment by the Company. In the event the Company terminates your employment for Other Than Cause, you will be entitled to receive separation payments totaling an amount equal to two (2) times the sum of (i) your annual base pay in effect on the last day of the calendar year immediately preceding the calendar year in which your employment is terminated (the “Compensation Year”), plus (ii) any annual cash incentive bonus paid or payable to you with respect to services performed in the Compensation Year. For example, if on December 31 of the Compensation Year you were being paid a base salary at the annual rate of $100,000, and in February of the year your employment terminated you received a $50,000 annual cash incentive bonus for services performed in the Compensation Year and a long term incentive bonus valued at $25,000 for services performed in the Compensation Year, your separation payments would total $300,000 (($100,000 + $50,000) x 2). These payments will be made to you in equal monthly installments over twenty-four (24) months beginning not later than sixty (60) days following your separation. The Company will withhold from any amounts payable to you all legally required federal, state, city and local taxes. |
D. | If the Company terminates your employment within one (1) year of a Change in Control of the Company, or if you terminate your employment by the Company voluntarily for Good Reason, you will be entitled to receive separation payments |
(a) | a change in your status or position with the Company that does not represent a promotion from your status and position in effect immediately prior to a Change in Control of the Company; |
(b) | a forced move to a location more than sixty (60) miles from your place of business immediately prior to a Change in Control; or |
(c) | a reduction by the Company in your base salary and /or a reduction in the your annual incentive bonus targets as compared to that in effect immediately prior to a Change in Control. You may not terminate your employment for “Good Reason” without providing the Company with written notice of the grounds which you believe constitute “Good Reason” and giving the Company at least ten (10) days after your notice to cure and remedy its conduct. |
E. | In the event you terminate employment effective on or after your 62nd birthday, you will not be entitled to receive any separation benefits from the Company under Paragraphs A, B or C above. |
F. | In the event that you die or become disabled before you have received all of your separation payments, you, your designee in writing or, if none, your estate will receive the balance of the separation payments otherwise due to you. |
G. | If you violate or fail to comply with any of your obligations as set forth herein, no further payments will become due or be paid to you (or your surviving spouse, designee or estate). Any payments otherwise due to you that were delayed pursuant to paragraph J. below shall still be paid to you. |
H. | If you become, without obtaining advance written consent by the Company, an owner of more than 2% of any business which is substantially similar to or competes with the Company, no further payments will become due or be paid to you (or your surviving spouse, designee or estate). |
I. | If you become, without obtaining advance written consent by the Company, employed by, or serve as an officer, director, consultant, independent contractor, agent or representative of, any business that is substantially similar to or competes with Company, no further payments will become due or be paid to you (or your surviving spouse, designee or estate). |
J. | To the extent required to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), as determined by the Company’s outside counsel, one or more payments described under A, B, C or D above shall be delayed to the six month anniversary of the date of your separation from service, within the meaning of Code Section 409A. |
1. | For a period of two (2) years following your separation from employment, you may not solicit or attempt to solicit any then-existing customer of the Company or any potential customer of the Company with whom the Company is then engaged in discussions regarding one or more specific possible transactions for purposes of providing, marketing, or selling products or services competitive with the products and/or services sold or offered by the Company. If you voluntarily terminate your employment by the Company for any reason, or if the Company terminates your employment For Cause, this two (2) year period will be reduced to one (1) year. |
2. | You may not use or disclose to anyone any Trade Secret belonging to the Company to which you may have had access while employed by Company. “Trade Secret” means information including, but not limited to, technical or non-technical data, a formula, a pattern or design, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers, tenants or suppliers which (a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. “Trade Secret” does not include information that is or becomes generally known to the public; or was already known by you prior to your employment by the Company; or that you obtain from an independent source having a bona fide right to use and disclose such information; or that the Company approves for unrestricted release by express authorization. |
