**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C.  20549**

 

**FORM 10-K**

 

**(Mark One)**

**ý****        ****ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934**

 

**For the fiscal year ended    December 31, 2004**

**OR**

 

**o****        ****TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934**

 

**For the transition period from               to               .**

 

**CommissionFile Number: 0-20625**

 

**DUKE REALTY LIMITED PARTNERSHIP**

(Exact Name ofRegistrant as Specified in Its Charter)

 
| **Indiana**                                                      | ** ** | **35-1898425**                        |
|------------------------------------------------------------------|------------|---------------------------------------|
| (State or Other  Jurisdiction of  Incorporation or Organization) |       | (IRS Employer  Identification Number) |
|                                                             |       |                                  |
| **600  East 96th Street, Suite 100  Indianapolis, Indiana**      | ** ** | **46240**                             |
| (Address of  Principal Executive Offices)                        |       | (Zip Code)                            |

 

**Registrant’s telephone number,including area code: (317) 808-6000**

 

**Securities registered pursuant toSection 12(b) of the Act:**

 

**Securities registered pursuant toSection 12(g) of the Act:**

 

Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.        Yes  ý   No  o

 

Indicate by check mark if disclosure of delinquent filers pursuant toItem 405 Regulation S-K is not contained herein, and will not be contained, tothe best of Registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or any amendment tothis Form 10-K.  o

 

Indicate by check mark whether the registrant is an accelerated filer(as defined in Exchange Act Rule 12b-2). Yes  o   No  ý

 

The aggregate market value of the Limited Partner Units held bynon-affiliates of Registrant is $274.7 million based on the last reported saleprice of the common shares of Duke Realty Corporation into which LimitedPartner Units are exchangeable, on June 30, 2004.

 

The aggregate number of Limited Partnership Units outstanding as ofFebruary 21, 2005, was 156,947,960.

 

**DocumentsIncorporated by Reference**

 

Portions of the registrant’s General Partner’s Definitive ProxyStatement for its 2005 Annual Meeting of Shareholders to be held on April 27,2005, are incorporated by reference in Part III of this Annual Report on Form10-K.

 

 

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**TABLE OF CONTENTS**

 

**Form 10-K**

 
| **Item No.** | ** ** | ** **                                                                                                                    | ** ** |
|--------------|------------|-------------------------------------------------------------------------------------------------------------------------------|------------|
|         |       |                                                                                                                          |       |
| PART I       |       |                                                                                                                          |       |
|         |       |                                                                                                                          |       |
| 1.           |       | Business                                                                                                                      |       |
| 2.           |       | Properties                                                                                                                    |       |
| 3.           |       | Legal Proceedings                                                                                                             |       |
| 4.           |       | Submission  of Matters to a Vote of Security Holders                                                                          |       |
|         |       |                                                                                                                          |       |
| PART II      |       |                                                                                                                          |       |
|         |       |                                                                                                                          |       |
| 5.           |       | Market  for the Registrant’s Common Equity, Related Stockholder Matters and Issuer  Purchases of Equity  Securities |       |
| 6.           |       | Selected Financial  Data                                                                                                      |       |
| 7.           |       | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                                   |       |
| 7A.          |       | Quantitative  and Qualitative Disclosures About Market Risk                                                                   |       |
| 8.           |       | Financial  Statements and Supplementary Data                                                                                  |       |
| 9.           |       | Changes  In and Disagreements With Accountants on Accounting and Financial Disclosure                                         |       |
| 9A.          |       | Disclosure  Controls and Procedures                                                                                           |       |
| 9B.          |       | Other Information.                                                                                                       |       |
|         |       |                                                                                                                          |       |
| PART  III    |       |                                                                                                                          |       |
|         |       |                                                                                                                          |       |
| 10.          |       | Directors  and Executive Officers of the Registrant                                                                           |       |
| 11.          |       | Executive  Compensation                                                                                                       |       |
| 12.          |       | Security  Ownership of Certain Beneficial Owners and Management and Related Stockholder  Matters                              |       |
| 13.          |       | Certain  Relationships and Related Transactions                                                                               |       |
| 14.          |       | Principal  Accountant Fees and Services                                                                                       |       |
|         |       |                                                                                                                          |       |
| PART IV      |       |                                                                                                                          |       |
|         |       |                                                                                                                          |       |
| 15.          |       | Exhibits  and Financial Statement Schedules                                                                                   |       |
|         |       |                                                                                                                          |       |
| Signatures   |       |

 

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**PART I**

 

**Item 1. Business**

 

**RiskFactors**

 

There are certain riskfactors associated with an investment in securities issued by Duke RealtyCorporation (the “General Partner”) and Duke Realty Limited Partnership (“thePartnership”). Discussion of these risk factors can be found within Item 7,Management’s Discussion and Analysis, Financial Conditions and Results ofOperations, of this Annual Report Form 10-K and in our Current Report on Form8-K dated September 5, 2003.

 

**Background**

 

The Partnership wasformed on October 4, 1993, when the General Partner contributed all of itsproperties 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 anoffering to the Partnership. Simultaneously, the Partnership completed the acquisitionof Duke Associates, a full-service commercial real estate firm operating in theMidwest. The General Partner was formed in 1985 and qualifies as a Real EstateInvestment Trust (“REIT”) under provisions of the Internal Revenue Code. TheGeneral Partner is the sole general partner of the Partnership, owning 91.3% ofthe common Partnership interest as of December 31, 2004 (“General Partner Units”).The remaining 8.7% of the Partnership’s common interest is owned by limitedpartners (“Limited Partner Units” and, together with the General Partner Units,the “Common Units”). The Limited Partner Units are exchangeable for shares ofthe General Partner’s common stock on a one-for-one basis subject generally toa one-year holding period.  As ofDecember 31, 2004, we own interest in a diversified portfolio of 893 rentalproperties (including 17 properties totaling 4.2 million square feet underdevelopment) which encompass over 114.2 million rentable square feet and areleased by a diverse and stable base of more than 4,200 tenants whose businessesinclude manufacturing, retailing, wholesale trade, distribution andprofessional services. We also own or control more than 4,600 acres ofunencumbered land ready for development.

 

Through our ServiceOperations, we provide, on a fee basis, leasing, property and asset management,development, construction, build-to-suit and other tenant-related services forapproximately 300 tenants in over 8.2 million square feet of space atproperties owned by third-party clients. With 13 primary operating platforms,we concentrate our activities in the Midwest and Southeast United States. SeeItem 7, “Management’s Discussion and Analysis of Financial Condition andResults of Operations” and Item 8, “Financial Statements and Supplementary Data”for financial information. Our rental operations are conducted through DukeRealty Limited Partnership (“DRLP”). In addition, we conduct our ServiceOperations through Duke Realty Services Limited Partnership (“DRSLP”) and DukeConstruction Limited Partnership (“DCLP”). In this Form 10-K Report, the terms “we,” “us” and “our” refer to thePartnership and those entities owned or controlled by the Partnership.

 

Our headquarters andexecutive offices are located in Indianapolis, Indiana. In addition, we havetwelve regional offices located in Atlanta, Georgia; Cincinnati, Ohio;Columbus, Ohio; Cleveland, Ohio; Chicago, Illinois; Dallas, Texas; Minneapolis,Minnesota; Nashville, Tennessee; Orlando, Florida; Raleigh, North Carolina; St.Louis, Missouri; and Tampa, Florida. We had approximately 1,100 employees as ofDecember 31, 2004.

 

1

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**BusinessStrategy**

 

Our business objective isto increase Funds From Operations (“FFO”) by (i) maintaining and increasing propertyoccupancy and rental rates through the management of our portfolio of existingproperties; (ii) expanding existing properties in our existing markets and byentering new markets; (iii) developing and acquiring new properties for rentaloperations in our existing markets; (iv) using our construction expertise toact as a general contractor in our existing markets and other domestic marketson a fee basis; (v) developing properties in our existing markets and othermarkets which we will sell through our merchant building development programand (vi) providing a full line of real estate services to our tenants and tothird parties. FFO is used by industry analysts and investors as a supplementaloperating performance measure of an equity REIT. FFO is calculated inaccordance with the definition that was adopted by the Board of Governors ofthe National Association of Real Estate Investment Trusts (“NAREIT”). FFO, asdefined by NAREIT, represents net income (loss) determined in accordance withaccounting principles generally accepted in the United States (“GAAP”),excluding extraordinary items as defined under GAAP and gains or losses fromsales of previously depreciated operating real estate assets, plus certainnon-cash items such as real estate asset depreciation and amortization, andafter similar adjustments for unconsolidated partnerships and joint ventures.

 

Historical costaccounting for real estate assets in accordance with GAAP implicitly assumesthat the value of real estate assets diminishes predictably over time. Sincereal estate values instead have historically risen or fallen with marketconditions, many industry investors and analysts have considered presentationof operating results for real estate companies that use historical cost accountingto be insufficient by themselves. Thus, NAREIT created FFO as a supplementalmeasure of REIT operating performance that excludes historical costdepreciation, among other items, from GAAP net income. Management believes thatthe use of FFO, combined with the required primary GAAP presentations, hasimproved the understanding of operating results of REITs among the investingpublic and made comparisons of REIT operating results more meaningful.Management generally considers FFO to be a useful measure for reviewingcomparative operating and financial performance (although FFO should bereviewed in conjunction with net income which remains the primary measure ofperformance) because by excluding gains or losses related to sales ofpreviously depreciated operating real estate assets and excluding real estateasset depreciation and amortization, FFO assists in comparing the operatingperformance of a company’s real estate between periods or as compared todifferent companies.

 

As a fully integratedcommercial real estate firm, we provide in-house leasing, management,development and construction services which, coupled with our significant baseof commercially zoned and unencumbered land in existing business parks, shouldgive us a competitive advantage both as a real estate operator and in futuredevelopment activities.

 

We believe that themanagement of real estate opportunities and risks can be done most effectivelyat regional or local levels. As a result, we intend to continue our emphasis onincreasing our market share and effective rents in the primary markets where weown properties. We also expect to utilize over 4,600 acres of unencumbered landand our many business relationships with more than 4,200 commercial tenants toexpand our build-to-suit business (development projects substantiallypre-leased to a single tenant) and to pursue other development and acquisitionopportunities in our primary markets. We believe that this regional focus willallow us to assess market supply and demand for real estate more effectively aswell as to capitalize on the strong relationships with our tenant base. Inaddition, we seek to further capitalize on strong customer relationships toprovide third-party construction and build-for-sale services outside ourprimary markets.

 

2

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Our strategy is to seekto develop and acquire primarily Class A commercial properties located inmarkets with high growth potential for large national and internationalcompanies and other quality regional and local firms. Our industrial andsuburban office development focuses on business parks and mixed-usedevelopments suitable for multiple projects on a single site where we cancreate and control the business environment. These business parks and mixed-usedevelopments often include restaurants and other amenities, which we believewill create an atmosphere that is particularly efficient and desirable. Ourretail development focuses on lifestyle, community and neighborhood centers inour existing markets and is developed primarily for held-for-saleopportunities. In 2004, we executed a new initiative with a prominenthealthcare real estate developer to jointly develop, construct and leasemedical office and related healthcare facilities on a merchant building basis.As a fully integrated real estate company, we are able to arrange for orprovide to our industrial, office, medical and retail customers not only welllocated and well maintained facilities, but also additional services such asbuild-to-suit construction, tenant finish construction and expansionflexibility.

 

All of our properties arelocated in areas that include competitive properties. Institutional investors,other REITs or local real estate operators generally own such properties; however,no single competitor or small group of competitors is dominant in our currentmarkets. The supply and demand of similar available rental properties mayaffect the rental rates we will receive on our properties.

 

**FinancingStrategy**

 

We seek to maintain awell-balanced, conservative and flexible capital structure by: (i) extendingand sequencing the maturity dates of debt; (ii) borrowing primarily at fixedrates by targeting a variable rate component of total debt less than 20%; (iii)pursuing current and future long-term debt financings and refinancing on anunsecured basis; (iv) maintaining conservative debt service and fixed chargecoverage ratios; and (v) issuing attractively priced perpetual preferred equityfor 5-10% of our total capital structure. Management believes that thesestrategies have enabled and should continue to enable us to favorably accesscapital markets for our long-term requirements such as debt refinancing andfinancing development and acquisitions of additional rental properties. Inaddition, as discussed under Item 7, “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations,” we have a $500 millionunsecured line of credit available for short-term fundings of development andacquisition of additional rental properties. Further, we pursue favorableopportunities to dispose of assets that no longer meet our long-term investmentcriteria and recycle the proceeds into new investments that we believe haveexcellent long-term growth prospects. Our debt to total market capitalizationratio (total market capitalization is defined as the total market value of alloutstanding Common Units and Preferred equity plus outstanding indebtedness) atDecember 31, 2004 was 29.5%. Our ratio of earnings to debt service and ratio ofearnings to fixed charges for the year ended December 31, 2004 were 1.96x and1.72x, respectively. In computing the ratio of earnings to debt service,earnings have been calculated by adding debt service to income from continuingoperations before earnings or losses from the sale of land and ownershipinterests in unconsolidated companies, net of impairment adjustments. Debtservice consists of interest expense and recurring principal amortization(excluding maturities) and excludes amortization of debt issuance costs. Incomputing the ratio of earnings to fixed charges, earnings have been calculatedby adding fixed charges, excluding capitalized interest, to income fromcontinuing operations before earnings or losses from the sale of land and ownershipinterests in unconsolidated companies, net of impairment adjustments. Fixedcharges consist of interest costs, whether expensed or capitalized, theinterest component of rental expense, amortization of debt issuance costs anddistribution requirements for preferred limited partner interest (“PreferredUnits”).

 

3

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**CorporateGovernance**

 

As alimited partnership that has one general partner owning over 90% of thepartnership interest, the governance of the Partnership is necessarily linkedto the corporate governance of the General Partner.  The General Partner has and continues to be aleader in issues important to investors such as disclosure and corporategovernance initiatives. Summarized below are highlights of the General Partner’sCorporate Governance Initiatives.

 
| **Board Composition** |   | General Partner’s Board is  controlled by supermajority (80%) of Independent Directors                                                                   |
|-----------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **            |   |                                                                                                                                                          |
| **Board Committees**  |   | General Partner’s Board  Committee members are all Independent Directors                                                                                 |
| ** **            |   |                                                                                                                                                          |
| **Lead Director**     |   | The Chairman of  the Corporate Governance Committee serves as Lead Director of the General  Partner’s Independent Directors                              |
| ** **            |   |                                                                                                                                                          |
| **Board Guidelines**  |   | Code of Conduct applies to all Directors of the General Partner and  Employees;  waivers require the vote of the General Partner’s Independent Directors |
| ** **            |   | Effective orientation  program created for new Directors of the General Partner  Independence of the General Partner’s Directors is reviewed annually    |
| ** **            |   | Independent Directors of the General Partner meet at least quarterly in  executive session                                                                    |
| ** **            |   | Independent Directors of the General Partner receive no compensation  from the Partnership other than as Directors                                            |
| ** **            |   | Equity-based compensation plans require General Partner’s shareholder  approval                                                                          |
| ** **            |   | Board effectiveness and performance is reviewed annually by the  Corporate Governance Committee                                                               |
| ** **            |   | Corporate Governance Committee conducts an annual review of the CEO succession  plan                                                                          |
| ** **            |   | Independent Directors of the General Partner and all Board Committees  may retain outside advisors, as they deem appropriate                                  |
| ** **            |   | Mandatory retirement age  for Directors of the General Partner                                                                                                |
| ** **            |   | Outstanding stock options  of the General Partner may not be repriced                                                                                         |
| ** **            |   | Directors of the General  Partner are required to offer resignation upon job change                                                                           |
| ** **            |   |                                                                                                                                                          |
| **Ownership**         |   | Minimum Stock Ownership  Guidelines apply to all Directors and Executive Officers of the General  Partner                                                     |

 

TheGeneral Partner’s Code of Conduct (which applies to all of its Directors andemployees, including the Chief Executive Officer and senior financial officers)and the Corporate Governance Guidelines are available in the investorinformation/corporate governance section of the General Partner’s website atwww.dukerealty.com.  A copy of thesedocuments may also be obtained without charge by writing to Duke RealtyCorporation, 600 East 96th Street, Suite 100, Indianapolis, Indiana 46240,Attention: Investor Relations.

 

**Other**

 

For additional informationregarding our investments and operations, see Item 7, “Management’s Discussionand Analysis of Financial Condition and Results of Operations,” and Item 8, “FinancialStatements and Supplementary Data.” For additional information about ourbusiness segments, see Item 8, “Financial Statements and Supplementary Data.”

 

4

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In addition to this Annual Report,the General Partner and the Partnership file quarterly and special reports,proxy statements and other information with the Securities and ExchangeCommission (the “SEC”). All documents that are filed with the SEC are availablefree of charge on the General Partner’s corporate website, which ishttp://www.dukerealty.com. You may also read and copy any document filed at thepublic reference facilities of the SEC at 450 Fifth Street, N.W., Washington,D.C. 25049.  Please call the SEC at (800)SEC-0330 for further information about the public reference facilities. Thesedocuments also may be accessed through the SEC’s electronic data gathering,analysis and retrieval system (“EDGAR”) via electronic means, including the SEC’shome page on the Internet (http://www.sec.gov). In addition, since some of theGeneral Partner’s securities are listed on the New York Stock Exchange, you mayread SEC filings at the offices of the New York Stock Exchange, 20 BroadStreet, New York, New York 10005.

 

**Item 2.  Properties**

 

**Product Review**

 

As of December 31, 2004, we own aninterest in a diversified portfolio of 893 commercial properties encompassingover 114.2 million net rentable square feet (including 17 properties comprising4.2 million square feet under development) and more than 4,600 acres of landfor future development.

 

**Industrial Properties:** We own interests in 623 industrial propertiesencompassing more than 84.5 million square feet (74% of total square feet) morespecifically described as follows:

•                  **Bulk Warehouses –**Industrial warehouse/distribution buildings withclear ceiling heights of 20 feet or more. We own 410 buildings totaling 71.5million 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 ofdrive-up and dock-height loading access. We own 213 buildings totalingapproximately 13.0 million square feet of such properties.

 

**Office Properties:**  We owninterests in 264 office buildings totaling approximately 29.1 million squarefeet (25% of total square feet). These properties include primarily suburbanoffice properties.

 

**Retail Properties:**  We owninterests in six retail projects totaling approximately 600,000 square feet (1%of total square feet). These properties encompass both power and neighborhoodshopping centers.

 

**Land:**  We own orcontrol more than 4,600 acres of land located primarily in existing businessparks. The land is ready for immediate use and is unencumbered. Over 69 millionsquare feet of additional space can be developed on these sites andsubstantially all of the land is zoned for either office, industrial or retaildevelopment.

 

**Service Operations:**  We provideproperty and asset management, development, leasing and construction servicesto third party owners in addition to our own properties. Our current propertymanagement base for third parties includes over 8.2 million square feet of propertiesserving approximately 300 tenants.

 

**PropertyDescriptions**

 

The following schedule representsthe geographic highlights of properties in our primary markets.

 

5

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Duke Realty LimitedPartnership

Geographic Highlights

In Service Properties asof December 31, 2004

 
| ** **         | ** ** | ** **

**Square Feet (1)** | ** ** | **Annual Net Effective Rent (2)** | ** ** | **Percent of Annual Net Effective Rent** | ** ** |
|--------------------|------------|---------------------------------|------------|----------------------------------------|------------|------------------------------------------|------------|
| ** **         | ** ** | **Industrial**                  | ** ** | ** **                             | ** ** | ** **                               | ** ** | ** ** | ** ** | **Percent of Overall** | ** ** | ** ** | ** ** |
| **Primary Market** | ** ** | **Service Center**              | ** ** | **Bulk**                               | ** ** | **Office**                               | ** ** | **Retail** | ** ** | **Overall** | ** ** | ** ** | ** ** | ** ** |
|               |       |                            |       |                                   |       |                                     |       |   |   |   |   |   |   |   |   |   |   |
| Atlanta            |       | 3,024,375                       |       | 7,964,013                              |       | 3,327,744                                |       | 29,996 |   | 14,346,128 |   | 13.03 | % | 87,291,761 |   | 14.26 | % |
| Cincinnati         |       | 1,238,959                       |       | 8,275,745                              |       | 5,080,759                                |       | 566,316 |   | 15,161,779 |   | 13.79 | % | 82,980,691 |   | 13.55 | % |
| Indianapolis       |       | 1,521,578                       |       | 18,146,945                             |       | 2,965,480                                |       | — |   | 22,634,003 |   | 20.58 | % | 77,163,312 |   | 12.60 | % |
| St. Louis          |       | 1,333,986                       |       | 2,919,800                              |       | 3,548,901                                |       | — |   | 7,802,687 |   | 7.09 | % | 62,531,938 |   | 10.21 | % |
| Columbus           |       | 82,520                          |       | 3,824,473                              |       | 3,228,844                                |       | — |   | 7,135,837 |   | 6.49 | % | 48,049,590 |   | 7.85 | % |
| Cleveland          |       | 60,600                          |       | 3,583,281                              |       | 2,280,177                                |       | — |   | 5,924,058 |   | 5.39 | % | 42,081,216 |   | 6.87 | % |
| Minneapolis        |       | 2,117,064                       |       | 3,489,049                              |       | 975,323                                  |       | — |   | 6,581,436 |   | 5.98 | % | 41,160,105 |   | 6.72 | % |
| Raleigh            |       | 1,162,729                       |       | 1,814,710                              |       | 2,237,183                                |       | — |   | 5,214,622 |   | 4.74 | % | 40,745,033 |   | 6.65 | % |
| Nashville          |       | 1,284,384                       |       | 3,335,928                              |       | 832,809                                  |       | — |   | 5,453,121 |   | 4.96 | % | 38,852,884 |   | 6.35 | % |
| Chicago            |       | 276,344                         |       | 5,116,560                              |       | 1,813,360                                |       | — |   | 7,206,264 |   | 6.55 | % | 38,257,033 |   | 6.25 | % |
| Central Florida    |       | 350,493                         |       | 2,722,877                              |       | 1,278,214                                |       | — |   | 4,351,584 |   | 3.96 | % | 26,866,053 |   | 4.39 | % |
| Dallas             |       | 470,754                         |       | 6,438,553                              |       | 152,000                                  |       | — |   | 7,061,307 |   | 6.42 | % | 16,452,224 |   | 2.69 | % |
| South Florida      |       | —                          |       | —                                 |       | 677,806                                  |       | — |   | 677,806 |   | 0.62 | % | 9,293,695 |   | 1.52 | % |
| Other(3)           |       | —                          |       | 436,139                                |       | —                                   |       | — |   | 436,139 |   | 0.40 | % | 557,914 |   | 0.09 | % |
|               |       |                            |       |                                   |       |                                     |       |   |   |   |   |   |   |   |   |   |   |
| Total              |       | 12,923,786                      |       | 68,068,073                             |       | 28,398,600                               |       | 596,312 |   | 109,986,771 |   | 100.00 | % | $ | 612,283,451 |   | 100.00 | % |
|               |       |                            |       |                                   |       |                                     |       |   |   |   |   |   |   |   |   |   |   |
|               |       | 11.75                           | %          | 61.89                                  | %          | 25.82                                    | %          | 0.54 | % | 100.00 | % |   |   |   |   |   |   |
|               |       |                            |       |                                   |       |                                     |       |   |   |   |   |   |   |   |   |   |   |
| ** **         | ** ** | **Occupancy%**                  | ** ** |                                   |
| ** **         | ** ** | **Industrial**                  | ** ** | ** **                             | ** ** | ** **                               | ** ** | ** ** | ** ** |   |
| **Primary Market** | ** ** | **Service Center**              | ** ** | **Bulk**                               | ** ** | **Office**                               | ** ** | **Retail** | ** ** | **Overall** | ** ** |   |
| ** **         | ** ** | ** **                      | ** ** | ** **                             | ** ** | ** **                               | ** ** | ** ** | ** ** | ** ** | ** ** |   |
| Atlanta            |       | 85.34                           | %          | 87.75                                  | %          | 90.71                                    | %          | 100.00 | % | 87.95 | % |   |
| Cincinnati         |       | 83.95                           | %          | 93.28                                  | %          | 89.03                                    | %          | 100.00 | % | 91.35 | % |   |
| Indianapolis       |       | 88.36                           | %          | 96.50                                  | %          | 91.12                                    | %          | — |   | 95.25 | % |   |
| St. Louis          |       | 85.39                           | %          | 90.23                                  | %          | 85.66                                    | %          | — |   | 87.32 | % |   |
| Columbus           |       | 100.00                          | %          | 95.35                                  | %          | 88.85                                    | %          | — |   | 92.46 | % |   |
| Cleveland          |       | 100.00                          | %          | 92.98                                  | %          | 78.13                                    | %          | — |   | 87.34 | % |   |
| Minneapolis        |       | 86.84                           | %          | 93.96                                  | %          | 85.05                                    | %          | — |   | 90.35 | % |   |
| Raleigh            |       | 72.97                           | %          | 90.65                                  | %          | 88.25                                    | %          | — |   | 85.68 | % |   |
| Nashville          |       | 80.45                           | %          | 90.89                                  | %          | 90.16                                    | %          | — |   | 88.32 | % |   |
| Chicago            |       | 96.63                           | %          | 94.27                                  | %          | 81.57                                    | %          | — |   | 91.17 | % |   |
| Central Florida    |       | 94.03                           | %          | 90.43                                  | %          | 81.38                                    | %          | — |   | 88.06 | % |   |
| Dallas             |       | 95.09                           | %          | 94.76                                  | %          | 100.00                                   | %          | — |   | 94.89 | % |   |
| South Florida      |       | —                          |       | —                                 |       | 87.33                                    | %          | — |   | 87.33 | % |   |
| Other(3)           |       | —                          |       | 100.00                                 | %          | —                                   |       | — |   | 100.00 | % |   |
|               |       |                            |       |                                   |       |                                     |       |   |   |   |   |   |
| Total              |       | 85.21                           | %          | 93.45                                  | %          | 87.16                                    | %          | 100.00 | % | 90.89 | % |   |
|                    |            |                                 |            |                                        |            |                                          |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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(1)          Includes all whollyowned and joint venture projects shown at 100% as of report date.

 

(2)          Represents the averageannual rental property revenue due from tenants in occupancy as of the date ofthis report, excluding additional rent due as operating expense reimbursements,landlord allowances for operating expenses and percentage rents. Joint Ventureproperties are shown at the Partnership’s ownership percentage.

 

(3)          Represents propertiesnot located in the Partnership’s primary markets. These properties are locatedin similar midwest or southeast markets.

 

6

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**Item 3.  Legal Proceedings**

 

Weare not subject to any material pending legal proceedings, other than ordinaryroutine litigation arising in the ordinary course of business. Our managementexpects that these ordinary routine legal proceedings will be covered byinsurance and does not expect these legal proceedings to have a materialadverse effect on our financial condition, results of operations, or liquidity.

 

**Item 4.  Submission of Matters to a Vote of SecurityHolders**

 

No matters were submittedto a vote of security holders of the General Partner during the quarter endedDecember 31, 2004.

 

**EXECUTIVE OFFICERS OF THE GENERAL PARTNER**

 

***Robert M. Chapman, age 51***.  Mr. Chapman has served as the General Partner’sSenior Executive Vice President, Real Estate Operations, since November 2003.From 1999 through November 2003, Mr. Chapman served in various real estateinvestment and operating positions of the General Partner.

 

***Matthew A. Cohoat, age 45***. Mr. Cohoatwas named Executive Vice President and Chief Financial Officer of the GeneralPartner on January 1, 2004. From 1990 through 2003, Mr. Cohoat held variouspositions in financial areas of the General Partner.

 

***James B. Conner, age 46.***Mr. Connorhas served as Regional Executive Vice President for the Chicago Region sinceDecember 2003. Previously, Mr. Connor served as Senior Vice President responsiblefor the Chicago Operations since joining the General Partner in 1998.

 

***Howard L. Feinsand, age 57***.** Mr. Feinsand has served as the General Partner’sExecutive Vice President and General Counsel since 1999. Mr. Feinsand served onthe General Partner’s Board of Directors from 1988 to January 2003.

 

***Robert D. Fessler, age 47.*** Mr. Fesslerhas served as a Regional Executive Vice President of the Atlanta Region sinceJuly 2003. Mr. Fessler was Senior Vice President of the Cincinnati Operationsfrom 2001 to July 2003, and led the Cincinnati Industrial Group from 1988through 2002.

 

***Steven R. Kennedy, age******48***. Mr. Kennedy wasnamed as the General Partner’s Executive Vice President, Construction onJanuary 1, 2004. From 1986 until 2004, he served in various capacities in theconstruction group, most recently as Senior Vice President.

 

***Dennis D. Oklak, age 51***.  Mr. Oklak was named President and ChiefExecutive Officer of the General Partner effective April 30, 2004. He wasCo-Chief Operating Officer of the General Partner from April 2002 throughJanuary 2003, at which time he was named President and Chief Operating Officer.Mr. Oklak assumed the position of Executive Vice President and ChiefAdministrative Officer in 1997. From 1986 through 1997, Mr. Oklak served invarious financial positions of the General Partner.

 

***Christopher L. Seger, age 37.***Mr.Seger was appointed Executive Vice President, National Development/Constructionin December 2003. From 2001 to 2003, Mr. Seger was Senior Vice President of theFlorida Group.  From 1999 to 2001, Mr.Seger was Senior Vice President of the Indiana Office Group.

 

**Item 5.  Market for the Registrant’s Common Equity,****Related Stockholder Matters and Issuer Purchases of Equity Securities**

 

There is no establishedpublic trading market for the Common Units. The following table sets forth the cash distributions paid during eachquarter.  As of February 21, 2005 therewere 184 record holders of Common Units.

 

7

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**PART II**

 
| **Quarter Ended** | ** ** | **2004 Distributions  per Common Unit** | ** ** | **2003 Distributions  per Common Unit** | ** ** |
|-------------------|------------|-----------------------------------------|------------|-----------------------------------------|------------|
|              |       |                                    |       |                                    |       |
| December 31       | ** ** | **$**                                   | **.465**   |                                    | $          | .460 |   |
| September 30      | ** ** | **.465**                                |       | .460                                    |       |
| June 30           | ** ** | **.460**                                |       | .455                                    |       |
| March 31          | ** ** | **.460**                                |       | .455                                    |       |
|                   |            |                                         |            |                                         |            |  |  |

 

On January 26, 2005, wedeclared a quarterly cash distribution of $.465 per Common Unit, payable onFebruary 28, 2005, to Common Unitholders of record on February 14, 2005.

 

**Item 6.  Selected Financial Data**

 

The following sets forthselected financial and operating information on a historical basis for each ofthe years in the five-year period ended December 31, 2004. The followinginformation should be read in conjunction with Item 7, “Management’s Discussionand Analysis of Financial Condition and Results of Operations” and Item 8, “FinancialStatements and Supplementary Data” included in this Form 10-K (in thousands,except per unit amounts):

 
| ** **                                                   | ** ** | **2004**          | ** **    | **2003**  | ** ** | **2002**  | ** ** | **2001**  | ** ** | **2000**  | ** ** |
|--------------------------------------------------------------|------------|-------------------|---------------|-----------|------------|-----------|------------|-----------|------------|-----------|------------|
| **Results  of Operations:**                                  |       |              |          |      |       |      |       |      |       |      |       |
| Revenues:                                                    |       |              |          |      |       |      |       |      |       |      |       |
| Rental  Operations from continuing operations                | ** ** | **$**             | **765,647**   |      | $          | 713,058   |       | $         | 680,042    |      | $          | 682,096 |   | $ | 677,591 |   |
| Service  Operations from continuing operations               | ** ** | **70,803**        |          | 58,496    |       | 67,860    |       | 80,459    |       | 82,799    |       |
| **Total  Revenues from Continuing Operations**               | ** ** | **$**             | **836,450**   |      | $          | 771,554   |       | $         | 747,902    |      | $          | 762,555 |   | $ | 760,390 |   |
| ** **                                                   | ** ** | ** **        |          |      |       |      |       |      |       |      |       |
| **Income  from Continuing Operations**                       | ** ** | **$**             | **176,628**   |      | $          | 198,813   |       | $         | 225,422    |      | $          | 308,913 |   | $ | 293,868 |   |
| ** **                                                   | ** ** | ** **        |          |      |       |      |       |      |       |      |       |
| **Net  Income Available for Common Units**                   | ** ** | **$**             | **167,212**   |      | $          | 179,587   |       | $         | 171,601    |      | $          | 259,892 |   | $ | 245,029 |   |
| ** **                                                   | ** ** | ** **        |          |      |       |      |       |      |       |      |       |
| **Per  Unit Data :**                                         |       |              |          |      |       |      |       |      |       |      |       |
| Basic income per  common unit:                               |       |              |          |      |       |      |       |      |       |      |       |
| Continuing  operations                                       | ** ** | **$**             | **.90**       |      | $          | 1.07      |       | $         | 1.10       |      | $          | 1.66 |   | $ | 1.62 |   |
| Discontinued  operations                                     | ** ** | **.18**           |          | .13       |       | .05       |       | .10       |       | .06       |       |
| Diluted income  per common unit:                             | ** ** | ** **        |          |      |       |      |       |      |       |      |       |
| Continuing  operations                                       | ** ** | **.89**           |          | 1.06      |       | 1.09      |       | 1.64      |       | 1.60      |       |
| Discontinued  operations                                     | ** ** | **.18**           |          | .13       |       | .05       |       | .10       |       | .06       |       |
| Distributions  paid per common unit                          | ** ** | **1.85**          |          | 1.83      |       | 1.81      |       | 1.76      |       | 1.64      |       |
| Weighted average  common units outstanding                   | ** ** | **155,281**       |          | 150,280   |       | 149,423   |       | 147,961   |       | 145,906   |       |
| Weighted average  common and dilutive potential common units | ** ** | **157,062**       |          | 151,141   |       | 150,839   |       | 151,710   |       | 147,441   |       |
|                                                         |       |              |          |      |       |      |       |      |       |      |       |
| **Balance  Sheet Data (at December 31):**                    |       |              |          |      |       |      |       |      |       |      |       |
|                                                         |       |              |          |      |       |      |       |      |       |      |       |
| Total Assets                                                 | ** ** | **$**             | **5,894,644** |      | $          | 5,558,711 |       | $         | 5,347,055  |      | $          | 5,330,246 |   | $ | 5,461,233 |   |
| Total Debt                                                   | ** ** | **2,518,704**     |          | 2,335,536 |       | 2,106,285 |       | 1,814,856 |       | 1,973,215 |       |
| Total Preferred  Equity                                      | ** ** | **616,780**       |          | 511,785   |       | 415,466   |       | 583,419   |       | 689,216   |       |
| Total Partners’  Equity                                 | ** ** | **3****,021,128** |          | 2,878,320 |       | 2,919,843 |       | 3,179,232 |       | 3,147,598 |       |
| Total Common  Units Outstanding                              | ** ** | **156,490**       |          | 150,705   |       | 149,907   |       | 148,438   |       | 146,911   |       |
|                                                         |       |              |          |      |       |      |       |      |       |      |       |
| **Other  Data:**                                             |       |              |          |      |       |      |       |      |       |      |       |
| Funds From  Operations (1)                                   | ** ** | **$**             | **388,185**   |      | $          | 372,519   |       | $         | 358,871    |      | $          | 388,355 |   | $ | 365,129 |   |

 

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(1)          Funds From Operations (“FFO”)is used by industry analysts and investors as a supplemental operatingperformance measure of an equity real estate investment trust (“REIT”). FFO iscalculated in accordance with the definition that was adopted by the Board ofGovernors of the National Association of Real Estate Investment Trusts (“NAREIT”).FFO, as defined by NAREIT, represents net income (loss) determined inaccordance with accounting principles generally accepted in the United States (“GAAP”),excluding extraordinary items as defined under GAAP and gains or losses fromsales of previously depreciated operating real estate assets, plus certainnon-cash items such as real estate asset depreciation and amortization, andafter similar adjustments for unconsolidated partnerships and joint ventures.

 

8

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Historical costaccounting for real estate assets in accordance with GAAP implicitly assumesthat the value of real estate assets diminishes predictably over time. Sincereal estate values instead have historically risen or fallen with marketconditions, many industry investors and analysts have considered thepresentation of operating results for real estate companies that use historicalcost accounting to be insufficient by themselves. Thus, NAREIT created FFO as asupplemental measure of REIT operating performance that excludes historicalcost depreciation, among other items, from GAAP net income. Management believesthat the use of FFO, combined with the required primary GAAP presentations,improves the understanding of operating results of REITs among the investingpublic and makes comparisons of REIT operating results more meaningful.Management considers FFO to be a useful measure for reviewing comparativeoperating and financial performance (although FFO should be reviewed inconjunction with net income which remains the primary measure of performance)because by excluding gains or losses related to sales of previously depreciatedoperating real estate assets and excluding real estate asset depreciation andamortization, FFO assists in comparing the operating performance of a company’sreal estate between periods or as compared to different companies.

 

See reconciliation of FFOto GAAP net income under Year in Review section of Management’s Discussion andAnalysis of Financial Condition and Results of Operations.

 

**Item 7.  Management’s Discussion and Analysis ofFinancial Condition and Results of Operations**

 

**CautionaryStatement Regarding Forward Looking Statements**

 

Certain statements inthis Annual Report, including those related to our future operations,constitute “forward-looking statements” within the meaning of Section 27A ofthe Securities Act of 1933, as amended, and Section 21E of the SecuritiesExchange Act of 1934, as amended. These forward-looking statements involveknown and unknown risks, uncertainties and other important factors that couldcause our actual results, performance or achievements, or industry results, todiffer materially from any predictions of future results, performance orachievements that we express or imply in this report. Some of the mostsignificant risks, uncertainties and other important factors that may affectour business, operations, or future financial performance include, amongothers:

 

• Changes in general economic and business conditions,including performance of financial markets;

• The General Partner’s continued qualification as areal estate investment trust;

• Heightened competition for tenants and decrease inproperty occupancy;

• Potential increases in real estate constructioncosts;

• Potential changes in interest rates;

• Ability to favorably raise debt and equity in thecapital markets;

• Inherent risks in the real estate businessincluding tenant defaults, potential liability relating to environmentalmatters and liquidity of real estate investments; and

• Other risks and uncertainties described from timeto time in the Partnership’s and the General Partner’s filings with the SEC.

 

This list of risks anduncertainties, however, is not intended to be exhaustive. We have on file withthe Securities and Exchange Commission (“SEC”) a Current Report on Form 8-Kdated September 5, 2003, with additional risk factor information.

 

The words “believe,” “estimate,”“expect,” “anticipate” and similar expressions or statements regarding futureperiods are intended to identify forward-looking statements. Although webelieve that the plans, expectations and results expressed in or suggested byour forward-looking statements are reasonable, all forward-looking statementsare inherently uncertain as they involve substantial risks and uncertaintiesbeyond our control. New

 

9

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factors emerge from timeto time, and it is not possible for us to predict the nature or assess thepotential impact of each new factor on our business. Given these uncertainties,we caution you not to place undue reliance on these forward-looking statements.We undertake no obligation to update or revise any of our forward-lookingstatements for events or circumstances that arise after the statement is made.

 

**BusinessOverview**

 

As of December 31, 2004,we:

•                  Ownedor jointly controlled 893 industrial, office and retail properties (includingproperties under development), consisting of over 114.2 million square feetprimarily located in 10 states; and

•                  Ownedor jointly controlled more than 4,600 acres of land with an estimated futuredevelopment potential of more than 69 million square feet of industrial, officeand retail properties.

 

We provide the followingservices for our properties and for certain properties owned by third parties:

•                  Propertyleasing;

•                  Propertymanagement;

•                  Construction;

•                  Development;and

•                  Othertenant-related services.

 

**ManagementPhilosophy and Priorities**

 

Our key business andfinancial strategies for the future include the following:

•                  Ourbusiness objective is to increase Funds from Operations (“FFO”) by (i)maintaining and increasing property occupancy and rental rates through themanagement of our portfolio of existing properties; (ii) expanding existingproperties in our existing markets and by entering new markets; (iii)developing and acquiring new properties for rental operations in our existingmarkets; (iv) using our construction expertise to act as a general contractorin our existing markets and other domestic markets on a fee basis; (v)developing properties in our existing markets and other markets which we willsell through our merchant building development program and (vi) providing afull line of real estate services to our tenants and to third parties.

 

See the Year in Review section below for furtherexplanation and definition of FFO.

 

•                  Weintend to continue our capital recycling program whereby we pursueopportunities to dispose of investment properties and land held for developmentthat no longer meet our long-term growth strategies. We intend to recycle thecapital from these transactions to retire outstanding debt and invest inproperties with better long-term return potential for us.

 

•                  Ourfinancing strategy is to actively manage the components of our capitalstructure including common and preferred equity and debt to maintain aconservatively leveraged balance sheet and investment grade ratings from ourcredit rating agencies. This strategy provides us with the financial flexibilityto fund both development and acquisition opportunities. We seek to maintain awell-balanced, conservative and flexible capital structure by: (i) extendingand sequencing the maturity dates of debt; (ii) borrowing primarily at fixedrates by targeting a variable rate component of total debt less than 20%; (iii)pursuing current and future long-term debt financings and refinancing on anunsecured basis; (iv) maintaining conservative debt service and fixed chargeratios; and (v) issuing attractively priced perpetual preferred equity for5-10% of our total capital structure.

 

10

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**Yearin Review**

 

Year 2004 presented acombination of economic and market challenges affecting the broader real estateindustry as well as our Partnership. In the face of these challenges, weachieved steady operating results while maintaining a strong balance sheet.

 

Net income available forcommon unitholders for the year ended December 31, 2004 was $167.2 million, or$1.07 per unit (diluted), compared to net income of $179.6 million, or $1.19per unit (diluted) for the year ended 2003. The decrease is primarilyattributable to a significant increase in depreciation expense resulting fromsignificant capital expenditures during 2003 and 2004 related to re-leasingexisting space and the effects of the adoption of Statement of FinancialAccounting Standards (“SFAS”) No. 141, *BusinessCombinations* (“SFAS 141”) in recording acquisitions, particularlythe recognition of short-lived in-place lease intangible assets. See furtherdiscussion of this policy under the Critical Accounting Polices section ofManagement’s Discussion and Analysis of Financial Condition and Results ofOperations. Through increased leasing activity, we achieved a growth in rentalrevenues in 2004 over 2003 as our in-service portfolio year-end occupancyincreased from 89.3% in 2003 to 90.9% at the end of 2004. We also experiencedan increase in our development and construction of new properties for bothowned investments and third-party construction projects in 2004 as compared to2003.

 

As an importantperformance metric for us as a real estate company, FFO available to commonunitholders increased to $388.2 million for the year ended December 31, 2004from $372.5 million for the same period in 2003, or 4.2%.

 

FFO is used by industryanalysts and investors as a supplemental operating performance measure of anequity real estate investment trust (“REIT”). FFO is calculated in accordancewith the definition that was adopted by the Board of Governors of the NationalAssociation of Real Estate Investment Trusts (“NAREIT”). FFO, as defined byNAREIT, represents net income (loss) determined in accordance with accountingprinciples generally accepted in the United States of America (“GAAP”),excluding extraordinary items as defined under GAAP and gains or losses fromsales of previously depreciated operating real estate assets, plus certainnon-cash items such as real estate asset depreciation and amortization, andafter similar adjustments for unconsolidated partnerships and joint ventures.

 

Historical costaccounting for real estate assets in accordance with GAAP implicitly assumesthat the value of real estate assets diminishes predictably over time. Sincereal estate values instead have historically risen or fallen with marketconditions, many industry investors and analysts have considered presentationof operating results for real estate companies that use historical costaccounting to be insufficient by themselves. Thus, NAREIT created FFO as asupplemental measure of REIT operating performance that excludes historicalcost depreciation, among other items, from GAAP net income. Management believesthat the use of FFO, combined with the required primary GAAP presentations,improves the understanding of operating results of REITs among the investingpublic and makes comparisons of REIT operating results more meaningful.Management considers FFO to be a useful measure for reviewing comparativeoperating and financial performance (although FFO should be reviewed inconjunction with net income which remains the primary measure of performance)because by excluding gains or losses related to sales of previously depreciatedoperating real estate assets and excluding real estate asset depreciation andamortization, FFO assists in comparing the operating performance of a company’sreal estate between periods or as compared to different companies.

 

11

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The following tablesummarizes the calculation of FFO for the years ended December 31 (inthousands):

 
| ** **                                         | ** ** | **2004**    | ** **  | **2003**   | ** ** | **2002**   | ** ** |
|----------------------------------------------------|------------|-------------|-------------|------------|------------|------------|------------|
| ** **                                         | ** ** | ** **  | ** **  | ** ** | ** ** | ** ** | ** ** |
| Net income  available for common units             | ** ** | **$**       | **167,212** |       | $          | 179,587    |       | $ | 171,601 |   |
| Add back  (deduct):                                |       |        |        |       |       |       |       |
| Depreciation and  amortization                     | ** ** | **228,582** |        | 196,234    |       | 175,621    |       |
| Share of  adjustments for unconsolidated companies | ** ** | **18,901**  |        | 18,839     |       | 17,598     |       |
| Earnings from  depreciated property sales          | ** ** | **(26,510** | **)**       | (22,141    | )          | (5,949     | )          |
| Funds From  Operations                             | ** ** | **$**       | **388,185** |       | $          | 372,519    |       | $ | 358,871 |   |

 

Throughout 2004, wecontinued to maintain a conservative balance sheet and investment grade debtratings from Moody’s (Baa1), Standard & Poors (BBB+) and Fitch (BBB+). Ourdebt to total market capitalization ratio (total market capitalization isdefined as the total market value of all outstanding Common Units and Preferredequity plus outstanding indebtedness) of 29.5% at December 31, 2004 compared to30.8% at December 31, 2003 continues to provide us financial flexibility tofund new investments.

 

Highlights of our debtfinancing activity in 2004 are as follows:

•                  InJanuary 2004, we issued $125 million of unsecured notes with an effectiveinterest rate of 3.35%, due 2008.

•                  InFebruary 2004, we renewed our $500 million unsecured credit facility and in theprocess reduced the stated interest rate by 5 basis points to LIBOR + 60 basispoints and extended the maturity to 2007.

•                  InAugust 2004, we issued $250 million of unsecured notes with an effectiveinterest rate of 6.33%, due 2014. A portion of the proceeds was used to retire$150 million of existing debt that had a blended effective interest rate of7.31%.

•                  InDecember 2004, we issued $250 million of floating rate unsecured debt at 26basis points over LIBOR. The debt matures in 2006, but is callable at ouroption after six months.

 

The General Partnerissued preferred stock during 2004 allowing it to redeem existing higher ratepreferred stock and continue to utilize preferred stock as a key component ofits capital structure. The proceeds of these offerings are contributed to us inexchange for additional interests in the Partnership. Highlights of the GeneralPartner’s preferred stock transactions in 2004 are as follows:

•                  InFebruary 2004, the General Partner issued $150 million of Series K preferredstock at a dividend rate of 6.5%. This issuance was in conjunction with theredemption of the General Partner’s $100 million Series E preferred stock inJanuary 2004, which had a dividend rate of 8.25%. Although the redemptionresulted in certain non-cash charges that were dilutive to earnings in 2004,the lower dividend rate will reduce our future cost of capital.

•                  InMarch 2004, the General Partner called for redemption of its Series Dconvertible preferred stock. Prior to the redemption, nearly all outstandingpreferred D shares were converted into common shares. TheSeries Dshares carried a dividend rate of 7.375%.

•                  InNovember 2004, the General Partner issued $200 million of Series L preferredstock at a dividend rate of 6.6%.

 

In addition to steadyoperating performance and prudent balance sheet management during 2004, wecontinued to effectively execute our capital recycling program and beganseveral key initiatives and projects to leverage our development andconstruction capabilities as follows:

•                  Wedisposed of nearly $150 million of older, non-strategic properties and used theproceeds to help fund over $260 million of acquisitions. The acquisitions werepredominantly suburban office properties totaling 1.8 million square feet withan expected return of 9.4%.

 

12

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•                  Weincreased our investment in undeveloped land to provide greater opportunitiesto use our development and construction expertise in the improving economiccycle. The new land positions included the exercise of purchase options toacquire $44 million of land in our newly announced 1,700 acre, multi-year Ansonmixed-use development project in suburban Indianapolis. Additionally, weacquired over $15 million of land to develop a suburban office park with retailamenities in a vibrant north Dallas suburb, thus allowing us to enter theDallas suburban office market and leverage our development and constructionplan.

•                  Weformed our National Development and Construction Group in 2004 to pursueopportunities with companies that have a national presence and seek to expandin multiple locations, including those outside our core markets. This groupcombines our multiple disciplines including property development, legal andconstruction management to provide a range of development options for customers.

•                  Also,2004 saw the creation of a strategic agreement with a developer of medicaloffice and healthcare related facilities to jointly develop and sell medicalfacilities throughout the United States. Our partner will develop, lease andmanage the facilities while we provide construction financing and generalcontractor services. We will share 50/50 in the profits upon sale of theprojects. This initiative allows us to further leverage our constructioncapabilities in a significantly growing industry.

•                  Finally,we will continue to develop long-term investment assets to be held in ourportfolio, develop assets to be sold upon completion and perform third-partyconstruction projects. With over $400 million in our development pipeline atDecember 31, 2004, we are encouraged about the long-term growth opportunitiesin our business.

 

**KeyPerformance Indicators**

Our operating resultsdepend primarily upon rental income from our office, industrial and retailproperties (“Rental Operations”). The following highlights the areas of RentalOperations that we consider critical for future revenue growth (all squarefootage totals and occupancy percentages reflect both wholly-owned propertiesand properties in joint ventures):

 

***Occupancy Analysis:*** As discussed above,the ability to maintain occupancy rates is a principal driver of our results ofoperations. The following table sets forth occupancy information regarding ourin-service portfolio of rental properties as of December 31, 2004 and 2003 (inthousands, except percent occupied):

 
| ** **      | ** ** | **Total  Square Feet** | ** ** | **Percent of  Total Square Feet** | ** ** | **Percent Occupied** | ** ** |
|-----------------|------------|------------------------|------------|-----------------------------------|------------|----------------------|------------|
| **Type**        | ** ** | **2004**               | ** ** | **2003**                          | ** ** | **2004**             | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
| **Industrial**  |       |                   |       |                              |       |                 |       |   |   |   |   |   |   |
| Service Centers | ** ** | **12,924**             |       | 13,200                            | ** ** | **11.8**             | **%**      | 12.4 | % | **85.2** | **%** | 85.8 | % |
| Bulk            | ** ** | **68,068**             |       | 66,068                            | ** ** | **61.9**             | **%**      | 62.2 | % | **93.4** | **%** | 91.1 | % |
| **Office**      | ** ** | **28,399**             |       | 26,213                            | ** ** | **25.8**             | **%**      | 24.7 | % | **87.2** | **%** | 86.2 | % |
| **Retail**      | ** ** | **596**                |       | 739                               | ** ** | **0.5**              | **%**      | 0.7 | % | **100.0** | **%** | 98.5 | % |
| Total           | ** ** | **109,987**            |       | 106,220                           | ** ** | **100.0**            | **%**      | 100.0 | % | **90.9** | **%** | 89.3 | % |

 

We experienced occupancyimprovement in our industrial bulk and office properties during 2004 asbusiness fundamentals improved moderately during the year.

