 RELIABLE. ANSWERS.
Citi Global Property CEO Conference
March 4-6, 2013
Exhibit 99.1 |
 RELIABLE. ANSWERS.
2013 Duke Realty Corporation
2
40 Years Timeline |
 RELIABLE. ANSWERS.
2013 Duke Realty Corporation
3
Three-Pronged Strategy for Success
Strategies for delivering shareholder value |
 RELIABLE. ANSWERS.
2013 Duke Realty Corporation
Exceptional Real Estate Brand
Duke Realty a Leading Real Estate Investment Company since 1972
4
Over 40 years history as an industrial, owner, operator and developer; Over
25 years as a medical office developer
Top 57 leaders with over 15 years average experience at Duke Realty; 33
leaders involved in corporate leadership (“LEAD”) program
Top tier Corporate Governance¹
Ranked as “best”
place to work in various cities across the country.
Significant
corporate initiatives focused on employee inclusion and acceptance as well as
involvement and support in the community.
Over 80% tenant renewal with over 3,000, high credit quality, diversified
customers Top three class-A market share in a majority of our industrial
markets with one of the highest quality portfolios
20 years as a public company . . delivered 6.4 % dividend yield on average and
10.0% average annual total shareholder return since 1993. 20.8%
total shareholder return in 2012.
(1)
2013
ISS
“Quickscore”
rank
in
top
decile
of
the
avg
of
S&P500
companies.
Leading
REIT
research
firm
corporate
governance
metric
places
DRE
in
the
97
percentile
on
avg
2008
thru
2012.
th |
 2013 Duke Realty Corporation
OPERATIONS STRATEGY
5 |
 2013 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%
6
OPERATIONS STRATEGY
93%
93%
72%
79%
77%
69%
83%
21.4
22.7
25.9
24.5
29.3 |
 2013 Duke Realty Corporation
Notes
1.
Based
on
simple
average
of
calendar
year-over-year
annual
same-property
cash
NOI
growth.
Five
year
analysis
measures
2008
-
2012
2.
Suburban Office Peers include BDN, CLI, HIW, OFC and LRY; weighted by historical
market cap 3.
Industrial includes DCT, EGP, FR, AMB and PLD; weighted by historical market
cap 1.4%
(0.3%)
(0.8%)
2.5%
1.0%
2.0%
(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)
Sources SNL and company filings
Duke Realty
Suburban Office Peers
(2)
Industrial Peers (3)
Consistent NOI Growth Outperformance
Relative Performance vs. Peers
OPERATIONS STRATEGY
7 |
 2013 Duke Realty Corporation
8
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 92.4%
Strong leasing pipeline
Demonstrated track record of 69-83% renewal rate over past 6 years
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 3.1MM SF of industrial, 0.8MM SF of medical office and 0.5MM SF
of suburban office
2013 estimated development starts of $400 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 |
 2013 Duke Realty Corporation
9
Land and Development Capabilities
OPERATIONS STRATEGY
$540
million
HELD FOR
DEVELOPMENT
Industrial
Office
Midwest
25.8
2.8
Indianapolis, Chicago,
Cincinnati, Columbus,
Minneapolis, and
St. Louis major
positions
East
3.8
2.3
New Jersey,
Baltimore,
Washington D.C. and
Raleigh
Southeast
9.0
1.2
Atlanta, Central
Florida, and South
Florida
Southwest
8.0
1.6
Phoenix, Dallas,
Houston and Nashville
Total
46.6 million SF
7.9 million SF
Attractive positions contribute to future development and value
Development –
Amounts in million SF |
 2013 Duke Realty Corporation
Chicago Industrial
•
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%
Select 2012 Industrial Development Starts
10
Columbus Industrial
•
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
year
lease
term
•
$15
million
project
•
15-year
projected
average
yield
of
8.1%
OPERATIONS STRATEGY
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%
Atlanta Industrial
•
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%
•
Regional distribution center build-to-suit in greater
Seattle for internet retailer
•
1,016,000 square feet
•
15 year lease term
•
$105 million project
•
15 year projected average yield of 7.6%
Greater Seattle Bulk Industrial
Delaware Industrial
•
Regional
distribution
center
build-to-
suit
in
Delaware
for
internet
retailer
•
1,015,000
square
feet
•
12
year
lease
term
•
$77
million
project
•
12-year
projected
average
yield
of
8.1% |
 2013 Duke Realty Corporation
2013 YTD Development Starts
11
OPERATIONS STRATEGY
Nashville Industrial
•
Regional distribution center build-to-suit for
Starbucks
•
680,000 square feet
•
7.5 year lease term
•
$26 million project
•
Projected average yield of 7.7%
Dallas Medical Office
•
Three Baylor Emergency (ER) facilities in
Metro Dallas (cities of Rockwell, Murphy
and Burleson)
•
38,000 square feet each (114,000 total
square feet)
•
$15 million project cost each ($45 million
total)
•
15 year term
•
Projected average yield of 9.4%
Dallas Office
•
Build-to-suit on Duke Realty Land
•
200,000 square feet
•
> 15 year lease term
•
~$40 million project
•
Projected average yield of 8.7% |
 RELIABLE. ANSWERS.