3. | For a period of two (2) years following your separation from employment, you may not use or disclose to anyone any Confidential Information belonging to the Company to which you may have had access while employed by the Company. "Confidential Information" means any data or information, other than Trade Secrets, that is important to the Company, is competitively sensitive, and is not generally known by the public. “Confidential Information” includes, without limitation: (1) the sales records, profit and performance records, pricing manuals, models and related materials, sales manuals, training manuals, selling and pricing |
4. | The payments and benefits under this agreement are conditioned upon your execution and non-revocation of a General Release of All Claims and Covenant Not to Sue, in the form in general use by the Company as of the time of your separation from employment (the “Release”). The Release (i) must be presented by the Company to you within 7 days after your separation of employment and (ii) must be executed by you, and all revocation periods shall have expired, within 60 days after your separation from employment; failing which such payments or benefits shall be forfeited. If such 60-day period spans two calendar years, the payment or benefit shall not be made or commence before the second such calendar year, even if the Release becomes irrevocable in the first such calendar year. In other words, you are not permitted to influence the calendar year of payment based on the timing of your signing of the Release. |
5. | For a period of one (1) year following your separation from employment by the Company, you may not, directly or indirectly, without obtaining prior approval from the Company, encourage or solicit any then-current employee of the Company to separate from employment by the Company. |
6. | Within two (2) days of your date of separation from employment by the Company, you must return to the Company all Trade Secrets and Confidential Information or other tangible things, including all computers, computer disks or other media, files, reports, financial data, handbooks, training materials, marketing or strategic reports, policy statements, programs, and other documents or tangible things provided to you by the Company or acquired by you as a result of your employment by the Company. You may not retain any copies or remove or participate in removing any such materials or things from the premises of Company. |
7. | You understand and agree that the non-solicitation and non-disclosure obligations described above are acceptable to you and are reasonable in light of the nature of the business of Company, your access to information while an employee of the Company, the opportunities, contacts, and professional development you have received during your employment by the Company and the Company’s legitimate need to protect its good will and guard against the disclosure or misuse of its proprietary information. |
Nine Months Ended September 30, 2013 | Year Ended December 31, 2012 | Year Ended December 31, 2011 | Year Ended December 31, 2010 | Year Ended December 31, 2009 | Year Ended December 31, 2008 | |||||||||||||||||||||||||
Net income (loss) from continuing operations, less preferred dividends | $ | (10,091 | ) | $ | (131,400 | ) | $ | (64,114 | ) | $ | (25,144 | ) | $ | (303,217 | ) | $ | 19,911 | |||||||||||||
Preferred dividends | 24,261 | 46,438 | 60,353 | 69,468 | 73,451 | 71,426 | ||||||||||||||||||||||||
Interest expense | 176,005 | 236,156 | 212,217 | 177,273 | 140,370 | 130,422 | ||||||||||||||||||||||||
Earnings (loss) before fixed charges | $ | 190,175 | $ | 151,194 | $ | 208,456 | $ | 221,597 | $ | (89,396 | ) | $ | 221,759 | |||||||||||||||||
Interest expense | $ | 176,005 | $ | 236,156 | $ | 212,217 | $ | 177,273 | $ | 140,370 | $ | 130,422 | ||||||||||||||||||
Interest costs capitalized | 13,173 | 9,357 | 4,335 | 11,498 | 26,864 | 53,456 | ||||||||||||||||||||||||
Total fixed charges | 189,178 | 245,513 | 216,552 | 188,771 | 167,234 | 183,878 | ||||||||||||||||||||||||
Preferred dividends | 24,261 | 46,438 | 60,353 | 69,468 | 73,451 | 71,426 | ||||||||||||||||||||||||
Total fixed charges and preferred dividends | $ | 213,439 | $ | 291,951 | $ | 276,905 | $ | 258,239 | $ | 240,685 | $ | 255,304 | ||||||||||||||||||
Ratio of earnings to fixed charges | 1.01 | N/A | (2) | N/A | (4) | 1.17 | N/A | (7) | 1.21 | |||||||||||||||||||||
Ratio of earnings to fixed charges and preferred dividends | N/A | (1) | N/A | (3) | N/A | (5) | N/A | (6) | N/A | (8) | N/A | (9) |
(1) | N/A - The ratio is less than 1.0; deficit of $23.3 million exists for the nine months ended September 30, 2013. The calculation of earnings includes $296.8 million of non-cash depreciation and amortization expense. |
(2) | N/A - The ratio is less than 1.0; deficit of $94.3 million exists for the year ended December 31, 2012. The calculation of earnings includes $358.3 million of non-cash depreciation and amortization expense. |
(3) | N/A - The ratio is less than 1.0; deficit of $140.8 million exists for the year ended December 31, 2012. The calculation of earnings includes $358.3 million of non-cash depreciation and amortization expense. |
(4) | N/A - The ratio is less than 1.0; deficit of $8.1 million exists for the year ended December 31, 2011. The calculation of earnings includes $311.4 million of non-cash depreciation and amortization expense. |
