ITEM 1. BUSINESS
Duke-Weeks Realty Limited Partnership (the "Partnership") was formed on October 4, 1993, when Duke-Weeks Realty Corporation (the "Predecessor" or the "General Partner") contributed all of its properties and related assets and liabilities along with the net proceeds of $309.3 million from the issuance of an additional 14,000,833 shares through an offering (the "1993 Offering") to the Partnership. Simultaneously, the Partnership completed the acquisition of Duke Associates, a full- service commercial real estate firm operating in the Midwest. The General Partner was formed in 1985 and qualifies as a Real Estate Investment Trust ("REIT") under provisions of the Internal Revenue Code. The General Partner is the sole general partner of the Partnership currently owning 86.9% of the partnership interest ("General Partner Units"). The remaining 13.1% of the Partnership is owned by limited partners ("Limited Partner Units" and, together with the General Partner Units, the "Common Units").
As of December 31, 1999, the Partnership's diversified portfolio of 925 rental properties (including 60 properties and three expansions totaling 9.9 million square feet under development) encompass 102.4 million rentable square feet and are leased by a diverse and stable base of nearly 5,000 tenants whose businesses include manufacturing, retailing, wholesale trade, distribution and professional services. The Partnership also owns more than 4,300 acres of unencumbered land ready for development.
The Partnership, through its Service Operations, also provides, on a fee basis, leasing, property and asset management, development, construction, landscaping, build-to-suit, and other tenant-related services for more than 700 tenants in over 7.1 million square feet of space at properties owned by third-party clients. With 13 primary operating platforms, the Partnership concentrates its activities in the Midwest and Southeast United States (see discussion of Merger with Weeks Corporation below). See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Item 8, "Financial Statements and Supplementary Data" for financial information. The Partnership has rental operations that are self- administered. In addition, the Partnership conducts its service operations through Duke Realty Services Limited Partnership and Duke Construction Limited Partnership, in which the Partnership's controlled subsidiary, Duke Services, Inc., is the sole general partner. All references to the "Partnership" in this Form 10-K Report include the Partnerhip and those entities owned or controlled by the Partnership, unless the context indicates otherwise. - 1 -
The Partnership's headquarters and executive offices are located in Indianapolis, Indiana. In addition, the Partnership has thirteen regional offices located in Atlanta, Georgia; Cincinnati, Ohio; Columbus, Ohio; Cleveland, Ohio; Chicago, Illinois; Dallas, Texas; Jacksonville, Florida; Minneapolis, Minnesota; Orlando, Florida; Nashville, Tennessee; Raleigh, North Carolina; St. Louis, Missouri and Tampa, Florida. The Partnership had 1,460 employees as of December 31, 1999.
BUSINESS STRATEGY
The Partnership's business objective is to increase its Funds From Operations ("FFO") by (i) maintaining and increasing property occupancy and rental rates through the aggressive management of its portfolio of existing properties; (ii) expanding existing properties; (iii) developing and acquiring new properties; and (iv) providing a full line of real estate services to the Partnership's tenants and to third- parties. FFO is defined by the National Association of Real Estate Investment Trusts as net income or loss, excluding gains or losses from debt restructuring and sales of depreciated property, plus operating property depreciation and amortization and adjustments for minority interest and unconsolidated companies on the same basis. While management believes that FFO is a relevant measure of the Partnership's operating performance because it is widely used by industry analysts to measure the operating performance of equity REITs, such amount does not represent cash flow from operations as defined by generally accepted accounting principles, should not be considered as an alternative to net income as an indicator of the Partnership's operating performance, and is not indicative of cash available to fund all cash flow needs. As a fully integrated commercial real estate firm, the Partnership believes that its in-house leasing, management, development and construction services and the Partnership's significant base of commercially zoned and unencumbered land in existing business parks should give the Partnership a competitive advantage in its future development activities.
The Partnership believes that the analysis of real estate opportunities and risks can be done most effectively at regional or local levels. As a result, the Partnership intends to continue its emphasis on increasing its market share and effective rents in the Midwestern markets where it owns properties and enter new markets with higher growth potential (see discussion of Merger with Weeks Corporation below). The Partnership also expects to utilize its more than 4,300 acres of unencumbered land and its many business relationships with nearly 5,000 commercial tenants to expand its build-to-suit business (development projects substantially pre-leased to a single tenant) and to pursue other development and acquisition opportunities in its primary markets and elsewhere. The Partnership believes that this regional focus will allow it to assess market supply and demand for real estate more effectively as well as to capitalize on its strong relationships with its tenant base.
The Partnership's policy is to seek to develop and acquire Class A commercial properties located in markets with high growth potential for Fortune 500 companies and other quality regional and local firms. The Partnership's industrial and suburban office development focuses on business parks and mixed-use developments suitable for development of multiple projects on a single site where the Partnership can create and control the business environment. These business parks and mixed-use developments generally include restaurants and other amenities which the Partnership believes will create an atmosphere that is particularly efficient and desirable. The Partnership's retail development focuses on community, power and neighborhood centers in its existing markets. As a fully integrated real estate Partnership, the Partnership is able to arrange for or provide to its industrial, office and retail tenants not only well located and well maintained facilities, but also additional services such as build-to-suit construction, tenant finish construction, expansion flexibility and advertising and marketing services.
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All of the Partnership's properties are located in areas that include competitive properties. Such properties are generally owned by institutional investors, other REITs or local real estate operators; however, no single competitor or small group of competitors is dominant in the Partnership's current markets. The supply and demand of similar available rental properties may affect the rental rates the Partnership will receive on its properties. Based upon the current occupancy rates in Partnership and competitive properties, the Partnership believes there will not be significant competitive pressure to lower rental rates in the near future.
FINANCING STRATEGY
The Partnership seeks to maintain a well-balanced, conservative and flexible capital structure by: (i) currently targeting a ratio of long- term debt to total market capitalization in the range of 25% to 40%; (ii) extending and sequencing the maturity dates of its debt; (iii) borrowing primarily at fixed rates; (iv) generally pursuing current and future long-term debt financings and refinancings on an unsecured basis; and (v) maintaining conservative debt service and fixed charge coverage ratios. Management believes that these strategies have enabled and should continue to enable the Partnership to access the debt and equity capital markets for their long-term requirements such as debt refinancings and financing development and acquisitions of additional rental properties. The General Partner and the Partnership have raised approximately $1.7 billion through public debt and equity offerings during the three years ended December 31, 1999. In addition, as discussed under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," the Partnership has $750 million in unsecured lines of credit available for short-term fundings of development and acquisition of additional rental properties. In addition to debt and equity capital markets, the Partnership has developed a strategy to pursue favorable opportunities to dispose of assets that no longer meet the Partnership's long-term investment criteria and re-deploy the proceeds into new investments with excellent long-term growth prospects. See additional discussion under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations." The Partnership's debt to total market capitalization ratio (total market capitalization is defined as the total market value of all outstanding Common and Preferred Units and units of limited partnership interest ("Units") in the Partnership plus outstanding indebtedness) at December 31, 1999 was 38.17%. The Partnership's ratio of earnings to debt service and ratio of earnings to fixed charges for the year ended December 31, 1999 were 2.58x and 1.77x, respectively. In computing the ratio of earnings to debt service, earnings have been calculated by adding debt service to income before gains or losses on property sales. Debt service consists of interest expense and recurring principal amortization (excluding maturities) and excludes amortization of debt issuance costs. In computing the ratio of earnings to fixed charges, earnings have been calculated by adding fixed charges, excluding capitalized interest, to income before gains or losses on property sales. Fixed charges consist of interest costs, whether expensed or capitalized, the interest component of rental expense, amortization of debt issuance costs and preferred stock dividend requirements. Management believes these measures to be consistent with its financing strategy.
MERGER WITH WEEKS CORPORATION
In July 1999, Weeks Corporation ("Weeks"), a self-administered, self- managed geographically focused REIT which operated primarily in the southeastern United States, was merged with and into the General Partner, pursuant to which Weeks Realty L.P. ("Weeks Operating Partnership") merged with and into the Partnership. This transaction is hereafter referred to as the "Weeks Merger." In accordance with the terms of the Weeks Merger, each outstanding Weeks Operating Partnership common unit was converted into 1.38 common units of the Partnership and each outstanding Weeks Operating Partnership Series A preferred unit
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was converted into one of the Partnership's Series F preferred units (the "Series F Preferred Units"). As a result, 27.4 million common units and 6,000,000 Series F Preferred Units were issued to Weeks Operating Partnership unitholders in exchange for all of the outstanding Weeks Operating Partnership common and preferred units. The total purchase price of Weeks Operating Partnership aggregated approximately $1.9 billion, which included the assumption of the outstanding debt and liabilities of Weeks Operating Partnership of approximately $775 million. The transaction was structured as a tax- free merger and was accounted for under the purchase method.
OTHER
The Partnership's operations are not dependent on a single or few customers as no single customer accounts for more than 1.5% of the Partnership's total revenue. The Partnership's operations are not subject to any significant seasonal fluctuations. The Partnership believes it is in compliance with environmental regulations and does not anticipate material effects of continued compliance.