2013 Duke Realty Corporation
Development Strategic Advantages
Development platform creates value
12
Duke Realty 40 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 55
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 comparable acquisition yields
Risk management policies in place to govern maximum development
pipeline size and speculative development starts |
 2013 Duke Realty Corporation
ASSET STRATEGY
13 |
 2013 Duke Realty Corporation
14
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
$800
Million
ASSET STRATEGY |
 2013 Duke Realty Corporation
2012
2013
15
Asset Strategy
BY PRODUCT
2009
BY GEOGRAPHY
ASSET STRATEGY
2009
2013
Southeast
21%
Southeast
30%
2012
Southeast
22% |
 2013 Duke Realty Corporation
16
New, High Quality Portfolio with Long-term Leases
ASSET STRATEGY
Premier portfolio of assets
Portfolio average
Bulk
Industrial
Suburban Office
Medical Office
Property age
11.1 years
14.0 years
7.1 years
Property size
229,000 SF
118,000 SF
79,000 SF
Lease term
7.2 years
7.3 years
11.2 years
Tenant size
79,000 SF
12,000 SF
9,000 SF |
 2013 Duke Realty Corporation
17
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
9%
54%
37%
Building Square Footage (000's)
10,000
60,000
41,000
No. of Buildings
155
277
54
Average Tenant Size
19,000
76,000
385,000
Occupancy
(12/31/12)
90.4%
94.2%
96.2%
Building Size
Portfolio Metric |
 2013 Duke Realty Corporation
Select Industrial Acquisitions in 2011 & 2012
18
Southern California Industrial
Staples Distribution Center
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
Southern California Industrial
Pacer International Distribution
323,000 SF, 100% leased
Dallas Industrial
Lakeside Ranch
749,000 SF, 100% leased
Dallas Industrial
Seefried Portfolio
329,000 SF, 100% leased
Premier Portfolio Industrial
Pompano, FL
1,163,000 SF, 90% leased
ASSET STRATEGY
Note: % leased figures represent status at time of acquisition
Houston Industrial
801 Seaco Court
135,000 SF, 100% leased
Chicago Industrial
335 Crossroads Parkway
288,000 SF, 0% leased
Northern California Industrial
Delicato Wines Distribution Center
552,000 SF, 100% leased
Northern California Industrial
ConAgra Western Distribution Center
727,000 SF, 100% leased |
 2013 Duke Realty Corporation
19
MEDICAL OFFICE STRATEGY &
Performance Update |
 2013 Duke Realty Corporation
20
Healthcare Trends
The nation’s largest industry
•
More than 17% of GDP; predicted to exceed 23% by 2020
•
U.S. population 65+ expected to approach 90 million by 2050
•
Aging population driving increase in healthcare expenditures
MEDICAL OFFICE STRATEGY
Annual Healthcare
Expenditures
Source: U.S. Bureau of the Census
Population 65+ by Age: 1960-2050
Source: U.S. Bureau of the Census
Growing healthcare expenditures and demographics
should drive long term MOB demand |
  2013
Duke Realty Corporation 21
Healthcare Trends
Affordable Care Act
•
People
insured
expected
to
increase
by
30
to
50
million
–
increased
demand
for
care
•
Number
of
physicians
will
increase
–
growing
MOB
space
demand
•
Patient
care
shifting
to
more
cost-efficient
MOB
settings
with
higher
acuity
of
services
•
Reduced
reimbursements
will
make
real
estate
efficiency
a
priority
–
larger
deals
and
floor
plates
•
Healthcare
system
consolidation
and
physician
employment
by
hospitals
escalating
MEDICAL OFFICE STRATEGY
Projected U.S. Residents with Insurance in 2021
Source: U.S. Bureau of the Census and U.S. Center for Disease Control and
Prevention Inpatient and Outpatient Trends
Source: Avalere Health, American Hospital Association
Annual Survey, U.S. Census Bureau
Inpatient Days
Outpatient Visits
Affordable
Care
Act
should
further
improve
trend
for
demand
for
lowest-
cost
setting
outpatient
facilities
such
as
Medical
Office |
 2013 Duke Realty Corporation
22
35%
47%
18%
In-Service
