-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FiDoty5bhFFLbh8+thH7DLj7MS9/mxSmAMKzZy+EaZqr3HNSpE36kku8FGuVcBxJ PquaIVP8lTQPWkA5afwGYQ== /in/edgar/work/0001003410-00-000004/0001003410-00-000004.txt : 20001115 0001003410-00-000004.hdr.sgml : 20001115 ACCESSION NUMBER: 0001003410-00-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DUKE WEEKS REALTY LIMITED PARTNERSHIP CENTRAL INDEX KEY: 0001003410 STANDARD INDUSTRIAL CLASSIFICATION: [6500 ] IRS NUMBER: 351898425 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20625 FILM NUMBER: 766604 BUSINESS ADDRESS: STREET 1: 600 EAST 96TH STREET STREET 2: SUITE 100 CITY: INDIANAPOLIS STATE: IN ZIP: 46260 BUSINESS PHONE: 3178086000 MAIL ADDRESS: STREET 1: 600 EAST 96TH STREET STREET 2: SUITE 100 CITY: INDIANAPOLIS STATE: IN ZIP: 46260 FORMER COMPANY: FORMER CONFORMED NAME: DUKE REALTY LIMITED PARTNERSHIP DATE OF NAME CHANGE: 19951114 10-Q 1 0001.txt 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 ------------------ OR - --- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . ------- ------- --------------------------------------------------------------------- Commission File Number: 0-20625 ------- DUKE-WEEKS REALTY LIMITED PARTNERSHIP State of Incorporation: IRS Employer ID Number: Indiana 35-1898425 - ----------------------- ---------------------- Address of principal executive offices: 8888 Keystone Crossing, Suite 1200 --------------------------------- Indianapolis, Indiana 46240 ---------------------------- Telephone: (317) 808-6000 -------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- The number of Limited Partnership Units outstanding as of November 10, 2000 was 146,514,293. DUKE-WEEKS REALTY LIMITED PARTNERSHIP INDEX PART I - FINANCIAL INFORMATION PAGE - ------------------------------ ---- ITEM 1. FINANCIAL STATEMENTS Condensed Consolidated Balance Sheets as of September 30, 2000 (Unaudited) and December 31, 1999 2 Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2000 and 1999 (Unaudited) 3 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2000 and 1999 (Unaudited) 4 Condensed Consolidated Statement of Partners' Equity for the nine months ended September 30, 2000 (Unaudited) 5 Notes to Condensed Consolidated Financial Statements (Unaudited) 6-11 Independent Accountants' Review Report 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 13-21 PART II - OTHER INFORMATION Item 1. Legal Proceedings 21 Item 2. Changes in Securities 21 Item 3. Defaults Upon Senior Securities 21 Item 4. Submission of Matters to a Vote of Security Holders 21 Item 5. Other Information 21 Item 6. Exhibits and Reports on Form 8-K 22 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DUKE-WEEKS REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
September 30, December 31, 2000 1999 ------------- ------------ (Unaudited) ASSETS - ------ Real estate investments Land and improvements $ 628,439 $ 602,789 Buildings and tenant improvements 4,326,808 4,124,117 Construction in progress 235,304 327,944 Investments in unconsolidated companies 160,094 145,587 Land held for development 262,340 246,533 --------- --------- 5,612,985 5,446,970 Accumulated depreciation (340,950) (254,574) --------- --------- Net real estate investments 5,272,035 5,192,396 Cash and cash equivalents 41,119 18,514 Accounts receivable, net of allowance of $1,367 and $1,775 17,377 26,844 Straight-line rent receivable, net of allowance of $841 38,027 29,770 Receivables on construction contracts 47,501 29,537 Deferred financing costs, net of accumulated amortization of $11,921 and $9,082 13,468 16,571 Deferred leasing and other costs, net of accumulated amortization of $32,255 and $21,287 106,418 83,153 Escrow deposits and other assets 91,381 90,499 --------- --------- $5,627,326 $5,487,284 ========= ========= LIABILITIES AND PARTNERS' EQUITY - -------------------------------- Indebtedness: Secured debt $ 448,105 $ 528,665 Unsecured notes 1,286,660 1,326,811 Unsecured lines of credit 466,000 258,000 --------- --------- 2,200,765 2,113,476 Construction payables and amounts due subcontractors 89,607 89,985 Accounts payable 3,378 3,179 Accrued expenses: Real estate taxes 66,922 47,604 Interest 19,562 20,658 Other 56,359 41,836 Other liabilities 31,334 30,541 Tenant security deposits and prepaid rents 33,629 36,156 --------- --------- Total liabilities 2,501,556 2,383,435 --------- --------- Minority interest 2,180 1,860 --------- --------- Partners' equity: General Partner Common equity 2,101,173 2,082,720 Preferred equity (liquidation preference of $609,117) 586,504 587,385 --------- --------- 2,687,677 2,670,105 Limited partners' common equity 332,958 328,929 Limited partners' preferred equity 102,955 102,955 --------- --------- 3,123,590 3,101,989 --------- --------- $5,627,326 $5,487,284 ========= =========
See accompanying Notes to Condensed Consolidated Financial Statements - 2 - DUKE-WEEKS REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (UNAUDITED)
Three months ended Nine months ended September 30, September 30, ------------------ ----------------- 2000 1999 2000 1999 ---- ---- ---- ---- RENTAL OPERATIONS: Revenues: Rental income $182,525 $157,001 $528,617 $360,849 Equity in earnings of unconsolidated companies 3,235 3,272 10,285 8,559 ------- ------- ------- ------- 185,760 160,273 538,902 369,408 ------- ------- ------- ------- Operating expenses: Rental expenses 30,322 25,095 87,428 61,222 Real estate taxes 18,833 16,408 56,417 38,899 Interest expense 36,376 25,960 105,310 59,080 Depreciation and amortization 41,884 32,738 121,429 74,127 ------- ------- ------- ------- 127,415 100,201 370,584 233,328 ------- ------- ------- ------- Earnings from rental operations 58,345 60,072 168,318 136,080 ------- ------- ------- ------- SERVICE OPERATIONS: Revenues: Property management, maintenance and leasing fees 5,937 7,255 18,202 14,676 Construction and development activity income 15,634 7,817 41,581 20,976 Other income 332 330 1,226 910 ------- ------- ------- ------- 21,903 15,402 61,009 36,562 Operating expenses 13,410 11,531 36,187 24,073 ------- ------- ------- ------- Earnings from service operations 8,493 3,871 24,822 12,489 ------- ------- ------- ------- General and administrative expense (5,825) (4,626) (15,499) (11,737) ------- ------- ------- ------- Operating income 61,013 59,317 177,641 136,832 OTHER INCOME (EXPENSE): Interest income 1,630 699 5,533 1,844 Earnings from land and depreciated property sales 4,459 3,095 22,550 7,380 Other expense (111) (133) (361) (471) Other minority interest in earnings of subsidiaries (697) (617) (1,669) (1,497) ------- ------- ------- ------- Net income 66,294 62,361 203,694 144,088 Dividends on preferred units (14,345) (14,356) (43,050) (32,452) ------- ------- ------- ------- Net income available for common unitholders $ 51,949 $ 48,005 $160,644 $111,636 ======= ======= ======= ======= Net income per common unit: Basic $ .36 $ .35 $ 1.10 $ 1.00 ======= ======= ======= ======= Diluted $ .35 $ .35 $ 1.09 $ 1.00 ======= ======= ======= ======= Weighted average number of common units outstanding 146,138 137,721 145,663 111,086 ======= ======= ======= ======= Weighted average number of common and dilutive potential common units 147,916 138,923 147,218 112,106 ======= ======= ======= =======
