 RELIABLE. ANSWERS.
2012 NAREIT San Diego, CA
November 13 -
15
Exhibit 99.1 |
 40
Years Timeline 2
RELIABLE. ANSWERS.
2012 Duke Realty Corporation |
 Focus on:
Increasing cash flow
Maximizing return on
assets
3
Strategy for Success
Focus on:
Improving coverage ratios
Improving ratings
Focus on:
Portfolio repositioning
Strategic acquisitions &
dispositions
Development opportunities
Strategies for delivering shareholder value
RELIABLE. ANSWERS.
2012 Duke Realty Corporation |
 RELIABLE. ANSWERS.
2012 Duke Realty Corporation
2012 Goals and Objectives
Q3 2012 Update
•
Lease-up portfolio, manage cap ex; reach
positive same property income growth
•
Balance execution with capital strategy
relative to level and quality of cash flow
and same property NOI
•
Development starts of $150 to $250MM
focus on medical office and build-to-suit
•
Total portfolio occupancy as of quarter end 91.9%, up 1.2%
from year-end; industrial only portfolio at 93.2%
•
Approximately 7.4 million square feet of leases completed
•
Debt to EBITDA @ 7.3x; 2.0% Same Property NOI growth
•
$115MM development starts. Two 100% leased bulk
industrial expansion projects (at 7.2% weighted yield), one
spec industrial (8.0%), three 100% leased medical office
projects (7.4%) and one office spec project (9.3% yield)
•
Continue strong momentum from 2011 on
repositioning of portfolio
•
Pursue acquisitions of medical and
industrial assets
•
Continue pruning suburban office primarily
in Midwest
•
Closed on approximately $92MM of acquisitions during the
quarter, all comprised of healthcare
•
$27MM in dispositions of non-core assets
•
Total suburban office portfolio 85.7% occupied, preparing
non-strategic assets for sale
•
Opportunistically access capital markets . .
push out maturity schedule further
•
Continue improving coverage ratios
•
Maintain minimal balance on line of credit
•
Fixed charge ratio of 1.81x unchanged from Q2 2012
•
Issued $300MM of senior notes at 3.875% coupon maturing
2022
•
Issued $87MM of equity through ATM program at a $14.92
share price . . . Additional $22MM executed through October
11th at $14.71
•
Zero credit facility balance and $113MM of cash at qtr end
Strategic Focus
Asset
Strategy
Operations
Strategy
Capital
Strategy
4
Solid Q3 performance across all three aspects of our strategy
|
 2012 Duke Realty Corporation
OPERATIONS STRATEGY
5 |
 6
Focus on Fundamentals
LEASING OF
PORTFOLIO
STRATEGIC
NEW DEVELOPMENT
AND LAND DISPOSITION
AFFO PAYOUT
OPERATIONS STRATEGY
Maximize return on assets
2012 Duke Realty Corporation |
 Consistent Operating Performance
Stabilized Occupancy (%)
Strong
historical
stabilized
occupancy
–
fundamentals
improving
Lease Renewals (%)
Strong lease renewal percentages
Stabilized occupancy
In-service occupancy
Leasing Activity
New
Leases
and
Renewals
–
Consistent
Execution
(in
millions of
square feet)
Lease Maturity Schedule
Lease maturities are well balanced with no one year accounting for
more than 12%
Demonstrated ability to
maintain consistency through economic cycles
95%
92%
92%
89%
88%
91%
91%
89%
89%
87%
7
OPERATIONS STRATEGY
93%
93%
72%
79%
77%
69%
82%
21.4
22.7
25.9
24.5
20.9
2012 Duke Realty Corporation
29.9
80% |
 2012 Duke Realty Corporation
Notes
1.
Based
on
simple
average
of
calendar
year-over-year
annual
same-property
cash
NOI
growth,
includes
2007
-
2011
2.
Suburban Office Peers include BDN, CLI, HIW, LRY and PKY; weighted by historical
market cap 3.
Industrial includes DCT, EGP, FR, FPO, PSB, AMB and PLD; weighted by historical
market cap 1.5%
(0.2%)
(0.2%)
3.2%
(0.6%)
0.2%
(1.0%)
0.0%
1.0%
2.0%
3.0%
4.0%
Suburban Office Peers
Industrial Peers
5-Year Avg.
1-Year Avg.