 

***Lease Expiration and Renewals:*** Ourability to maintain and grow occupancy rates primarily depends upon ourcontinuing ability to re-lease expiring space. The following table reflects ourin-service lease expiration schedule as of December 31, 2004, by product type.The table indicates square footage and annualized net effective rents (based onDecember 2004 rental revenue) under expiring leases (in thousands):

 

13

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| ** **                   | ** ** | **Total Portfolio** | ** ** | **Industrial** | ** ** | **Office** | ** ** | **Retail** | ** ** |
|------------------------------|------------|---------------------|------------|----------------|------------|------------|------------|------------|------------|
| ** **                   | ** ** | **Square**          | ** ** | ** **     | ** ** | ** ** | ** ** | **Square** | ** ** | ** ** | ** ** | **Square** | ** ** | ** ** | ** ** | **Square** | ** ** | ** ** | ** ** |
| **Year of Expiration**       | ** ** | **Feet**            | ** ** | **Dollars**    | ** ** | **%**      | ** ** | **Feet**   | ** ** | **Dollars** | ** ** | **Feet** | ** ** | **Dollars** | ** ** | **Feet** | ** ** | **Dollars** | ** ** |
|                         |       |                |       |           |       |       |       |       |       |   |   |   |   |   |   |   |   |   |   |
| 2005                         |       | 12,820              |       | $              | 82,401     |       | 12         | %          | 10,258     |   | $ | 46,645 |   | 2,551 |   | $ | 35,605 |   | 11 |   | $ | 151 |   |
| 2006                         |       | 11,279              |       | 76,066         |       | 12         | %          | 8,941      |       | 43,882 |   | 2,338 |   | 32,184 |   | — |   | — |   |
| 2007                         |       | 12,862              |       | 82,939         |       | 12         | %          | 10,031     |       | 46,162 |   | 2,807 |   | 36,528 |   | 24 |   | 249 |   |
| 2008                         |       | 12,813              |       | 80,516         |       | 12         | %          | 9,995      |       | 44,617 |   | 2,799 |   | 35,562 |   | 19 |   | 337 |   |
| 2009                         |       | 12,848              |       | 86,291         |       | 13         | %          | 9,420      |       | 41,930 |   | 3,420 |   | 44,231 |   | 8 |   | 130 |   |
| 2010                         |       | 9,257               |       | 70,347         |       | 10         | %          | 6,631      |       | 33,337 |   | 2,618 |   | 36,847 |   | 8 |   | 163 |   |
| 2011                         |       | 5,400               |       | 42,495         |       | 6          | %          | 3,689      |       | 17,757 |   | 1,692 |   | 24,399 |   | 19 |   | 339 |   |
| 2012                         |       | 5,633               |       | 34,772         |       | 5          | %          | 4,231      |       | 16,457 |   | 1,395 |   | 17,982 |   | 7 |   | 333 |   |
| 2013                         |       | 4,545               |       | 43,454         |       | 6          | %          | 2,269      |       | 9,827 |   | 2,244 |   | 33,122 |   | 32 |   | 505 |   |
| 2014                         |       | 4,154               |       | 19,262         |       | 3          | %          | 3,592      |       | 12,251 |   | 562 |   | 7,011 |   | — |   | — |   |
| 2015 and  Thereafter         |       | 8,360               |       | 61,011         |       | 9          | %          | 5,565      |       | 24,594 |   | 2,327 |   | 33,576 |   | 468 |   | 2,841 |   |
|                         |       | 99,971              |       | $              | 679,554    |       | 100        | %          | 74,622     |   | $ | 337,459 |   | 24,753 |   | $ | 337,047 |   | 596 |   | $ | 5,048 |   |
| Total Portfolio  Square Feet |       | 109,987             |       |           |       |       |       | 80,992     |       |   |   | 28,399 |   |   |   | 596 |   |   |   |
| Percent Occupied             |       | 90.9                | %          |           |       |       |       | 92.1       | %          |   |   | 87.2 | % |   |   | 100.0 | % |   |   |

 

We renewed 74.0% and 71.4% of ourleases up for renewal totaling approximately 10.0 million and 7.6 millionsquare feet on which we attained a 1.4% and a 1.1% growth in net effectiverents in 2004 and 2003, respectively. The relatively flat growth in rentalrates is indicative of excess vacancies in many of our markets requiringcompetitive pricing strategies to retain current tenants. Our lease renewalpercentages over the past three years have remained relatively consistent at a70-75% success rate despite the relatively weak market conditions. We do notexpect this renewal percentage in 2005 to differ from that experienced in 2004.

 

The average term of renewalsincreased to 3.8 years in 2004 from 3.5 years in 2003. The increase in theaverage term is due to competitive market conditions with tenants seekinglonger leases at attractive rates.

 

***FutureDevelopment:***Anothersource of growth in earnings is the development of additional rentalproperties. These properties should provide future earnings through ServiceOperations income upon sale or from Rental Operations growth as they are placedin service. We had 4.2 million square feet of property under development withtotal project costs of $194.9 million at December 31, 2004, compared to 2.8million square feet and total project costs of $160.3 million at December 31,2003. The increase in volume is attributable to a general increase in leasingactivity and speculative and preleased developments in 2004. In 2003, we specificallylimited the development of speculative properties due to the weakened economy.Our speculative development levels are still below historical levels; however,as certain sectors of the economy begin to improve, our level of speculativedevelopment may increase.

 

A summary of properties underdevelopment as of December 31, 2004, follows (in thousands, except percentleased and anticipated stabilized returns):

 
| **Anticipated  In-Service  Date** | ** ** | **Square  Feet** | ** ** | **Percent  Leased** | ** ** | **Project  Costs** | ** **    | **Anticipated  Stabilized  Return** | ** ** |
|-----------------------------------|------------|------------------|------------|---------------------|------------|--------------------|---------------|-------------------------------------|------------|
| Held for Rental:                  |       |             |       |                |       |               |          |                                |       |
| 1st  Quarter 2005                 |       | 2,094            |       | 45                  | %          | $                  | 57,056        |                                | 9.8        | % |
| 2nd  Quarter 2005                 |       | 320              |       | 39                  | %          | 19,617             |          | 10.2                                | %          |
| 3rd  Quarter 2005                 |       | 307              |       | 42                  | %          | 27,950             |          | 10.2                                | %          |
| Thereafter                        |       | 523              |       | 63                  | %          | 51,004             |          | 10.6                                | %          |
|                              |       | 3,244            |       | 47                  | %          | $                  |  155,627 |                                | 10.2       | % |
| Held-for-sale:                    |       |             |       |                |       |               |          |                                |       |
| 1st  Quarter 2005                 |       | 919              |       | 100                 | %          | $                  | 28,951        |                                | 8.3        | % |
| 2nd  Quarter 2005                 |       | 26               |       | 100                 | %          | 4,022              |          | 9.4                                 | %          |
| 3rd  Quarter 2005                 |       | 39               |       | 53                  | %          | 6,308              |          | 9.6                                 | %          |
| Thereafter                        |       | —           |       | —              |       | —             |          | —                              |       |
|                              |       | 984              |       | 98                  | %          | $                  | 39,281        |                                | 8.6        | % |
|                              |       |             |       |                |       |               |          |                                |       |
| Total                             |       | 4,228            |       | 59                  | %          | $                  | 194,908       |                                | 9.9        | % |
|                                   |            |                  |            |                     |            |                    |               |                                     |            |  |  |  |

 

14

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***Acquisition and Disposition Activity:***We have an active capital recycling programbased upon a strategy to dispose of non-strategic assets and utilize theproceeds to fund new development and acquisitions of more desirable properties.Through this program, we are continually improving the overall quality of ourinvestment portfolio.

 

Salesproceeds from dispositions of held-for-rental properties in 2004 and 2003, were$147 and $126 million, respectively. The disposition proceeds were used topartially fund 2004 and 2003 acquisitions of $264 and $232 million,respectively. We will continue to pursue both disposition and acquisitionopportunities that arise in 2005.

 

**Resultsof Operations**

 

A summary of ouroperating results and property statistics for each of the years in thethree-year period ended December 31, 2004, follows (in thousands, except numberof properties and per unit amounts):

 
| ** **                                                   | ** ** | **2004**    | ** **  | **2003** | ** ** | **2002** | ** ** |
|--------------------------------------------------------------|------------|-------------|-------------|----------|------------|----------|------------|
|                                                         |       |        |        |     |       |     |       |
| Rental Operations revenues from Continuing  Operations       | ** ** | **$**       | **765,647** |     | $          | 713,058  |       | $ | 680,042 |   |
| Service Operations revenues from Continuing  Operations      | ** ** | **70,803**  |        | 58,496   |       | 67,860   |       |
| Earnings from Continuing Rental Operations                   | ** ** | **165,000** |        | 180,975  |       | 210,334  |       |
| Earnings from Continuing Service Operations                  | ** ** | **24,421**  |        | 21,118   |       | 29,520   |       |
| Operating income                                             | ** ** | **163,033** |        | 180,768  |       | 215,181  |       |
| Net income available for common units                        | ** ** | **167,212** |        | 179,587  |       | 171,601  |       |
| Weighted average  common units outstanding                   | ** ** | **155,281** |        | 150,280  |       | 149,423  |       |
| Weighted average  common and dilutive potential common units | ** ** | **157,062** |        | 151,141  |       | 150,839  |       |
| Basic income per  common unit:                               |       |        |        |     |       |     |       |
| Continuing  operations                                       | ** ** | **$**       | **.90**     |     | $          | 1.07     |       | $ | 1.10 |   |
| Discontinued  operations                                     | ** ** | **$**       | **.18**     |     | $          | .13      |       | $ | .05 |   |
| Diluted income  per common unit:                             | ** ** | ** **  |        |     |       |     |       |
| Continuing  operations                                       | ** ** | **$**       | **.89**     |     | $          | 1.06     |       | $ | 1.09 |   |
| Discontinued  operations                                     | ** ** | **$**       | **.18**     |     | $          | .13      |       | $ | .05 |   |
| Number of  in-service properties at end of year              | ** ** | **876**     |        | 884      |       | 910      |       |
| In-service  square footage at end of year                    | ** ** | **109,987** |        | 106,220  |       | 105,196  |       |
| Under development square footage at end of year              | ** ** | **4,228**   |        | 2,813    |       | 3,058    |       |

 

**Comparisonof Year Ended December 31, 2004 to Year Ended December 31, 2003**

 

Rental Income fromContinuing Operations

 

Rental income from continuingoperations increased from $689.4 million in 2003 to $744.1 million in 2004. Thefollowing table reconciles rental income from continuing operations byreportable segment to total reported rental income from continuing operationsfor the years ended December 31, 2004 and 2003 (in thousands):

 
| ** ** | ** ** | **2004**    | ** **  | **2003** | ** ** |
|------------|------------|-------------|-------------|----------|------------|
| Office     | ** ** | **$**       | **459,431** |     | $          | 419,962 |   |
| Industrial | ** ** | **274,393** |        | 259,762  |       |
| Retail     | ** ** | **4,893**   |        | 5,863    |       |
| Other      | ** ** | **5,344**   |        | 3,783    |       |
| Total      | ** ** | **$**       | **744,061** |     | $          | 689,370 |   |

 

Our three reportable segmentscomprising Rental Operations (office, industrial and retail) are all within thereal estate industry; however, the same economic and industry conditions do notnecessarily affect them. The primary causes of the increase in rental incomefrom continuing operations, with specific references to a particular segmentwhen applicable, are summarized below:

•                  Ourin-service occupancy increased from 89.3% at December 31, 2003, to 90.9% atDecember 31, 2004. Improving occupancy continues to be a key management goal in2005.

 

15

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•                  Duringthe year ended 2004, we acquired 19 new properties and placed 18 developmentprojects in-service. These acquisitions and developments are the primaryfactors in the overall $54.7 million increase in rental revenue for the yearended 2004, compared to the same period in 2003.

 

The 19 property acquisitions totaled $264.0 millionon 2.6 million square feet and were 80.3% leased at December 31, 2004. The twolargest acquisitions were office buildings in Atlanta and Cincinnati. The 2004acquisitions provided revenues of $14.2 million. Revenues from acquisitionsthat occurred during 2003 were $35.2 million in 2004 compared to $11.9 millionin 2003.

 

Developments placed in service in 2004 providedrevenues of $9.9 million, while revenues associated with developments placed inservice in 2003 totaled $14.7 million in 2004 compared to $6.6 million in 2003.

 

•                  Therental income shown above includes lease termination fees.  Lease termination fees relate to specifictenants that pay a fee to terminate their lease obligations before the end ofthe contractual lease term. Lease termination fees totaled $16.2 million in2003, compared to $14.7 in 2004. The decrease in termination fees correspondswith fewer corporate downsizings due to improving market conditions.

 

Equity in Earningsof Unconsolidated Companies

Equity in earningsrepresents our ownership share of net income from investments in unconsolidatedcompanies. These joint ventures generally own and operate rental properties andhold land for development.  Theseearnings decreased from $23.7 in 2003 to $21.6 million in 2004 despite overalloccupancy remaining relatively flat around 94%. The decrease in earnings is dueto the following:

•                  Atenant filed for bankruptcy in one joint venture property resulting in occupancyfor the property at the end of 2004 being 69.7% versus 87.4% in 2003.

•                  Wesold our interest in one joint venture in December 2003 and, as a result, noearnings were recorded in 2004.

 

Rental Expensesand Real Estate Taxes

The following table reconcilesrental expenses and real estate taxes by reportable segment to our totalreported amounts in the statement of operations for the years ended December31, 2004 and 2003 (in thousands):

 
| ** **          | ** ** | **2004**   | ** **  | **2003** | ** ** |
|---------------------|------------|------------|-------------|----------|------------|
| Rental Expenses:    |       |       |        |     |       |
| Office              | ** ** | **$**      | **117,300** |     | $          | 104,056 |   |
| Industrial          | ** ** | **37,551** |        | 34,872   |       |
| Retail              | ** ** | **501**    |        | 609      |       |
| Other               | ** ** | **717**    |        | 1,688    |       |
| Total               | ** ** | **$**      | **156,069** |     | $          | 141,225 |   |
|                |       |       |        |     |       |
| Real Estate  Taxes: |       |       |        |     |       |
| Office              | ** ** | **$**      | **48,559**  |     | $          | 42,850 |   |
| Industrial          | ** ** | **31,554** |        | 29,846   |       |
| Retail              | ** ** | **446**    |        | 323      |       |
| Other               | ** ** | **4,240**  |        | 4,128    |       |
| Total               | ** ** | **$**      | **84,799**  |     | $          | 77,147 |   |

 

The increased rental and real estate tax expenses for 2004,as compared to 2003, were primarily the result of our increase in averagein-service square feet and occupancy. These increases resulted from ouracquisition activities and developments placed in service as noted above.

 

16

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**InterestExpense**

Interest expenseincreased from $125.7 million in 2003 to $135.1 million in 2004. We issued newdebt to fund debt maturities, new developments and acquisitions and to takeadvantage of the favorable interest rate environment. The following is asummary of debt activities for 2004:

•                  InJanuary, we obtained a $65 million floating rate term loan and immediatelyfixed the rate at 2.18% with two interest rate swaps. We expect to pay off thisloan in the first quarter of 2005. Also in January, we issued $125 million ofunsecured debt with a four-year maturity at 3.35%. In August we issued $250million of unsecured debt with a ten-year maturity at an effective rate of6.33%. In December we issued $250 million of unsecured floating rate debt at 26basis points over LIBOR. The debt matures in two years, but is callable at ouroption after six months.

•                  InAugust we paid off $15 million of a $40 million secured floating rate termloan. We also assumed $29.9 million of secured debt in conjunction with aproperty acquisition in Atlanta.

•                  Theaverage balance and average borrowing rate of our $500 million revolving creditfacility were slightly higher in 2004 than in 2003. At the end of 2004 we werenot utilizing our credit facility.

 

Depreciation andAmortization Expense

Depreciation andamortization expense increased from $188.0 million in 2003 to $224.6 million in2004 as a result of increased capital spending associated with increasedleasing, the additional basis resulting from acquisitions, development activityand the application of SFAS 141 as described below.  The points below highlight the significant increasein depreciation and amortization.

•                  Depreciationexpense on tenant improvements increased by $14.1 million.

•                  Depreciationexpense on buildings increased by $6.0 million.

•                  Leasecommission amortization increased by $2.2 million.

 

The amortization expenseassociated with acquired lease intangible assets increased by approximately$10.0 million. The acquisitions were accounted for in accordance with SFAS 141,which requires the allocation of a portion of a property’s purchase price tointangible assets for leases acquired and in-place at the closing date of theacquisition. These intangible assets are amortized over the remaining life ofthe leases (generally 3-5 years) as compared to the building basis portion ofthe acquisition, which is depreciated over 40 years.

 

Service Operations

Service Operationsprimarily consist of our merchant building sales and the leasing, management,construction and development services for joint venture properties andproperties owned by third parties.  Theseoperations are heavily influenced by the current state of the economy asleasing and management fees are dependent upon occupancy while construction anddevelopment services rely on businesses expanding operations. ServiceOperations earnings increased from $21.1 million in 2003 to $24.4 million in2004.  The increase reflects higherconstruction volumes partially offset by increased staffing costs for our newNational Development and Construction group and construction jobs in certainmarkets.  Other factors impacting serviceoperations are discussed below.

•                  Weexperienced a 1.6% decrease in our overall gross profit margin percentage inour general contractor business in 2004 as compared to 2003, due to continuedcompetitive pricing pressure in many of our markets.  We expect margins toincrease in 2005 as economic conditions improve.  However, despite this decrease, we were ableto increase our net general contractor revenues from $26.8 million in 2003 to$27.6 million in 2004 because of an increase in volume. This volume increasewas attributable to continued low financing costs available to businesses,thereby making it more attractive for them to own instead of lease facilities.We have a substantial backlog of $183.2 million for third party construction asof December 31, 2004, that will carry into 2005.

 

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•                  Ourmerchant building development and sales program, whereby a building isdeveloped by us and then sold, is a significant component of construction anddevelopment income. During 2004, we generated after tax gains of $16.5 millionfrom the sale of six properties compared to $9.6 million from the sale of fourproperties in 2003. Profit margins on these types of building sales fluctuateby sale depending on the type of property being sold, the strength of theunderlying tenant and nature of the sale, such as a pre-contracted purchaseprice for a primary tenant versus a sale on the open market.

 

General andAdministrative Expense

General andadministrative expense increased from $21.3 million in 2003 to $26.4 million in2004. The increase was a result of increased staffing and employee compensationcosts to support development of our National Development and Constructiongroup. We also experienced an increase in marketing to support certain newprojects.

 

Other Income and Expenses

Earnings from sales ofland and ownership interests in unconsolidated companies, net of impairmentadjustments, is comprised of the following amounts in 2004 and 2003 (inthousands):

 
| ** **                               | ** ** | **2004**   | ** ** | **2003** | ** ** |
|------------------------------------------|------------|------------|------------|----------|------------|
| Gain on sale of  joint venture interests | ** ** | $          | **83**     |     | $          | 8,617 |   |
| Gain on land  sales                      | ** ** | **10,543** |       | 7,695    |       |
| Impairment  adjustment                   | ** ** | **(424**   | **)**      | (560     | )          |
| Total                                    | ** ** | **$**      | **10,202** |     | $          | 15,752 |   |

 

In the first quarter of2003, we sold our 50% interest in a joint venture that owned and operateddepreciable investment property. The joint venture developed and operated realestate assets; thus, the gain was not included in operating income.

 

Gain on land sales arederived from sales of undeveloped land owned by us. We pursue opportunities todispose of land in markets with a high concentration of undeveloped land and inthose markets where the land no longer meets our strategic development plans.The increase was partially attributable to a land sale to a current corporatetenant for potential future expansion.

 

We recorded $424,000 and$560,000 of impairment charges associated with contracts to sell land parcelsfor the years ended December 31, 2004 and 2003, respectively. As of December31, 2004, only one parcel on which we recorded impairment charges is stillowned by us. We anticipate selling this parcel in the first quarter of 2005.

 

Discontinued Operations

We have classifiedoperations of 86 buildings as discontinued operations as of December 31, 2004.These 86 buildings consist of 69 industrial, 12 office and five retailproperties. As a result, we classified net income from operations of $1.8million, $7.0 million and $11.9 million as net income from discontinuedoperations for the years ended December 31, 2004, 2003 and 2002, respectively.In addition, 41 of the properties classified in discontinued operations weresold during 2004, 42 properties were sold during 2003, two properties were soldduring 2002 and one operating property is classified as held-for-sale atDecember 31, 2004. The gains on disposal of these properties, net of impairmentadjustment, of $26.2 million and $13.0 million for the years ended December 31,2004 and 2003, respectively, are also reported in discontinued operations. Forthe year ended December 21, 2002, a $5.0 million loss on disposal ofproperties, net of impairment adjustments, is reported in discontinuedoperations due to impairment charges of $7.7 million recorded on threeproperties in 2002 that were later sold in 2003 and 2004.

 

18

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**Comparison of Year Ended December 31, 2003 toYear Ended December 31, 2002**

 

Rental Income from Continuing Operations

Rental income from continuing operations increased from $652.9 millionin 2002 to $689.4 million in 2003. The following table reconciles rental incomeby reportable segment to our total reported rental income from continuingoperations for the years ended December 31, 2003 and 2002 (in thousands):

 
| ** ** | ** ** | **2003**    | ** **  | **2002** | ** ** |
|------------|------------|-------------|-------------|----------|------------|
| Office     | ** ** | **$**       | **419,962** |     | $          | 393,810 |   |
| Industrial | ** ** | **259,762** |        | 250,391  |       |
| Retail     | ** ** | **5,863**   |        | 4,733    |       |
| Other      | ** ** | **3,783**   |        | 3,928    |       |
| Total      | ** ** | **$**       | **689,370** |     | $          | 652,862 |   |

 

Although our three reportable segments comprising Rental Operations(office, industrial and retail) are all within the real estate industry, theyare not necessarily affected by the same economic and industry conditions. Forexample, our retail segment experienced high occupancies and strong overallperformance during 2003, while our office and industrial segments reflected theweaker economic environment for those property types. The primary causes of theincrease in rental income from continuing operations, with specific referencesto a particular segment when applicable, are summarized below:

•                  During 2003,in-service occupancy improved from 87.1% at the end of 2002 to 89.3% at the endof 2003. The second half of 2003 was highlighted by a significant increase inthe industrial portfolio occupancy of 2.1% along with a slight increase inoffice portfolio occupancy of .9%.

•                  Leasetermination fees totaled $27.4 million in 2002 compared to $16.2 million in2003. Most of this decrease was attributable to the office segment, whichrecognized $21.1 million of termination fees in 2002 as compared to $11.8million in 2003. Lease termination fees relate to specific tenants that pay afee to terminate their lease obligations before the end of the contractuallease term. The high volume of termination fees in 2002 was reflective of thecontraction of the business of large office users during that year and theirdesire to downsize their use of office space. The decrease in termination feesfor 2003 was indicative of an improving economy and a more stable financialposition of our tenants.

•                  During the yearended 2003, we acquired $232 million of properties totaling 2.1 million squarefeet. The acquisitions were primarily Class A office buildings in existingmarkets with overall occupancy near 90%. Revenues associated with theseacquisitions totaled $11.9 million in 2003. In addition, revenues from 2002acquisitions totaled $15.8 million in 2003 compared to $4.8 million in 2002.This significant increase is primarily due to a large office acquisition thatclosed at the end of December 2002.

•                  Developmentsplaced in-service in 2003 provided revenues of $6.6 million, while revenuesassociated with developments placed in-service in 2002 totaled $13.7 million in2003 compared to $4.7 million in 2002.

•                  Proceeds fromdispositions of held for rental properties totaled $126.1 million in 2003,compared to $40.9 million in 2002. These properties generated revenue of $12.5million in 2003 versus $19.6 million in 2002.

 

Equity in Earnings ofUnconsolidated Companies

Equity in earnings represents ourownership share of net income from investments in unconsolidated companies.These joint ventures generally own and operate rental properties and hold landfor development. These earnings decreased from $27.2 million in 2002 to $23.7million in 2003. This decrease is a result of the following significantactivity:

•                  In 2002, a $1.8million gain was recognized on a property that was developed and sold uponcompletion to a third party.

 

19

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•                  In 2003, ourtotal investment in joint ventures decreased. This decrease was the result ofour acquiring our partner’s interest in three joint ventures, selling interestin two and one venture being dissolved in 2003. While the number of jointventures decreased, the joint ventures’ occupancy increased from 93.2% to 94.0%in 2003.

 

Rental Expenses and Real EstateTaxes

The following table reconcilesrental expenses and real estate taxes by reportable segment to our totalreported amounts in the statement of operations for the years ended December31, 2003 and 2002 (in thousands):

 
| ** **         | ** ** | **2003**       | ** **  | **2002** | ** ** |
|--------------------|------------|----------------|-------------|----------|------------|
| Rental Expenses:   |       |           |        |     |       |
| Office             | ** ** | **$**          | **104,056** |     | $          | 92,190 |   |
| Industrial         | ** ** | **34,872**     |        | 28,585   |       |
| Retail             | ** ** | **609**        |        | 281      |       |
| Other              | ** ** | **1,688**      |        | 1,394    |       |
| Total              | ** ** | **$**          | **141,225** |     | $          | 122,450 |   |
|               |       |           |        |     |       |
| Real Estate Taxes: |       |           |        |     |       |
| Office             | ** ** | **$**          | **42,850**  |     | $          | 38,485 |   |
| Industrial         | ** ** | **29****,846** |        | 27,934   |       |
| Retail             | ** ** | **323**        |        | 325      |       |
| Other              | ** ** | **4,128**      |        | 3,044    |       |
| Total              | ** ** | **$**          | **77,147**  |     | $          | 69,788 |   |

 

The increased rental and realestate tax expenses for 2003, as compared to 2002, was primarily the result ofour increase in average in-service square feet and occupancy. These increasesresulted from our acquisition activities and developments placed in service in2003.

 

**InterestExpense**

Our interest expense increased from $111.4 million in 2002 to $125.7million in 2003. Although we benefited from significantly lower interest ratesduring 2003, interest expense increased because of increased borrowings duringthe year and a decrease in the amount of interest that was capitalized. Theincreased borrowings reflected the funding of our developments during the yearand the excess of properties acquired over those disposed. Interest capitalizedfor 2003 was significantly lower than 2002 as development activity for 2003 wassubstantially slower than prior years. Development starts for 2003 totaled only$108 million compared to approximately $225 million for 2002. Other significantfactors impacting interest expense for 2003 are summarized as follows:

•                  We continued toreplace secured debt financing with unsecured debt, and paid off over $120million of secured loans throughout 2003. The payoffs included secured loansdue in 2003 and those due in 2004 and beyond for which we were able to takeadvantage of expired or negotiated lower pre-payment penalties and utilizelower financing costs from unsecured debt offerings or the unsecured line ofcredit.

•                  Approximately$425 million of new unsecured debt was issued in 2003. We issued $175 millionof seven-year debt in January 2003 at an effective interest rate of 5.37%, $150million of ten-year debt in May 2003 at an effective interest rate of 4.64% and$100 million of four-year debt in November 2003 at an effective interest rateof 3.63%. We retired $175 million of debt in June 2003 that had an effectiveinterest rate of 7.33%.

•                  We utilized our$500 million unsecured line of credit more heavily in 2003 than during 2002 inorder to take advantage of the historically low borrowing costs. The balance onthe line of credit was $351 million at December 31, 2003 compared to $281million at December 31, 2002.

 

20

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Depreciation and Amortization Expense

Depreciation and amortization expense for 2003 increased byapproximately $22.0 million compared to 2002 because of an increase in tenantimprovements and leasing costs. As discussed earlier, we experienced higheroverall occupancy and more acquisition activity in 2003, which resulted inincreased capital expenditures for tenant improvements and deferred leasecommissions as well as increases in held for investment property basis. Thefollowing highlights the significant changes in depreciable and amortizableproperty during 2003:

•                  The basis of theheld for investment property portfolio increased by $166 million as a result ofour development and acquisition activity.

•                  We incurredtenant improvement costs of $91.3 million in 2003.

•                  We incurredlease commissions of $41.6 million in 2003.

 

The amortization associated with the acquired lease intangible assetsrecorded on 2003 acquisitions totaled $4.2 million. The acquisitions wereaccounted for in accordance with SFAS 141, which requires the allocation of aportion of a property’s purchase price to intangible assets for leases acquiredand in-place at the closing date of the acquisition. These intangible assetsare amortized over the remaining life of the leases (generally 3-5 years) ascompared to the building basis portion of the acquisition, which is depreciatedover 40 years.

 

## **Service Operations**

Service Operations primarily consist of leasing, management,construction and development services for joint venture properties andproperties owned by third parties. These operations are heavily influenced bythe current state of the economy as leasing and management fees are dependentupon occupancy while construction and development services rely on businessesexpanding operations. The following highlights the significant components ofrevenues in Service Operations:

•                  We experiencedmore than a 2% decrease in overall gross profit margin percentage in ourgeneral contractor business in 2003 because of more competitive pricing in manyof our markets.  However, despite thisdecrease, we were able to increase net general contractor revenues from $21.9million in 2002 to $26.8 million in 2003 because of a significant increase involume. This volume increase was attributable to the low cost of financingavailable to businesses, thereby making it more attractive for them to owninstead of lease facilities.

•                  Propertymanagement, maintenance and leasing fee revenues have remained fairly constantbetween 2002 and 2003 as the number of properties we managed has not changedsignificantly.

•                  Constructionmanagement and development activity income represents construction anddevelopment fees earned on projects where we act as the construction manageralong with profits from our merchant building program under which we developproperty with the intent to sell upon completion. The decrease in revenues from$29.4 million in 2002 to $15.5 million in 2003 is primarily due to fewerproperties being sold from the program in 2003. During 2002, we sold eightproperties for a net gain of $21.7 million compared to the sale of fourproperties in 2003 for a net gain of $9.6 million in 2003. Profit margins onthese types of transactions fluctuate by sale depending on the type of propertybeing sold, the strength of the underlying tenant and the nature of the sale,such as a pre-contracted purchase price for a primary tenant versus a sale onthe open market.

 

General and Administrative Expense

General and administrative expense decreased from $24.7 million in 2002to $21.3 million for the year ended December 31, 2003. The decrease isprimarily attributable to an increase in construction volume for third partyprojects resulting in a greater allocation of overhead to Service Operationsoperating expenses.

 

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Other Income and Expenses

Earnings from sales of land, depreciable property dispositions andownership interests in unconsolidated companies, net of impairment adjustments,is comprised of the following amounts in 2003 and 2002 (in thousands):

 
| ** **                              | ** ** | **2003**  | ** ** | **2002** | ** ** |
|-----------------------------------------|------------|-----------|------------|----------|------------|
| Gain on sales of depreciable properties | ** ** | **$**     | **0**      |     | $          | 4,491 |   |
| Gain on sale of joint venture interests | ** ** | **8,617** |       | 0        |       |
| Gain on land sales                      | ** ** | **7,695** |       | 4,478    |       |
| Impairment adjustment                   | ** ** | **(560**  | **)**      | (1,677   | )          |
| Total                                   | ** ** | **$**     | **15,752** |     | $          | 7,292 |   |
|                                         |            |           |            |          |            |  |  |  |

 

Gain on sales of depreciable properties represent sales of previouslyheld for investment rental properties which did not qualify to be classified asdiscontinued operations under SFAS No. 144, *Accountingfor the Impairment or Disposal of Long-Lived Assets*(“SFAS 144”). Therewere no such sales in 2003.

 

In 2003, we sold our interests in two joint ventures that owned andoperated depreciable investment property. We owned 50% of each of these jointventures.

 

Gain on land sales represents sales of undeveloped land we owned. Wepursue opportunities to dispose of land in markets with a high concentration ofundeveloped land and those markets where the land no longer meets our strategicdevelopment plans.

 

We recorded $560,000 of impairment charges on three land parcels thatwere sold in 2003. The $1.7 million adjustment recorded in 2002 was associatedwith three properties determined to be impaired.

 

Other revenue and expenses are comprised primarily of the write-off ofcontract development costs for abandoned development projects and gains onterminations of interest rate swaps. In 2003, we recorded contract developmentexpenses of $1.0 million compared to $1.2 million in 2002. We accumulate costsof potential projects as an asset until such time as the costs are capitalizedinto a new project or expensed for a failed project.

 

In 2003, we terminated four forward startinginterest rate swap agreements for a net gain of $643,000. The swap agreementswere entered into as hedges for future anticipated debt issuances. Theseagreements were terminated as a result of our capital needs being met throughthe General Partner’s issuance of the Series J Preferred Stock in lieu of thecontemplated debt issuances and the contribution of the net proceeds of suchofferings to the Partnership in return for the issuance of Series J PreferredUnits. In 2002, a $1.4 million gain was recognized in connection with a swapthat did not qualify for hedge accounting. See discussion of our use ofderivative instruments in the footnotes to the financial statements.

 

# **Critical Accounting Policies**

# ** **

Thepreparation of our consolidated financial statements in conformity withaccounting principles generally accepted in the United States (GAAP) requiresus to make estimates and assumptions that affect the reported amounts of assetsand liabilities and disclosure of contingent assets and liabilities at the dateof the financial statements and the reported amounts of revenues and expensesduring the reported period. Our estimates, judgments and assumptions are continuallyevaluated based upon available information and experience. Note 2 to theConsolidated Financial Statements includes further discussion of oursignificant accounting policies.

 

Ourmanagement has assessed the accounting policies used in the preparation of ourfinancial statements and discussed them with the General Partner’s AuditCommittee and independent auditors. The following accounting policies areconsidered critical based upon materiality to the financial statements, degreeof judgment involved in estimating reported amounts and sensitivity to changesin industry and economic conditions:

 

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*Accounting for Joint Ventures:*We analyze our investments in joint ventures underFinancial Accounting Standards Board (“FASB”) Interpretation No. 46 (R), *Consolidation of Variable Interest Entities,*todetermine if the joint venture is considered a variable interest entity andwould require consolidation. We have equity interests ranging from 10%-75% injoint ventures that own and operate rental properties and hold land fordevelopment. We consolidate those joint ventures that we control throughmajority ownership interests or substantial participating rights. Control isfurther demonstrated by the ability of the general partner to manage day-to-dayoperations, refinance debt and sell the assets of the joint venture without theconsent of the limited partner and inability of the limited partner to replacethe general partner. We use the equity method of accounting for those jointventures where we do not have control over operating and financial polices.Under the equity method of accounting, our investment in each joint venture isincluded on our balance sheet; however, the assets and liabilities of the jointventures for which we use the equity method are not included on our balancesheet.

 

*Cost Capitalization:* Direct and certain indirect costs, includinginterest, clearly associated and incremental to the development, construction,leasing or expansion of real estate investments are capitalized as a cost ofthe property. The following discusses the significant categories of costs weincur:

 

Withinour Rental Operations, direct and indirect costs are capitalized under theguidelines of SFAS No. 67, *Accounting for Costsand Initial Rental Operations of Real Estate Projects*(“SFAS 67”),**and interest costs are capitalized underthe guidelines of SFAS No. 34, “*Capitalizationof Interest Cost*” (“SFAS 34”). We capitalize these project costsassociated with the initial construction of a property up to the time theproperty is substantially complete and ready for its intended use. We believethe completion of the building shell is the proper basis for determiningsubstantial completion and that this basis is the most widely accepted standardin the real estate industry. The interest rate used to capitalize interest isbased upon our average borrowing rate on existing debt.

 

Inaddition, we capitalize costs, including interest costs, on vacant space duringextended lease-up periods after construction of the building shell has beencompleted if costs are being incurred to ready the vacant space for itsintended use. If costs and activities incurred to ready the vacant space cease,then cost capitalization is also discontinued until such activities areresumed. Once necessary work has been completed on a vacant space, projectcosts are no longer capitalized. We cease capitalization of all project costson extended lease-up periods after the shorter of a one-year period after the completionof the building shell or when the property attains a 90% occupancy. We followguidelines in SFAS 34 and SFAS 67 in determining the capitalization of projectcosts during the lease-up period of a property and believe that this treatmentis consistent with real estate industry standards for project costcapitalization.

 

Alldirect construction and development costs associated with the development of anew property are capitalized. In addition, all leasing commissions paid tothird parties for new leases or lease renewals are capitalized. A portion ofour indirect costs considered directly related and incremental to construction/development and leasing efforts are capitalized. In assessing the amount ofindirect costs to be capitalized, we first allocate payroll costs, on adepartment-by-department basis, among activities for which capitalization iswarranted (i.e., construction, development and leasing) and those for which capitalizationis not warranted (i.e., property management, maintenance, acquisitions anddispositions and general corporate functions). To the extent the employees of adepartment split their time between capitalizable and non-capitalizableactivities, the allocations are made based on estimates of the actual amount oftime spent in each activity. Once the payroll costs are allocated, thenon-payroll costs of each department are allocated among the capitalizable andnon-capitalizable activities in the same proportion as payroll costs. Thecapitalized cost pool does not include any costs allocable to our executiveofficers.

 

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Toensure that an appropriate amount of costs are capitalized, the amount ofcapitalized costs that are allocated to a specific project are limited toamounts using standards we developed. These standards consist of a percentageof the total development costs of a project and a percentage of the total grosslease amount payable under a specific lease. These standards are derived afterconsidering both the amount of costs that would need to be paid by us if theservices were performed by third parties, and the amounts that would beallocated if the personnel in the departments were working at full capacity.The use of these standards ensures that overhead costs attributable to downtimeor to unsuccessful projects or leasing activities are not capitalized by us.

 

*Impairment of Real Estate Investments:* We evaluate our real estate investments uponoccurrence of significant changes in the operations, but not less than annually,to assess whether any impairment indications are present that affect therecovery of the recorded value. If any real estate investment is consideredimpaired, a loss is provided to reduce the carrying value of the asset to itsestimated fair value. We utilize the guidelines established under SFAS 144 todetermine if impairment conditions exist. Under SFAS 144, we review theexpected undiscounted cash flows of each property in our held for rentalportfolio to determine if there are any indications of impairment of aproperty. The review of anticipated cash flows involves subjective assumptionsof estimated occupancy and rental rates and ultimate residual value. Inaddition to reviewing anticipated cash flows, we assess other factors such aschanges in business climate and legal factors that may affect the ultimatevalue of the property. These assumptions are subjective and the anticipatedcash flows may not ultimately be achieved.

 

Realestate assets to be disposed of are reported at the lower of their carryingvalue amount or the fair value less estimated cost to sell.

 

*Acquisition of Real Estate Property.*In accordance with SFAS 141, we allocate thepurchase price of acquired properties to net tangible and identified intangibleassets based on their respective fair values.

 

Theallocation to tangible assets (buildings, tenant improvements and land) isbased upon management’s determination of the value of the property as if itwere vacant using discounted cash flow models similar to those used by independentappraisers. Factors considered by management include an estimate of carryingcosts during the expected lease-up periods considering current marketconditions, and costs to execute similar leases. The remaining purchase priceis allocated among three categories of intangible assets consisting of theabove or below market component of in-place leases, the value of in-placeleases and the value of customer relationships.

•                  The valueallocable to the above or below market component of an acquired in-place leaseis determined based upon the present value (using an interest rate whichreflects the risks associated with the lease) of the difference between (i) thecontractual amounts to be paid pursuant to the lease over its remaining termand (ii) management’s estimate of the amounts that would be paid using currentfair market rates over the remaining term of the lease. The amounts allocatedto above or below market leases are included in deferred leasing and othercosts in the balance sheet and are amortized to rental income over theremaining terms of the respective leases.

•                  The total amountof intangible assets is further allocated to in-place lease values and tocustomer relationship values, based upon management’s assessment of theirrespective values. These intangible assets are included in deferred leasing andother costs in the balance sheet and are depreciated over the remaining term ofthe existing lease, or the anticipated life of the customer relationship, asapplicable.

 

*Valuation of Receivables:* We are subject to tenant defaults and bankruptciesthat could affect the collection of outstanding receivables. In order tomitigate these risks, we perform in-house credit review and analysis on majorexisting tenants and all significant leases before they are executed. We haveestablished the following procedures and policies to evaluate thecollectibility of outstanding receivables and record allowances:

 

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•                  We maintain atenant “watch list” containing a list of significant tenants for which thepayment of receivables and future rent may be at risk. Various factors such aslate rent payments, lease or debt instrument defaults, and indications of adeteriorating financial position are considered when determining whether toinclude a tenant on the watch list.

•                  As a matter ofpolicy, we reserve the entire receivable balance, including straight-line rent,of any tenant with an amount outstanding over 90 days.

•                  Straight-linerent receivables for any tenant on the watch list or any other tenantidentified as a potential long-term risk, regardless of the status of rentreceivables, are reviewed and reserved as necessary.

 

*Revenue Recognition on Construction Contracts:* We recognize income on construction contracts wherewe serve as a general contractor on the percentage of completion method. Usingthis method, profits are recorded on the basis of our estimates of the overallprofit and percentage of completion of individual contracts. A portion of theestimated profits is accrued based upon our estimates of the percentage ofcompletion of the construction contract. Cumulative revenues recognized may beless or greater than cumulative costs and profits billed at any point in timeduring a contract’s term. This revenue recognition method involves inherentrisks relating to profit and cost estimates with those risks reduced throughapproval and monitoring processes.

 

Withregards to critical accounting policies, management has discussed the followingwith the Audit Committee of the General Partner’s Board of Directors:

 

•                  Criteria foridentifying and selecting;

•                  Methodology inapplying; and

•                  Impact on thefinancial statements.

 

TheAudit Committee of the General Partner has reviewed the critical accountingpolicies we identified.

 

# **Liquidity and Capital Resources**

 

**Sources ofLiquidity**

 

We expect to meet our liquidity requirements over the next twelvemonths, including payments of distributions as well as recurring capitalexpenditures relating to maintaining our current real estate assets, primarilythrough the following:

 

•                  working capital;and

•                  net cashprovided by operating activities

 

Although we historically have not used any other sources of funds topay for recurring capital expenditures on our current real estate investments,the use of borrowings or property disposition proceeds may be temporarilyneeded to fund such expenditures during periods of high leasing volume.

 

We expect to meet long-term liquidity requirements, such as scheduledmortgage debt maturities, preferred stock redemptions, the retirement ofunsecured notes and amounts outstanding under the unsecured credit facility,property acquisitions, financing of development activities and othernon-recurring capital improvements, primarily from the following sources:

 

•                  issuance ofadditional unsecured notes;

•                  issuance ofadditional General Partner preferred equity;

•                  undistributedcash provided by operating activities, if any; and

•                  proceedsreceived from real estate dispositions.

 

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### ***RentalOperations***

Webelieve our principal source of liquidity, cash flows from Rental Operations,provides a stable source of cash to fund operational expenses. We believe thiscash-based revenue stream is substantially aligned with revenue recognition(except for periodic straight-line rental income accruals and amortization ofabove or below market rents) as cash receipts from the leasing of rentalproperties are generally received in advance of or in a short time following theactual revenue recognition. We are subject to risks of decreased occupancythrough market conditions as well as tenant defaults and bankruptcies, andpotential reduction in rental rates upon renewal or re-letting of properties,which would result in reduced cash flow from operations. However, we believethat these risks are mitigated by our strong market presence in most locationsand the fact that we perform in-house credit review and analysis on majortenants and all significant leases before they are executed.

 

*Credit Facilities*

We had one unsecured line of credit available at December 31, 2004,described as follows (in thousands):

 
| **Description**          | ** ** | **Borrowing  Capacity** | ** ** | **Maturity  Date** | ** **   | **Interest  Rate** | ** **   | **Outstanding  at December  31, 2004** | ** ** |
|--------------------------|------------|-------------------------|------------|--------------------|--------------|--------------------|--------------|----------------------------------------|------------|
| Unsecured Line of Credit |       | $                       | 500,000    |               | January 2007 |               | LIBOR + .60% |                                   | $          | — |   |
|                          |            |                         |            |                    |              |                    |              |                                        |            |  |  |

 

The stated interest rate under the line is LIBOR plus sixty basispoints.  However, the facility providesus with an option to obtain borrowings from financial institutions thatparticipate in the line, at rates lower than the stated interest rate, subjectto certain restrictions.  At December 31,2004, we were not using this facility.

 

The line of credit facility also contains financial covenants thatrequire us to meet defined levels of performance.  As of December 31, 2004, we are in compliancewith all covenants and expect to remain in compliance for the foreseeablefuture.

 

*Debt and Equity Securities*

We currently have on file with the SEC an effective shelf registrationstatement that permits us to sell up to an additional $795.0 million ofunsecured debt securities as of December 31, 2004. In addition, the GeneralPartner has on file with the SEC an effective shelf registration statement thatpermits the General Partner to sell up to an additional $350.7 million ofcommon and preferred stock as of December 31, 2004. From time-to-time, theGeneral Partner and we expect to issue additional securities under theseregistration statements to fund development and acquisition of additionalrental properties and to fund the repayment of the credit facility and otherlong-term debt upon maturity.

 

The indenture governing our unsecured notes also requires us to complywith financial ratios and other covenants regarding our operations. We arecurrently in compliance with all such covenants and expect to remain incompliance for the foreseeable future.

 

*Sale of Real Estate Assets*

We utilize sales of real estate assets as an additional source ofliquidity. We pursue opportunities to sell real estate assets and prune ourolder portfolio properties when beneficial to our long-term strategy.

 

**Uses of Liquidity**

 

Our principal uses of liquidity include the following:

 

•                  Property investments;

•                  Recurring leasing/capital costs;

•                  Distributions to unitholders;

•                  Long-term debt maturities; and

•                  Other contractual obligations.

 

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*Property Investments*

We evaluate development and acquisition opportunities based upon marketoutlook, supply, and long-term growth potential.

 

*Recurring expenditures*

A summary of our recurring capital expenditures isas follows for the year ended December 31, (in thousands):

 
| ** **            | ** ** | **2004**   | ** **  | **2003** | ** ** | **2002** | ** ** |
|-----------------------|------------|------------|-------------|----------|------------|----------|------------|
|                  |       |       |        |     |       |     |       |
| Tenant improvements   | ** ** | **$**      | **58,847**  |     | $          | 35,972   |       | $ | 28,011 |   |
| Leasing costs         | ** ** | **27,777** |        | 20,932   |       | 17,975   |       |
| Building improvements | ** ** | **21,029** |        | 19,544   |       | 13,373   |       |
| Totals                | ** ** | **$**      | **107,653** |     | $          | 76,448   |       | $ | 59,359 |   |

 

The increase in recurringcapital expenditures is the result of higher leasing activity during 2004. Ourlease renewal percentage increased from 71.4% to 74.0% in 2004.

 

*Distributions*

In order to qualify as a REIT for federal income tax purposes, theGeneral Partner must currently distribute at least 90% of its taxable income toits shareholders. We paid distributions per Common Unit of $1.85, $1.83 and$1.81 for the years ended December 31, 2004, 2003 and 2002, respectively. Weexpect to continue to distribute taxable earnings to meet the requirements forthe General Partner to maintain its REIT status. However, distributions aredeclared at the discretion of the General Partner’s Board of Directors and aresubject to actual cash available for distribution, our financial condition,capital requirements and such other factors, as the General Partner’s Board ofDirectors deems relevant.

 

*Debt Maturities*

Debt outstanding at December 31, 2004, totaled $2.5 billion with aweighted average interest rate of 5.69% maturing at various dates through 2028.We had $2.3 billion of unsecured debt and $203.1 million of secured debtoutstanding at December 31, 2004. Scheduled principal amortization of such debttotaled $7.3 million for the year ended December 31, 2004.

 

Following is a summary of the scheduled future amortization andmaturities of our indebtedness at December 31, 2004 (in thousands):

 
| ** ** | ** ** | **Future Repayments** | ** ** | **Weighted****Average********Interest Rate of  Future Repayments** | ** ** |
|------------|------------|-----------------------|------------|--------------------------------------------------------------------|------------|
| ** ** | ** ** | **Scheduled**         | ** ** | ** **                                                         | ** ** | ** ** | ** ** | ** ** |
| **Year**   | ** ** | **Amortization**      | ** ** | **Maturities**                                                     | ** ** | **Total** | ** ** | ** ** |
|       |       |                  |       |                                                               |       |   |   |   |   |
| 2005       |       | $                     | 8,686      |                                                               | $          | 270,980 |   | $ | 279,666 |   | 6.04 | % |
| 2006       |       | 8,318                 |       | 415,186                                                            |       | 423,504 |   | 4.29 | % |
| 2007       |       | 6,891                 |       | 214,615                                                            |       | 221,506 |   | 5.51 | % |
| 2008       |       | 6,031                 |       | 259,028                                                            |       | 265,059 |   | 4.92 | % |
| 2009       |       | 5,867                 |       | 275,000                                                            |       | 280,867 |   | 7.37 | % |
| 2010       |       | 5,313                 |       | 175,000                                                            |       | 180,313 |   | 5.39 | % |
| 2011       |       | 4,647                 |       | 175,000                                                            |       | 179,647 |   | 6.94 | % |
| 2012       |       | 3,332                 |       | 200,000                                                            |       | 203,332 |   | 5.86 | % |
| 2013       |       | 3,049                 |       | 150,000                                                            |       | 153,049 |   | 4.64 | % |
| 2014       |       | 3,800                 |       | 273,196                                                            |       | 276,996 |   | 6.23 | % |
| Thereafter |       | 4,765                 |       | 50,000                                                             |       | 54,765 |   | 6.66 | % |
|       |       | $                     | 60,699     |                                                               | $          | 2,458,005 |   | $ | 2,518,704 |   | 5.69 | % |

 

**Historical Cash Flows**

 

A comparison of our historical cash flows for 2004, 2003 and 2002 is asfollows (in millions):

 

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| ** **                                            | ** ** | **Years Ended December 31,** | ** ** |
|-------------------------------------------------------|------------|------------------------------|------------|
| ** **                                            | ** ** | **2004**                     | ** ** | **2003** | ** ** | **2002** | ** ** |
| Net cash provided by Operating Activities             | ** ** | **$**                        | **379.3**  |   | $ | 368.1 |   | $ | 569.0 |   |
| Net Cash Used by Investing Activities                 | ** ** | **(430.8**                   | **)**      | (319.6 | ) | (337.2 | ) |
| Net Cash Provided by (Used for) Financing  Activities | ** ** | **44.6**                     |       | (52.9 | ) | (225.1 | ) |
|                                                       |            |                              |            |  |  |  |  |  |  |  |

 

*Operating Activities*

Cash flows from operating activities provide the cash necessary to meetnormal operational requirements of our rental operations and merchant buildingactivities. The receipt of rental income from rental operations continues toprovide the primary source of our revenues and operating cash flows. Inaddition, we also develop buildings with the intent to sell, which providesanother significant source of operating cash flow activity.