See accompanying Notes to Condensed Consolidated Financial Statements - 3 - DUKE-WEEKS REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, (IN THOUSANDS) (UNAUDITED)
2000 1999 ---- ---- Cash flows from operating activities: Net income $203,694 $144,088 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of buildings and tenant improvements 107,906 66,993 Amortization of deferred financing costs 2,702 1,324 Amortization of deferred leasing and other costs 13,523 7,134 Minority interest in earnings 1,669 1,497 Straight-line rent adjustment (12,819) (7,462) Earnings from land and depreciated property sales (22,550) (7,380) Construction contracts, net (18,342) 29,741 Other accrued revenues and expenses, net 25,718 23,766 Equity in earnings in excess of operating distributions received from unconsolidated companies (105) (942) ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES 301,396 258,759 ------- ------- Cash flows from investing activities: Development of real estate investments (409,428) (306,031) Acquisition of real estate investments (5,932) (124,968) Acquisition of land held for development and infrastructure costs (73,194) (82,995) Recurring costs: Tenant improvements (24,085) (14,003) Leasing costs (14,175) (7,952) Building improvements (4,924) (1,564) Other deferred leasing costs (27,941) (17,126) Other deferred costs and other assets (9,548) (39,103) Escrow for property exchanges, net 5,235 - Proceeds from land and depreciated property sales, net 345,064 35,524 Capital distributions received from unconsolidated companies - 16,802 Net investment in and advances to unconsolidated companies (24,891) (30,048) ------- ------- NET CASH USED BY INVESTING ACTIVITIES (243,819) (571,464) ------- ------- Cash flows from financing activities: Contributions from General Partner 21,842 299,978 Proceeds from indebtedness - 300,000 Borrowings on lines of credit, net 240,026 174,000 Repayments on indebtedness including principal amortization (73,810) (264,711) Distributions to partners (176,231) (119,382) Distributions to preferred unitholders (43,050) (32,452) Distributions to minority interest (1,349) (1,401) Deferred financing costs (2,400) (5,141) ------- ------- NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (34,972) 350,891 ------- ------- NET INCREASE IN CASH AND CASH EQUIVALENTS 22,605 38,186 Cash and cash equivalents at beginning of period 18,514 6,626 ------- ------- Cash and cash equivalents at end of period $ 41,119 $ 44,812 ======= ======= Significant non-cash items: Assumption of debt for real estate acquisitions $ - $ 26,186 ======= ======= Acquisition of minority interest $ 6,806 $ 49,941 ======= ======= Issuance of limited partner units for real estate acquisitions $ 7,615 $ 2,017 ======= ======= Transfer of mortgage debt in sale of depreciated property $ 72,650 $ - ======= =======
See accompanying Notes to Condensed Consolidated Financial Statements - 4 - DUKE-WEEKS REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (IN THOUSANDS) (UNAUDITED)
General Partner Limited Limited ---------------------- Partners' Partners' Common Preferred Common Preferred Equity Equity Equity Equity Total --------- --------- --------- --------- --------- BALANCE AT DECEMBER 31, 1999 $2,082,720 $ 587,385 $328,929 $102,955 $3,101,989 Net income 139,533 36,744 21,111 6,306 203,694 Capital contribution from (repayments to) General Partner 23,648 (881) - - 22,767 Acquisition of partnership interest for common stock of General Partner 8,334 - (1,528) - 6,806 Acquisition of property in exchange for Limited Partner Units - - 7,615 - 7,615 Distributions to preferred unitholders - (36,744) - (6,306) (43,050) Distributions to partners ($1.21 per common unit) (153,062) - (23,169) - (176,231) --------- ------- ------- ------- --------- BALANCE AT SEPTEMBER 30, 2000 $2,101,173 $586,504 $332,958 $102,955 $3,123,590 ========= ======= ======= ======= ========= COMMON UNITS OUTSTANDING AT SEPTEMBER 30, 2000 127,509 18,980 146,489 ========= ======= =========
See accompanying Notes to Condensed Consolidated Financial Statements - 5 - DUKE-WEEKS REALTY LIMITED PARTNERSHIP NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. FINANCIAL STATEMENTS The interim condensed consolidated financial statements included herein have been prepared by Duke-Weeks Realty Limited Partnership (the "Partnership") without audit. The statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Partnership's Annual Financial Statements. THE PARTNERSHIP The Partnership was formed on October 4, 1993, when the General Partner contributed all of its properties and related assets and liabilities along with the net proceeds from the issuance of an additional 14,000,833 units through a common stock offering to the Partnership. Simultaneously, the Partnership completed the acquisition of Duke Associates, a full-service commercial real estate firm operating in the Midwest. The General Partner was formed in 1985 and qualifies as a real estate investment trust under provisions of the Internal Revenue Code. The General Partner is the sole general partner of the Partnership and owns 86.9% of the Partnership at September 30, 2000. The remaining limited partnership interest ("Limited Partner Units") (together with the units of General Gartner interests, the ("Common Units")) are mainly owned by the previous partners of Duke Associates. The Limited Partner Units are exchangeable for shares of the General Partner's common stock on a one-for-one basis subject generally to a one-year holding period. The General Partner periodically acquires a portion of the minority interest in the Partnership through the issuance of shares of common stock for a like number of Common Units. The acquisition of the minority interest is accounted for under the purchase method with assets acquired recorded at the fair market value of the General Partner's common stock on the date of acquisition. The service operations are conducted through Duke Realty Services Limited Partnership and Duke Construction Limited Partnership, in which the Partnership has an 89% profits interest (after certain preferred returns on partners' capital accounts) and effective control of their operations. The consolidated financial statements include the accounts of the Partnership and its majority-owned or controlled subsidiaries. The equity interests in these majority- owned or controlled subsidiaries not owned by the Partnership are reflected as minority interests in the consolidated financial statements. 