7.5 Percent Increase to Quarterly Dividend

$141 Million of Development Starts

27.9 Percent Growth in Rents on Leasing Activity

Earnings Guidance Increased

INDIANAPOLIS, Oct. 24, 2018 (GLOBE NEWSWIRE) -- Duke Realty Corporation (NYSE: DRE), the largest domestic only, logistics REIT today reported results for the third quarter 2018.

Jim Connor, Chairman and Chief Executive Officer said, "We have completed a strong quarter of earnings growth, as our leasing results throughout the year have driven an increase to Core FFO per share of 6.1 percent compared to the second quarter of 2018 and 16.7 percent compared to the third quarter of 2017.  We are also pleased to announce an increase to our quarterly dividend from $0.20 per share to $0.215 per share.  This 7.5 percent increase to our quarterly dividend is based on our expectations of continued earnings growth allowing us to continue coverage of our ongoing dividends in the range of 65 to 75 percent of AFFO.

Operational performance was also outstanding, as we generated growth in same-property net operating income of 6.3 percent for the quarter over the third quarter of 2017, which was the result of both continued rental rate growth and increased occupancy. New and renewal leases executed during the quarter will result in rent growth of 11.2 percent on a cash basis and 27.9 percent growth in annualized net effective rents."

Mark Denien, Executive Vice President and Chief Financial Officer, stated, "We utilized a portion of the proceeds from the $450 million unsecured note issuance that we executed in September to repay two secured loans totaling $224 million.  These transactions resulted in a reduction to our cost of borrowing and effectively eliminated secured debt as a meaningful component of our financing structure.  Additionally, we do not have any significant debt maturities until 2021.

We finished the quarter with $133 million of available cash, $128 million of cash held in escrow for future 1031 exchanges and $277 million of interest bearing notes receivable that will mature at various times through January 2020.  These sources of liquidity will fund near term growth in our development pipeline."

Quarterly Highlights

• A complete reconciliation, in dollars and per share amounts, of net income to funds from operations ("FFO"), as defined by NAREIT, as well as to Core FFO, is included in the financial tables included in this release.
   
• Net income was $0.15 per diluted share for the third quarter of 2018, compared to $0.46 per diluted share for the third quarter of 2017. The decrease to net income per diluted share was due to significant gains recognized from the sale of medical office and suburban office properties during the third quarter of 2017.
   
• FFO, as defined by NAREIT, was $0.36 per diluted share for the third quarter of 2018, compared to $0.26 per diluted share for the third quarter of 2017.  FFO per diluted share, as defined by NAREIT, increased due to increased investments in new industrial properties, overall improved operations and the recognition of $17 million of losses on debt extinguishment during the third quarter of 2017.
   
• Core FFO was $0.35 per diluted share for the third quarter of 2018, compared to $0.30 per diluted share for the third quarter of 2017. With the exception of the losses on debt extinguishment during the third quarter of 2017, the increase in Core FFO per diluted share was driven by the same factors as the increase in FFO per diluted share, as defined by NAREIT.
   
• Operating performance within the company's industrial portfolio included:
  
  • Total stabilized occupancy at September 30, 2018 of 97.9 percent compared to 98.2 percent at June 30, 2018 and 98.0 percent at September 30, 2017
  
  • Total in-service occupancy at September 30, 2018 of 96.8 percent compared to 97.4 percent at June 30, 2018 and 95.7 percent at September 30, 2017
  
  • Total occupancy, including properties under development, of 93.7 percent at September 30, 2018 compared to 94.0 percent at June 30, 2018 and 93.2 percent at September 30, 2017
  
  • Tenant retention of 82.7 percent
  
  • Same-property net operating income growth of 6.3 percent and 4.6 percent for the three and nine-month periods ended September 30, 2018 compared to the same periods in 2017
  
  • Total leasing activity of 5.2 million square feet for the quarter
  
  • Overall cash and annualized net effective rent growth on new and renewal leases of 11.2 percent and 27.9 percent, respectively, for the quarter
  
  
• Successful execution of capital transactions in the third quarter included:
  
  • Issued $450 million of unsecured notes, maturing in September 2028, at an effective rate of 4.1 percent
  
  • Repaid two secured loans, totaling $224 million, that bore interest at an average effective rate of 7.6 percent
  
  • Issued 990,400 common shares under our ATM program, at an average issuance price of $29.24 per share, for total net proceeds of $28 million
  
  • Started six new development projects with expected costs of $141 million

Real Estate Investment Activity

Mr. Connor further stated, "We started $141 million of developments during the quarter, totaling 2.0 million square feet, which were 51 percent pre-leased.  Our development pipeline at September 30, 2018 was 52 percent leased and consisted of 25 properties totaling 10.6 million square feet, with expected costs of $854 million.  A significant portion of the unleased space in these new development properties is located in Tier One markets where we expect future lease up efforts to result in significant ongoing net operating income and rent growth potential outside of our same property population."