For additional information regarding the Partnership's investments and operations, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and Item 8, "Financial Statements and Supplementary Data." For additional information about the Partnership's business segments, see Item 8, "Financial Statements and Supplementary Data."
ITEM 2.
ITEM 2. PROPERTIES
PRODUCT REVIEW -------------- As of December 31, 1999, the Partnership owns an interest in a diversified portfolio of 925 commercial properties encompassing approximately 102.4 million net rentable square feet (including 60 properties and three expansions comprising 9.9 million square feet under development) located primarily in eight states and more than 4,300 acres of land for future development.
INDUSTRIAL PROPERTIES: ---------------------- The Partnership owns interests in 674 industrial properties encompassing approximately 77.2 million square feet (75% of total square feet) more specifically described as follows: BULK WAREHOUSES - Industrial warehouse/distribution buildings with clear ceiling heights of 20 feet or more. The Partnership owns 452 buildings totaling 63.7 million square feet of such properties. SERVICE CENTERS - Also known as flex buildings or light industrial, this product type has 12-18 foot clear ceiling heights and a combination of drive-up and dock-height loading access. The Partnership owns 222 buildings totaling 13.5 million square feet of such properties.
OFFICE PROPERTIES: ------------------ The Partnership owns interests in 219 office buildings totaling approximately 22.5 million square feet (22% of total square feet) more specifically described as follows: SUBURBAN OFFICE - The Partnership owns 215 suburban office buildings totaling 21.6 million square feet. CBD OFFICE - The Partnership owns four downtown office projects totaling approximately 861,000 square feet.
RETAIL PROPERTIES: ------------------ The Partnership owns interests in 32 retail projects totaling approximately 2.7 million square feet (3% of total square feet). These properties encompass both power and neighborhood shopping centers.
- 4 - LAND: ---- The Partnership owns more than 4,300 acres of land located primarily in its existing business parks. The land is ready for immediate use and is unencumbered by debt. Over 62 million square feet of additional space can be developed on these sites and all of the land is zoned for either office, industrial or retail development.
SERVICE OPERATIONS: ------------------- The Partnership provides property and asset management, development, leasing and construction services to third party owners in addition to its own properties. The Partnership's current property management base for third parties includes over 7.1 million square feet of properties serving more than 700 tenants.
PROPERTY DESCRIPTIONS --------------------- The Partnership's properties are described on the following pages:
[1] The Partnership retains the indicated effective ownership interest in an entity which owns the building. The Partnership shares in the profit or loss from such building in accordance with the Partnership's ownership interest.
[2] These buildings are owned by a partnership in which the Partnership is a partner. The Partnership owns a 10% capital interest in the partnership and receives a 50% interest in the residual cash flow after payment of a 9% preferred return to the other partner on its capital interest.
[3] The Partnership owns the building and has a leasehold interest in the land underlying this building with a lease term expiring in 2048 or later.
[4] The Partnership has a leasehold interest in this building with a lease term expiring May 2006.
[5] These are properties for which there are loans to owners which fully encumber the properties. Under the terms of the loans, the Partnership effectively receives all income and economic value from the properties. As a result, the properties are accounted for as owned properties.
[6] The Partnership has a leasehold interest in the building and the underlying land with a lease term expiring June 2020. The Partnership has an option to purchase the fee interest in the property throughout the term of the lease.
[7] This building is owned by a partnership in which the Partnership owns a 60% interest. The Partnership receives an 11% cumulative preferred return on its equity, with any excess cash flow after debt service received in accordance with the ownership interest. - 23 -
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not party to any claims or litigation that it believes the results, individually or in the aggregate, will have a material adverse affect on its business, financial position or results of operations.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the General Partner during the fourth quarter of the year ended December 31, 1999.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is no established public trading market for the Common Units. The following table sets forth the cash distributions paid during each quarter. Comparable cash distributions are expected in the future. As of February 29, 2000, there were 10,382 record holders of Common Units.
On January 26, 2000, the Partnership declared a quarterly cash distribution of $0.39 per Common Unit payable on February 29, 2000 to Common Unitholders of record on February 11, 2000.
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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The following sets forth selected consolidated financial and operating information on a historical basis for the Partnership for each of the years in the five-year period ended December 31, 1999. The following information should be read in conjunction with Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Item 8, "Financial Statements and Supplementary Data" included in this Form 10-K (in thousands, except per unit amounts):
(1)Information for all five years reflects the General Partner's two-for-one stock split effected in August 1997.
(2)Funds From Operations is defined by the National Association of Real Estate Investment Trusts as net income or loss excluding gains or losses from debt restructuring and sales of depreciated property plus operating property depreciation and amortization, and adjustments for minority interest and unconsolidated comp anies on the same basis. Funds From Operations does not represent cash flow from operations as defined by generally accepted accounting principles, should not be considered as an alternative to net income as an indicator of the Partnership's operating performance, and is not indicative of cash available to fund all cash flow needs.
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ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW -------- The Partnership's income from rental operations is substantially influenced by the supply and demand for the Partnership's rental space in its primary markets, its ability to maintain occupancy rates and increase rental rates on its in-service portfolio and to continue development and acquisition of additional rental properties.
The Partnership's primary markets in the Midwest have continued to offer strong and stable local economies and have provided attractive new development opportunities because of their central location, established manufacturing base, skilled work force and moderate labor costs. Additionally, through the Weeks Merger (see discussion below under Merger with Weeks Corporation), the Partnership has expanded and diversified its geographic base into southeastern markets that have similar demographics to the Midwest and are located in fast growing southeast cities expected to provide additional growth opportunities. The Partnership's occupancy rate of its in-service portfolio was 91.9% at December 31, 1999. The Partnership expects to maintain its overall occupancy at comparable levels and to increase rental rates as leases are renewed or new leases are executed. This stable occupancy and increasing rental rates should improve the Partnership's results of operations from its in-service properties. The Partnership's strategy for continued growth includes developing and acquiring additional rental properties in its primary markets and expanding into other attractive markets.
The Partnership tracks Same Property performance which compares those properties that were in-service for all of a two-year period. As a result of the rapid growth of the Partnership, this population of properties only represented 62.4% and 47.7% of the in-service portfolio at December 31, 1999 and December 31, 1998, respectively. In 1999, net operating income from the same property portfolio increased 3.2% over 1998, while for 1998, net operating income from the same property portfolio increased 5.4% over 1997.
The following table sets forth information regarding the Partnership's in-service portfolio of rental properties as of December 31, 1999 (square feet in thousands):
Management expects occupancy of the in-service property portfolio to remain stable because (i) only 10.3% and 10.9% of the Partnership's occupied square footage is subject to leases expiring in 2000 and 2001, respectively, and (ii) the Partnership's renewal percentage averaged 72%, 69% and 81% in 1999, 1998 and 1997, respectively.
The following table reflects the Partnership's in-service lease expiration schedule as of December 31, 1999, by product type indicating square footage and annualized net effective rents under expiring leases (in thousands, except per square foot amounts): - 26 -
This stable occupancy, along with increasing rental rates in each of the Partnership's markets, will allow the in-service portfolio to continue to provide an increasing level of earnings from rental operations. The Partnership also expects to realize growth in earnings from rental operations through (i) the development and acquisition of additional rental properties in its primary markets; (ii) the expansion into other attractive markets; (iii) re-deployment of capital proceeds from the disposal of non-performing and low growth assets into additional rental properties with excellent long-term growth prospects; and (iv) the completion of the 9.9 million square feet of properties under development at December 31, 1999, over the next four quarters and thereafter. These properties under development are expected to be placed in service as follows (in thousands, except percentages):
MERGER WITH WEEKS CORPORATION
In July 1999, Weeks Corporation ("Weeks"), a self-administered, self- managed geographically focused REIT which operated primarily in the southeastern United States, was merged with and into the General Partner, pursuant to which Weeks Realty L.P. ("Weeks Operating Partnership"), was merged with and into the Partnership. This transaction is hereafter referred to as the "Weeks Merger." In accordance with the terms of the Weeks Merger, each outstanding Weeks Operating Partnership common unit was converted into 1.38 common units of the Partnership and each outstanding Weeks Operating Partnership Series A preferred unit was converted into one of the Partnership's Series F preferred units (the "Series F Preferred Units"). As a result, 27.4 million common units and 6,000,000 Series F Preferred Units were issued to Weeks Operating Partnership unitholders in exchange for all of the outstanding Weeks Operating Partnership common and preferred units. The total purchase price of Weeks Operating Partnership aggregated approximately $1.9 billion, which included the assumption of the outstanding debt and liabilities of Weeks Operating Partnership of approximately $775 million. The transaction was structured as a tax- free merger and was accounted for under the purchase method.
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RESULTS OF OPERATIONS
A summary of the Partnership's operating results and property statistics for each of the years in the three-year period ended December 31, 1999, is as follows (in thousands, except number of properties and per unit amounts):
(1) As adjusted for the General Partner's two-for-one stock split effected in August 1997.
COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998 -------------------------------------------------------------------------- Rental Operations ----------------- The Partnership increased its in-service portfolio of rental properties from 453 properties comprising 52.0 million square feet at December 31, 1998 to 865 properties comprising 92.5 million square feet at December 31, 1999 through the acquisition of 366 properties totaling 31.4 million square feet and the placement in service of 67 properties and four building expansions totaling 10.4 million square. Of these additional acquisition properties, 335 properties totaling 28.6 million square feet relate to the Weeks Merger.