Under
Development
Total
Properties
69
10
79
Investment $
$1.2 B
$240 M
$1.4 B
Square Feet
5.4 M
884 K
6.3 M
Leased Occupancy
91%
100%
93%
Local
Regional
National
Portfolio investment
by product type
Portfolio investment by
hospital system
19%
5%
76%
MOB
On-Campus
MOB
Off-Campus
Specialty
Hospital
Medical Office Portfolio at December 31, 2012
MEDICAL OFFICE STRATEGY |
 2013 Duke Realty Corporation
23
3%
4%
1%
5%
5%
10%
0%
2%
4%
6%
8%
10%
2013
2014
2015
2016
2017
2018
Lease Expirations (% of In-Service 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
Ascension Health
Aa1
510,000
Baylor Health Care System
Aa2
450,000
Scott & White Healthcare
A1
404,000
Harbin Clinic
Unrated
313,000
Franciscan Alliance, Inc.
Aa3
288,000
Health & Hospital Corp Marion
County
Aa1
274,000
Trinity Health
Aa2
259,000
Catholic Health Initiatives
Aa2
250,000
Veterans Administration
Aaa
224,000
Northside Hospital
Unrated
223,000
MEDICAL OFFICE STRATEGY |
 2013 Duke Realty Corporation
24
14
19
26
35
61
0
10
20
30
40
50
60
70
2008
2009
2010
2011
2012
Medical office portfolio projected to exceed 15% of total asset base by 2013
NOI in
$millions
Annual NOI
88.0%
78.4%
85.8%
90.1%
91.3%
70%
75%
80%
85%
90%
95%
2008
2009
2010
2011
2012
In-Service Portfolio Occupancy
As of 12/31/2012
Medical Office NOI and Portfolio Occupancy
MEDICAL OFFICE STRATEGY |
 2013 Duke Realty Corporation
25
Healthcare Development Pipeline
MEDICAL OFFICE STRATEGY
VA Tampa
Tampa, FL
117,000 SF, 100% preleased
Scott and White MOB
Marble Falls, TX
67,000 SF, 100% preleased
Wishard Health FOB
Indianapolis, IN
275,000 SF, 100% preleased
Scott & White MOB
College Station, TX
119,000 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
Scott & White Bone and
Joint Institute
Temple, TX
78,000 SF, 100% preleased
Baylor ED at Keller
Keller, TX
38,000 SF, 100% preleased
Bethesda Imaging/ED Expansion
Cincinnati, OH
11,000 SF, 100% preleased |
 2013 Duke Realty Corporation
Goal: Grow Medical Office Primarily through Development
Our Plan
Existing healthcare assets $1.4 Billion
New developments projected $200 Million in
2013
Lease-up space for growth –
92.5% leased at
December 31, 2012 . . . projected to increase in
2013
26
MEDICAL OFFICE STRATEGY
Our Focus
On-campus
assets
Major
hospital
system
relationships |
 2013 Duke Realty Corporation
Strategic Benefits to Duke Realty
Medical office to provide solid NOI growth and lower volatility
27
•
Reliable NOI growth with long term leases averaging over 11 years with
very high tenant retention
o
Typical lease includes 2-3% annual rent escalators and expenses
passed through
•
Strong credit tenants, with over 95% of the portfolio leased or affiliated
with major hospital systems, a majority credit-rated single A or double
AA
•
76% of portfolio on-campus
•
The newest portfolio in REIT sector with an average age of 7 years
•
Total portfolio occupancy 92.5%, December 31, 2012. Projected to
increase by December 2013
•
Medical office development starts solid with approximately $200 million
projected for 2013, majority 100% leased
•
Growth industry, defensive asset class
MEDICAL OFFICE STRATEGY |
 2013 Duke Realty Corporation
CAPITAL STRATEGY AND 2013 GUIDANCE
28 |
 2013 Duke Realty Corporation
Capital Strategy Focus
29
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
CAPITAL STRATEGY
1
2
3
4 |
 2013 Duke Realty Corporation
30
Key Metrics & Goals
2009
Actual
2010
Actual
2011
Actual
Proforma
2012*
Goal
Debt to Gross Assets
44.5%
46.3%
46.8%
45.5%
45.0%
Debt + Preferred to Gross
Assets
54.9%
55.5%
55.6%
51.7%
50.0%
Fixed Charge Coverage
Ratio
1.79 : 1
1.79 : 1
1.82 : 1
1.81 : 1
2.00 : 1
Debt + Preferred/EBITDA
8.47
8.88
8.58
8.20
7.75
CAPITAL STRATEGY
Progressing toward strategic plan goals
*Proforma 2012 includes common equity offering January 2013.