Annual Same-Store
NOI Growth
(1)
%, y-y
Sources SNL and company filings
Duke Realty
Suburban Office Peers
(2)
Industrial Peers (3)
Consistent NOI Growth Outperformance
Relative Performance vs. Peers
OPERATIONS STRATEGY
8 |
 9
Positioned for NAV Growth
KEY NAV GROWTH DRIVERS
Lease up
existing
vacancy
Increased
management &
service fees
Accretive future
development
Accretive
future
acquisitions
Portfolio occupancy of 92.0%
Strong leasing pipeline
Demonstrated track record of 69-80% renewal rate
Should benefit from uptick in third party and JV partners development and
construction activity
Property
management
and
leasing
fees
-
should
trend
higher
as
occupancy
improves
Current pipeline 3.4MM SF of industrial, 0.8MM SF of medical office and 0.5MM SF
of suburban office
2012 estimated development starts of $300 to $500 million
Acquisitions focused on achieving asset repositioning goals
Industrial and medical office assets
Higher rental rate growth markets
Increase Rents/
Reduced
Capex
Rent roll downs burning off and positive same property NOI performance
Forecasts of industrial market wide average annual rent growth of 3.2% from
2013-16 Sources: Duke Realty. Rent forecasts per PPR and Green
Street OPERATIONS STRATEGY
2012 Duke Realty Corporation |
 10
Land and Development Capabilities
OPERATIONS STRATEGY
$498
million
HELD FOR DEVELOPMENT
Industrial
Office
Midwest
26.3
2.8
Indianapolis, Chicago,
Cincinnati, Columbus,
Minneapolis, and
St. Louis major
positions
East
3.8
2.1
New Jersey,
Baltimore,
Washington D.C., and
Raleigh
Southeast
8.5
1.3
Atlanta, Central
Florida, and, South
Florida
Southwest
5.8
0.7
Phoenix, Dallas, and
Houston
Total
44.4 million SF
6.9 million SF
Attractive positions contribute to future development and value
Development –
Amounts in million SF
2012 Duke Realty Corporation |
 11
Columbus -
Industrial
OPERATIONS STRATEGY
•
Restoration Hardware Expansion for Eastern U.S. Distribution Operations
•
West Jefferson submarket on 19 acres of our land
•
418,000 square feet, as an addition to existing 805,000 square feet
•
$15.3 million project
•
15-year projected average yield of 8.1%
Industrial facility expansion and lease extension with
growing high-end retailer on our land
2012 Duke Realty Corporation
•
15
year
lease
term |
 12
Chicago -
Industrial
OPERATIONS STRATEGY
•
Yusen Logistics build-to-suit
•
O’Hare submarket on 26 acre brownfield redevelopment
•
230,000 square feet
•
12
year
lease
term
•
$21.3 million project
•
12-year projected average yield of 7.0%
Expand industrial with global logistics provider in strategic market
2012 Duke Realty Corporation |
 2012 Duke Realty Corporation
13
Atlanta -
Industrial
OPERATIONS STRATEGY
Expand industrial on Duke Realty land in airport submarket
•
Kuehne & Nagel build-to-suit on Duke Realty land at Camp Creek
•
South Atlanta submarket near Hartsfield Airport
•
211,000 square feet
•
10 year lease term
•
$15 million project
•
10-year projected average yield of 8.3% |
 14
Southern California -
Industrial
•
Speculative development on Duke Realty Land in Chino, CA
•
Inland Empire West submarket
•
421,000 square feet
•
$26 million project
•
5-year projected average yield of 7.0%
Expand industrial with Southern California
speculative development on Duke Realty land
2012 Duke Realty Corporation
OPERATIONS STRATEGY |
 2012 Duke Realty Corporation
15
Indianapolis –
Industrial
OPERATIONS STRATEGY
Expand industrial with solid global manufacturer
•
Regal Beloit build-to-suit bulk distribution facility in Plainfield
submarket •
376,000 square feet, 10 year lease term to growing global manufacturing
company
•
Duke Realty won with strategic land position
•
$15 million project
•
10-year projected average yield of 8.0% |
 OPERATIONS STRATEGY
16
Northeast U.S. –
Bulk Industrial Build-to-Suit
Repeat business new development with growing tenant
•
Regional distribution center build-to-suit in Delaware for Amazon
•
1,015,000 square feet
•
12 year lease term
•
$77 million project
•
12-year projected average yield of 8.1%
2012 Duke Realty Corporation |
 17
Southeast & Midwest –
Medical Office
•
Three build-to-suit developments with existing relationships in Atlanta,
Cincinnati and Indianapolis
•
Leased to Northside Hospital, Good Samaritan and Community Health
•
181,000 total square feet, each with fifteen-year leases
•
$48 million in project costs, 15-year projected average yield of 8.6%
Grow Medical Office
2011 Duke Realty Corporation |
 18
Tampa –
Medical Office
•
VA Primary Care Annex at Tampa
•
Leased to Department of Veterans Affairs
•
120,000 square feet
•
20 year lease
•
$39 million project
•
20-year projected average yield of 8.2%
Grow Medical Office
OPERATIONS STRATEGY
2012 Duke Realty Corporation |
 RELIABLE. ANSWERS.