The Partnership also disposed of 21 properties totaling 1.3 million square feet. These 412 net additional rental properties primarily account for the $186.9 million increase in revenues from Rental Operations from 1998 to 1999. The increase from 1998 to 1999 in rental expenses, real estate taxes and depreciation and amortization expense is also a result of the additional 412 in-service rental properties.
The $26.5 million increase in interest expense is primarily attributed to higher outstanding debt balances associated with the financing of the Partnership's investment activities. The increased balances include $450 million of unsecured debt issued in 1999, the assumption of $185 million of secured debt and $287 million of unsecured debt in the Weeks Merger, and increased borrowings on the Partnership's unsecured lines of credit. These higher borrowing costs were partially offset by the capitalization of interest on increased property development activities which increased in 1999 compared to 1998.
As a result of the above mentioned items, earnings from Rental Operations increased $69.4 million from $126.0 million for 1998 to $195.4 million for 1999.
Service Operations ------------------ Service Operations revenues increased from $24.7 million to $54.0 million for the year ended 1999 as compared to 1998 primarily as a result of increases in construction management fee revenue because of an - 28 -
increase in third-party construction volume. Service Operations expenses increased from $17.5 million to $36.1 million for the year ended 1999 as compared to 1998 as a result of (i) payroll increasing from $12.5 million in 1998 to $17.2 million in 1999 due to the Weeks Merger and additional personnel added to existing regional offices due to the overall growth of the Partnership; (ii) income tax expenses increasing by $5.2 million as a result of increased activity in properties constructed for sale; and (iii) maintenance expenses increasing from $2.5 million in 1998 to $9.7 million 1999 through the addition of substantial landscape operations in the Weeks Merger and the growth of the Partnership in Midwest markets.
As a result of the above-mentioned items, earnings from Service Operations increased $10.7 million from $7.2 million in 1998 to $17.9 million for the year ended 1999.
General and Administrative Expense ---------------------------------- General and administrative expense increased from $11.6 million for the year ended 1998 to $16.6 million for 1999 primarily due to an overall increase in corporate expenses associated with the Weeks Merger and the overall growth of the Partnership.
Earnings from Land and Depreciated Property Sales ------------------------------------------------- During 1999, the Partnership developed a disposition strategy to pursue favorable opportunities to dispose of real estate assets that no longer meet long-term investment objectives of the Partnership, which resulted in net sales proceeds of $76.4 million and a net gain of $10.0 million in 1999.
As part of this ongoing real estate asset disposition strategy, the Partnership was committed to the sale of 13 real estate assets with a net book value of $153.6 million as of December 31, 1999. Subject to normal closing risks, the Partnership expects to complete these and other dispositions during 2000 and use the proceeds to fund future investments in real estate assets. As part of management's long-term strategy, the Partnership will continue to pursue favorable opportunities to dispose of assets that do not meet its long-term investment objectives and use proceeds for the funding of real estate development and acquisition opportunities.
Net Income Available for Common Units ------------------------------------- Net income available for common units for the year ended December 31, 1999, was $159.4 million compared to $103.1 million for 1998. This increase results primarily from the increases in the operating results of rental and service operations explained above.
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997 -------------------------------------------------------------------------- Rental Operations ----------------- The Partnership increased its in-service portfolio of rental properties from 355 properties comprising 40.7 million square feet at December 31, 1997 to 453 properties comprising 52.0 million square feet at December 31, 1998 through the acquisition of 66 properties totaling 5.0 million square feet and the placement in service of 34 properties and seven building expansions totaling 6.3 million square feet developed by the Partnership.
The Partnership also disposed of two properties totaling 21,000 square feet. These 98 net additional rental properties primarily account for the $118.9 million increase in revenues from Rental Operations from 1997 to 1998. The increase from 1997 to 1998 in rental expenses, real estate taxes and depreciation and amortization expense is also a result of the additional 98 in-service rental properties. - 29 -
The $19.9 million increase in interest expense is primarily attributable to higher outstanding debt balances associated with the financing of the Partnership's investment activities. The increased balances include $250 million of unsecured debt issued in 1998 and increased borrowings on the Partnership's unsecured line of credit. These higher borrowing costs were partially offset by the capitalization of interest in property development activities which increased in 1998 compared to 1997.
As a result of the above mentioned items, earnings from Rental Operations increased $42.3 million from $83.7 million for the year ended 1997 to $126.0 million for 1998.
Service Operations ------------------ Service Operations revenues increased from $22.4 million to $24.7 million for the year ended 1998 as compared to 1997 primarily as a result of increases in construction management fee revenue because of an increase in third-party construction volume. Service Operations expenses increased from $15.2 million to $17.5 million for the year ended 1998 as compared to 1997 primarily as a result of an increase in payroll expenses resulting from the overall growth of the Partnership and the additional regional offices opened in 1997.
As a result of the above-mentioned items, earnings from Service Operations remained constant at $7.2 million for the years ended 1998 and 1997.
General and Administrative Expense ---------------------------------- General and administrative expense increased from $7.3 million for the year ended 1997 to $11.6 million for 1998 as a result of internal acquisition costs which are no longer permitted to be capitalized being charged to general and administrative expense as well as an increase in state and local income taxes resulting from the overall growth of the Partnership.
Net Income Available for Common Units ------------------------------------- Net income available for common units for the year ended 1998 was $103.1 million compared to $72.8 million for 1997. This increase results primarily from the increases in the operating results of rental and service operations explained above.
LIQUIDITY AND CAPITAL RESOURCES
Financial Flexibility --------------------- During the latter half of 1998 and continuing into 1999, the real estate industry experienced a reduced supply of favorably priced equity and debt capital, which generally decreased the level of new investment activity by real estate companies. While the Partnership has been subject to the same capital market conditions as other real estate companies, management believes the Partnership's financial and liquidity position are relatively strong. Over the years, the Partnership has carefully managed its balance sheet in an effort to avoid liquidity issues in any given quarter or year. In management's view, this should provide a competitive advantage in the current capital constrained market over many of its competitors. Following are three key indicators that demonstrate the overall strength of the Partnership's financial position. First, the Partnership believes that its strong balance sheet and expected real estate asset disposition proceeds will provide the Partnership with sufficient capital to fund its investment activities during 2000 without the need to raise additional common equity through the General Partner. Second, the Partnership has only $65.0 million of final debt maturities in
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2000. Third, as of December 31, 1999, the Partnership has a total of $492.0 million of undrawn capacity on its existing lines of credit to meet its short-term obligations. Although it is not clear how long the current market conditions will prevail, management believes that these key factors will provide the Partnership with substantial financial flexibility to capitalize on investment opportunities which may not be available to other real estate companies with more limited financial resources.
Operating Activities -------------------- Net cash flow provided by operating activities increased by $122.8 million in 1999 as compared to 1998 and by $61.8 million in 1998 as compared to 1997. These increases are due primarily to the Weeks Merger in July 1999, the development and acquisition of additional rental properties, and cash flow from existing real estate assets.
Investing and Financing Activities ---------------------------------- During 1999, 1998 and 1997, the Partnership invested cash of $767.9 million, $703.6 million and $597.0 million, respectively, in real estate investments. The $767.9 million invested in real estate in 1999 was financed primarily from the borrowings under the Partnership's unsecured lines of credit. These unsecured lines of credit were partially repaid with proceeds from the issuance of $450.0 million of long-term unsecured debt, $214.8 million in net proceeds from the General Partner's sale of common shares in 1999, and $96.5 million of net proceeds from the Genral Partner's sale of preferred shares in 1999. The $703.6 million invested in real estate during 1998 was financed primarily from borrowings under the Partnership's line of credit. These borrowings were partially repaid during 1998 with proceeds from the issuance of $250.0 million of long-term unsecured debt, $211.5 million in net proceeds from the General Partner's sale of common shares in 1998, and $129.5 million of net proceeds from the General Partner's sale of preferred shares in 1998. The $597.0 million invested in real estate during 1997 was financed primarily from borrowings under the Partnership's line of credit. These borrowings were partially repaid during 1997 with proceeds from the issuance of $100.0 million of long-term unsecured debt, $321.3 million in net proceeds from the General Partner's sale of common shares in 1997, and $146.1 million of net proceeds from the General Partner's sale of preferred shares in 1997.
Other significant financing activity included the payment of $222.4 million, $137.0 million and $94.5 million in common and preferred unit distributions in 1999, 1998 and 1997, respectively. The increases are primarily attributable to (i) an increase in the overall number of common units and Series F Preferred Units outstanding resulting from the Weeks Merger in 1999; and (ii) annual increases in the cash distributions paid per common unit.
The General Partner and the Partnership currently have on file three Form S-3 Registration Statements (the "Shelf Registrations") with the Securities and Exchange Commission which have remaining availability as of December 31, 1999 of $292.9 million to issue additional common stock, preferred stock and unsecured debt securities. The General Partner and the Partnership intend to issue additional securities under such Shelf Registrations to fund the development and acquisition of additional rental properties. The General Partner also has a Shelf Registration on file for at-the-market offerings of 1.5 million shares of common stock, and the General Partner and the Partnership also plan to file a $500.0 million Shelf Registration during the first quarter of 2000.
