Duke has reaffirmed its full year funds from operations guidance in the range of $1.42 to $1.64 per share.

Press Release

INDIANAPOLIS, IN, Oct 28, 2009 -- Duke Realty Corporation (NYSE: DRE), a leading industrial and office property REIT, today reported results for the third quarter 2009.
Operating Highlights

-- Funds from operations per diluted share ("FFO") for the quarter was income of $0.32, excluding the effects of impairment and related charges as well as losses on debt transactions. With the effects of these items, FFO for the quarter was a loss of $1.02, which includes the effects of $297.1 million of non-cash impairment and related charges and $13.6 million of losses on debt transactions.
-- Impairment charges primarily recognized as a result of further
refinements in strategy including planned reductions in undeveloped
land inventory in light of lower anticipated development volume and
the targeting of non-strategic property dispositions to further align focus on high growth markets with an emphasis on industrial
and medical properties.
-- Liquidity position was further enhanced during the quarter to
$1.5 billion (based upon available line of credit balance and cash
on hand):
-- $500.0 million unsecured bonds issued in August;
-- $351.9 million par value of unsecured debt obligations
repurchased; and
-- $114.0 million secured financing closed in July.
-- Capital raised year to date through September 2009 of nearly $1.5 billion; all remaining 2009 and 2010 unsecured debt maturities
addressed with available cash.
-- 2009 FFO guidance reaffirmed at the lower end of the $1.42 - $1.64 per share range as adjusted for the additional shares issued in the April 2009 common stock offering.

"We have continued to access the capital markets, have now addressed all of our near-term obligations and remain focused on deleveraging our balance sheet," said Dennis D. Oklak, chairman and chief executive officer. "Our core operating portfolio has held up reasonably well during the last twelve months. We are focused on leasing our recently placed in-service development projects and strategically reducing our undeveloped land inventory in light of lower anticipated development volume for the foreseeable future."

Financial Performance

-- FFO for the third quarter of 2009 was a loss of $1.02 compared to
income of $0.65 for the third quarter of 2008. Third quarter 2009 FFO included non-cash impairment and related charges of $297.1 million ($1.28 per share), and $13.6 million ($0.06 per share) of losses on debt transactions. Excluding the impact of these items, FFO was $0.32 for the third quarter of 2009.
-- Net income per diluted share (EPS) for third quarter 2009 was a loss of $1.44, as compared to earnings of $0.08 for the same quarter in 2008. The loss was primarily attributable to the impairment and other non-cash charges and losses on debt transactions recognized in the third quarter of 2009.

Capital Markets

During the third quarter 2009, the company successfully refinanced, extended and obtained new financings, including:

-- Completed a $500 million unsecured debt offering consisting of $250 million of 7.375% (7.50% effective interest rate) notes due 2015 and $250 million of 8.25% (8.375% effective interest rate) notes due 2019.
-- Repurchased $206.8 million face value of its December 2011
exchangeable notes.
-- Repurchased $145.1 million of unsecured bonds through a tender offer comprised of the following:
-- $39.3 million of its 7.75% November 2009 senior notes;
-- $57.9 million of its 5.25% January 2010 senior notes; and
-- $47.9 million of its 6.95% March 2011 senior notes
-- Closed on a $114 million, 10-year, interest only secured loan bearing interest at 7.75%. The loan is secured by a portfolio of suburban office and industrial assets.
-- Recognized $13.6 million of losses on debt transactions, comprised of a $6.5 million commitment fee paid to terminate a previously announced $280 million secured debt transaction, and approximately $7.1 million in book losses on unsecured notes repurchased either through a cash tender offer transaction or open market purchases during the quarter.

As a result of these and previously announced capital transactions, the company has nearly $1.5 billion of available liquidity as of September 30, 2009, including $1.3 billion of availability on its credit facility and $155 million of cash. All remaining 2009 and 2010 unsecured debt maturities will be repaid with available cash.

Portfolio Performance

-- Overall portfolio occupancy, including projects under development, was 87.0 percent as of September 30, 2009, compared to 87.4 percent at June 30, 2009.

