SOURCE: Duke Realty Corporation

January 30, 2008 17:38 ET

Duke Realty Announces Fourth Quarter Earnings

Common and Preferred Stock Dividends Declared

INDIANAPOLIS, IN--(Marketwire - January 30, 2008) - Duke Realty Corporation (NYSE: DRE) reported today results for the fourth quarter 2007. Funds from Operations available to common shareholders (diluted) ("FFO") was $0.80 per share for the fourth quarter of 2007, as compared to $0.76 per share for the same quarter in 2006, an increase of 5.3 percent. Net income available for common shareholders (diluted) ("EPS") was $0.40 per share for the fourth quarter of 2007, as compared to $0.37 for the same quarter in 2006.

Denny Oklak, Chairman and Chief Executive Officer, commenting on Duke's fourth quarter performance, stated, "The fourth quarter was solid in nearly all areas of our operating business. Leasing activity remained strong and we successfully closed our anticipated dispositions. We are pleased that our overall 2007 execution resulted in record levels of leasing and new developments along with a 10.5% growth in annual FFO per share. As we look forward to 2008, the volatility in the capital markets has increased uncertainty in the business climate; therefore, we are revising our 2008 guidance for FFO per share to $2.60 - $2.90 from $2.80 - $3.00 to reflect our more cautious view."

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 February 29, 2008, to shareholders of record on February 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      February 15, 2008    February 29, 2008
Series K    DREPRK     $.406250      February 15, 2008    February 29, 2008
Series L    DREPRL     $.412500      February 15, 2008    February 29, 2008
Series M    DREPRM     $.434375       March 17, 2008       March 31, 2008
Series N    DREPRN     $.453125       March 17, 2008       March 31, 2008

Fourth Quarter Operating Statistics

--  The Company's 688 in-service properties totaling 111.1 million square
    feet were 92.7 percent leased compared to 93.5 percent and 92.8 percent
    leased at September 30, 2007 and December 31, 2006, respectively.
    
--  The Company's value creation pipeline totaled $2.0 billion, including
    $742 million of developments with an expected stabilized return of 9.0
    percent that Duke plans to own indefinitely after completion; $1.0 billion
    of developments with an expected stabilized return of 8.4 percent that the
    Company plans to sell within approximately one year of completion; and a
    $183 million backlog of third-party construction volume with an average
    overall profit margin of 15.8 percent.
    
--  In addition to 688 in-service properties, the Company has 38
    properties under development representing 10.0 million square feet that are
    27.6 percent pre-leased.
    
--  Duke renewed 68 percent of leases up for renewal, totaling 1.3 million
    square feet, on which net effective rents increased 9.0 percent.
    
--  Same property net operating income increased 0.8 percent for the three
    months ended December 31, 2007.
    
--  Property sales in the fourth quarter totaled $209.3 million at an
    average stabilized capitalization rate of 7.2 percent.
    
--  The Company completed the acquisition of an industrial portfolio
    totaling $69.8 million with an overall stabilized yield of 8.6 percent.
    
--  The Company's interest and fixed-charge coverage ratios in the fourth
    quarter were 4.0 and 2.5, respectively, and its debt-to-total market
    capitalization ratio was 48.4 percent at December 31, 2007.
    

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 March 6, 2007 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 130 million rentable square feet in 22 major U.S. cities. Duke, which controls approximately 7,700 acres of land for over 113 million square feet of future development, also provides nationwide real estate solutions through its national development division. Duke Realty Corporation is publicly traded on the NYSE under the symbol DRE and is included in the S&P MidCap 400 Index.

A copy of the Company's supplemental information fact book will be available after 6:00 p.m. EST 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 fourth 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     Twelve Months Ended
                                  December 31,           December 31,
                              --------------------  ----------------------
Operating Results               2007       2006        2007        2006
                              ---------  ---------  ----------  ----------

Revenues from continuing
 operations                   $ 261,384  $ 256,351  $  923,227  $  871,677
Earnings from rental
 operations                      37,610     37,154     109,079     125,514
Earnings from service
 operations                      25,781     34,719      52,034      53,196
Net income available for
 common shareholders - Basic     58,666     50,196     217,692     145,095
Net income available for
 common shareholders -
 Diluted                         61,964     55,038     232,091     159,333
Funds from operations
 available for common
 shareholders - Basic           116,750    102,788     384,032     338,008
Funds from operations
 available for common
 shareholders - Diluted         123,492    112,657     409,414     371,104

Per Share:
Funds from operations
 available for common
 shareholders - Basic         $    0.80  $    0.76  $     2.76  $     2.51
Funds from operations
 available for common
 shareholders - Diluted       $    0.80  $    0.76  $     2.74  $     2.48
Net income available for
 common shareholders - Basic  $    0.40  $    0.37  $     1.56  $     1.08
Net income available for
 common shareholders -
 Diluted                      $    0.40  $    0.37  $     1.55  $     1.07
Dividend payout ratio of
 funds from operations             60.0%      62.5%       69.9%       76.4%
Weighted average shares
 outstanding
    Basic - Net income
     and Funds From
     Operations                 145,623    134,665     139,255     134,883
    Diluted - Net income
     and Funds From
     Operations                 154,467    149,020     149,614     149,393

