SOURCE: Duke Realty Corporation

April 30, 2008 18:31 ET

Duke Realty Announces First Quarter Earnings

Common and Preferred Stock Dividends Declared

INDIANAPOLIS, IN--(Marketwire - April 30, 2008) - Duke Realty Corporation (NYSE: DRE) reported today results for the first quarter 2008. Funds from Operations available to common shareholders (diluted) ("FFO") was $0.58 per share for the first quarter of 2008, as compared to $0.62 per share for the same quarter of 2007. The variance is attributable to $0.09 per share recognized on the sale of undeveloped land in the first quarter of 2007, which was partially offset by increased FFO from property operations in the first quarter of 2008. Net income available for common shareholders (diluted) ("EPS") was $0.03 per share for the first quarter of 2008, compared to $0.49 for the same quarter in 2007. First quarter 2007 net income included $0.32 per share from capital gains from the sale of rental properties.

Denny Oklak, Chairman and Chief Executive Officer, commenting on Duke's first quarter performance, stated:

"Operating performance was solid in the first quarter. Despite challenging economic conditions, we leased 1.5 million square feet more in the first quarter than we did in the first quarter of 2007. Renewals were particularly strong at 2.7 million square feet, with average increases in rent of nearly seven percent. With leases of only five percent of our rental portfolio yet to expire this year, we are focused on achieving a stabilized in-service occupancy of 95 percent and leasing our newly developed properties. As we move further into 2008, we continue to be comfortable with our annual guidance of FFO per share of $2.60 - $2.90."

Dividends

Additionally, the Company's Board of Directors declared its quarterly common stock dividend of $0.48 per share, or $1.92 per share on an annualized basis. The dividend is payable on May 30, 2008, to shareholders of record on May 14, 2008.

The Board also declared today the following dividends on the Company's outstanding preferred stock:

            NYSE    Quarterly
Class      Symbol  Amount/Share   Record Date    Payment Date
-----      ------  ------------   -----------    ------------
Series J   DREPRJ    $.414063    May 16, 2008    May 30, 2008
Series K   DREPRK    $.406250    May 16, 2008    May 30, 2008
Series L   DREPRL    $.412500    May 16, 2008    May 30, 2008
Series M   DREPRM    $.434375   June 16, 2008   June 30, 2008
Series N   DREPRN    $.453125   June 16, 2008   June 30, 2008
Series O   DREPRO    $.523438   June 16, 2008   June 30, 2008

First Quarter Operating Statistics

--  At the end of the first quarter, the Company's 673 stabilized in-
    service properties, totaling 108.3 million square feet, were 92.9 percent
    leased compared to 94.9 percent leased at December 31, 2007.
    
--  The Company's value creation pipeline totaled $1.8 billion, including
    $614 million of developments with an expected stabilized return of 8.8
    percent that Duke plans to own indefinitely after completion; $1.1 billion
    of developments with an expected stabilized return of 8.2 percent that the
    Company plans to sell within approximately one year of completion; and a
    $116 million backlog of third-party construction contracts with an average
    overall profit margin of 18.2 percent.
    
--  In addition to its 673 stabilized in-service properties, the Company
    owns 25 recently completed development properties, with a total 6.9 million
    square feet, that are 31.6 percent leased.  The company owns 32 properties
    under development, with a total of 7.3 million square feet, that are 30.7
    percent pre-leased.
    
--  The Company renewed 71 percent of all leases expiring in the first
    quarter, for a total of 2.7 million square feet, with average net effective
    rent increases of 6.8 percent.
    
--  Same property net operating income increased 1.8 percent for the three
    months ended March 31, 2008.
    
--  Property sales in the first quarter totaled $44.1 million, at an
    average stabilized capitalization rate of 7.3 percent.
    
--  The Company completed acquisitions of properties totaling $28.0
    million, with an overall stabilized yield of 8.0 percent.
    
--  The Company's interest and fixed-charge coverage ratios in the first
    quarter were 3.2 and 2.0, respectively, and its debt-to-total market
    capitalization ratio was 48.7 percent at March 31, 2008.
    

When used in this press release, the word "believes," "expects," "estimates" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties that 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 liquidity of real estate investments. Readers are advised to refer to Duke's Annual Report on Form 10-K as filed with the Securities and Exchange Commission on February 29, 2008 for additional information concerning these risks.