Development

The third quarter included the following development activity:

Consolidated Properties

• During the quarter, the company started $108 million of consolidated development projects totaling 1.4 million square feet, which were 75 percent pre-leased in total.  These development projects included a 340,000 square foot development in Southern California that was started on a speculative basis and then fully leased; a 618,000 square foot build-to-suit development in Cincinnati; and a 338,000 square foot speculative development in Houston.
  
  
• Six projects totaling 3.4 million square feet, which were 69 percent leased in total, were placed in service during the quarter. 

Unconsolidated Joint Venture Properties

• During the quarter, a 50 percent-owned joint venture started two speculative developments in Indianapolis totaling 645,000 square feet.
   
• A 400,000 square foot logistics project in Indianapolis, which was 100 percent leased, was placed in service during the quarter by a 50 percent-owned joint venture. 

Building Dispositions

Building dispositions totaled $9 million in the third quarter, with the only building sale being a property in Indianapolis, IN, totaling 284,000 square feet, which was sold from a 50 percent-owned joint venture.

Distributions Declared

The company's board of directors declared a quarterly cash distribution on its common stock of $0.215 per share, or $0.86 per share on an annualized basis. The third quarter dividend will be payable on November 30, 2018 to shareholders of record on November 15, 2018.

Revisions to 2018 Guidance

A reconciliation of the company's guidance for diluted net income per common share to FFO, as defined by NAREIT, and to Core FFO, is included in the financial tables to this release. The company revised its guidance for net income to a range of $1.02 to $1.10 per diluted share from its previous guidance of $0.97 to $1.12 per diluted share.  The company revised its guidance for FFO, as defined by NAREIT, to a range of $1.33 to $1.39 per diluted share from its previous guidance of $1.29 to $1.37.

Commenting on the revision to the company's 2018 guidance, Mr. Connor stated, "As we near the end of 2018 and our leasing and rental growth results have continued to come in at the higher end of our estimates, we have increased and narrowed our guidance for Core FFO to a range of $1.31 to $1.35 per diluted share from the previous range of $1.29 to $1.35 per diluted share.  For these same reasons, we have also increased our guidance for growth in same-property net operating income to a range of 4.2 percent to 4.8 percent from the previous range of 3.5 percent to 4.5 percent."

A summary of further guidance changes is as follows:

• The guidance for growth in AFFO, on a share adjusted basis, was narrowed to a range of 5.5 percent to 9.1 percent from the previous range of 4.5 percent to 10.0 percent.
  
  
• The estimate for building dispositions was increased to a range of $500 million to $600 million from the previous range of $470 million to $600 million.
  
  
• The estimate for building acquisitions was narrowed to a range of $200 million to $300 million from the previous range of $100 million to $400 million.
  
  
• The estimate for earnings from service operations was increased to a range of $5 million to $7 million from the previous range of $2 million to $5 million.

An updated version of the company's 2018 guidance will be available by 6:00 p.m. Eastern Time today through the Investor Relations section of the company's website.

FFO and AFFO Reporting Definitions

FFO: FFO is computed in accordance with standards established by NAREIT.  NAREIT defines FFO as net income (loss) excluding gains (losses) on sales of depreciable property, impairment charges related to depreciable real estate assets; plus real estate related depreciation and amortization, and after similar adjustments for unconsolidated joint ventures. The company believes FFO to be most directly comparable to net income as defined by generally accepted accounting principles ("GAAP"). The company believes that FFO should be examined in conjunction with net income (as defined by GAAP) as presented in the financial statements accompanying this release. FFO does not represent a measure of liquidity, nor is it indicative of funds available for the company’s cash needs, including the company’s ability to make cash distributions to shareholders.