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The recurring capital needs of the Partnership are funded primarily through the undistributed net cash provided by operating activities. A summary of the Partnership's recurring capital expenditures is as follows (in thousands):
The Partnership has the following lines of credit available (in thousands):
Both lines of credit are used to fund development and acquisition of additional rental properties and to provide working capital.
Effective July 2, 1999, the interest rate on the $450 million line of credit was adjusted from LIBOR + .80% to LIBOR + .70%. Additionally, the $450 million line of credit allows the Partnership an option to obtain borrowings from the financial institutions that participate in the line of credit at rates lower than the stated interest rate, subject to certain restrictions. Amounts outstanding on the line of credit at December 31, 1999 are at LIBOR + .70%.
The $300 million line of credit was obtained July 2, 1999, in connection with the Weeks Merger.
The debt outstanding at December 31, 1999 totals $2.1 billion with a weighted average interest rate of 7.22% maturing at various dates through 2028. The Partnership has $1.6 billion of unsecured debt and $528.7 million of secured debt outstanding at December 31, 1999. Scheduled principal amortization of such debt totaled $10.2 million for the year ended December 31, 1999.
Following is a summary of the scheduled future amortization and maturities of the Partnership's indebtedness at December 31, 1999 (in thousands):
UNITHOLDER DISTRIBUTION REQUIREMENTS
The Partnership intends to pay regular quarterly distributions from net cash provided by operating activities. A quarterly distribution of $.39 per common unit was declared on January 26, 2000, which represents an annualized distribution of $1.56 per share.
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FUNDS FROM OPERATIONS
Management believes that Funds From Operations ("FFO"), which is defined by the National Association of Real Estate Investment Trusts as net income or loss, excluding gains or losses from debt restructuring and sales of depreciated property, plus operating property depreciation and amortization and adjustments for minority interest and unconsolidated companies on the same basis, is the industry standard for reporting the operations of real estate investment trusts.
The following reflects the calculation of the Partnership's FFO for the years ended December 31 (in thousands):
The increase in FFO during the three-year period results primarily from the increased in-service rental property portfolio as discussed above under "Results of Operations," and, for the year ended 1999, the Weeks Merger.
While management believes that FFO is the most relevant and widely used measure of the Partnership's operating performance, such amount does not represent cash flow from operations as defined by generally accepted accounting principles, should not be considered as an alternative to net income as an indicator of the Partnership's operating performance, and is not indicative of cash available to fund all cash flow needs.
YEAR 2000
The Partnership did not experience any Year 2000 related disruptions or failures to its internal operations or the critical building systems of its properties. The primary focus of the Partnership's Year 2000 project was to protect the tenant spaces, buildings and internal operating systems. The rewards of the Partnership's Year 2000 planning efforts can be found in the detailed emergency contingency plans that are now in place for all buildings in all markets. With these plans in place, in the event of major unforeseen events such as loss of electricity, utilities or other vital services, the Partnership's property/asset managers are better equipped to efficiently and effectively respond to such emergencies. In addition to the foregoing, enhancements were made to the Partnership's internal information systems (software and hardware) in preparation for the Year 2000. It is expected that these upgrades and replacements will benefit the Partnership's business operations for years to come. Non-reimbursable costs to the Partnership in preparing for the Year 2000 were approximately $125,000.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
The Partnership is exposed to interest rate changes primarily as a result of its line of credit and long-term debt used to maintain liquidity and fund capital expenditures and expansion of the Partnership's real estate investment portfolio and operations. The Partnership's interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. To
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achieve its objectives the Partnership borrows primarily at fixed rates and may enter into derivative financial instruments such as interest rate swaps, caps and treasury locks in order to mitigate its interest rate risk on a related financial instrument. The Partnership does not enter into derivative or interest rate transactions for speculative purposes.
The Partnership's interest rate risk is monitored using a variety of techniques. The table below presents the principal amounts (in thousands) of the expected annual maturities, weighted average interest rates for the average debt outstanding in the specified period, fair values and other terms required to evaluate the expected cash flows and sensitivity to interest rate changes. The fair values of the Partnership's debt instruments are calculated as the present value of estimated future cash flows using a discount rate commensurate with the risks involved.
The Partnership has three interest rate swap agreements outstanding which have an aggregate fair market value of $2.65 million at December 31, 1999. The swap agreements mature on December 31, 2001.
As the table incorporates only those exposures that exist as of December 31, 1999, it does not consider those exposures or positions which could arise after that date. Moreover, because firm commitments are not presented in the table above, the information presented therein has limited predictive value. As a result, the Partnership's ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during the period, the Partnership's hedging strategies at that time, and interest rates.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data are included under Item 14 of this Report.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND ON ACCOUNTING FINANCIAL DISCLOSURE
None.
Part III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership does not have any directors or officers. The information required by Item 10 for Directors and Certain Executive Officers will be contained in a definitive proxy statement of the General Partner, which was filed on March 17, 2000, and herein is incorporated by reference. - 34 -
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 will be contained in a definitive proxy statement for the General Partner which was filed on March 17, 2000, and herein is incorporated by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Partnership had 19,059,815 Limited Partner Units which were outstanding as of the close of business on March 8, 2000.
The following table shows, as of March 8, 2000, the number and percentage of Limited Partner Units held by each person known to the Partnership who beneficially owned more than five percent of outstanding Limited Partner Units. Except as otherwise noted, all Limited Partner Units are held with sole power to vote and sole power of disposition.
(1) Includes 3,706,196 Units held by partnerships in which Mr. Nelley is a general partner and a 22% owner.
(2) Includes 552,214 Units held by trusts of which Mr. Weeks is a trustee and a 20% beneficiary and 352,760 Units owned by corporations controlled by Mr. Weeks.
(3) Includes 1,104,847 Units owned by Lindbergh-Warson Properties, Inc., a partnership in which Mr. Baur owns a 60.395% interest.
(4) Includes 1,104,847 Units owned by Lindbergh-Warson Properties, Inc., a partnership in which Mr. Mullins owns a 34.094% interest.
(5) Includes 1,104,847 Units owned by Lindbergh-Warson Properties, Inc., a partnership in which Mr. Eckhoff owns a 5.512% interest.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 will be contained in a definitive proxy statement for the General Partner which was filed on March 17, 2000, and herein is incorporated by reference.
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ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) DOCUMENTS FILED AS PART OF THIS REPORT
1. CONSOLIDATED FINANCIAL STATEMENTS:
The following Consolidated Financial Statements of the Partnership, together with the Independent Auditor's Report, are listed below:
Independent Auditors' Report Consolidated Balance Sheets, December 31, 1999 and 1998 Consolidated Statements of Operations, Years Ended December 31, 1999, 1998 and 1997 Consolidated Statements of Cash Flows, Years Ended December 31, 1999, 1998 and 1997 Consolidated Statements of Partners' Equity, Years Ended December 31, 1999, 1998 and 1997 Notes to Consolidated Financial Statements
2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
Schedule III - Real Estate and Accumulated Depreciation
3. EXHIBITS
See Index to Exhibits on page 74 of this report.
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INDEPENDENT AUDITORS' REPORT
The Partners of Duke-Weeks Realty Limited Partnership:
We have audited the consolidated financial statements of Duke-Weeks Realty Limited Partnership and Subsidiaries as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule as listed in the accompanying index. These consolidated financial statements and the financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the consolidated financial statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Duke-Weeks Realty Limited Partnership and Subsidiaries as of December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the years in the three- year period ended December 31, 1999, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
KPMG LLP Indianapolis, Indiana January 25, 2000
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DUKE-WEEKS REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31 (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
See accompanying Notes to Consolidated Financial Statements.
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DUKE-WEEKS REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31 (IN THOUSANDS)
See Note (3) for other non-cash items
See accompanying Notes to Consolidated Financial Statements.
- 40 -
DUKE-WEEKS REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (IN THOUSANDS, EXCEPT FOR PER UNIT AMOUNTS)
See accompanying Notes to Consolidated Financial Statements.
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DUKE-WEEKS REALTY LIMITED PARTNERSHIP Notes to Consolidated Financial Statements
(1) THE PARTNERSHIP ---------------- Duke-Weeks Realty Limited Partnership (the "Partnership") was formed on October 4, 1993, when Duke-Weeks Realty Corporation (the "Predecessor" or the "General Partner") contributed all of its properties and related assets and liabilities along with the net proceeds of $309.2 million from the issuance of an additional 14,000,833 shares through an offering (the "1993 Offering") to the Partnership. Simultaneously, the Partnership completed the acquisition of Duke Associates, a full-service commercial real estate firm operating in the Midwest. The General Partner was formed in 1985 and qualifies as a real estate investment trust under provisions of the Internal Revenue Code. In connection with the 1993 Offering, the formation of the Partnership and the acquisition of Duke Associates, the General Partner effected a 1 for 4.2 reverse stock split of its existing common shares. The General Partner is the sole general partner of the Partnership and received 16,046,144 units of partnership interest ("General Partner Units") in exchange for its original contribution which represented a 78.36% interest in the Partnership. As part of the acquisition, Duke Associates received 4,432,109 units of limited partnership interest ("Limited Partner Units") (together with the General Partner Units, the ("Common Units")) which represented a 21.64% interest in the Partnership. The Limited Partner Units are exchangeable for shares of the General Partner's common stock on a one-for-one basis subject generally to a one-year holding period.
