Duke Announces Third Quarter Earnings and Increased Share Repurchase Authorization; Common and Preferred Stock Dividends, and Amendment to Shareholder Rights Plan Also Announced.

Business & Real Estate Editors

INDIANAPOLIS--(BUSINESS WIRE)--Oct. 31, 2001

Duke Realty Corporation (NYSE:DRE) reported today that funds from operations "FFO") increased 8.8 percent to $88.9 million for the third quarter of 2001 versus $81.7 million for the same period last year. On a per share basis, FFO increased 6.3 percent to $0.67 per share in the third quarter of 2001 from $0.63 per share for the third quarter of 2000.

Net income available for common shareholders for the third quarter of 2001 increased 70.8 percent to $77.1 million on revenues of $200.0 million, up from $45.1 million on revenues of $207.7 million for the third quarter last year. On a per share basis, third quarter net income available for common shareholders increased 65.7 percent to $0.58 per share compared with $0.35 per share for the third quarter of 2000. All per share amounts reported are diluted with basic per share information also included in the financial table accompanying this press release.

Duke also announced today that its Board of Directors has increased the Company's share repurchase authorization from $100 million to $250 million. To date, Duke has repurchased 20,000 shares at an average price of $21.80 per share in 2001.

Additionally, the Company's Board of Directors declared a quarterly dividend of $.45 per common share, or $1.80 per share on an annualized basis. The dividend is payable on November 30, 2001 to common shareholders of record on November 14, 2001.

The Board also declared today the following dividends on the Company's outstanding preferred stock:

              NYSE       Quarterly
Class        Symbol     Amount/Share   Record Date    Payment Date
-----        ------     ------------   -----------    ------------
Series B   Not Listed     $.99875     Dec. 17, 2001   Dec. 31, 2001
Series D     DREPRD       $.46094     Dec. 17, 2001   Dec. 31, 2001
Series E     DREPRE       $.51563     Dec. 17, 2001   Dec. 31, 2001
Series F     DREPRF       $.50000     Jan. 17, 2002   Jan. 31, 2002
Series I     DREPRI       $.52813     Dec. 17, 2001   Dec. 31, 2001

Commenting on Duke's third quarter performance, Tom Hefner, Chairman and Chief Executive Officer, stated,

"As we have indicated in recent public statements, the interaction

of an economy that has dramatically deteriorated combined with the

effects of selling over $500 million of assets this year has

clearly slowed our growth rate. In the fourth quarter, with the

full period effect of the $281 million of properties that we sold

in the third quarter, we will see FFO impacted by four cents per

share from this added liquidity."

Hefner continued,

"While the weak economy and our high level of assets sales has

clearly affected our earnings and will continue to do so until the

economy recovers and we reinvest some of our excess liquidity, we

do have some bright spots to highlight. First, with third quarter

bad debt expense of approximately 0.5 percent of revenues and no

more than 10 percent of our leases expiring in 2002 or 2003, our

income stream remains stable and durable. Second, although our

margins are lower than the business booked in 2000 due to more

projects on non-Duke land, demand for third-party construction

services has been relatively strong throughout the year led by 2.8

million square feet of new projects for Lowes Inc. Third, our

strong level of assets sales throughout 2000 and 2001 has given us

excellent liquidity and enhanced flexibility to make opportunistic 

investments. Accordingly, with the increased share repurchase

authorization approved today by our Board, we remain ready to

buyback our shares under the right circumstances, or make

opportunistic real estate investments."

Property information at September 30, 2001 was as follows:

-- The Company's 840 stabilized in-service properties totaling 94.5 million
square feet were 93.6 percent leased.

-- The Company's value creation pipeline at September 30, totaled $595 million
including $248 million of developments with an expected stabilized return of
11.4 percent that Duke plans to own indefinitely after completion; $231 million
of developments with an expected stabilized return of 11.9 percent that the
Company plans to sell within approximately one year of completion; and a $116
million backlog of third-party construction volume with a 9.3 percent pre-tax
profit margin.

-- Including projects under development, the Company's total portfolio at the
end of the third quarter consisted of 912 properties totaling more than 106
million square feet.

The Company also disclosed the following information for the third quarter of 2001:

-- Duke renewed 69 percent of leases up for renewal, totaling 1.8

million square feet, on which it attained a 10.5 percent

increase in net effective rents.