Core FFO: Core FFO is computed as FFO adjusted for certain items that are generally non-cash in nature and that materially distort the comparative measurement of company performance over time. The adjustments include gains on sale of undeveloped land, impairment charges not related to depreciable real estate assets, tax expenses or benefits related to (i) changes in deferred tax asset valuation allowances, (ii) changes in tax exposure accruals that were established as the result of the adoption of new accounting principles, or (iii) taxable income (loss) related to other items excluded from FFO or Core FFO (collectively referred to as “other income tax items”), gains (losses) on debt transactions, gains (losses) on and related costs of acquisitions, gains on sale of merchant buildings,  gains (losses) from involuntary conversion related to weather events or natural disasters, promote income and severance charges related to major overhead restructuring activities. Although the company’s calculation of Core FFO differs from NAREIT’s definition of FFO and may not be comparable to that of other REITs and real estate companies, the company believes it provides a meaningful supplemental measure of its operating performance.

AFFO: AFFO is a supplemental performance measure defined by the company as Core FFO (as defined above), less recurring building improvements and total second generation capital expenditures (the leasing of vacant space that had previously been under lease by the company is referred to as second generation lease activity) related to leases commencing during the reporting period and adjusted for certain non-cash items including straight line rental income and expense, non-cash components of interest expense and stock compensation expense, and after similar adjustments for unconsolidated partnerships and joint ventures.

Same-Property Performance

The company includes same-property net operating income growth as a property-level supplemental measure of performance.  The company utilizes same-property net operating income growth as a supplemental measure to evaluate property-level performance, and jointly-controlled properties are included at the company's ownership percentage.

A reconciliation of net income from continuing operations to same property net operating income is included in the financial tables to this release.  A description of the properties that are excluded from the company’s same-property net operating income measure is included on page 17 of its September 30, 2018 supplemental information.

About Duke Realty Corporation

Duke Realty Corporation owns and operates approximately 152 million rentable square feet of industrial assets in 20 major logistics markets. Duke Realty Corporation is publicly traded on the NYSE under the symbol DRE and is listed on the S&P 500 Index. More information about Duke Realty Corporation is available at www.dukerealty.com.

Third Quarter Earnings Call and Supplemental Information

Duke Realty Corporation is hosting a conference call tomorrow, October 25, 2018, at 3:00 p.m. ET to discuss its third quarter operating results. All investors and other interested parties are invited to listen to the call. Access is available through the Investor Relations section of the company's website.

A copy of the company's supplemental information will be available by 6:00 p.m. ET today through the Investor Relations section of the company's website.

Cautionary Notice Regarding Forward-Looking Statements

This news release may contain forward-looking statements within the meaning of the federal securities laws.  All statements, other than statements of historical facts, including, among others, statements regarding the company’s future financial position or results, future dividends, and future performance, are forward-looking statements. Those statements include statements regarding the intent, belief, or current expectations of the company, members of its management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as "may," "will," "seeks," "anticipates," "believes," "estimates," "expects," "plans," "intends," "should," or similar expressions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that actual results may differ materially from those contemplated by such forward-looking statements. Many of these factors are beyond the company’s abilities to control or predict. Such factors include, but are not limited to, (i) general adverse economic and local real estate conditions; (ii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business; (iii) financing risks, such as the inability to obtain equity, debt or other sources of financing or refinancing on favorable terms, if at all; (iv) the company’s ability to raise capital by selling its assets; (v) changes in governmental laws and regulations; (vi) the level and volatility of interest rates and foreign currency exchange rates; (vii) valuation of joint venture investments; (viii) valuation of marketable securities and other investments; (ix) valuation of real estate; (x) increases in operating costs; (xi) changes in the dividend policy for the company’s common stock; (xii) the reduction in the company’s income in the event of multiple lease terminations by tenants; (xiii) impairment charges, (xiv) the effects of geopolitical instability and risks such as terrorist attacks; (xv) the effects of weather and natural disasters such as floods, droughts, wind, tornadoes and hurricanes; and (xvi) the effect of any damage to our reputation resulting from developments relating to any of items (i) – (xv). Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the company's filings with the Securities and Exchange Commission.  The company refers you to the section entitled “Risk Factors” contained in the company's Annual Report on Form 10-K for the year ended December 31, 2017. Copies of each filing may be obtained from the company or the Securities and Exchange Commission.

The risks included here are not exhaustive and undue reliance should not be placed on any forward-looking statements, which are based on current expectations. All written and oral forward-looking statements attributable to the company, its management, or persons acting on their behalf are qualified in their entirety by these cautionary statements. Further, forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time unless otherwise required by law.