|
 RELIABLE. ANSWERS.
2013 Duke Realty Corporation
Relative Performance of Duke Realty
Notes
1.
DRE stock price as of end of trading 2/27/13, @ $16.06
2.
Total
return
for comparable
companiescalculatedon
a
market
cap
weighted
basis
3.
Comparables include PLD, BDN, CLI, DCT, HIW, LRY, FR, OFC, and EGP; PLD and AMB are
included historically; figures shown on a market cap weighted basis 31
|
 2013 Duke Realty Corporation
32
CAPITAL STRATEGY
Executing on capital strategy objectives
CAPITAL SOURCE
2008
2009
2010
2011
2012
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
$153
$3,111
TOTAL
$1,100
$1,645
$1,094
$1,650
$994
$6,483
•
Investment grade rated debt for over 15 years
•
Proven access to multiple capital sources
•
Available line of credit -
$850 million capacity
•
Conservative AFFO payout ratio (81%)
Continue to strengthen balance sheet
($ in millions) |
 2013 Duke Realty Corporation
Duke Realty 2012 Transactions
Lowering Cost of Capital with Highly Efficient Bond Offering Executions
33
CAPITAL STRATEGY |
 2013 Duke Realty Corporation
January 10, 2013
34
Duke Realty $590MM Overnight Marketed Offering
Source
Morgan Stanley
CAPITAL STRATEGY
Summary of Deal Terms
Post
Over-Allotment Option
Launch Date
January9, 2013(Post-Close)
Pricing Date
January10, 2013(Pre-Open)
Offer Price
$14.25
% File/
Offer
Discount
-2.1%
Days Trading
21.0x
% of TSO
14.8%
Shares Offered (Post-greenshoe)
41.4MM
Amount Offered (Post-greenshoe)
$590MM
Bookrunners
Morgan Stanley,
USB
Institutions
79%
Other Retail
10%
MS Retail 10%
Allocation Breakdown
By Investor Type (%)
Real Estate
65%
Hedge Fund
18%
Index 8%
Mutual Fund 5%
Other 3%
Value 1%
Allocation Breakdown
By Investor Style (%)
•
Duke Realty Corp. issued $590MM (post
-greenshoe) of
common equity via an overnight marketed offering to
repay outstanding balance on revolving credit facility
($285MM) and redeem Series O Preferred shares
callable in February 2013
•
The offering priced at the tight end of the range at
$14.25, which represents a file / offer discount of
-2.1%
–
2012 REIT overnight offerings priced at an average file
/ offer discount of
-3.4%
•
This represents DRE’s largest follow
-on offering ever
•
The company conducted 5 1x1 calls and a group call for
investors at the time of the launch
•
The orderbook was oversubscribed by high
-quality real
estate investors with ~80% of the deal allocated to
institutions and the remaining ~20% to retail investors
–
The offering was upsized a full 20% from 30MM
shares to 36MM shares given a well oversubscribed
orderbook
•
The offering traded up 3.5% on the first trade date
|
 2013 Duke Realty Corporation
35
Liquidity Position
($ in millions)
CAPITAL STRATEGY
Manageable debt maturities
$667
$383
$559
$2,493
Debt Maturity and Amortization Schedule
December 31, 2012 |
 RELIABLE. ANSWERS.