In July 1999, Weeks Corporation ("Weeks") was merged with and into the General Partner, pursuant to which Weeks Realty L.P. ("Weeks Operating Partnership") was merged with and into the Partnership. This transaction is hereafter referred to as the "Weeks Merger." Upon consummation of the Weeks Merger, the name of the operating partnership was changed to Duke-Weeks Realty Limited Partnership. Financial information and references throughout this document are labeled "the Partnership" for both pre-merger and post-merger periods as a result of this name change. The Partnership's financial statements and related footnotes as of and for the period from the merger date (July 1999) to December 31, 1999, give effect to the Weeks Merger which was accounted for under the purchase method. See Note 3 for a more complete discussion of the Weeks Merger.
The Partnership owns and operates a portfolio of industrial, office and retail properties in the midwestern and southeastern United States and provides real estate services to third-party owners. The service operations are conducted through Duke Realty Services Limited Partnership and Duke Construction Limited Partnership, in which the Partnership has an 89% profits interest (after certain preferred returns on partners' capital accounts) and effective control of their operations.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ PRINCIPLES OF CONSOLIDATION --------------------------- The consolidated financial statements include the accounts of the Partnership and its majority-owned or controlled subsidiaries. The equity interests in these majority-owned or controlled subsidiaries not owned by the Partnership are reflected as minority interests in the consolidated financial statements. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements.
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DUKE-WEEKS REALTY LIMITED PARTNERSHIP Notes to Consolidated Financial Statements
RECLASSIFICATIONS ----------------- Certain 1997 and 1998 balances have been reclassified to conform to 1999 presentation.
REAL ESTATE INVESTMENTS ----------------------- Real estate investments to be held and used are stated at the lower of cost less accumulated depreciation or fair value if impairment is identified. Real estate investments to be disposed of are reported at the lower of their carrying amount or fair value less cost to sell. Buildings and land improvements are depreciated on the straight-line method over their estimated life not to exceed 40 and 15 years, respectively, and tenant improvement costs are depreciated on the straight-line method over the term of the related lease.
All direct and indirect costs, including interest and real estate taxes clearly associated with the development, construction or expansion of real estate investments are capitalized as a cost of the property. All external costs associated with the acquisition of real estate investments are capitalized as a cost of the property.
The Partnership evaluates its real estate investments to be held and used upon occurrence of significant changes in the operations, but not less than annually, to assess whether any impairment indications are present, including recurring operating losses and significant adverse changes in legal factors or business climate that affect the recovery of the recorded value. If any real estate investment is considered impaired, a loss is provided to reduce the carrying value of the property to its estimated fair value.
The acquisitions of Partnership interests are recorded under the purchase method with assets acquired reflected at the fair market value of the General Partner's common stock on the date of acquisition, net of the retirement of any minority interest liabilities. The acquisition amounts are allocated to rental property based on their estimated fair values.
The Partnership has equity interests in unconsolidated partnerships and joint ventures which own and operate rental properties and hold land for development. The equity method of accounting is used for these investments in which the Partnership has the ability to exercise significant influence over operating and financial policies. Any difference between the carrying amount of these investments and the underlying equity in net assets is amortized to equity in earnings of unconsolidated companies over the depreciable life of the property, generally 40 years.
CASH EQUIVALENTS ---------------- Highly liquid investments with a maturity of three months or less when purchased are classified as cash equivalents.
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DUKE-WEEKS REALTY LIMITED PARTNERSHIP Notes to Consolidated Financial Statements DEFERRED COSTS -------------- Costs incurred in connection with obtaining financing are amortized to interest expense on the straight-line method over the term of the related loan. All direct and indirect costs associated with the rental of real estate investments owned by the Partnership are amortized over the term of the related lease. Unamortized costs are charged to expense upon the early termination of the lease or upon early payment of the financing.
REVENUES -------- Rental Operations ----------------- Rental income from leases with scheduled rental increases during their terms is recognized on a straight-line basis.
Service Operations ------------------ Management fees are based on a percentage of rental receipts of properties managed and are recognized as the rental receipts are collected. Maintenance fees are based upon established hourly rates and are recognized as the services are performed. Construction management and development fees are generally based on a percentage of costs and are recognized as incurred.
Duke Construction Limited Partnership ("DCLP") provides construction contract services to third parties including the development and construction of properties intended for resale. Duke Realty Services Limited Partnership ("DRSLP") is the sole general partner of DCLP and the operations of DCLP are included in the consolidated financial statements of the Partnership. The sole limited partner of DCLP is Duke Realty Construction, Inc. ("DRCI"), of which the Partnership owns 100% of the preferred stock and realizes substantially all economic benefits of its activities. DRCI is not a qualified REIT subsidiary of the Partnership. Accordingly, provisions for federal income taxes are recognized as appropriate.
Net Income Per Common Unit -------------------------- Basic net income per common unit is computed by dividing net income available for common units by the weighted average number of common units outstanding for the period. Diluted net income per unit is computed by dividing net income available for common units by the sum of the weighted average number of common units and dilutive potential common units outstanding for the period.
The following table reconciles the components of basic and diluted net income per unit:
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DUKE-WEEKS REALTY LIMITED PARTNERSHIP Notes to Consolidated Financial Statements
The Preferred D Series Convertible equity was anti-dilutive in 1999 and 1998; therefore, no conversion to common units is assumed in weighted units outstanding at December 31, 1999 and 1998, respectively. Additionally, the Series G Preferred Units (see Note 3) were anti-dilutive in 1999; therefore, no conversion to common units is included in weighted units outstanding at December 31, 1999.
All units and per unit amounts have been adjusted to reflect the General Partner's two-for-one stock split in August 1997.
FEDERAL INCOME TAXES -------------------- As a partnership, the allocated share of income and loss for the year is included in the income tax returns of the partners; accordingly, no accounting for income taxes is required in the accompanying consolidated financial statements.
FAIR VALUE OF FINANCIAL INSTRUMENTS ----------------------------------- The fair values of the Partnership's financial instruments are generally calculated as the present value of estimated future cash flows using a discount rate commensurate with the risks involved and approximate their carrying or contract values.
DERIVATIVE FINANCIAL INSTRUMENTS -------------------------------- The Partnership may enter into derivative financial instruments such as interest rate swaps and treasury locks in order to mitigate its interest rate risk on a related financial instrument. These derivative financial instruments are designated as hedges and deferral accounting is applied as the derivative financial instrument reduces exposure to interest rate risk. Gains and losses on derivative financial instruments are amortized to interest expense over the term of the hedged instrument. Amounts paid or received on interest rate swaps are included in interest expense.
USE OF ESTIMATES ---------------- The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
(3) Merger With Weeks Corporation ----------------------------- In July 1999, Weeks, a self-administered, self-managed geographically focused REIT which operated primarily in the southeastern United States, and Weeks Operating Partnership, were merged with and into the General Partner and the Partnership. In accordance with the terms of the Weeks Merger, each outstanding Weeks Operating Partnership common unit was converted into 1.38 common units of the
- 45 -
DUKE-WEEKS REALTY LIMITED PARTNERSHIP Notes to Consolidated Financial Statements
Partnership and each outstanding Weeks Operating Partnership Series A preferred unit was converted into one of the Partnership's Series F preferred units (the "Series F Preferred Units"). As a result, 27.4 million common units and 6,000,000 Series F Preferred Units were issued to Weeks Operating Partnership unitholders in exchange for all of the outstanding Weeks Operating Partnership common and preferred units.
In accordance with the terms of the Weeks Merger, the Partnership converted 1,400,000 Weeks Operating Partnership 8% Series C cumulative redeemable preferred limited partnership interests into 1,400,000 8% Series G cumulative redeemable preferred limited partnership interests (the "Series G Preferred Units"). The Series G Preferred Units were recorded at a value of $35,000,000 based upon the estimated fair market value at the date of the merger announcement and are recorded in partners' equity. The Series G Preferred Units have a liquidation preference of $25.00 per preferred unit and are redeemable by the Partnership on or after November 6, 2003, at a redemption price of $25.00 per preferred unit. In combination with the issuance of the Series G Preferred Units, the Partnership issued a warrant that entitles its holder to purchase either 1,444,486 shares of General Partner common stock at a price of $24.23 per share, or 1,400,000 shares of General Partner preferred stock at a price of $25.00 per share. The Series G Preferred Units are automatically redeemed upon the exercise of the warrant. The warrant has a perpetual term unless the Series G Preferred Units are redeemed by the Partnership, in which case the warrant expires within 30 days of redemption.