Contact Information:

Investors:
Ron Hubbard
317.808.6060

Media:
Helen McCarthy
317.708.8010

Duke Realty Corporation and Subsidiaries
Consolidated Statement of Operations
(Unaudited and in thousands, except per share amounts)
			Three Months Ended								Nine Months Ended
			September 30,								September 30,
			2018				2017				2018				2017
Revenues:
	Rental and related revenue		$	196,912			$	169,611			$	582,461			$	507,123
	General contractor and service fee revenue			34,986				25,217				94,552				58,192
				231,898				194,828				677,013				565,315
Expenses:
	Rental expenses			17,704				16,224				54,869				46,967
	Real estate taxes			31,515				28,157				93,857				81,569
	General contractor and other services expenses			33,730				24,079				89,392				54,077
	Depreciation and amortization			78,855				67,992				232,216				197,028
				161,804				136,452				470,334				379,641
Other operating activities:
	Equity in earnings of unconsolidated joint ventures			5,552				1,841				15,521				58,523
	Promote income			—				—				—				20,007
	Gain on sale of properties			(107	)			21,952				194,741				93,339
	Gain on land sales			3,915				5,665				7,221				8,449
	Other operating expenses			(668	)			(770	)			(2,591	)			(2,226	)
	Impairment charges			—				(3,622	)			—				(4,481	)
	General and administrative expenses			(8,959	)			(10,075	)			(43,441	)			(41,165	)
				(267	)			14,991				171,451				132,446
	Operating income			69,827				73,367				378,130				318,120
Other income (expenses):
	Interest and other income, net			4,129				6,404				13,319				9,197
	Interest expense			(21,462	)			(20,835	)			(62,137	)			(65,401	)
	Loss on debt extinguishment			(89	)			(16,568	)			(240	)			(26,104	)
Income from continuing operations, before income taxes				52,405				42,368				329,072				235,812
	Income tax benefit (expense)			897				(359	)			(9,495	)			(7,918	)
	Income from continuing operations			53,302				42,009				319,577				227,894
Discontinued operations:
	Income before gain on sales and income taxes			85				2,563				108				17,747
	Gain on sale of depreciable properties			136				120,179				3,157				1,229,270
	Income tax benefit (expense)			—				876				—				(10,736	)
	Income from discontinued operations			221				123,618				3,265				1,236,281
Net income				53,523				165,627				322,842				1,464,175
Net income attributable to noncontrolling interests				(498	)			(358	)			(3,009	)			(18,163	)
	Net income attributable to common shareholders		$	53,025			$	165,269			$	319,833			$	1,446,012
Basic net income per common share:
	Continuing operations attributable to common shareholders		$	0.15			$	0.12			$	0.88			$	0.63
	Discontinued operations attributable to common shareholders			—				0.34				0.01				3.43
Total			$	0.15			$	0.46			$	0.89			$	4.06
Diluted net income per common share:
	Continuing operations attributable to common shareholders		$	0.15			$	0.12			$	0.88			$	0.63
	Discontinued operations attributable to common shareholders			—				0.34				0.01				3.40
Total			$	0.15			$	0.46			$	0.89			$	4.03

 

	Duke Realty Corporation and Subsidiaries
	Consolidated Balance Sheets
	(Unaudited and in thousands)
			September 30,				December 31,
			2018				2017
	Assets
Real estate investments:
	Real estate assets		$	6,943,629			$	6,593,567
	Construction in progress			515,324				401,407
	Investments in and advances to unconsolidated joint ventures			107,811				126,487
	Undeveloped land			314,075				226,987
				7,880,839				7,348,448
	Accumulated depreciation			(1,294,370	)			(1,193,905	)
	Net real estate investments			6,586,469				6,154,543
Real estate investments and other assets held-for-sale				53,653				17,550
Cash and cash equivalents				133,405				67,562
Accounts receivable, net				19,494				19,427
Straight-line rents receivable, net				102,480				93,005
Receivables on construction contracts, including retentions				33,699				13,480
Deferred leasing and other costs, net				305,143				292,682
Restricted cash held in escrow for like-kind exchange				127,597				116,405
Notes receivable from property sales				276,744				426,657
Other escrow deposits and other assets				186,126				186,885
			$	7,824,810			$	7,388,196
	Liabilities and Equity
Indebtedness:
	Secured debt, net of deferred financing costs		$	80,716			$	311,349
	Unsecured debt, net of deferred financing costs			2,553,460				2,111,542
				2,634,176				2,422,891
Liabilities related to real estate investments held-for-sale
				606				1,163
Construction payables and amounts due subcontractors, including retentions				100,323				54,545
Accrued real estate taxes				89,671				67,374
Accrued interest				27,463				17,911
Other liabilities				208,874				210,825
Tenant security deposits and prepaid rents				38,773				39,109
	Total liabilities			3,099,886				2,813,818
Shareholders' equity:
	Common shares			3,583				3,564
	Additional paid-in-capital			5,240,495				5,205,316
	Distributions in excess of net income			(571,617	)			(676,036	)
	Total shareholders' equity			4,672,461				4,532,844
Noncontrolling interests				52,463				41,534
	Total equity			4,724,924				4,574,378
			$	7,824,810			$	7,388,196