2. LINES OF CREDIT The Partnership has the following lines of credit available (in thousands): Outstanding Borrowing Maturity Interest at September Description Capacity Date Rate 30, 2000 - ------------------------ --------- -------- --------- ------------ Unsecured Line of Credit $450,000 April 2001 LIBOR + .70% $436,000 Unsecured Line of Credit $300,000 June 2001 LIBOR + .90% $ 30,000 Secured Line of Credit $150,000 January 2003 LIBOR + 1.05% $ 32,026 - 6 - The lines of credit are used to fund development and acquisition of additional rental properties and to provide working capital. The $450 million line of credit allows the Partnership an option to obtain borrowings from the financial institutions that participate in the line of credit at rates lower than the stated interest rate, subject to certain restrictions. Amounts outstanding on the line of credit at September 30, 2000, are at LIBOR + .51% to .70%. 3. RELATED PARTY TRANSACTIONS The Partnership provides management, maintenance, leasing, construction, and other tenant related services to properties in which certain executive officers have continuing ownership interests. The Partnership was paid fees totaling $1.7 million and $2.0 million for such services for the nine months ended September 30, 2000 and 1999, respectively. Management believes the terms for such services are equivalent to those available in the market. The Partnership has an option to purchase the executive officers' interest in each of these properties which expires October 2003. The option price of each property was established at the date the option was granted. At September 30, 2000, other assets included outstanding loan advances totaling $2.4 million due from a related party, under a $5.7 million demand loan agreement. The loan bears interest at LIBOR plus 2.10% and is secured by real estate assets held by the related entity, which the Partnership has arrangements to acquire in future periods. Interest earned under the agreement and included in the accompanying condensed consolidated statements of operations totaled $173,705 for the nine months ended September 30, 2000. 4. NET INCOME PER COMMON UNIT Basic net income per common unit is computed by dividing net income available for common unitholders by the weighted average number of common units outstanding for the period. Diluted net income per unit is computed by dividing net income available for common unitholders by the sum of the weighted average number of common units units and dilutive potential common units outstanding for the period. The following table reconciles the components of basic and diluted net income per common unit for the three and nine months ended September 30 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------ 2000 1999 2000 1999 ---- ---- ---- ---- Net income available for common unitholders $ 51,949 $ 48,005 $160,644 111,636 ======= ======= ======= ======= Weighted average number of common units outstanding 146,138 137,721 145,663 111,086 Dilutive units for long-term compensation plans 1,778 1,202 1,555 1,020 ------- ------- ------- ------- Weighted average number of common units and dilutive potential common units 147,916 138,923 147,218 112,106 ======= ======= ======= ======= The Preferred D Series Convertible equity and the Series G preferred limited partner units were anti-dilutive at September 30, 2000; therefore, no conversion to common units is included in weighted dilutive potential common units outstanding. - 7 - 5. SEGMENT REPORTING The Partnership is engaged in four operating segments; the ownership and rental of office, industrial and retail real estate investments and the providing of various real estate services such as property management, maintenance, leasing and construction management to third-party property owners ("Service Operations"). The Partnership's reportable segments offer different products or services and are managed separately because each requires different operating strategies and management expertise. There are no material intersegment sales or transfers. Non-segment revenue to reconcile to total revenue consists mainly of equity in earnings of unconsolidated companies. Non-segment assets to reconcile to total assets consist of corporate assets including cash, deferred financing costs and investments in unconsolidated companies. The Partnership assesses and measures segment operating results based on an industry performance measure referred to as Funds From Operations ("FFO"). The National Association of Real Estate Investment Trusts defines FFO as net income or loss, excluding gains or losses from debt restructuring and sales of depreciated operating property, plus operating property depreciation and amortization and adjustments for minority interest and unconsolidated companies on the same basis. FFO is not a measure of operating results or cash flows from operating activities as measured by generally accepted accounting principles, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity. Interest expense and other non-property specific revenues and expenses are not allocated to individual segments in determining the Partnership's performance measure. The revenues and FFO for each of the reportable segments for the three and nine months ended September 30, 2000 and 1999, and the assets for each of the reportable segments as of September 30, 2000 and December 31, 1999, are summarized as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------ 2000 1999 2000 1999 ---- ---- ---- ---- Revenues Rental Operations: Office $ 87,811 $ 75,628 $251,785 $198,025 Industrial 87,513 74,877 256,032 143,267 Retail 7,434 7,248 22,325 19,326 Service Operations 21,903 15,402 61,009 36,562 -------- ------- ------- ------- Total Segment FFO 204,661 173,155 591,151 397,180 Non-Segment Revenue 3,002 2,520 8,760 8,790 ------- ------- ------- ------- Consolidated Revenue $207,663 $175,675 $599,911 $405,970 ======= ======= ======= ======= - 8 - Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------ 2000 1999 2000 1999 ---- ---- ---- ---- Funds From Operations Rental Operations: Office $ 59,091 $ 51,981 $171,817 $135,764 Industrial 68,536 59,296 200,182 111,578 Retail 5,801 5,874 17,833 15,659 Services Operations 8,493 3,871 24,822 12,489 ------- ------- ------- ------- Total Segment FFO 141,921 121,022 414,654 275,490 Non-Segment FFO: Interest expense (36,376) (25,960) (105,310) (59,080) Interest income 1,630 699 5,533 1,844 General and administrative expenses (5,825) (4,626) (15,499) (11,737) Gain on land sales 2,612 690 6,525 1,577 Other revenues and expenses, net (250) (1,798) (5,855) (2,792) Other minority interest in earnings of subsidiaries (697) (617) (1,669) (1,497) Joint venture FFO 5,298 4,553 15,751 12,632 Dividends on preferred units (14,345) (14,356) (43,050) (32,452) ------- ------- ------- ------- Consolidated FFO 93,968 79,607 271,080 183,985 Depreciation and amortization (41,884) (32,738) (121,429) (74,127) Share of joint venture adjustments (1,982) (1,270) (5,032) (4,026) Earnings from depreciated property sales 1,847 2,406 16,025 5,804 ------- ------- ------- ------- Net Income Available for Common Unitholders $ 51,949 $ 48,005 $160,644 $111,636 ======= ======= ======= ======= September 30, December 31, 2000 1999 ---- ---- Assets Rental Operations: Office $2,405,913 $2,252,795 Industrial 2,689,542 2,707,028 Retail 186,628 205,993 Service Operations 93,460 62,335 --------- --------- Total Segment Assets 5,375,543 5,228,151 Non-Segment Assets 251,783 259,133 --------- --------- Consolidated Assets $5,627,326 $5,487,284 ========= ========= 6. REAL ESTATE ASSETS HELD FOR SALE In order to redeploy capital, the Partnership has an active sales program through which it is continually pursuing favorable opportunities to dispose of real estate assets that do not meet long-term investment objectives of the Partnership. At September 30, 2000, the Partnership had 15 industrial, 17 office and three retail properties comprising approximately 3.9 million square feet held for sale. Of these properties, six build-to-suit industrial, four build-to-suit office and two build-to-suit retail properties were under development at September 30, 2000. Net operating income (defined as total property revenues, less property expenses, which include real estate taxes, repairs and maintenance, property management, utilities, insurance and other expenses) of the properties held for sale for the nine months ended September 30, 2000, was approximately $9.8 million. Net book value of the properties held for sale at September 30, 2000, was $130.3 million. There can be no assurances that such properties will be sold. 7. PARTNERS' EQUITY The following series of preferred equity are outstanding as of September 30, 2000 (in thousands, except percentages): - 9 - Units Dividend Redemption Liquidation Description Outstanding Rate Date Preference Convertible - ------------------ ----------- -------- ---------- ----------- ----------- Preferred A Series 300 9.100% 08/31/01 $ 75,000 No Preferred B Series 300 7.990% 09/30/07 150,000 No Preferred D Series 536 7.375% 12/31/03 134,117 Yes Preferred E Series 400 8.250% 01/20/04 100,000 No Preferred F Series 600 8.000% 10/10/02 150,000 No All series of preferred equity require cumulative distributions, have no stated maturity date, and the redemption price of each series may only be paid from the proceeds of other capital contributions from the General Partner, which may include other classes or series of preferred equity. The Preferred Series D equity is convertible at a conversion rate of 9.3677 common units for each preferred unit outstanding. The dividend rate on the Preferred B Series equity increases to 9.99% after September 12, 2012. 8. MERGER WITH WEEKS CORPORATION In July 1999, the General Partner and Weeks Corporation ("Weeks"), approved a merger transaction whereby Weeks, a self-administered, self-managed geographically focused Real Estate Investment Trust ("REIT") which operated primarily in the southeastern United States and its consolidated subsidiary, Weeks Realty L.P. ("Weeks Operating Partnership"), were merged with and into the General Partner and its consolidated subsidiary, Duke Realty Limited Partnership ("Duke Operating Partnership"). The total purchase price of Weeks and Weeks Operating Partnership aggregated approximately $1.9 billion, which included the assumption of the outstanding debt and liabilities of Weeks Operating Partnership of approximately $775 million. The following summarized pro forma unaudited information represents the combined historical operating results of Weeks Operating Partnership and Duke Operating Partnership with the appropriate purchase accounting adjustments, assuming the merger had occurred on January 1, 1999. The pro forma financial information presented is not necessarily indicative of what the Partnership's actual operating results would have been had Weeks Operating Partnership and Duke Operating Partnership constituted a single entity during such periods (in thousands, except per unit amounts): Nine Months Ended September 30, ------------------ 2000 1999 ---- ---- (ACTUAL) (Pro Forma) Rental income $528,617 $451,932 ======= ======= Net income available for common unitholders $160,644 $136,623 ======= ======= Weighted average common units outstanding: Basic 145,663 136,350 ======= ======= Diluted 147,218 137,540 ======= ======= Net income per common unit: Basic $ 1.10 $ 1.00 ======= ======= Diluted $ 1.09 $ 0.99 ======= ======= 9. RECLASSIFICATIONS Certain 1999 balances have been reclassified to conform to 2000 presentation. - 10 - 10. SUBSEQUENT EVENTS DECLARATION OF DIVIDENDS BY GENERAL PARTNER The Board of Directors of the General Partner declared the following distributions on October 25, 2000: Quarterly Class Amount/Unit Record Date Payment Date - ------------ ----------- ----------------- ----------------- Common $ 0.43 November 14, 2000 November 30, 2000 Preferred: Series A $0.56875 November 16, 2000 November 30, 2000 Series B $0.99875 December 15, 2000 December 29, 2000 Series D $0.46094 December 15, 2000 December 29, 2000 Series E $0.51563 December 15, 2000 December 29, 2000 Series F $0.50000 January 17, 2000 January 31, 2000 INVESTMENT IN JOINT VENTURE On October 4, 2000, the Partnership sold or contributed $469 million of industrial properties and $18 million of undeveloped land to a joint venture in which the Partnership will have a 50% interest. This trans- action expands an existing venture which, upon completion of this transaction, will own 129 buildings totaling more than 21 million square feet with a value of $789 million. The venture properties are secured by $383 million of first mortgage debt. The Partnership will provide real estate related services to the venture through its Service Operations. - 11 - INDEPENDENT ACCOUNTANTS' REVIEW REPORT The Partners DUKE-WEEKS REALTY LIMITED PARTNERSHIP: We have reviewed the condensed consolidated balance sheet of Duke- Weeks Realty Limited Partnership and subsidiaries as of September 30, 2000, the related condensed consolidated statements of operations for the three months and nine months ended September 30, 2000 and 1999, the related condensed consolidated statements of cash flows for the nine months ended September 30, 2000 and 1999, and the related condensed consolidated statement of partners' equity for the nine months ended September 30, 2000. These condensed consolidated financial statements are the responsibility of the