•                  During the yearended December 31, 2004, we incurred merchant building development costs of$43.1 million compared to $55.6 million for the year ended December 31, 2003.The difference is reflective of the timing of activity in the held for salepipeline as we had significant sales of these properties during the fourthquarter of 2003; thus, the development costs were much higher for 2003. Thepipeline of held for sale projects under construction as of December 31, 2004has anticipated costs of $39.3 million.

•                  We sold sixmerchant buildings in 2004, for a net after tax gain of $16.5 million ascompared to four in 2003 for a net after tax gain of $9.6 million.

 

*Investing Activities*

Investing activities are one of the primary uses of our liquidity.Development and acquisition activity typically generates additional rentalrevenues and provides cash flows for operational requirements. Highlights ofsignificant cash uses are as follows:

•                  Developmentcosts increased to $145.6 million for the year ended December 31, 2004 from$129.2 million for the same period in 2003. The increase reflects the overallimprovement in the development climate during 2004. We anticipate developmentvolume to increase in 2005 through new initiatives such as our 1,700 acre,mixed-use project referred to as the Anson project and our National Developmentand Construction group.

•                  In the yearended December 31, 2004, we have significantly increased our costs associatedwith the acquisition of land held for development. We acquired $116.7 millionof land in 2004 as compared to $32.9 million in 2003. The significant increaseis primarily attributable to the acquisition of over 260 acres of land at acost of over $37 million in our Indianapolis market. This initial acquisition ispart of our 1,700-acre, mixed-use Anson project, which we anticipate will bedeveloped over a 15-year period.

•                  Recurring costsfor tenant improvements, lease commissions and building improvements havecontinued to increase. Management anticipates that these costs will remain highas overall portfolio occupancy continues to increase.

•                  Sales of landand depreciated property provided $178.3 million in net proceeds in 2004,compared to $167.6 million in 2003. Sales of non-strategic and older propertieswill continue to be utilized as part of our capital recycling program to fundacquisitions and new development while improving the overall quality of ourinvestment portfolio.

 

*Financing Activities*

We raised capital by borrowing from banks, utilizing the public debtmarkets and issuing preferred stock through the General Partner in 2004. Inorder to enhance our flexibility with respect to properties, we have continuedto replace secured debt with unsecured debt. Our low leverage provides us withthe opportunity to borrow funds at very attractive rates. Highlights ofsignificant financing activities are as follows:

 

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•                  In February, wereceived approximately $145.0 million in net proceeds from the General Partner’sissuance of its Series K preferred stock. This preferred equity was issued at afavorable dividend yield of 6.5%. The Series K preferred issuance correspondedwith the redemption of $100.0 million of the General Partner’s Series Epreferred shares in January, which carried an 8.25% dividend rate.

•                  We tookadvantage of the low interest rate environment in January when we issued $125.0million of unsecured debt at 3.35% with a four-year term. The net proceeds fromthis unsecured offering were used to decrease the amounts outstanding under ourunsecured line of credit.

•                  In February, theGeneral Partner called for the redemption of all of its Series D convertiblepreferred shares as of March 16, 2004. The redemption price of each depositoryshare of the Series D stock was $25, whereas each depository share wasconvertible into .93677 shares of the General Partner’s common stock. Since thevalue of the General Partner’s common stock was well in excess of the $26.68strike price per share during the redemption period, the vast majority of theSeries D shareholders elected to convert their shares into the General Partner’scommon stock. Prior to the redemption date, 5,242,635 Series D convertiblepreferred depositary shares were converted into 4,911,143 common shares of theGeneral Partner, with the remaining 103,695 Series D convertible preferreddepositary shares redeemed for $2.6 million on March 16, 2004. The GeneralPartner’s equity issuances are directly related with corresponding equityissuances by the Partnership to the General Partner. We issued one Common Unitfor each common share issued by the General Partner, and cancelled one Series DPreferred Unit for each Series D preferred share converted or redeemed by theGeneral Partner.

•                  We paid $2.9million in cash to a group of warrant holders in exchange for the cancellationof their warrants in March. The price paid represented the “in-the money” valueof the warrants based upon the difference between the exercise price of thewarrants and the price of the General Partner’s common stock at the exercisedate.

•                  In August, weissued $250 million of 5.40% unsecured notes due in 2014. The notes were issuedas part of an exchange of securities for $100 million principal amount of our6.95% unsecured debt. The remaining cash proceeds were used to finance costsassociated with the offering and exchange of debt, and to reduce amountsoutstanding under our unsecured line of credit.

•                  In November, theGeneral Partner issued its Series L preferred stock and received approximately$194 million in net proceeds. This preferred equity was issued at a dividendyield of 6.6%. The proceeds were used to reduce borrowings under our unsecuredline of credit that had partially increased as a result of the maturity andpayment of $50 million of medium term notes carrying an interest rate of 7.22%.

•                  In December, weissued $250 million of unsecured floating rate debt at 26 basis points overLIBOR. The debt matures in two years but is callable after six months. Theproceeds were used to pay off our credit line, which was not being utilized atDecember 31, 2004.

 

Credit Ratings

 

TheGeneral Partner and we are currently assigned investment grade corporate creditratings on senior unsecured notes from Fitch Ratings, Moody’s Investor Serviceand Standard and Poor’s Ratings Group. Currently, Fitch and Standard and Poor’shave assigned a rating of BBB+ and Moody’s Investors has assigned a rating ofBaa1 to the senior notes.

 

TheGeneral Partner and we also received investment grade credit ratings from thesame rating agencies on the General Partner’s preferred stock.  Fitch and Standard and Poor’s have assigned aPreferred Stock rating of BBB and Moody’s Investors has assigned a PreferredStock rating of Baa2.

 

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Thesesenior notes and preferred stock ratings could change based upon, among otherthings, our results of operations and financial condition.

 

Financial Instruments

 

We areexposed to capital market risk, such as changes in interest rates. In order tomanage the volatility relating to interest rate risk, we may enter intointerest rate hedging arrangements from time to time. We do not utilizederivative financial instruments for trading or speculative purposes. Weaccount for derivative instruments under SFAS No. 133, “*Accounting for Derivative Instruments and HedgingActivities,*” as amended (“SFAS 133”).

 

Duringthe first quarter of 2004, we funded a $65 million note receivable secured by afirst mortgage on a portfolio of office properties owned by a third partylocated in Atlanta, Georgia. The note receivable had a maximum two-year termwith an interest rate of 5.5% for the first 6 months and 6.5% thereafter. Inorder to fund the note receivable, we borrowed $65 million under a variableinterest rate term loan. The loan bears interest at the rate of LIBOR + 75basis points, has a maturity date of January 2005, and contains two six monthrenewal options. To hedge our variable interest rate risk on the loan, weentered into two interest rate swaps totaling $65 million that effectivelyfixed the rate at 2.184% through maturity. The hedge accounting rules are beingused for the swaps, which allow for changes in market value of the swaps to berecorded through Other Comprehensive Income (“OCI”) in equity versus earningsin the Statement of Operations. In the third quarter of 2004, the $65 millionnote receivable was repaid in connection with our acquisition of the propertiesthat secured the note. However, our $65 million note payable and relatedinterest swaps were not retired. As of December 31, 2004, the fair value of thehedge was $51,000, which was reflected through an increase in other assets andOCI on our balance sheet.

 

InJune 2004, we simultaneously entered into three forward-starting interest rateswaps aggregating $144.3 million, which effectively fixed the rate on financingexpected in 2004 at 5.346%, plus our credit spread over the swap rate. Theswaps qualified for hedge accounting under SFAS 133; therefore, changes in thefair value were recorded in OCI. In August 2004, we settled these three swapswhen we issued $250.0 million of unsecured notes with an effective interestrate of 6.33%, due in 2014. We paid $6.85 million to unwind the swaps, whichwill be amortized from OCI into interest expense over the life of the new 6.33%notes.

 

InDecember 2002, we simultaneously entered into two $50 million forward-startinginterest rate swaps as a hedge to effectively fix the rate on unsecured debtfinancings expected in 2003. Then again in February 2003, we simultaneouslyentered into two additional $25 million forward-starting interest rate swaps asa hedge to effectively fix the rate on unsecured debt financings expected in2003. All four swaps qualified for hedge accounting under SFAS 133; therefore,changes in fair value were recorded in other comprehensive income. In July2003, we terminated the swaps for a net gain of $643,000, which is included inother revenue in the Statements of Operations. The swaps were terminatedbecause our capital needs were met through the issuance of the Series JPreferred Stock in lieu of the previously contemplated issuance of debt.

 

Duringthe year ended December 31, 2002, we recorded a $1.4 million gain associatedwith an interest rate contract that did not qualify for hedge accounting.  The contract expired on December 30, 2002.

 

In May2003, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 150, *Accounting for Certain Financial Instruments withCharacteristics of both Liabilities and Equity* (“SFAS 150”). SFAS150 establishes standards for classifying and measuring as liabilities certainfinancial instruments that embody obligations of the issuer and havecharacteristics of both liabilities and equity. SFAS 150 is effective for allfinancial instruments created or modified after May 31, 2003, and otherwise iseffective July 1, 2003. We include the operations of one joint venture in ourconsolidated financial statements. This joint venture is partially owned byunaffiliated parties that have noncontrolling interests. SFAS 150 requires thedisclosure of

 

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theestimated settlement value of these noncontrolling interests. As of December31, 2004, the estimated settlement value of the noncontrolling interest in thisconsolidated joint venture was approximately $1.0 million as compared to theminority interest asset recorded on our books for this joint venture of$142,000.

 

# **Off Balance Sheet Arrangements**

# ** **

# ***Investmentsin Unconsolidated Companies***

We have equity interests ranging from 10% – 64% in unconsolidatedcompanies that own and operate rental properties and hold land for development.The equity method of accounting is used for these investments in which we havethe ability to exercise significant influence, but not control, over operatingand financial policies. As a result, the assets and liabilities of these jointventures are not included on our balance sheet.

 

Our investment in unconsolidated companies represents less than 5% ofour total assets as of December 31, 2004. These investments provide severalbenefits to us, including increased market share, tenant and propertydiversification and an additional source of capital to fund real estateprojects.

 

The following tables presents summarized financial information forunconsolidated companies for the years ended December 31, 2004 and 2003 (inthousands, except percentages):

 
| ** **                                    | ** ** | **Dugan  Realty, LLC** | ** **  | **Dugan  Texas, LLC** | ** ** | **Dugan  Office, LLC** | ** ** | **Other  Industrial****   and Office Joint Ventures** | ** **  | **Total**      | ** ** |
|-----------------------------------------------|------------|------------------------|-------------|-----------------------|------------|------------------------|------------|------------------------------------------------------------|-------------|----------------|------------|
| ** **                                    | ** ** | **2004**               | ** **  | **2003**              | ** ** | **2004**               | ** ** | **2003**                                                   | ** **  | **2004**       | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
| Land, buildings  and tenant improvements, net | ** ** | **$**                  | **715,931** |                  | $          | 727,411                | ** ** | **$**                                                      | **210,524** |           | $          | 209,602 | ** ** | **$** | **88,088** |   | $ | 91,170 | ** ** | **$** | **143,525** |   | $ | 145,049 | ** ** | **$** | **1,158,068** |   | $ | 1,173,232 |   |
| Land held for  development                    | ** ** | **18,174**             |        | 17,663                | ** ** | **11,312**             |       | 12,710                                                     | ** **  | **4****,293**  |       | 4,293 | ** ** | **16,394** |   | 16,662 | ** ** | **50,173** |   | 51,328 |   |
| Other assets                                  | ** ** | **29,738**             |        | 29,213                | ** ** | **13,223**             |       | 16,535                                                     | ** **  | **3,256**      |       | 2,934 | ** ** | **15,973** |   | 13,514 | ** ** | **62,190** |   | 62,196 |   |
| ** **                                    |       | **$**                  | **763,843** |                  | $          | 774,287                | ** ** | **$**                                                      | **235,059** |           | $          | 238,847 | ** ** | **$** | **95,637** |   | $ | 98,397 | ** ** | **$** | **175,892** |   | $ | 175,225 | ** ** | **$** | **1,270,431** |   | $ | 1,286,756 |   |
| ** **                                    |       | ** **             |        |                  | ** ** | ** **             |       |                                                       | ** **  | ** **     |       |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   |   |
| Property  indebtedness                        | ** ** | **$**                  | **412,179** |                  | $          | 409,349                | ** ** | **$**                                                      | **18,000**  |           | $          | 16,035 | ** ** | **$** | **68,393** |   | $ | 69,160 | ** ** | **$** | **72,369** |   | $ | 83,188 | ** ** | **$** | **570,941** |   | $ | 577,732 |   |
| Other liabilities                             | ** ** | **18,921**             |        | 18,232                | ** ** | **8,791**              |       | 9,342                                                      | ** **  | **3,318**      |       | 3,460 | ** ** | **20,347** |   | 10,657 | ** ** | **51,377** |   | 41,691 |   |
| ** **                                    |       | **431,100**            |        | 427,581               | ** ** | **26,791**             |       | 25,377                                                     | ** **  | **71,****711** |       | 72,620 | ** ** | **92****,716** |   | 93,845 | ** ** | **622,318** |   | 619,423 |   |
| Owner’s equity                           | ** ** | **332,743**            |        | 346,706               | ** ** | **208,268**            |       | 213,470                                                    | ** **  | **23****,926** |       | 25,777 | ** ** | **83,176** |   | 81,380 | ** ** | **648,113** |   | 667,333 |   |
| ** **                                    |       | **$**                  | **763,843** |                  | $          | 774,287                | ** ** | **$**                                                      | **235,059** |           | $          | 238,847 | ** ** | **$** | **95,637** |   | $ | 98,397 | ** ** | **$** | **175,892** |   | $ | 175,225 | ** ** | **$** | **1,270,431** |   | $ | 1,286,756 |   |
| ** **                                    |       | ** **             |        |                  | ** ** | ** **             |       |                                                       | ** **  | ** **     |       |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   |   |
| Rental income                                 | ** ** | **$**                  | **98,020**  |                  | $          | 97,150                 | ** ** | **$**                                                      | **29,860**  |           | $          | 28,248 | ** ** | **$** | **14,776** |   | $ | 18,202 | ** ** | **$** | **25,147** |   | $ | 26,627 | ** ** | **$** | **167,803** |   | $ | 170,227 |   |
| Net income                                    | ** ** | **$**                  | **23,398**  |                  | $          | 23,397                 | ** ** | **$**                                                      | **13,039**  |           | $          | 12,688 | ** ** | **$** | **252** |   | $ | 1, 536 | ** ** | **$** | **3,449** |   | $ | 3,444 | ** ** | **$** | **40,138** |   | $ | 41,065 |   |
|                                          | ** ** | ** **             |        |                  | ** ** | ** **             |       |                                                       | ** **  | ** **     |       |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   |   |
| Total square feet                             | ** ** | **22,763**             |        | 22,761                | ** ** | **6,018**              |       | 5,808                                                      | ** **  | **652**        |       | 652 | ** ** | **4,****465** |   | 4,465 | ** ** | **33,898** |   | 33,686 |   |
| Percent leased                                | ** ** | **95.0**               | **%**       | 94.8                  | %          | **95.3**               | **%**      | 95.0                                                       | %           | **69.7**       | **%**      | 87.4 | % | **94.2** | **%** | 89.4 | % | **94.4** | **%** | 94.0 | % |
| Company ownership  percentage                 | ** ** | **50.0**               | **%**       | 50.0                  | %          | **50.0**               | **%**      | 50.0                                                       | %           | **50.0**       | **%**      | 50.0 | % | **10.0%**

**64.0** |  **-**

**%** | 10.0%

64.0 |  -

% |   |   |   |   |

* *

*Off Balance Sheet Arrangements*

We do not have any relationships with unconsolidated entities orfinancial partnerships, such as “special purpose entities,” which are generallyestablished for the purpose of facilitating off-balance sheet arrangements orother specific purposes.

 

*Contractual Obligations*

As of December 31, 2004, we are subject to certain contractual paymentobligations as described in the table below (in thousands):

 
| ** **                                                   | ** ** | ** ** | ** ** | **Payments due by Period** | ** ** |
|--------------------------------------------------------------|------------|------------|------------|----------------------------|------------|
| **Contractual Obligations**                                  | ** ** | **Total**  | ** ** | **2005**                   | ** ** | **2006** | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** | **Thereafter** | ** ** |
| Long-term debt (1)                                           |       | $          | 3,040,759  |                       | $          | 415,068 |   | $ | 317,848 |   | $ | 326,059 |   | $ | 351,371 |   | $ | 356,444 |   | $ | 1,273,969 |   |
| Line of credit (2)                                           |       | —     |       | —                     |       | — |   | — |   | — |   |   |   | — |   |
| Share of mortgage debt of unconsolidated  joint ventures (3) |       | 332,440    |       | 48,364                     |       | 29,538 |   | 74,825 |   | 12,552 |   | 55,798 |   | 111,363 |   |
| Ground leases                                                |       | 8,204      |       | 288                        |       | 295 |   | 309 |   | 305 |   | 288 |   | 6,719 |   |
| Operating leases                                             |       | 1,173      |       | 383                        |       | 236 |   | 228 |   | 216 |   | 110 |   | — |   |
| Development and construction backlog costs  (4)              |       | 227,141    |       | 227,141                    |       | — |   | — |   | — |   |   |   | — |   |
| Future land acquisitions (5)                                 |       | 43,779     |       | 40,277                     |       | 1,751 |   | 1,751 |   | — |   |   |   | — |   |
| Service contracts (6)                                        |       | 72,552     |       | 14,676                     |       | 14,527 |   | 14,512 |   | 14,221 |   | 14,616 |   | — |   |
| Other (7)                                                    |       | 8,000      |       | 8,000                      |       | — |   | — |   | — |   | — |   | — |   |
| **Total Contractual Obligations**                            |       | $          | 3,734,048  |                       | $          | 754,197 |   | $ | 364,195 |   | $ | 417,684 |   | $ | 378,665 |   | $ | 427,256 |   | $ | 1,392,051 |   |

 

31

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----

(1)          Our long-term debt consists of both securedand unsecured debt and includes both principal and interest. Interest expensefor variable rate debt was calculated using the interest rate at December 31,2004.

(2)          Our unsecured line of credit matures in 2007.We were not using our line of credit at December 31, 2004.

(3)          Our share of unconsolidated mortgage debtincludes both principal and interest. Interest expense for variable rate debtwas calculated using the interest rate at December 31, 2004.

(4)          Represents estimated remaining costs on thecompletion of held-for-rental, held-for-sale and third-party constructionprojects.

(5)          These land acquisitions are subject to thecompletion of due diligence requirements, resolution of certain contingenciesand completion of certain contingencies and completion of customary closingconditions. If we were to terminate these contracts, we would forfeit our totalescrow amount of $1,485,000 and would have no further contractual obligations.

(6)          Service contracts defined as those whichcover periods greater than one year and are not cancelable without cause byeither party.

(7)          Represents the contracted purchase price of abuilding.

 

**Related Party Transactions**

 

We provide property management, leasing, construction and other tenantrelated services to properties in which former executive officers and currentdirectors have ownership interests. We received fees totaling approximately$693,000, $1.2 million, and $1.4 million in 2004, 2003 and 2002, respectively,for services provided to these properties. The fees we charged for suchservices are equivalent to those charged to unrelated third-party owners forsimilar services.  We had an option toacquire the executive officers’ interests in these properties. Two of theseproperties, the Bank One Towers office buildings in Cincinnati, Ohio, wereacquired in August 2003 at a price of $45.5 million. The terms of this acquisitionwere reviewed and approved by the independent members of the General Partner’sBoard of Directors. The options on the remaining properties expired in October2003, as the independent members of the General Partner’s Board of Directorsdetermined that it was not in our best interest to exercise the options.

 

We provide property management, leasing, construction and other tenantrelated services to unconsolidated companies in which we have an equityinterest. For each of the years ended December 31, 2004, 2003 and 2002, wereceived management fees of $4.9 million from these unconsolidated companies.In addition, for each of the years ended December 31, 2004, 2003 and 2002,respectively, we received from these entities leasing fees of $2.6 million, $2.3million and $2.5 million and construction and development fees of $1.5 million,$1.4 million and $4.5 million. These fees were charged at market rates and weeliminated our ownership percentage of these fees in the consolidated financialstatements.

 

In 2002, we received lease termination fees totaling $7.7 million froma tenant that is a subsidiary of Progress Energy, Inc. At that time, WilliamCavanaugh III was President and Chief Executive Officer of Progress Energy,Inc. and a member of the General Partner’s Board of Directors. The GeneralPartner’s independent directors approved the transaction and managementbelieves that the amount received approximates a value that would have beencharged to tenants with similar lease terms and commitments.

 

##### **Commitments and Contingencies**

##### ** **

In 1998 and 1999, certain members of management and the General Partner’sBoard of Directors purchased $69 million of the General Partner’s common stockin connection with an Executive and Senior Officer Stock Purchase Plan. The purchaseswere financed by five-year personal loans at market interest rates fromfinancial institutions. As of December 31, 2004, the outstanding balance onthese loans was approximately $1.6 million as some participants have extendedtheir involvement in the program beyond the original five years. These loanswere secured by common shares of the General Partner with a fair market valueof approximately $2.5 million purchased through this program and owned by theremaining plan participants at December 31, 2004. As a condition of thefinancing agreement with the financial institution, we guaranteed repayment ofprincipal, interest and other obligations for each participant, but are fullyindemnified by the participants. In the opinion of management, it is notprobable that we will be required to satisfy these guarantees.

 

32

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In October 2000, we sold or contributed industrial properties andundeveloped land with a fair value of $487 million to a joint venture (DuganRealty LLC) in which we have a 50% interest and recognized a net gain of $35.2million. This transaction expanded an existing joint venture with aninstitutional real estate investor. As a result of the total transactions, wereceived $363.9 million of proceeds. The joint venture partially financed thistransaction with $350 million of secured mortgage debt, the repayment of whichwe directly or indirectly guaranteed. The guarantee associated with $260million of such debt expired in December 2003 without us being required tosatisfy the guarantee. The remaining $90 million of such debt is stillguaranteed by us. In connection with this transaction, the joint venturepartners were given an option to put up to a $50 million interest in the jointventure to us in exchange for the General Partner’s common stock or cash (atour option), subject to certain timing and other restrictions. As a result ofthis put option, we deferred $10.2 million of gain on sale of depreciatedproperty and recorded a $50 million liability.

 

We have guaranteed the repayment of $12.3 million of economicdevelopment bonds issued by various municipalities in connection with certaincommercial developments. We will be required to make payments under ourguarantees to the extent that incremental taxes from specified developments arenot sufficient to pay the bond debt service. Management does not believe that it is probable that we will be requiredto make any significant payments in satisfaction of these guarantees.

 

We have also guaranteed the repayment of a $2 million mortgage loanencumbering the real estate of one of our unconsolidated joint ventures.Management believes that the value of the real estate exceeds the loan balanceand that we will not be required to satisfy this guarantee.

 

We evaluated our guarantees under FASB Interpretation 45 (“FIN 45”) inorder to determine the amount of potential liability we may incur resultingfrom the guarantees. For this evaluation we used discounted cash flowprojections for expected incremental financing to be generated from anticipateddevelopment. Based upon these projections, no liability was recorded atDecember 31, 2004.

 

We have entered into agreements, subject to the completion of duediligence requirements, resolution of certain contingencies and completion ofcustomary closing conditions, for the future acquisition of land totaling $43.8million. We have also entered into an agreement to acquire a single buildingfor $8.0 million, which is expected to close in 2005.

 

We renewed all of our major insurance policies in 2004. These policiesinclude coverage for acts of terrorism for our properties. We believe that thisinsurance provides adequate coverage against normal insurance risks and thatany loss experienced would not have a significant impact on our liquidity,financial position, or results of operations.

 

We are subject to various legal proceedings and claims that arise inthe ordinary course of business.  In theopinion of management, the amount of any ultimate liability with respect tothese actions will not materially affect our consolidated financial statementsor results of operations.

 

# **Recent Accounting Pronouncements**

# ** **

In December 2004, FASB issued SFAS No. 123 (R), *Share-Based Payment,*which is a revisionof SFAS No. 123, *Accounting for Stock BasedCompensation,*and is effective July 2005*.*We are currently evaluating the impact on our financialposition and results of operations.

 

**Item 7A.  Quantitative andQualitative Disclosure About Market Risks**

 

We are exposed to interest rate changes primarily as a result of ourline of credit and long-term debt borrowings. Our interest rate risk managementobjective is to limit the impact of interest rate changes on

 

33

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earnings and cash flows and to lower overall borrowing costs. Toachieve our objectives, we borrow primarily at fixed rates and may enter intoderivative financial instruments such as interest rate swaps, caps and treasurylocks in order to mitigate our interest rate risk on a related financialinstrument. We do not enter into derivative or interest rate transactions forspeculative purposes.

 

Our interest rate risk is monitored using a variety of techniques. Thetable below presents the principal amounts (in thousands) of the expectedannual maturities, weighted average interest rates for the average debtoutstanding in the specified period, fair values and other terms required toevaluate the expected cash flows and sensitivity to interest rate changes.

 
| ** **                      | ** ** | **2005** | ** ** | **2006** | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** | **Thereafter** | ** ** | **Total** | ** ** | **Fair  Value** | ** ** |
|---------------------------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------------|------------|-----------|------------|-----------------|------------|
|                            |       |     |       |     |       |     |       |     |       |     |       |           |       |      |       |            |       |
| Fixed rate  secured debt        |       | $        | 13,698     |     | $          | 47,483   |       | $        | 20,539     |     | $          | 39,203         |       | $         | 4,976      |            | $          | 37,708 |   | $ | 163,607 |   | $ | 173,012 |   |
| Weighted average  interest rate |       | 6.93     | %          | 7.17     | %          | 7.55     | %          | 5.26     | %          | 7.27     | %          | 6.17           | %          |      |       |            |       |
|                            |       |     |       |     |       |     |       |     |       |     |       |           |       |      |       |            |       |
| Variable rate  secured debt     |       | $        | 741        |     | $          | 25,781   |       | $        | 811        |     | $          | 856            |       | $         | 891        |            | $          | 10,394 |   | $ | 39,474 |   | $ | 39,474 |   |
| Weighted average  interest rate |       | 2.25     | %          | 4.10     | %          | 2.24     | %          | 2.23     | %          | 2.22     | %          | 2.14           | %          |      |       |            |       |
|                            |       |     |       |     |       |     |       |     |       |     |       |           |       |      |       |            |       |
| Fixed rate  unsecured notes     |       | $        | 265,227    |     | $          | 100,240  |       | $        | 200,156    |     | $          | 225,000        |       | $         | 275,000    |            | $          | 1,000,000 |   | $ | 2,065,623 |   | $ | 2,196,736 |   |
| Weighted average  interest rate |       | 6.00     | %          | 6.72     | %          | 5.31     | %          | 4.87     | %          | 7.39     | %          | 5.97           | %          |      |       |            |       |
|                            |       |     |       |     |       |     |       |     |       |     |       |           |       |      |       |            |       |
| Variable rate  unsecured notes  |       | $        | —     |     | $          | 250,000  |       | $        | —     |     | $          | —         |       | $         | —     |            | $          | — |   | $ | 250,000 |   | $ | 250,000 |   |
| Weighted average  interest rate |       | N/A      |       | 2.78     | %          | N/A      |       | N/A      |       | N/A      |       | N/A            |       |      |       |            |       |
|                            |       |     |       |     |       |     |       |     |       |     |       |           |       |      |       |            |       |
| Unsecured line of  credit       |       | $        | —     |     | $          | —   |       | $        | —     |     | $          | —         |       | $         | —     |            | $          | — |   | $ | — |   | $ | — |   |
| Rate at December  31, 2004      |       | N/A      |       | N/A      |       | N/A      |       | N/A      |       | N/A      |       | N/A            |       |      |       |            |       |

 

As the table incorporates only those exposures that exist as ofDecember 31, 2004, it does not consider those exposures or positions that couldarise after that date. As a result, our ultimate realized gain or loss withrespect to interest rate fluctuations will depend on the exposures that ariseduring the period, our hedging strategies at that time, and interest rates.

 

**Item 8.  Financial Statements andSupplementary Data**

 

The financial statements and supplementary data are included under Item15 of this Report.

 

**Item 9.  Changes in andDisagreements with Accountants on Accounting and Financial Disclosure**

 

None.

 

**Item 9A. Disclosure Controls and Procedures**

 

We conducted an evaluation of the effectiveness of the design andoperation of our “disclosure controls and procedures” as of the end of theperiod covered by this Annual Report. The controls evaluation was done underthe supervision and with the participation of management, including the GeneralPartner’s Chief Executive Officer and the General Partner’s Chief FinancialOfficer.

 

Attached as exhibits to this Annual Report are certifications of theGeneral Partner’s Chief Executive Officer and Chief Financial Officer, whichare required in accordance with Rule 13a-14 of the Securities Exchange Act of1934. This Disclosure Controls and Procedures section includes the informationconcerning the controls evaluation referred to in the certifications and itshould be read in conjunction with the certifications for a more completeunderstanding of the topics presented.

 

Disclosure controls and procedures (as defined in Rule 13a-15 and15d-15f under the Securities Exchange Act of 1934 (the “Exchange Act”) arecontrols and other procedures that are designed to ensure that

 

34

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information required to be disclosed in our reports filed under theExchange Act, such as this Annual Report, is recorded, processed, summarizedand reported within the time periods specified in the SEC’s rules and forms.Disclosure controls and procedures are also designed to ensure that suchinformation is accumulated and communicated to our management, including theGeneral Partner’s principal executive and principal financial officers, asappropriate, to allow timely decisions regarding required disclosure.

 

Based on the disclosure controls and procedures evaluation referencedabove, the General Partner’s Chief Executive Officer and Chief FinancialOfficer have concluded that as of the end of the period covered by this AnnualReport, our disclosure controls and procedures were effective.

 

Management’s annual report on internal control over financial reportingand the attestation report of our registered public accounting firm areincluded in Item 15 of Part IV under the headings “Management’s Report onInternal Control” and “Report of Independent Registered Public Accounting Firm,”respectively, and are incorporated herein by reference.

 

There were no changes in our internal controls over financial reportingduring the quarter ended December 31, 2004, that have materially affected, orare reasonably likely to materially affect, our internal controls overfinancial reporting.

 

**Item9B. Other Information**

 

None

 

**PART III**

 

**Item 10.  Directors and ExecutiveOfficers of the Registrant**

 

The Partnership does not have any directors or officers. Theinformation required by Item 10 for Directors and Certain Executive officers iscontained in a definitive proxy statement for the General Partner, which hereinis incorporated by reference.

 

**Item 11.  Executive Compensation**

 

The information required by Item 11 is contained in a definitive proxystatement for the General Partner, which herein is incorporated by reference.

 

**Item 12. Security Ownership of Certain Beneficial Ownersand Management and Related Unitholder Matters**

** **

**The information required by Item12 is contained in a definitive proxy statement for the General Partner, whichherein is incorporated by reference.**

** **

**Item 13.  Certain Relationshipsand Related Transactions**

 

**The information required by Item13 is contained in a definitive proxy statement for the General Partner, whichherein is incorporated by reference**.

** **

**Item 14.  Principal AccountantFees and Services**

 

**The information required by Item14 is contained in a definitive proxy statement for the General Partner, whichherein is incorporated by reference**.

 

35

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**Part IV**

 

**Item 15.  Exhibits and FinancialStatement Schedules**

 

**(a)****                                 ****The following documents are filed as part ofthis Form 10-K:**

 

**1.****             ****Consolidated Financial Statements**

 

Thefollowing Consolidated Financial Statements, together with the Management’sReport on Internal Control, the Report of Independent Registered PublicAccounting Firm-Financial Statements and Financial Statement Schedule III andReport of Independent Registered Public Accounting Firm-Management’s Assessmentof the Effectiveness of Internal Control over Financial Reporting and theEffectiveness of Internal Control over Financial Reporting, are listed below:

 
| Management’s  Report on Internal Control                                                   |   |
|-------------------------------------------------------------------------------------------------|--------|
| Report  of Independent Registered Public Accounting                                             |   |
| Firm-Financial  Statements and Financial Statement Schedule III                                 |   |
| Report  of Independent Registered Public Accounting Firm-Management’s                      |   |
| Assessment  of the Effectiveness of Internal Control over Financial                             |   |
| Reporting  and the Effectiveness of Internal Control over Financial Reporting                   |   |
| Consolidated  Balance Sheets, December 31, 2004 and 2003                                        |   |
| Consolidated  Statements of Operations, Years Ended December 31, 2004, 2003 and 2002            |   |
| Consolidated  Statements of Cash Flows, Years Ended December 31, 2004, 2003 and 2002            |   |
| Consolidated  Statements of Partners’ Equity, Years Ended December 31, 2004, 2003 and 2002 |   |
| Notes to  Consolidated Financial Statements                                                     |   |

 

**2.****              ConsolidatedFinancial Statement Schedules**
| Schedule III – Real Estate and  Accumulated Depreciation |   |
|---------------------------------------------------------------|--------|

 

**3.****              Exhibits**

The following exhibits are filed with thisForm 10-K or incorporated herein by reference to the listed document previouslyfiled with the SEC. Previously unfiled documents are noted with an asterisk(*).

 
| **Number** | ** ** | **Description**                                                                                                                                                                                                   |
|------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** ** | ** **                                                                                                                                                                                                        |
| 4.1        |       | Third Restated Articles of Incorporation of  the Partnership, incorporated by reference from Exhibit 3.1 to the  Partnership’s Quarterly Report on Form 10-Q for the quarterly period ended  March 31, 2003. |
|       |       |                                                                                                                                                                                                              |
| 4.2        |       | Third Amended and Restated Bylaws of the  Partnership, incorporated by reference from Exhibit 3.2 to the Partnership’s  Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003.         |
|       |       |                                                                                                                                                                                                              |
| 4.3        |       | Amendment to the Third Restated Articles of  Incorporation, incorporated by reference from Exhibit 3 of the Partnership’s  Current Report on Form 8-K dated August 25, 2003.                                 |
|       |       |                                                                                                                                                                                                              |
| 4.4        |       | Amendment to the Third Restated Articles of  Incorporation, incorporated by reference from Exhibit 3 of the Partnership’s  Current Report on Form 8-K dated February 13, 2004.                               |

 

36

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| 4.5    |   | Indenture between DRLP and The First  National Bank of Chicago, Trustee, incorporated by reference to Exhibit 4.1  to the Partnership’s Current Report on Form 8-K filed September 22, 1995.    |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                 |
| 4.6    |   | First Supplemental Indenture, incorporated  by reference to Exhibit 4.2 to the Partnership’s Current Report on Form 8-K  filed September 22, 1995.                                              |
|   |   |                                                                                                                                                                                                 |
| 4.7    |   | Second Supplemental Indenture, incorporated  by reference to Exhibit 4 to the Partnership’s Current Report on Form 8-K  filed July 12, 1996.                                                    |
|   |   |                                                                                                                                                                                                 |
| 4.8    |   | Third Supplemental Indenture, incorporated  by reference to Exhibit 4 to the Partnership’s Current Report on Form 8-K  filed May 20, 1997.                                                      |
|   |   |                                                                                                                                                                                                 |
| 4.9    |   | Fourth Supplemental Indenture, incorporated  by reference to Exhibit 4.8 to the Partnership’s Form S-4 Registration  Statement No. 333-77645 dated May 4, 1999 (Merger Registration Statement). |
|   |   |                                                                                                                                                                                                 |
| 4.10   |   | Fifth Supplemental Indenture, incorporated  by reference to Exhibit 4 to the Partnership’s Current Report on Form 8-K  filed June 1, 1998.                                                      |
|   |   |                                                                                                                                                                                                 |
| 4.11   |   | Sixth Supplemental Indenture, incorporated  by reference to Exhibit 4 to the Partnership’s Current Report on Form 8-K  filed February 12, 1999.                                                 |
|   |   |                                                                                                                                                                                                 |
| 4.12   |   | Seventh Supplemental Indenture,  incorporated by reference to Exhibit 4 to the Partnership’s Current Report on  Form 8-K filed June 29, 1999.                                                   |
|   |   |                                                                                                                                                                                                 |
| 4.13   |   | Eighth Supplemental Indenture, incorporated  by reference to Exhibit 4 to the Partnership’s Current Report on Form 8-K filed  November 15, 1999.                                                |
|   |   |                                                                                                                                                                                                 |
| 4.14   |   | Ninth Supplemental Indenture, incorporated  by reference to Exhibit 4 to the Partnership’s Current Report on Form 8-K  filed March 2, 2001.                                                     |
|   |   |                                                                                                                                                                                                 |
| 4.15   |   | Tenth Supplemental Indenture, incorporated  by reference to Exhibit 4 to the Partnership’s Current Report on Form 8-K  filed August 13, 2002.                                                   |
|   |   |                                                                                                                                                                                                 |
| 4.16   |   | Eleventh Supplemental Indenture,  incorporated by reference to Exhibit 4 to the Partnership’s Current Report on  Form 8-K filed August 26, 2002.                                                |
|   |   |                                                                                                                                                                                                 |
| 4.17   |   | Twelfth Supplemental Indenture,  incorporated by reference to Exhibit 4 to Partnership’s Current Report on  Form 8-K filed January 16, 2002.                                                    |
|   |   |                                                                                                                                                                                                 |
| 4.18   |   | Thirteenth Supplemental Indenture,  incorporated by reference to Exhibit 4 to Partnership’s Current Report on  Form 8-K filed May 22, 2003.                                                     |
|   |   |                                                                                                                                                                                                 |
| 4.19   |   | Fourteenth Supplemental Indenture,  incorporated by reference to Exhibit 4 to Partnership’s Current Report on  Form 8-K filed October 24, 2003.                                                 |
|   |   |                                                                                                                                                                                                 |
| 4.20   |   | Fifteenth Supplemental Indenture,  incorporated by reference to Exhibit 4 to Partnership’s Current Report on  Form 8-K filed January 9, 2004.                                                   |
|   |   |                                                                                                                                                                                                 |
| 4.21   |   | Sixteenth Supplemental Indenture,  incorporated by reference to Exhibit 4 to Partnership’s Current Report on  Form 8-K filed January 23, 2004.                                                  |
|   |   |                                                                                                                                                                                                 |
| 4.22   |   | Seventeenth Supplemental Indenture, incorporated  by reference to Exhibit 4 of Partnership’s Current Report on Form 8-K filed  August 18, 2004.                                                 |
|   |   |                                                                                                                                                                                                 |
| 4.23   |   | Eighteenth Supplemental Indenture,  incorporated by reference to Exhibit 4 of Partnership’s Current Report on  Form 8-K filed December 23, 2004.                                                |

 

37

----

 
| 10.1   |   | Second Amended and Restated Agreement of  Limited Partnership of DRLP, incorporated by reference from Exhibit 4.1 to  DRLP’s Current Report on Form 8-K filed July 16, 1999.                                                                                                                |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                             |
| 10.2   |   | First Amendment to Second Amended and  Restated Agreement of Limited Partnership of DRLP, incorporated by reference  from Exhibit 10.2 to the Partnership’s Annual Report on Form 10-K for the  fiscal year ended December 31, 2000.                                                        |
|   |   |                                                                                                                                                                                                                                                                                             |
| 10.3   |   | Second Amendment to Second Amended and  Restated Agreement of Limited Partnership of DRLP incorporated by reference  from Exhibit 10.3 to the Partnership’s Annual Report on Form 10-K for the  fiscal year ended December 31, 2001.                                                        |
|   |   |                                                                                                                                                                                                                                                                                             |
| 10.4   |   | Third Amendment To Second Amended and  Restated Agreement of Limited Partnership of DRLP incorporated by reference  from Exhibit 10.4 to the Partnership’s Annual Report on Form 10-K for the  fiscal year ended December 31, 2001.                                                         |
|   |   |                                                                                                                                                                                                                                                                                             |
| 10.5   |   | Fourth Amendment to Second Amended and  Restated Agreement of Limited Partnership of DRLP incorporated by reference  from Exhibit 10.5 to the Partnership’s Annual Report on Form 10-K for the  fiscal year ended December 31, 2001.                                                        |
|   |   |                                                                                                                                                                                                                                                                                             |
| 10.6   |   | Second Amended and Restated Agreement of  Limited Partnership of Duke Realty Services Limited Partnership (the  “Services Partnership”), incorporated herein by reference to Exhibit 10.3 to  the Partnership’s Annual Report on Form 10-K for the year ended December 31,  1995. |
|   |   |                                                                                                                                                                                                                                                                                             |
| 10.7   |   | First Amendment to Second Amended and  Restated Agreement of Limited Partnership of the Services Partnership  incorporated by reference from Exhibit 10.7 to the Partnership’s Annual  Report on Form 10-K for the fiscal year ended December 31, 2001.                                     |
|   |   |                                                                                                                                                                                                                                                                                             |
| 10.8   |   | Second Amendment to Second Amended and  Restated Agreement of Limited Partnership of the Services Partnership  incorporated by reference from Exhibit 10.8 to the Partnership’s Annual  Report on Form 10-K for the fiscal year ended December 31, 2001.                                    |
|   |   |                                                                                                                                                                                                                                                                                             |
| 10.9   |   | Third Amendment to Second Amended and  Restated Agreement of Limited Partnership of the Services Partnership  incorporated by reference from Exhibit 10.9 to the Partnership’s Annual  Report on Form 10-K for the fiscal year ended December 31, 2001.                                     |
|   |   |                                                                                                                                                                                                                                                                                             |
| 10.10  |   | Promissory Note of the Services  Partnership, incorporated herein by reference to Exhibit 10.3 to the  Partnership’s Form S-2 Registration Statement No. 33-64038 filed June 8, 1993  (the “1993 Registration Statement”).                                                        |
|   |   |                                                                                                                                                                                                                                                                                             |
| 10.11  |   | Services Partnership 1993 Stock Option  Plan, incorporated herein by reference to Exhibit 10.4 to the 1993  Registration Statement.#                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                             |
| 10.12  |   | Amendment One to Services Partnership 1993  Stock Option Plan incorporated by reference from Exhibit 10.12 to the  Partnership’s Annual Report on Form 10-K for the fiscal year ended December  31, 2001.#                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                             |
| 10.13  |   | Amendment Two to Services Partnership 1993  Stock Option Plan incorporated by reference from Exhibit 10.13 to the  Partnership’s Annual Report on Form 10-K for the fiscal year ended December  31, 2002.#                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                             |
| 10.14  |   | Amendment Three to Services Partnership  1993 Stock Option Plan incorporated by reference from Exhibit 10.14 to the  Partnership’s Annual Report on Form 10-K for the fiscal year ended December  31, 2002.#                                                                                |

 

38

----

 
| 10.15  |   | Acquisition Option Agreement relating to  certain properties not contributed to the Operating Partnership by Duke  Associates (the “Excluded Properties”), incorporated herein by reference to  Exhibit 10.5 to the 1993 Registration Statement.          |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                |
| 10.16  |   | Management Agreement relating to the  Excluded Properties, incorporated herein by reference to Exhibit 10.6 to the  1993 Registration Statement.                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                |
| 10.17  |   | Indemnification Agreement, incorporated  herein by reference to Exhibit 10.11 to the 1993 Registration Statement.                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                |
| 10.18  |   | 1995 Key Employee Stock Option Plan of the  Partnership, incorporated herein by reference to Exhibit 10.13 to the  Partnership’s Annual Report on Form 10-K for the year ended December 31,  1995.#                                                            |
|   |   |                                                                                                                                                                                                                                                                |
| 10.19  |   | Amendment One To The 1995 Key Employees’  Stock Option Plan of Duke Realty Investments, Inc. incorporated by reference  from Exhibit 10.19 to the Partnership’s Annual Report on Form 10-K for the  fiscal year ended December 31, 2001.#                 |
|   |   |                                                                                                                                                                                                                                                                |
| 10.20  |   | Amendment Two to the 1995 Key Employees’  Stock Option Plan of Duke Realty Investments, Inc. incorporated by reference  from Exhibit 10.20 to the Partnership’s Annual Report on Form 10-K for the  fiscal year ended December 31, 2001.#                 |
|   |   |                                                                                                                                                                                                                                                                |
| 10.21  |   | Amendment Three to the 1995 Key Employees’  Stock Option Plan of Duke Realty Investments, Inc. incorporated by reference  from Exhibit 10.21 to the Partnership’s Annual Report on Form 10-K for the  fiscal year ended December 31, 2001.#               |
|   |   |                                                                                                                                                                                                                                                                |
| 10.22  |   | Amendment Four to the 1995 Key Employees’  Stock Option Plan of Duke Realty Investments, Inc. incorporated by reference  from Exhibit 10.22 to the Partnership’s Annual Report on Form 10-K for the  fiscal year ended December 31, 2001.#                |
|   |   |                                                                                                                                                                                                                                                                |
| 10.23  |   | Amendment Five to the 1995 Key Employees’  Stock Option Plan of Duke Realty Investments, Inc. incorporated by reference  from Exhibit 10.23 to the Partnership’s Annual Report on Form 10-K for the  fiscal year ended December 31, 2001.#                |
|   |   |                                                                                                                                                                                                                                                                |
| 10.24  |   | Amendment Six to the 1995 Key Employees’  Stock Option Plan of Duke Realty Investments, Inc. incorporated by reference  from Exhibit 10.24 to the Partnership’s Annual Report on Form 10-K for the  fiscal year ended December 31, 2001.#                 |
|   |   |                                                                                                                                                                                                                                                                |
| 10.25  |   | Amendment Seven to the 1995 Key Employees’  Stock Option Plan of Duke Realty Investments, Inc., incorporated herein by  reference to Exhibit 10.1 to the Partnership’s Quarterly Report on Form 10-Q  for the quarterly period ended September 30, 2002.# |
|   |   |                                                                                                                                                                                                                                                                |
| 10.26  |   | Amended and Restated Dividend Increase Unit  Plan of the Services Partnership incorporated by reference from Exhibit 10.25  to the Partnership’s Annual Report on Form 10-K for the fiscal year ended  December 31, 2001.#                                     |
|   |   |                                                                                                                                                                                                                                                                |
| 10.27  |   | Amendment One to the Amended and Restated  Dividend Increase Unit Plan of Services Partnership incorporated by reference  from Exhibit 10.26 to the Partnership’s Annual Report on Form 10-K for the  fiscal year ended December 31, 2001.#                    |
|   |   |                                                                                                                                                                                                                                                                |
| 10.28  |   | Amendment Two to the Amended and Restated  Dividend Increase Unit Plan of Services Partnership incorporated by reference  from Exhibit 10.27 to the Partnership’s Annual Report on Form 10-K for the  fiscal year ended December 31, 2001.#                    |

 

39

----

 
| 10.29  |   | Amendment Three to the Amended and Restated  Dividend Increase Unit Plan of Duke Realty Services Limited Partnership,  incorporated herein by reference to Exhibit 10.5 to the Partnership’s  Quarterly Report on Form 10-Q for the quarterly period ended September 30,  2001.#       |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                        |
| 10.30  |   | Amendment Four to the 1995 Dividend  Increase Unit Plan of Duke Realty Services Limited Partnership.#*                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                        |
| 10.31  |   | 1995 Shareholder Value Plan of the Services  Partnership incorporated herein by reference to Exhibit 10.15 to the  Partnership’s Annual Report on Form 10-K for the fiscal year ended December  31, 1995.#                                                                             |
|   |   |                                                                                                                                                                                                                                                                                        |
| 10.32  |   | Amendment One to the 1995 Shareholder Value  Plan of Services Partnership incorporated by reference from Exhibit 10.29 to  the Partnership’s Annual Report on Form 10-K for the fiscal year ended  December 31, 2001.#                                                                 |
|   |   |                                                                                                                                                                                                                                                                                        |
| 10.33  |   | Amendment Two to the 1995 Shareholder Value  Plan of Services Partnership incorporated by reference from Exhibit 10.30 to  the Partnership’s Annual Report on Form 10-K for the fiscal year ended  December 31, 2001.#                                                                 |
|   |   |                                                                                                                                                                                                                                                                                        |
| 10.34  |   | Amendment Three to the 1995 Shareholder  Value Plan of Services Partnership incorporated by reference from Exhibit  10.31 to the Partnership’s Annual Report on Form 10-K for the fiscal year  ended December 31, 2001.#                                                               |
|   |   |                                                                                                                                                                                                                                                                                        |
| 10.35  |   | Amendment Four to the 1995 Shareholder  Value Plan of Services Partnership, incorporated herein by reference to  Exhibit 10.2 to the Partnership’s Quarterly Report on Form 10-Q for the  quarterly period ended September 30, 2002.#                                                  |
|   |   |                                                                                                                                                                                                                                                                                        |
| 10.36  |   | 1998 Duke Realty Severance Pay Plan,  incorporated herein by reference to Exhibit 10.18 to the Partnership’s Annual  Report on Form 10-K for the fiscal year ended December 31, 1998.#                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                        |
| 10.37  |   | 1999 Directors’ Stock Option and Dividend  Increase Unit Plan, incorporated by reference to Annex F to the Prospectus in  the Merger Registration Statement.#                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                        |
| 10.38  |   | 1999 Salary Replacement Stock Option and Dividend  Increase Unit Plan is incorporated by reference to Annex G to the Prospectus  in the Merger Registration Statement.#                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                        |
| 10.39  |   | Amendment One to the 1999 Salary  Replacement Stock Option and Dividend Increase Unit Plan of Duke Realty  Investments, Inc. incorporated herein by reference to Exhibit 10.3 to the  Partnership’s Quarterly Report on Form 10-Q for the quarterly period ended  September 30, 2002.# |
|   |   |                                                                                                                                                                                                                                                                                        |
| 10.40  |   | Amendment Two to the 1999 Salary  Replacement Stock Option and Dividend Increase Unit Plan of Duke Realty  Investments, Inc. incorporated herein by reference to Exhibit 10.4 to the  Partnership’s Quarterly Report on Form 10-Q for the quarterly period ended  September 30, 2002.# |
|   |   |                                                                                                                                                                                                                                                                                        |
| 10.41  |   | 2000 Performance Share Plan of Duke-Weeks  Realty Corporation incorporated herein by reference to Proposal 2 of the  partnership’s 2001 Proxy filed March 13, 2001.                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                        |
| 10.42  |   | Amendment One to the 2000 Performance Share  Plan of Duke-Weeks Realty Corporation incorporated herein by reference to  Exhibit 10.6 to the Partnership’s Quarterly Report on Form 10-Q for the  quarterly period ended September 30, 2002.                                            |

 

40

----

 
| 10.43  |   | Amendment Two to the 2000 Performance Share  Plan of Duke-Weeks Realty Corporation incorporated herein by reference to  Exhibit 10.42 to the Partnership’s Annual Report on Form 10-K for the fiscal  year ended December 31, 2003.*                                                                                                                  |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                       |
| 10.44  |   | Fourth Amended and Restated Revolving  Credit Agreement dated January 22, 2004, among the Partnership, as borrower,  Duke Realty Corporation as General Partner and Guarantor, and Bank One as  Administrative Agent and Lender incorporated by reference from Exhibit 10.1  to the Partnership’s Current Report on Form 8-K filed January 22, 2004.* |
|   |   |                                                                                                                                                                                                                                                                                                                                                       |
| 11.1   |   | Statement of Computation of Ratios of  Earnings to Fixed Charges.*                                                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                       |
| 11.2   |   | Statement of Computation of Ratios of  Earnings to Debt Service.*                                                                                                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                       |
| 21.    |   | List of the Partnership’s Subsidiaries.*                                                                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                       |
| 23.    |   | Consent of KPMG LLP.*                                                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                       |
| 24.    |   | Executed Powers of Attorney of certain  directors.*                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                       |
| 31.1   |   | Rule 13a-14(A) Certification of the General  Partner’s Chief Executive Officer.                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                       |
| 31.2   |   | Rule 13a-14(A) Certification of the General  Partner’s Chief Financial Officer.                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                       |
| 32.1   |   | Section 1350 Certification of the General  Partner’s Chief Executive Officer.                                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                       |
| 32.2   |   | Section 1350 Certification of the General  Partner’s Chief Financial Officer.                                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                       |
| 99.1   |   | Selected Quarterly Financial Information.*                                                                                                                                                                                                                                                                                                                 |

 

----

# Represents managementcontract or compensatory plan or arrangement.

 

We will furnish to any security holder, upon written request, copies ofany exhibit incorporated by reference, for a fee of 15 cents per page, to coverthe costs of furnishing the exhibits. Written requests should include arepresentation that the person making the request was the beneficial owner ofsecurities entitled to vote at the Annual Meeting of Shareholders.