(5) | N/A - The ratio is less than 1.0; deficit of $68.4 million exists for the year ended December 31, 2011. The calculation of earnings includes $311.4 million of non-cash depreciation and amortization expense. |
(6) | N/A - The ratio is less than 1.0; deficit of $36.6 million exists for the year ended December 31, 2010. The calculation of earnings includes $258.8 million of non-cash depreciation and amortization expense. |
(7) | N/A - The ratio is less than 1.0; deficit of $256.6 million exists for the year ended December 31, 2009. The calculation of earnings includes $229.8 million of non-cash depreciation and amortization expense. |
(8) | N/A - The ratio is less than 1.0; deficit of $330.1 million exists for the year ended December 31, 2009. The calculation of earnings includes $229.8 million of non-cash depreciation and amortization expense. |
(9) | N/A - The ratio is less than 1.0; deficit of $33.5 million exists for the year ended December 31, 2008. The calculation of earnings includes $205.2 million of non-cash depreciation and amortization expense. |
Nine Months Ended September 30, 2013 | Year Ended December 31, 2012 | Year Ended December 31, 2011 | Year Ended December 31, 2010 | Year Ended December 31, 2009 | Year Ended December 31, 2008 | |||||||||||||||||||||||||
Net income (loss) from continuing operations, less preferred distributions | $ | (10,091 | ) | $ | (131,400 | ) | $ | (64,114 | ) | $ | (25,144 | ) | $ | (303,217 | ) | $ | 19,911 | |||||||||||||
Preferred distributions | 24,261 | 46,438 | 60,353 | 69,468 | 73,451 | 71,426 | ||||||||||||||||||||||||
Interest expense | 176,005 | 236,156 | 212,217 | 177,273 | 140,370 | 130,422 | ||||||||||||||||||||||||
Earnings (loss) before fixed charges | $ | 190,175 | $ | 151,194 | $ | 208,456 | $ | 221,597 | $ | (89,396 | ) | $ | 221,759 | |||||||||||||||||
Interest expense | $ | 176,005 | $ | 236,156 | $ | 212,217 | $ | 177,273 | $ | 140,370 | $ | 130,422 | ||||||||||||||||||
Interest costs capitalized | 13,173 | 9,357 | 4,335 | 11,498 | 26,864 | 53,456 | ||||||||||||||||||||||||
Total fixed charges | 189,178 | 245,513 | 216,552 | 188,771 | 167,234 | 183,878 | ||||||||||||||||||||||||
Preferred distributions | 24,261 | 46,438 | 60,353 | 69,468 | 73,451 | 71,426 | ||||||||||||||||||||||||
Total fixed charges and preferred distributions | $ | 213,439 | $ | 291,951 | $ | 276,905 | $ | 258,239 | $ | 240,685 | $ | 255,304 | ||||||||||||||||||
Ratio of earnings to fixed charges | 1.01 | N/A | (2) | N/A | (4) | 1.17 | N/A | (7) | 1.21 | |||||||||||||||||||||
Ratio of earnings to fixed charges and preferred distributions | N/A | (1) | N/A | (3) | N/A | (5) | N/A | (6) | N/A | (8) | N/A | (9) |
(1) | N/A - The ratio is less than 1.0; deficit of $23.3 million exists for the nine months ended September 30, 2013. The calculation of earnings includes $296.8 million of non-cash depreciation and amortization expense. |
(2) | N/A - The ratio is less than 1.0; deficit of $94.3 million exists for the year ended December 31, 2012. The calculation of earnings includes $358.3 million of non-cash depreciation and amortization expense. |
(3) | N/A - The ratio is less than 1.0; deficit of $140.8 million exists for the year ended December 31, 2012. The calculation of earnings includes $358.3 million of non-cash depreciation and amortization expense. |
(4) | N/A - The ratio is less than 1.0; deficit of $8.1 million exists for the year ended December 31, 2011. The calculation of earnings includes $311.4 million of non-cash depreciation and amortization expense. |
(5) | N/A - The ratio is less than 1.0; deficit of $68.4 million exists for the year ended December 31, 2011. The calculation of earnings includes $311.4 million of non-cash depreciation and amortization expense. |
(6) | N/A - The ratio is less than 1.0; deficit of $36.6 million exists for the year ended December 31, 2010. The calculation of earnings includes $258.8 million of non-cash depreciation and amortization expense. |
(7) | N/A - The ratio is less than 1.0; deficit of $256.6 million exists for the year ended December 31, 2009. The calculation of earnings includes $229.8 million of non-cash depreciation and amortization expense. |
(8) | N/A - The ratio is less than 1.0; deficit of $330.1 million exists for the year ended December 31, 2009. The calculation of earnings includes $229.8 million of non-cash depreciation and amortization expense. |
(9) | N/A - The ratio is less than 1.0; deficit of $33.5 million exists for the year ended December 31, 2008. The calculation of earnings includes $205.2 million of non-cash depreciation and amortization expense. |
1 | I have reviewed this Quarterly Report on Form 10-Q of Duke Realty Corporation; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4 | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5 | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Dennis D. Oklak |
Dennis D. Oklak |
Chairman and Chief Executive Officer |
1 | I have reviewed this Quarterly Report on Form 10-Q of Duke Realty Corporation; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4 | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5 | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Mark A. Denien |
Mark A. Denien |
Executive Vice President and Chief Financial Officer |
1 | I have reviewed this Quarterly Report on Form 10-Q of Duke Realty Limited Partnership; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4 | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5 | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Dennis D. Oklak |