2012 Duke Realty Corporation
Development Strategic Advantages
Development platform creates value
19
Duke Realty forty years of experience in development
Recognized as one of the leading commercial developers in each of
our 18 markets
Land bank in strategic locations that can support approximately 50
million square feet of development is a significant value advantage
going forward
Capital deployed in development can generate 75 to 150 basis points
of premium yield over typical acquisition yields
Risk management policies in place to govern maximum development
pipeline size and speculative development starts |
 2012 Duke Realty Corporation
ASSET STRATEGY
20 |
 21
Track Record
Proven ability to execute and allocate investments
in alignment with our strategy
Flex
Disposition
$1 Billion
2005
2006
Savannah
Washington DC
2007
Healthcare
2009
Asset Strategy
2010
Dugan
CBRERT
Premier
Suburban
Office
disposition
$1 Billion
2011
2012
MOB and
Industrial
acquisitions
$300-500
Million
Projected
ASSET STRATEGY
2012 Duke Realty Corporation |
 22
Asset Strategy
BY PRODUCT
2009
2013
BY GEOGRAPHY
ASSET STRATEGY
2009
2013
2012
Southeast
21%
Southeast
24%
Southeast
30%
2012
Note:
2012
figures
as
of
September
30
th
,
2012
2012 Duke Realty Corporation |
 2012 Duke Realty Corporation
23
Asset Strategy: Road Map
($ in millions)
Investment
12/31/10
Investment
9/30/12
ACTION PLAN
Investment
2013
PRODUCT TYPE
Amount
%
Amount
%
Acquisitions /
Developments /
Repositioning
Amount
%
Industrial
$3,645
45%
$4,451
53%
$469
$4,920
60%
Office
3,770
46%
2,549
31%
(499)
2,050
25%
Medical Office
515
6%
1040
13%
190
1,230
15%
Retail
280
3%
291
3%
(291)
0
0%
$8,210
100%
$8,331
100%
$(131)
$8,200
100 %
REGION
Midwest
$3,970
48%
$3,797
46%
($517)
$3,280
40%
Southeast
2,270
28%
2,027
24%
433
2,460
30%
East
955
11%
1,083
13%
147
1,230
15%
South
950
12%
1,171
14%
(351)
820
10%
West
65
1%
253
3%
157
410
5%
$8,210
100%
$8,331
100%
$(131)
$8,200
100%
Portfolio sale accelerates suburban office repositioning
ASSET STRATEGY |
 2012 Duke Realty Corporation
24
New, High Quality Portfolio with Long-term Leases
ASSET STRATEGY
Premier portfolio of assets
Portfolio average
Bulk
Industrial
Suburban Office
Medical
Office
Property age
11.0 years
13.7 years
6.2 years
Property size
224,000 SF
118,000 SF
77,000 SF
Lease term
7.2 years
7.3 years
11.7 years
Tenant size
75,000 SF
12,000 SF
10,000 SF |
  2012
Duke Realty Corporation 25
Premier Quality Industrial Portfolio
ASSET STRATEGY
Industry leading focus on newer built, modern bulk warehouse type
with strong performance characteristics
<100,000
100,000-500,000
>500,000
% Total Square Feet
10%
54%
36%
Building Square Footage (000's)
11,000
60,000
39,000
No. of Buildings
162
273
51
Average Tenant Size
20,202
86,385
477,676
9/30/12 Occupancy
89.1%
93.9%
95.5%
Building Size
Portfolio Metric |
 26
Southern California Industrial
Trojan Way
497,620 SF, 100% leased
Atlanta Industrial
Hartman Business Center V
569,674 SF, 100% leased
Columbus Industrial
Creekside XIV & XXII
1,076,625 SF, 86% leased
Chicago Industrial
Crate & Barrel Distribution Center
827,268 SF, 100% leased
Chicago Industrial
940 North Enterprise
257,542 SF, 100% leased
Century Distribution Center
Los Angeles, CA
323,000 SF, 100% leased
Lakeside Ranch Industrial
Dallas, TX
749,000 SF, 100% leased
Seefried Industrial
Dallas, TX
324,000 SF, 100% leased
Premier Portfolio Industrial
Pompano, FL
1,163,000 SF, 90% leased
Note: % leased figures represent status at time of acquisition
ASSET STRATEGY
Select Industrial Acquisitions in 2011 & 2012
©
2012 Duke Realty Corporation |
 27
MEDICAL OFFICE STRATEGY &
Performance Update
©
2012 Duke Realty Corporation |
 28
©
2012 Duke Realty Corporation
Healthcare Data Points
The nation’s largest industry
•
More than 17% of GDP, predicted to exceed 23% by 2020
•
More than 5% of pre-tax income spent on healthcare
•
People insured expected to increase by 30 to 50 million –
increased demand for care
•
Number
of