 

**(b)           Exhibits**

 

The exhibits required to be filed with thisForm 10-K pursuant to Item 601 of Regulation S-K or listed under “Exhibits” inPart IV, Item 14(a)(3) of Form 10-K, which are incorporated herein byreference.

 

**(c)           Financial Statement Schedule**

 

TheFinancial Statement Schedule required to be filed with this Form 10-K is listedunder “Consolidated Financial Statement Schedules” in Part IV, Item 14(a)(2) ofthis Form 10-K, and is incorporated herein by reference.

 

41

----

 

**Management’s Report on Internal Control**

 

We, as management of Duke Realty LimitedPartnership and its subsidiaries (“the Partnership”), are responsible forestablishing and maintaining adequate internal control over financial reporting(as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, asamended). Pursuant to the rules and regulations of the Securities and ExchangeCommission, internal control over financial reporting is a process designed by,or under the supervision of, the principal executive and principal financialofficers, or persons performing similar functions, and effected by the GeneralPartner’s board of directors, management and other personnel, to providereasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance withU.S. generally accepted accounting principles and includes those policies andprocedure that:

 

•                  Pertain to the maintenance of records that inreasonable detail accurately and fairly reflect the transactions anddispositions of assets of the company;

•                  Provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles, and that receipts andexpenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and

•                  Provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use or disposition of thecompany’s assets that could have a material effect on the financial statements.

 

Management has evaluated theeffectiveness of its internal control over financial reporting as of December31, 2004, based on the control criteria established in a report entitledInternal Control – Integrated Framework, issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO). Based on such evaluation, wehave concluded that, as of December 31, 2004, our internal control overfinancial reporting is effective based on these criteria.

 

The independent registered publicaccounting firm of KPMG LLP, as auditors of the Partnership’s consolidatedfinancial statements, has issued an attestation report on management’sassessment of the Partnership’s internal control over financial reporting.

 
| /s/      Dennis  D. Oklak        |   | /s/ Matthew A. Cohoat                                 |
|----------------------------------------------------------------|--------|-------------------------------------------------------|
| Dennis D. Oklak                                                |   | Matthew A. Cohoat                                     |
| President  and Chief Executive Officer  of the General Partner |   | Executive Vice President and  Chief Financial Officer |
| (Principal Executive Officer)                                  |   | of  the General Partner                               |
|                                                           |   | (Principal Financial Officer)                         |

 

42

----

 

**Report of Independent RegisteredPublic Accounting Firm**

 

The Partners of

Duke Realty LimitedPartnership:

 

We have audited theconsolidated balance sheets of Duke Realty Limited Partnership and Subsidiaries(the “Partnership”) as of December 31, 2004 and 2003, and the relatedconsolidated statements of operations, cash flows and partners’ equity for eachof the years in the three-year period ended December 31, 2004. Inconnection with our audits of the consolidated financial statements, we alsohave audited the financial statement schedule III. These consolidatedfinancial statements and the financial statement schedule are theresponsibility of the Partnership’s management. Our responsibility is toexpress an opinion on these consolidated financial statements and the financialstatement schedule based on our audits.

 

We conducted our auditsin accordance with the standards of the Public Company Accounting OversightBoard (United States). Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basisfor our opinion.

 

In our opinion, theconsolidated financial statements referred to above present fairly, in allmaterial respects, the financial position of Duke Realty Limited Partnershipand Subsidiaries as of December 31, 2004 and 2003, and the results oftheir operations and their cash flows for each of the years in the three-yearperiod ended December 31, 2004, in conformity with U.S. generally acceptedaccounting principles. Also, in our opinion, the related financial statement schedule III,when considered in relation to the basic consolidated financial statementstaken as a whole, presents fairly, in all material respects, the informationset forth therein.

 

We also have audited, inaccordance with the standards of the Public Company Accounting Oversight Board(United States), the effectiveness of Duke Realty Limited Partnership andSubsidiaries’ internal control over financial reporting as of December 31,2004, based on criteria established in Internal Control-Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO), and our report dated February 28, 2005, expressed an unqualifiedopinion on management’s assessment of, and the effective operation of, internalcontrol over financial reporting.

 

 

**KPMG LLP**

Indianapolis, Indiana

February 28, 2005

 

43

----

 

**Report of Independent RegisteredPublic Accounting Firm**

 

The Partners of

Duke Realty LimitedPartnership:

 

We have auditedmanagement’s assessment, included in the accompanying Management’s Report onInternal Control, that Duke Realty Limited Partnership and Subsidiaries (the “Partnership”)maintained effective internal control over financial reporting as of December 31,2004, based on criteria established in Internal Control-Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO). Duke Realty Limited Partnership and Subsidiaries’ management isresponsible for maintaining effective internal control over financial reportingand for its assessment of the effectiveness of internal control over financialreporting. Our responsibility is to express an opinion on management’sassessment and an opinion on the effectiveness of the Partnership’s internalcontrol over financial reporting based on our audit.

 

We conducted our audit inaccordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit toobtain reasonable assurance about whether effective internal control overfinancial reporting was maintained in all material respects. Our audit includedobtaining an understanding of internal control over financial reporting,evaluating management’s assessment, testing and evaluating the design andoperating effectiveness of internal control, and performing such otherprocedures as we considered necessary in the circumstances.  We believe that our audit provides areasonable basis for our opinion.

 

A company’s internalcontrol over financial reporting is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with U.S. generallyaccepted accounting principles. A company’s internal control over financialreporting includes those policies and procedures that (1) pertain to themaintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2)provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with U.S. generallyaccepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management anddirectors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition, use, or dispositionof the company’s assets that could have a material effect on the financialstatements.

 

Because of its inherent limitations,internal control over financial reporting may not prevent or detectmisstatements. Also, projections of any evaluation of effectiveness to futureperiods are subject to the risk that controls may become inadequate because ofchanges in conditions, or that the degree of compliance with the policies orprocedures may deteriorate.

 

In our opinion,management’s assessment that Duke Realty Limited Partnership and Subsidiariesmaintained effective internal control over financial reporting as of December 31,2004, is fairly stated, in all material respects, based on criteria establishedin Internal Control-Integrated Framework issued by COSO. Also, in our opinion,Duke Realty Limited Partnership and Subsidiaries maintained, in all materialrespects, effective internal control over financial reporting as of December 31,2004, based on criteria established in Internal Control-Integrated Frameworkissued by COSO.

 

We also have audited, inaccordance with the standards of the Public Company Accounting Oversight Board(United States), the consolidated balance sheets of Duke Realty LimitedPartnership and Subsidiaries as of December 31, 2004 and 2003, and therelated consolidated statements of operations, cash flows and partners’ equityfor each of the years in the three-year period ended December 31, 2004 andrelated financial statement schedule III, and our report dated February 28,2005, expressed an unqualified opinion on those consolidated financialstatements and related financial statement schedule III.

 

 

**KPMG LLP**

Indianapolis, Indiana

February 28, 2005

 

44

----

 

**DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES**

**Consolidated Balance Sheets**

**As of December 31,**

**(in thousands, except per unit amounts)**

 
| ** **                                                                                | ** ** | **2004**       | ** **    | **2003**  | ** ** |
|-------------------------------------------------------------------------------------------|------------|----------------|---------------|-----------|------------|
|                                                                                      |       |           |          |      |       |
| **ASSETS**                                                                                |       |           |          |      |       |
|                                                                                      |       |           |          |      |       |
| Real estate investments:                                                                  |       |           |          |      |       |
| Land and improvements                                                                     | ** ** | **$**          | **710,379**   |      | $          | 641,544 |   |
| Buildings and tenant improvements                                                         | ** ** | **4,666,715**  |          | 4,452,624 |       |
| Construction in progress                                                                  | ** ** | **109,788**    |          | 119,441   |       |
| Investments in unconsolidated companies                                                   | ** ** | **287,554**    |          | 295,837   |       |
| Land held for development                                                                 | ** ** | **393,100**    |          | 314,446   |       |
| ** **                                                                                |       | **6,167,536**  | ** **    | 5,823,892 |       |
| Accumulated depreciation                                                                  | ** ** | **(788,900**   | **)**         | (677,357  | )          |
|                                                                                      |       |           | ** **    |      |       |
| Net real estate investments                                                               | ** ** | **5,378,636**  | ** **    | 5,146,535 |       |
|                                                                                      |       |           |          |      |       |
| Cash and cash equivalents                                                                 | ** ** | **5,770**      |          | 12,695    |       |
| Accounts receivable, net of allowance of $1,238 and  $1,524                               | ** ** | **17,127**     |          | 17,121    |       |
| Straight-line rent receivable, net of allowance of  $1,646 and $2,146                     | ** ** | **89,497**     |          | 70,143    |       |
| Receivables on construction contracts                                                     | ** ** | **59,342**     |          | 44,905    |       |
| Deferred financing costs, net of accumulated  amortization of $9,006 and $10,703          | ** ** | **31,924**     |          | 13,358    |       |
| Deferred leasing and other costs, net of accumulated  amortization of $88,888 and $67,317 | ** ** | **203,882**    |          | 158,562   |       |
| Escrow deposits and other assets                                                          | ** ** | **108,466**    |          | 95,392    |       |
| ** **                                                                                |       | **$**          | **5,894,644** |      | $          | 5,558,711 |   |
|                                                                                      |       |           |          |      |       |
| **LIABILITIES AND PARTNERS’ EQUITY**                                                 |       |           |          |      |       |
|                                                                                      |       |           |          |      |       |
| Indebtedness:                                                                             |       |           |          |      |       |
| Secured debt                                                                              | ** ** | **$**          | **203,081**   |      | $          | 208,649 |   |
| Unsecured notes                                                                           | ** ** | **2,315,623**  |          | 1,775,887 |       |
| Unsecured line of credit                                                                  | ** ** | **—**     |          | 351,000   |       |
| ** **                                                                                |       | **2,518,704**  |          | 2,335,536 |       |
|                                                                                      |       |           |          |      |       |
| Construction payables and amounts due subcontractors                                      | ** ** | **67,740**     |          | 60,789    |       |
| Accounts payable                                                                          | ** ** | **526**        |          | 2,268     |       |
| Accrued expenses:                                                                         |       |           |          |      |       |
| Real estate taxes                                                                         | ** ** | **55,745**     |          | 52,955    |       |
| Interest                                                                                  | ** ** | **36,531**     |          | 33,259    |       |
| Other                                                                                     | ** ** | **48****,605** |          | 49,029    |       |
| Other liabilities                                                                         | ** ** | **105,838**    |          | 107,321   |       |
| Tenant security deposits and prepaid rents                                                | ** ** | **39,827**     |          | 37,975    |       |
| Total liabilities                                                                         | ** ** | **2,873,516**  |          | 2,679,132 |       |
|                                                                                      |       |           |          |      |       |
| Minority interest                                                                         | ** ** | **—**     |          | 1,259     |       |
|                                                                                      |       |           |          |      |       |
| Partners’ equity:                                                                    |       |           |          |      |       |
| General Partner                                                                           |       |           |          |      |       |
| Common equity                                                                             | ** ** | **2,214,473**  |          | 2,153,844 |       |
| Preferred equity (liquidation preferences of  $657,250)                                   | ** ** | **616,780**    |          | 511,785   |       |
| ** **                                                                                |       | **2,831,253**  | ** **    | 2,665,629 |       |
| Limited partners’ common equity                                                      | ** ** | **196,422**    | ** **    | 212,691   |       |
| Accumulated other comprehensive income (loss)                                             | ** ** | **(6,547**     | **)**         | —    |       |
| Total partners’ equity                                                               | ** ** | **3,021,128**  | ** **    | 2,878,320 |       |
|                                                                                      |       |           | ** **    |      |       |
| ** **                                                                                |       | **$**          | **5,894,644** |      | $          | 5,558,711 |   |

 

See accompanying Notes to Consolidated Financial Statements.

 

45

----

 

**DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES**

**Consolidated****Statements of Operations**

**For theYears Ended December 31**

**(in thousands, except per unit amounts)**

 
| ** **                                                                                                                          | ** ** | **2004**        | ** **  | **2003**   | ** ** | **2002** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------|-------------|------------|------------|----------|------------|
| **RENTAL OPERATIONS:**                                                                                                              |       |            | ** **  |       |       |     |       |
| Revenues:                                                                                                                           |       |            | ** **  |       |       |     |       |
| Rental income from continuing operations                                                                                            | ** ** | **$**           | **744,061** | ** ** | $          | 689,370  |       | $ | 652,862 |   |
| Equity in earnings of unconsolidated companies                                                                                      | ** ** | **21,586**      | ** **  | 23,688     |       | 27,180   |       |
| ** **                                                                                                                          |       | **765,647**     | ** **  | 713,058    |       | 680,042  |       |
|                                                                                                                                |       |            | ** **  |       |       |     |       |
| Operating expenses:                                                                                                                 |       |            | ** **  |       |       |     |       |
| Rental expenses                                                                                                                     | ** ** | **156,069**     | ** **  | 141,225    |       | 122,450  |       |
| Real estate taxes                                                                                                                   | ** ** | **84,799**      | ** **  | 77,147     |       | 69,788   |       |
| Interest expense                                                                                                                    | ** ** | **135,130**     | ** **  | 125,696    |       | 111,411  |       |
| Depreciation and amortization                                                                                                       | ** ** | **224,649**     | ** **  | 188,015    |       | 166,059  |       |
| ** **                                                                                                                          |       | **600,647**     | ** **  | 532,083    |       | 469,708  |       |
| Earnings from continuing rental operations                                                                                          | ** ** | **165,000**     | ** **  | 180,975    |       | 210,334  |       |
|                                                                                                                                |       |            | ** **  |       |       |     |       |
| **SERVICE OPERATIONS:**                                                                                                             |       |            | ** **  |       |       |     |       |
| Revenues:                                                                                                                           |       |            | ** **  |       |       |     |       |
| General contractor gross revenue                                                                                                    | ** ** | **357,133**     | ** **  | 286,689    |       | 194,439  |       |
| General contractor costs                                                                                                            | ** ** | **(329,545**    | **)**       | (259,930   | )          | (172,559 | )          |
| Net general contractor revenue                                                                                                      | ** ** | **27,588**      | ** **  | 26,759     |       | 21,880   |       |
|                                                                                                                                |       |            | ** **  |       |       |     |       |
| Property management, maintenance and leasing fees                                                                                   | ** ** | **15,000**      | ** **  | 14,731     |       | 14,301   |       |
| Construction management and development activity  income                                                                            | ** ** | **25,002**      | ** **  | 15,486     |       | 29,428   |       |
| Other income                                                                                                                        | ** ** | **3,213**       | ** **  | 1,520      |       | 2,251    |       |
| Total revenue                                                                                                                       | ** ** | **70,803**      | ** **  | 58,496     |       | 67,860   |       |
| Operating expenses                                                                                                                  | ** ** | **46,382**      | ** **  | 37,378     |       | 38,340   |       |
|                                                                                                                                |       |            | ** **  |       |       |     |       |
| Earnings from service operations                                                                                                    | ** ** | **24,421**      | ** **  | 21,118     |       | 29,520   |       |
|                                                                                                                                |       |            | ** **  |       |       |     |       |
| General and administrative expense                                                                                                  | ** ** | **(26,388**     | **)**       | (21,325    | )          | (24,673  | )          |
|                                                                                                                                |       |            | ** **  |       |       |     |       |
| Operating income                                                                                                                    | ** ** | **163,033**     | ** **  | 180,768    |       | 215,181  |       |
|                                                                                                                                |       |            | ** **  |       |       |     |       |
| **OTHER INCOME (EXPENSE):**                                                                                                         |       |            | ** **  |       |       |     |       |
|                                                                                                                                |       |            | ** **  |       |       |     |       |
| Interest income                                                                                                                     | ** ** | **5,213**       | ** **  | 3,613      |       | 3,860    |       |
| Earnings from sale of land, depreciable property and  ownership interests in unconsolidated companies, net of impairment adjustment | ** ** | **10,202**      | ** **  | 15,752     |       | 7,292    |       |
| Other revenue (expense)                                                                                                             | ** ** | **(567**        | **)**       | (734       | )          | 182      |       |
| Other minority interest in earnings of subsidiaries                                                                                 | ** ** | **(1,253**      | **)**       | (586       | )          | (1,093   | )          |
| Income from continuing operations                                                                                                   | ** ** | **176,628**     | ** **  | 198,813    |       | 225,422  |       |
|                                                                                                                                |       |            | ** **  |       |       |     |       |
| Discontinued operations:                                                                                                            |       |            | ** **  |       |       |     |       |
| Net income from discontinued operations                                                                                             | ** ** | **1,759**       | ** **  | 6,975      |       | 11,906   |       |
| Gain (loss) on sale of discontinued operations, net  of impairment adjustment                                                       | ** ** | **26,247**      | ** **  | 13,024     |       | (4,969   | )          |
| Income from discontinued operations                                                                                                 | ** ** | **28,006**      | ** **  | 19,999     |       | 6,937    |       |
|                                                                                                                                |       |            | ** **  |       |       |     |       |
| Net income                                                                                                                          | ** ** | **204****,634** | ** **  | 218,812    |       | 232,359  |       |
| Dividends on preferred units                                                                                                        | ** ** | **(33,777**     | **)**       | (39,225    | )          | (52,613  | )          |
| Adjustments for redemption of preferred units                                                                                       | ** ** | **(3,645**      | **)**       | —     |       | (8,145   | )          |
| Net income available for common unitholders                                                                                         | ** ** | **$**           | **167,212** | ** ** | $          | 179,587  |       | $ | 171,601 |   |
|                                                                                                                                |       |            | ** **  |       |       |     |       |
| Basic net income per common unit:                                                                                                   |       |            | ** **  |       |       |     |       |
| Continuing operations                                                                                                               | ** ** | **$**           | **.90**     | ** ** | $          | 1.07     |       | $ | 1.10 |   |
| Discontinued operations                                                                                                             | ** ** | **.18**         | ** **  | .13        |       | .05      |       |
| Total                                                                                                                               | ** ** | **$**           | **1.08**    | ** ** | $          | 1.20     |       | $ | 1.15 |   |
|                                                                                                                                |       |            | ** **  |       |       |     |       |
| Diluted net income per common unit:                                                                                                 |       |            | ** **  |       |       |     |       |
| Continuing operations                                                                                                               | ** ** | **$**           | **.89**     | ** ** | $          | 1.06     |       | $ | 1.09 |   |
| Discontinued operations                                                                                                             | ** ** | **.18**         | ** **  | .13        |       | .05      |       |
| Total                                                                                                                               | ** ** | **$**           | **1.07**    | ** ** | $          | 1.19     |       | $ | 1.14 |   |
|                                                                                                                                |       |            | ** **  |       |       |     |       |
| Weighted average number of common units outstanding                                                                                 | ** ** | **155,281**     | ** **  | 150,280    |       | 149,423  |       |
| Weighted average number of common and dilutive  potential common units                                                              | ** ** | **157,062**     | ** **  | 151,141    |       | 150,839  |       |

 

See accompanying Notes to Consolidated Financial Statements.

 

46

----

 

**DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES**

**Consolidated****Statements of Cash Flows**

**For theYears Ended December 31**

**(in thousands)**

 
| ** **                                                                                      | ** ** | **2004**      | ** **  | **2003**   | ** ** | **2002**   | ** ** |
|-------------------------------------------------------------------------------------------------|------------|---------------|-------------|------------|------------|------------|------------|
| Cash flows from operating activities:                                                           |       |          | ** **  |       |       |       |       |
| Net income                                                                                      | ** ** | **$**         | **204,634** | ** ** | $          | 218,812    |       | $ | 232,359 |   |
| Adjustments to reconcile net income to net cash  provided by operating activities:              |       |          | ** **  |       |       |       |       |
| Depreciation of buildings and tenant improvements                                               | ** ** | **189,119**   | ** **  | 168,959    |       | 154,565    |       |
| Amortization of deferred leasing and other costs                                                | ** ** | **39,463**    | ** **  | 27,275     |       | 21,056     |       |
| Amortization of deferred financing costs                                                        | ** ** | **4,904**     | ** **  | 3,626      |       | 3,725      |       |
| Minority interest in earnings                                                                   | ** ** | **1,****253** | ** **  | 586        |       | 1,093      |       |
| Straight-line rent adjustment                                                                   | ** ** | **(22,436**   | **)**       | (22,387    | )          | (12,500    | )          |
| Earnings from land and depreciated property sales                                               | ** ** | **(36,449**   | **)**       | (28,776    | )          | (1,048     | )          |
| Build-for-sale operations, net                                                                  | ** ** | **(41**       | **)**       | (20,899    | )          | 168,199    |       |
| Construction contracts, net                                                                     | ** ** | **(11,047**   | **)**       | (3,210     | )          | (11,656    | )          |
| Other accrued revenues and expenses, net                                                        | ** ** | **(551**      | **)**       | 15,319     |       | 8,605      |       |
| Operating distributions received in excess of equity  in earnings from unconsolidated companies | ** ** | **10,447**    | ** **  | 8,783      |       | 4,575      |       |
| **Net cash provided by operating activities**                                                   | ** ** | **379,296**   | ** **  | 368,088    |       | 568,973    |       |
|                                                                                            |       |          | ** **  |       |       |       |       |
| Cash flows from investing activities:                                                           |       |          | ** **  |       |       |       |       |
| Development of real estate investments                                                          | ** ** | **(145,629**  | **)**       | (129,199   | )          | (158,131   | )          |
| Acquisition of real estate investments                                                          | ** ** | **(204,361**  | **)**       | (201,819   | )          | (98,062    | )          |
| Acquisition of land held for development and  infrastructure costs                              | ** ** | **(116,669**  | **)**       | (32,944    | )          | (27,182    | )          |
| Recurring tenant improvements                                                                   | ** ** | **(58,847**   | **)**       | (35,972    | )          | (28,011    | )          |
| Recurring leasing costs                                                                         | ** ** | **(27,777**   | **)**       | (20,932    | )          | (17,975    | )          |
| Recurring building improvements                                                                 | ** ** | **(21,029**   | **)**       | (19,544    | )          | (13,373    | )          |
| Other deferred leasing costs                                                                    | ** ** | **(16,386**   | **)**       | (17,167    | )          | (18,219    | )          |
| Other deferred costs and other assets                                                           | ** ** | **(15,413**   | **)**       | (24,412    | )          | (17,350    | )          |
| Proceeds from land and depreciated property sales,  net                                         | ** ** | **178,301**   | ** **  | 167,891    |       | 52,186     |       |
| Advances to unconsolidated companies                                                            | ** ** | **(3,033**    | **)**       | (5,481     | )          | (11,130    | )          |
| **Net cash used by investing activities**                                                       | ** ** | **(430,843**  | **)**       | (319,579   | )          | (337,247   | )          |
|                                                                                            |       |          | ** **  |       |       |       |       |
| Cash flows from financing activities:                                                           |       |          | ** **  |       |       |       |       |
| Contribution from General Partner, common units                                                 | ** ** | **12,259**    | ** **  | 14,026     |       | 22,651     |       |
| Contribution from General Partner, preferred units                                              | ** ** | **338,360**   | ** **  | 96,700     |       | —     |       |
| Payments for redemption of General Partner’s  preferred equity                             | ** ** | **(102,652**  | **)**       | (65,020    | )          | (202,953   | )          |
| Payment for exercise of warrants                                                                | ** ** | **(2,881**    | **)**       | (4,692     | **)**      | **—** | ** ** |
| Proceeds from indebtedness                                                                      | ** ** | **690,000**   | ** **  | 425,000    |       | 200,000    |       |
| Payments on unsecured debt                                                                      | ** ** | **(150,000**  | **)**       | (175,000   | )          | —     |       |
| Proceeds from debt refinancing                                                                  |       | —        | ** **  | 38,340     |       | —     |       |
| Proceeds from issuance of secured debt                                                          |       | —        | ** **  | 40,000     |       | —     |       |
| Payments on indebtedness including principal  amortization                                      | ** ** | **(39,430**   | **)**       | (143,542   | )          | (71,953    | )          |
| Borrowings (payments) on lines of credit, net                                                   | ** ** | **(351,000**  | **)**       | 46,105     |       | 157,305    |       |
| Distributions to common unitholders                                                             | ** ** | **(286,913**  | **)**       | (275,282   | )          | (271,659   | )          |
| Distributions to preferred unitholders                                                          | ** ** | **(31,828**   | **)**       | (42,180    | )          | (54,613    | )          |
| Distributions to minority interest                                                              | ** ** | **(1,134**    | **)**       | (1,531     | )          | (565       | )          |
| Deferred financing costs                                                                        | ** ** | **(30,159**   | **)**       | (5,867     | )          | (3,263     | )          |
| **Net cash provided by (used for) financing  activities**                                       | ** ** | **44,622**    | ** **  | (52,943    | )          | (225,050   | )          |
|                                                                                            |       |          | ** **  |       |       |       |       |
| **Net increase (decrease) in cash and cash  equivalents**                                       | ** ** | **(6,925**    | **)**       | (4,434     | )          | 6,676      |       |
|                                                                                            |       |          | ** **  |       |       |       |       |
| Cash and cash equivalents at beginning of year                                                  | ** ** | **12,695**    | ** **  | 17,129     |       | 10,453     |       |
| Cash and cash equivalents at end of year                                                        | ** ** | **$**         | **5,770**   |       | $          | 12,695     |       | $ | 17,129 |   |
| Other non-cash items:                                                                           |       |          |        |       |       |       |       |
| Assumption of debt for real estate acquisitions                                                 | ** ** | **$**         | **29,824**  |       | $          | —     |       | $ | 9,566 |   |
| Contributions of property to unconsolidated companies                                           | ** ** | **$**         | **—**  |       | $          | 5,009      |       | $ | — |   |
| Conversion of Limited Partner Units to common shares  of General Partner                        | ** ** | **$**         | **11,408**  |       | $          | 9,984      |       | $ | 13,226 |   |
| Issuance of Limited Partner Units for real estate  acquisitions                                 | ** ** | **$**         | **7,575**   |       | $          | 3,187      |       | $ | 4,686 |   |
| Transfer of debt in sale of depreciated property                                                | ** ** | **$**         | **—**  |       | $          | —     |       | $ | 2,432 |   |
| Acquisition of partners’ interest in unconsolidated  companies                             | ** ** | **$**         | **—**  |       | $          | 20,630     |       | $ | 12,149 |   |

 

See accompanying Notes to Consolidated****FinancialStatements.

 

47

----

 

**DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES**

**Consolidated****Statements of Partners’ Equity**

**(in thousands, except per unit data)**

 
| ** **                                                               | ** ** | **General Partner**   | ** **    | **Limited  Partners’  Common  Equity** | ** ** | **Limited  Partners’  Preferred  Equity** | ** ** | **Accumulated  Other  Comprehensive  Income** | ** **  | **Total**  | ** ** |
|--------------------------------------------------------------------------|------------|-----------------------|---------------|---------------------------------------------|------------|------------------------------------------------|------------|-----------------------------------------------|-------------|------------|------------|
| **Common  Equity**                                                       | ** ** | **Preferred  Equity** |
| **Balance at December 31, 2001**                                    | ** ** | **$**                 | **2,203,291** | ** **                                  | **$**      | **583,419**                                    | ** ** | **$**                                         | **286,759** | ** ** | **$**      | **102,955** | ** ** | **$** | **(192** | **)** | **$** | **3,176,232** | ** ** |
| Comprehensive income:                                                    |       |                  |          |                                        |       |                                           |       |                                          |        |       |       |   |   |
| Net income                                                               |       | 159,178               |          | 47,053                                      |       | 18,568                                         |       | 7,560                                         |        | —     |       | 232,359 |   |
| Distributions to preferred unitholders                                   |       | —                |          | (47,053                                     | )          | —                                         |       | (7,560                                        | )           | —     |       | (54,613 | ) |
| Gains (losses) on derivative instruments                                 |       | —                |          | —                                      |       | —                                         |       | —                                        |        | (1,919     | )          | (1,919 | ) |
| Comprehensive income available for common unitholders                    |       |                  |          |                                        |       |                                           |       |                                          |        |       |       | 175,827 |   |
| Capital contribution from General Partner                                |       | 22,651                |          | —                                      |       | —                                         |       | —                                        |        | —     |       | 22 651 |   |
| Acquisition of partnership interest for common stock  of General Partner |       | 60,509                |          | —                                      |       | (47,283                                        | )          | —                                        |        | —     |       | 13,226 |   |
| Acquisition of property in exchange for Limited  Partner Units           |       | —                |          | —                                      |       | 5,439                                          |       | —                                        |        | —     |       | 5,439 |   |
| Repurchase of Series D Preferred units                                   |       | —                |          | (25                                         | )          | —                                         |       | —                                        |        | —     |       | (25 | ) |
| Redemption of Series B Preferred units                                   |       | —                |          | (17,928                                     | )          | —                                         |       | —                                        |        | —     |       | (17,928 | ) |
| Redemption of Series F Preferred units                                   |       | —                |          | (150,000                                    | )          | —                                         |       | —                                        |        | —     |       | (150,000 | ) |
| Redemption of Series G Preferred units                                   |       | —                |          | —                                      |       | —                                         |       | (35,000                                       | )           | —     |       | (35,000 | ) |
| Tax benefits from Employee Stock Plans                                   |       | 856                   |          | —                                      |       | —                                         |       | —                                        |        | —     |       | 856 |   |
| FASB 123 Compensation Expense                                            |       | 224                   |          | —                                      |       | —                                         |       | —                                        |        | —     |       | 224 |   |
| Distributions to General Partner                                         |       | (1,174                | )             | —                                      |       | —                                         |       | —                                        |        | —     |       | (1,174 | ) |
| Distributions to partners ($1.81 per Common Unit)                        |       | (242,475              | )             | —                                      |       | (28,010                                        | )          | —                                        |        | —     |       | (270,485 | ) |
| **Balance at December 31, 2002**                                    | ** ** | **$**                 | **2,203,060** | ** **                                  | **$**      | **415,466**                                    | ** ** | **$**                                         | **235,473** | ** ** | **$**      | **67,955** | ** ** | **$** | **(2,111** | **)** | **$** | **2,919,843** | ** ** |
| Comprehensive income:                                                    |       |                  |          |                                        |       |                                           |       |                                          |        |       |       |   |   |
| Net income                                                               |       | 162,041               |          | 37,321                                      |       | 17,546                                         |       | 1,904                                         |        | —     |       | 218,812 |   |
| Distributions to preferred unitholders                                   |       | —                |          | (37,321                                     | )          | —                                         |       | (1,904                                        | )           | —     |       | (39,225 | ) |
| Gains (losses) on derivative instruments                                 |       | —                |          | —                                      |       | —                                         |       | —                                        |        | 2,111      |       | 2,111 |   |
| Comprehensive income available for common unitholders                    |       |                  |          |                                        |       |                                           |       |                                          |        |       |       | 181,698 |   |
| Capital contribution from General Partner                                |       | 14,160                |          | 96,700                                      |       | —                                         |       | —                                        |        | —     |       | 110,860 |   |
| Acquisition of partnership interest for common stock  of General Partner |       | 26,546                |          | —                                      |       | (16,562                                        | )          | —                                        |        | —     |       | 9,984 |   |
| Acquisition of property in exchange for Limited  Partner Units           |       | —                |          | —                                      |       | 3,187                                          |       | —                                        |        | —     |       | 3,187 |   |
| Redemption of Series H Preferred units                                   |       | —                |          | —                                      |       | —                                         |       | (67,955                                       | )           | —     |       | (67,955 | ) |
| Repurchase of Series D Preferred units                                   |       | —                |          | (20                                         | )          | —                                         |       | —                                        |        | —     |       | (20 | ) |
| Conversion of Series D Preferred units                                   |       | 361                   |          | (361                                        | )          | —                                         |       | —                                        |        | —     |       | — |   |
| Exercise of General Partner warrants                                     |       | (4,692                | )             | —                                      |       | —                                         |       | —                                        |        | —     |       | (4,692 | ) |
| Tax benefits from Employee Stock Plans                                   |       | 542                   |          | —                                      |       | —                                         |       | —                                        |        | —     |       | 542 |   |
| FASB 123 Compensation Expense                                            |       | 155                   |          | —                                      |       | —                                         |       | —                                        |        | —     |       | 155 |   |
| Distribution to General Partner                                          |       | (229                  | )             | —                                      |       | —                                         |       | —                                        |        | —     |       | (229 | ) |
| Distributions to partners ($1.83 per Common Unit)                        |       | (248,100              | )             | —                                      |       | (26,953                                        | )          | —                                        |        | —     |       | (275,053 | ) |
| **Balance at December 31, 2003**                                    | ** ** | **$**                 | **2,153,844** | ** **                                  | **$**      | **511,785**                                    | ** ** | **$**                                         | **212,691** | ** ** | **$**      | **—** | ** ** | **$** | **—** | ** ** | **$** | **2,878,320** | ** ** |
| Comprehensive income:                                                    |       |                  |          |                                        |       |                                           |       |                                          |        |       |       |   |   |
| Net income                                                               |       | 154,926               |          | 33,777                                      |       | 15,931                                         |       | —                                        |        | —     |       | 204,634 |   |
| Distributions to preferred unitholders                                   |       | —                |          | (33,777                                     | )          | —                                         |       | —                                        |        | —     |       | (33,777 | ) |
| Gains (losses) on derivative instruments                                 |       | —                |          | —                                      |       | —                                         |       | —                                        |        | (6,547     | )          | (6,547 | ) |
| Comprehensive income available for common unitholders                    |       |                  |          |                                        |       |                                           |       |                                          |        |       |       | 164,310 |   |
| Capital contribution from General Partner                                |       | 12,367                |          | 338,312                                     |       | —                                         |       | —                                        |        | —     |       | 350,679 |   |
| Acquisition of Partnership interest for common stock  of General Partner |       | 25,376                |          | —                                      |       | (13,968                                        | )          | —                                        |        | —     |       | 11,408 |   |
| Acquisition of property in exchange for Limited  Partner Units           |       | —                |          | —                                      |       | 7,575                                          |       | —                                        |        | —     |       | 7,575 |   |
| Redemption of Series E Preferred Units                                   |       | —                |          | (100,029                                    | )          | —                                         |       | —                                        |        | —     |       | (100,029 | ) |
| General Partner’s redemption of Series D Preferred  Units           |       | —                |          | (2,623                                      | )          | —                                         |       | —                                        |        | —     |       | (2,623 | ) |
| General Partner’s conversion of Series D Preferred  Units           |       | 130,665               |          | (130,665                                    | )          | —                                         |       | —                                        |        | —     |       | — |   |
| Exercise of General Partner warrants                                     |       | (2,881                | )             | —                                      |       | —                                         |       | —                                        |        | —     |       | (2,881 | ) |
| Tax benefits from employee stock plans                                   |       | 770                   |          | —                                      |       | —                                         |       | —                                        |        | —     |       | 770 |   |
| FASB 123 compensation expense                                            |       | 512                   |          | —                                      |       | —                                         |       | —                                        |        | —     |       | 512 |   |
| Distribution to General Partner                                          |       | (45                   | )             | —                                      |       | —                                         |       | —                                        |        | —     |       | (45 | ) |
| Distributions to partners ($1.85 per Common Unit)                        |       | (261,061              | )             | —                                      |       | (25,807                                        | )          | —                                        |        | —     |       | (286,868 | ) |
| **Balance at December 31, 2004**                                    | ** ** | **$**                 | **2,214,473** | ** **                                  | **$**      | **616,780**                                    | ** ** | **$**                                         | **196,422** | ** ** | **$**      | **—** | ** ** | **$** | **(6,547** | **)** | **$** | **3,021,128** | ** ** |
|                                                                     |       |                  |          |                                        |       |                                           |       |                                          |        |       |       |   |   |
| **Common Units outstanding at December 31,  2004**                  | ** ** | **142,894**           | ** **    | ** **                                  | ** ** | **13,596**                                     |       |                                          |        |       |       | **156,490** |   |
|                                                                          |            |                       |               |                                             |            |                                                |            |                                               |             |            |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

See accompanying Notes to Consolidated****FinancialStatements.

 

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**DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES**

 

Notes to ConsolidatedFinancial Statements

 

**(1)****                                 ThePartnership**

 

DukeRealty Limited Partnership (the “Partnership”) was formed on October 4,1993, when Duke Realty Corporation (the “General Partner”) contributed all ofits properties and related assets and liabilities, along with the net proceedsof $309.2 million from the issuance of an additional 14,000,833 shares of theGeneral Partner through an offering to the Partnership. Simultaneously, thePartnership completed the acquisition of Duke Associates, a full-servicecommercial real estate firm operating in the Midwest. The General Partner wasformed in 1985 and qualifies as a Real Estate Investment Trust (“REIT”) under provisionsof the Internal Revenue Code. The General Partner is the sole general partnerof the Partnership, owning 91.3% of the common partnership interests as of December 31,2004 (“General Partner Units”). The remaining 8.7% of the Partnership’s common interestis owned by limited partners (“Limited Partner Units” and, together with theGeneral Partner Units, the “Common Units”). The Limited Partner Units areexchangeable for shares of the General Partner’s common stock on a one-for-onebasis subject generally to a one-year holding period.

 

We ownand operate a portfolio of industrial, office and retail properties in themidwestern and southeastern United States and provide real estate services tothird-party owners. We conduct Service Operations through Duke Realty ServicesLimited Partnership (“DRSLP”) and Duke Construction Limited Partnership (“DCLP”).

 

**(2)****                                 Summaryof Significant Accounting Policies**

 

**Principles of Consolidation**

 

Theconsolidated financial statements include our accounts and our controlledsubsidiaries. The equity interests in these controlled subsidiaries not ownedby us are reflected as minority interests in the consolidated financialstatements. All significant intercompany balances and transactions have beeneliminated in the consolidated financial statements. Investments in entitiesthat we do not control through majority voting interest or where the otherowner has substantial participating rights are not consolidated and arereflected as investments in unconsolidated companies under the equity method ofreporting.

 

**Reclassifications**

 

Certain2003 and 2002 balances have been reclassified to conform to the 2004presentation.

 

**Real Estate Investments**

 

Rentalreal property, including land, land improvements, buildings and building improvements,are included in real estate investments and are generally stated at cost.Buildings and land improvements are depreciated on the straight-line methodover their estimated life not to exceed 40 and 15 years, respectively, andtenant improvement costs are depreciated using the straight-line method overthe term of the related lease.

 

Directand certain indirect costs clearly associated and incremental to thedevelopment, construction, leasing or expansion of real estate investments arecapitalized as a cost of the property. In addition, all leasing commissionspaid to third parties for new leases or lease renewals are capitalized. Wecapitalize a portion of our indirect costs associated with ourconstruction/development and leasing efforts. In assessing the amount of directand indirect costs to be capitalized, allocations are made based on estimatesof the actual amount of time spent in each activity. The capitalized cost pooldoes not include any costs allocable to its executive officers. Additionally,we do not capitalize any costs attributable to downtime or to unsuccessfulprojects of leasing activities.

 

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Withinour Rental Operations, direct and indirect costs are capitalized under theguidelines of Statement of Financial Accounting Standard (“SFAS”) No. 67, *Accounting for Costs and Initial Rental Operations ofReal Estate Projects*(“SFAS67”), and interest costs are capitalizedunder the guidelines of SFAS No. 34, *Capitalizationof Interest Cost* (“SFAS 34”)*.*The Partnership capitalizes these project costs associated with the initialconstruction of a property up to the time the property is substantiallycomplete and ready for its intended use. In addition, the Partnershipcapitalizes costs, including real estate taxes, insurance, and utilities, thathave been allocated to vacant space based on the square footage of the portionof the building not held available for immediate occupancy during the extendedlease-up periods after construction of the building shell has been completed ifcosts are being incurred to ready the vacant space for its intended use. Ifcosts and activities incurred to ready the vacant space cease, then costcapitalization is also discontinued until such activities are resumed. Oncenecessary work has been completed on a vacant space, project costs are nolonger capitalized. We cease capitalization of all project costs on extendedlease-up periods after the shorter of a one-year period after the completion ofthe building shell or when the property attains 90% occupancy. Tenantimprovement costs are generally not incurred on vacant space until a lease issigned and specific improvements are identified in the lease.

 

Constructionin process and land held for development are included in real estateinvestments and are stated at cost. Real estate investments also include ourequity interests in unconsolidated joint ventures that own and operate rentalproperties and hold land for development. We analyze our investments in jointventures under Financial Accounting Standards Board (“FASB”) Interpretation No.46 (R), *Consolidation of Variable InterestEntities,*to determine if the joint venture is considered a variableinterest entity and would require consolidation. The equity method of accountingis used for these investments in which we have the ability to exercisesignificant influence, but not control, over operating and financial policies.Any difference between the carrying amount of these investments and theunderlying equity in net assets is amortized to equity in earnings ofunconsolidated companies over the depreciable life of the property, generally40 years.

 

Weadopted SFAS No. 144, *Accounting for theImpairment or Disposal of Long Lived Assets* (“SFAS144”), in2002.  In accordance with this statement,properties held for rental are individually evaluated for impairment whenconditions exist which may indicate that it is probable that the sum ofexpected future cash flows (on an undiscounted basis) from a rental propertyover its anticipated holding period is less than its historical net cost basis.Upon determination that a permanent impairment has occurred, a loss is recordedto reduce the net book value of that property to its fair market value. Realproperties to be disposed of are reported at the lower of net historical costbasis or the estimated fair market value, less the estimated costs to sell.Once a property is designated as held for disposal, no further depreciationexpense is recorded.

 

Inaccordance with SFAS No. 141, *BusinessCombinations* (“SFAS 141”), we allocate the purchase price ofacquired properties to net tangible and identified intangible assets based ontheir respective fair values. The allocation to tangible assets (buildings,tenant improvements and land) is based upon management’s determination of thevalue of the property as if it were vacant using discounted cash flow modelssimilar to those used by independent appraisers. Factors considered bymanagement include an estimate of carrying costs during the expected lease-upperiods considering current market conditions, and costs to execute similarleases. The remaining purchase price is allocated among three categories ofintangible assets consisting of the above or below market component of in-placeleases, the value of in-place leases and the value of customer relationships.

 

Thevalue allocable to the above or below market component of an acquired in-placelease is determined based upon the present value (using a discount rate whichreflects the risks associated with the acquired leases) of the differencebetween (i) the contractual amounts to be paid pursuant to the lease over its

 

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remainingterm and (ii) management’s estimate of the amounts that would be paid usingfair market rates over the remaining term of the lease. The amounts allocatedto above or below market leases are included in deferred leasing and othercosts in the balance sheet and are amortized to rental income over theremaining terms of the respective leases.

 

Thetotal amount of intangible assets is further allocated to in-place lease valuesand to customer relationship values based upon management’s assessment of theirrespective values. These intangible assets are included in deferred leasing andother costs in the balance sheet and are depreciated over the remaining term ofthe existing lease, or the anticipated life of the customer relationship, asapplicable.

 

**Cash Equivalents**

 

Highlyliquid investments with a maturity of three months or less when purchased areclassified as cash equivalents.

 

**Valuation of Receivables**

 

Wereserve the entire receivable balance, including straight-line rent, of anytenant with an amount outstanding over 90 days. Straight-line rent receivablesfor any tenant with long-term risk, regardless of the status of rentreceivables, are reviewed and reserved as necessary.

 

**Deferred Costs**

 

Costsincurred in connection with obtaining financing are amortized to interestexpense on the straight-line method, which approximates a constant spread overthe term of the related loan. All direct and indirect costs, includingestimated internal costs, associated with the leasing of real estateinvestments owned by us are capitalized and amortized over the term of therelated lease. Unamortized costs are charged to expense upon the earlytermination of the lease or upon early payment of the financing.

 

**Revenues**

 

RentalOperations

 

Rentalincome from leases with scheduled rental increases during their terms isrecognized on a straight-line basis.

 

ServiceOperations

 

Managementfees are based on a percentage of rental receipts of properties managed and arerecognized as the rental receipts are collected. Maintenance fees are basedupon established hourly rates and are recognized as the services are performed.Construction management and development fees represent fee based third partycontracts and are recognized as earned based on the terms of the contract,which approximates the percentage of completion method.

 

Werecognize income on construction contracts where we serve as a generalcontractor on the percentage of completion method. Using this method, profitsare recorded based on our estimates of the percentage of completion ofindividual contracts, commencing when the work performed under the contractsreach a point where the final costs can be estimated with reasonable accuracy.The percentage of completion estimates are based on a comparison of thecontract expenditures incurred to the estimated final costs. Changes in job performance,job conditions and estimated profitability may result in revisions to costs andincome and are recognized in the period in which the revisions are determined.

 

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PropertySales

 

Gainsfrom sales of depreciated property are recognized in accordance with SFAS No.66, *Accounting for Sales of Real Estate*(“SFAS 66”), and are included in earnings from sales of land and depreciableproperty dispositions, net of any impairment adjustments, in the Statement ofOperations if identified as held-for-sale prior to adoption of SFAS 144 and indiscontinued operations if identified as held-for-sale after adoption of SFAS144.

 

Gainsor losses to our sale of property that were developed with the intent to selland not for long-term rental are recognized in accordance with SFAS 66 and areincluded in construction management and development activity income in theStatement of Operations.

 

**Net Income Per Common Unit**

 

Basicnet income per common unit is computed by dividing net income available forcommon units by the weighted average number of common units outstanding for theperiod. Diluted net income per common unit is****computedby dividing the sum of net income available for common unitholders by the sumof the weighted average number of common units outstanding, including anydilutive potential common units for the period.

 

Thefollowing table reconciles the components of basic and diluted net income percommon unit (in thousands):

 
| ** **                                                                   | ** ** | **2004**    | ** **  | **2003** | ** ** | **2002** | ** ** |
|------------------------------------------------------------------------------|------------|-------------|-------------|----------|------------|----------|------------|
| Basic and diluted net income available for common  unitholders               | ** ** | **$**       | **167,212** |     | $          | 179,587  |       | $ | 171,601 |   |
|                                                                         |       |        |        |     |       |     |       |
| Weighted average number of common units outstanding                          | ** ** | **155,281** |        | 150,280  |       | 149,423  |       |
| Weighted average conversion of Series D preferred  units (1)                 | ** ** | **877**     |        | —   |       | —   |       |
| Dilutive units for stock-based compensation plans                            | ** ** | **904**     |        | 861      |       | 1,416    |       |
| Weighted average number of common units and dilutive  potential common units | ** ** | **157,062** |        | 151,141  |       | 150,839  |       |
|                                                                              |            |             |             |          |            |          |            |  |  |  |

 

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(1)The General Partner called for the redemption of the Series D preferred unitsas of March 16, 2004. Prior to the redemption date, nearly 5.3 millionSeries D preferred units were converted to 4.9 million common units. Theseunits represent the weighted effect, assuming the Series D preferred units hadbeen converted on January 1, 2004.

 

TheSeries D Convertible Preferred Stock was anti-dilutive for the years ended December 31,2003 and 2002; therefore, no conversion to common shares was included inweighted average dilutive potential common shares.

 

Ajoint venture partner in one of our unconsolidated companies has the option toconvert a portion of its ownership to the General Partner’s common shares,which would require the issuance of additional Common units to the GeneralPartner. The effect of this option on earnings per unit was anti-dilutive forthe years ended December 31, 2004, 2003 and 2002.

 

**Federal Income Taxes**

 

Werecorded federal and state income taxes of $5.9 million, $3.7 million and $11.2million for 2004, 2003 and 2002, respectively, which were primarily attributableto the earnings of our taxable REIT subsidiaries. The taxable REIT subsidiarieshad no significant deferred income tax items.

 

As apartnership, the allocated share of income and loss other than the operationsof the taxable REIT subsidiaries is included in the income tax returns of thepartners; accordingly, no accounting for federal income taxes is required inthe accompanying consolidated financial statements.

 

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**Stock Based Compensation**

 

Under the limited partnership agreement of thePartnership, we are required to issue one Common Unit to the General Partnerfor each share of common stock issued by the General Partner.  Accordingly, the issuance of common shares bythe General Partner under its stock based compensation plans requires theissuance of a corresponding number of Common Units by us to the GeneralPartner.

 

We apply the recognition and measurement provisionsof APB Opinion No. 25, *Accounting for StockIssued to Employees,*and related Interpretations in accounting, forall stock based awards issued by the General Partner prior to 2002.Accordingly, for stock options granted prior to 2002, no compensation expenseis reflected in net income as all options granted had an exercise price equalto the market value of the General Partner’s underlying common stock on thedate of the grant.

 

In 2002, we prospectively adopted the fair valuerecognition provisions of SFAS No. 123, *Accountingfor Stock-Based Compensation*(“SFAS 123”)*,* for all awards granted after January 1, 2002.

 

Awards under the General Partner’s stock basedemployee compensation plans generally vest over five years at 20% per year.Therefore, the expense related to these plans is less than that which wouldhave been recognized if the fair value method had been applied to all awardssince the original effective date of SFAS 123. The following table illustratesthe effect on net income and earnings per share if the fair value method hadbeen applied to all outstanding and unvested awards in each period (inthousands, except per unit amounts).

 
| ** **                                                                                                | ** ** | **2004** | ** **  | **2003** | ** ** | **2002** | ** ** |
|-----------------------------------------------------------------------------------------------------------|------------|----------|-------------|----------|------------|----------|------------|
| Net income, as reported                                                                                   | ** ** | **$**    | **167,212** |     | $          | 179,587  |       | $ | 171,601 |   |
| Add: Stock-based employee compensation expense  included in net income determined under fair value method | ** ** | **455**  |        | 155      |       | 224      |       |
| Deduct: Total stock based compensation expense  determined under fair value method for all awards         | ** ** | **(923** | )           | (778     | )          | (1,153   | )          |
| Proforma Net Income                                                                                       | ** ** | **$**    | **166,744** |     | $          | 178,964  |       | $ | 170,672 |   |
|                                                                                                      |       |     |        |     |       |     |       |
| Basic net income per unit                                                                                 |       |     |        |     |       |     |       |
| As reported                                                                                               | ** ** | **$**    | **1.08**    |     | $          | 1.20     |       | $ | 1.15 |   |
| Pro forma                                                                                                 | ** ** | **$**    | **1.07**    |     | $          | 1.19     |       | $ | 1.14 |   |
|                                                                                                      |       |     |        |     |       |     |       |
| Diluted net income per unit                                                                               |       |     |        |     |       |     |       |
| As reported                                                                                               | ** ** | **$**    | **1.07**    |     | $          | 1.19     |       | $ | 1.14 |   |
| Pro forma                                                                                                 | ** ** | **$**    | **1.06**    |     | $          | 1.18     |       | $ | 1.13 |   |

 

**Derivative Financial Instruments**

 

Weperiodically enter into certain interest rate protection agreements toeffectively convert or cap floating rate debt to a fixed rate, and to hedgeanticipated future financing transactions. Net amounts paid or received underthese agreements are recognized as an adjustment to the interest expense of thecorresponding debt. We do not utilize derivative financial instruments fortrading or speculative purposes.