Partnership's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Duke-Weeks Realty Limited Partnership and subsidiaries as of December 31, 1999, and the related consolidated statements of operations, partners' equity and cash flows for the year then ended (not presented herein); and in our report dated January 25, 2000, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1999 is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. KPMG LLP Indianapolis, Indiana October 25, 2000 - 12 - ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW - -------- The Partnership's operating results depend primarily upon income from the rental operations of its industrial, office and retail properties located in its primary markets. This income from rental operations is substantially influenced by the supply and demand for the Partnership's rental space in its primary markets. In addition, the Partnership's continued growth is dependent upon its ability to maintain occupancy rates and increase rental rates of its in- service portfolio and to continue development and acquisition of additional rental properties. The Partnership's primary markets have continued to offer strong and stable local economies and have provided attractive new development opportunities because of their established manufacturing base, skilled work force and moderate labor costs. The Partnership expects to continue to maintain its overall occupancy levels and also expects to be able to increase rental rates as leases are renewed or new leases are executed. This combination should improve the Partnership's results of operations from its in-service properties. The Partnership's strategy for continued growth also includes developing and acquiring additional rental properties in its primary markets. The Partnership tracks same property performance which compares those properties that were in-service for all of a calendar two- year period. The net operating income from the same property portfolio increased 4.75% for the nine months ended September 30, 2000, compared to the nine months ended September 30, 1999. The following table sets forth information regarding the Partnership's in-service portfolio of rental properties as of September 30, 2000 and 1999 (in thousands, except percentages): Total Percent of Square Feet Total Square Feet Percent Occupied ---------------- ----------------- ---------------- Type 2000 1999 2000 1999 2000 1999 - ---- ---- ---- ---- ---- ---- ---- INDUSTRIAL Service Centers 13,359 11,313 13.9% 12.8% 92.3% 93.9% Bulk 59,431 56,527 62.0 64.0 94.2% 92.4% OFFICE Suburban 19,663 16,751 20.5 19.0 92.0% 92.7% CBD 861 861 1.0 1.0 97.1% 92.2% RETAIL 2,535 2,836 2.6 3.2 97.0% 93.7% ------ ------ ----- ----- Total 95,849 88,288 100.0% 100.0% 93.6% 92.7% ====== ====== ===== ===== The following table reflects the Partnership's in-service portfolio lease expiration schedule as of September 30, 2000, by product type, indicating square footage and annualized net effective rents under expiring leases (in thousands, except per square foot amounts): - 13 -
Total Industrial Office Retail ----- ---------- ------ ------ Yr of Square Square Square Square Exp Feet Revenue Feet Revenue Feet Revenue Feet Revenue - ----- ------ ------- ------- ------- ------ ------- ------ ------- 2000 2,463 $ 14,857 1,967 $ 8,668 425 $ 5,526 71 $ 663 2001 9,252 57,766 7,147 31,960 2,034 24,913 71 893 2002 9,373 60,402 7,451 36,922 1,848 22,444 74 1,036 2003 10,212 67,927 8,073 40,017 2,021 26,486 118 1,424 2004 9,588 66,870 7,271 35,050 2,227 30,574 90 1,246 2005 12,673 91,363 9,425 45,687 2,921 42,393 327 3,283 2006 7,134 41,480 5,836 23,124 1,276 18,073 22 283 2007 5,704 35,281 4,764 22,006 868 12,563 72 712 2008 5,433 33,114 4,460 19,940 910 12,460 63 714 2009 6,416 39,930 5,218 22,530 1,092 15,951 106 1,449 2010 and There- after 11,436 92,994 6,686 29,830 3,306 49,751 1,444 13,413 ------ ------- ------ ------- ------ ------- ----- ------ Total Leased 89,684 $601,984 68,298 $315,734 18,928 $261,134 2,458 $25,116 ====== ======= ====== ======= ====== ======= ===== ====== Total Portfolio Sq Ft 95,849 72,790 20,524 2,535 ====== ====== ====== ===== Annualized net effective rent per sq ft $ 6.71 $ 4.62 $ 13.80 $ 10.22 ====== ====== ======= ======
The Partnership also expects to realize growth in earnings from rental operations through the development and acquisition of additional rental properties in its primary markets and the completion of the 7.9 million square feet of properties under development by the Partnership at September 30, 2000, over the next three quarters and thereafter. These properties under development should provide future earnings through Service Operations income upon sale or from rental operations growth as they are placed in service as follows (in thousands, except percent leased and stabilized returns): Anticipated In-Service Square Percent Project Stabilized Date Feet Leased Costs Return ------------ ------- ------- -------- -------- Held for Rental: 4th Quarter 2000 2,516 45% $180,844 11.4% 1st Quarter 2001 2,287 39% 115,400 11.5% 2nd Quarter 2001 1,043 0% 69,822 11.9% Thereafter 128 0% 13,148 12.0% ----- ------- 5,974 34% $379,214 11.6% ===== ======= Build-to-Suit for Sale: 4th Quarter 2000 - 0% $ - 1st Quarter 2001 291 54% 24,747 2nd Quarter 2001 488 68% 34,642 Thereafter 1,157 100% 97,996 ----- ------- 1,936 85% $157,385 ===== ======= Total 7,910 46% $536,599 ===== ======= MERGER WITH WEEKS CORPORATION - ----------------------------- In July 1999, the General Partner and Weeks Corporation ("Weeks"), approved a merger transaction whereby Weeks, a self-administered, self-managed geographically focused Real Estate Investment Trust ("REIT") which operated primarily in the southeastern United States and its consolidated subsidiary, Weeks Realty L.P. ("Weeks Operating Partnership"), were merged with and into the General Partner and its consolidated subsidiary, Duke Realty Limited Partnership ("Duke Operating Partnership"). The total purchase price of Weeks and Weeks Operating Partnership aggregated approximately $1.9 billion, which included the assumption of the outstanding debt and liabilities of Weeks Operating Partnership of approximately $775 million. - 14 - The following summarized pro forma unaudited information represents the combined historical operating results of Weeks Operating Partnership and Duke Operating Partnership with the appropriate purchase accounting adjustments, assuming the merger had occurred on January 1, 1999. The pro forma financial information presented is not necessarily indicative of what the Partnership's actual operating results would have been had Weeks Operating Partnership and Duke Operating Partnership constituted a single entity during such periods (in thousands, except per unit amounts): Nine Months Ended September 30, ------------------ 