Fitch Rates Duke Realty's $175MM Senior Note Offering 'BBB+'.

Business Editors

NEW YORK--(BUSINESS WIRE)--Jan. 9, 2003

Fitch Ratings has assigned a 'BBB+' rating to the recent offering of $175 million 5.25% senior notes due 2010 by Duke Realty Limited Partnership, the operating partnership of Duke Realty Corporation (NYSE: DRE). Fitch has also affirmed the ratings at 'BBB+' for $1.525 billion outstanding senior unsecured notes due 2003 through 2028, and 'BBB' for $440 million outstanding preferred stock for the REIT. The Rating Outlook is Stable.

Proceeds from the offering will ultimately repay a $175 million unsecured note maturing in June 2003, but will initially pay down outstandings under its bank credit facility, now at $286 million.

The ratings continue to reflect DRE's good asset quality, experienced and capable senior and regional management teams, low debt leverage, and continued access to capital, as evidenced by the current debt offering. In addition, defensive portfolio features include a well diversified tenant base of over 4,000 tenants with no one tenant representing more than 2% of its total effective rent, a manageable lease maturity schedule, and a balanced investment focus in both industrial and office properties, representing 52% and 47% of total net operating income (NOI), respectively. The ratings are further supported by DRE's solid financial flexibility and ample financing capacity.

The ratings are balanced by weakening property fundamentals in light of constrained economic conditions. In addition, DRE's geographic focus in the Midwest and Southeast regions are considered low barrier to entry markets, and susceptible to downward pressure on property fundamentals. As of Sept. 30, 2002 Duke's stabilized in-service occupancy was 90.2%, down from 93.6% reported Sept. 30, 2001.

Mitigating these operating challenges, DRE exhibits one of the stronger balance sheets in the real estate investment trust (REIT) sector. Fitch estimates DRE's ratio of debt plus preferred stock to undepreciated book capital at 44% (proforma the debt offering). Coverage ratios (adjusted for capitalized interest and capital expenditures) are solid with Fitch estimated interest and fixed charge coverage at 3.6 times (x) and 2.5x, respectively (proforma the debt offering). DRE's bondholder protection measures are further enhanced by its sizeable unencumbered assets base which is at the upper end of its peer group and covers its unsecured debt obligations at 2.6x (proforma the debt offering). DRE also maintains a well-laddered debt maturity schedule and ample capacity under its bank facility. Fitch anticipates that the financial strength of its financial ratios will moderate through debt financed acquisitions and/or development activity, although the timing of an accelerated investment program is uncertain and tempered by the company's ability to self fund through divestitures and retained cash flow.

Duke Realty Corporation (Duke Realty) is a $6.8 billion (total market capitalization) equity REIT focused on the ownership and development of suburban office and industrial properties. Headquartered in Indianapolis, Indiana, Duke Realty's portfolio exhibits a mid-west and southeast geographic presence consisting of 916 properties encompassing 106.4 million square feet, along with a significant land bank of 4,042 acres (of which 2,939 acres are owned). DRE's primary markets include Atlanta, Cincinnati, Indianapolis, St. Louis, Columbus, Minneapolis, Cleveland, Raleigh, Nashville, Chicago, Tampa/Orlando, and South Florida.