 

SFASNo. 133, *Accounting for DerivativeInstruments and Hedging Activities*, as amended (“SFAS 133”),requires that all derivative instruments be recorded on the balance sheet asassets or liabilities at their fair value. Derivatives that are not hedges mustbe adjusted to fair value through the recording of income or expense. If aderivative qualifies as a hedge, the changes in fair value of the effectiveportion

 

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of thehedge are recognized in other comprehensive income, while the ineffectiveportion of the derivative’s change in fair value is recognized in earnings. We estimatethe fair value of derivative instruments using standard market conventions andtechniques such as discounted cash flow analysis, option pricing models andtermination cost at each balance sheet date.

 

**Use Of Estimates**

 

Thepreparation of the financial statements requires management to make a number ofestimates and assumptions that affect the reported amount of assets andliabilities and the disclosure of contingent assets and liabilities at the dateof the financial statements and the reported amounts of revenues and expensesduring the period. Actual results could differ from those estimates.

 

**(3)****                                 RelatedParty Transactions**

 

Weprovide property management, leasing, construction and other tenant relatedservices to properties in which former executive officers and current directorshave ownership interests. We received fees totaling approximately $693,000,$1.2 million, and $1.4 million in 2004, 2003 and 2002, respectively, forservices provided to these properties. The fees we charged for such servicesare equivalent to those charged to unrelated third-party owners for similarservices. We had an option to acquire the executive officers’ interests inthese properties. Two of these properties, the Bank One Towers office buildingsin Cincinnati, Ohio, were acquired in August 2003 at a price of $45.5million. The terms of this acquisition were reviewed and approved by theindependent members of the General Partner’s Board of Directors. The options onthe remaining properties expired in October 2003, as the independentmembers of the General Partner’s Board of Directors determined that it was notin our best interests to exercise the options.

 

Weprovide property management, leasing, construction and other tenant relatedservices to unconsolidated companies in which we have an equity interest. Foreach of the years ended December 31, 2004, 2003 and 2002, we receivedmanagement fees of $4.9 million from these unconsolidated companies. Inaddition, for each of the years ended December 31, 2004, 2003 and 2002,respectively, we received from these entities leasing fees of $2.6 million,$2.3 million and $2.5 million and construction and development fees of $1.5million, $1.4 million and $4.5 million. These fees were charged at market ratesand we eliminated our ownership percentage of these fees in the consolidatedfinancial statements.

 

In2002, we received lease termination fees totaling $7.7 million from a tenantthat is a subsidiary of Progress Energy, Inc. At that time, William CavanaughIII was President and Chief Executive Officer of Progress Energy, Inc. and amember of the General Partner’s Board of Directors. The General Partner’sindependent directors approved the transaction and management believes that theamount received approximates a value that would have been charged to tenantswith similar lease terms and commitments.

 

**(4)****                                 Investmentsin Unconsolidated Companies**

 

Wehave equity interests ranging from 10% – 64% in unconsolidated joint venturesthat own and operate rental properties and hold land for development.

 

Combinedsummarized financial information for the unconsolidated companies as of December 31,2004 and 2003, and for the years ended December 31, 2004, 2003, and 2002,are as follows (in thousands):

 

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| ** **                                   | ** ** | **2004**    | ** **    | **2003** | ** ** | **2002**  | ** ** |
|----------------------------------------------|------------|-------------|---------------|----------|------------|-----------|------------|
| Rental revenue                               | ** ** | **$**       | **167,803**   |     | $          | 170,227   |       | $ | 169,683 |   |
| Net income                                   | ** ** | **$**       | **40,138**    |     | $          | 41,065    |       | $ | 51,013 |   |
| Earnings distributions received              | ** ** | **$**       | **30,309**    |     | $          | 30,844    |       | $ | 29,238 |   |
|                                         |       |        |          |     |       |      |       |
| Land, buildings and tenant improvements, net | ** ** | **$**       | **1,158,068** |     | $          | 1,173,232 |       |   |   |
| Land held for development                    | ** ** | **50,173**  |          | 51,328   |       |      |       |
| Other assets                                 | ** ** | **62,190**  |          | 62,196   |       |      |       |
| ** **                                   |       | **$**       | **1,270,431** |     | $          | 1,286,756 |       |   |   |
| Property indebtedness                        | ** ** | **$**       | **570,941**   |     | $          | 577,732   |       |   |   |
| Other liabilities                            | ** ** | **51,377**  |          | 41,691   |       |      |       |
| ** **                                   |       | **622,318** |          | 619,423  |       |      |       |
| Owners’ equity                          | ** ** | **648,113** |          | 667,333  |       |      |       |
| ** **                                   |       | **$**       | **1,270,431** |     | $          | 1,286,756 |       |   |   |

 

Our share of the scheduled payments of long term debt for theunconsolidated joint ventures for each of the next five years and thereafter asof December 31, 2004, are as follows (in thousands):

 

| **Year**   | ** ** | **Future Repayments** | ** ** |
|------------|------------|-----------------------|------------|
| 2005       |       | $                     | 31,713     |   |
| 2006       |       | 13,740                |       |
| 2007       |       | 62,254                |       |
| 2008       |       | 1,507                 |       |
| 2009       |       | 70,473                |       |
| Thereafter |       | 104,595               |       |
|       |       | $                     | 284,282    |   |

 

The following significant transactions involving the unconsolidated companies have occurred over the past three years:

 

During 2003, we purchased our partners’ interests inthree separate joint ventures. We had a 50% interest in each of these venturesprior to their acquisition. We also sold our 50% interest in two separate jointventures to our partners. In addition, we contributed cash and undeveloped landto a joint venture that owns undeveloped land and an office building in returnfor a 50% interest.

 

In2002, we recognized a gain of $1.8 million on the sale of a building that wasdeveloped for sale by a joint venture in which we owned a 50% interest. Thegain was included in equity in earnings in the Statement of Operations. We alsobought out our other partners’ interest in six separate joint ventures.  We had a 50% interest in each of theseventures prior to such acquisitions.

 

**(5)****                                 RealEstate Investments**

 

Wehave classified operations of 86 buildings as discontinued operations as of December 31,2004. These 86 buildings consist of 69 industrial, 12 office and five retailproperties. As a result, we classified net income of $1.8 million, $7.0 millionand $11.9 million as net income from discontinued operations for the yearsended December 31, 2004, 2003 and 2002, respectively. Forty-one of theseproperties were sold during 2004, 42 properties were sold during 2003, twoproperties were sold during 2002 and one operating property is classified asheld-for-sale at December 31, 2004. The gains on disposal of theseproperties, net of impairment adjustment, of $26.2 million and $13.0 million forthe years ended December 31, 2004 and 2003, respectively, are alsoreported in discontinued operations. For the year ended December 31, 2002,a $5.0 million loss on disposal of properties, net of impairment adjustment, isreported in discontinued operations due to impairment charges of $7.7 millionrecorded on three properties in 2002 that were later sold in 2003 and 2004.

 

Thefollowing table illustrates the major classes of assets and operations affectedby the 86 buildings identified as discontinued operations at December 31,2004 (in thousands):

 

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| ** **                                                     | ** ** | **2004**   | ** ** | **2003** | ** ** | **2002** | ** ** |
|----------------------------------------------------------------|------------|------------|------------|----------|------------|----------|------------|
| Statement of Operations:                                       |       |       |       |     |       |     |       |
| Revenues                                                       | ** ** | **$**      | **11,916** |     | $          | 29,874   |       | $ | 37,700 |   |
| Expenses:                                                      |       |       |       |     |       |     |       |
| Operating                                                      | ** ** | **3,703**  |       | 8,831    |       | 9,296    |       |
| Interest                                                       | ** ** | **2,479**  |       | 5,810    |       | 6,872    |       |
| Depreciation and Amortization                                  | ** ** | **3,933**  |       | 8,219    |       | 9,562    |       |
| General and Administrative                                     | ** ** | **42**     |       | 41       |       | 63       |       |
| Operating Income                                               | ** ** | **1,759**  |       | 6,973    |       | 11,907   |       |
| Other Income                                                   |       | —     |       | 2        |       | (1       | )          |
| Income from discontinued operations, before gain on  sale      | ** ** | **1,759**  |       | 6,975    |       | 11,906   |       |
| Gain (loss) on sale of property, net of impairment  adjustment | ** ** | **26,247** |       | 13,024   |       | (4,969   | )          |
| Income from discontinued operations                            | ** ** | **$**      | **28,006** |     | $          | 19,999   |       | $ | 6,937 |   |
| Balance Sheet:                                                 |       |       |       |     |       |     |       |
| Real estate investments, net                                   | ** ** | **$**      | **3,358**  |     |       |     |       |   |
| Other Assets                                                   | ** ** | **1,195**  |       |     |       |     |       |
| Total Assets                                                   | ** ** | **$**      | **4,553**  |     |       |     |       |   |
| Accrued Expenses                                               | ** ** | **$**      | **18**     |     |       |     |       |   |
| Other Liabilities                                              | ** ** | **38**     |       |     |       |     |       |
| Equity                                                         | ** ** | **4,497**  |       |     |       |     |       |
| Total Liabilities and Equity                                   | ** ** | **$**      | **4,553**  |     |       |     |       |   |

 

Weallocate interest expense to discontinued operations as permitted under EITF87-24, *“Allocation of Interest toDiscontinued Operations,”*and have included such interest expense incomputing net income from discontinued operations. Interest expense allocableto discontinued operations includes interest on the debt for the securedproperties and an allocable share of our consolidated unsecured interestexpense for unencumbered properties. The allocation of unsecured interestexpense to discontinued operations was based upon the Gross Book Value of thediscontinued operations unencumbered population as it related to our entireunencumbered population.

 

At December 31,2004, we had one industrial property comprising approximately 81,000 squarefeet classified as held-for-sale. The net book value of the propertyheld-for-sale at December 31, 2004, was approximately $3.4 million.

 

In2004 we recorded $424,000 of impairment adjustments for three land parcels thatwere held-for-sale. We also recorded a $180,000 impairment adjustment for theindustrial building classified as held-for-sale at December 31, 2004.These adjustments reflect the write-down of the carrying values of theproperties to their projected sales prices, less selling expenses, once itbecame probable that the properties would be sold. The industrial building isprojected to sell in the first quarter of 2005. Each of the land parcelproperties were later sold in 2004.

 

In2003 we recorded $1.1 million of impairment adjustments for one industrialbuilding and three land parcels that were held-for-sale. These adjustmentsreflect the write-down of the carrying values of the properties to theirprojected sales prices, less selling expenses, once it became probable that theproperties would be sold. Each of these properties was later sold in 2003.

 

Werecorded a $9.4 million impairment adjustment for six properties in 2002. Thistotal consisted of a $7.7 million adjustment for three industrial propertiesand a $1.7 million adjustment for three office properties. The properties wereidentified as impaired upon the comparison of their projected undiscounted cashflows to their carrying values. The impairment adjustment reflects thewrite-down of the carrying values of the properties to their estimated fairmarket values. In estimating fair market value, management considers valuationfactors used by independent appraisers, including the sales of comparableproperties, replacement cost and the capitalization of future expected netoperating income.

 

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**(6)****                                 Indebtedness**

 

Indebtednessat December 31 consists of the following (in thousands):

 
| ** **                                                                                                                                                                     | ** ** | **2004**      | ** **    | **2003**  | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------|---------------|-----------|------------|
| Fixed rate secured debt, weighted average interest  rate of 6.51% at December 31, 2004, and 6.94% at December 31, 2003,  maturity dates ranging from 2005 to 2017    | ** ** | **$**         | **163,607**   |      | $          | 153,460 |   |
|                                                                                                                                                                           |       |          |          |      |       |
| Variable rate secured debt, weighted average  interest rate of 3.43% at December 31, 2004, and 2.42% at December 31,  2003, maturity dates ranging from 2006 to 2025 | ** ** | **39,474**    |          | 55,189    |       |
|                                                                                                                                                                           |       |          |          |      |       |
| Fixed rate unsecured notes, weighted average  interest rate of 6.02% at December 31, 2004, and 6.41% at December 31,  2003, maturity dates ranging from 2005 to 2028 | ** ** | **2,065,623** |          | 1,775,887 |       |
|                                                                                                                                                                           |       |          |          |      |       |
| Unsecured line of credit, facility unused at December 31,  2004, interest rate of 1.77% at December 31, 2003, maturity date 2007                                     |       | —        |          | 351,000   |       |
|                                                                                                                                                                           |       |          |          |      |       |
| Variable rate unsecured note, interest rate of 2.78%  at December 31, 2004, maturity date of 2006                                                                         | ** ** | **250,000**   |          | —    |       |
| ** **                                                                                                                                                                     |       | **$**         | **2,518,704** |      | $          | 2,335,536 |   |

 

Thefair value of our indebtedness as of December 31, 2004, was $2.7 billion.

 

As of December 31,2004, the $203.1 million of secured debt was collateralized by rentalproperties with a carrying value of $464.6 million and by letters of credit inthe amount of $14 million.

 

We hadone unsecured line of credit available at December 31, 2004, described asfollows (in thousands):

 
| **Description**          | ** ** | **Borrowing  Capacity** | ** ** | **Maturity  Date** | ** **        | **Interest  Rate** | ** **   | **Outstanding  at December  31, 2004** | ** ** |
|--------------------------|------------|-------------------------|------------|--------------------|-------------------|--------------------|--------------|----------------------------------------|------------|
| Unsecured Line of Credit |       | $                       | 500,000    |               | January 2007 |               | LIBOR + .60% |                                   | $          | — |   |
|                          |            |                         |            |                    |                   |                    |              |                                        |            |  |  |

 

Thestated interest rate under the line is LIBOR plus 60 basis points. However, thefacility provides us with an option to obtain borrowings from financialinstitutions that participate in the line, at rates lower than the statedinterest rate, subject to certain restrictions. At December 31, 2004, wewere not using this facility.

 

Theline of credit also contains financial covenants that require us to meetdefined levels of performance. As of December 31, 2004, we are incompliance with all covenants and expect to remain in compliance for theforeseeable future.

 

In January 2004,we issued $125 million of four-year unsecured debt at an effective interestrate of 3.35%.

 

In August 2004,we issued $250 million of 5.40% unsecured notes due in 2014. The notes wereissued as part of an exchange of securities for $100 million principal amountof our 6.95% unsecured debt due August 2004. The remaining cash proceedswere used to fund costs associated with the offering and exchange of debt, andto reduce amounts outstanding under our unsecured line of credit.

 

In December 2004,we issued $250.0 million of unsecured floating rate debt at 26 basis pointsover LIBOR.  The debt matures in 2006,but is callable by us after six months.

 

At December 31,2004, the scheduled amortization and maturities of all indebtedness for thenext five years and thereafter were as follows (in thousands):

 

| **Year**   | ** ** | **Amount** | ** ** |
|------------|------------|------------|------------|
| 2005       |       | $          | 279,666    |   |
| 2006       |       | 423,504    |       |
| 2007       |       | 221,506    |       |
| 2008       |       | 265,059    |       |
| 2009       |       | 280,867    |       |
| Thereafter |       | 1,048,102  |       |
|       |       | $          | 2,518,704  |   |

 

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Theamount of interest paid in 2004, 2003, and 2002 was $136.2 million, $130.1million and $125.9 million, respectively. The amount of interest capitalized in2004, 2003 and 2002 was $6.0 million, $6.7 million and $13.5 million,respectively.

 

**(7)****                                 SegmentReporting**

 

We areengaged in four operating segments, the first three of which consist of theownership and rental of office, industrial and retail real estate investments(collectively, “Rental Operations”). The fourth segment consists of ourbuild-to-suit for sale operations and the providing of various real estateservices such as property management, maintenance, leasing, development andconstruction management to third-party property owners and joint ventures (“ServiceOperations”). Our reportable segments offer different products or services andare managed separately because each requires different operating strategies andmanagement expertise. There are no material intersegment sales or transfers.

 

Non-segmentrevenue consists mainly of equity in earnings of unconsolidated companies.Segment FFO information is calculated by subtracting operating expensesattributable to the applicable segment from segment revenues. Non-segmentassets consist of corporate assets including cash, deferred financing costs andinvestments in unconsolidated companies. Interest expense and othernon-property specific revenues and expenses are not allocated to individualsegments in determining our performance measure.

 

Weassess and measure segment operating results based upon an industry performancemeasure referred to as Funds From Operations (“FFO”), which management believesis a useful indicator of our operating performance. FFO is used by industryanalysts and investors as a supplemental operating performance measure of anequity real estate investment trust (“REIT”). FFO is calculated in accordancewith the definition that was adopted by the Board of Governors of the NationalAssociation of Real Estate Investment Trusts (“NAREIT”). FFO, as defined byNAREIT, represents net income (loss) determined in accordance with accountingprinciples generally accepted in the United States of America (“GAAP”),excluding extraordinary items as defined under GAAP and gains or losses fromsales of previously depreciated operating real estate assets, plus certainnon-cash items such as real estate asset depreciation and amortization, andafter similar adjustments for unconsolidated partnerships and joint ventures.

 

Therevenues and FFO for each of the reportable segments for the years ended December 31,2004, 2003, and 2002, and the assets of each reportable segment as of December 31,2004 and 2003 are summarized as follows (in thousands):

 
| ** **                                      | ** ** | **2004**    | ** **  | **2003** | ** ** | **2002** | ** ** |
|-------------------------------------------------|------------|-------------|-------------|----------|------------|----------|------------|
| Revenues                                        |       |        |        |     |       |     |       |
| Rental Operations:                              |       |        |        |     |       |     |       |
| Office                                          | ** ** | **$**       | **459,431** |     | $          | 419,962  |       | $ | 393,810 |   |
| Industrial                                      | ** ** | **274,393** |        | 259,762  |       | 250,391  |       |
| Retail                                          | ** ** | **4,893**   |        | 5,863    |       | 4,733    |       |
| Service Operations                              | ** ** | **70,803**  |        | 58,496   |       | 67,860   |       |
| Total Segment Revenues                          | ** ** | **809,520** |        | 744,083  |       | 716,794  |       |
| Non-Segment Revenue                             | ** ** | **26,930**  |        | 27,471   |       | 31,108   |       |
| Consolidated Revenue from continuing operations | ** ** | **836,450** |        | 771,554  |       | 747,902  |       |
| Discontinued Operations                         | ** ** | **11,916**  |        | 29,874   |       | 38,975   |       |
| Consolidated Revenue                            | ** ** | **$**       | **848,366** |     | $          | 801,428  |       | $ | 786,877 |   |

 

58

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| ** **                                                                                                             | ** ** | **2004**     | ** **  | **2003**   | ** ** | **2002**   | ** ** |
|------------------------------------------------------------------------------------------------------------------------|------------|--------------|-------------|------------|------------|------------|------------|
| Funds From  Operations                                                                                                 | ** ** | ** **   | ** **  | ** ** | ** ** | ** ** | ** ** |
| Rental Operations:                                                                                                     | ** ** | ** **   | ** **  | ** ** | ** ** | ** ** | ** ** |
| Office                                                                                                                 | ** ** | **$**        | **293,572** | ** ** | $          | 273,055    |       | $ | 263,135 |   |
| Industrial                                                                                                             | ** ** | **205,470**  | ** **  | 195,046    |       | 193,873    |       |
| Retail                                                                                                                 | ** ** | **3,946**    | ** **  | 4,929      |       | 4,128      |       |
| Services Operations                                                                                                    | ** ** | **24,421**   | ** **  | 21,118     |       | 29,520     |       |
| Total Segment FFO                                                                                                      | ** ** | **527,409**  | ** **  | 494,148    |       | 490,656    |       |
| Non-Segment FFO:                                                                                                       |       |         | ** **  |       |       |       |       |
| Interest expense                                                                                                       | ** ** | **(135,130** | **)**       | (125,696   | )          | (111,411   | )          |
| Interest income                                                                                                        | ** ** | **5,213**    | ** **  | 3,613      |       | 3,860      |       |
| General and administrative expense                                                                                     | ** ** | **(26,388**  | **)**       | (21,325    | )          | (24,673    | )          |
| Gain on land sales                                                                                                     | ** ** | **10,119**   | ** **  | 7,135      |       | 4,478      |       |
| Impairment charges on depreciable property                                                                             | ** ** | **(180**     | **)**       | (500       | )          | (9,379     | )          |
| Other expenses                                                                                                         | ** ** | **(363**     | **)**       | (2,765     | )          | (330       | )          |
| Minority interest in earnings of subsidiaries                                                                          | ** ** | **(1,253**   | **)**       | (586       | )          | (1,093     | )          |
| Joint venture FFO                                                                                                      | ** ** | **40,488**   | ** **  | 42,526     |       | 44,778     |       |
| Dividends on preferred units                                                                                           | ** ** | **(33,777**  | **)**       | (39,225    | )          | (52,613    | )          |
| Adjustment for redemption of units                                                                                     | ** ** | **(3,645**   | **)**       | —     |       | (8,145     | )          |
| Discontinued operations                                                                                                | ** ** | **5,692**    | ** **  | 15,194     |       | 22,743     |       |
| Consolidated FFO                                                                                                       | ** ** | **388,185**  | ** **  | 372,519    |       | 358,871    |       |
|                                                                                                                   |       |         | ** **  |       |       |       |       |
| Depreciation and amortization on continuing  operations                                                                | ** ** | **(224,649** | **)**       | (188,015   | )          | (166,059   | )          |
| Depreciation and amortization on discontinued  operations                                                              | ** ** | **(3,933**   | **)**       | (8,219     | )          | (9,562     | )          |
| Share of joint venture adjustments                                                                                     | ** ** | **(18,901**  | **)**       | (18,839    | )          | (17,598    | )          |
| Earnings from depreciated property sales and  ownership interests in unconsolidated companies on continuing operations | ** ** | **83**       |        | 8,617      |       | 4,491      |       |
| Earnings from depreciated property sales on  discontinued operations                                                   | ** ** | **26,427**   |        | 13,524     |       | 1,458      |       |
|                                                                                                                   | ** ** | ** **   |        |       |       |       |       |
| Net income available for common unitholders                                                                            | ** ** | **$**        | **167,212** |       | $          | 179,587    |       | $ | 171,601 |   |

 
| ** **           | ** ** | **December 31,  2004** | ** **    | **December 31,  2003** | ** ** |
|----------------------|------------|-----------------------------|---------------|-----------------------------|------------|
| Assets               |       |                        |          |                        |       |
| Rental Operations    |       |                        |          |                        |       |
| Office               | ** ** | **$**                       | **3,128,387** |                        | $          | 2,884,834 |   |
| Industrial           | ** ** | **2,211,509**               |          | 2,177,483                   |       |
| Retail               | ** ** | **84,625**                  |          | 47,293                      |       |
| Service Operations   | ** ** | **131,218**                 |          | 111,318                     |       |
| Total Segment Assets | ** ** | **5,555,739**               |          | 5,220,928                   |       |
| Non-Segment Assets   | ** ** | **338,905**                 |          | 337,783                     |       |
| Consolidated Assets  | ** ** | **$**                       | **5,894,644** |                        | $          | 5,558,711 |   |

 

Inaddition to revenues and FFO, we also review our recurring capital expendituresin measuring the performance of our individual Rental Operations segments.These recurring capital expenditures consist of tenant improvements, leasingcommissions and building improvements. We review these expenditures todetermine the costs associated with re-leasing vacant space and maintaining thecondition of our properties. Our recurring capital expenditures by segment aresummarized as follows for the years ended December 31, 2004, 2003 and2002, respectively (in thousands):

 
| ** **                     | ** ** | **2004**   | ** **  | **2003** | ** ** | **2002** | ** ** |
|--------------------------------|------------|------------|-------------|----------|------------|----------|------------|
| Recurring Capital Expenditures |       |       |        |     |       |     | ** ** |
| Office                         |       | **$**      | **68,535**  |     | $          | 44,602   |       | $ | 31,616 | ** ** |
| Industrial                     |       | **39,096** |        | 31,711   |       | 27,398   | ** ** |
| Retail                         |       | **22**     |        | 135      |       | 345      | ** ** |
| Total                          |       | **$**      | **107,653** |     | $          | 76,448   |       | $ | 59,359 | ** ** |
|                                |            |            |             |          |            |          |            |  |  |  |  |

 

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**(8)****                                 LeasingActivity**

 

Futureminimum rents due to us under non-cancelable operating leases at December 31,2004, are as follows (in thousands):

 

| **Year**   | ** ** | **Amount** | ** ** |
|------------|------------|------------|------------|
| 2005       |       |       | $          | 567,801 |   |
| 2006       |       |       | 518,136    |   |
| 2007       |       |       | 441,843    |   |
| 2008       |       |       | 358,202    |   |
| 2009       |       |       | 289,451    |   |
| Thereafter |       |       | 832,194    |   |
|       |       | $          | 3,007,627  |   |

 

Inaddition to minimum rents, certain leases require reimbursements of specifiedoperating expenses that amounted to $137.9 million, $130.3 million, and $121.0million for the years ended December 31, 2004, 2003 and 2002,respectively.

 

**(9)****                                 EmployeeBenefit Plans**

 

Wemaintain a 401(k) plan for full-time employees. We make matching contributions up to an amount equal to three percent ofthe employee’s salary and may also make annual discretionary contributions. Thetotal expense recognized for this plan was $1.9 million, $1.6 million and $1.7million for the years ended 2004, 2003 and 2002, respectively.

 

Wemake contributions to a contributory health and welfare plan as necessary tofund claims not covered by employee contributions. The total expense werecognized related to this plan was $7.2 million, $6.4 million and $5.4 millionfor 2004, 2003 and 2002, respectively. These expense amounts include estimatesbased upon the historical experience of claims incurred but not reported as of year-end.

 

**(10)****                          Partners’Equity**

 

TheGeneral Partner periodically accesses the public equity markets to fund thedevelopment and acquisition of additional rental properties or to pay downdebt. The proceeds of these offerings are contributed to us in exchange for anadditional interest in the Partnership.

 

Thefollowing series of preferred units were outstanding as of December 31,2004 (in thousands, except percentages):

 
| **Description**    | ** ** | **Units  Outstanding** | ** ** | **Dividend  Rate** | ** ** | **Redemption  Date**     | ** ** | **Liquidation  Preference** | ** ** | **Convertible** | ** ** |
|--------------------|------------|------------------------|------------|--------------------|------------|--------------------------|------------|-----------------------------|------------|-----------------|------------|
| Series B Preferred |       | 265                    |       | 7.990              | %          | September 30,  2007 |       | $                           | 132,250    |            | No         |   |
| Series I Preferred |       | 300                    |       | 8.450              | %          | February 6,  2006   |       | 75,000                      |       | No              |       |
| Series J Preferred |       | 400                    |       | 6.625              | %          | August 29,  2008    |       | 100,000                     |       | No              |       |
| Series K Preferred |       | 600                    |       | 6.500              | %          | February 13,  2009  |       | 150,000                     |       | No              |       |
| Series L Preferred |       | 800                    |       | 6.600              | %          | November 30,  2009  |       | 200,000                     |       | No              |       |
|                    |            |                        |            |                    |            |                          |            |                             |            |                 |            |  |

 

Allseries of preferred equity require cumulative distributions and have no statedmaturity date (although the General Partner may redeem them on or followingtheir optional redemption dates).

 

TheSeries B, Series I, Series J, Series K and Series L Preferred Units may beredeemed only at the General Partner’s option, in whole or in part.

 

TheGeneral Partner issued $150 million of Series K Preferred Units in February 2004at a dividend rate of 6.50% and $200 million of Series L Preferred Units in November 2004at a dividend rate of 6.60%.

 

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Thedividend rate on the Series B Preferred units increases to 9.99% after September 12,2012. The General Partner repurchased 355,000 shares of its Series B Preferredstock in September 2002, which resulted in the repurchase of 355,000Series B Preferred units by the Partnership from the General Partner. The repurchasetransaction was initiated by a group of Series B Preferred shareholders whovoluntarily approached the General Partner with an opportunity for the GeneralPartner to buy back these shares before their earliest stated redemption date.

 

TheGeneral Partner called for the redemption of the Series D Convertible PreferredUnits as of March 16, 2004. Prior to the redemption date, 5,242,635 SeriesD Convertible Preferred Units were converted into 4,911,143 Common Units. Theremaining 103,695 Series D Convertible Preferred Units outstanding on March 16,2004 were redeemed.

 

TheGeneral Partner redeemed its $100 million Series E Preferred Units on January 20,2004, at par value.

 

**(11)****                          StockBased Compensation**

 

At December 31,2004, the General Partner had nine stock-based employee compensation plans thatare described more fully below.  TheGeneral Partner is authorized to issue up to 7,144,711 shares of the GeneralPartner’s common stock under these Plans.

 

FixedStock Option Plans

 

TheGeneral Partner had options outstanding under six fixed stock option plans asof December 31, 2004. Additional grants may be made under three of thoseplans.

 

Asummary of the status of the fixed stock option plans as of December 31,2004, 2003 and 2002 and changes during the years ended on those dates follows:

 
| ** **                                                      | ** ** | **2004**      | ** ** | **2003**                               | ** ** | **2002**   | ** ** |
|-----------------------------------------------------------------|------------|---------------|------------|----------------------------------------|------------|------------|------------|
| ** **                                                      | ** ** | ** **    | ** ** | **Weighted  Average  Exercise  Price** | ** ** | ** ** | ** ** | **Weighted  Average  Exercise  Price** | ** ** | ** ** | ** ** | **Weighted  Average  Exercise  Price** | ** ** |
| Outstanding, beginning of year                                  | ** ** | **3,586,360** | ** ** | **$**                                  | **22.65**  |       | 3,920,198  |   | $ | 22.09 |   | 4,691,659 |   | $ | 21.12 |   |
| Granted                                                         | ** ** | **506,688**   | ** ** | **32.49**                              |       | 609,390    |       | 25.48 |   | 676,038 |   | 23.37 |   |
| Exercised                                                       | ** ** | **(728,250**  | **)**      | **20.85**                              |       | (773,625   | )          | 21.87 |   | (1,203,534 | ) | 18.82 |   |
| Forfeited                                                       | ** ** | **(12,329**   | **)**      | **27.20**                              |       | (169,603   | )          | 23.63 |   | (243,965 | ) | 22.96 |   |
| Outstanding, end of year                                        | ** ** | **3,352,469** | ** ** | **24.51**                              |       | 3,586,360  |       | 22.65 |   | 3,920,198 |   | 22.09 |   |
| Options exercisable, end of year                                | ** ** | **1,844,256** |       |                                   |       | 2,014,875  |       |   |   | 2,297,500 |   |   |   |
|                                                            |       |          |       |                                   |       |       |       |   |   |   |   |   |   |
| Weighted-average fair value of options granted  during the year | ** ** | **$**         | **2.84**   |                                   |       |       | $          | 1.81 |   |   |   | $ | 2.05 |   |   |   |
|                                                                 |            |               |            |                                        |            |            |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

Thefair values of the options were determined using the Black-Scholesoption-pricing model with the following assumptions:

 
| ** **              | ** ** | **2004**    | ** ** | **2003** | ** ** | **2002** | ** ** |
|-------------------------|------------|-------------|------------|----------|------------|----------|------------|
| Dividend yield          | ** ** | **6.50**    | %          | 7.25     | %          | 7.25     | %          |
| Volatility              | ** ** | **20.0**    | %          | 20.0     | %          | 20.0     | %          |
| Risk-free interest rate | ** ** | **3.6**     | %          | 3.2      | %          | 4.7      | %          |
| Expected life           | ** ** | **6 years** |       | 6 years  |       | 6 years  |       |

 

Theoptions outstanding at December 31, 2004, under the fixed stock optionplans have a range of exercise prices from $12.94 to $34.14 with a weightedaverage exercise price of $24.51 and a weighted average remaining contractuallife of 6.11 years. The options exercisable at December 31, 2004 have aweighted average exercise price of $22.55.

 

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Eachoption’s maximum term is ten years. With limited exceptions, options vest at20% per year, or, if earlier, upon the death, retirement or disability of theoptionee or a change in control of the General Partner.

 

PerformanceBased Stock Plans

 

Performanceshares are granted under the 2000 Performance Share Plan, with each performanceshare economically equivalent to one share of the General Partner’s commonstock. The performance shares vest over a five-year period with the vestingpercentage for a year dependent upon the General Partner’s attainment ofcertain predefined levels of earnings growth for such year. The value of vestedperformance shares are payable in cash upon the retirement or termination ofemployment of the participant. At December 31, 2004, plan participants hadthe right to receive up to 200,726 performance shares, of which 48,760 werevested and 152,002 were contingent upon future earnings achievement.

 

Theamount of compensation cost was based upon the intrinsic value of the vestedperformance shares at the end of each applicable reporting period. The compensationcost that was charged against income for this plan was $1.7 million, $529,000and $96,000 for 2004, 2003 and 2002, respectively.

 

In October 2002,the General Partner amended its Shareholder Value Plan (“SVP Plan”) andDividend Increase Unit Plans (“DIU Plans”) by requiring that all payouts underthese two plans to be in cash only. Payments made under the General Partner’sSVP Plan are based upon the General Partner’s cumulative shareholder return fora three-year period as compared to the cumulative total return of the S&P500 and the NAREIT Equity REIT Total Return indices. Payments under the DIUPlans are based upon increases in the General Partner’s dividend per commonshare. The total compensation cost that was charged against income for thesetwo plans was $2.3 million, $1.6 million and $4.6 million for 2004, 2003 and2002, respectively.

 

DirectorsStock Payment Plan

 

Underthe General Partner’s 1999 Directors’ Stock Payment Plan, non-employee membersof the General Partner’s board of directors are entitled to 1,600 shares of itscommon stock per year as partial compensation for services as a board member.The shares are fully vested when issued and we record the value of the sharesas an expense. The amount of that expense was $525,000, $415,000 and $274,000for 2004, 2003 and 2002, respectively.

 

EmployeeStock Purchase Plan

 

Underthe General Partner’s Employee Stock Purchase Plan, employees are entitled topurchase the General Partner’s common stock at a 15% discount through payrolldeductions. Under SFAS 123, we are required to record the amount of thediscount as compensation expense. The amount of that expense for 2004 and 2003was $255,000 and $219,000, respectively.

 

**(12)****                          FinancialInstruments**

 

We areexposed to capital market risk, such as changes in interest rates. In order tomanage the volatility relating to interest rate risk, we may enter intointerest rate hedging arrangements from time to time. We do not utilizederivative financial instruments for trading or speculative purposes. Weaccount for derivative instruments under SFAS 133.

 

Duringthe first quarter of 2004, we funded a $65 million note receivable secured by afirst mortgage on a portfolio of office properties owned by a third partylocated in Atlanta, Georgia. The note receivable had a maximum two-year termwith an interest rate of 5.5% for the first 6 months and 6.5% thereafter. Inorder to

 

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fundthe note receivable, we borrowed $65 million under a variable interest rateterm loan. The loan bears interest at the rate of LIBOR + 75 basis points, hasa maturity date of January 2005, and contains two six month renewaloptions. To hedge our variable interest rate risk on the loan, we entered intotwo interest rate swaps totaling $65 million that effectively fixed the rate at2.184% through maturity. The hedge accounting rules are being used for theswaps, which allow for changes in market value of the swaps to be recordedthrough Other Comprehensive Income (“OCI”) in equity versus the Statement ofOperations. In the third quarter of 2004, the $65 million note receivable wasrepaid in connection with our acquisition of the properties that secured thenote. However, our $65 million note payable and related interest swaps were notretired. As of December 31, 2004, the fair value of the hedge was $51,000,which was reflected through an increase in other assets and OCI on our balancesheet.

 

In June 2004,we simultaneously entered into three forward-starting interest rate swaps aggregating$144.3 million, which effectively fixed the rate on financing expected in 2004at 5.346%, plus our credit spread over the swap rate. The swaps qualified forhedge accounting under SFAS 133; therefore, changes in the fair value wererecorded in OCI. In August 2004, we settled these three swaps when weissued $250.0 million of unsecured notes with an effective interest rate of6.33%, due in 2014. We paid $6.85 million to unwind the swaps, which will beamortized from OCI into interest expense over the life of the new 6.33% notes.

 

In December 2002,we simultaneously entered into two $50 million forward-starting interest rateswaps as a hedge to effectively fix the rate on unsecured debt financingsexpected in 2003. Then again in February 2003, we simultaneously enteredinto two additional $25 million forward-starting interest rate swaps as a hedgeto effectively fix the rate on unsecured debt financings expected in 2003.  All four swaps qualified for hedge accountingunder SFAS 133; therefore, changes in fair value were recorded in othercomprehensive income. In July 2003, we terminated the swaps for a net gainof $643,000, which is included in other revenue in the Statements ofOperations. The swaps were terminated because our capital needs were met throughthe issuance of the Series J Preferred Stock in lieu of the previouslycontemplated issuance of debt.

 

Duringthe year ended December 31, 2002, we recorded a $1.4 million gainassociated with an interest rate contract that did not qualify for hedge accounting.The contract expired on December 30, 2002.

 

In May2003, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 150, *Accounting for Certain Financial Instruments withCharacteristics of both Liabilities and Equity* (“SFAS 150”). SFAS 150establishes standards for classifying and measuring as liabilities certainfinancial instruments that embody obligations of the issuer and havecharacteristics of both liabilities and equity. SFAS 150 is effective for allfinancial instruments created or modified after May 31, 2003, and otherwise iseffective July 1, 2003. We include the operations of one joint venture inour consolidated financial statements. This joint venture is partially owned byunaffiliated parties that have noncontrolling interests. SFAS 150 requires thedisclosure of the estimated settlement value of these noncontrolling interests.As of December 31, 2004, the estimated settlement value of thenoncontrolling interest in this consolidated joint venture was approximately$1.0 million as compared to the minority interest asset recorded on our booksfor this joint venture of $142,000.

 

**(13)****                          RecentAccounting Pronouncements**

 

In December 2004,FASB issued SFAS No. 123 (R), *Share-BasedPayment*, which is a revision of SFAS No. 123, *Accounting for Stock Based Compensation,*and is effective July 2005. We are currently evaluating the impact on ourfinancial position and results of operations.

 

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**(14)****                          Commitmentsand Contingencies**

 

In1998 and 1999, certain members of management and the General Partner’s Board ofDirectors purchased $69 million of the General Partner’s common stock inconnection with an Executive and Senior Officer Stock Purchase Plan. Thepurchases were financed by five-year personal loans at market interest ratesfrom financial institutions. As of December 31, 2004, the outstandingbalance on these loans was approximately $1.6 million as some participants haveextended their involvement in the program beyond the original five years. Theseloans were secured by common shares of the General Partner with a fair marketvalue of approximately $2.5 million purchased through this program and owned bythe remaining plan participants at December 31, 2004. As a condition ofthe financing agreement with the financial institution, we guaranteed repaymentof principal, interest and other obligations for each participant, but arefully indemnified by the participants. In the opinion of management, it is notprobable that we will be required to satisfy these guarantees.

 

In October 2000,we sold or contributed industrial properties and undeveloped land with a fairvalue of $487 million to a joint venture (Dugan Realty LLC) in which we have a50% interest and recognized a net gain of $35.2 million. This transactionexpanded an existing joint venture with an institutional real estate investor.As a result of the total transactions, we received $363.9 million of proceeds.The joint venture partially financed this transaction with $350 million of securedmortgage debt, the repayment of which we directly or indirectly guaranteed. Theguarantee associated with $260 million of such debt expired in December 2003without us being required to satisfy the guarantee. The remaining $90 millionof such debt is still guaranteed by us.In connection with this transaction, the joint venture partners were given anoption to put up to a $50 million interest in the joint venture to us inexchange for the General Partner’s common stock or cash (at our option),subject to certain timing and other restrictions. As a result of this putoption, we deferred $10.2 million of gain on sale of depreciated property andrecorded a $50 million liability.

 

We have guaranteed the repayment of $12.3 million ofeconomic development bonds issued by various municipalities in connection withcertain commercial developments. We will be required to make payments under ourguarantees to the extent that incremental taxes from specified developments arenot sufficient to pay the bond debt service. Management does not believe that it is probable that we will be requiredto make any significant payments in satisfaction of these guarantees.

 

We have also guaranteed the repayment of a $2million mortgage loan encumbering the real estate of one of our unconsolidatedjoint ventures. Management believes that the value of the real estate exceedsthe loan balance and that we will not be required to satisfy this guarantee.

 

We evaluated our guarantees under FASBInterpretation 45 (“FIN 45”) in order to determine the amount of potentialliability we may incur resulting from the guarantees. For this evaluation weused discounted cash flow projections for expected incremental financing to begenerated from anticipated development. Based upon these projections, noliability was recorded at December 31, 2004.

 

Wehave entered into agreements, subject to the completion of due diligencerequirements, resolution of certain contingencies and completion of customaryclosing conditions, for the future acquisition of land totaling $43.8 million. We have also entered into an agreement to acquirea single building for $8.0 million, which is expected to close in 2005.

 

We renewed all of our major insurance policies in2004. These policies include coverage for acts of terrorism for our properties.We believe that this insurance provides adequate coverage against normalinsurance risks and that any loss experienced would not have a significantimpact on our liquidity, financial position, or results of operations.

 

64

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We are subject to various legal proceedings andclaims that arise in the ordinary course of business.  In the opinion of management, the amount ofany ultimate liability with respect to these actions will not materially affectour consolidated financial statements or results of operations.

 

**(15)****                          SubsequentEvents**

 

Effective as of January 1, 2005, thePartnership, the General Partner, Duke Management, Inc (“DMI”), an Indianacorporation, and DRSLP entered into a Contribution Agreement, pursuant to whichDMI contributed to the Partnership all of DMI’s limited partnership interest inDRSLP in exchange for the issuance to DMI of 435,814 DRLP limited partnershipunits. As a result, the Partnership and the General Partner now own 100% of thepartnership interests in DRSLP. In addition, DMI owns a total of 501,349 DRLPlimited partnership units as a result of the transaction.

 

See additional information regarding thistransaction in a Current Report on Form 8-K filed by the General Partner withthe SEC on January 4, 2005.

 

65

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| **DUKE  REALTY LIMITED PARTNERSHIP** | **Schedule 3** |
|--------------------------------------|---------------------|