physicians
will
probably
increase
–
growing
space demand
•
Hospitals expect margin largely due to Medicare
reimbursement risks . . . incentive to increase market share
(M&A),
accelerate
IT
and
equipment
investments
and
seek
capital partners for “non-core assets”
•
May
reduce
reimbursements
–
real
estate
efficiency
a
priority
–
larger deals and floor plates
Reform
Healthcare systems growing and physician employment
changing
MEDICAL OFFICE STRATEGY |
 29
Source: AHA Trendwatch Chartbook, 2011
Trends in Inpatient Days and Outpatient Visits
Outpatient demand drives occupancy in MOB’s
©
2012 Duke Realty Corporation
MEDICAL OFFICE STRATEGY |
 Trends in Medical
Practice Ownership Hospitals are increasing physician employment to create efficiencies and to
position themselves to become Accountable Care Organizations
Physicians
are
seeking
employment
in
the
declining
reimbursement
environment
30
Source: MGMA Physician Compensation and Production Survey Report; Wall Street Journal, 10/8/10
Hospital-owned practices creating access to better credit generally
MEDICAL
OFFICE
STRATEGY
2002
2003
2004
2005
2006
2007
2008
2009
0%
25%
50%
75%
100%
Physician-owned
Hospital-owned
2012 Duke Realty Corporation |
 Local
19%
Regional
45%
National
36%
Portfolio investment
by product type
Portfolio investment by
hospital system
MOB
On-Campus
76%
MOB Off-Campus
19%
Specialty
Hospital
5%
Medical Office Portfolio at September 30, 2012
MEDICAL
OFFICE
STRATEGY
In-Service
Under
Development
Total
Properties
Investment $
Square Feet
Occupancy
69
$1.2 B
5.4 M
91%
7
$190 M
760 K
100%
76
$1.4 B
6.1 M
92%
2012 Duke Realty Corporation
31
Note:
Figures
as
of
September
30
th
,
2012
including proforma 1.2 million square foot Seavest acquisition (Seavest closed October 2012)
|
 Strategic Benefits to Duke Realty
Medical office should provide solid NOI growth and lower volatility
32
Operational and Diversification Strategic Benefits
•
One of the newest portfolios in REIT sector among the highest credit
tenants lease rosters
•
Medical office development starts solid during recession with nearly
$400 million of starts between 2008 and 2010
•
Leasing, construction and market location synergies with existing multi-
tenant industrial and office portfolio
•
NOI stream should reduce company beta with longer term leases, 2-3%
rent escalators with very high tenant retention and strong credit tenant
base
MEDICAL OFFICE STRATEGY
©
2012 Duke Realty Corporation |
 ©
2012 Duke Realty Corporation
33
1%
1%
1%
1%
1%
2%
0%
2%
4%
6%
8%
10%
2012
2013
2014
2015
2016
2017
Lease Maturity (% of Total Sq. Ft.)
High credit tenants and limited lease maturity result in
stable and growing cash flow
Top Health System Relationships
Health System
Credit Rating
(Moody's)
Rentable SF
Baylor Health Care System
Aa2
456,000
Ascension Health
Aa1
367,000
Franciscan Alliance, Inc.
Aa3
274,000
Health & Hospital Corp Marion
County
Aa1
274,000
Trinity Health
Aa2
259,000
Northside Hospital
Unrated
208,000
Scott & White Healthcare
A1
195,000
Carolinas Medical Center
Aa3
190,000
US Oncology, Inc. (McKesson)
Baa2
182,000
Catholic Health Initiatives
Aa2
179,000
MEDICAL OFFICE STRATEGY |
 ©
2012 Duke Realty Corporation
34
34
NOI in
$millions
Annual NOI
In-Service Portfolio Occupancy
*
As of 9/30/2012
*Projected for lease up of unstabilized and completed development assets
Medical Office NOI and Portfolio Occupancy
MEDICAL OFFICE STRATEGY
70
60
50
40
30
20
10
0
2008
2009
2010
2011
2012
14
20
28
37
61
2008
2009
2010
2011
2012
95%
90%
85%
80%
75%
70%
86.6%
78.4%
85.8%
90.1%
91.9%
Medical office business projected to reach or exceed 15% of total asset base by
2013 |
 Seavest Portfolio
Overview Class A, On-campus portfolio
35
Geographic Footprint
(Hospital System)
Representative Asset Snapshots
1,202,285 square feet (14 assets)
13 of the 14 assets are on-campus or
adjacent to campus
Fair Oaks MOB
(INOVA Health)
Fairfax, VA
Celebration Health Plaza
Kissimmee Medical Plaza
East Orlando Med Surg.