-- Year-to-date same property net operating income for 2001

increased 6.2 percent.

-- Property sales through the third quarter of 2001 were $505

million at an average capitalization rate of 10.0 percent.

-- Duke's interest and fixed-charge coverage ratios in the third

quarter were 5.1 and 3.3, respectively, compared to 3.9 and

2.8 for the third quarter of 2000.

-- At September 30, 2001, the Company had $20 million drawn on

its $650 million of credit lines, and a debt-to-total market

capitalization ratio of 29.5 percent.

-- Return on Assets and Return on Common Shareholder's Equity for

the first nine months of 2001 increased to 10.7 percent and

14.0 percent, respectively, compared to 10.2 percent and 13.3

percent for the first nine months of 2000.

Duke also announced today that pursuant to a resolution passed by shareholders at its annual meeting this year, the Company's Board of Directors has reviewed the Company's shareholder rights plan. As a result of such review, the Board has approved an amendment to the shareholder rights plan that exempts certain qualified takeover offers from its provisions. In the next few days, the Company intends to file an 8-K providing further detail of its amended shareholder rights plan.

When used in this press release, the word "believes," "expects," "estimates" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially. In particular, among the factors that could cause actual results to differ materially are continued qualification as a real estate investment trust, general business and economic conditions, competition, increases in real estate construction costs, interest rates, accessibility of debt and equity capital markets and other risks inherent in the real estate business including tenant defaults, potential liability relating to environmental matters and liquidity of real estate investments. Readers are advised to refer to Duke's Form 8-K Report as filed with the Securities and Exchange Commission on March 29, 1996 for additional information concerning these risks.

Duke Realty Corporation is the largest publicly traded office and industrial real estate company in the United States. Offering a complete range of real estate products and services, Duke produces approximately $800 million in annual revenue from approximately 4,500 tenants and focuses on building dominant market positions in each of its 13 geographic platforms across the Midwest and the Sunbelt. Duke owns interests in 106 million square feet of properties, has approximately 1,050 employees and owns or controls approximately 4,300 acres of undeveloped land that can support more than 65 million square feet of future development. Visit Duke on the web at www.dukerealty.com.

A copy of the Company's third quarter 2001 supplemental information fact book will be available after 7:00 p.m. EST  today in the Investor Information section of the Company's web site at www.dukerealty.com. These materials are also available upon written request to:

                 Thomas K. Peck
                 Senior Vice President, Investor Relations
                 Duke Realty Corporation
                 600 East 96th Street, Suite 100
                 Indianapolis, IN 46240

                        Duke Realty Corporation
                         Financial Highlights
                 (in thousands, except per share data)

                                ------------------  ------------------
                                Three Months Ended   Nine Months Ended
                                   September 30        September 30
                                ------------------  ------------------
Operating Results                 2001      2000      2001      2000
--------------------------------------------------  ------------------

Revenues                        $199,875  $207,663  $611,560  $599,911
Earnings from
 rental operations                62,507    58,354   195,223   169,757
Earnings from
 service operations               11,840     8,493    30,355    24,822
Net income - common
 shareholders                     77,102    45,149   185,547   139,533
Funds from operations - Basic     88,881    81,667   262,227   235,487
Funds from operations - Diluted  104,541    97,146   309,539   280,631

Per Share:
Funds from operations - Basic      $0.68     $0.64     $2.03     $1.86
Funds from operations - Diluted    $0.67     $0.63     $1.98     $1.83
Net income - common
 shareholders - Basic              $0.59     $0.36     $1.44     $1.10
Net income - common
 shareholders - Diluted            $0.58     $0.35     $1.42     $1.09
Dividend payout ratio              67.2%     68.3%     67.2%     68.3%
Weighted average shares
 outstanding
   Basic                         130,104   127,010   129,219   126,561
   Diluted                       156,569   154,397   155,995   153,726


                                            --------------------------
                                            September 30   December 31
Balance Sheet Data                              2001          2000
----------------------------------------------------------------------

Net real estate investments                  $4,628,022    $4,706,854
Total assets                                  5,304,002     5,460,036
Total debt                                    1,763,950     1,973,215
Shareholders' equity                          2,772,838     2,712,890
Common shares outstanding at end of period      130,236       127,932