Dennis D. Oklak |
Chairman and Chief Executive Officer of the General Partner |
1 | I have reviewed this Quarterly Report on Form 10-Q of Duke Realty Limited Partnership; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4 | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5 | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Mark A. Denien |
Mark A. Denien |
Executive Vice President and Chief Financial Officer |
/s/ Dennis D. Oklak | |
Dennis D. Oklak | |
Chairman and Chief Executive Officer | |
Date: | November 1, 2013 |
/s/ Mark A. Denien | |
Mark A. Denien | |
Executive Vice President and Chief Financial Officer | |
Date: | November 1, 2013 |
/s/ Dennis D. Oklak | |
Dennis D. Oklak | |
Chairman and Chief Executive Officer of the General Partner | |
Date: | November 1, 2013 |
/s/ Mark A. Denien | |
Mark A. Denien | |
Executive Vice President and Chief Financial Officer of the General Partner | |
Date: | November 1, 2013 |
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Segment Reporting
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2013
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting We have four reportable operating segments at September 30, 2013, the first three of which consist of the ownership and rental of (i) industrial, (ii) office and (iii) medical office real estate investments. The operations of our industrial, office and medical office properties, along with our retail properties, are collectively referred to as "Rental Operations." Our retail properties, as well as any other properties not included in our reportable segments, do not by themselves meet the quantitative thresholds for separate presentation as a reportable segment. The fourth reportable segment consists of various real estate services such as property management, asset management, maintenance, leasing, development, general contracting and construction management to third-party property owners and joint ventures, and is collectively referred to as "Service Operations." Our reportable segments offer different products or services and are managed separately because each segment requires different operating strategies and management expertise. We assess and measure the overall operating results of the General Partner and the Partnership based upon Funds From Operations ("FFO"), which is an industry performance measure that management believes is a useful indicator of consolidated operating performance. FFO is used by industry analysts and investors as a supplemental operating performance measure of a REIT. The National Association of Real Estate Investment Trusts ("NAREIT") created FFO as a non-GAAP supplemental measure of REIT operating performance. FFO, as defined by NAREIT, represents GAAP net income (loss), excluding extraordinary items as defined under GAAP, gains or losses from sales of previously depreciated real estate assets, impairment charges related to depreciable real estate assets, plus certain non-cash items such as real estate asset depreciation and amortization, and after similar adjustments for unconsolidated partnerships and joint ventures. The most comparable GAAP measure is net income (loss) attributable to common shareholders or common unitholders. FFO attributable to common shareholders or common unitholders should not be considered as a substitute for net income (loss) attributable to common shareholders or common unitholders or any other measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. FFO is calculated in accordance with the definition that was adopted by the Board of Governors of NAREIT. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry analysts and investors have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Management believes that the use of FFO attributable to common shareholders or common unitholders, combined with net income (which remains the primary measure of performance), improves the understanding of operating results of REITs among the investing public and makes comparisons of REIT operating results more meaningful. Management believes that the use of FFO as a performance measure enables investors and analysts to readily identify the operating results of the long-term assets that form the core of a REIT's activity and assist them in comparing these operating results between periods or between different companies. Other revenue consists of other operating revenues not identified with one of our operating segments. We do not allocate interest expense and certain other non-property specific revenues and expenses ("Non-Segment Items," as shown in the table below) to our individual operating segments in determining our performance measure. Thus, the operational performance measure presented here on a segment-level basis represents net earnings, excluding depreciation expense and the Non-Segment Items not allocated, and is not meant to present FFO as defined by NAREIT. The following table shows (i) the revenues for each of the reportable segments and (ii) a reconciliation of FFO attributable to common shareholders or common unitholders to net income (loss) attributable to common shareholders or common unitholders for the three and nine months ended September 30, 2013 and 2012, respectively (in thousands):
The assets for each of the reportable segments at September 30, 2013 and December 31, 2012 were as follows (in thousands):
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