The Partnership also converted 2,600,000 Weeks Operating Partnership 8.625% Series D cumulative redeemable preferred limited partnership interest into 2,600,000 8.625% Series H cumulative redeemable preferred limited partnership interests (the "Series H Preferred Units"). The Series H Preferred Units were recorded at a value of $67,955,000 based upon the estimated fair market value at the date of the merger announcement and are recorded in partners' equity. The Series H Preferred Units have a liquidation preference of $25.00 per preferred unit and are redeemable at the option of the Partnership on or after November 12, 2003, at a redemption price of $25.00 per preferred unit.
The Partnership issued 10,144,424 common units to Weeks Operating Partnership limited partnership unitholders at a rate of 1.38 Partnership common units for each Weeks Operating Partnership limited partnership unit outstanding. These common units were recorded as partners' equity at a value of $220.6 million based upon the estimated fair market value of the General Partner's common stock at the date of the merger announcement.
The total purchase price of Weeks Operating Partnership aggregated approximately $1.9 billion, which included the assumption of the outstanding debt and liabilities of Weeks Operating Partnership of approximately $775 million based upon the estimated fair market value at the date of the merger. The transaction was structured as a tax-free merger and was accounted for under the purchase method.
The following summarized pro forma unaudited information represents the combined historical operating results of Weeks Operating Partnership and Duke Realty Limited Partnership with the appropriate purchase accounting adjustments, assuming the Weeks Merger had occurred on January 1, 1998. The pro forma financial information presented is not necessarily indicative of what the Partnership's actual operating results would have been had Weeks Operating Partnership and Duke Realty Limited Partnership constituted a single entity during such periods (in thousands, except per unit amounts): - 46 -
DUKE-WEEKS REALTY LIMITED PARTNERSHIP Notes to Consolidated Financial Statements
(4) RELATED PARTY TRANSACTIONS -------------------------- The Partnership provides management, leasing, construction and other tenant related services to partnerships in which certain executive officers have continuing ownership interests. The Partnership was paid fees totaling $2.4 million, $2.3 million and $3.3 million for such services in 1999, 1998 and 1997, respectively. Management believes the terms for such services are equivalent to those available in the market. The Partnership has an option to purchase the executive officers' interest in each of these properties which expires October 2003. The option price of each property was established at the date the options were granted.
At December 31, 1999, other assets included outstanding loan advances totaling $3.45 million due from a related party, under a $5.7 million demand loan agreement. The loan bears interest at LIBOR plus 2.10% and is secured by real estate assets held by the related entity, for which the Partnership has arrangements to acquire in future periods. Interest earned under the agreement and included in the accompanying consolidated statements of operations totaled $120,852 in the year ended December 31, 1999.
(5) INVESTMENTS IN UNCONSOLIDATED COMPANIES --------------------------------------- Combined summarized financial information of the companies which are accounted for by the equity method as of December 31, 1999 and 1998 and for the years ended December 31, 1999, 1998, and 1997 are as follows (in thousands):
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DUKE-WEEKS REALTY LIMITED PARTNERSHIP Notes to Consolidated Financial Statements
(6) REAL ESTATE HELD FOR SALE ------------------------- The Partnership has an active sales program through which it is continually pursuing favorable opportunities to dispose of real estate assets that no longer meet long-term investment objectives of the Partnership in order to redeploy capital. At December 31, 1999, the Partnership had seven office and six industrial properties comprising approximately 3.5 million square feet held for sale. Of these properties, five build-to-suit office and two build-to-suit industrial properties were under development at December 31, 1999. Net operating income (defined as total property revenues, less property expenses, which include real estate taxes, repairs and maintenance, property management, utilities, insurance and other expenses) of the properties held for sale for the years ended December 31, 1999, 1998 and 1997 is approximately $7.5 million, $5.7 million, and $4.0 million, respectively. Net book value of the properties held for sale at December 31, 1999 is approximately $153.6 million. There can be no assurance that such properties held for sale will be sold.
(7) INDEBTEDNESS ------------ Indebtedness at December 31 consists of the following (in thousands):
As of December 31, 1999, the $528.7 million of secured debt is collateralized by rental properties with a net carrying value of $835.3 million.
Both lines of credit are used to fund development and acquisition of additional rental properties and to provide working capital.
Effective July 2, 1999, the interest rate on the $450 million line of credit was adjusted from LIBOR + .80% to LIBOR + .70%. Additionally, the $450 million line of credit allows the Partnership an option to obtain borrowings from the financial institutions that participate in the line of credit at rates lower than the stated interest rate, subject to certain restrictions. Amounts outstanding on the line of credit at December 31, 1999 are at LIBOR +.70%.
The $300 million line of credit was obtained July 2, 1999, in connection with the Weeks Merger (see Note 3).
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DUKE-WEEKS REALTY LIMITED PARTNERSHIP Notes to Consolidated Financial Statements
In July 1999 in conjunction with the Weeks Merger, the Partnership assumed an $85 million unsecured syndicated bank term loan (the "Term Loan"). Interest accrues on the Term Loan at LIBOR + 1.10% and the Term Loan matures on December 31, 2001. The Partnership also assumed three interest rate swap agreements with three commercial banks that effectively changes the interest costs on the entire $85 million Term Loan from its variable rate to a fixed rate. The interest rate swap agreements, with notational principal amounts of $35 million, $25 million and $25 million, mature on December 31, 2001, and effectively convert interest costs on the Term Loan to a fixed rate of approximately 6.1% through maturity. The estimated fair market value of the swap agreements was $2.65 million at December 31, 1999.
At December 31, 1999, scheduled amortization and maturities of all indebtedness for the next five years and thereafter are as follows (in thousands):
Year Amount ---- -------- 2000 $ 78,200 2001 451,117 2002 69,167 2003 295,290 2004 188,736 Thereafter 1,030,966 --------- $2,113,476 =========
Cash paid for interest in 1999, 1998, and 1997 was $100.3 million, $63.6 million and $41.9 million, respectively. Total interest capitalized in 1999, 1998 and 1997 was $26.0 million, $8.5 million and $6.0 million, respectively.
(8) SEGMENT REPORTING ----------------- The Partnership is engaged in four operating segments, the ownership and rental of office, industrial, and retail real estate investments and the providing of various real estate services such as property management, maintenance, landscaping, leasing, and construction management to third-party property owners ("Service Operations). The Partnership's reportable segments offer different products or services and are managed separately because each requires different operating strategies and management expertise. There are no material intersegment sales or transfers.
Non-segment revenue to reconcile to total revenue consists mainly of equity in earnings of joint ventures. Non- segment assets to reconcile to total assets consists of corporate assets including cash, deferred financing costs and investments in unconsolidated subsidiaries.
The accounting policies of the segments are the same as those described in Note 1.
The Partnership assesses and measures segment operating results based on a performance measure referred to as Funds From Operations ("FFO"). The National Association of Real Estate Investment Trusts defines FFO as net income or loss, excluding gains or losses from debt restructurings and sales of depreciated property, plus operating property depreciation and amortization and adjustments for minority interest and unconsolidated companies on the same basis. FFO is not a measure of operating results or cash flows from operating activities as measured by generally accepted accounting principles, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity. Interest expense and other non-property specific revenues and expenses are not allocated to individual segments in determining the Partnership's performance measure. - 49 -
DUKE-WEEKS REALTY LIMITED PARTNERSHIP Notes to Consolidated Financial Statements
The revenues, FFO and assets for each of the reportable segments are summarized as follows for the years ended December 31, 1999, 1998, and 1997:
(9) Leasing Activity ------------------- Future minimum rents due to the Partnership under non-cancelable operating leases at December 31, 1999 are as follows (in thousands):
Year Amount ---- -------- 2000 $ 553,812 2001 520,939 2002 457,339 2003 388,863 2004 317,017 Thereafter 1,136,019 --------- $3,373,989 =========
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DUKE-WEEKS REALTY LIMITED PARTNERSHIP Notes to Consolidated Financial Statements
In addition to minimum rents, certain leases require reimbursements of specified operating expenses which amounted to $85.1 million, $56.5 million, and $33.8 million for the years ended December 31, 1999, 1998 and 1997, respectively.
(10) EMPLOYEE BENEFIT PLANS ----------------------- The Partnership maintains a 401(k) plan for the benefit of its full- time employees. The Partnership matches the employees' contributions up to three percent of the employees' salary and may also make annual discretionary contributions. Total expense recognized by the Partnership was $2.3 million, $1.5 million and $882,000 for the years ended 1999, 1998 and 1997, respectively.
The Partnership makes contributions to a contributory health and welfare plan as necessary to fund claims not covered by employee contributions. Total expense recognized by the Partnership related to this plan was $2.7 million, $2.2 million and $1.2 million for 1999, 1998 and 1997, respectively. Included in total expense is an estimate based on historical experience of the effect of claims incurred but not reported as of year-end.
(11) PARTNERS' EQUITY ---------------- The General Partner periodically accesses the public equity markets and contributes the net proceeds to the Partnership to fund the development and acquisition of additional rental properties. The proceeds of these offerings are contributed by the Partnership in exchange for additional common or preferred units.
The following series of preferred equity is outstanding as of December 31, 1999 (in thousands, except percentages):
All series of preferred equity require cumulative distributions, have no stated maturity date, and the redemption price of each series may only be paid from the proceeds of other capital shares of the General Partner, which may include other classes or series of preferred equity.
