Duke Realty Corporation Completes $1 Billion Suburban Portfolio Sale December 9, 2011
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. 2011 Duke Realty Corporation 2
$1.06B PORTFOLIO SALE EXECUTIVE SUMMARY 2011 Duke Realty Corporation 3
RELIABLE. ASSET STRATEGY ANSWERS. BY PRODUCT Portfolio Strategy Industrial 36% Retail 4% Medical 5% 55% Industrial 53% Medical 8% Q3 2011 Proforma 2009 2013 35% Retail 4% Industrial 60% Medical 15% 25% BY GEOGRAPHY South 12% West 1% South 13% West 2% South 10% West 5% East 13% Southeast 21% Midwest 53% East 14% Q3 2011 Proforma 2009 2013 East 15% Midwest Southeast 46% 25% Southeast 30% Midwest 40% Note: Proforma reflects $1.06 billion announced Blackstone sale 2011 Duke Realty Corporation 4
Blackstone Portfolio Sale - $1.06 Billion Geographic Footprint Asset Snapshots Minneapolis (6%) Chicago (33%) Columbus (15%) Northwinds Atlanta Sugarloaf Atlanta Highland Oaks Tampa Celebration Orlando Executive Towers Chicago Riverway Chicago Tuttle Crossing Columbus Duke Bridges Dallas 1600 Tower Minneapolis Atlanta (30%) Dallas (5%) C. Florida (11%) 9.8 million square feet (79 Assets) All wholly-owned assets in each market 54% concentration in Midwest Region Accelerates portfolio repositioning strategy 5
Blackstone Sale Portfolio Analysis Blackstone Portfolio Total Square Feet Remaining Portfolio 9.8M 23.6M 79 207 125,000 115,000 12,000 12,000 Average Age 15 13 Average Lease Term 6.5 7.2 $10.56 $12.78 2012 14% 9% 2013 19% 12% 2014 11% 8% # of Properties Average Size Average Tenant Size 9 months annualized NOI PSF Lease Expirations (% of total): Sale improves age, lease term and rollover of remaining portfolio 6
Blackstone Sale Cap rate based on annualized 2011 first nine months of NOI 8.3% Cap rate based on annualized 2011 third-quarter NOI 8.6% Price per square foot $108 Estimated replacement cost per square foot $125 - $135 Average age of properties 15 Years Quality portfolio at solid pricing 7
Duke Realty Overall Portfolio 10 year Average Renewal Rental Rate Growth 2.5% 2.0% 1.5% TotalIndustrial Bulk Bulk 1.0% 0.5% 0.0% 1 Provides opportunity to achieve increased rental rate growth 8 Note: For period 2001-2010 8
Duke Realty Overall Portfolio 10 Year Average Cap Ex as % of Net Effective Rent New Deals Renewals 30% 25% 20% Bulk Industrial 15% 10% Bulk Industrial 5% 0% 1 Provides opportunity to improve AFFO 9 Note: For period 2001-2010 9
Blackstone Sale Anticipated Use of Proceeds Transaction generates $1.02 billion of capital to redeploy: Pay off line of credit $ 284 Million Repay December debt maturities $ 168 Million Net fourth quarter acquisitions $ 250 Million Redeem Series M Preferred stock $ 168 Million $ 870 Million Available cash for future acquisitions $ 150 Million TOTAL Proceeds $1.02 Billion Use of proceeds to de-lever and invest in high quality industrial and medical office assets 10
Blackstone Sale Effect on Earnings No significant effect on 2011 earnings 2012 expected earnings effect: Core FFO per share dilution of $0.10 to $0.12 per share Core AFFO per share dilution of $0.02 to $0.03 per share Focused on AFFO per share and dividend coverage / payout ratio 11
Summary Limited impact on AFFO with improved future earnings growth profile 1 Consistent with our long term asset strategy of decreasing our investment concentration in suburban office assets, primarily in Midwest markets 2 54% of targeted asset population is concentrated in Midwest markets and 46% is concentrated in Southern markets; disposes of substantially all wholly-owned office properties in respective markets 3 Generates $1.02 billion of capital that can be redeployed into industrial and medical office assets as well as used to further de-lever 4 Significantly reduces future rollover risk and a significant portion of our capital intensive assets 5 Demonstrates our ability to execute Strategic disposition of suburban office properties in alignment with our objectives 12
Vision Road Map Future Duke Realty What We Will Be Action Plan Low leveraged Debt to gross assets under 45% Debt plus preferred stock to gross assets under 50% Fixed charge coverage ratio over 2.0 times Product focused Concentrate in high growth markets Increase industrial and medical office investment Industrial: 60% : 25% Medical: 15% Align investment and resources to higher growth and major distribution markets The announced transaction is consistent with our vision 13