-- Stabilized, in-service properties (130 million square feet) were 87.7 percent leased at September 30, 2009, compared with 88.5 percent at June 30, 2009. This decrease is primarily attributable to the addition of 6 recently developed properties aggregating nearly 1.5 million square feet which were 55.6 percent leased at September 30, 2009. The company classifies a property as stabilized upon the earlier of its reaching 90% occupancy or one year after its in-service date. The decrease in stabilized occupancy as a result of these newly developed assets was anticipated by the company.

-- Tenant retention for the third quarter of 2009 was 85.0 percent with a slight decrease in net effective rents on renewals of 0.8 percent.

-- Same property net operating income decreased by 5.6 percent for the third quarter of 2009, compared with the three-month period ended September 30, 2008. Same property net operating income decreased by approximately 0.5 percent for the 12-month period ended September 30, 2009, compared with the 12-month period ended September 30, 2008. Core operations results were consistent with forecasts and in line with expectations.

Real Estate Investment Activity

Development

Wholly Owned Properties

-- The company's wholly owned development pipeline at September 30, 2009, consisted mostly of projects that are in the final stages of completion. The total estimated costs of these projects upon stabilization are $223.6 million, with $71.1 million in costs remaining to be funded. The pipeline is 1.4 million square feet comprised of 9 properties and one building expansion, which are 92 percent pre-leased in the aggregate.

-- The company placed into service two healthcare properties totaling 250,000 square feet, which were 82% pre-leased in the aggregate, and a 146,000 square foot, 100% pre-leased suburban office building.

-- The company began construction of one medical office property (45,000 square feet) that is 62% pre-leased.

Joint Venture Properties

-- The company's joint venture development pipeline at September 30, 2009, consists of three projects which total 1.1 million square feet and are 28 percent pre-leased. The total estimated costs of these projects upon stabilization are $337.9 million, with $95.4 million in remaining costs to be funded. Each joint venture has obtained third-party debt to finance construction of these properties. (All joint venture costs and square footage are reported at 100 percent ownership.)

Real Estate Valuation - Impairment and Other Charges

During the third quarter of 2009, the company recorded non-cash impairment and related charges of $297.1 million.

Components of these charges were as follows:

-- Impairment of land holdings targeted for disposition of $132.0
million;
-- Impairment of operating and under development properties of $70.7 million;
-- Impairment of investment in 3630 Peachtree joint venture in Atlanta, Georgia of $50.7 million;
-- Impairment of other real estate assets of $31.4 million; and
-- Reserves of deferred tax assets of $12.3 million.

These charges were primarily triggered as a result of further refinements in strategy including planned reductions in undeveloped land inventory in light of lower anticipated development volume and the targeting of non-strategic property dispositions. These impairment charges rely upon many subjective assumptions, such as intended holding periods, future capitalization rates and rental rates, used in applying relevant accounting rules. These non-cash charges have no effect on liquidity, and have no significant impact on compliance with the company's credit facility or unsecured bond covenants.

Dividends Declared

The company's board of directors declared a quarterly cash dividend on the company's common stock of $0.17 per share, or $0.68 per share on an annualized basis. The third quarter dividend will be payable November 30, 2009, to shareholders of record as of November 13, 2009. The company's policy is to pay aggregate annual dividends in 2009 in an amount generally equal to and not to exceed its estimated annual taxable income.

Earnings Guidance

The company reaffirmed FFO guidance for 2009 in the range of $1.42 - $1.64, as adjusted for the additional shares issued in the April 2009 common stock offering. As previously discussed in the second quarter of 2009, it is anticipated that the FFO per share will be at the lower end of guidance based upon current expectations of leasing volumes and the timing of potential transactions expected to occur in the fourth quarter of 2009. Guidance reflects $6.7 million ($0.035 per share) of severance costs incurred through September 30, 2009, and excludes the effects of impairment and other non-cash charges as well as gains or losses on debt transactions.

About Duke Realty Corporation

Duke Realty Corporation owns and operates approximately 136 million rentable square feet of industrial and office space in 20 U.S. cities. Duke Realty Corporation is publicly traded on the NYSE under the symbol DRE and is listed on the S&P MidCap 400 Index. More information about Duke is available at www.dukerealty.com.