2000 1999 ---- ---- (Actual) (Pro Forma) Rental income $528,617 $451,932 ======= ======= Net income available for common shareholders $160,644 $136,623 ======= ======= Weighted average common shares outstanding: Basic 145,663 136,350 ======= ======= Diluted 147,218 137,540 ======= ======= Net income per common share: Basic $ 1.10 $ 1.00 ======= ======= Diluted $ 1.09 $ 0.99 ======= ======= RESULTS OF OPERATIONS - --------------------- Following is a summary of the Partnership's operating results and property statistics for the three and nine months ended September 30, 2000 and 1999 (in thousands, except number of properties and per unit amounts): Three months ended Nine months ended September 30, September 30, ------------------ ----------------- 2000 1999 2000 1999 ---- ---- ---- ---- Rental Operations revenue $185,760 $160,273 $538,902 $369,408 Service Operations revenue 21,903 15,402 61,009 36,562 Earnings from Rental Operations 58,345 60,072 168,318 136,080 Earnings from Service Operations 8,493 3,871 24,822 12,489 Operating income 61,013 59,317 177,641 136,832 Net income available for common unitholders $ 51,949 $ 48,005 $160,644 $111,636 Weighted average common units outstanding 146,138 137,721 145,663 111,086 Weighted average common and dilutive potential common units 147,916 138,923 147,218 112,106 Basic income per common unit $ .36 $ .35 $ 1.10 $ 1.00 Diluted income per common unit $ .35 $ .35 $ 1.09 $ 1.00 Number of in-service properties at end of period 878 841 878 841 In-service square footage at end of period 95,849 88,288 95,849 88,288 Under development square footage at end of period 7,910 12,479 7,910 12,479 Rental Operations - ----------------- Rental Operations revenue increased to $185.8 million from $160.3 million for the three months ended September 30, 2000, compared to the same period in 1999. This increase is primarily due to the increase in the number of in-service properties during the respective periods. As of September 30, 2000, the Partnership had 878 properties in service compared to 841 properties at September 30, 1999. The following is a summary of the Partnership's acquisition and development activity since January 1, 1999: - 15 - Square Buildings Feet --------- ------ Properties owned as of: January 1, 1999 453 52,028 Weeks merger 335 28,569 Acquisitions 30 2,867 Developments placed in service 68 10,903 Dispositions (21) (1,890) Building remeasurements - 25 --- ------ December 31, 1999 865 92,502 Acquisitions 2 169 Developments placed in service 57 9,561 Dispositions (46) (6,390) Building remeasurements - 7 --- ------ September 30, 2000 878 95,849 === ====== Rental property, real estate tax and depreciation and amortization expenses increased for the three months ended September 30, 2000, compared to the same period in 1999, due to the increase in the number of in-service properties during the respective periods. The $10.4 million increase in interest expense is primarily attributable to higher outstanding debt balances associated with the financing of the Partnership's investment activities. The increased balances include $150 million of unsecured debt issued in the fourth quarter of 1999, and increased borrowings on the Partnership's lines of credit. These higher borrowing costs were partially offset by the capitalization of interest on increased property development activities. As a result of the above-mentioned items, earnings from Rental Operations decreased $1.8 million from $60.1 million for the three months ended September 30, 1999, to $58.3 million for the three months ended September 30, 2000. Service Operations - ------------------ Service Operations revenues increased by $6.5 million from $15.4 million for the three months ended September 30, 1999, to $21.9 million for the three months ended September 30, 2000, primarily as a result of increases in construction and development income from increased third-party construction. Service Operations operating expenses increased from $11.5 million for the three months ended September 30, 1999, to $13.4 million for the three months ended September 30, 2000, primarily due to increases in payroll and maintenance expenses due to the overall growth of the Partnership and the increased portfolio of buildings associated with this growth. As a result, earnings from Service Operations increased from $3.9 million for the three months ended September 30, 1999, to $8.5 million for the three months ended September 30, 2000. - 16 - Other Income and Expenses - ------------------------- Interest income increased from $699,000 for the three months ended September 30, 1999, to $1.6 million for the same period in 2000 primarily through earnings on funds deposited in tax deferred exchange escrows of $794,000. The Partnership has a disposition strategy to pursue favorable opportunities to dispose of real estate assets that no longer meet long-term investment objectives of the Partnership, which resulted in net sales proceeds of $130.8 million and a net gain of $4.5 million during the three months ended September 30, 2000. In conjunction with this disposition strategy, included in net real estate investments are 35 buildings with a net book value of $130.3 million which were classified as held for sale by the Partnership at September 30, 2000. The Partnership expects to complete these and other dispositions and use the proceeds to fund future investments in real estate assets. Net Income Available for Common Unitholders - ------------------------------------------- Net income available for common unitholders for the three months ended September 30, 2000, was $51.9 million compared to net income available for common unitholders of $48.0 million for the three months ended September 30, 1999. This increase results primarily from the operating result fluctuations in rental and service operations explained above. COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2000 TO NINE MONTHS ENDED SEPTEMBER 30, 1999 - ------------------------------------------------------------------- Rental Operations - ----------------- Rental Operations revenue increased to $538.9 million from $369.4 million for the nine months ended September 30, 2000, compared to the same period in 1999. This increase is primarily due to the increase in the number of in-service properties during the respective periods, particularly, the revenues from the 335 buildings obtained in the Weeks Merger, for which nine months of operations are included in 2000 compared to three months in 1999. As of September 30, 2000, the Partnership had 878 properties in service compared to 841 properties at September 30, 1999. Rental property, real estate tax and depreciation and amortization expenses increased for the nine months ended September 30, 2000, compared to the same period in 1999 due to