Sebring Med. Pavilion
(Adventist Health)
Orlando, FL
VA Clinic
Ft. Lauderdale, FL
Seton Prof. Building
Water Tower Commons
(Ascension Health)
Milwaukee, WI
The Green Clinic
(Green Surgical Hospital)
Ruston, LA
Mountainview MOB
(Community Health)
Las Cruces, NM
Medical Mall of Abilene
(Abilene Reg. Med. Cen.)
Abilene, TX
Hillcrest Baptist I
Hillcrest Baptist II
(Scott & White)
Waco, TX
Longview MOB
(Community Health)
Longview, TX
MEDICAL OFFICE STRATEGY
©
2012 Duke Realty Corporation
Kissimmee Medical Plaza
Orlando, FL
Seton Professional Bldg.
Milwaukee, WI
Longview MOB
Longview, TX
Mountainview Med. Plaza
Las Cruces, NM
VA Clinic
Sunrise, FL (Ft. Lauderdale)
Celebration Health
Orlando, FL
Sebring Medical Pavilion
Sebring, FL
East Orl. Med. Surg. Plaza
Orlando, FL
Water Tower Commons
Milwaukee, WI |
 Harbin Portfolio
Overview Off-market, relationship driven opportunity
36
Geographic Footprint
Representative Asset Snapshots
334,000 square feet (7 assets)
6 of the 7 assets are 100% leased to
Harbin Clinic LLC for 15 years
Self managed portfolio will require no
additional overhead
Harbin Cancer Center
On-Campus. Class A MOB. 55K sf.
Harbin Specialty Center
On-Campus. Class A MOB. 75K sf.
1825 Martha Berry MOB
Off-Campus. Class B MOB. 122K sf.
Rome, GA
7 buildings
MEDICAL OFFICE STRATEGY
©
2012 Duke Realty Corporation |
 37
Baylor McKinney MOB I
McKinney, TX
115,000 SF, 89% preleased
North Fulton MOB
Atlanta, GA
52,000 SF, 52% preleased
MEDICAL OFFICE STRATEGY
VA Tampa
Tampa, FL
117,000 SF, 100% preleased
Scott and White MOB
Marble Falls, TX
67,000 SF, 100% preleased
Select Healthcare Developments 2011-2012
Scott & White MOB
College Station, TX
119,000 SF, 100% preleased
Wishard Health FOB
Indianapolis, IN
275,000 SF, 100% preleased
Tri Health Cardiology
Cincinnati, OH
21,000 SF, 100% preleased
Centerre Community Rehab
Indianapolis, IN
60,000 SF, 100% preleased
NSH Cherokee Towne Lake MOB
Atlanta, GA
101,000 SF, 100% preleased |
 Our
Plan Existing healthcare assets $1.4 Billion
New developments $150+ Million in 2012
Opportunistic new development starts in 2013
Our Focus
On-campus assets
Major hospital system relationships
~
~
Goal: Grow Medical Office Primarily through Development
38
~
~
MEDICAL OFFICE STRATEGY
©
2012 Duke Realty Corporation |
 CAPITAL STRATEGY AND 2012 GUIDANCE
39
©
2012 Duke Realty Corporation |
 Capital Strategy Focus
40
Reducing leverage
Increasing coverage ratios
Maintaining size and quality of unencumbered asset base
Executing portfolio repositioning in alignment with capital strategy
objectives
Further improve balance sheet strength and ratings
©
2012 Duke Realty Corporation
1
2
3
4
CAPITAL STRATEGY |
 ©
2012 Duke Realty Corporation
41
Key Metrics & Goals
2009
Actual
2010
Actual
2011
Actual
2012
3Q
Actual
Goal
Debt to Gross Assets
44.5%
46.3%
46.8%
48.7%
45.0%
Debt + Preferred to Gross
Assets
54.9%
55.5%
55.6%
55.4%
50.0%
Fixed Charge Coverage
Ratio
1.79 : 1
1.79 : 1
1.82 : 1
1.81:1
2.00 : 1
Debt/EBITDA
6.65
7.31
6.02*
7.29**
< 6.00
Debt + Preferred/EBITDA
8.47
8.88
7.34*
8.42**
< 7.75
Progressing toward strategic plan goals
*Excluding 2011 Blackstone sale figures are 7.0x and 8.6x, respectively. **
Excluding Blackstone sale figures are 7.5x and 8.7x, respectively. CAPITAL
STRATEGY |
 ©
2012 Duke Realty Corporation
Relative Performance of Duke Realty vs. All Comps
Notes
1.