**REAL ESTATE AND ACCUMULATED DEPRECIATION**

**DECEMBER 31, 2004**

**(IN THOUSANDS)**

 
| ** **                      | ** ** | ** **                     | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Cost Capitalized**          | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
|---------------------------------|------------|--------------------------------|------------|--------------|------------|------------------|------------|------------------|------------|-----------------|------------|-------------------------------|------------|-------------------|------------|--------------|------------|------------|------------|----------------------|------------|-----------------|------------|--------------|------------|
| ** **                      | ** ** | ** **                     | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Subsequent to**             | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
| ** **                      | ** ** | ** **                     | ** ** | **Building** | ** ** | ** **       | ** ** | **Initial Cost** | ** ** | **Development** | ** ** | **Gross Book Value 12/31/04** | ** ** | **Accumulated**   | ** ** | **Year**     | ** ** | **Year**   | ** ** |
| **Development**                 | ** ** | **Name**                       | ** ** | **Type**     | ** ** | **Encumbrances** | ** ** | **Land**         | ** ** | **Buildings**   | ** ** | **or Acquisition**            | ** ** | **Land/Land Imp** | ** ** | **Bldgs/TI** | ** ** | **Total**  | ** ** | **Depreciation (1)** | ** ** | **Constructed** | ** ** | **Acquired** | ** ** |
| **ALPHARETTA, GEORGIA**         | ** ** | ** **                     | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | ** **                    | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
| Brookside Office Park           |       | Radiant I                      |       | Office       |       |             |       | $                | 1,269      |            | $          | 14,749                        |       | $                 | 6          |         | $          | 1,269      |       | $                    | 14,755     |            | $          | 16,024       |       | $ | 2,036 |   | 1998 |   | 1999 |   |
| Brookside Office Park           |       | Brookside I                    |       | Office       |       |             |       | 1,625            |       | 11,094          |       | 2,929                         |       | 1,625             |       | 14,023       |       | 15,648     |       | 3,452                |       | 1999            |       | 1999         |       |
| Brookside Office Park           |       | Radiant II                     |       | Office       |       |             |       | 831              |       | 7,327           |       | 115                           |       | 831               |       | 7,442        |       | 8,273      |       | 704                  |       | 2000            |       | 2000         |       |
| Brookside Office Park           |       | Brookside II                   |       | Office       |       |             |       | 1,381            |       | 12,313          |       | 1,370                         |       | 1,381             |       | 13,683       |       | 15,064     |       | 1,834                |       | 2000            |       | 2001         |       |
| Hembree Crest                   |       | 11800 Wills Road               |       | Industrial   |       |             |       | 304              |       | 2,152           |       | 380                           |       | 304               |       | 2,532        |       | 2,836      |       | 455                  |       | 1987            |       | 1999         |       |
| Hembree Crest                   |       | 11810 Wills Road               |       | Industrial   |       |             |       | 296              |       | 2,260           |       | 139                           |       | 296               |       | 2,399        |       | 2,695      |       | 387                  |       | 1987            |       | 1999         |       |
| Hembree Crest                   |       | 11820 Wills Road               |       | Industrial   |       |             |       | 488              |       | 2,285           |       | 883                           |       | 488               |       | 3,168        |       | 3,656      |       | 432                  |       | 1987            |       | 1999         |       |
| Hembree Crest                   |       | 11415 Old Roswell  Road        |       | Industrial   |       |             |       | 648              |       | 2,463           |       | 1,039                         |       | 648               |       | 3,502        |       | 4,150      |       | 783                  |       | 1991            |       | 1999         |       |
| Hembree Park                    |       | 1750 Founders                  |       | Industrial   |       |             |       | 1,936            |       | 7,813           |       | 436                           |       | 1,936             |       | 8,249        |       | 10,185     |       | 2,254                |       | 1999            |       | 2000         |       |
| Hembree Park                    |       | NMeadow SC II @  Founders      |       | Industrial   |       |             |       | 1,369            |       | 3,646           |       | 2,417                         |       | 1,369             |       | 6,063        |       | 7,432      |       | 571                  |       | 2001            |       | 2001         |       |
| North Meadow                    |       | 1350 Northmeadow  Parkway      |       | Industrial   |       |             |       | 672              |       | 3,658           |       | 260                           |       | 672               |       | 3,918        |       | 4,590      |       | 700                  |       | 1994            |       | 1999         |       |
| North Meadow                    |       | 11835 Alpharetta  Highway      |       | Retail       |       |             |       | 524              |       | 2,869           |       | 46                            |       | 524               |       | 2,915        |       | 3,439      |       | 394                  |       | 1994            |       | 1999         |       |
| Northwinds Pointe               |       | Northwinds VII                 |       | Office       |       |             |       | 2,271            |       | 20,070          |       | 766                           |       | 2,271             |       | 20,836       |       | 23,107     |       | 2,913                |       | 1998            |       | 1999         |       |
| Northwinds Pointe               |       | Northwinds I                   |       | Office       |       |             |       | 1,866            |       | 15,912          |       | —                        |       | 1,866             |       | 15,912       |       | 17,778     |       | 356                  |       | 1997            |       | 2004         |       |
| Northwinds Pointe               |       | Northwinds II                  |       | Office       |       |             |       | 1,786            |       | 15,934          |       | —                        |       | 1,786             |       | 15,934       |       | 17,720     |       | 352                  |       | 1997            |       | 2004         |       |
| Northwinds Pointe               |       | Northwinds III                 |       | Office       |       | 17,457           |       | 1,850            |       | 15,813          |       | —                        |       | 1,850             |       | 15,813       |       | 17,663     |       | 354                  |       | 1998            |       | 2004         |       |
| Northwinds Pointe               |       | Northwinds IV                  |       | Office       |       | 16,614           |       | 1,833            |       | 15,831          |       | —                        |       | 1,833             |       | 15,831       |       | 17,664     |       | 356                  |       | 1999            |       | 2004         |       |
| Northwinds Pointe               |       | Northwinds V                   |       | Office       |       |             |       | 2,203            |       | 15,511          |       | —                        |       | 2,203             |       | 15,511       |       | 17,714     |       | 355                  |       | 1999            |       | 2004         |       |
| Northwinds Pointe               |       | Northwinds VI                  |       | Office       |       |             |       | 2,645            |       | 15,352          |       | —                        |       | 2,645             |       | 15,352       |       | 17,997     |       | 357                  |       | 2000            |       | 2004         |       |
| Northwinds Pointe               |       | Northwinds  Village            |       | Retail       |       |             |       | 578              |       | 4,511           |       | —                        |       | 578               |       | 4,511        |       | 5,089      |       | 63                   |       | 2000            |       | 2004         |       |
| Northwinds Pointe               |       | Northwinds  Restaurant         |       | Retail       |       |             |       | 202              |       | 329             |       | —                        |       | 202               |       | 329          |       | 531        |       | 6                    |       | 1998            |       | 2004         |       |
| Ridgeland                       |       | 1320 Ridgeland  Pkwy           |       | Industrial   |       |             |       | 998              |       | 5,890           |       | 37                            |       | 998               |       | 5,927        |       | 6,925      |       | 805                  |       | 1999            |       | 1999         |       |
| Ridgeland                       |       | Ridgeland  Business Dist I     |       | Industrial   |       |             |       | 488              |       | 2,983           |       | 447                           |       | 488               |       | 3,430        |       | 3,918      |       | 883                  |       | 1999            |       | 1999         |       |
| Ridgeland                       |       | Ridgeland  Business Dist. II   |       | Industrial   |       |             |       | 579              |       | 2,536           |       | 239                           |       | 579               |       | 2,775        |       | 3,354      |       | 621                  |       | 1999            |       | 2000         |       |
| Preston Ridge                   |       | Preston Ridge IV               |       | Office       |       |             |       | 2,777            |       | 13,081          |       | —                        |       | 2,777             |       | 13,081       |       | 15,858     |       | 416                  |       | 2000            |       | 2004         |       |
| Windward                        |       | 800 North Point  Parkway       |       | Office       |       |             |       | 1,250            |       | 18,443          |       | —                        |       | 1,250             |       | 18,443       |       | 19,693     |       | 870                  |       | 1991            |       | 2003         |       |
| Windward                        |       | 900 North Point  Parkway       |       | Office       |       |             |       | 1,250            |       | 13,945          |       | —                        |       | 1,250             |       | 13,945       |       | 15,195     |       | 666                  |       | 1991            |       | 2003         |       |
|                            |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **ANTIOCH, TENNESSEE**          |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Jackson Business Center         |       | Keebler                        |       | Industrial   |       |             |       | 307              |       | 1,311           |       | 20                            |       | 307               |       | 1,331        |       | 1,638      |       | 315                  |       | 1985            |       | 1995         |       |
|                            |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **ARLINGTON HEIGHTS, ILLINOIS** |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Arlington Business Park         |       | Atrium II                      |       | Office       |       |             |       | 776              |       | 7,230           |       | 1,345                         |       | 776               |       | 8,575        |       | 9,351      |       | 1,636                |       | 1986            |       | 1998         |       |
|                            |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **ATLANTA, GEORGIA**            |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Druid Chase                     |       | 6 W. Druid Hills  Drive        |       | Office       |       |             |       | 473              |       | 6,758           |       | 2,297                         |       | 473               |       | 9,055        |       | 9,528      |       | 1,162                |       | 1968            |       | 1999         |       |
| Druid Chase                     |       | 2801 Buford  Highway           |       | Office       |       |             |       | 794              |       | 9,905           |       | 1,826                         |       | 794               |       | 11,731       |       | 12,525     |       | 1,832                |       | 1977            |       | 1999         |       |
| Druid Chase                     |       | 1190 W. Druid  Hills Drive     |       | Office       |       |             |       | 689              |       | 6,631           |       | 1,098                         |       | 689               |       | 7,729        |       | 8,418      |       | 1,040                |       | 1980            |       | 1999         |       |
| Druid Chase                     |       | 2071 N. Druid  Hills Drive     |       | Retail       |       |             |       | 98               |       | 321             |       | —                        |       | 98                |       | 321          |       | 419        |       | 44                   |       | 1968            |       | 1999         |       |
| Gwinnett Park                   |       | Gwinnett Park  Land            |       | Grounds      |       |             |       |             |       | —          |       | 30                            |       | 30                |       | —       |       | 30         |       | 5                    |       |            |       | 1999         |       |
|                            |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **AURORA, ILLINOIS**            |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Meridian Business Campus        |       | 535 Exchange                   |       | Industrial   |       |             |       | 386              |       | 930             |       | 64                            |       | 386               |       | 994          |       | 1,380      |       | 170                  |       | 1984            |       | 1999         |       |
| Meridian Business Campus        |       | 515-525 North  Enterprise      |       | Industrial   |       |             |       | 342              |       | 1,694           |       | 72                            |       | 342               |       | 1,766        |       | 2,108      |       | 293                  |       | 1984            |       | 1999         |       |
| Meridian Business Campus        |       | 615 Enterprise                 |       | Industrial   |       |             |       | 468              |       | 2,831           |       | 528                           |       | 468               |       | 3,359        |       | 3,827      |       | 549                  |       | 1984            |       | 1999         |       |
| Meridian Business Campus        |       | 3615 Exchange                  |       | Industrial   |       |             |       | 410              |       | 1,618           |       | 59                            |       | 410               |       | 1,677        |       | 2,087      |       | 293                  |       | 1986            |       | 1999         |       |
| Meridian Business Campus        |       | 4000 Sussex                    |       | Industrial   |       |             |       | 417              |       | 1,952           |       | 245                           |       | 417               |       | 2,197        |       | 2,614      |       | 399                  |       | 1990            |       | 1999         |       |
| Meridian Business Campus        |       | 3737 East  Exchange            |       | Industrial   |       |             |       | 598              |       | 2,562           |       | 57                            |       | 598               |       | 2,619        |       | 3,217      |       | 440                  |       | 1985            |       | 1999         |       |
| Meridian Business Campus        |       | 444 North  Commerce            |       | Industrial   |       |             |       | 722              |       | 5,480           |       | 423                           |       | 722               |       | 5,903        |       | 6,625      |       | 1,017                |       | 1985            |       | 1999         |       |
| Meridian Business Campus        |       | Meridian I                     |       | Industrial   |       |             |       | 1,150            |       | 6,731           |       | 11                            |       | 1,150             |       | 6,742        |       | 7,892      |       | 1,574                |       | 1999            |       | 2000         |       |
| Meridian Business Campus        |       | Meridian II                    |       | Industrial   |       |             |       | 567              |       | 1,283           |       | 1,701                         |       | 567               |       | 2,984        |       | 3,551      |       | 148                  |       | 2001            |       | 2001         |       |
| Meridian Business Campus        |       | Genera Corp                    |       | Industrial   |       |             |       | 970              |       | 4,796           |       | —                        |       | 1,957             |       | 3,809        |       | 5,766      |       | 46                   |       | 2004            |       | 2004         |       |
|                            |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **BEACHWOOD, OHIO**             |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Corporate Exchange              |       | One Corporate  Exchange        |       | Office       |       | 3,487            |       | 1,287            |       | 8,803           |       | 1,088                         |       | 1,287             |       | 9,891        |       | 11,178     |       | 2,314                |       | 1989            |       | 1996         |       |
| Corporate Place                 |       | Corporate Place                |       | Office       |       |             |       | 1,161            |       | 7,909           |       | 813                           |       | 1,163             |       | 8,720        |       | 9,883      |       | 1,955                |       | 1988            |       | 1996         |       |
|                            |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **BLOOMINGTON, MINNESOTA**      |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Alpha Buildings                 |       | Alpha Business  Ctr I&II   |       | Office       |       |             |       | 280              |       | 1,631           |       | 302                           |       | 280               |       | 1,933        |       | 2,213      |       | 372                  |       | 1980            |       | 1999         |       |
| Alpha Buildings                 |       | Alpha Business  Ctr III&IV |       | Industrial   |       |             |       | 341              |       | 2,000           |       | 261                           |       | 341               |       | 2,261        |       | 2,602      |       | 409                  |       | 1980            |       | 1999         |       |
| Alpha Buildings                 |       | Alpha Business  Ctr V          |       | Industrial   |       |             |       | 537              |       | 3,125           |       | 265                           |       | 538               |       | 3,389        |       | 3,927      |       | 543                  |       | 1980            |       | 1999         |       |
| Bloomington Industrial Center   |       | Bloomington  Industrial Center |       | Industrial   |       | 1,211            |       | 621              |       | 3,689           |       | 776                           |       | 621               |       | 4,465        |       | 5,086      |       | 1,187                |       | 1963            |       | 1997         |       |
| Hampshire Dist. Center          |       | Hampshire Dist  Center North   |       | Industrial   |       | 1,881            |       | 779              |       | 4,511           |       | 217                           |       | 779               |       | 4,728        |       | 5,507      |       | 819                  |       | 1979            |       | 1997         |       |
| Hampshire Dist. Center          |       | Hampshire Dist  Center South   |       | Industrial   |       | 2,203            |       | 901              |       | 5,239           |       | 286                           |       | 901               |       | 5,525        |       | 6,426      |       | 1,072                |       | 1979            |       | 1997         |       |
| Hampshire Tech Center           |       | Hampshire Tech  Center         |       | Industrial   |       |             |       | 2,124            |       | 13,123          |       | 797                           |       | 2,223             |       | 13,821       |       | 16,044     |       | 2,913                |       | 1998            |       | 1998         |       |
| Lyndale Commons                 |       | Lyndale Commons I              |       | Industrial   |       |             |       | 247              |       | 1,449           |       | 98                            |       | 247               |       | 1,547        |       | 1,794      |       | 282                  |       | 1981            |       | 1998         |       |
| Lyndale Commons                 |       | Lyndale Commons  II            |       | Industrial   |       |             |       | 181              |       | 1,056           |       | 273                           |       | 183               |       | 1,327        |       | 1,510      |       | 336                  |       | 1985            |       | 1998         |       |
| Norman Center                   |       | Norman Center 4                |       | Office       |       |             |       | 562              |       | 3,276           |       | 248                           |       | 579               |       | 3,507        |       | 4,086      |       | 1,552                |       | 1967            |       | 1998         |       |
| Norman Center Plaza             |       | Norman Pointe I                |       | Office       |       |             |       | 3,650            |       | 28,380          |       | 1,879                         |       | 3,650             |       | 30,259       |       | 33,909     |       | 3,573                |       | 2000            |       | 2000         |       |
|                                 |            |                                |            |              |            |                  |            |                  |            |                 |            |                               |            |                   |            |              |            |            |            |                      |            |                 |            |              |            |  |  |  |  |  |  |  |

 

66

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| ** **                      | ** ** | ** **                      | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Cost Capitalized**          | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
|---------------------------------|------------|---------------------------------|------------|--------------|------------|------------------|------------|------------------|------------|-----------------|------------|-------------------------------|------------|-------------------|------------|--------------|------------|------------|------------|----------------------|------------|-----------------|------------|--------------|------------|
| ** **                      | ** ** | ** **                      | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Subsequent to**             | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
| ** **                      | ** ** | ** **                      | ** ** | **Building** | ** ** | ** **       | ** ** | **Initial Cost** | ** ** | **Development** | ** ** | **Gross Book Value 12/31/04** | ** ** | **Accumulated**   | ** ** | **Year**     | ** ** | **Year**   | ** ** |
| **Development**                 | ** ** | **Name**                        | ** ** | **Type**     | ** ** | **Encumbrances** | ** ** | **Land**         | ** ** | **Buildings**   | ** ** | **or Acquisition**            | ** ** | **Land/Land Imp** | ** ** | **Bldgs/TI** | ** ** | **Total**  | ** ** | **Depreciation (1)** | ** ** | **Constructed** | ** ** | **Acquired** | ** ** |
| **BLUE ASH, OHIO**              |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Alliance Woods                  |       | McAuley Place                   |       | Office       |       |             |       | 2,331            |       | 18,772          |       | 1,205                         |       | 2,331             |       | 19,977       |       | 22,308     |       | 2,162                |       | 2000            |       | 2001         |       |
| Cornell Commerce Center         |       | Cornell Commerce  Center        |       | Industrial   |       |             |       | 495              |       | 4,841           |       | 625                           |       | 495               |       | 5,466        |       | 5,961      |       | 1,184                |       | 1989            |       | 1996         |       |
| Creek Road                      |       | Creek Road Bldg 1               |       | Industrial   |       |             |       | 103              |       | 833             |       | 65                            |       | 103               |       | 898          |       | 1,001      |       | 184                  |       | 1971            |       | 1996         |       |
| Creek Road                      |       | Creek Road Bldg 2               |       | Industrial   |       |             |       | 132              |       | 1,164           |       | 79                            |       | 132               |       | 1,243        |       | 1,375      |       | 262                  |       | 1971            |       | 1996         |       |
| Huntington Bank Building        |       | Huntington Bank  Building       |       | Office       |       |             |       | 175              |       | 241             |       | —                        |       | 175               |       | 241          |       | 416        |       | 49                   |       | 1986            |       | 1996         |       |
| Lake Forest/Westlake            |       | Lake Forest Place               |       | Office       |       |             |       | 1,953            |       | 20,823          |       | 1,904                         |       | 1,953             |       | 22,727       |       | 24,680     |       | 5,361                |       | 1985            |       | 1996         |       |
| Northmark Office Park           |       | Northmark Bldg. 1               |       | Office       |       |             |       | 1,452            |       | 4,903           |       | —                        |       | 1,452             |       | 4,903        |       | 6,355      |       | 231                  |       | 1987            |       | 2004         |       |
| Northmark Office Park           |       | Northmark Bldg. 2               |       | Office       |       |             |       | 1,386            |       | 4,133           |       | —                        |       | 1,386             |       | 4,133        |       | 5,519      |       | 87                   |       | 1984            |       | 2004         |       |
| Lake Forest/Westlake            |       | Westlake Center                 |       | Office       |       |             |       | 2,459            |       | 17,035          |       | 2,037                         |       | 2,459             |       | 19,072       |       | 21,531     |       | 4,270                |       | 1981            |       | 1996         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **BOLINGBROOK, ILLINOIS**       |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Bolingbrook                     |       | 555 Joliet Road                 |       | Industrial   |       |             |       | 2,184            |       | 9,319           |       | 113                           |       | 2,184             |       | 9,432        |       | 11,616     |       | 672                  |       | 1967            |       | 2002         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **BRANDON, FLORIDA**            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Regency Park North              |       | Regency I                       |       | Office       |       |             |       | 1,048            |       | 4,276           |       | 846                           |       | 1,048             |       | 5,122        |       | 6,170      |       | 1,293                |       | 2000            |       | 2000         |       |
| Regency Park North              |       | Regency II                      |       | Office       |       |             |       | 1,411            |       | 3,722           |       | —                        |       | 1,411             |       | 3,722        |       | 5,133      |       | 726                  |       | 2001            |       | 2002         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **BRASELTON, GEORGIA**          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Braselton                       |       | Braselton II                    |       | Industrial   |       |             |       | 1,365            |       | 9,570           |       | 1,447                         |       | 1,878             |       | 10,504       |       | 12,382     |       | 850                  |       | 2001            |       | 2001         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **BRENTWOOD, TENNESSEE**        |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Aspen Grove Business Center     |       | Aspen Grove 4                   |       | Industrial   |       |             |       | 492              |       | 2,430           |       | 4                             |       | 492               |       | 2,434        |       | 2,926      |       | 194                  |       | 2002            |       | 2002         |       |
| Brentwood South Bus. Center     |       | 7104 Crossroads  Blvd           |       | Industrial   |       |             |       | 1,065            |       | 6,011           |       | 653                           |       | 1,065             |       | 6,664        |       | 7,729      |       | 992                  |       | 1987            |       | 1999         |       |
| Brentwood South Bus. Center     |       | 7106 Crossroads  Blvd           |       | Industrial   |       |             |       | 1,065            |       | 2,846           |       | 932                           |       | 1,065             |       | 3,778        |       | 4,843      |       | 546                  |       | 1987            |       | 1999         |       |
| Brentwood South Bus. Center     |       | 7108 Crossroads  Blvd           |       | Industrial   |       |             |       | 848              |       | 4,152           |       | 520                           |       | 848               |       | 4,672        |       | 5,520      |       | 697                  |       | 1989            |       | 1999         |       |
| Creekside Crossing              |       | Creekside  Crossing One         |       | Office       |       |             |       | 1,900            |       | 7,676           |       | 606                           |       | 1,901             |       | 8,281        |       | 10,182     |       | 1,722                |       | 1997            |       | 1998         |       |
| Creekside Crossing              |       | Creekside  Crossing Two         |       | Office       |       |             |       | 2,087            |       | 9,749           |       | 631                           |       | 2,087             |       | 10,380       |       | 12,467     |       | 2,802                |       | 1999            |       | 2000         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **BROOKLYN PARK, MINNESOTA**    |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| 7300 Northland Drive            |       | 7300 Northland  Drive           |       | Industrial   |       |             |       | 700              |       | 6,119           |       | 3                             |       | 703               |       | 6,119        |       | 6,822      |       | 1,023                |       | 1980            |       | 1998         |       |
| Crosstown North                 |       | Crosstown North  Bus. Ctr. 1    |       | Industrial   |       |             |       | 835              |       | 5,504           |       | 1,047                         |       | 1,286             |       | 6,100        |       | 7,386      |       | 1,176                |       | 1998            |       | 1999         |       |
| Crosstown North                 |       | Crosstown North  Bus. Ctr. 2    |       | Industrial   |       |             |       | 449              |       | 2,979           |       | 488                           |       | 599               |       | 3,317        |       | 3,916      |       | 583                  |       | 1998            |       | 1999         |       |
| Crosstown North                 |       | Crosstown North  Bus. Ctr. 3    |       | Industrial   |       |             |       | 758              |       | 2,764           |       | 44                            |       | 837               |       | 2,729        |       | 3,566      |       | 945                  |       | 1999            |       | 1999         |       |
| Crosstown North                 |       | Crosstown North  Bus. Ctr. 4    |       | Industrial   |       |             |       | 2,079            |       | 8,199           |       | 1,000                         |       | 2,397             |       | 8,881        |       | 11,278     |       | 2,096                |       | 1999            |       | 1999         |       |
| Crosstown North                 |       | Crosstown North  Bus. Ctr. 5    |       | Industrial   |       |             |       | 1,079            |       | 5,632           |       | 356                           |       | 1,354             |       | 5,713        |       | 7,067      |       | 1,261                |       | 1999            |       | 2000         |       |
| Crosstown North                 |       | Crosstown North  Bus. Ctr. 6    |       | Industrial   |       |             |       | 788              |       | 3,680           |       | 1,534                         |       | 1,031             |       | 4,971        |       | 6,002      |       | 995                  |       | 2000            |       | 2000         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **CARMEL, INDIANA**             |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Hamilton Crossing               |       | Hamilton Crossing  Bldg 1       |       | Industrial   |       |             |       | 835              |       | 4,952           |       | 2,374                         |       | 847               |       | 7,314        |       | 8,161      |       | 1,907                |       | 1989            |       | 1993         |       |
| Hamilton Crossing               |       | Hamilton Crossing  Bldg 2       |       | Office       |       |             |       | 313              |       | 1,430           |       | 831                           |       | 384               |       | 2,190        |       | 2,574      |       | 724                  |       | 1997            |       | 1997         |       |
| Hamilton Crossing               |       | Hamilton Crossing  Bldg 3       |       | Office       |       |             |       | 890              |       | 10,151          |       | 1,270                         |       | 890               |       | 11,421       |       | 12,311     |       | 1,987                |       | 2000            |       | 2000         |       |
| Hamilton Crossing               |       | Hamilton Crossing  Bldg 4       |       | Office       |       |             |       | 515              |       | 5,616           |       | 67                            |       | 598               |       | 5,600        |       | 6,198      |       | 1,102                |       | 1999            |       | 1999         |       |
| Hamilton Crossing               |       | Hamilton Crossing  Bldg 6       |       | Office       |       |             |       | 1,044            |       | 14,307          |       | —                        |       | 1,044             |       | 14,307       |       | 15,351     |       | 432                  |       | 2003            |       | 2003         |       |
| Meridian Technology Center      |       | Meridian Tech  Center           |       | Office       |       |             |       | 600              |       | 2,719           |       | 887                           |       | 600               |       | 3,606        |       | 4,206      |       | 232                  |       | 1986            |       | 2002         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **CAROL STREAM, ILLINOIS**      |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Carol Stream Business Park      |       | Carol Stream #4                 |       | Industrial   |       |             |       | 1,973            |       | 13,835          |       | —                        |       | 3,197             |       | 12,611       |       | 15,808     |       | 395                  |       | 1994            |       | 2003         |       |
| Carol Stream Business Park      |       | Carol Stream #5                 |       | Industrial   |       |             |       | 4,553            |       | 7,317           |       | —                        |       | 4,553             |       | 7,317        |       | 11,870     |       | 280                  |       | 1986            |       | 2003         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **CARY, NORTH CAROLINA**        |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Regency Forest                  |       | 200 Regency  Forest Dr.         |       | Office       |       |             |       | 1,230            |       | 13,535          |       | 1,103                         |       | 1,230             |       | 14,638       |       | 15,868     |       | 1,988                |       | 1999            |       | 1999         |       |
| Regency Forest                  |       | 100 Regency  Forest Dr.         |       | Office       |       |             |       | 1,538            |       | 10,788          |       | 1,598                         |       | 1,618             |       | 12,306       |       | 13,924     |       | 2,322                |       | 1997            |       | 1999         |       |
| Weston Parkway                  |       | 6501 Weston  Parkway            |       | Office       |       |             |       | 1,775            |       | 10,700          |       | 225                           |       | 1,775             |       | 10,925       |       | 12,700     |       | 1,518                |       | 1996            |       | 1999         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **CELEBRATION, FLORIDA**        |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Celebration Business Center     |       | Celebration  Business Center I  |       | Office       |       |             |       | 1,102            |       | 4,859           |       | 261                           |       | 1,308             |       | 4,914        |       | 6,222      |       | 714                  |       | 1997            |       | 1999         |       |
| Celebration Business Center     |       | Celebration  Business Center II |       | Office       |       |             |       | 771              |       | 3,590           |       | 153                           |       | 961               |       | 3,553        |       | 4,514      |       | 524                  |       | 1997            |       | 1999         |       |
| Celebration Business Center     |       | Celebration  Office Center I    |       | Office       |       |             |       | 1,382            |       | 7,957           |       | 83                            |       | 1,382             |       | 8,040        |       | 9,422      |       | 1,904                |       | 2000            |       | 2000         |       |
| Celebration Business Center     |       | Celebration  Office Center II   |       | Office       |       |             |       | 1,382            |       | 6,272           |       | 777                           |       | 1,382             |       | 7,049        |       | 8,431      |       | 813                  |       | 2001            |       | 2001         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **CHANHASSEN, MINNESOTA**       |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Chanhassen Lakes                |       | Chanhassen Lakes  I             |       | Industrial   |       |             |       | 357              |       | 2,084           |       | 884                           |       | 370               |       | 2,955        |       | 3,325      |       | 769                  |       | 1983            |       | 1998         |       |
| Chanhassen Lakes                |       | Chanhassen Lakes  II            |       | Industrial   |       |             |       | 438              |       | 2,542           |       | 585                           |       | 453               |       | 3,112        |       | 3,565      |       | 569                  |       | 1986            |       | 1998         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **CHAPEL HILL, NORTH CAROLINA** |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Governors Village               |       | Governors Village  - Office     |       | Office       |       |             |       | 515              |       | 5,669           |       | 107                           |       | 515               |       | 5,776        |       | 6,291      |       | 632                  |       | 2000            |       | 2001         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **CINCINNATI, OHIO**            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| 312 Elm                         |       | 312 Elm                         |       | Office       |       | 36,994           |       | 4,750            |       | 47,436          |       | 3,858                         |       | 5,428             |       | 50,616       |       | 56,044     |       | 14,064               |       | 1992            |       | 1993         |       |
| 312 Plum                        |       | 312 Plum                        |       | Office       |       |             |       | 2,539            |       | 24,934          |       | 2,538                         |       | 2,590             |       | 27,421       |       | 30,011     |       | 7,938                |       | 1987            |       | 1993         |       |
| Bank One Towers                 |       | Towers of Kenwood               |       | Office       |       |             |       | 4,891            |       | 41,022          |       | —                        |       | 4,891             |       | 41,022       |       | 45,913     |       | 1,694                |       | 1989            |       | 2003         |       |

 

67

----

 
| ** **                  | ** ** | ** **                   | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Cost Capitalized**          | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
|-----------------------------|------------|------------------------------|------------|--------------|------------|------------------|------------|------------------|------------|-----------------|------------|-------------------------------|------------|-------------------|------------|--------------|------------|------------|------------|----------------------|------------|-----------------|------------|--------------|------------|
| ** **                  | ** ** | ** **                   | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Subsequent to**             | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
| ** **                  | ** ** | ** **                   | ** ** | **Building** | ** ** | ** **       | ** ** | **Initial Cost** | ** ** | **Development** | ** ** | **Gross Book Value 12/31/04** | ** ** | **Accumulated**   | ** ** | **Year**     | ** ** | **Year**   | ** ** |
| **Development**             | ** ** | **Name**                     | ** ** | **Type**     | ** ** | **Encumbrances** | ** ** | **Land**         | ** ** | **Buildings**   | ** ** | **or Acquisition**            | ** ** | **Land/Land Imp** | ** ** | **Bldgs/TI** | ** ** | **Total**  | ** ** | **Depreciation (1)** | ** ** | **Constructed** | ** ** | **Acquired** | ** ** |
| Blue Ash Office Center      |       | Blue Ash Office  Ctr VI      |       | Office       |       |             |       | 518              |       | 2,861           |       | 339                           |       | 518               |       | 3,200        |       | 3,718      |       | 627                  |       | 1989            |       | 1997         |       |
| Executive Plaza             |       | Executive Plaza I            |       | Office       |       |             |       | 728              |       | 5,571           |       | 520                           |       | 728               |       | 6,091        |       | 6,819      |       | 1,347                |       | 1980            |       | 1996         |       |
| Executive Plaza             |       | Executive Plaza  II          |       | Office       |       |             |       | 728              |       | 5,661           |       | 932                           |       | 728               |       | 6,593        |       | 7,321      |       | 1,269                |       | 1981            |       | 1996         |       |
| Executive Plaza             |       | Executive Plaza  III         |       | Office       |       |             |       | 509              |       | 5,060           |       | 618                           |       | 509               |       | 5,678        |       | 6,187      |       | 1,168                |       | 1998            |       | 1998         |       |
| Governors Hill              |       | 8790 Governor’s  Hill   |       | Office       |       |             |       | 400              |       | 4,805           |       | 769                           |       | 408               |       | 5,566        |       | 5,974      |       | 1,553                |       | 1985            |       | 1993         |       |
| Governors Hill              |       | 8800 Governor’s  Hill   |       | Office       |       |             |       | 225              |       | 2,319           |       | 41                            |       | 231               |       | 2,354        |       | 2,585      |       | 1,075                |       | 1985            |       | 1986         |       |
| Governors Hill              |       | 8600 Governor’s  Hill   |       | Office       |       |             |       | 1,220            |       | 19,041          |       | 3,468                         |       | 1,245             |       | 22,484       |       | 23,729     |       | 5,988                |       | 1986            |       | 1993         |       |
| Iams Industrial Park        |       | Cincinnati Bell  Supply      |       | Industrial   |       |             |       | 606              |       | 3,266           |       | 2                             |       | 606               |       | 3,268        |       | 3,874      |       | 393                  |       | 1999            |       | 2000         |       |
| Kenwood Commons             |       | 8230 Kenwood  Commons        |       | Office       |       | 3,980            |       | 638              |       | 3,189           |       | 602                           |       | 638               |       | 3,791        |       | 4,429      |       | 2,239                |       | 1986            |       | 1986         |       |
| Kenwood Commons             |       | 8280 Kenwood  Commons        |       | Office       |       | 2,420            |       | 638              |       | 1,740           |       | 326                           |       | 638               |       | 2,066        |       | 2,704      |       | 1,029                |       | 1986            |       | 1986         |       |
| Kenwood Executive Center    |       | Kenwood Executive  Center    |       | Office       |       |             |       | 606              |       | 4,072           |       | 674                           |       | 664               |       | 4,688        |       | 5,352      |       | 818                  |       | 1981            |       | 1997         |       |
| Kenwood MOB                 |       | Kenwood MOB                  |       | Office       |       |             |       |             |       | 7,852           |       | 47                            |       | —            |       | 7,899        |       | 7,899      |       | 1,110                |       | 1994            |       | 1999         |       |
| One Ashview Place           |       | One Ashview Place            |       | Office       |       |             |       | 1,204            |       | 12,674          |       | 2,786                         |       | 1,204             |       | 15,460       |       | 16,664     |       | 3,043                |       | 1989            |       | 1997         |       |
| Pfeiffer Place              |       | Pfeiffer Place               |       | Office       |       |             |       | 3,608            |       | 15,049          |       | 1,057                         |       | 3,608             |       | 16,106       |       | 19,714     |       | 2,112                |       | 2001            |       | 2001         |       |
| Pfeiffer Woods              |       | Pfeiffer Woods               |       | Office       |       |             |       | 1,450            |       | 12,405          |       | 399                           |       | 1,450             |       | 12,804       |       | 14,254     |       | 1,713                |       | 1998            |       | 1999         |       |
| Remington Office Park       |       | Remington Park  Bldg A       |       | Office       |       |             |       | 560              |       | 1,472           |       | 478                           |       | 560               |       | 1,950        |       | 2,510      |       | 301                  |       | 1982            |       | 1997         |       |
| Remington Office Park       |       | Remington Park  Bldg B       |       | Office       |       |             |       | 560              |       | 1,587           |       | 464                           |       | 560               |       | 2,051        |       | 2,611      |       | 442                  |       | 1982            |       | 1997         |       |
| Triangle Office Park        |       | Triangle Office  Park        |       | Office       |       | 4,425            |       | 1,018            |       | 11,511          |       | 386                           |       | 1,018             |       | 11,897       |       | 12,915     |       | 5,334                |       | 1965            |       | 1986         |       |
| World Park                  |       | World Park Bldg 5            |       | Industrial   |       |             |       | 270              |       | 3,413           |       | 135                           |       | 371               |       | 3,447        |       | 3,818      |       | 1,373                |       | 1987            |       | 1988         |       |
| World Park                  |       | World Park Bldg 6            |       | Industrial   |       |             |       | 378              |       | 3,876           |       | 239                           |       | 480               |       | 4,013        |       | 4,493      |       | 1,638                |       | 1987            |       | 1988         |       |
| World Park                  |       | World Park Bldg 7            |       | Industrial   |       |             |       | 525              |       | 4,558           |       | 154                           |       | 537               |       | 4,700        |       | 5,237      |       | 1,834                |       | 1987            |       | 1988         |       |
| Zussman Building            |       | Zussman Bldg                 |       | Office       |       |             |       | 339              |       | 6,911           |       | 926                           |       | 346               |       | 7,830        |       | 8,176      |       | 3,572                |       | 1986            |       | 1993         |       |
|                        |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **CLAYTON, MISSOURI**       |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Clayton                     |       | Interco Corporate  Tower     |       | Office       |       |             |       | 6,150            |       | 39,591          |       | 672                           |       | 6,150             |       | 40,263       |       | 46,413     |       | 2,436                |       | 1986            |       | 2002         |       |
|                        |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **COLUMBUS, OHIO**          |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Easton                      |       | Easton Way One               |       | Office       |       |             |       | 1,874            |       | 10,461          |       | 427                           |       | 1,874             |       | 10,888       |       | 12,762     |       | 2,211                |       | 2000            |       | 2000         |       |
| Easton                      |       | Easton Way Two               |       | Office       |       |             |       | 2,005            |       | 10,392          |       | 686                           |       | 2,005             |       | 11,078       |       | 13,083     |       | 1,670                |       | 2001            |       | 2001         |       |
| Easton                      |       | Easton Way Three             |       | Office       |       |             |       | 2,640            |       | 10,670          |       | —                        |       | 2,640             |       | 10,670       |       | 13,310     |       | 414                  |       | 2002            |       | 2003         |       |
| Easton                      |       | One Easton Oval              |       | Office       |       |             |       | 2,789            |       | 11,472          |       | 325                           |       | 2,789             |       | 11,797       |       | 14,586     |       | 2,978                |       | 1998            |       | 1999         |       |
| Easton                      |       | Two Easton Oval              |       | Office       |       |             |       | 2,489            |       | 16,944          |       | 1,078                         |       | 2,489             |       | 18,022       |       | 20,511     |       | 3,001                |       | 1996            |       | 1998         |       |
| Polaris                     |       | 1000 Polaris  Parkway        |       | Office       |       |             |       | 1,200            |       | 6,659           |       | 1,463                         |       | 1,293             |       | 8,029        |       | 9,322      |       | 1,544                |       | 1992            |       | 1999         |       |
| Westbelt Drive              |       | 2190-2200  Westbelt Drive    |       | Industrial   |       |             |       | 300              |       | 1,981           |       | 140                           |       | 300               |       | 2,121        |       | 2,421      |       | 342                  |       | 1986            |       | 1998         |       |
| Westbelt West               |       | Westbelt West #1             |       | Industrial   |       |             |       | 432              |       | 4,215           |       | 872                           |       | 432               |       | 5,087        |       | 5,519      |       | 1,273                |       | 1999            |       | 1999         |       |
| Westbelt West               |       | Westbelt West #2             |       | Industrial   |       |             |       | 509              |       | 5,264           |       | 408                           |       | 509               |       | 5,672        |       | 6,181      |       | 1,001                |       | 1999            |       | 2000         |       |
| Zane Trace                  |       | 3800 Zane Trace  Drive       |       | Industrial   |       |             |       | 170              |       | 2,122           |       | 714                           |       | 170               |       | 2,836        |       | 3,006      |       | 597                  |       | 1978            |       | 1994         |       |
| Zane Trace                  |       | 3635 Zane Trace  Drive       |       | Industrial   |       |             |       | 236              |       | 1,828           |       | 566                           |       | 236               |       | 2,394        |       | 2,630      |       | 332                  |       | 1980            |       | 1998         |       |
|                        |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **COPPELL, TEXAS**          |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Freeport North              |       | Freeport X                   |       | Industrial   |       |             |       | 8,198            |       | 19,931          |       | —                        |       | 8,198             |       | 19,931       |       | 28,129     |       | 840                  |       | 2003            |       | 2003         |       |
|                        |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **CREVE COUER, MISSOURI**   |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Twin Oaks Office Ctr        |       | Twin Oaks                    |       | Office       |       |             |       | 566              |       | 8,333           |       | 1,379                         |       | 566               |       | 9,712        |       | 10,278     |       | 1,813                |       | 1995            |       | 1997         |       |
|                        |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **CRYSTAL, MINNESOTA**      |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Crystal Industrial Center   |       | Crystal  Industrial Center   |       | Industrial   |       |             |       | 456              |       | 2,629           |       | 390                           |       | 480               |       | 2,995        |       | 3,475      |       | 754                  |       | 1974            |       | 1997         |       |
|                        |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **DAVENPORT, FLORIDA**      |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| FL Central Park North       |       | Park 27  Distribution Center |       | Industrial   |       |             |       | 2,449            |       | 6,100           |       | 8                             |       | 2,449             |       | 6,108        |       | 8,557      |       | 460                  |       | 2002            |       | 2002         |       |
|                        |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **DES PLAINES, ILLINOIS**   |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| 105 East Oakton             |       | 105 East Oakton              |       | Industrial   |       |             |       | 1,132            |       | 4,306           |       | 379                           |       | 1,132             |       | 4,685        |       | 5,817      |       | 892                  |       | 1974            |       | 1999         |       |
| Deckbrand Building          |       | Wolf Road Building           |       | Industrial   |       |             |       | 179              |       | 1,642           |       | 362                           |       | 179               |       | 2,004        |       | 2,183      |       | 339                  |       | 1966            |       | 1998         |       |
|                        |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **DOWNERS GROVE, ILLINOIS** |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Executive Towers            |       | Executive Towers  I          |       | Office       |       |             |       | 2,652            |       | 24,578          |       | 3,486                         |       | 2,652             |       | 28,064       |       | 30,716     |       | 5,393                |       | 1983            |       | 1997         |       |
| Executive Towers            |       | Executive Towers  II         |       | Office       |       |             |       | 3,386            |       | 31,968          |       | 7,128                         |       | 3,386             |       | 39,096       |       | 42,482     |       | 8,908                |       | 1984            |       | 1997         |       |
| Executive Towers            |       | Executive Towers  III        |       | Office       |       |             |       | 3,512            |       | 33,016          |       | 6,344                         |       | 3,512             |       | 39,360       |       | 42,872     |       | 7,073                |       | 1987            |       | 1997         |       |
|                        |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **DUBLIN, OHIO**            |       |                         |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Scioto Corporate Center     |       | Scioto Corporate  Center     |       | Office       |       |             |       | 1,100            |       | 3,381           |       | 946                           |       | 1,100             |       | 4,327        |       | 5,427      |       | 1,079                |       | 1987            |       | 1996         |       |
| Tuttle Crossing             |       | Metrocenter III              |       | Office       |       |             |       | 887              |       | 3,015           |       | 739                           |       | 887               |       | 3,754        |       | 4,641      |       | 736                  |       | 1983            |       | 1996         |       |
| Tuttle Crossing             |       | Qwest (LCI)                  |       | Office       |       |             |       | 2,618            |       | 19,087          |       | 1,053                         |       | 2,670             |       | 20,088       |       | 22,758     |       | 5,678                |       | 1990            |       | 1993         |       |
| Tuttle Crossing             |       | Sterling 1                   |       | Office       |       |             |       | 1,494            |       | 12,963          |       | 430                           |       | 1,524             |       | 13,363       |       | 14,887     |       | 3,677                |       | 1990            |       | 1993         |       |
| Tuttle Crossing             |       | 4700 Lakehurst  Ct.          |       | Office       |       |             |       | 717              |       | 2,495           |       | 108                           |       | 717               |       | 2,603        |       | 3,320      |       | 654                  |       | 1994            |       | 1994         |       |
| Tuttle Crossing             |       | Sterling 2                   |       | Office       |       |             |       | 605              |       | 5,935           |       | 89                            |       | 605               |       | 6,024        |       | 6,629      |       | 1,432                |       | 1995            |       | 1995         |       |
| Tuttle Crossing             |       | 5500 Glendon  Court          |       | Office       |       |             |       | 1,066            |       | 7,767           |       | 837                           |       | 1,066             |       | 8,604        |       | 9,670      |       | 1,974                |       | 1995            |       | 1995         |       |
| Tuttle Crossing             |       | 5555 Glendon  Court          |       | Office       |       |             |       | 1,600            |       | 10,984          |       | 830                           |       | 1,767             |       | 11,647       |       | 13,414     |       | 5,241                |       | 1995            |       | 1995         |       |
| Tuttle Crossing             |       | Sterling 3                   |       | Office       |       |             |       | 1,601            |       | 8,815           |       | 72                            |       | 1,601             |       | 8,887        |       | 10,488     |       | 2,963                |       | 1996            |       | 1996         |       |
| Tuttle Crossing             |       | Compmanagement               |       | Office       |       |             |       | 867              |       | 4,471           |       | 545                           |       | 867               |       | 5,016        |       | 5,883      |       | 1,186                |       | 1997            |       | 1997         |       |
| Tuttle Crossing             |       | Sterling 4                   |       | Office       |       |             |       | 483              |       | 9,456           |       | 892                           |       | 483               |       | 10,348       |       | 10,831     |       | 2,378                |       | 1998            |       | 1998         |       |

 

68

----

 
| ** **                    | ** ** | ** **                      | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Cost Capitalized**          | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
|-------------------------------|------------|---------------------------------|------------|--------------|------------|------------------|------------|------------------|------------|-----------------|------------|-------------------------------|------------|-------------------|------------|--------------|------------|------------|------------|----------------------|------------|-----------------|------------|--------------|------------|
| ** **                    | ** ** | ** **                      | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Subsequent to**             | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
| ** **                    | ** ** | ** **                      | ** ** | **Building** | ** ** | ** **       | ** ** | **Initial Cost** | ** ** | **Development** | ** ** | **Gross Book Value 12/31/04** | ** ** | **Accumulated**   | ** ** | **Year**     | ** ** | **Year**   | ** ** |
| **Development**               | ** ** | **Name**                        | ** ** | **Type**     | ** ** | **Encumbrances** | ** ** | **Land**         | ** ** | **Buildings**   | ** ** | **or Acquisition**            | ** ** | **Land/Land Imp** | ** ** | **Bldgs/TI** | ** ** | **Total**  | ** ** | **Depreciation (1)** | ** ** | **Constructed** | ** ** | **Acquired** | ** ** |
| Tuttle Crossing               |       | Xerox Bldg-5555  Parkcenter Cir |       | Office       |       |             |       | 1,580            |       | 9,437           |       | 671                           |       | 1,580             |       | 10,108       |       | 11,688     |       | 2,811                |       | 1992            |       | 1994         |       |
| Tuttle Crossing               |       | Parkwood Place                  |       | Office       |       |             |       | 1,690            |       | 11,714          |       | 893                           |       | 1,690             |       | 12,607       |       | 14,297     |       | 3,300                |       | 1997            |       | 1997         |       |
| Tuttle Crossing               |       | Nationwide                      |       | Office       |       |             |       | 4,815            |       | 19,459          |       | 212                           |       | 4,815             |       | 19,671       |       | 24,486     |       | 6,432                |       | 1996            |       | 1996         |       |
| Tuttle Crossing               |       | Emerald II                      |       | Office       |       |             |       | 495              |       | 2,863           |       | 22                            |       | 495               |       | 2,885        |       | 3,380      |       | 456                  |       | 1998            |       | 1998         |       |
| Tuttle Crossing               |       | Atrium II, Phase  I             |       | Office       |       |             |       | 1,649            |       | 10,143          |       | 391                           |       | 1,649             |       | 10,534       |       | 12,183     |       | 2,204                |       | 1997            |       | 1998         |       |
| Tuttle Crossing               |       | Atrium II, Phase  II            |       | Office       |       |             |       | 1,597            |       | 7,993           |       | 1,077                         |       | 1,597             |       | 9,070        |       | 10,667     |       | 1,502                |       | 1998            |       | 1999         |       |
| Tuttle Crossing               |       | Blazer I                        |       | Office       |       |             |       | 904              |       | 4,517           |       | 603                           |       | 904               |       | 5,120        |       | 6,024      |       | 934                  |       | 1999            |       | 1999         |       |
| Tuttle Crossing               |       | Parkwood II                     |       | Office       |       |             |       | 1,848            |       | 14,160          |       | 57                            |       | 1,848             |       | 14,217       |       | 16,065     |       | 2,815                |       | 2000            |       | 2000         |       |
| Tuttle Crossing               |       | Blazer II                       |       | Office       |       |             |       | 1,016            |       | 6,969           |       | 294                           |       | 1,016             |       | 7,263        |       | 8,279      |       | 1,391                |       | 2000            |       | 2000         |       |
| Tuttle Crossing               |       | Emerald III                     |       | Office       |       |             |       | 1,685            |       | 9,954           |       | 156                           |       | 1,694             |       | 10,101       |       | 11,795     |       | 1,458                |       | 2001            |       | 2001         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **DULUTH, GEORGIA**           |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Breckinridge                  |       | 2825 Breckinridge  Blvd         |       | Industrial   |       |             |       | 317              |       | 3,634           |       | 96                            |       | 317               |       | 3,730        |       | 4,047      |       | 520                  |       | 1986            |       | 1999         |       |
| Breckinridge                  |       | 2875 Breckinridge  Blvd         |       | Industrial   |       |             |       | 476              |       | 4,809           |       | 34                            |       | 476               |       | 4,843        |       | 5,319      |       | 659                  |       | 1986            |       | 1999         |       |
| Breckinridge                  |       | 2885 Breckinridge  Blvd         |       | Industrial   |       |             |       | 487              |       | 6,910           |       | 561                           |       | 487               |       | 7,471        |       | 7,958      |       | 1,343                |       | 1997            |       | 1999         |       |
| Business Park At Sugarloaf    |       | 2775 Premiere  Parkway          |       | Industrial   |       |             |       | 560              |       | 4,709           |       | 23                            |       | 560               |       | 4,732        |       | 5,292      |       | 648                  |       | 1997            |       | 1999         |       |
| Business Park At Sugarloaf    |       | 3079 Premiere  Parkway          |       | Industrial   |       |             |       | 776              |       | 6,538           |       | 1,084                         |       | 776               |       | 7,622        |       | 8,398      |       | 1,062                |       | 1998            |       | 1999         |       |
| Business Park At Sugarloaf    |       | Sugarloaf Office  I             |       | Industrial   |       |             |       | 1,042            |       | 8,650           |       | 729                           |       | 1,042             |       | 9,379        |       | 10,421     |       | 1,364                |       | 1998            |       | 1999         |       |
| Business Park At Sugarloaf    |       | Sugarloaf Office  II            |       | Industrial   |       |             |       | 972              |       | 4,088           |       | 81                            |       | 1,006             |       | 4,135        |       | 5,141      |       | 243                  |       | 1999            |       | 2002         |       |
| Business Park At Sugarloaf    |       | Sugarloaf Office  III           |       | Industrial   |       |             |       | 696              |       | 3,793           |       | 121                           |       | 696               |       | 3,914        |       | 4,610      |       | 226                  |       | 1999            |       | 2002         |       |
| Business Park At Sugarloaf    |       | Sugarloaf Office  IV            |       | Industrial   |       |             |       | 623              |       | 3,960           |       | 9                             |       | 623               |       | 3,969        |       | 4,592      |       | 1,123                |       | 2000            |       | 2000         |       |
| Business Park At Sugarloaf    |       | Sugarloaf Office  V             |       | Industrial   |       |             |       | 744              |       | 4,006           |       | 406                           |       | 744               |       | 4,412        |       | 5,156      |       | 1,046                |       | 2001            |       | 2001         |       |
| Business Park At Sugarloaf    |       | 2850 Premiere  Parkway          |       | Industrial   |       |             |       | 621              |       | 4,621           |       | 10                            |       | 621               |       | 4,631        |       | 5,252      |       | 252                  |       | 1997            |       | 2002         |       |
| Business Park At Sugarloaf    |       | 2855 Premiere  Parkway          |       | Industrial   |       |             |       | 765              |       | 4,006           |       | 186                           |       | 765               |       | 4,192        |       | 4,957      |       | 772                  |       | 1999            |       | 1999         |       |
| Business Park At Sugarloaf    |       | 6655 Sugarloaf                  |       | Industrial   |       |             |       | 1,651            |       | 6,505           |       | 4                             |       | 1,651             |       | 6,509        |       | 8,160      |       | 498                  |       | 1998            |       | 2001         |       |
| Crestwood Pointe              |       | 3805 Crestwood  Parkway         |       | Office       |       |             |       | 877              |       | 15,197          |       | 1,237                         |       | 877               |       | 16,434       |       | 17,311     |       | 2,393                |       | 1997            |       | 1999         |       |
| Crestwood Pointe              |       | 3885 Crestwood  Parkway         |       | Office       |       |             |       | 878              |       | 14,187          |       | 502                           |       | 878               |       | 14,689       |       | 15,567     |       | 2,120                |       | 1998            |       | 1999         |       |
| Hampton Green                 |       | Hampton Green Off  I            |       | Office       |       |             |       | 1,388            |       | 12,451          |       | 411                           |       | 1,388             |       | 12,862       |       | 14,250     |       | 1,799                |       | 2000            |       | 2000         |       |
| River Green                   |       | 3450 River Green  Court         |       | Industrial   |       |             |       | 194              |       | 2,197           |       | 195                           |       | 194               |       | 2,392        |       | 2,586      |       | 451                  |       | 1989            |       | 1999         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **EAGAN, MINNESOTA**          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Apollo Distribution Center    |       | Apollo Industrial  Ctr I        |       | Industrial   |       |             |       | 866              |       | 5,009           |       | 1,341                         |       | 882               |       | 6,334        |       | 7,216      |       | 1,228                |       | 1997            |       | 1997         |       |
| Apollo Distribution Center    |       | Apollo Industrial  Ctr II       |       | Industrial   |       |             |       | 474              |       | 3,171           |       | 7                             |       | 474               |       | 3,178        |       | 3,652      |       | 799                  |       | 2000            |       | 2000         |       |
| Apollo Distribution Center    |       | Apollo Industrial  Ctr III      |       | Industrial   |       |             |       | 1,432            |       | 6,966           |       | —                        |       | 1,432             |       | 6,966        |       | 8,398      |       | 951                  |       | 2000            |       | 2000         |       |
| Eagandale Crossing            |       | Eagandale  Crossing             |       | Industrial   |       |             |       | 974              |       | 4,567           |       | 92                            |       | 987               |       | 4,646        |       | 5,633      |       | 2,055                |       | 1998            |       | 1998         |       |
| Eagandale Tech Center         |       | Eagandale Tech  Center          |       | Industrial   |       |             |       | 987              |       | 5,744           |       | 542                           |       | 997               |       | 6,276        |       | 7,273      |       | 1,282                |       | 1998            |       | 1998         |       |
| Outside of a Development Park |       | Lunar Pointe                    |       | Industrial   |       |             |       | 982              |       | 4,477           |       | 517                           |       | 982               |       | 4,994        |       | 5,976      |       | 214                  |       | 2001            |       | 2001         |       |
| Silverbell Commons            |       | Silverbell  Commons             |       | Industrial   |       |             |       | 1,807            |       | 6,851           |       | 673                           |       | 1,807             |       | 7,524        |       | 9,331      |       | 1,351                |       | 1999            |       | 1999         |       |
| Trapp Road                    |       | Trapp Road  Commerce I          |       | Industrial   |       |             |       | 671              |       | 3,919           |       | 274                           |       | 700               |       | 4,164        |       | 4,864      |       | 675                  |       | 1996            |       | 1998         |       |
| Trapp Road                    |       | Trapp Road  Commerce II         |       | Industrial   |       |             |       | 1,250            |       | 7,050           |       | 357                           |       | 1,266             |       | 7,391        |       | 8,657      |       | 1,342                |       | 1998            |       | 1998         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **EARTH CITY, MISSOURI**      |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Earth City                    |       | 3322 NGIC                       |       | Office       |       | 5,852            |       | 2,615            |       | 10,927          |       | 873                           |       | 2,615             |       | 11,800       |       | 14,415     |       | 2,187                |       | 1987            |       | 1997         |       |
| Earth City                    |       | 3300 Pointe 70                  |       | Office       |       | 4,103            |       | 1,186            |       | 7,661           |       | 1,136                         |       | 1,186             |       | 8,797        |       | 9,983      |       | 1,656                |       | 1989            |       | 1997         |       |
| Earth City                    |       | Corporate Center,  Earth City   |       | Industrial   |       |             |       | 783              |       | 4,570           |       | 727                           |       | 783               |       | 5,297        |       | 6,080      |       | 1,429                |       | 2000            |       | 2000         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **EAST POINTE, GEORGIA**      |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Camp Creek                    |       | Camp Creek Bldg  1400           |       | Industrial   |       |             |       | 561              |       | 3,440           |       | 435                           |       | 561               |       | 3,875        |       | 4,436      |       | 492                  |       | 1988            |       | 2001         |       |
| Camp Creek                    |       | Camp Creek Bldg  1800           |       | Industrial   |       |             |       | 462              |       | 3,048           |       | 6                             |       | 462               |       | 3,054        |       | 3,516      |       | 487                  |       | 1989            |       | 2001         |       |
| Camp Creek                    |       | Camp Creek Bldg  2000           |       | Industrial   |       |             |       | 395              |       | 2,312           |       | 16                            |       | 395               |       | 2,328        |       | 2,723      |       | 232                  |       | 1989            |       | 2001         |       |
| Camp Creek                    |       | Camp Creek Bldg  2400           |       | Industrial   |       |             |       | 296              |       | 1,865           |       | 51                            |       | 296               |       | 1,916        |       | 2,212      |       | 279                  |       | 1988            |       | 2001         |       |
| Camp Creek                    |       | Camp Creek Bldg  2600           |       | Industrial   |       |             |       | 364              |       | 2,367           |       | 26                            |       | 364               |       | 2,393        |       | 2,757      |       | 341                  |       | 1990            |       | 2001         |       |
| Camp Creek                    |       | Clorox Company                  |       | Industrial   |       |             |       | 4,406            |       | 9,600           |       | —                        |       | 4,406             |       | 9,600        |       | 14,006     |       | 230                  |       | 2003            |       | 2003         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **EDEN PRAIRIE, MINNESOTA**   |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Edenvale Executive Center     |       | Edenvale  Executive Center      |       | Industrial   |       |             |       | 1,184            |       | 6,786           |       | 929                           |       | 1,185             |       | 7,714        |       | 8,899      |       | 1,243                |       | 1987            |       | 1999         |       |
| Golden Triangle Tech Center   |       | Golden Triangle  Tech Ctr       |       | Industrial   |       |             |       | 1,446            |       | 8,324           |       | 379                           |       | 1,458             |       | 8,691        |       | 10,149     |       | 1,404                |       | 1997            |       | 1998         |       |
| Valley Gate/Green             |       | Valley Gate North               |       | Industrial   |       |             |       | 548              |       | 3,158           |       | 596                           |       | 556               |       | 3,746        |       | 4,302      |       | 805                  |       | 1986            |       | 1999         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **EDINA, MINNESOTA**          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Edina Interchange             |       | Edina Interchange  I            |       | Industrial   |       | 1,316            |       | 630              |       | 3,673           |       | 451                           |       | 630               |       | 4,124        |       | 4,754      |       | 880                  |       | 1995            |       | 1997         |       |
| Edina Interchange             |       | Edina Interchange  II           |       | Industrial   |       | 841              |       | 432              |       | 2,523           |       | 75                            |       | 432               |       | 2,598        |       | 3,030      |       | 474                  |       | 1980            |       | 1997         |       |
| Edina Interchange             |       | Edina Interchange  III          |       | Industrial   |       | 945              |       | 487              |       | 2,844           |       | 70                            |       | 487               |       | 2,914        |       | 3,401      |       | 538                  |       | 1981            |       | 1997         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **FAIRFIELD, OHIO**           |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Fairfield Business Center     |       | Fairfield Bus.  Ctr. D          |       | Industrial   |       |             |       | 135              |       | 1,757           |       | 154                           |       | 135               |       | 1,911        |       | 2,046      |       | 486                  |       | 1990            |       | 1995         |       |
| Fairfield Business Center     |       | Fairfield Bus.  Ctr. E          |       | Industrial   |       |             |       | 398              |       | 2,612           |       | 61                            |       | 398               |       | 2,673        |       | 3,071      |       | 587                  |       | 1990            |       | 1995         |       |
| University Moving             |       | Thunderbird Bldg  1             |       | Industrial   |       |             |       | 248              |       | 1,769           |       | 147                           |       | 248               |       | 1,916        |       | 2,164      |       | 491                  |       | 1991            |       | 1995         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **FENTON, MISSOURI**          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Fenton Interstate Buildings   |       | Fenton Interstate  Building C   |       | Industrial   |       |             |       | 519              |       | 1,993           |       | 303                           |       | 519               |       | 2,296        |       | 2,815      |       | 347                  |       | 1986            |       | 1999         |       |
| Fenton Interstate Buildings   |       | Fenton Interstate  Building D   |       | Industrial   |       |             |       | 1,286            |       | 5,207           |       | 175                           |       | 1,286             |       | 5,382        |       | 6,668      |       | 810                  |       | 1987            |       | 1999         |       |