the increase in the number of in-service properties during the respective periods. The $46.2 million increase in interest expense is primarily attributable to higher outstanding debt balances associated with the financing of the Partnership's investment activities. The increased balances include $450 million of unsecured debt issued in 1999, the assumption of $185 million of secured debt and $287 million of unsecured debt in the merger with Weeks Corporation in July 1999, and increased borrowings on the Partnership's lines of credit. These higher borrowing costs were partially offset by the capitalization of interest on increased property development activities. As a result of the above-mentioned items, earnings from Rental Operations increased $32.2 million from $136.1 million for the nine months ended September 30, 1999, to $168.3 million for the nine months ended September 30, 2000. - 17 - Service Operations - ------------------ Service Operations revenues increased by $24.4 million from $36.6 million for the nine months ended September 30, 1999, to $61.0 million for the nine months ended September 30, 2000, primarily as a result of increases in construction and development income from increased third-party construction. Service Operations operating expenses increased from $24.1 million for the nine months ended September 30, 1999, to $36.2 million for the nine months ended September 30, 2000, primarily due to increases in payroll and maintenance expenses due to the overall growth of the Partnership and the increased portfolio of buildings associated with this growth. As a result, earnings from Service Operations increased from $12.5 million for the nine months ended September 30, 1999, to $24.8 million for the nine months ended September 30, 2000. Other Income and Expenses - ------------------------- Interest income increased from $1.8 million for the nine months ended September 30, 1999, to $5.5 million for the same period in 2000 primarily through earnings on funds deposited in tax deferred exchange escrows of $3.3 million. The Partnership has a disposition strategy to pursue favorable opportunities to dispose of real estate assets that no longer meet long-term investment objectives of the Partnership, which resulted in net sales proceeds of $345.1 million and a net gain of $22.6 million during the nine months ended September 30, 2000. Net Income Available for Common Unitholders - --------------------------------------------- Net income available for common unitholders for the nine months ended September 30, 2000 was $160.6 million compared $111.6 million for the nine months ended September 30, 1999. This increase results primarily from the operating result fluctuations in rental and service operations explained above. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities totaling $301.4 million and $258.8 million for the nine months ended September 30, 2000 and 1999, respectively, represents the primary source of liquidity to fund distributions to unitholders and the other minority interests and to fund recurring costs associated with the renovation and re- letting of the Partnership's properties. Net cash used by investing activities totaling $243.8 million and $571.5 million for the nine months ended September 30, 2000 and 1999, respectively, represents the investment of funds by the Partnership to expand its portfolio of rental properties through the development and acquisition of additional rental properties, net of proceeds received from property sales. - 18 - Net cash provided (used) by (for) financing activities totaling ($35.0) million and $350.9 million for the nine months ended September 30, 2000 and 1999, respectively, is comprised of debt and equity issuances, net of distributions to unitholders and minority interests and repayments of outstanding indebtedness. In the first nine months of 2000, the Partnership received $22.7 million of net proceeds from the General Partner's issuance of common shares which was used to reduce amounts outstanding under the Partnership's lines of credit and to fund the development and acquisition of additional rental properties. In the first nine months of 1999, the Partnership received $203.4 million of net proceeds from the General Partner's issuance of common shares, received $96.5 million from the General Partner's issuance of preferred shares and issued $300.0 million of unsecured debt. The Partnership used the net proceeds to reduce amounts outstanding under the Partnership's lines of credit and to fund the development and acquisition of additional rental properties. The Partnership has the following lines of credit available (in thousands): Outstanding Borrowing Maturity Interest at September Description Capacity Date Rate 30, 2000 ------------------------ --------- ------------ ------------- ------------ Unsecured Line of Credit $450,000 April 2001 LIBOR + .70% $436,000 Unsecured Line of Credit $300,000 June 2001 LIBOR + .90% $ 30,000 Secured Line of Credit $150,000 January 2003 LIBOR + 1.05% $ 32,026 The lines of credit are used to fund development and acquisition of additional rental properties and to provide working capital. The $450 million line of credit allows the Partnership an option to obtain borrowings from the financial institutions that participate in the line of credit at rates lower than the stated interest rate, subject to certain restrictions. Amounts outstanding on the line of credit at September 30, 2000 are at LIBOR + .51% to .70%. The General Partner and the Partnership currently have on file one Form S-3 Registration Statement with the Securities and Exchange Commission ("Shelf Registration") which has remaining availability as of September 30, 2000 of $793.0 million to issue common stock, preferred stock or unsecured debt securities. The General Partner and the Partnership intend to issue additional equity or debt under this Shelf Registration as market conditions change and capital needs arise to fund the development and acquisition of additional rental properties. The General Partner and the Partnership also plan to file additional shelf registrations as necessary. The total debt outstanding at September 30, 2000, consists of notes totaling $2.2 billion with a weighted average interest rate of 7.31% maturing at various dates through 2028. The Partnership has $1.8 billion of unsecured debt and $448.1 million of secured debt outstanding at September 30, 2000. Scheduled principal amortization of such debt totaled $8.8 million for the nine months ended September 30, 2000. Following is a summary of the scheduled future amortization and maturities of the Partnership's indebtedness at September 30, 2000 (in thousands): - 19 - Future Repayments ---------------------------------------- Weighted Average Scheduled Interest Rate of Year Amortization