Comparables
include
BDN,
CLI,
DCT,
EGP,
FR,
HIW,
LRY,
OFC,
and
PLD;
PLD
and
AMB
are
included
historically;
figures
shown
on
a
market
cap
weighted
basis
2.
Industrial
comparables
include
DCT,
EGP,
FR,
and
PLD;
PLD
and
AMB
are
included
historically,
total
return
for
comparable
companies
figures
are
calculated
on
a
market
cap
weighted
basis
3.
DRE
stock
price
as
of
end
of
trading
10/31/12,
@
$14.48
4.
DRE
performance
since
announcement
of
$1.1Bn
office
divestiture.
Based
upon
10/20/11
close
of
$10.68
Industrial and Suburban Office Comps
(1)
Industrial Comps
(2)
% Total Shareholder Return
Ind Comps
-4.0%
S&P 400
-1.7%
FY 2011
YTD
2012
(3)
FY 2010
DRE
+2.1%
Ind Comps
+21.6%
Ind Comps
+24.4%
RMS
+8.7%
S&P 500
+2.1%
RMS
+28.5%
S&P 500
+15.1%
DRE
+8.4%
S&P 400
+26.6%
FY 2009
Ind Comps
+24.4%
S&P 400
+37.4%
S&P 500
+26.5%
DRE
+19.8%
RMS
+28.6%
Since -
10/20/2011
(4)
Ind Comps
+37.8%
DRE
+24.6%
S&P 400
+12.9%
S&P 500
+14.3%
RMS
+13.9%
RMS
+25.1%
DRE
+42.6%
S&P 500
+18.8%
S&P 400
+18.2%
Comps
-6.0%
S&P 400
-1.7%
DRE
+2.1%
S&P 500
+15.1%
Comps
+21.8%
DRE
+24.6%
S&P 400
+12.9%
S&P 500
+14.3%
RMS
+13.9%
RMS
+8.7%
S&P 500
+2.1%
RMS
+28.5%
DRE
+8.4%
Comps
+7.4%
S&P 400
+26.6%
Comps
+24.8%
S&P 400
+37.4%
S&P 500
+26.5%
DRE
+19.8%
RMS
+28.6%
FY 2011
YTD
2012
(3)
FY 2010
FY 2009
RMS
+25.1%
Comps
+32.1%
DRE
+42.6%
S&P 500
+18.8%
S&P 400
+18.2%
Since -
10/20/2011
(4)
CAPITAL STRATEGY
42 |
 RELIABLE. ANSWERS.
87.9%
92.7%
94.1%
90.7%
86.9%
92.2%
89.6%
89.6%
87.6%
89.3%
80%
83%
86%
89%
92%
95%
LRY
HIW
OFC
CLI
BDN
DRE
EGP
PLD
DCT
FR
43
Office Average: $5,093
58.2%
49.2%
50.2%
46.4%
33.9%
44.8%
51.2%
38.3%
42.8%
42.7%
0%
20%
40%
60%
80%
BDN
OFC
HIW
CLI
LRY
DRE
FR
PLD
DCT
EGP
8.3x
7.7x
7.3x
10.2x
7.7x
7.2x
6.4x
6.1x
5.1x
5.9x
0.0x
3.0x
6.0x
9.0x
12.0x
OFC
BDN
HIW
LRY
CLI
DRE
PLD
FR
DCT
EGP
Duke Realty Benchmarking Statistics
Source: SNL Financial, 8/29/12 and Duke latest quarterly supplemental
Industrial Average: 7.9x
Industrial Average: 91.1%
$30,672
$32,000
Industrial Average: $9,778
Office Average: 88.8%
Office Average: 6.6x
Office Average: 46.6%
Industrial Average: 43.8%
Total Market Cap ($ in millions)
Total Debt / Total Market Cap
In Service Portfolio Occupancy
Total Debt / 2012E EBITDA
93.6%
= DRE industrial in service portfolio
Duke Realty benchmarks as the second largest by total market capitalization among its comps,
with above average leverage and improving occupancy
Key:
Office: LRY=Liberty; CLI=Mack-Cali; HIW=Highwoods; BDN=Brandywine
Industrial: PLD=Prologis; FR=First Industrial; DCT=DCT Industrial Trust; EGP=
Eastgroup; FPO= First Potomic (DRE = 93.6%)
(DRE = 85.9%)
$7,202
$3,099
$2,982
$2,360
$4,671
$4,310
$4,690
$4,593
$9,031
$0
$2,000
$4,000
$6,000
$8,000
$10,000
LRY
CLI
HIW
BDN
OFC
DRE
PLD
DCT
FR
EGP
©
2012 Duke Realty Corporation
RELIABLE. ANSWERS. |
 RELIABLE. ANSWERS.