About Duke Realty Corporation

Duke Realty Corporation specializes in the ownership, construction, development, leasing and management of office, industrial, medical office and retail real estate. It is the largest publicly traded, vertically integrated office/industrial real estate company in the United States. The company owns, manages or has under development more than 122 million rentable square feet in 24 major U.S. cities. Duke, which controls approximately 7,600 acres of land for more than 111 million square feet of future development, also provides nationwide real estate solutions through its national development division.

A copy of the Company's supplemental information fact book will be available after 6:00 p.m. EDT today in the Investor Relations section of the Company's web site at www.dukerealty.com. Duke is also hosting a conference call tomorrow at 3:00 p.m. New York time to discuss its first quarter operating results. All investors are invited to listen to this call, which can be accessed through the Investor Relations section of the Company's web site.

                           Financial Highlights
                  (in thousands, except per share data)



                                                     Three Months Ended
                                                          March 31,
                                                  ========================
Operating Results                                     2008         2007
                                                  ===========  ===========

Revenues from continuing operations               $   242,677  $   224,526
Earnings from rental operations                        22,083       24,921
Earnings from service operations                        4,413        6,934
Net income available for common shareholders -
 Basic                                                  4,048       68,563
Net income available for common shareholders -
 Diluted                                                4,268       73,925
Funds from operations available for common
 shareholders - Basic                                  84,642       86,327
Funds from operations available for common
 shareholders - Diluted                                89,188       92,500

Per Share:
Funds from operations available for common
 shareholders - Basic                             $      0.58  $      0.63
Funds from operations available for common
 shareholders - Diluted                           $      0.58  $      0.62
Net income available for common shareholders -
 Basic                                            $      0.03  $      0.50
Net income available for common shareholders -
 Diluted                                          $      0.03  $      0.49
Dividend payout ratio of funds from operations           82.8%        76.6%
Weighted average shares outstanding
        Basic - Net income and Funds From
         Operations                                   146,331      136,823
        Diluted- Funds From Operations                154,596      148,327
        Diluted- Net income                           154,596      149,465



                                                   March 31,   December 31,
Balance Sheet Data                                   2008         2007
                                                  ===========  ===========

Net real estate investments                       $ 6,173,431  $ 6,101,332
Total assets                                        7,760,243    7,661,981
Total debt                                          4,262,139    4,316,460
Shareholders' equity                                2,979,653    2,750,033
Common shares outstanding at end of period            146,670      146,175





          Reconciliation of Net Income to Funds From Operations
                  (in thousands, except per share data)



                                         Three Months Ended
                                              March 31,
                                            (Unaudited)
                          ================================================
                                    2008                     2007
                          =======================  =======================
                                     Wtd.                     Wtd.
                                     Avg.    Per              Avg.    Per
                           Amount   Shares  Share   Amount   Shares  Share
                          --------  ------- ------ --------  ------- ------
Net Income Available for
 Common Shares            $  4,048  146,331 $ 0.03 $ 68,563  136,823 $ 0.50
Add back:
  Minority interest in
   earnings of
   unitholders                 220    7,858           4,910    9,729
  Joint Venture Partner
   Convertible Ownership
   Net Income                                           452    1,138
  Other common stock
   equivalents                          407                    1,775
                          --------  -------        --------  -------
Diluted Net Income
 Available for Common
 Shares                   $  4,268  154,596 $ 0.03 $ 73,925  149,465 $ 0.49
                          ========  ======= ====== ========  ======= ======

Reconciliation to Funds
 From Operations ("FFO")
Net Income Available for
 Common Shares            $  4,048  146,331 $ 0.03 $ 68,563  136,823 $ 0.50
Adjustments:
  Depreciation and
   Amortization             79,121                   67,739
  Company Share of Joint
   Venture Depreciation
   and amortization          6,928                    4,968
  Earnings from
   depreciable property
   sales-wholly owned       (1,110)                 (51,720)
  Earnings from
   depreciable property
   sales-JV                    (19)                  (1,960)
  Minority interest
   share of adjustments     (4,326)                  (1,263)
                          --------  -------        --------  -------
Basic Funds From
 Operations                 84,642  146,331 $ 0.58   86,327  136,823 $ 0.63
  Minority interest in
   earnings of
   unitholders                 220    7,858           4,910    9,729
  Minority interest
   share of adjustments      4,326                    1,263
  Other common stock
   equivalents                          407                    1,775
                          --------  -------        --------  -------
Diluted Funds From
 Operations               $ 89,188  154,596 $ 0.58 $ 92,500  148,327 $ 0.62
                          ========  ======= ====== ========  ======= ======


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