 

69

----

 
| ** **                    | ** ** | ** **                    | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Cost Capitalized**          | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
|-------------------------------|------------|-------------------------------|------------|--------------|------------|------------------|------------|------------------|------------|-----------------|------------|-------------------------------|------------|-------------------|------------|--------------|------------|------------|------------|----------------------|------------|-----------------|------------|--------------|------------|
| ** **                    | ** ** | ** **                    | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Subsequent to**             | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
| ** **                    | ** ** | ** **                    | ** ** | **Building** | ** ** | ** **       | ** ** | **Initial Cost** | ** ** | **Development** | ** ** | **Gross Book Value 12/31/04** | ** ** | **Accumulated**   | ** ** | **Year**     | ** ** | **Year**   | ** ** |
| **Development**               | ** ** | **Name**                      | ** ** | **Type**     | ** ** | **Encumbrances** | ** ** | **Land**         | ** ** | **Buildings**   | ** ** | **or Acquisition**            | ** ** | **Land/Land Imp** | ** ** | **Bldgs/TI** | ** ** | **Total**  | ** ** | **Depreciation (1)** | ** ** | **Constructed** | ** ** | **Acquired** | ** ** |
| Fenton Interstate Buildings   |       | Fenton Industrial  Bldg A     |       | Industrial   |       |             |       | 603              |       | 2,641           |       | 23                            |       | 603               |       | 2,664        |       | 3,267      |       | 403                  |       | 1987            |       | 2000         |       |
| Fenton Interstate Buildings   |       | Fenton Industrial  Bldg B     |       | Industrial   |       |             |       | 702              |       | 2,345           |       | 98                            |       | 702               |       | 2,443        |       | 3,145      |       | 315                  |       | 1986            |       | 2000         |       |
| Southport                     |       | Southport  Commerce Ctr       |       | Industrial   |       |             |       | 233              |       | 1,026           |       | 137                           |       | 233               |       | 1,163        |       | 1,396      |       | 201                  |       | 1978            |       | 1997         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **FISHERS, INDIANA**          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Exit 5                        |       | Exit 5 Bldg I                 |       | Industrial   |       |             |       | 822              |       | 2,728           |       | 101                           |       | 822               |       | 2,829        |       | 3,651      |       | 504                  |       | 1999            |       | 1999         |       |
| Exit 5                        |       | Exit 5 Bldg. II               |       | Industrial   |       |             |       | 749              |       | 4,673           |       | 162                           |       | 749               |       | 4,835        |       | 5,584      |       | 1,208                |       | 1999            |       | 2000         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **FRANKLIN, TENNESSEE**       |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Aspen Grove Business Center   |       | 277 Mallory  Station          |       | Industrial   |       |             |       | 936              |       | 6,556           |       | 2,497                         |       | 936               |       | 9,053        |       | 9,989      |       | 1,141                |       | 1996            |       | 1999         |       |
| Aspen Grove Business Center   |       | 320 Premier Court             |       | Industrial   |       |             |       | 1,151            |       | 6,539           |       | 379                           |       | 1,151             |       | 6,918        |       | 8,069      |       | 974                  |       | 1996            |       | 1999         |       |
| Aspen Grove Business Center   |       | 305 Seaboard Lane             |       | Industrial   |       |             |       | 970              |       | 5,680           |       | 566                           |       | 970               |       | 6,246        |       | 7,216      |       | 1,297                |       | 1998            |       | 1999         |       |
| Aspen Grove Business Center   |       | 416 Mary Lindsay  Polk Dr     |       | Industrial   |       |             |       | 943              |       | 5,304           |       | 754                           |       | 943               |       | 6,058        |       | 7,001      |       | 1,022                |       | 1996            |       | 1999         |       |
| Aspen Grove Business Center   |       | 318 Seaboard Lane  Bldg 200   |       | Industrial   |       |             |       | 240              |       | 1,390           |       | 147                           |       | 240               |       | 1,537        |       | 1,777      |       | 121                  |       | 1999            |       | 1999         |       |
| Aspen Grove Business Center   |       | 341 Cool Springs  Blvd        |       | Office       |       |             |       | 950              |       | 7,559           |       | 1,707                         |       | 950               |       | 9,266        |       | 10,216     |       | 1,972                |       | 1999            |       | 1999         |       |
| Aspen Grove Business Center   |       | 318 Seaboard Lane  Bldg 100   |       | Industrial   |       |             |       | 301              |       | 1,684           |       | 553                           |       | 301               |       | 2,237        |       | 2,538      |       | 613                  |       | 1999            |       | 1999         |       |
| Aspen Grove Business Center   |       | Aspen Grove Flex  Ctr III     |       | Industrial   |       |             |       | 327              |       | 2,050           |       | 804                           |       | 327               |       | 2,854        |       | 3,181      |       | 289                  |       | 2001            |       | 2001         |       |
| Aspen Grove Business Center   |       | Aspen Grove Flex  Ctr IV      |       | Industrial   |       |             |       | 205              |       | 1,545           |       | 148                           |       | 205               |       | 1,693        |       | 1,898      |       | 405                  |       | 2001            |       | 2001         |       |
| Aspen Grove Business Center   |       | Aspen Corporate  Center 100   |       | Office       |       |             |       | 723              |       | 2,179           |       | —                        |       | 723               |       | 2,179        |       | 2,902      |       | —               |       | 2004            |       | 2004         |       |
| Brentwood South Bus. Center   |       | 119 Seaboard Lane             |       | Industrial   |       |             |       | 569              |       | 2,442           |       | 96                            |       | 569               |       | 2,538        |       | 3,107      |       | 337                  |       | 1990            |       | 1999         |       |
| Brentwood South Bus. Center   |       | 121 Seaboard Lane             |       | Industrial   |       |             |       | 445              |       | 1,936           |       | 50                            |       | 445               |       | 1,986        |       | 2,431      |       | 265                  |       | 1990            |       | 1999         |       |
| Brentwood South Bus. Center   |       | 123 Seaboard Lane             |       | Industrial   |       |             |       | 489              |       | 1,248           |       | 450                           |       | 489               |       | 1,698        |       | 2,187      |       | 225                  |       | 1990            |       | 1999         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **FRIDLEY, MINNESOTA**        |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| River Road                    |       | River Road  Business Ctr. S.  |       | Industrial   |       | 3,315            |       | 1,083            |       | 6,426           |       | 483                           |       | 1,112             |       | 6,880        |       | 7,992      |       | 1,157                |       | 1986            |       | 1999         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **FT. LAUDERDALE, FLORIDA**   |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Beacon Pointe At Weston       |       | Beacon  Pointe@Weston Bldg 2  |       | Office       |       |             |       | 2,183            |       | 10,785          |       | —                        |       | 2,183             |       | 10,785       |       | 12,968     |       | 638                  |       | 2001            |       | 2003         |       |
| Beacon Pointe At Weston       |       | Beacon  Pointe@Weston Bldg 3  |       | Office       |       |             |       | 2,183            |       | 11,507          |       | —                        |       | 2,183             |       | 11,507       |       | 13,690     |       | 457                  |       | 2001            |       | 2003         |       |
| Beacon Pointe At Weston       |       | Beacon  Pointe@Weston Bldg 1  |       | Office       |       |             |       | 2,580            |       | 10,001          |       | —                        |       | 2,580             |       | 10,001       |       | 12,581     |       | 432                  |       | 1999            |       | 2003         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **GLENWILLOW, OHIO**          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Emerald Valley                |       | Emerald Valley  Bldg 1, 201   |       | Industrial   |       |             |       | 555              |       | 6,477           |       | 131                           |       | 556               |       | 6,607        |       | 7,163      |       | 881                  |       | 1999            |       | 1999         |       |
| Emerald Valley                |       | Emerald Valley  Bldg 2, 144   |       | Industrial   |       |             |       | 519              |       | 5,070           |       | 729                           |       | 519               |       | 5,799        |       | 6,318      |       | 387                  |       | 2001            |       | 2002         |       |
| Emerald Valley                |       | Emerald Valley 3,  144 W      |       | Industrial   |       |             |       | 1,593            |       | 3,409           |       | —                        |       | 1,593             |       | 3,409        |       | 5,002      |       | 70                   |       | 2003            |       | 2003         |       |
| Emerald Valley                |       | Emerald Valley  Building 4    |       | Industrial   |       |             |       | 1,357            |       | 3,486           |       | —                        |       | 1,357             |       | 3,486        |       | 4,843      |       | 38                   |       | 2004            |       | 2004         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **GOLDEN VALLEY, MINNESOTA**  |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Golden Hills                  |       | Golden Hills 1                |       | Industrial   |       |             |       | 1,081            |       | 6,317           |       | 454                           |       | 1,105             |       | 6,747        |       | 7,852      |       | 1,174                |       | 1996            |       | 1998         |       |
| Golden Hills                  |       | Golden Hills 2                |       | Industrial   |       |             |       | 1,741            |       | 4,366           |       | 355                           |       | 1,742             |       | 4,720        |       | 6,462      |       | 1,333                |       | 1999            |       | 1999         |       |
| Golden Hills                  |       | Golden Hills 3                |       | Industrial   |       |             |       | 1,813            |       | 4,910           |       | 395                           |       | 1,815             |       | 5,303        |       | 7,118      |       | 1,647                |       | 1999            |       | 1999         |       |
| Outside of a Development Park |       | 5075 Building                 |       | Office       |       |             |       | 506              |       | 2,393           |       | 365                           |       | 539               |       | 2,725        |       | 3,264      |       | 1,206                |       | 1965            |       | 1998         |       |
| Sandburg Industrial Center    |       | Sandburg  Industrial Center   |       | Industrial   |       |             |       | 451              |       | 2,629           |       | 552                           |       | 451               |       | 3,181        |       | 3,632      |       | 732                  |       | 1973            |       | 1997         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **GREENWOOD, INDIANA**        |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| South Park-Indiana            |       | Brylane Parking  Lot          |       | Grounds      |       |             |       | 54               |       | —          |       | 3                             |       | 57                |       | —       |       | 57         |       | 30                   |       |            |       | 1994         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **GROVE CITY, OHIO**          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| South Pointe                  |       | South Pointe Bldg  D          |       | Industrial   |       |             |       | 276              |       | 3,212           |       | 250                           |       | 276               |       | 3,462        |       | 3,738      |       | 785                  |       | 1997            |       | 1997         |       |
| South Pointe                  |       | South Pointe Bldg  E          |       | Industrial   |       |             |       | 279              |       | 2,482           |       | 572                           |       | 279               |       | 3,054        |       | 3,333      |       | 788                  |       | 1997            |       | 1997         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **GROVEPORT, OHIO**           |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| 6600 Port Road                |       | 6600 Port Road                |       | Industrial   |       |             |       | 2,725            |       | 23,709          |       | 1,137                         |       | 2,850             |       | 24,721       |       | 27,571     |       | 4,682                |       | 1995            |       | 1997         |       |
| Groveport Commerce Ctr        |       | Groveport Comm  Ctr #2        |       | Industrial   |       |             |       | 1,049            |       | 7,657           |       | 1,187                         |       | 1,065             |       | 8,828        |       | 9,893      |       | 1,560                |       | 1999            |       | 1999         |       |
| Groveport Commerce Ctr        |       | Groveport Comm  Ctr #3        |       | Industrial   |       |             |       | 510              |       | 3,910           |       | 899                           |       | 510               |       | 4,809        |       | 5,319      |       | 698                  |       | 1999            |       | 2000         |       |
| Groveport Commerce Ctr        |       | Groveport  Commerce Ctr. #345 |       | Industrial   |       |             |       | 1,045            |       | 7,402           |       | 577                           |       | 1,045             |       | 7,979        |       | 9,024      |       | 1,183                |       | 2000            |       | 2000         |       |
| Groveport Commerce Ctr        |       | Groveport CC  Common Area     |       | N/A          |       |             |       | —           |       | —          |       | 45                            |       | —            |       | 45           |       | 45         |       | —               |       |            |       | 1999         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **HEBRON, KENTUCKY**          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| KY, Southpark                 |       | Ky. Southpark  Bldg 4         |       | Industrial   |       |             |       | 779              |       | 3,395           |       | 51                            |       | 779               |       | 3,446        |       | 4,225      |       | 898                  |       | 1994            |       | 1994         |       |
| KY, Southpark                 |       | CR Services                   |       | Industrial   |       |             |       | 1,085            |       | 4,259           |       | 1,291                         |       | 1,085             |       | 5,550        |       | 6,635      |       | 1,393                |       | 1994            |       | 1994         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **HIGHLAND HILLS, OHIO**      |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Metropolitan Plaza            |       | Metropolitan  Plaza           |       | Office       |       |             |       | 2,310            |       | 14,044          |       | —                        |       | 2,310             |       | 14,044       |       | 16,354     |       | 429                  |       | 2000            |       | 2003         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **HIGHLAND HEIGHTS, OHIO**    |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Highland Park                 |       | 5335 Avion Park  Drive        |       | Industrial   |       |             |       | 606              |       | 2,548           |       | 167                           |       | 606               |       | 2,715        |       | 3,321      |       | 210                  |       | 1994            |       | 2002         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **HIGHLAND HILLS, OHIO**      |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Harvard Road                  |       | 20800 Harvard  Road           |       | Office       |       |             |       | 660              |       | 6,814           |       | —                        |       | 660               |       | 6,814        |       | 7,474      |       | 59                   |       | 1999            |       | 2004         |       |

 

70

----

 
| ** **                    | ** ** | ** **                    | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Cost Capitalized**          | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
|-------------------------------|------------|-------------------------------|------------|--------------|------------|------------------|------------|------------------|------------|-----------------|------------|-------------------------------|------------|-------------------|------------|--------------|------------|------------|------------|----------------------|------------|-----------------|------------|--------------|------------|
| ** **                    | ** ** | ** **                    | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Subsequent to**             | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
| ** **                    | ** ** | ** **                    | ** ** | **Building** | ** ** | ** **       | ** ** | **Initial Cost** | ** ** | **Development** | ** ** | **Gross Book Value 12/31/04** | ** ** | **Accumulated**   | ** ** | **Year**     | ** ** | **Year**   | ** ** |
| **Development**               | ** ** | **Name**                      | ** ** | **Type**     | ** ** | **Encumbrances** | ** ** | **Land**         | ** ** | **Buildings**   | ** ** | **or Acquisition**            | ** ** | **Land/Land Imp** | ** ** | **Bldgs/TI** | ** ** | **Total**  | ** ** | **Depreciation (1)** | ** ** | **Constructed** | ** ** | **Acquired** | ** ** |
| **HOPKINS, MINNESOTA**        |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Cornerstone Business Center   |       | Cornerstone  Business Center  |       | Industrial   |       | 5,462            |       | 1,469            |       | 8,512           |       | 410                           |       | 1,543             |       | 8,848        |       | 10,391     |       | 1,608                |       | 1996            |       | 1997         |       |
| Westside Business Park        |       | Westside Business  Park       |       | Industrial   |       |             |       | 1,170            |       | 6,899           |       | 1,357                         |       | 1,170             |       | 8,256        |       | 9,426      |       | 1,682                |       | 1987            |       | 1997         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **INDEPENDENCE, OHIO**        |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| 6111 Oak Tree                 |       | Oak Tree Place                |       | Office       |       |             |       | 703              |       | 4,708           |       | 504                           |       | 703               |       | 5,212        |       | 5,915      |       | 918                  |       | 1979            |       | 1997         |       |
| Corporate Plaza               |       | Corporate Plaza I             |       | Office       |       | 5,578            |       | 2,116            |       | 14,248          |       | 761                           |       | 2,116             |       | 15,009       |       | 17,125     |       | 3,304                |       | 1989            |       | 1996         |       |
| Corporate Plaza               |       | Corporate Plaza  II           |       | Office       |       | 4,622            |       | 1,841            |       | 12,428          |       | 973                           |       | 1,841             |       | 13,401       |       | 15,242     |       | 3,133                |       | 1991            |       | 1996         |       |
| Freedom Square                |       | Freedom Square I              |       | Office       |       |             |       | 595              |       | 4,020           |       | 305                           |       | 600               |       | 4,320        |       | 4,920      |       | 934                  |       | 1980            |       | 1996         |       |
| Freedom Square                |       | Freedom Square II             |       | Office       |       | 4,339            |       | 1,746            |       | 11,847          |       | 605                           |       | 1,746             |       | 12,452       |       | 14,198     |       | 2,801                |       | 1987            |       | 1996         |       |
| Freedom Square                |       | Freedom Square  III           |       | Office       |       |             |       | 701              |       | 6,412           |       | 39                            |       | 701               |       | 6,451        |       | 7,152      |       | 1,505                |       | 1997            |       | 1997         |       |
| Park Center                   |       | Park Center Bldg  I           |       | Office       |       |             |       | 2,193            |       | 12,943          |       | 639                           |       | 2,193             |       | 13,582       |       | 15,775     |       | 3,042                |       | 1998            |       | 1998         |       |
| Park Center                   |       | Park Center Bldg  II          |       | Office       |       |             |       | 2,190            |       | 12,957          |       | 462                           |       | 2,190             |       | 13,419       |       | 15,609     |       | 2,733                |       | 1999            |       | 1999         |       |
| Park Center                   |       | Park Center Bldg  III         |       | Office       |       |             |       | 2,190            |       | 12,975          |       | 2,256                         |       | 2,190             |       | 15,231       |       | 17,421     |       | 2,710                |       | 2000            |       | 2000         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **INDIANAPOLIS, INDIANA**     |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Franklin Road Business Park   |       | Franklin Road  Bus. Ctr.      |       | Industrial   |       |             |       | 594              |       | 10,803          |       | 744                           |       | 594               |       | 11,547       |       | 12,141     |       | 3,101                |       | 1962            |       | 1995         |       |
| Hillsdale                     |       | Hillsdale Bldg 4              |       | Industrial   |       |             |       | 366              |       | 5,173           |       | 679                           |       | 366               |       | 5,852        |       | 6,218      |       | 1,578                |       | 1987            |       | 1993         |       |
| Hillsdale                     |       | Hillsdale Bldg 5              |       | Industrial   |       |             |       | 251              |       | 3,265           |       | 600                           |       | 251               |       | 3,865        |       | 4,116      |       | 1,153                |       | 1987            |       | 1993         |       |
| Hillsdale                     |       | Hillsdale Bldg 6              |       | Industrial   |       |             |       | 315              |       | 4,348           |       | 1,661                         |       | 315               |       | 6,009        |       | 6,324      |       | 1,701                |       | 1987            |       | 1993         |       |
| KATC - South                  |       | 8465 Keystone  Crossing       |       | Office       |       |             |       | 89               |       | 1,397           |       | 320                           |       | 89                |       | 1,717        |       | 1,806      |       | 447                  |       | 1983            |       | 1995         |       |
| Keystone Crossing             |       | 8555 Keystone  Crossing       |       | Office       |       |             |       | —           |       | 6,074           |       | 591                           |       | —            |       | 6,665        |       | 6,665      |       | 1,249                |       | 1985            |       | 1997         |       |
| Nampac Building               |       | 6061 Guion Rd                 |       | Industrial   |       |             |       | 274              |       | 1,822           |       | 165                           |       | 274               |       | 1,987        |       | 2,261      |       | 452                  |       | 1974            |       | 1995         |       |
| Outside of a Development Park |       | 4750 Kentucky  Avenue         |       | Industrial   |       |             |       | 246              |       | 2,392           |       | 220                           |       | 246               |       | 2,612        |       | 2,858      |       | 531                  |       | 1974            |       | 1996         |       |
| Not Applicable                |       | River Road Bldg I             |       | Office       |       |             |       | 856              |       | 7,800           |       | 1,062                         |       | 856               |       | 8,862        |       | 9,718      |       | 2,038                |       | 1997            |       | 1998         |       |
| Outside of a Development Park |       | 4316 West  Minnesota          |       | Industrial   |       |             |       | 287              |       | 2,291           |       | 295                           |       | 287               |       | 2,586        |       | 2,873      |       | 526                  |       | 1970            |       | 1996         |       |
| One North Capital             |       | One North Capitol             |       | Office       |       |             |       | 1,439            |       | 9,748           |       | 155                           |       | 1,439             |       | 9,903        |       | 11,342     |       | 1,684                |       | 1980            |       | 1998         |       |
| Park 100                      |       | Park 100 Bldg 96              |       | Industrial   |       |             |       | 1,414            |       | 13,948          |       | —                        |       | 1,667             |       | 13,695       |       | 15,362     |       | 3,397                |       | 1994            |       | 1995         |       |
| Park 100                      |       | Park 100 Bldg 98              |       | Industrial   |       |             |       | 273              |       | 8,380           |       | 1,785                         |       | 273               |       | 10,165       |       | 10,438     |       | 2,334                |       | 1968            |       | 1994         |       |
| Park 100                      |       | Park 100 Bldg 100             |       | Industrial   |       |             |       | 103              |       | 2,494           |       | 534                           |       | 103               |       | 3,028        |       | 3,131      |       | 934                  |       | 1995            |       | 1995         |       |
| Park 100                      |       | Park 100 Bldg 107             |       | Industrial   |       |             |       | 99               |       | 1,721           |       | 112                           |       | 99                |       | 1,833        |       | 1,932      |       | 423                  |       | 1984            |       | 1995         |       |
| Park 100                      |       | Park 100 Bldg 109             |       | Industrial   |       |             |       | 240              |       | 1,856           |       | 70                            |       | 246               |       | 1,920        |       | 2,166      |       | 801                  |       | 1985            |       | 1986         |       |
| Park 100                      |       | Park 100 Bldg 116             |       | Office       |       |             |       | 341              |       | 3,233           |       | 198                           |       | 348               |       | 3,424        |       | 3,772      |       | 1,284                |       | 1988            |       | 1988         |       |
| Park 100                      |       | Park 100 Bldg 118             |       | Office       |       |             |       | 226              |       | 2,443           |       | 401                           |       | 230               |       | 2,840        |       | 3,070      |       | 791                  |       | 1988            |       | 1993         |       |
| Park 100                      |       | Park 100 Bldg 119             |       | Office       |       |             |       | 388              |       | 3,757           |       | 1,326                         |       | 500               |       | 4,971        |       | 5,471      |       | 1,512                |       | 1989            |       | 1993         |       |
| Park 100                      |       | Park 100 Bldg 122             |       | Industrial   |       |             |       | 284              |       | 3,783           |       | 348                           |       | 290               |       | 4,125        |       | 4,415      |       | 1,148                |       | 1990            |       | 1993         |       |
| Park 100                      |       | Park 100 Building  124        |       | Office       |       |             |       | 227              |       | 2,771           |       | 8                             |       | 227               |       | 2,779        |       | 3,006      |       | 294                  |       | 1992            |       | 2002         |       |
| Park 100                      |       | Park 100 Bldg 127             |       | Industrial   |       |             |       | 96               |       | 1,956           |       | 302                           |       | 96                |       | 2,258        |       | 2,354      |       | 696                  |       | 1995            |       | 1995         |       |
| Park 100                      |       | UPS Parking                   |       | Grounds      |       |             |       | 270              |       | —          |       | —                        |       | 270               |       | —       |       | 270        |       | 61                   |       |            |       | 1997         |       |
| Park 100                      |       | Norgate Ground  Lease         |       | Grounds      |       |             |       | 51               |       | —          |       | —                        |       | 51                |       | —       |       | 51         |       | —               |       |            |       | 1995         |       |
| Park 100                      |       | Zollman Ground  Lease         |       | Grounds      |       |             |       | 115              |       | —          |       | —                        |       | 115               |       | —       |       | 115        |       | —               |       |            |       | 1994         |       |
| Park 100                      |       | Bldg 111 Parking  Lot         |       | Grounds      |       |             |       | 196              |       | —          |       | —                        |       | 196               |       | —       |       | 196        |       | —               |       |            |       | 1994         |       |
| Park 100                      |       | Becton Dickinson  Lot         |       | Grounds      |       |             |       | —           |       | —          |       | 13                            |       | 13                |       | —       |       | 13         |       | 6                    |       |            |       | 1993         |       |
| Park 100                      |       | 3.58 acres on  Allison Avenue |       | Grounds      |       |             |       | 242              |       | —          |       | —                        |       | 242               |       | —       |       | 242        |       | —               |       |            |       | 2000         |       |
| Park 100                      |       | Hewlett-Packard  Land Lease   |       | Grounds      |       |             |       | 252              |       | —          |       | —                        |       | 252               |       | —       |       | 252        |       | —               |       |            |       | 2003         |       |
| Park 100                      |       | Park 100 Bldg 121  Land Lease |       | Grounds      |       |             |       | 5                |       | —          |       | —                        |       | 5                 |       | —       |       | 5          |       | —               |       |            |       | 2003         |       |
| Park 100                      |       | Hewlett Packard  Land Lse-62  |       | Grounds      |       |             |       | 45               |       | —          |       | —                        |       | 45                |       | —       |       | 45         |       | —               |       |            |       | 2003         |       |
| Park Fletcher                 |       | Park Fletcher  Bldg 14        |       | Industrial   |       |             |       | 76               |       | 740             |       | 161                           |       | 76                |       | 901          |       | 977        |       | 196                  |       | 1978            |       | 1996         |       |
| Parkwood Crossing             |       | One Parkwood                  |       | Office       |       |             |       | 1,018            |       | 10,282          |       | 632                           |       | 1,028             |       | 10,904       |       | 11,932     |       | 2,480                |       | 1989            |       | 1995         |       |
| Parkwood Crossing             |       | Two Parkwood                  |       | Office       |       |             |       | 861              |       | 7,704           |       | 800                           |       | 871               |       | 8,494        |       | 9,365      |       | 2,449                |       | 1996            |       | 1996         |       |
| Parkwood Crossing             |       | Three Parkwood                |       | Office       |       |             |       | 1,377            |       | 9,857           |       | 178                           |       | 1,387             |       | 10,025       |       | 11,412     |       | 2,588                |       | 1997            |       | 1997         |       |
| Parkwood Crossing             |       | Four Parkwood                 |       | Office       |       |             |       | 1,489            |       | 11,280          |       | 632                           |       | 1,537             |       | 11,864       |       | 13,401     |       | 1,930                |       | 1998            |       | 1998         |       |
| Parkwood Crossing             |       | Five Parkwood                 |       | Office       |       |             |       | 1,485            |       | 13,739          |       | 47                            |       | 1,528             |       | 13,743       |       | 15,271     |       | 3,248                |       | 1999            |       | 1999         |       |
| Parkwood Crossing             |       | Six Parkwood                  |       | Office       |       |             |       | 1,960            |       | 15,828          |       | 483                           |       | 1,960             |       | 16,311       |       | 18,271     |       | 2,733                |       | 2000            |       | 2000         |       |
| Parkwood Crossing             |       | Eight Parkwood                |       | Office       |       |             |       | 6,435            |       | 14,829          |       | 70                            |       | 6,435             |       | 14,899       |       | 21,334     |       | 885                  |       | 2002            |       | 2002         |       |
| Woodfield                     |       | Two Woodfield  Crossing       |       | Office       |       |             |       | 719              |       | 9,553           |       | 1,791                         |       | 733               |       | 11,330       |       | 12,063     |       | 3,131                |       | 1987            |       | 1993         |       |
| Woodfield                     |       | Three Woodfield  Crossing     |       | Office       |       |             |       | 3,767            |       | 21,404          |       | 3,644                         |       | 3,843             |       | 24,972       |       | 28,815     |       | 7,269                |       | 1989            |       | 1993         |       |
| Woodland Corporate Park       |       | Woodland  Corporate Park I    |       | Office       |       |             |       | 290              |       | 4,666           |       | 644                           |       | 320               |       | 5,280        |       | 5,600      |       | 1,475                |       | 1998            |       | 1998         |       |
| Woodland Corporate Park       |       | Woodland  Corporate Park II   |       | Office       |       |             |       | 271              |       | 3,673           |       | 782                           |       | 297               |       | 4,429        |       | 4,726      |       | 857                  |       | 1999            |       | 1999         |       |
| Woodland Corporate Park       |       | Woodland  Corporate Park III  |       | Office       |       |             |       | 1,227            |       | 4,480           |       | 72                            |       | 1,227             |       | 4,552        |       | 5,779      |       | 921                  |       | 1999            |       | 2000         |       |
| Woodland Corporate Park       |       | Woodland  Corporate Park IV   |       | Office       |       |             |       | 715              |       | 7,340           |       | 438                           |       | 715               |       | 7,778        |       | 8,493      |       | 1,267                |       | 2000            |       | 2000         |       |
| Woodland Corporate Park       |       | Woodland  Corporate Park V    |       | Office       |       |             |       | 768              |       | 10,002          |       | 31                            |       | 768               |       | 10,033       |       | 10,801     |       | 657                  |       | 2002            |       | 2002         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **KENNESAW, GEORGIA**         |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Town Point                    |       | 3391 Town Point  Drive        |       | Office       |       |             |       | 797              |       | 8,508           |       | 614                           |       | 797               |       | 9,122        |       | 9,919      |       | 1,792                |       | 1999            |       | 1999         |       |
|                          |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **LAKE FOREST, ILLINOIS**     |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Bradley Business Center       |       | Ballard Drive  Building       |       | Industrial   |       |             |       | 186              |       | 1,770           |       | 328                           |       | 186               |       | 2,098        |       | 2,284      |       | 335                  |       | 1985            |       | 1998         |       |
| Bradley Business Center       |       | Laurel Drive  Building        |       | Industrial   |       |             |       | 98               |       | 913             |       | 52                            |       | 98                |       | 965          |       | 1,063      |       | 164                  |       | 1981            |       | 1998         |       |
| Bradley Business Center       |       | 13825 W. Laurel  Dr.          |       | Industrial   |       |             |       | 750              |       | 1,900           |       | 862                           |       | 750               |       | 2,762        |       | 3,512      |       | 585                  |       | 1978            |       | 1999         |       |
| Conway Park                   |       | One Conway Park               |       | Office       |       |             |       | 1,901            |       | 18,441          |       | 951                           |       | 1,901             |       | 19,392       |       | 21,293     |       | 3,766                |       | 1989            |       | 1998         |       |

 

71

----

 
| ** **                     | ** ** | ** **                      | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Cost Capitalized**          | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
|--------------------------------|------------|---------------------------------|------------|--------------|------------|------------------|------------|------------------|------------|-----------------|------------|-------------------------------|------------|-------------------|------------|--------------|------------|------------|------------|----------------------|------------|-----------------|------------|--------------|------------|
| ** **                     | ** ** | ** **                      | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Subsequent to**             | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
| ** **                     | ** ** | ** **                      | ** ** | **Building** | ** ** | ** **       | ** ** | **Initial Cost** | ** ** | **Development** | ** ** | **Gross Book Value 12/31/04** | ** ** | **Accumulated**   | ** ** | **Year**     | ** ** | **Year**   | ** ** |
| **Development**                | ** ** | **Name**                        | ** ** | **Type**     | ** ** | **Encumbrances** | ** ** | **Land**         | ** ** | **Buildings**   | ** ** | **or Acquisition**            | ** ** | **Land/Land Imp** | ** ** | **Bldgs/TI** | ** ** | **Total**  | ** ** | **Depreciation (1)** | ** ** | **Constructed** | ** ** | **Acquired** | ** ** |
| ** **                     | ** ** | ** **                      | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | ** **                    | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
| **LAKE MARY, FLORIDA**         |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Northpoint                     |       | Northpoint Center  I            |       | Office       |       |             |       | 1,087            |       | 11,546          |       | 79                            |       | 1,087             |       | 11,625       |       | 12,712     |       | 1,186                |       | 1998            |       | 1999         |       |
| Northpoint                     |       | Northpoint Center  II           |       | Office       |       |             |       | 1,202            |       | 9,693           |       | 387                           |       | 1,202             |       | 10,080       |       | 11,282     |       | 1,248                |       | 1999            |       | 2000         |       |
| Northpoint                     |       | Northpoint III                  |       | Office       |       |             |       | 1,552            |       | 11,087          |       | 26                            |       | 1,552             |       | 11,113       |       | 12,665     |       | 1,394                |       | 2001            |       | 2001         |       |
| Northpoint                     |       | Northpoint IV                   |       | Office       |       |             |       | 1,605            |       | 8,590           |       | 1,477                         |       | 1,605             |       | 10,067       |       | 11,672     |       | 366                  |       | 2002            |       | 2002         |       |
| Technology Park                |       | Technology Park I               |       | Industrial   |       |             |       | 640              |       | 3,531           |       | 172                           |       | 640               |       | 3,703        |       | 4,343      |       | 567                  |       | 1986            |       | 1999         |       |
| Technology Park                |       | Technology Park  II             |       | Industrial   |       |             |       | 835              |       | 4,318           |       | 354                           |       | 835               |       | 4,672        |       | 5,507      |       | 656                  |       | 1998            |       | 1999         |       |
| Technology Park                |       | Technology Park  III            |       | Industrial   |       |             |       | 477              |       | 3,859           |       | 83                            |       | 477               |       | 3,942        |       | 4,419      |       | 528                  |       | 1998            |       | 1999         |       |
| Technology Park                |       | Technology Park  IV             |       | Industrial   |       |             |       | 669              |       | 2,945           |       | 297                           |       | 669               |       | 3,242        |       | 3,911      |       | 595                  |       | 1999            |       | 1999         |       |
| Technology Park                |       | Technology Park V               |       | Industrial   |       |             |       | 547              |       | 2,907           |       | 210                           |       | 547               |       | 3,117        |       | 3,664      |       | 387                  |       | 1999            |       | 1999         |       |
|                           |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **LAKELAND, FLORIDA**          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Lakeland Interstate Park       |       | Lakeland  Interstate Park I     |       | Industrial   |       |             |       | 864              |       | 4,267           |       | 586                           |       | 864               |       | 4,853        |       | 5,717      |       | 429                  |       | 2001            |       | 2001         |       |
|                           |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **LAWRENCEVILLE, GEORGIA**     |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Hillside at Huntcrest          |       | Huntcrest I                     |       | Office       |       |             |       | 1,193            |       | 11,047          |       | 28                            |       | 1,193             |       | 11,075       |       | 12,268     |       | 1,352                |       | 2000            |       | 2001         |       |
| Hillside at Huntcrest          |       | Huntcrest II                    |       | Office       |       |             |       | 927              |       | 11,606          |       | 16                            |       | 927               |       | 11,622       |       | 12,549     |       | 1,819                |       | 2000            |       | 2001         |       |
| Hillside at Huntcrest          |       | Huntcrest III                   |       | Office       |       |             |       | 1,358            |       | 12,997          |       | 238                           |       | 1,358             |       | 13,235       |       | 14,593     |       | 1,076                |       | 2001            |       | 2002         |       |
| Hillside at Huntcrest          |       | Huntcrest IV                    |       | Office       |       |             |       | 1,306            |       | 6,005           |       | —                        |       | 1,306             |       | 6,005        |       | 7,311      |       | 126                  |       | 2003            |       | 2003         |       |
| Other Northeast I85 Properties |       | Weyerhaeuser                    |       | Industrial   |       |             |       | 3,974            |       | 2,840           |       | —                        |       | 3,974             |       | 2,840        |       | 6,814      |       | —               |       | 2004            |       | 2004         |       |
|                           |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **LEBANON, INDIANA**           |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Lebanon Bus. Park              |       | Lebanon Building  4             |       | Industrial   |       |             |       | 305              |       | 9,767           |       | 89                            |       | 305               |       | 9,856        |       | 10,161     |       | 1,924                |       | 1997            |       | 1997         |       |
| Lebanon Bus. Park              |       | Lebanon Building  9             |       | Industrial   |       |             |       | 554              |       | 6,974           |       | 667                           |       | 554               |       | 7,641        |       | 8,195      |       | 1,107                |       | 1999            |       | 1999         |       |
| Lebanon Bus. Park              |       | Lebanon Building  11            |       | Industrial   |       |             |       | 480              |       | 5,208           |       | —                        |       | 1,286             |       | 4,402        |       | 5,688      |       | 292                  |       | 2003            |       | 2003         |       |
| Lebanon Bus. Park              |       | Lebanon Bldg 13                 |       | Industrial   |       |             |       | 561              |       | 6,554           |       | —                        |       | 1,901             |       | 5,214        |       | 7,115      |       | 325                  |       | 2003            |       | 2003         |       |
| Lebanon Bus. Park              |       | Lebanon Bldg 12                 |       | Industrial   |       |             |       | 5,163            |       | 13,207          |       | 4                             |       | 5,163             |       | 13,211       |       | 18,374     |       | 669                  |       | 2002            |       | 2002         |       |
|                           |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **LEWIS CENTER, OHIO**         |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Orange Point Commerce Park     |       | Orange Point #73                |       | Industrial   |       |             |       | 551              |       | 3,281           |       | 499                           |       | 551               |       | 3,780        |       | 4,331      |       | 530                  |       | 2001            |       | 2001         |       |
| Orange Point Commerce Park     |       | Orange Point 144                |       | Industrial   |       |             |       | 886              |       | 4,990           |       | 81                            |       | 886               |       | 5,071        |       | 5,957      |       | 751                  |       | 2001            |       | 2001         |       |
|                           |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **LISLE, ILLINOIS**            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Corporate Lakes Business Park  |       | 2275 Cabot Drive                |       | Office       |       |             |       | 3,355            |       | 6,263           |       | —                        |       | 3,355             |       | 6,263        |       | 9,618      |       | 108                  |       | 1996            |       | 2004         |       |
|                           |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **MARIETTA, GEORGIA**          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Franklin Forest                |       | 805 Franklin  Court             |       | Industrial   |       |             |       | 313              |       | 1,937           |       | 158                           |       | 313               |       | 2,095        |       | 2,408      |       | 274                  |       | 1983            |       | 1999         |       |
| Franklin Forest                |       | 810 Franklin  Court             |       | Industrial   |       |             |       | 255              |       | 1,658           |       | 50                            |       | 255               |       | 1,708        |       | 1,963      |       | 232                  |       | 1983            |       | 1999         |       |
| Franklin Forest                |       | 811 Livingston  Court           |       | Industrial   |       |             |       | 193              |       | 1,428           |       | 263                           |       | 193               |       | 1,691        |       | 1,884      |       | 310                  |       | 1983            |       | 1999         |       |
| Franklin Forest                |       | 825 Franklin  Court             |       | Industrial   |       |             |       | 358              |       | 562             |       | 1,034                         |       | 358               |       | 1,596        |       | 1,954      |       | 212                  |       | 1983            |       | 1999         |       |
| Franklin Forest                |       | 830 Franklin  Court             |       | Industrial   |       |             |       | 133              |       | 759             |       | 90                            |       | 133               |       | 849          |       | 982        |       | 108                  |       | 1983            |       | 1999         |       |
| Franklin Forest                |       | 835 Franklin  Court             |       | Industrial   |       |             |       | 393              |       | 637             |       | 980                           |       | 393               |       | 1,617        |       | 2,010      |       | 214                  |       | 1983            |       | 1999         |       |
| Franklin Forest                |       | 840 Franklin  Court             |       | Industrial   |       |             |       | 242              |       | 893             |       | 603                           |       | 242               |       | 1,496        |       | 1,738      |       | 132                  |       | 1983            |       | 1999         |       |
| Franklin Forest                |       | 821 Livingston  Court           |       | Industrial   |       |             |       | 145              |       | 975             |       | 101                           |       | 145               |       | 1,076        |       | 1,221      |       | 169                  |       | 1983            |       | 1999         |       |
| Franklin Forest                |       | 841 Livingston  Court           |       | Industrial   |       |             |       | 275              |       | 2,736           |       | 7                             |       | 275               |       | 2,743        |       | 3,018      |       | 374                  |       | 1983            |       | 1999         |       |
| Northwest Business Center      |       | 1335 Capital  Circle            |       | Industrial   |       |             |       | 416              |       | 2,112           |       | 161                           |       | 416               |       | 2,273        |       | 2,689      |       | 318                  |       | 1985            |       | 1999         |       |
| Northwest Business Center      |       | 1337-41-51  Capital Circle      |       | Industrial   |       |             |       | 558              |       | 5,364           |       | 1,114                         |       | 558               |       | 6,478        |       | 7,036      |       | 1,050                |       | 1985            |       | 1999         |       |
| Northwest Business Center      |       | 2260 Northwest  Parkway         |       | Industrial   |       |             |       | 320              |       | 1,826           |       | 751                           |       | 320               |       | 2,577        |       | 2,897      |       | 419                  |       | 1982            |       | 1999         |       |
| Northwest Business Center      |       | 2252 Northwest  Parkway         |       | Industrial   |       |             |       | 92               |       | 982             |       | 84                            |       | 92                |       | 1,066        |       | 1,158      |       | 168                  |       | 1982            |       | 1999         |       |
| Northwest Business Center      |       | 2242 Northwest  Parkway         |       | Industrial   |       |             |       | 175              |       | 1,444           |       | 140                           |       | 175               |       | 1,584        |       | 1,759      |       | 233                  |       | 1982            |       | 1999         |       |
| Northwest Business Center      |       | 2256 Northwest  Parkway         |       | Industrial   |       |             |       | 85               |       | 916             |       | 75                            |       | 85                |       | 991          |       | 1,076      |       | 133                  |       | 1982            |       | 1999         |       |
| Northwest Business Center      |       | 2244 Northwest  Parkway         |       | Industrial   |       |             |       | 47               |       | 492             |       | 8                             |       | 47                |       | 500          |       | 547        |       | 68                   |       | 1982            |       | 1999         |       |
| Northwest Business Center      |       | 2150 Northwest  Parkway         |       | Industrial   |       |             |       | 294              |       | 3,087           |       | 468                           |       | 294               |       | 3,555        |       | 3,849      |       | 488                  |       | 1982            |       | 1999         |       |
| Northwest Business Center      |       | 2152 Northwest  Parkway         |       | Industrial   |       |             |       | 161              |       | 1,637           |       | 187                           |       | 161               |       | 1,824        |       | 1,985      |       | 256                  |       | 1982            |       | 1999         |       |
| Northwest Business Center      |       | 2130 Northwest  Parkway         |       | Industrial   |       |             |       | 353              |       | 2,885           |       | 429                           |       | 353               |       | 3,314        |       | 3,667      |       | 493                  |       | 1982            |       | 1999         |       |
| Northwest Business Center      |       | 2270 Northwest  Parkway         |       | Industrial   |       | 1,590            |       | 483              |       | 3,887           |       | 485                           |       | 483               |       | 4,372        |       | 4,855      |       | 661                  |       | 1988            |       | 1999         |       |
| Northwest Business Center      |       | 2275 Northwest  Parkway         |       | Industrial   |       | 1,044            |       | 327              |       | 2,641           |       | 252                           |       | 327               |       | 2,893        |       | 3,220      |       | 435                  |       | 1988            |       | 1999         |       |
|                           |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **MARYLAND HEIGHTS, MISSOURI** |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Riverport Business Park        |       | Riverport Tower                 |       | Office       |       |             |       | 3,549            |       | 30,215          |       | 7,875                         |       | 3,954             |       | 37,685       |       | 41,639     |       | 6,298                |       | 1991            |       | 1997         |       |
| Riverport Business Park        |       | Riverport  Distribution         |       | Industrial   |       |             |       | 242              |       | 2,272           |       | 124                           |       | 242               |       | 2,396        |       | 2,638      |       | 443                  |       | 1990            |       | 1997         |       |
| Riverport Business Park        |       | Express Scripts                 |       | Office       |       |             |       | 2,285            |       | 12,535          |       | 184                           |       | 2,285             |       | 12,719       |       | 15,004     |       | 3,938                |       | 1999            |       | 1999         |       |
| Riverport Business Park        |       | Riverport 1                     |       | Industrial   |       |             |       | 900              |       | 3,798           |       | 124                           |       | 900               |       | 3,922        |       | 4,822      |       | 1,240                |       | 1999            |       | 1999         |       |
| Riverport Business Park        |       | Riverport 2                     |       | Industrial   |       |             |       | 1,238            |       | 7,056           |       | 2                             |       | 1,238             |       | 7,058        |       | 8,296      |       | 2,751                |       | 2000            |       | 2000         |       |
| Riverport Business Park        |       | Riverport 3                     |       | Industrial   |       |             |       | 1,269            |       | 4,570           |       | 1,933                         |       | 1,269             |       | 6,503        |       | 7,772      |       | 999                  |       | 2001            |       | 2001         |       |
| Riverport Distribution         |       | Express Scripts  Service Center |       | Industrial   |       |             |       | 1,197            |       | 8,825           |       | 150                           |       | 1,197             |       | 8,975        |       | 10,172     |       | 1,697                |       | 1992            |       | 1997         |       |
|                           |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **MASON, OHIO**                |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Deerfield Crossing             |       | Deerfield  Crossing Bldg 1      |       | Office       |       |             |       | 1,493            |       | 14,492          |       | 221                           |       | 1,493             |       | 14,713       |       | 16,206     |       | 3,595                |       | 1999            |       | 1999         |       |
| Deerfield Crossing             |       | Deerfield  Crossing Bldg 2      |       | Office       |       |             |       | 1,069            |       | 14,269          |       | 207                           |       | 1,069             |       | 14,476       |       | 15,545     |       | 2,557                |       | 2001            |       | 2001         |       |
| Governor’s Pointe North   |       | Community  Insurance            |       | Office       |       |             |       | 3,252            |       | 17,314          |       | —                        |       | 3,252             |       | 17,314       |       | 20,566     |       | —               |       | 2002            |       | 2002         |       |

 