The Preferred Series D equity is convertible at a conversion rate of 9.3677 common units for each preferred unit outstanding.
The dividend rate on the Preferred B Series equity increases to 9.99% after September 12, 2012.
Under a shareholder rights plan ("Rights Agreement") of the General Partner, each common unitholder has one right for each share of the General Partner's common stock prior to the occurrence of certain triggering events which would in effect execute the Rights Agreement. Upon the occurrence of such events, each right entitles the registered holder to purchase from the General Partner, one one-thousandth
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DUKE-WEEKS REALTY LIMITED PARTNERSHIP Notes to Consolidated Financial Statements
of a share of Series C Junior Preferred Stock of the General Partner which has substantially the same economic attributes and carries substantially the same voting rights as one share of General Partner common stock. As of December 31, 1999, no events have triggered execution of the Rights Agreement.
In August 1998, members of management and unaffiliated members of the General Partner's Board of Directors purchased approximately $37 million of common stock of the General Partner. In November 1999, an additional $32 million of common stock was purchased by management and members of the Board of Directors. Both purchases were financed by five-year personal loans at market interest rates from a financial institution. Participants are personally responsible for repaying the interest, principal balance, and other obligations as defined in the Executive and Senior Officer Stock Purchase Plan. As a condition of the financing agreement with the financial institution, the General Partner and the Partnership have guaranteed repayment of principal, interest and other obligations for each participant, but are fully indemnified by the participants. In the opinion of management, it is not probable that the General Partner or the Partnership will be required to satisfy this guarantee.
(12) STOCK BASED COMPENSATION ------------------------ The Partnership has eight stock based compensation plans, including fixed stock option plans and performance based stock plans. The Partnership is authorized to issue up to 10,042,000 shares of the General Partner's common stock under these plans. The Partnership applies APB Opinion No. 25 and related interpretations in accounting for its plans. Accordingly, no compensation cost has been recognized for its fixed stock option plans as the exercise price of each option equals the market price of the General Partner's common stock on the date of grant. The Partnership charges compensation costs against its income for its performance based stock plans. If compensation cost for the Partnership's fixed stock option plans had been determined consistent with FASB Statement No. 123, the Partnership's net income and net income per unit for the years ended December 31 would have been reduced to the pro forma amounts indicated below:
The effects of applying FASB Statement No. 123 in this pro forma disclosure are not indicative of future amounts. The Statement does not apply to awards prior to 1995, and additional awards in future years are anticipated.
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used: Dividend yield of 7.0%, 6.0% and 5.8% for 1999, 1998 and 1997, respectively; expected volatility of 20.1%, 19.9% and 19.1% for 1999, 1998 and 1997, respectively; weighted average risk-free interest rates of 4.9%, 5.7%, and 6.4%,for 1999, 1998 and 1997 grants, respectively; and weighted average expected lives of 6.5 years for all grants.
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DUKE-WEEKS REALTY LIMITED PARTNERSHIP Notes to Consolidated Financial Statements
Fixed Stock Option Plans ------------------------- The Partnership had two fixed stock option plans as of December 31, 1998. In 1999, the Partnership adopted the 1999 Directors' Stock Option and Dividend Increase Unit Plan and the 1999 Salary Replacement Stock Option and Dividend Increase Unit Plan. In addition, upon the Weeks Merger, the Partnership assumed all obligations under two Weeks Operating Partnership stock incentive plans.
A summary of the status of the Partnership's six fixed stock option plans as of December 31, 1999, 1998 and 1997, and changes during the years ended on those dates is as follows:
The options outstanding at December 31, 1999, under the fixed stock option plans have a range of exercise prices from $11.87 to $24.44 with a weighted average exercise price of $19.00 and a weighted average remaining contractual life of 7.05 years. The options exercisable at December 31, 1999, have a weighted average exercise price of $16.64.
Each option's maximum term is ten years. Excluding the Weeks Operating Partnership plans and with other limited exceptions, options vest at 20% per year, or, if earlier, upon the death, retirement or disability of the optionee or a change in control of the Partnership. The vesting period of the Weeks Operating Partnership plans was generally 33 1/3% per year.
Performance Based Stock Plans ----------------------------- The Partnership has two types of performance based equity compensation plans: Dividend Increase Unit Plans ("DIU Plans") and a Shareholder Value Plan. Under the DIU Plans, Dividend Increase Units ("DIUs") are granted to key employees and directors. The value of DIUs exercised by participants is payable in General Partner common stock. The maximum term of all DIUs granted is ten years.
The value of each DIU when exercised is equal to the increase in the General Partner's annualized dividend per share from the date of grant to the date of exercise, divided by the "dividend yield." Dividend yield is the annualized dividend per share divided by the market price per share of the General Partner's common stock at the date of grant. DIUs are generally subject to a 20% per year vesting schedule.
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DUKE-WEEKS REALTY LIMITED PARTNERSHIP Notes to Consolidated Financial Statements
Under the 1995 Shareholder Value Plan (the "SV Plan"), the Partnership may grant awards in specified dollar amounts to key employees. The award is payable to the employee on the third anniversary of the date of grant. One-half of the award is payable in common stock of the General Partner, and one-half is payable in cash. The initial dollar amount of each award granted under the SV Plan is adjusted upward or downward based on a comparison of the General Partner's cumulative total shareholder return for the three-year period as compared to the cumulative total return of the S&P 500 and the NAREIT Equity REIT Total Return indices. The award is not payable upon the employee's termination of employment for any reason other than retirement, death, disability or a change in control of the General Partner.
The Partnership believes that it is not possible to reasonably estimate the fair value of the General Partner's common stock to be issued under the performance based stock compensation plans and, therefore, computes compensation cost for these plans based on the intrinsic value of the awards as if they were exercised at the end of each applicable reporting period. The compensation cost that has been charged against income for these plans was $5.9 million , $4.1 million , and $2.5 million for 1999, 1998, and 1997, respectively.
(13) COMMITMENTS AND CONTINGENCIES ----------------------------- The General Partner and the Partnership have guaranteed $93 million of mortgage loans of unconsolidated companies of which the Partnership is a 50% partner. The mortgage loans are collateralized by rental properties of joint ventures which have a net carrying value substantially in excess of the mortgage loans. The Partnership does not anticipate that it will be required to satisfy these guarantees.
The Partnership has entered into agreements, subject to the completion of due diligence requirements, resolution of certain contingencies and completion of customary closing conditions, for the future acquisition of land totaling $34.9 million. The acquisitions are scheduled to close periodically through 2002 and will be paid for through a combination of cash and Limited Partner Unit issuance. - 54 -
DUKE-WEEKS REALTY LIMITED PARTNERSHIP REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (IN THOUSANDS)
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DUKE-WEEKS REALTY LIMITED PARTNERSHIP REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (IN THOUSANDS)
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- 72 - DUKE-WEEKS REALTY LIMITED PARTNERSHIP REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (IN THOUSANDS)
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DUKE-WEEKS REALTY LIMITED PARTNERSHIP REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31,1999 (IN THOUSANDS) (1) Costs capitalized subsequent to acquisition include decreases for purchase price reduction payments received and land sales or takedowns.
(2) Depreciation of real estate is computed using the straight-line method over 40 years for buildings, 15 years for land improvements and shorter periods based on lease terms (generally 3 to 10 years) for tenant improvements.
(3) 1999 Building was placed in service in December 1999.
(4) 1999 Land leases not depreciated.
(5) Building is not being depreciated as it is designated as held for sale by the Partnership.
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3. EXHIBITS
Certain exhibits required by Item 601 of Regulation S-K have been filed with previous reports by the Partnership and the General Partner and are herein incorporated by reference thereto.
NUMBER DESCRIPTION - ------ ----------- 2.1 Agreement and Plan of Merger, dated as of February 28, 1999, by and between Duke-Weeks Realty Realty Corporation (f/k/a Duke Realty Investments, Inc.) and Weeks Corporation incorporated by reference to exhibit 10.1 of Duke Realty Investments, Inc.'s Form 8-K, dated February 28, 1999.
2.2 Agreement and Plan of Merger, dated as of February 28, 1999, by and between Duke-Weeks Realty Limited Partnership (f/k/a Duke Realty Limited Partnership) and Weeks Realty, L.P. incorporated by reference to exhibit 10.2 of Duke Realty Investments, Inc.'s Form 8-K, dated February 28, 1999.
4.1 Second Amended and Restated Agreement of Limited Partnership of Duke-Weeks Realty Limited Partnership (f/k/a Duke Realty Limited Partnership) is incorporated herein by reference to Exhibit 4.1 of the Partnership's Form 8-K filed on July 16, 1999.
4.2 Indenture between Duke-Weeks Realty Limited Partnership (f/k/a Duke Realty Limited Partnership) and The First National Bank of Chicago, Trustee, incorporated by reference to Exhibit 4.1 to the Duke-Weeks Realty Corporation (f/k/a Duke Realty Investments, Inc.) Current Report on Form 8-K dated September 22, 1995.
4.3 First Supplement to Indenture, incorporated by reference to Exhibit 4.2 to the Duke-Weeks Realty Corporation (f/k/a Duke Realty Investments, Inc.) Current Report on Form 8-K filed September 22, 1995.