 

	Duke Realty Corporation and Subsidiaries
	Summary of EPS, FFO and AFFO
	Three Months Ended September 30,
	(Unaudited and in thousands, except per share amounts)
			2018							2017
					Wtd.							Wtd.
					Avg.	Per						Avg.	Per
		Amount			Shares	Share			Amount			Shares	Share
Net income attributable to common shareholders		$	53,025						$	165,269
Less dividends on participating securities			(394	)						(444	)
Net income per common share-basic			52,631		357,898	$	0.15			164,825		355,905	$	0.46
Add back:
	Noncontrolling interest in earnings of unitholders		495		3,302					1,535		3,301
	Other potentially dilutive securities		—		210					444		2,896
Net income attributable to common shareholders-diluted		$	53,126		361,410	$	0.15			166,804		362,102	$	0.46
Reconciliation to FFO
Net income attributable to common shareholders		$	53,025		357,898				$	165,269		355,905
Adjustments:
	Depreciation and amortization		78,855							68,029
	Company share of joint venture depreciation, amortization and other		2,367							2,171
	Gains on depreciable property sales - discontinued operations		(136	)						(121,348	)
	Gains on depreciable property sales - continuing operations		107							(21,952	)
	Income tax benefit triggered by depreciable property sales		(897	)						(516	)
	Gains on depreciable property sales - unconsolidated joint ventures		(2,008	)						37
	Noncontrolling interest share of adjustments		(718	)						677
NAREIT FFO attributable to common shareholders - basic			130,595		357,898	$	0.36			92,367		355,905	$	0.26
	Noncontrolling interest in income of unitholders		495		3,302					1,535		3,301
	Noncontrolling interest share of adjustments		718							(677	)
	Other potentially dilutive securities				2,117							2,896
NAREIT FFO attributable to common shareholders - diluted		$	131,808		363,317	$	0.36		$	93,225		362,102	$	0.26
	Gains on land sales		(3,915	)						(5,665	)
	Gains on involuntary conversion - unconsolidated joint venture		(1,397	)						—
	Loss on debt extinguishment		89							16,568
	Land impairment charges		—							3,622
Core FFO attributable to common shareholders - diluted		$	126,585		363,317	$	0.35		$	107,750		362,102	$	0.30
AFFO
Core FFO - diluted		$	126,585		363,317	$	0.35		$	107,750		362,102	$	0.30
Adjustments:
	Straight-line rental income and expense		(6,445	)						(4,292	)
	Amortization of above/below market rents and concessions		(593	)						1,232
	Stock based compensation expense		2,208							1,943
	Noncash interest expense		1,443							1,244
	Second generation concessions		—							(19	)
	Second generation tenant improvements		(4,043	)						(3,700	)
	Second generation leasing costs		(4,440	)						(4,983	)
	Building improvements		(1,417	)						(5,184	)
AFFO - diluted		$	113,298		363,317				$	93,991		362,102

 