Maturities Total Future Repayments ---- ------------ ---------- ----- ----------------- 2000 $ 2,750 $ - $ 2,750 7.31% 2001 11,605 645,381 656,986 7.31% 2002 11,836 55,037 66,873 7.36% 2003 11,433 313,239 324,672 7.71% 2004 9,893 176,146 186,039 7.41% 2005 8,654 213,662 222,316 7.25% 2006 7,725 146,178 153,903 7.12% 2007 5,802 116,579 122,381 7.13% 2008 4,756 100,000 104,756 6.77% 2009 5,099 150,000 155,099 7.73% Thereafter 29,990 175,000 204,990 6.88% ------- --------- --------- Total $109,543 $2,091,222 $2,200,765 7.31% ======= ========= ========= FUNDS FROM OPERATIONS Management believes that Funds From Operations ("FFO"), which is defined by the National Association of Real Estate Investment Trusts as net income or loss, excluding gains or losses from debt restructuring and sales of depreciated property, plus operating property depreciation and amortization and adjustments for minority interest and unconsolidated companies on the same basis, is the industry standard for reporting the operations of real estate investment trusts. The following table reflects the calculation of the Partnership's FFO for the three and nine months ended September 30 as follows (in thousands): Three months ended Nine months ended September 30, September 30, ------------------- ----------------- 2000 1999 2000 1999 ---- ---- ---- ---- Net income available for common unitholders $51,949 $48,005 $160,644 $111,636 Add back: Depreciation and amortization 41,884 32,738 121,429 74,127 Share of joint venture adjustments 1,982 1,270 5,032 4,026 Earnings from depreciated property sales (1,847) (2,406) (16,025) (5,804) ------- ------- ------- ------- Funds From Operations $93,968 $79,607 $271,080 $183,985 ======= ======= ======= ======= Cash flow provided by (used by): Operating activities $126,831 $176,189 $301,396 $258,759 Investing activities 14,649 (248,488) (243,819) (571,464) Financing activities (141,764) (50,985) (34,972) 350,891 The increase in FFO for the three and nine months ended September 30, 2000 compared to the three and nine months ended September 30, 1999, results primarily from the increased in-service rental property portfolio as discussed above under "Results of Operations." While management believes that FFO is the most relevant and widely used measure of the Partnership's operating performance, such amount does not represent cash flow from operations as defined by generally accepted accounting principles, should not be considered as an alternative to net income as an indicator of the Partnership's operating performance, and is not indicative of cash available to fund all cash flow needs. - 20 - ACCOUNTING CHANGES In June 1998, the Financial Accounting Standards Board issued Statement No. 133, "Accounting for Derivative Instruments and for Hedging Activities," effective for fiscal years beginning after June 15, 2000. The statement will require the Partnership to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, then depending on the nature of the hedge, changes in the fair value will either be offset through earnings, against the change in fair value of hedged assets, liabilities or firm commitments or recognized in other comprehensive income until the hedged item is recognized in income. The ineffective portion of a hedge's change in fair value will be immediately recognized in income. The adoption of this statement will not have a material impact on the Partnership's financial statements. PART II - OTHER INFORMATION Item 1. Legal Proceedings - -------------------------- None Item 2. Changes in Securities - ------------------------------ None Item 3. Defaults upon Senior Securities - ---------------------------------------- None Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ None Item 5. Other Information - -------------------------- When used in this Form 10-Q, the words "believes," "expects," "estimates" and similar expressions are intended to identify forward looking-statements. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially. In particular, among the factors that could cause actual results to differ materially are continued qualification as a real estate investment trust, general business and economic conditions, competition, increases in real estate construction costs, interest rates, accessibility of debt and equity capital markets and other risks inherent in the real estate business including tenant defaults, potential liability relating to environmental matters and illiquidity of real estate investments. Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date hereof. The Partnership undertakes no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also advised to refer to the Partnership's Form 8-K Report as filed with the U.S. Securities and Exchange Commission on March 29, 1996 for additional information concerning these risks. - 21 - Item 6. Exhibits and Reports on Form 8-K ----------------------------------------- Exhibits -------- Exhibit 15. Letter regarding unaudited interim financial information Exhibit 27. Financial Data Schedule (EDGAR Filing Only) Reports on Form 8-K ------------------- None - 22 - SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DUKE-WEEKS REALTY LIMITED PARTNERSHIP By: Duke-Weeks Realty Limited Partnership, General Partner Registrant Date: November 12, 2000 /s/ Thomas L. Hefner ----------------- ----------------------------- President and Chief Executive Officer /s/ Darell E. Zink, Jr. ----------------------------- Executive Vice President and Chief Financial Officer /s/ Dennis D. Oklak ----------------------------- Executive Vice President and Chief Administrative Officer - 23 - EX-15 2 0002.txt AUDITORS' LETTER Exhibit 15 The Partners DUKE-WEEKS REALTY LIMITED PARTNERSHIP: RE: Registration Statement No. 333-04695, 333-26845, 333-49911 and 333-37920 With respect to the subject registration statement, we acknowledge our awareness of the use therein of our report dated October 25, 2000 related to our review of interim financial information. Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not considered a part of a registration statement prepared or certified by an accountant, or a report prepared or certified by an accountant within the meaning of sections 7 and 11 of the Act. KPMG LLP Indianapolis, Indiana November 10, 2000 EX-27 3 0003.txt 2000 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DUKE-WEEKS REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES SEPTEMBER 30, 2000, CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERECE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-2000 SEP-30-2000 41,119 0 105,113 (2,208) 0 197,378 5,272,035 (340,950) 5,627,326 300,791 2,200,765 0 0 0 3,123,590 5,627,326 0 627,994 0 317,321 44,719 0 105,310 160,644 0 160,644 0 0 0 160,644 $1.10 $1.09
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