4.4 Second Supplement to Indenture, incorporated by reference to Exhibit 4 to the Duke-Weeks Realty Limited Partnership (f/k/a Duke Realty Limited Partnership) Current Report on Form 8-K filed July 12, 1996.
4.5 Third Supplement to Indenture, incorporated by reference to Exhibit 4 to the Duke-Weeks Realty Limited Partnership (f/k/a Duke Realty Limited Partnership) Current Report on Form 8-K filed May 20, 1997.
4.6 Fourth Supplement to Indenture, incorporated by reference to Exhibit 4.8 to the Duke-Weeks Realty Corporation (f/k/a Duke Realty Investments, Inc.) Form S-4 dated May 4, 1999 (Merger Registration Statement).
4.7 Fifth Supplement to Indenture, incorporated by reference to Exhibit 4 to the Duke-Weeks Realty Limited Partnership (f/k/a Duke Realty Limited Partnership) Current Report on Form 8-K filed June 1, 1998. - 74 -
4.8 Sixth Supplement to Indenture, incorporated by reference to Exhibit 4 to the Duke-Weeks Realty Limited Partnership (f/k/a Duke Realty Limited Partnership) Current Report on Form 8-K filed February 12, 1999.
4.9 Seventh Supplement to Indenture, incorporated by reference to Exhibit 4 to the Duke-Weeks Realty Limited Partnership (f/k/a Duke Realty Limited Partnership) Current Report on Form 8-K filed June 29, 1999.
4.10 Eighth Supplement to Indenture, incorporated by reference to Exhibit 4 to the Duke-Weeks Realty Limited Partnership (f/k/a Duke Realty Limited Partnership) Current Report on Form 8-K filed November 15, 1999.
4.11 Indenture between Weeks Realty, L.P. and State Street Bank and Trust Company, incorporated by reference to the Weeks Realty, L.P. Form 8-A, filed on August 3, 1998.
4.12 First Supplement to Indenture, incorporated by reference to the Weeks Realty, L.P. Form 8-A, filed on August 2, 1998.
10.1 Second Amended and Restated Agreement of Limited Partnership of Duke Realty Services Limited Partnership (the "Services Partnership") are incorporated herein by reference to Exhibit 10.4 of the DRE 10-K.
10.2 Promissory Note of the Services Partnership is incorporated herein by reference to Exhibit 10.3 to the 1993 Registration Statement.
10.3 Duke Realty Services Limited Partnership 1993 Stock Option Plan is incorporated herein by reference to Exhibit 10.4 to the 1993 Registration Statement. *
10.4 Acquisition Option Agreement relating to certain properties not contributed to the Operating Partnership by Duke Associates (the "Excluded Properties") is incorporated herein by reference to Exhibit 10.5 to the 1993 Registration Statement.
10.5 Management Agreement relating to the Excluded Properties is incorporated herein by reference to Exhibit 10.6 to the 1993 Registration Statement.
10.6 Contribution Agreement for certain properties and land contributed by Duke Associates and Registrant to the Partnership is incorporated herein by reference to Exhibit 10.7 to the 1993 Registration Statement.
10.7 Contribution Agreement for certain assets and contracts contributed by Duke Associates to the Service Partnership is incorporated herein by reference to Exhibit 10.8 to the 1993 Registration Statement.
10.8 Contribution Agreement for certain contracts contributed by Duke Associates to the Partnership is incorporated herein by reference to Exhibit 10.9 to the 1993 Registration Statement.
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DUKE-WEEKS REALTY LIMITED PARTNERSHIP
10.9 Stock Purchase Agreement is incorporated herein by reference to Exhibit 10.10 to the 1993 Registration Statement.
10.10 Indemnification Agreement is incorporated herein by reference to Exhibit to 10.11 to the 1993 Registration Statement.
10.11 1995 Key Employee Stock Option Plan is incorporated herein by reference to Exhibit 10.13 to the Annual Report on Form 10-K for the year ended December 31, 1995.*
10.12 1995 Dividend Increase Unit Plan is incorporated herein by reference to Exhibit 10.14 to the Annual Report on Form 10-K for the year ended December 31, 1995. *
10.13 1995 Shareholder Value Plan is incorporated herein by reference to Exhibit 10.15 to the Annual Report on Form 10-K for the year ended December 31, 1995. *
10.14 1998 Duke Realty Severance Pay Plan is incorporated herein by reference to Exhibit 10.15 to the Partnership's Form 10-K filed March 31, 1999. *
10.15 Revolving Credit Agreement dated July 2, 1999, by and among Duke-Weeks Realty Limited Partnership as borrower, Duke-Weeks Realty Corporation as General Partner and guarantor, Banc One Capital Markets, Inc. and Wachovia Securities, Inc. ("Wachovia") as lead arrangers and joint book runners, Wells Fargo Bank, National Association ("Wells Fargo"), as co-arranger, the First National Bank of Chicago as lender and administrative agent, Wells Fargo and Wachovia as co-syndication agents, First Union National Bank and PNC Bank as co-agents and lenders, is hereby incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed March 17, 2000.
10.16 Second Amended and Restated Revolving Credit Agreement by and among Duke-Weeks Realty Limited Partnership(the "Borrower"), Duke-Weeks Realty Corporation (the "General Partner" and the "Guarantor"), First Chicago Capital Markets, Inc. ("FCCM") and Wells Fargo Bank, National Association ("Wells Fargo") (collectively, the "Arrangers"), The First National Bank of Chicago ("First Chicago") as a Lender and not individually, but as "Administrative Agent", Wells Fargo as Syndication Agent, PNC Bank, National Association ("PNC"), as Documentation Agent, Commerzbank A.G. Chicago Branch ("Commerzbank") and Bank of America National Trust and Savings Association ("Bank of America") as Co-Agents, is hereby incorporated by reference to Exhibit 10.2 to the Registrant's Form 8-K filed March 17, 2000.
11.1 Statement of Computation of Ratios Earnings to Fixed Changes
11.2 Statement of Computation of Ratios Earnings to Debt Service
21. List of Subsidiaries of Registrant.
23. Consent of KPMG LLP.
24. Executed powers of attorney of certain directors.
27. Financial Data Schedule
99.1 Selected Quarterly Financial Information - 76 -
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
* Represents Management contract or compensatory plan or arrangement.
The Partnership will furnish to any security holder, upon written request, copies of any exhibit incorporated by reference, for a fee of 15 cents per page, to cover the costs of furnishing the exhibits. Written request should include a representation that the person making the request was the beneficial owner of securities entitled to vote at the 1999 Annual Meeting of the General Partner shareholders.
(B) Reports on Form 8-K
The Partnership filed Form 8-K on November 15, 1999 to file exhibits in connection with the issuance of 7.75% Series Notes due 2009. - 77 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
By: Duke-Weeks Realty Corporation Its General Partner
March 31, 2000 By: /s/ Thomas L. Hefner ----------------------- Thomas L. Hefner President and Chief Executive Officer
By: /s/ Darell E. Zink, Jr. ----------------------- Darell E. Zink, Jr. Executive Vice President and Chief Financial Officer
By: /s/ Dennis D. Oklak ----------------------- Dennis D. Oklak Executive Vice President and Chief Administrative Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Date Title --------- ---- ------
/s/ Thomas L. Hefner * 3/31/00 Chairman of the Board, President ---------------------- ------- Thomas L. Hefner and Chief Executive Officer and Director
/s/ Darell E. Zink, Jr. * 3/31/00 Executive Vice President and Chief ---------------------- ------- Darell E. Zink, Jr. Financial Officer and Director
/s/ Dennis D. Oklak * 3/31/00 Executive Vice President and ---------------------- ------- Dennis D. Oklak Chief Administrative Officer
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/s/ Barrington Branch * 3/31/00 Director ---------------------- -------- Barrington Branch
/s/ Geoffrey Button * 3/31/00 Director ---------------------- -------- Geoffrey Button
/s/ William Cavanaugh, III * 3/31/00 Director -------------------------- -------- William Cavanaugh, III
/s/ Ngaire E. Cuneo * 3/31/00 Director ---------------------- -------- Ngaire E. Cuneo
/s/ Charles R. Eitel * 3/31/00 Director ---------------------- -------- Charles R. Eitel
/s/ Howard L. Feinsand * 3/31/00 Director ---------------------- ------- Howard L. Feinsand
/s/ L. Ben Lytle * 3/31/00 Director ---------------------- ------- L. Ben Lytle
/s/ William O. McCoy * 3/31/00 Director ---------------------- ------- William O. McCoy
/s/ John W. Nelley, Jr. * 3/31/00 Director ---------------------- ------- John W. Nelley, Jr.
/s/ James E. Rogers * 3/31/00 Director ---------------------- ------- James E. Rogers
/s/ Thomas D. Senkbeil * 3/31/00 Director ---------------------- -------- Thomas D. Senkbeil
/s/ Jay J. Strauss * 3/31/00 Director ---------------------- -------- Jay J. Strauss
/s/ A. Ray Weeks, Jr. * 3/31/00 Director ---------------------- -------- A. Ray Weeks, Jr.
* By Dennis D. Oklak, Attorney-in-Fact /s/ Dennis D. Oklak --------------------
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