2013 Duke Realty Corporation
2013 Range of Estimates
Metrics
2012
Actual
Pessimistic
Optimisti
Key Assumptions
Core FFO per share
$1.02
$1.03
$1.11
- Continued improvement in operating fundamentals
- Development projects
- Growth in asset base from repositioning actitivies
AFFO Payout Ratio
83%
83%
76%
- Annual dividend maintained at $0.68 per share
Average Occupancy - In-Service
92.2%
92.0%
94.0%
- Positive momentum continued, although slower pace
- Expirations only 9% of portfolio
Same Property NOI Growth
2.5%
1.0%
4.0%
- Occupancy growth slowing
- Slightly improved rental rate assumptions
Building Acquisitions
$801
$300
$500
- Remain selective regarding property type and location
in alignment with long-term strategy
Building Dispositions
$141
$400
$600
- Continue to prune remaining office and retail
Land Sale Proceeds
$12
$15
$25
- Selling identified non-strategic parcels
- Demand still sluggish
Development Starts
$520
$400
$500
- Comprised of industrial and medical office
- Substantially pre-leased
Service Operations Income
$22
$16
$24
- Consistent third party volumes anticipated
General & Administrative expense
$44
$43
$37
- Continued efficiency gains
2013 Range of Estimates
$ in millions
36 |
 RELIABLE. ANSWERS
2013 Duke Realty Corporation
37
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 |
 2013 Duke Realty Corporation
APPENDIX
38 |
 RELIABLE. ANSWERS.
2013 Duke Realty Corporation
Strategic Focus
2012 Goals and Objectives
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 at year end 92.4%, up 1.7% from
2011; industrial portfolio at 93.8%
•
More than 29 million square feet of leases completed
•
Debt to EBITDA @ 7.0x¹; 2.5% Same Property NOI
growth •
$520MM development starts. Nine 77% pre-leased (on
average) bulk industrial projects (at 7.2% weighted yield), nine
100% pre-leased medical office projects (7.1% yield) and one
speculative office project (9%+ expected 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 $800MM of acquisitions during the
year, weighted 66% healthcare and 34% industrial
•
$153MM in dispositions of non-core assets
•
Total suburban office portfolio 85.9% 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, down from 1.82x at year end 2011
•
Issued $322MM of equity through ATM program at a $14.19
share price
•
$285MM balance on credit facility at 12/31/12
•
Issued $572MM of equity through a marketed follow-on
offering at a $14.25 price in January 2013 to delever and fund
growth
Asset
Strategy
Operations
Strategy
Capital
Strategy
Solid 2012 performance across all three aspects of our strategy
(1) Proforma $572 (net) common equity offering executed January 2013
39 |
 RELIABLE. ANSWERS.
2013 Duke Realty Corporation
40
U.S. Rail and Highway Logistics Routes & Corridors
Duke Realty’s Primary Markets Strategically Placed in Key
Distribution Corridors
Note:
Duke Realty Primary Industrial Markets in Bold Blue; Rail lines in medium
blue, Interstate highway system in red lines |
 2013 Duke Realty Corporation
41
Midwest
Expansion -
Industrial
Restoration Hardware
Columbus
418,655 SF
Term 15 years
Renewal & Expansion –
Industrial
McGraw-Hill Companies
Columbus
668,000 SF
Weighted Term 5.5 years
MARKET OVERVIEW & KEY POINTS
Committed to Midwest because we perform…
Midwest remains a key component to our
industrial strategy
Renewal -
Industrial
Crossroads Centers
Indianapolis
601,000 SF
Term 5 years
MIDWEST OVERVIEW
Acquisition -
Industrial
335 Crossroads Parkway
Chicago
288,000 SF
66% leased
Strong distribution base: Over 30% of U.S.
population within one day’s drive
74 Fortune 500 headquarters
High growth and return opportunities, particularly in
Chicago, Columbus, and Indianapolis
Duke Realty’s roots and a position of strength
Original location –
since 1972
Low basis product
Dominant market position |
 2013 Duke Realty Corporation
42
Midwest Overview
Location
Product
Type
Industrial
Office
Average Age
12.4 years
17.2 years
Average Building Size
259,000 SF
126,000 SF
Total Square Footage
57.7 million
12.3 million
Current Occupancy
95.7%
83.8%
Indianapolis
94.3%
92.3%
Chicago
96.9%
90.2%
Cincinnati
94.5%
84.6%
St. Louis
93.6%
74.0%
Columbus
100%
90.9%
Minneapolis
93.7%
91.9%
MIDWEST OVERVIEW |
 2013 Duke Realty Corporation
43
Midwest Focus
DOMINANT POSITION
BULK INDUSTRIAL
REDUCE OFFICE
CONCENTRATION
MIDWEST OVERVIEW
Enhancing dominant industrial position in Midwest |
 2013 Duke Realty Corporation
EAST & SOUTHEAST OVERVIEW
Performance Update
44 |
 2013 Duke Realty Corporation
RECENT TRANSACTIONS
45
East & Southeast Overview
Disposition –
Industrial
CapTrust Tower
Raleigh
300,00 SF
Leased: 95%
MARKET OVERVIEW & KEY POINTS
New/Renewal -
Office
Liberty Center II
Washington, D.C.