©
2012 Duke Realty Corporation
Industrial Average: 16.2x
Office Average: 11.1x
9.2%
7.6%
8.1%
7.5%
6.6%
6.0%
6.2%
7.7%
7.8%
7.6%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
9.0%
9.5%
10.0%
CLI
HIW
BDN
OFC
LRY
DRE
FR
DCT
PLD
EGP
18.0x
17.8x
17.7x
26.6x
23.7x
13.2x
22.6x
22.3x
16.0x
15.0x
10.0x
14.0x
18.0x
22.0x
26.0x
30.0x
LRY
HIW
BDN
OFC
CLI
DRE
PLD
DCT
FR
EGP
13.5x
11.9x
8.5x
13.8x
19.1x
11.8x
15.2x
9.7x
16.9x
13.6x
6.0x
10.0x
14.0x
18.0x
22.0x
LRY
HIW
OFC
CLI
BDN
DRE
PLD
EGP
DCT
FR
Industrial Average: 23.8x
Industrial Average: 3.4%
Industrial Average: 6.7%
Office Average: 16.0x
Office Average: 5.5%
Office Average: 8.0%
Price / 2012E FFO
Implied Cap Rate
(1)
Dividend Yield
Price / 2012E AFFO
Key:
Office: LRY=Liberty; CLI=Mack-Cali; HIW=Highwoods; BDN=Brandywine; OFC=Corporate
Office Industrial: PLD=Prologis; FR=First Industrial; DCT=DCT Industrial
Trust; EGP=Eastgroup Source: SNL Financial, 11/8/12
(1) Per Wall Street research as of 10/26/12
Duke Realty Valuation Statistics
Duke Realty still undervalued by most levered and NAV metrics
7.1%
0.0%
4.1%
4.5%
4.9%
4.5%
3.3%
5.2%
5.3%
5.4%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
CLI
LRY
HIW
BDN
OFC
DRE
DCT
EGP
PLD
FR
44 |
 ©
2012 Duke Realty Corporation
Barra Beta Summary
Historical Barra Beta Analysis 2002-2012
45
Notes
1.
As of most recent Barra Beta published on October 31, 2012
2.
Includes BDN, CLI, HIW, LRY, and OFC
3.
Includes DCT, EGP, FR, LRY, and PLD
4.
DCT’s beta only available since its IPO. Barra began tracking DCT’s
beta in December 2006 5.
Includes HCN, HCP, HR, HTA, and VTR
Beta trends are slowly improving consistent with asset and capital strategy….
working on further lowering beta
Current
(1)
12/31/11
1 Year
Avg
5 Year
Avg
10 Year
Avg
DRE
1.22
1.49
1.34
1.56
1.14
Office Comps
(2)
1.09
1.29
1.19
1.35
1.02
Industrial Comps
(3)(4)
1.08
1.28
1.19
1.41
0.98
Healthcare Comps
(5)
0.94
1.07
1.01
1.21
0.97
CAPITAL STRATEGY |
 46
CAPITAL STRATEGY
Executing on capital strategy objectives
CAPITAL SOURCE
2008
2009
2010
2011
2012
YTD
TOTAL
Common Stock
-
$575
$311
-
$241
$1,127
Preferred Stock
$300
-
-
-
-
$300
Unsecured Debt
$325
$500
$250
-
$600
$1,675
Secured Debt
-
$270
-
-
-
$270
Asset Dispositions
$475
$300
$533
$1,650
$126
$3,084
TOTAL
$1,100
$1,645
$1,094
$1,650
$967
$6,456
•
Investment grade rated debt for over 15 years
•
Proven access to multiple capital sources
•
Available line of credit -
$850 million capacity
•
Dividend covered by AFFO
Continue to strengthen balance sheet
($ in millions)
©
2012 Duke Realty Corporation |
 Duke
Realty Recent Bond Transactions Lowering Cost of Capital with Highly Efficient
Bond Offering Executions 47
CAPITAL STRATEGY
Source: Barclay’s
June & September Transaction Details
Issuer:
Duke Realty Limited Partnership
Ratings:
Baa2 / BBB
-
Outlook:
Stable / Stable
Offering Format:
SEC Registered
Issue Date:
June 6, 2012
September 14, 2012
Amount:
$300m
$300mm
Final Maturity:
June 15, 2022
October 15, 2022
Treasury Yield:
10 yr UST: 1.666%
10yr UST: 1.875%
Reoffer Spread:
T + 280 bps
T + 205bps
Reoffer Yield:
4.466%
3.925%
Coupon:
4.375%
3.875%
Reoffer Price:
99.271%
99.584%
120
170
220
270
320
370
420
470
6/1/2012
6/22/2012
7/14/2012
8/4/2012
8/26/2012
9/17/2012
(bps)
UST 10yr
DRE 10yr Indicative Pricing
DRE Spread Compression Analysis
June 6:
4.466%
UST: 1.666%
T+280
DRE was able to achieve 75 bps in spread compression
between the June and September transactions
Sept 14:
3.925%
UST: 1.875%
T+205
©
2012 Duke Realty Corporation |
 48
Liquidity Position
($ in millions)
CAPITAL STRATEGY
Manageable debt maturities
$57
$658
$440
$3,026
Debt Maturity and Amortization Schedule
September 30, 2012
Unsecured Debt
Secured Debt
JV Debt
2012
2013
2014
2015
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
2016
©
2012 Duke Realty Corporation
and beyond
$363 |
 RELIABLE. ANSWERS.