                              ---------  ---------  ----------  ----------
                                                     December    December
                                                        31,         31,
Balance Sheet Data                                     2007        2006
                              ---------  ---------  ----------  ----------

Net real estate investments                         $6,101,332  $5,781,272
Total assets                                         7,661,981   7,238,595
Total debt                                           4,316,460   4,109,154
Shareholders' equity                                 2,750,033   2,503,583
Common shares outstanding at
 end of period                                         146,175     133,921



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



                                       Three Months Ended
                                          December 31,
                                          (Unaudited)
                      -----------------------------------------------------
                                2007                       2006
                      -------------------------- --------------------------
                                  Wtd.                       Wtd.
                                  Avg.     Per               Avg.     Per
                        Amount   Shares   Share    Amount   Shares   Share
                      ---------  ------- ------- ---------  ------- -------
 Net Income Available
  for Common Shares   $  58,666  145,623 $  0.40 $  50,196  134,665 $  0.37
 Add back:
     Minority
      interest in
      earnings of
      unitholders         3,298    8,146             4,842   12,839
     Other common
      stock
      equivalents                    698                      1,516
                      ---------  -------         ---------  -------
 Diluted Net Income
  Available for
  Common Shares       $  61,964  154,467 $  0.40 $  55,038  149,020 $  0.37
                      =========  ======= ======= =========  ======= =======

 Reconciliation to
  Funds From
  Operations ("FFO")
 Net Income Available
  for Common Shares   $  58,666  145,623 $  0.40 $  50,196  134,665 $  0.37
 Adjustments:
     Depreciation and
      Amortization       69,469                     64,156
     Company Share of
      Joint Venture
      Depreciation
      and amortization    5,796                      4,700
     Earnings from
      depreciable
      property
      sales-wholly
      owned              (9,321)                      (516)
     Earnings from
      depreciable
      property
      sales-JV           (4,416)                   (10,721)
     Minority
      interest share
      of adjustments     (3,444)                    (5,027)
                      ---------  -------         ---------  -------
 Basic Funds From
  Operations            116,750  145,623 $  0.80   102,788  134,665 $  0.76
     Minority
      interest in
      earnings of
      unitholders         3,298    8,146             4,842   12,839
     Minority
      interest share
      of adjustments      3,444                      5,027
     Other common
      stock
      equivalents                    698                      1,516
                      ---------  -------         ---------  -------
 Diluted Funds From
  Operations          $ 123,492  154,467 $  0.80 $ 112,657  149,020 $  0.76
                      =========  ======= ======= =========  ======= =======



                                       Twelve Months Ended
                                           December 31,
                                           (Unaudited)
                      -----------------------------------------------------
                                2007                       2006
                      -------------------------- --------------------------
                                  Wtd.                       Wtd.
                                  Avg.     Per               Avg.     Per
                       Amount    Shares   Share    Amount   Shares   Share
                      ---------  ------- ------- ---------  ------- -------
 Net Income Available
  for Common Shares   $ 217,692  139,255 $  1.56 $ 145,095  134,883 $  1.08
 Add back:
     Minority
      interest in
      earnings of
      unitholders        14,399    9,204            14,238   13,186
     Other common
      stock
      equivalents                  1,155                      1,324
                      ---------  -------         ---------  -------
 Diluted Net Income
  Available for
  Common Shares       $ 232,091  149,614 $  1.55 $ 159,333  149,393 $  1.07
                      =========  ======= ======= =========  ======= =======

 Reconciliation to
  Funds From
  Operations ("FFO")
 Net Income Available
  for Common Shares   $ 217,692  139,255 $  1.56 $ 145,095  134,883 $  1.08
 Adjustments:
     Depreciation and
      Amortization      277,691                    254,268
     Company Share of
      Joint Venture
      Depreciation
       and amortization  26,948                     18,394
     Earnings from
      depreciable
      property
      sales-wholly
      owned            (121,072)                   (42,089)
     Earnings from
      depreciable
      property
      sales-share of
      joint venture      (6,244)                   (18,802)
     Minority
      interest share
      of adjustments    (10,983)                   (18,858)
                      ---------  -------         ---------  -------
 Basic Funds From
  Operations            384,032  139,255 $  2.76   338,008  134,883 $  2.51
     Minority
      interest in
      earnings of
      unitholders        14,399    9,204            14,238   13,186
     Minority
      interest share
      of adjustments     10,983                     18,858
     Other common
      stock
      equivalents                  1,155                      1,324
                      ---------  -------         ---------  -------
 Diluted Funds From
  Operations          $ 409,414  149,614 $  2.74 $ 371,104  149,393 $  2.48
                      =========  ======= ======= =========  ======= =======

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