Scitor Corp
159,000 SF
Term: 10 years
Renewal -
Industrial
Port City Logistics, Inc.
Savannah
332,000 SF
Term: 7 years
Renewal –
Industrial
Ford Motor Company
Orlando
275,000 SF
5 year term
Strong presence
East and Southeast cities among top growth
markets in country…
strong in-migration
Diversified economies; Government, healthcare,
finance and education
Eastern cities maintained highest employment rate
through downturn
Atlanta and Northeast corridor strong in bulk
industrial
EAST & SOUTHEAST OVERVIEW |
 2013 Duke Realty Corporation
46
East & Southeast Overview
Location
Product
Type
Industrial
Office
Average Age
10.0 years
10.8 years
Average Building Size
169,000 SF
114,000 SF
Total Square Footage
30.0 million
9.4 million
Current Occupancy
91.3%
88.5%
Atlanta
87.9%
86.5%
South Florida
89.8%
87.4%
Raleigh
98.7%
94.5%
Washington D.C./Baltimore
96.0%
82.5%
Central Florida
98.4%
88.9%
Savannah
90.6%
NA
EAST & SOUTHEAST OVERVIEW |
 2013 Duke Realty Corporation
47
East & Southeast Focus
BULK INDUSTRIAL/PORTS
LEASE UP AND RENT GROWTH
ACQUISITIONS & DEVELOPMENT
EAST & SOUTHEAST OVERVIEW
Maximize assets and market position |
 2013 Duke Realty Corporation
48
SOUTH & WEST OVERVIEW
Performance Update |
 2013 Duke Realty Corporation
49
South & West
Acquisition –
Industrial
Northern California
Delicato Wines
552,000 SF
Leased: 100%
Acquisition -
Industrial
Northern California
ConAgra
727,000 SF
Leased: 100%
MARKET OVERVIEW & KEY POINTS
New Lease -
Industrial
Greater Seattle Area
Internet Retailer
1,016,000 SF
Term: 15 years
Acquisition –
Industrial
Houston, TX
135,000 SF
Leased: 100%
Duke Realty one of top 3 owner/developers in
Dallas/Ft.Worth
52 Fortune 500 headquarters
Demographic drivers: modern transportation and
infrastructure, population and job growth
Strong industrial demand expected post-recovery
Port, inland port and logistics key for bulk
distribution markets
Expand industrial presence by pursuing select
acquisition opportunities in Houston, Phoenix and
Southern California
SOUTH & WEST OVERVIEW |
 2013 Duke Realty Corporation
50
South & West Overview
Location
Product
Type
Industrial
Office
Average Age
9.3 years
8.3 years
Average Building Size
291,000 SF
110,000 SF
Total Square Footage
26.8 million
1.8 million
Current Occupancy
92.6%
86.6%
Dallas
90.8%
100.0%
Nashville
95.8%
93.3%
Houston
100.0%
61.2%
Phoenix
98.1%
N/A
Southern California
85.0%
N/A
SOUTH & WEST OVERVIEW
San
Antonio
3%
Austin
7%
Southern CA
13%
Dallas
37%
Seattle 7%
Houston
11%
Nashville
18%
Phoenix 4% |
 2013 Duke Realty Corporation
51
South & West Focus
DALLAS LEASE-UP
HOUSTON INDUSTRIAL PORT
DALLAS INLAND PORT
SOUTHERN CALIFORNIA
EXPANSION
SOUTH & WEST OVERVIEW
Grow |
 RELIABLE. ANSWERS.