2012 Range of Estimates
Leasing actions and development execution drive upside
49
2012 Range
Metrics
2011
Actual
9/30/12 YTD
Actual
Pessimistic
Optimistic
Key 2012 Assumptions
Core FFO Per Share
$1.15
$0.75
$1.00
$1.04
•
Better than expected leasing early in year; Low end of
guidance raised $0.06, top end reduced $0.02
AFFO Payout Ratio
87%
84%
96%
80%
•
Annual dividend maintained at $0.68 per share
Average Occupancy-
In Service
89.7%
92.0%
89.5%
92.5%
•
Better than expected industrial leasing early in the
year
•
Low expirations exposure
Same Property NOI
3.2%
3.5%
(1.5%)
2.5%
•
Occupancy higher than budget
•
Rental rate pressure remains on office product
Building Acquisitions
$747
$353
$300
$500
•
Focus on industrial and medical office portfolios
Building Dispositions
$1,634
$116
$200
$300
•
Continue to prune remaining non-core office portfolio
Land Dispositions
$12
$10
$20
$30
•
Demand still sluggish
Construction and
Development Starts
$489
$432
$300
$500
•
Comprised of medical office and industrial starts
•
Development starts YTD of $373 MM (highest since
2008) with a good pipeline
Construction Volume
$727
$421
$400
$600
•
Third Party construction volume is lower than budget
Service Operations Income
$46
$19
$20
$25
•
Normal run rate post BRAC
General and Administrative
Expenses
$40
$32
$43
$38
•
Consistent level
$ in millions |
 RELIABLE. ANSWERS.
©
2012 Duke Realty Corporation
50
WHY DUKE REALTY?
¦
Quality portfolio improving with asset strategy
¦
Solid balance sheet improving with capital strategy
¦
Unmatched ability to execute on daily operations
¦
Development capabilities in place with existing land bank
¦
Talent and leadership depth to execute
Delivering on what we say we will do |
 RELIABLE. ANSWERS.
©
2012 Duke Realty Corporation
Forward-Looking Statement
51
This slide presentation contains statements that constitute “forward-looking statements”
within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 as
amended by the Private Securities Litigation Reform Act of 1995. These forward-looking
statements include, among others, our statements regarding (1) strategic initiatives with respect
to our assets, operations and capital and (2) the assumptions underlying our expectations.
Prospective investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, and that actual results may differ
materially from those contemplated by such forward-looking statements. A number of important
factors could cause actual results to differ materially from those contemplated by
forward-looking statements in this slide presentation. Many of these factors are beyond
our ability to control or predict. Factors that could cause actual results to differ
materially from those contemplated in this slide presentation include the factors set forth in
our filings with the Securities and Exchange Commission, including our annual report on Form10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K. We believe these
forward-looking statements are reasonable, however, undue reliance should not be placed on any
forward-looking statements, which are based on current expectations. We do not assume
any obligation to update any forward-looking statements as a result of new information or
future developments or otherwise. Certain of the financial measures appearing in this slide presentation are or may be considered to be
non- GAAP financial measures. Management believes that these non-GAAP financial measures
provide additional appropriate measures of our operating results. While we believe these
non-GAAP financial measures are useful in evaluating our company, the information should be
considered supplemental in nature and not a substitute for the information prepared in accordance
with GAAP. We have provided for your reference supplemental financial disclosure for these
measures, including the most directly comparable GAAP measure and an associated reconciliation in
our most recent quarter supplemental report, which is available on our website at
www.dukerealty.com. Our most recent quarter supplemental report also includes the information
necessary to recalculate certain operational ratios and ratios of financial position. The
calculation of these non-GAAP measures may differ from the methodology used by other REITs,
and therefore, may not be comparable. |