	Duke Realty Corporation and Subsidiaries
	Summary of EPS, FFO and AFFO
	Nine Months Ended September 30,
	(Unaudited and in thousands, except per share amounts)
			2018							2017
					Wtd.							Wtd.
					Avg.	Per						Avg.	Per
		Amount			Shares	Share			Amount			Shares	Share
Net income attributable to common shareholders		$	319,833						$	1,446,012
Less dividends on participating securities			(1,249	)						(1,527	)
Net income per common share-basic			318,584		357,235	$	0.89			1,444,485		355,614	$	4.06
Add back:
	Noncontrolling interest in earnings of unitholders		3,002		3,350					13,427		3,307
	Other potentially dilutive securities		1,249		2,160					1,527		3,026
Net income attributable to common shareholders-diluted		$	322,835		362,745	$	0.89		$	1,459,439		361,947	$	4.03
Reconciliation to FFO
Net income attributable to common shareholders		$	319,833		357,235				$	1,446,012		355,614
Adjustments:
	Depreciation and amortization		232,216							222,914
	Company share of joint venture depreciation, amortization and other		6,647							7,266
	Impairment charges - depreciable property		—							859
	Gains on depreciable property sales - discontinued operations		(3,157	)						(1,224,422	)
	Gains on depreciable property sales - continuing operations		(194,741	)						(93,339	)
	Income tax expense triggered by depreciable property sales		9,495							19,142
	Gains on depreciable property sales - unconsolidated joint ventures		(8,186	)						(50,694	)
	Noncontrolling interest share of adjustments		(395	)						10,307
NAREIT FFO attributable to common shareholders - basic			361,712		357,235	$	1.01			338,045		355,614	$	0.95
	Noncontrolling interest in income of unitholders		3,002		3,350					13,427		3,307
	Noncontrolling interest share of adjustments		395							(10,307	)
	Other potentially dilutive securities				2,160							3,026
NAREIT FFO attributable to common shareholders - diluted		$	365,109		362,745	$	1.01		$	341,165		361,947	$	0.94
	Gains on land sales		(7,221	)						(8,449	)
	Gains on involuntary conversion - unconsolidated joint venture		(1,397	)						—
	Loss on debt extinguishment		240							26,104
	Gain on non-depreciable property sale - unconsolidated joint ventures		—							(119	)
	Land impairment charges		—							3,622
	Promote income		—							(20,007	)
	Other income tax items		—							(2,619	)
Core FFO attributable to common shareholders - diluted		$	356,731		362,745	$	0.98		$	339,697		361,947	$	0.94
AFFO
Core FFO - diluted		$	356,731		362,745	$	0.98		$	339,697		361,947	$	0.94
Adjustments:
	Straight-line rental income and expense		(17,759	)						(12,336	)
	Amortization of above/below market rents and concessions		(1,598	)						1,895
	Stock based compensation expense		18,238							16,023
	Noncash interest expense		4,244							4,448
	Second generation concessions		(135	)						(94	)
	Second generation tenant improvements		(12,194	)						(11,197	)
	Second generation leasing commissions		(16,232	)						(15,260	)
	Building improvements		(3,165	)						(8,115	)
AFFO - diluted		$	328,130		362,745				$	315,061		361,947

 

Duke Realty Corporation and Subsidiaries
Reconciliation of Same Property Net Operating Income Growth
(Unaudited and in thousands)
	Three Months Ended
	September 30, 2018				September 30, 2017
Income from continuing operations before income taxes	$	52,405			$	42,368
Share of same property NOI from unconsolidated joint ventures		4,063				4,049
Income and expense items not allocated to segments		98,202				85,605
Earnings from service operations		(1,256	)			(1,138	)
Properties not included and other adjustments		(35,163	)			(19,623	)
Same property NOI	$	118,251			$	111,261
Percent Change		6.3	%
	Nine Months Ended
	September 30, 2018				September 30, 2017
Income from continuing operations before income taxes	$	329,072			$	235,812
Share of same property NOI from unconsolidated joint ventures		12,016				11,990
Income and expense items not allocated to segments		113,710				150,064
Earnings from service operations		(5,160	)			(4,115	)
Properties not included and other adjustments		(100,489	)			(59,805	)
Same property NOI	$	349,149			$	333,946
Percent Change		4.6	%
Duke Realty Corporation and Subsidiaries
Reconciliation of 2018 FFO Guidance
(Unaudited )
	Pessimistic				Optimistic
Net income attributable to common shareholders - diluted	$	1.02			$	1.10
Depreciation and gains on sales of depreciated property (including share of joint venture)		0.31				0.29
NAREIT FFO attributable to common shareholders - diluted	$	1.33			$	1.39
Gains on land sales		(0.02	)			(0.03	)
Other reconciling items		—				(0.01	)
Core FFO attributable to common shareholders - diluted	$	1.31			$	1.35

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