2013 Duke Realty Corporation
89.2%
88.3%
90.0%
89.9%
93.0%
87.2%
92.1%
95.1%
94.2%
89.0%
94.6%
80%
83%
86%
89%
92%
95%
98%
LRY
HIW
OFC
BDN
CLI
DRE
EGP
PLD
FR
DCT
$7,753
$3,678
$3,226
$2,543
$5,053
$4,574
$4,727
$4,951
$10,134
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
LRY
HIW
CLI
BDN
OFC
DRE
PLD
DCT
FR
EGP
57.2%
41.8%
41.8%
45.1%
44.1%
39.5%
38.0%
44.5%
40.7%
32.2%
0%
20%
40%
60%
80%
BDN
CLI
OFC
HIW
LRY
DRE
PLD
FR
DCT
EGP
$32,480
Total Market Cap ($ in millions)
Total Debt / Total Market Cap
In Service Portfolio Occupancy
Net Debt / LTM EBITDA
Duke Realty Benchmarking Statistics
Duke Realty benchmarks as the second largest by total market capitalization among its
comps, with above average leverage and improving occupancy
Office Average: $5,411
Industrial Average: $10,482
Industrial Average: 7.0x
Office Average: 6.6x
Office Average: 44.7%
Industrial Average: 39.1%
DRE total in service portfolio
DRE industrial in service portfolio
Industrial Average: 92.1%
Office Average: 89.4%
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 Medical Office Building: HR=Healthcare Realty;
HTA=Healthcare Trust of America Source: SNL Financial, 2/22/13
1
1
(1) DRE proforma January 2013 $572 million (net) equity offering. PLD proforma
Norges and J-REIT transactions, as estimated by Green Street Advisors, February 2013.
52
7.6x
7.1x
7.1x
7.7x
6.6x
7.2x
6.4x
6.4x
5.7x
6.2x
0.0x
3.0x
6.0x
9.0x
12.0x
BDN
OFC
LRY
HIW
CLI
DRE
DCT
PLD
EGP
FR |
 RELIABLE. ANSWERS.
2013 Duke Realty Corporation
Industrial Average: 18.9x
Office Average: 12.4x
14.7x
13.9x
14.6x
23.2x
9.1x
13.3x
17.6x
10.8x
18.2x
16.8x
6.0x
10.0x
14.0x
18.0x
22.0x
26.0x
LRY
OFC
HIW
CLI
BDN
DRE
PLD
EGP
FR
DCT
Industrial Average: 25.6x
Industrial Average: 3.4%
Office Average: 18.0x
Office Average: 5.0%
Office Average: 7.6%
Price / 2013E FFO
Implied Cap Rate
(1)
Dividend Yield
Price / 2013E 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, 2/22/13
(1) Per Wall Street research as of 2/14/13
Duke Realty Valuation Statistics
Duke Realty still undervalued by most levered and NAV metrics
Industrial Average: 6.2%
20.2x
18.8x
18.8x
29.8x
25.1x
16.4x
24.1x
23.4x
18.3x
16.4x
10.0x
14.0x
18.0x
22.0x
26.0x
30.0x
34.0x
LRY
OFC
HIW
CLI
BDN
DRE
PLD
DCT
FR
EGP
9.1%
7.2%
7.3%
7.4%
7.4%
5.7%
5.7%
6.1%
6.9%
7.4%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
9.0%
9.5%
10.0%
CLI
BDN
OFC
HIW
LRY
DRE
FR
DCT
EGP
PLD
6.5%
2.1%
3.7%
3.9%
4.3%
4.2%
2.8%
4.5%
4.7%
4.9%
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
53 |
 RELIABLE. ANSWERS.
2013 Duke Realty Corporation
Historical Barra Beta Analysis 2002-2013
Current
(1)
1 Year
Avg
5 Year
Avg
10 Year
Avg
12/31/11
DRE
1.19
1.28
1.55
1.16
1.49
Office Comps
(2)
1.05
1.12
1.27
0.99
1.26
Industrial Comps
(3)(4)
1.05
1.14
1.40
1.00
1.28
Healthcare Comps
(5)
0.91
0.98
1.20
0.98
1.07
Notes
1.
As of most recent Barra Beta published on January 31, 2013
2.
Includes BDN, CUZ, CLI, CWH, HIW, LRY, OFC, PKY and WRE
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
54
Barra Beta Summary |
 RELIABLE. ANSWERS.
2013 Duke Realty Corporation
Forward-Looking Statement
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. 55 |