72

----

 
| ** **                      | ** ** | ** **                      | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Cost Capitalized**          | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
|---------------------------------|------------|---------------------------------|------------|--------------|------------|------------------|------------|------------------|------------|-----------------|------------|-------------------------------|------------|-------------------|------------|--------------|------------|------------|------------|----------------------|------------|-----------------|------------|--------------|------------|
| ** **                      | ** ** | ** **                      | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Subsequent to**             | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
| ** **                      | ** ** | ** **                      | ** ** | **Building** | ** ** | ** **       | ** ** | **Initial Cost** | ** ** | **Development** | ** ** | **Gross Book Value 12/31/04** | ** ** | **Accumulated**   | ** ** | **Year**     | ** ** | **Year**   | ** ** |
| **Development**                 | ** ** | **Name**                        | ** ** | **Type**     | ** ** | **Encumbrances** | ** ** | **Land**         | ** ** | **Buildings**   | ** ** | **or Acquisition**            | ** ** | **Land/Land Imp** | ** ** | **Bldgs/TI** | ** ** | **Total**  | ** ** | **Depreciation (1)** | ** ** | **Constructed** | ** ** | **Acquired** | ** ** |
| Governor’s Pointe          |       | Governor’s Pointe  4770    |       | Office       |       |             |       | 586              |       | 8,016           |       | 114                           |       | 596               |       | 8,120        |       | 8,716      |       | 3,150                |       | 1986            |       | 1988         |       |
| Governor’s Pointe          |       | Governor’s Pointe  4700    |       | Industrial   |       |             |       | 584              |       | 5,868           |       | 501                           |       | 595               |       | 6,358        |       | 6,953      |       | 2,320                |       | 1987            |       | 1988         |       |
| Governor’s Pointe          |       | Governor’s Pointe  4900    |       | Industrial   |       |             |       | 654              |       | 4,412           |       | 430                           |       | 673               |       | 4,823        |       | 5,496      |       | 1,821                |       | 1987            |       | 1989         |       |
| Governor’s Pointe          |       | Governor’s Pointe  4705    |       | Office       |       |             |       | 719              |       | 8,360           |       | 3,162                         |       | 987               |       | 11,254       |       | 12,241     |       | 3,637                |       | 1988            |       | 1993         |       |
| Governor’s Pointe          |       | Governor’s Pointe  4605    |       | Office       |       |             |       | 630              |       | 18,121          |       | 949                           |       | 909               |       | 18,791       |       | 19,700     |       | 5,036                |       | 1990            |       | 1993         |       |
| Governor’s Pointe          |       | Governor’s Pointe  8990    |       | Office       |       |             |       | 594              |       | 6,199           |       | 436                           |       | 594               |       | 6,635        |       | 7,229      |       | 2,328                |       | 1997            |       | 1997         |       |
| Governor’s Pointe          |       | Governor’s Pointe  4660    |       | Office       |       |             |       | 385              |       | 4,838           |       | 54                            |       | 529               |       | 4,748        |       | 5,277      |       | 1,183                |       | 1997            |       | 1997         |       |
| Governor’s Pointe          |       | Governor’s Pointe  4680    |       | Office       |       |             |       | 1,115            |       | 8,697           |       | 116                           |       | 1,115             |       | 8,813        |       | 9,928      |       | 2,273                |       | 1998            |       | 1998         |       |
| Governor’s Pointe          |       | Governor’s Pointe  4690    |       | Office       |       |             |       | 907              |       | 3,488           |       | 174                           |       | 907               |       | 3,662        |       | 4,569      |       | 476                  |       | 2002            |       | 2002         |       |
| Governors Pointe Retail         |       | Bigg’s  Supercenter        |       | Retail       |       |             |       | 2,107            |       | 10,040          |       | 23                            |       | 4,227             |       | 7,943        |       | 12,170     |       | 2,392                |       | 1996            |       | 1996         |       |
| Governors Pointe Retail         |       | Lowes                           |       | Retail       |       |             |       | 3,750            |       | 6,614           |       | 219                           |       | 3,750             |       | 6,833        |       | 10,583     |       | 2,135                |       | 1997            |       | 1997         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **MAYFIELD HEIGHTS, OHIO**      |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Landerbrook Corporate Ctr       |       | Landerbrook Corp.  Center I     |       | Office       |       |             |       | 1,807            |       | 10,266          |       | 69                            |       | 1,808             |       | 10,334       |       | 12,142     |       | 2,323                |       | 1997            |       | 1997         |       |
| Landerbrook Corporate Ctr       |       | Landerbrook Corp.  Center II    |       | Office       |       |             |       | 1,382            |       | 10,226          |       | 1,787                         |       | 1,382             |       | 12,013       |       | 13,395     |       | 2,839                |       | 1998            |       | 1998         |       |
| Landerbrook Corporate Ctr       |       | Landerbrook Corp.  Center III   |       | Office       |       |             |       | 1,528            |       | 8,591           |       | 4,631                         |       | 1,684             |       | 13,066       |       | 14,750     |       | 1,454                |       | 2000            |       | 2001         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **MCDONOUGH, GEORGIA**          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Liberty Dist. Center            |       | 120 Declaration  Drive          |       | Industrial   |       |             |       | 615              |       | 8,603           |       | 80                            |       | 615               |       | 8,683        |       | 9,298      |       | 1,200                |       | 1997            |       | 1999         |       |
| Liberty Dist. Center            |       | Liberty III                     |       | Industrial   |       |             |       | 2,273            |       | 14,604          |       | 611                           |       | 2,273             |       | 15,215       |       | 17,488     |       | 1,906                |       | 2001            |       | 2001         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **MENDOTA HEIGHTS, MINNESOTA**  |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Enterprise Industrial Center    |       | Enterprise  Industrial Center   |       | Industrial   |       | 1,775            |       | 864              |       | 5,073           |       | 235                           |       | 864               |       | 5,308        |       | 6,172      |       | 960                  |       | 1979            |       | 1997         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **MILFORD, OHIO**               |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Park 50                         |       | Park 50 Bldg 17                 |       | Office       |       |             |       | 500              |       | 5,123           |       | 347                           |       | 510               |       | 5,460        |       | 5,970      |       | 2,541                |       | 1985            |       | 1986         |       |
| Park 50                         |       | Park 50 Bldg 20                 |       | Industrial   |       |             |       | 461              |       | 6,634           |       | 365                           |       | 469               |       | 6,991        |       | 7,460      |       | 3,179                |       | 1987            |       | 1988         |       |
| Park 50                         |       | Park 50 Bldg 25                 |       | Industrial   |       |             |       | 1,161            |       | 3,751           |       | 755                           |       | 1,184             |       | 4,483        |       | 5,667      |       | 1,266                |       | 1989            |       | 1993         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **MINNEAPOLIS, MINNESOTA**      |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Broadway Business Center        |       | Broadway Business  Ctr III      |       | Industrial   |       |             |       | 140              |       | 817             |       | 171                           |       | 144               |       | 984          |       | 1,128      |       | 160                  |       | 1983            |       | 1998         |       |
| Broadway Business Center        |       | Broadway Business  Ctr IV       |       | Industrial   |       |             |       | 194              |       | 1,173           |       | 323                           |       | 200               |       | 1,490        |       | 1,690      |       | 286                  |       | 1983            |       | 1998         |       |
| Broadway Business Center        |       | Broadway Business  Ctr VI       |       | Industrial   |       |             |       | 433              |       | 2,538           |       | 583                           |       | 447               |       | 3,107        |       | 3,554      |       | 652                  |       | 1983            |       | 1998         |       |
| Broadway Business Center        |       | Broadway Business  Ctr VII      |       | Industrial   |       |             |       | 233              |       | 1,385           |       | 95                            |       | 241               |       | 1,472        |       | 1,713      |       | 249                  |       | 1983            |       | 1998         |       |
| Minneapolis                     |       | Chilies Ground  Lease           |       | Grounds      |       |             |       | 921              |       | —          |       | 69                            |       | 990               |       | —       |       | 990        |       | 3                    |       |            |       | 1998         |       |
| Minneapolis                     |       | Olive Garden  Ground Lease      |       | Grounds      |       |             |       | 921              |       | —          |       | —                        |       | 921               |       | —       |       | 921        |       | —               |       |            |       | 1998         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **MINNETONKA, MINNESOTA**       |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| 10801 Red Circle Drive          |       | 10801 Red Circle  Dr.           |       | Office       |       |             |       | 527              |       | 2,472           |       | 701                           |       | 527               |       | 3,173        |       | 3,700      |       | 574                  |       | 1977            |       | 1997         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **MONROE, OHIO**                |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Monroe Business Center          |       | Monroe Business  Center Bldg. 1 |       | Industrial   |       |             |       | 660              |       | 5,484           |       | 305                           |       | 660               |       | 5,789        |       | 6,449      |       | 974                  |       | 1992            |       | 1999         |       |
|                            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **MORRISVILLE, NORTH CAROLINA** |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Perimeter Park                  |       | 507 Airport Blvd                |       | Industrial   |       |             |       | 1,327            |       | 8,464           |       | 914                           |       | 1,351             |       | 9,354        |       | 10,705     |       | 1,317                |       | 1993            |       | 1999         |       |
| Perimeter Park                  |       | 5151 McCrimmon  Pkwy            |       | Industrial   |       |             |       | 1,318            |       | 8,241           |       | 431                           |       | 1,342             |       | 8,648        |       | 9,990      |       | 1,473                |       | 1995            |       | 1999         |       |
| Perimeter Park                  |       | 2600 Perimeter  Park Dr         |       | Industrial   |       |             |       | 975              |       | 5,407           |       | 341                           |       | 991               |       | 5,732        |       | 6,723      |       | 842                  |       | 1997            |       | 1999         |       |
| Perimeter Park                  |       | 5150 McCrimmon  Pkwy            |       | Industrial   |       |             |       | 1,739            |       | 12,278          |       | 150                           |       | 1,773             |       | 12,394       |       | 14,167     |       | 1,700                |       | 1998            |       | 1999         |       |
| Perimeter Park                  |       | 2400 Perimeter  Park Dr.        |       | Office       |       |             |       | 760              |       | 6,322           |       | 1,035                         |       | 778               |       | 7,339        |       | 8,117      |       | 1,198                |       | 1999            |       | 1999         |       |
| Perimeter Park                  |       | 3000 Perimeter  Park Dr         |       | Industrial   |       | 1,693            |       | 482              |       | 3,165           |       | 653                           |       | 491               |       | 3,809        |       | 4,300      |       | 675                  |       | 1989            |       | 1999         |       |
| Perimeter Park                  |       | 2900 Perimeter  Park Dr         |       | Industrial   |       | 1,312            |       | 235              |       | 2,346           |       | 705                           |       | 264               |       | 3,022        |       | 3,286      |       | 586                  |       | 1990            |       | 1999         |       |
| Perimeter Park                  |       | 2800 Perimeter  Park Dr         |       | Industrial   |       | 2,350            |       | 777              |       | 4,940           |       | 213                           |       | 811               |       | 5,119        |       | 5,930      |       | 763                  |       | 1992            |       | 1999         |       |
| Perimeter Park                  |       | 100 Perimeter  Park Drive       |       | Industrial   |       |             |       | 477              |       | 3,250           |       | 1,496                         |       | 477               |       | 4,746        |       | 5,223      |       | 612                  |       | 1987            |       | 1999         |       |
| Perimeter Park                  |       | 200 Perimeter  Park Drive       |       | Industrial   |       |             |       | 567              |       | 3,160           |       | 229                           |       | 576               |       | 3,380        |       | 3,956      |       | 470                  |       | 1987            |       | 1999         |       |
| Perimeter Park                  |       | 300 Perimeter  Park Drive       |       | Industrial   |       |             |       | 567              |       | 3,159           |       | 1,567                         |       | 567               |       | 4,726        |       | 5,293      |       | 583                  |       | 1986            |       | 1999         |       |
| Perimeter Park                  |       | 400 Perimeter  Park Drive       |       | Industrial   |       | 3,614            |       | 486              |       | 4,470           |       | 104                           |       | 486               |       | 4,574        |       | 5,060      |       | 657                  |       | 1983            |       | 1999         |       |
| Perimeter Park                  |       | 500 Perimeter  Park Drive       |       | Industrial   |       |             |       | 522              |       | 4,421           |       | 238                           |       | 522               |       | 4,659        |       | 5,181      |       | 679                  |       | 1985            |       | 1999         |       |
| Perimeter Park                  |       | 800 Perimeter  Park Drive       |       | Industrial   |       | 2,672            |       | 405              |       | 3,321           |       | 1,753                         |       | 405               |       | 5,074        |       | 5,479      |       | 964                  |       | 1984            |       | 1999         |       |
| Perimeter Park                  |       | 900 Perimeter  Park Drive       |       | Industrial   |       |             |       | 629              |       | 1,918           |       | 1,277                         |       | 629               |       | 3,195        |       | 3,824      |       | 495                  |       | 1982            |       | 1999         |       |
| Perimeter Park                  |       | 1000 Perimeter  Park Drive      |       | Industrial   |       |             |       | 405              |       | 3,268           |       | 940                           |       | 405               |       | 4,208        |       | 4,613      |       | 665                  |       | 1982            |       | 1999         |       |
| Perimeter Park                  |       | 1100 Perimeter  Park Drive      |       | Industrial   |       |             |       | 777              |       | 6,056           |       | 664                           |       | 794               |       | 6,703        |       | 7,497      |       | 980                  |       | 1990            |       | 1999         |       |
| Perimeter Park                  |       | 1400 Perimeter  Park Drive      |       | Office       |       |             |       | 666              |       | 4,614           |       | 1,284                         |       | 974               |       | 5,590        |       | 6,564      |       | 827                  |       | 1991            |       | 1999         |       |
| Perimeter Park                  |       | 1500 Perimeter  Park Drive      |       | Office       |       |             |       | 1,148            |       | 10,424          |       | 301                           |       | 1,177             |       | 10,696       |       | 11,873     |       | 1,527                |       | 1996            |       | 1999         |       |
| Perimeter Park                  |       | 1600 Perimeter  Park Drive      |       | Office       |       |             |       | 1,463            |       | 10,160          |       | 771                           |       | 1,513             |       | 10,881       |       | 12,394     |       | 1,528                |       | 1994            |       | 1999         |       |
| Perimeter Park                  |       | 1800 Perimeter  Park Drive      |       | Office       |       |             |       | 907              |       | 5,751           |       | 593                           |       | 976               |       | 6,275        |       | 7,251      |       | 853                  |       | 1994            |       | 1999         |       |
| Perimeter Park                  |       | 2000 Perimeter  Park Drive      |       | Office       |       |             |       | 788              |       | 5,860           |       | 677                           |       | 842               |       | 6,483        |       | 7,325      |       | 1,215                |       | 1997            |       | 1999         |       |
| Perimeter Park                  |       | 1700 Perimeter  Center West     |       | Office       |       |             |       | 1,230            |       | 10,808          |       | 372                           |       | 1,260             |       | 11,150       |       | 12,410     |       | 1,514                |       | 1997            |       | 1999         |       |
| Perimeter Park                  |       | 3900 N. Paramount  Parkway      |       | Office       |       |             |       | 540              |       | 13,328          |       | 154                           |       | 574               |       | 13,448       |       | 14,022     |       | 1,876                |       | 1998            |       | 1999         |       |
| Perimeter Park                  |       | 3900 S.Paramount  Pkwy          |       | Office       |       |             |       | 1,575            |       | 12,573          |       | 1,011                         |       | 1,612             |       | 13,547       |       | 15,159     |       | 2,568                |       | 2000            |       | 1999         |       |
| Perimeter Park                  |       | 5200 East  Paramount            |       | Office       |       |             |       | 1,748            |       | 17,892          |       | 816                           |       | 1,797             |       | 18,659       |       | 20,456     |       | 3,479                |       | 1999            |       | 1999         |       |
| Perimeter Park                  |       | 3500 Paramount  Pkwy            |       | Office       |       |             |       | 755              |       | 13,072          |       | 13                            |       | 755               |       | 13,085       |       | 13,840     |       | 2,446                |       | 1999            |       | 2000         |       |
| Perimeter Park                  |       | 2700 Perimeter  Park            |       | Industrial   |       |             |       | 662              |       | 3,233           |       | 948                           |       | 662               |       | 4,181        |       | 4,843      |       | 559                  |       | 2001            |       | 2001         |       |

 

73

----

 
| ** **                  | ** ** | ** **                    | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Cost Capitalized**          | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
|-----------------------------|------------|-------------------------------|------------|--------------|------------|------------------|------------|------------------|------------|-----------------|------------|-------------------------------|------------|-------------------|------------|--------------|------------|------------|------------|----------------------|------------|-----------------|------------|--------------|------------|
| ** **                  | ** ** | ** **                    | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Subsequent to**             | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
| ** **                  | ** ** | ** **                    | ** ** | **Building** | ** ** | ** **       | ** ** | **Initial Cost** | ** ** | **Development** | ** ** | **Gross Book Value 12/31/04** | ** ** | **Accumulated**   | ** ** | **Year**     | ** ** | **Year**   | ** ** |
| **Development**             | ** ** | **Name**                      | ** ** | **Type**     | ** ** | **Encumbrances** | ** ** | **Land**         | ** ** | **Buildings**   | ** ** | **or Acquisition**            | ** ** | **Land/Land Imp** | ** ** | **Bldgs/TI** | ** ** | **Total**  | ** ** | **Depreciation (1)** | ** ** | **Constructed** | ** ** | **Acquired** | ** ** |
| Perimeter Park              |       | 5200 West  Paramount          |       | Office       |       |             |       | 1,831            |       | 13,288          |       | 26                            |       | 1,831             |       | 13,314       |       | 15,145     |       | 1,422                |       | 2000            |       | 2001         |       |
| Perimeter Park              |       | 2450 Perimeter  Park          |       | Office       |       |             |       | 669              |       | 4,028           |       | —                        |       | 669               |       | 4,028        |       | 4,697      |       | 856                  |       | 2001            |       | 2001         |       |
| Research Triangle Ind. Ctr  |       | 409 Airport Blvd  Bldg A      |       | Industrial   |       | 700              |       | 296              |       | 1,291           |       | 22                            |       | 300               |       | 1,309        |       | 1,609      |       | 186                  |       | 1983            |       | 1999         |       |
| Research Triangle Ind. Ctr  |       | 409 Airport Blvd  Bldg B      |       | Industrial   |       | 439              |       | 175              |       | 772             |       | 54                            |       | 177               |       | 824          |       | 1,001      |       | 128                  |       | 1986            |       | 1999         |       |
| Research Triangle Ind. Ctr  |       | 409 Airport Blvd  bldg C      |       | Industrial   |       | 1,415            |       | 185              |       | 2,856           |       | 219                           |       | 193               |       | 3,067        |       | 3,260      |       | 467                  |       | 1982            |       | 1999         |       |
| Woodlake Center             |       | 100 Innovation  Avenue        |       | Industrial   |       |             |       | 633              |       | 4,014           |       | 261                           |       | 633               |       | 4,275        |       | 4,908      |       | 721                  |       | 1994            |       | 1999         |       |
| Woodlake Center             |       | 101 Innovation  Ave           |       | Industrial   |       |             |       | 615              |       | 4,106           |       | 97                            |       | 615               |       | 4,203        |       | 4,818      |       | 605                  |       | 1997            |       | 1999         |       |
| Woodlake Center             |       | 200 Innovation  Drive         |       | Industrial   |       |             |       | 357              |       | 4,336           |       | 85                            |       | 357               |       | 4,421        |       | 4,778      |       | 693                  |       | 1999            |       | 1999         |       |
| Woodlake Center             |       | 501 Innovation  Ave.          |       | Industrial   |       |             |       | 640              |       | 7,132           |       | 47                            |       | 640               |       | 7,179        |       | 7,819      |       | 1,951                |       | 1999            |       | 1999         |       |
| Woodlake Center             |       | 1000 Innovation               |       | Industrial   |       |             |       | 514              |       | 2,941           |       | 39                            |       | 514               |       | 2,980        |       | 3,494      |       | 208                  |       | 1996            |       | 2002         |       |
| Woodlake Center             |       | 1200 Innovation               |       | Industrial   |       |             |       | 740              |       | 5,925           |       | 59                            |       | 740               |       | 5,984        |       | 6,724      |       | 674                  |       | 1996            |       | 2002         |       |
| Woodlake Center             |       | Woodlake VIII                 |       | Industrial   |       |             |       | 908              |       | 1,545           |       | —                        |       | 908               |       | 1,545        |       | 2,453      |       | 72                   |       | 2003            |       | 2003         |       |
|                        |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **NAPERVILLE, ILLINOIS**    |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Meridian Business Campus    |       | 1835 Jefferson                |       | Industrial   |       |             |       | 1,723            |       | 5,553           |       | —                        |       | 1,723             |       | 5,553        |       | 7,276      |       | 216                  |       | 2003            |       | 2003         |       |
|                        |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **NASHVILLE, TENNESSEE**    |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Airpark Business Center     |       | 1420 Donelson  Pike           |       | Industrial   |       | 521              |       | 1,331            |       | 5,417           |       | 499                           |       | 1,357             |       | 5,890        |       | 7,247      |       | 908                  |       | 1985            |       | 1999         |       |
| Airpark Business Center     |       | 1410 Donelson  Pike           |       | Industrial   |       | 610              |       | 1,411            |       | 6,917           |       | 164                           |       | 1,411             |       | 7,081        |       | 8,492      |       | 989                  |       | 1986            |       | 1999         |       |
| Airpark Business Center     |       | 1400 Donelson  Pike           |       | Industrial   |       | 470              |       | 1,276            |       | 5,057           |       | 224                           |       | 1,276             |       | 5,281        |       | 6,557      |       | 830                  |       | 1996            |       | 1999         |       |
| Airpark Business Center     |       | 400 Airpark  Center           |       | Industrial   |       | 1,695            |       | 419              |       | 2,188           |       | 18                            |       | 419               |       | 2,206        |       | 2,625      |       | 318                  |       | 1989            |       | 1999         |       |
| Airpark Business Center     |       | 500 Airpark  Center Dr.       |       | Industrial   |       | 2,661            |       | 923              |       | 2,465           |       | 792                           |       | 923               |       | 3,257        |       | 4,180      |       | 466                  |       | 1988            |       | 1999         |       |
| Airpark Business Center     |       | 600 Airport  Center Dr        |       | Industrial   |       | 2,645            |       | 729              |       | 3,341           |       | 63                            |       | 729               |       | 3,404        |       | 4,133      |       | 483                  |       | 1990            |       | 1999         |       |
| Airpark Business Center     |       | 700 Airpark  Center Dr.       |       | Industrial   |       | 2,578            |       | 801              |       | 2,849           |       | 379                           |       | 801               |       | 3,228        |       | 4,029      |       | 459                  |       | 1992            |       | 1999         |       |
| Airpark Business Center     |       | 800 Airpark  Center Dr.       |       | Industrial   |       | 2,373            |       | 924              |       | 4,021           |       | 392                           |       | 924               |       | 4,413        |       | 5,337      |       | 683                  |       | 1995            |       | 1999         |       |
| Airpark Business Center     |       | 900 Airpark  Center Dr        |       | Industrial   |       | 1,961            |       | 798              |       | 3,424           |       | 259                           |       | 798               |       | 3,683        |       | 4,481      |       | 580                  |       | 1995            |       | 1999         |       |
| Airpark Business Center     |       | 1000 Airpark  Center Dr.      |       | Industrial   |       |             |       | 1,300            |       | 9,650           |       | 26                            |       | 1,300             |       | 9,676        |       | 10,976     |       | 1,335                |       | 1997            |       | 1999         |       |
| Airpark Business Center     |       | 5270 Harding  place           |       | Industrial   |       | 1,059            |       | 535              |       | 2,501           |       | 8                             |       | 535               |       | 2,509        |       | 3,044      |       | 348                  |       | 1996            |       | 1999         |       |
| Airpark Business Center     |       | 1415 Donelson  Pike           |       | Industrial   |       | 3,700            |       | 1,308            |       | 8,822           |       | 378                           |       | 1,308             |       | 9,200        |       | 10,508     |       | 1,308                |       | 1996            |       | 1999         |       |
| Airpark Business Center     |       | 1413 Donelson  Pike           |       | Industrial   |       | 1,180            |       | 549              |       | 2,751           |       | 43                            |       | 549               |       | 2,794        |       | 3,343      |       | 395                  |       | 1996            |       | 1999         |       |
| Airpark Business Center     |       | 5233 Harding  Place           |       | Industrial   |       |             |       | 628              |       | 3,084           |       | 18                            |       | 628               |       | 3,102        |       | 3,730      |       | 711                  |       | 1998            |       | 1999         |       |
| Airpark East                |       | Airpark  East-Eagle Bldg      |       | Industrial   |       |             |       | 1,564            |       | 3,363           |       | 677                           |       | 1,564             |       | 4,040        |       | 5,604      |       | 348                  |       | 2001            |       | 2002         |       |
| Cumberland Business Center  |       | Cumberland  Business Center I |       | Industrial   |       |             |       | 1,461            |       | 6,958           |       | —                        |       | 1,461             |       | 6,958        |       | 8,419      |       | 1,538                |       | 1999            |       | 1999         |       |
| Four-Forty Business Center  |       | 700 Melrose  Avenue           |       | Industrial   |       | 3,197            |       | 938              |       | 6,481           |       | —                        |       | 938               |       | 6,481        |       | 7,419      |       | 886                  |       | 1997            |       | 1999         |       |
| Four-Forty Business Center  |       | 684 Melrose Ave               |       | Industrial   |       |             |       | 1,812            |       | 7,605           |       | 209                           |       | 1,812             |       | 7,814        |       | 9,626      |       | 1,127                |       | 1998            |       | 1999         |       |
| Four-Forty Business Center  |       | 782 Melrose  Avenue           |       | Industrial   |       |             |       | 1,522            |       | 5,766           |       | 261                           |       | 1,522             |       | 6,027        |       | 7,549      |       | 933                  |       | 1997            |       | 1999         |       |
| Four-Forty Business Center  |       | 784 Melrose Ave.              |       | Industrial   |       |             |       | 471              |       | 3,331           |       | 516                           |       | 471               |       | 3,847        |       | 4,318      |       | 849                  |       | 1999            |       | 1999         |       |
| Greenbriar                  |       | Greenbriar  Business Park     |       | Industrial   |       |             |       | 1,445            |       | 5,248           |       | 953                           |       | 1,445             |       | 6,201        |       | 7,646      |       | 1,583                |       | 1986            |       | 1994         |       |
| Haywood Oaks                |       | Haywood Oaks Bldg  2          |       | Industrial   |       |             |       | 395              |       | 1,941           |       | 183                           |       | 395               |       | 2,124        |       | 2,519      |       | 579                  |       | 1988            |       | 1993         |       |
| Haywood Oaks                |       | Haywood Oaks Bldg  3          |       | Industrial   |       |             |       | 346              |       | 1,777           |       | 375                           |       | 346               |       | 2,152        |       | 2,498      |       | 698                  |       | 1988            |       | 1993         |       |
| Haywood Oaks                |       | Haywood Oaks Bldg  4          |       | Industrial   |       |             |       | 435              |       | 2,126           |       | 68                            |       | 435               |       | 2,194        |       | 2,629      |       | 598                  |       | 1988            |       | 1993         |       |
| Haywood Oaks                |       | Haywood Oaks Bldg  5          |       | Industrial   |       |             |       | 629              |       | 3,093           |       | 95                            |       | 629               |       | 3,188        |       | 3,817      |       | 878                  |       | 1988            |       | 1993         |       |
| Haywood Oaks                |       | Haywood Oaks Bldg  6          |       | Industrial   |       |             |       | 924              |       | 6,418           |       | 481                           |       | 946               |       | 6,877        |       | 7,823      |       | 1,919                |       | 1989            |       | 1993         |       |
| Haywood Oaks                |       | Haywood Oaks Bldg  7          |       | Industrial   |       |             |       | 456              |       | 1,875           |       | 265                           |       | 456               |       | 2,140        |       | 2,596      |       | 520                  |       | 1995            |       | 1995         |       |
| Haywood Oaks                |       | Haywood Oaks Bldg  8          |       | Industrial   |       |             |       | 617              |       | 3,563           |       | 181                           |       | 751               |       | 3,610        |       | 4,361      |       | 1,087                |       | 1997            |       | 1997         |       |
| Haywood Oaks East           |       | Haywood Oaks East             |       | Industrial   |       |             |       | 969              |       | 5,906           |       | 248                           |       | 969               |       | 6,154        |       | 7,123      |       | 1,326                |       | 2000            |       | 2000         |       |
| Lakeview Place              |       | Three Lakeview                |       | Office       |       |             |       | 2,126            |       | 14,034          |       | 1,708                         |       | 2,126             |       | 15,742       |       | 17,868     |       | 3,180                |       | 1999            |       | 1999         |       |
| Lakeview Place              |       | One Lakeview  Place           |       | Office       |       |             |       | 2,046            |       | 11,887          |       | 1,377                         |       | 2,123             |       | 13,187       |       | 15,310     |       | 2,429                |       | 1986            |       | 1998         |       |
| Lakeview Place              |       | Two Lakeview  Place           |       | Office       |       |             |       | 2,046            |       | 11,910          |       | 581                           |       | 2,046             |       | 12,491       |       | 14,537     |       | 2,009                |       | 1988            |       | 1998         |       |
| Riverview Business Center   |       | 545 Mainstream  Dr.           |       | Office       |       |             |       | 847              |       | 6,326           |       | 683                           |       | 847               |       | 7,009        |       | 7,856      |       | 1,134                |       | 1983            |       | 1999         |       |
| Metro Center                |       | 566 Mainstream  Dr.           |       | Industrial   |       |             |       | 454              |       | 3,937           |       | 496                           |       | 454               |       | 4,433        |       | 4,887      |       | 732                  |       | 1982            |       | 1999         |       |
| Metro Center                |       | 621 Mainstream  Dr.           |       | Industrial   |       |             |       | 428              |       | 2,868           |       | 243                           |       | 428               |       | 3,111        |       | 3,539      |       | 470                  |       | 1984            |       | 1999         |       |
| Riverview Business Center   |       | Riverview  Business Center I  |       | Industrial   |       |             |       | 497              |       | 2,878           |       | 59                            |       | 497               |       | 2,937        |       | 3,434      |       | 687                  |       | 2000            |       | 2000         |       |
| Riverview Business Center   |       | Riverview  Business Center II |       | Industrial   |       |             |       | 685              |       | 2,738           |       | 210                           |       | 685               |       | 2,948        |       | 3,633      |       | 506                  |       | 2001            |       | 2001         |       |
| Metropolitan Airport Center |       | Metro Airport  Center Bldg 1  |       | Industrial   |       |             |       | 1,180            |       | 4,128           |       | 344                           |       | 1,190             |       | 4,462        |       | 5,652      |       | 861                  |       | 1999            |       | 1999         |       |
| Metropolitan Airport Center |       | Metro Airport Bus  Ctr C      |       | Industrial   |       |             |       | 1,053            |       | 6,652           |       | 111                           |       | 1,053             |       | 6,763        |       | 7,816      |       | 745                  |       | 2001            |       | 2001         |       |
| Nashville Business Center   |       | 3300 Briley Park  Blvd        |       | Industrial   |       |             |       | 936              |       | 6,417           |       | 103                           |       | 936               |       | 6,520        |       | 7,456      |       | 1,175                |       | 1997            |       | 1999         |       |
| Nashville Park              |       | Powertel Pk Lot  at Grassmere |       | Grounds      |       |             |       | 1,050            |       | —          |       | 39                            |       | 1,089             |       | —       |       | 1,089      |       | 78                   |       | 2003            |       | 2003         |       |
| Royal Parkway Center        |       | 2515 Perimeter  Park          |       | Industrial   |       |             |       | 731              |       | 4,766           |       | 217                           |       | 734               |       | 4,980        |       | 5,714      |       | 681                  |       | 1990            |       | 1999         |       |
| Royal Parkway Center        |       | 500 Royal Parkway             |       | Industrial   |       |             |       | 603              |       | 4,644           |       | 18                            |       | 603               |       | 4,662        |       | 5,265      |       | 639                  |       | 1990            |       | 1999         |       |
|                        |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **NEW ALBANY, OHIO**        |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| New Albany                  |       | 6525 West Campus  Oval        |       | Office       |       |             |       | 842              |       | 3,467           |       | 1,922                         |       | 881               |       | 5,350        |       | 6,231      |       | 524                  |       | 1993            |       | 1999         |       |
|                        |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **NILES, ILLINOIS**         |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Niles Park                  |       | 6300 Howard St.               |       | Industrial   |       |             |       | 4,920            |       | 3,671           |       | —                        |       | 4,920             |       | 3,671        |       | 8,591      |       | 61                   |       | 1950            |       | 2004         |       |
|                        |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **NORCROSS, GEORGIA**       |       |                          |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Gwinnett Park               |       | 4258  Communications Drive    |       | Industrial   |       |             |       | 29               |       | 2,388           |       | 116                           |       | 29                |       | 2,504        |       | 2,533      |       | 342                  |       | 1981            |       | 1999         |       |
| Gwinnett Park               |       | 4245  International Blvd      |       | Industrial   |       |             |       | 192              |       | 6,961           |       | —                        |       | 192               |       | 6,961        |       | 7,153      |       | 1,441                |       | 1985            |       | 1999         |       |
| Gwinnett Park               |       | 4355  International Blvd      |       | Industrial   |       |             |       | 233              |       | 2,969           |       | 110                           |       | 233               |       | 3,079        |       | 3,312      |       | 429                  |       | 1983            |       | 1999         |       |
| Gwinnett Park               |       | 4436 Park Drive               |       | Industrial   |       |             |       | 18               |       | 1,516           |       | 36                            |       | 26                |       | 1,544        |       | 1,570      |       | 307                  |       | 1968            |       | 1999         |       |

 

74

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| ** **                    | ** ** | ** **                      | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Cost Capitalized**          | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
|-------------------------------|------------|---------------------------------|------------|--------------|------------|------------------|------------|------------------|------------|-----------------|------------|-------------------------------|------------|-------------------|------------|--------------|------------|------------|------------|----------------------|------------|-----------------|------------|--------------|------------|
| ** **                    | ** ** | ** **                      | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Subsequent to**             | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
| ** **                    | ** ** | ** **                      | ** ** | **Building** | ** ** | ** **       | ** ** | **Initial Cost** | ** ** | **Development** | ** ** | **Gross Book Value 12/31/04** | ** ** | **Accumulated**   | ** ** | **Year**     | ** ** | **Year**   | ** ** |
| **Development**               | ** ** | **Name**                        | ** ** | **Type**     | ** ** | **Encumbrances** | ** ** | **Land**         | ** ** | **Buildings**   | ** ** | **or Acquisition**            | ** ** | **Land/Land Imp** | ** ** | **Bldgs/TI** | ** ** | **Total**  | ** ** | **Depreciation (1)** | ** ** | **Constructed** | ** ** | **Acquired** | ** ** |
| Gwinnett Park                 |       | 1835 Shackleford  Court         |       | Office       |       |             |       | 29               |       | 6,309           |       | 1,000                         |       | 29                |       | 7,309        |       | 7,338      |       | 1,076                |       | 1990            |       | 1999         |       |
| Gwinnett Park                 |       | 1854 Shackleford  Road          |       | Office       |       |             |       | 52               |       | 10,387          |       | 1,115                         |       | 52                |       | 11,502       |       | 11,554     |       | 2,085                |       | 1985            |       | 1999         |       |
| Gwinnett Park                 |       | 4274 Shackleford  Road          |       | Industrial   |       |             |       | 27               |       | 3,626           |       | 82                            |       | 32                |       | 3,703        |       | 3,735      |       | 541                  |       | 1974            |       | 1999         |       |
| Gwinnett Park                 |       | 4275 Shackleford  Court         |       | Office       |       | 334              |       | 8                |       | 2,125           |       | 497                           |       | 12                |       | 2,618        |       | 2,630      |       | 416                  |       | 1985            |       | 1999         |       |
| Northeast I85                 |       | 5755 Peachtree  Industrial Blvd |       | Office       |       |             |       | 800              |       | 3,652           |       | 229                           |       | 800               |       | 3,881        |       | 4,681      |       | 532                  |       | 1997            |       | 1999         |       |
| Northeast I85                 |       | 5765 Peachtree  Industrial Blvd |       | Industrial   |       |             |       | 521              |       | 4,671           |       | —                        |       | 521               |       | 4,671        |       | 5,192      |       | 640                  |       | 1997            |       | 1999         |       |
| Northeast I85                 |       | 5775 Peachtree  Industrial Blvd |       | Industrial   |       |             |       | 521              |       | 4,695           |       | 35                            |       | 521               |       | 4,730        |       | 5,251      |       | 665                  |       | 1997            |       | 1999         |       |
| Northwoods                    |       | 2915 Courtyards  Drive          |       | Industrial   |       |             |       | 268              |       | 1,967           |       | 374                           |       | 268               |       | 2,341        |       | 2,609      |       | 317                  |       | 1986            |       | 1999         |       |
| Northwoods                    |       | 2925 Courtyards  Drive          |       | Industrial   |       |             |       | 333              |       | 3,243           |       | 311                           |       | 333               |       | 3,554        |       | 3,887      |       | 457                  |       | 1986            |       | 1999         |       |
| Northwoods                    |       | 2975 Courtyards  Drive          |       | Industrial   |       |             |       | 144              |       | 1,268           |       | 261                           |       | 144               |       | 1,529        |       | 1,673      |       | 217                  |       | 1986            |       | 1999         |       |
| Northwoods                    |       | 2995 Courtyards  Drive          |       | Industrial   |       |             |       | 109              |       | 894             |       | 34                            |       | 109               |       | 928          |       | 1,037      |       | 123                  |       | 1986            |       | 1999         |       |
| Northwoods                    |       | 2725 Northwoods  Pkwy           |       | Industrial   |       |             |       | 440              |       | 2,575           |       | 704                           |       | 440               |       | 3,279        |       | 3,719      |       | 568                  |       | 1984            |       | 1999         |       |
| Northwoods                    |       | 2755 Northwoods  Pkwy           |       | Industrial   |       |             |       | 249              |       | 2,887           |       | 127                           |       | 249               |       | 3,014        |       | 3,263      |       | 403                  |       | 1986            |       | 1999         |       |
| Northwoods                    |       | 2775 Northwoods  Pkwy           |       | Industrial   |       |             |       | 322              |       | 2,431           |       | 145                           |       | 322               |       | 2,576        |       | 2,898      |       | 338                  |       | 1986            |       | 1999         |       |
| Northwoods                    |       | 2850 Colonnades  Court          |       | Industrial   |       |             |       | 562              |       | 5,294           |       | 251                           |       | 562               |       | 5,545        |       | 6,107      |       | 755                  |       | 1988            |       | 1999         |       |
| Northwoods                    |       | 3040 Northwoods  Pkwy           |       | Industrial   |       |             |       | 298              |       | 1,806           |       | 311                           |       | 298               |       | 2,117        |       | 2,415      |       | 367                  |       | 1984            |       | 1999         |       |
| Northwoods                    |       | 3055 Northwoods  Pkwy           |       | Industrial   |       |             |       | 213              |       | 1,560           |       | 88                            |       | 213               |       | 1,648        |       | 1,861      |       | 236                  |       | 1985            |       | 1999         |       |
| Northwoods                    |       | 3075 Northwoods  Pkwy           |       | Industrial   |       |             |       | 374              |       | 2,872           |       | 789                           |       | 374               |       | 3,661        |       | 4,035      |       | 456                  |       | 1985            |       | 1999         |       |
| Northwoods                    |       | 3100 Northwoods  Pkwy           |       | Industrial   |       |             |       | 393              |       | 2,550           |       | 165                           |       | 393               |       | 2,715        |       | 3,108      |       | 360                  |       | 1985            |       | 1999         |       |
| Northwoods                    |       | 3155 Northwoods  Pkwy           |       | Industrial   |       |             |       | 331              |       | 2,511           |       | 320                           |       | 331               |       | 2,831        |       | 3,162      |       | 356                  |       | 1985            |       | 1999         |       |
| Northwoods                    |       | 3175 Northwoods  Pkwy           |       | Industrial   |       |             |       | 250              |       | 2,076           |       | 84                            |       | 250               |       | 2,160        |       | 2,410      |       | 287                  |       | 1985            |       | 1999         |       |
| Peachtree Corners Tech Center |       | 3170 Reps Miller  Road          |       | Industrial   |       |             |       | 500              |       | 3,671           |       | 18                            |       | 500               |       | 3,689        |       | 4,189      |       | 504                  |       | 1998            |       | 1999         |       |
| Peachtree Corners Tech Center |       | 3180 Reps Miller  Road          |       | Industrial   |       |             |       | 500              |       | 2,951           |       | 38                            |       | 500               |       | 2,989        |       | 3,489      |       | 410                  |       | 1998            |       | 1999         |       |
| Peachtree Corners Tech Center |       | 3190 Reps Miller  Road          |       | Industrial   |       |             |       | 525              |       | 2,371           |       | 1,329                         |       | 525               |       | 3,700        |       | 4,225      |       | 506                  |       | 1998            |       | 1999         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       | —            |       | —       |       |       |       |                 |       |            |       |         |       |
| **NORTHLAKE, ILLINOIS**       |       |                            |       |         |       |             |       |             |       |            |       |                          |       | —            |       | —       |       |       |       |                 |       |            |       |         |       |
| Northlake                     |       | Northlake I                     |       | Industrial   |       |             |       | 5,721            |       | 10,859          |       | —                        |       | 5,721             |       | 10,859       |       | 16,580     |       | 810                  |       | 2002            |       | 2002         |       |
| Northlake                     |       | Northlake II                    |       | Industrial   |       |             |       | 2,911            |       | 5,784           |       | —                        |       | 2,977             |       | 5,718        |       | 8,695      |       | 84                   |       | 1970            |       | 2004         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **NORTH OLMSTED, OHIO**       |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Great Northern Corp Center    |       | Great Northern  Corp Center I   |       | Office       |       |             |       | 1,040            |       | 7,235           |       | 961                           |       | 1,040             |       | 8,196        |       | 9,236      |       | 1,750                |       | 1985            |       | 1996         |       |
| Great Northern Corp Center    |       | Great Northern  Corp Center II  |       | Office       |       |             |       | 1,048            |       | 7,299           |       | 893                           |       | 1,048             |       | 8,192        |       | 9,240      |       | 1,780                |       | 1987            |       | 1996         |       |
| Great Northern Corp Center    |       | Great Northern  Corp Center III |       | Office       |       |             |       | 604              |       | 5,776           |       | 339                           |       | 604               |       | 6,115        |       | 6,719      |       | 1,294                |       | 1999            |       | 1999         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **OLIVETTE, MISSOURI**        |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Warson Commerce Center        |       | Warson Commerce  Center         |       | Industrial   |       |             |       | 749              |       | 5,448           |       | 481                           |       | 749               |       | 5,929        |       | 6,678      |       | 1,081                |       | 1987            |       | 1998         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **ORLANDO, FLORIDA**          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Business Centre at Lee Vista  |       | Lee Vista  Distribution Ctr I   |       | Industrial   |       |             |       | 819              |       | 4,559           |       | 85                            |       | 819               |       | 4,644        |       | 5,463      |       | 1,335                |       | 1998            |       | 1999         |       |
| Business Centre at Lee Vista  |       | Lee Vista  Distribution Ctr II  |       | Industrial   |       |             |       | 740              |       | 3,959           |       | 12                            |       | 740               |       | 3,971        |       | 4,711      |       | 1,123                |       | 1999            |       | 2000         |       |
| Business Centre at Lee Vista  |       | Lee Vista Service  Center I     |       | Industrial   |       |             |       | 926              |       | 2,378           |       | 1,250                         |       | 926               |       | 3,628        |       | 4,554      |       | 403                  |       | 2000            |       | 2001         |       |
| Bus Ctr at Lee Vista-Gen      |       | Lee Vista  Distrib. Center III  |       | Industrial   |       |             |       | 841              |       | 3,596           |       | 186                           |       | 841               |       | 3,782        |       | 4,623      |       | 310                  |       | 2001            |       | 2002         |       |
| Liberty Park @ Southcenter    |       | Southcenter  I-Brede/Allied     |       | Industrial   |       |             |       | 3,094            |       | 3,867           |       | —                        |       | 3,094             |       | 3,867        |       | 6,961      |       | 298                  |       | 2002            |       | 2002         |       |
| Parksouth Dist. Center        |       | Parksouth Dist.  Ctr-Bldg B     |       | Industrial   |       |             |       | 565              |       | 4,906           |       | 407                           |       | 570               |       | 5,308        |       | 5,878      |       | 709                  |       | 1996            |       | 1999         |       |
| Parksouth Dist. Center        |       | Parksouth Dist.  Ctr-Bldg A     |       | Industrial   |       |             |       | 493              |       | 4,557           |       | 159                           |       | 498               |       | 4,711        |       | 5,209      |       | 640                  |       | 1997            |       | 1999         |       |
| Parksouth Dist. Center        |       | Parksouth Dist.  Ctr-Bldg D     |       | Industrial   |       |             |       | 593              |       | 4,142           |       | 5                             |       | 597               |       | 4,143        |       | 4,740      |       | 581                  |       | 1998            |       | 1999         |       |
| Parksouth Dist. Center        |       | Parksouth Dist.  Ctr-Bldg E     |       | Industrial   |       |             |       | 649              |       | 4,667           |       | 215                           |       | 653               |       | 4,878        |       | 5,531      |       | 686                  |       | 1997            |       | 1999         |       |
| Parksouth Dist. Center        |       | Parksouth Dist.  Ctr-Bldg F     |       | Industrial   |       |             |       | 1,030            |       | 5,543           |       | 978                           |       | 1,035             |       | 6,516        |       | 7,551      |       | 1,199                |       | 1999            |       | 1999         |       |
| Parksouth Dist. Center        |       | Parksouth Dist.  Ctr-Bldg H     |       | Industrial   |       |             |       | 725              |       | 3,977           |       | 9                             |       | 730               |       | 3,981        |       | 4,711      |       | 613                  |       | 2000            |       | 2000         |       |
| Parksouth Dist. Center        |       | Chase Orlando                   |       | Industrial   |       |             |       | 598              |       | 2,068           |       | 1,220                         |       | 674               |       | 3,212        |       | 3,886      |       | 234                  |       | 2000            |       | 2001         |       |
| Parksouth Dist. Center        |       | Parksouth-Benjamin  Moore       |       | Industrial   |       |             |       | 708              |       | 2,076           |       | —                        |       | 1,115             |       | 1,669        |       | 2,784      |       | 117                  |       | 2003            |       | 2003         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **OVERLAND, MISSOURI**        |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| I-170 Center                  |       | I-170 Center                    |       | Industrial   |       |             |       | 950              |       | 4,230           |       | 721                           |       | 1,018             |       | 4,883        |       | 5,901      |       | 1,198                |       | 1986            |       | 1996         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **PARK RIDGE, ILLINOIS**      |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| O’Hare Corporate Centre  |       | O’Hare Corporate  Centre   |       | Office       |       |             |       | 1,476            |       | 9,184           |       | —                        |       | 1,476             |       | 9,184        |       | 10,660     |       | 274                  |       | 1985            |       | 2003         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **PEPPER PIKE, OHIO**         |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Corporate Circle              |       | Corporate Circle                |       | Office       |       |             |       | 1,696            |       | 11,534          |       | 2,460                         |       | 1,698             |       | 13,992       |       | 15,690     |       | 2,880                |       | 1983            |       | 1996         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **PLAINFIELD, INDIANA**       |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Plainfield Business Park      |       | Plainfield  Building 1          |       | Industrial   |       | 6,072            |       | 1,104            |       | 11,235          |       | 10                            |       | 1,104             |       | 11,245       |       | 12,349     |       | 1,385                |       | 2000            |       | 2000         |       |
| Plainfield Business Park      |       | Plainfield  Building 2          |       | Industrial   |       |             |       | 1,387            |       | 9,734           |       | 14                            |       | 1,387             |       | 9,748        |       | 11,135     |       | 1,430                |       | 2000            |       | 2000         |       |
| Plainfield Business Park      |       | Plainfield  Building 3          |       | Industrial   |       |             |       | 2,016            |       | 12,460          |       | 281                           |       | 2,016             |       | 12,741       |       | 14,757     |       | 859                  |       | 2002            |       | 2002         |       |
| Plainfield Business Park      |       | Plainfield  Building 5          |       | Industrial   |       |             |       | 1,890            |       | 6,867           |       | —                        |       | 1,890             |       | 6,867        |       | 8,757      |       | —               |       | 2004            |       | 2004         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **PLANO, TEXAS**              |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Legacy Business Park          |       | Metasolv Building  Phase I      |       | Office       |       |             |       | 1,527            |       | 5,849           |       | 706                           |       | 1,527             |       | 6,555        |       | 8,082      |       | 1,025                |       | 1997            |       | 1999         |       |
| Legacy Business Park          |       | Metasolv Building  Phase II     |       | Office       |       |             |       | 1,181            |       | 11,294          |       | 65                            |       | 1,181             |       | 11,359       |       | 12,540     |       | 1,903                |       | 1999            |       | 1999         |       |

 

75

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| ** **                    | ** ** | ** **                     | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Cost Capitalized**          | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
|-------------------------------|------------|--------------------------------|------------|--------------|------------|------------------|------------|------------------|------------|-----------------|------------|-------------------------------|------------|-------------------|------------|--------------|------------|------------|------------|----------------------|------------|-----------------|------------|--------------|------------|
| ** **                    | ** ** | ** **                     | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Subsequent to**             | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
| ** **                    | ** ** | ** **                     | ** ** | **Building** | ** ** | ** **       | ** ** | **Initial Cost** | ** ** | **Development** | ** ** | **Gross Book Value 12/31/04** | ** ** | **Accumulated**   | ** ** | **Year**     | ** ** | **Year**   | ** ** |
| **Development**               | ** ** | **Name**                       | ** ** | **Type**     | ** ** | **Encumbrances** | ** ** | **Land**         | ** ** | **Buildings**   | ** ** | **or Acquisition**            | ** ** | **Land/Land Imp** | ** ** | **Bldgs/TI** | ** ** | **Total**  | ** ** | **Depreciation (1)** | ** ** | **Constructed** | ** ** | **Acquired** | ** ** |
|                          |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **PLYMOUTH, MINNESOTA**       |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Medicine Lake                 |       | Medicine Lake  Indus. Center   |       | Industrial   |       | 3,045            |       | 1,145            |       | 6,744           |       | 862                           |       | 1,145             |       | 7,606        |       | 8,751      |       | 1,651                |       | 1970            |       | 1997         |       |
| Plymouth Office/Tech Center   |       | Plymouth  Office/Tech Center   |       | Industrial   |       |             |       | 428              |       | 2,458           |       | 562                           |       | 431               |       | 3,017        |       | 3,448      |       | 596                  |       | 1986            |       | 1998         |       |
| Westpoint Buildings           |       | Westpoint  Business Ctr        |       | Office       |       |             |       | 98               |       | 573             |       | 301                           |       | 114               |       | 858          |       | 972        |       | 237                  |       | 1978            |       | 1999         |       |
| Westpoint Buildings           |       | Westpoint Bldg  B&C        |       | Industrial   |       |             |       | 370              |       | 2,166           |       | 756                           |       | 370               |       | 2,922        |       | 3,292      |       | 576                  |       | 1978            |       | 1999         |       |
| Westpoint Buildings           |       | Westpoint Bldg  D&E        |       | Industrial   |       |             |       | 362              |       | 2,127           |       | 636                           |       | 362               |       | 2,763        |       | 3,125      |       | 779                  |       | 1978            |       | 1999         |       |
|                          |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **RALEIGH, NORTH CAROLINA**   |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Brook Forest                  |       | Brook Forest I                 |       | Office       |       |             |       | 1,242            |       | 6,221           |       | 404                           |       | 1,242             |       | 6,625        |       | 7,867      |       | 1,184                |       | 2000            |       | 2000         |       |
| Centerview                    |       | Centerview 5540                |       | Office       |       |             |       | 773              |       | 6,307           |       | 342                           |       | 773               |       | 6,649        |       | 7,422      |       | 212                  |       | 1986            |       | 2003         |       |
| Centerview                    |       | Centerview 5565                |       | Office       |       |             |       | 513              |       | 4,831           |       | 123                           |       | 513               |       | 4,954        |       | 5,467      |       | 161                  |       | 1999            |       | 2003         |       |
| Centerview                    |       | Centerview 5580                |       | Office       |       |             |       | 768              |       | 5,675           |       | 178                           |       | 768               |       | 5,853        |       | 6,621      |       | 188                  |       | 1987            |       | 2003         |       |
| Crabtree Overlook             |       | Crabtree Overlook              |       | Office       |       |             |       | 2,164            |       | 21,005          |       | 135                           |       | 2,164             |       | 21,140       |       | 23,304     |       | 2,720                |       | 2000            |       | 2001         |       |
| Interchange Plaza             |       | 801 Jones  Franklin Rd         |       | Office       |       | 4,770            |       | 1,351            |       | 7,800           |       | 508                           |       | 1,351             |       | 8,308        |       | 9,659      |       | 1,145                |       | 1995            |       | 1999         |       |
| Interchange Plaza             |       | 5520 Capital Ctr  Dr           |       | Office       |       |             |       | 842              |       | 4,412           |       | 507                           |       | 842               |       | 4,919        |       | 5,761      |       | 788                  |       | 1993            |       | 1999         |       |
| Spring Forest Business Center |       | 3200 Spring  Forest Road       |       | Industrial   |       |             |       | 561              |       | 5,253           |       | 1,578                         |       | 561               |       | 6,831        |       | 7,392      |       | 924                  |       | 1986            |       | 1999         |       |
| Spring Forest Business Center |       | 3100 Spring  Forest Road       |       | Industrial   |       |             |       | 616              |       | 4,232           |       | 410                           |       | 616               |       | 4,642        |       | 5,258      |       | 716                  |       | 1992            |       | 1999         |       |
| Spring Forest Business Center |       | Spring Forest Bus  Center III  |       | Office       |       |             |       | 462              |       | 3,124           |       | 357                           |       | 462               |       | 3,481        |       | 3,943      |       | 402                  |       | 2002            |       | 2002         |       |
| Walnut Creek                  |       | Walnut Creek  Business Park #1 |       | Industrial   |       |             |       | 419              |       | 3,126           |       | 218                           |       | 419               |       | 3,344        |       | 3,763      |       | 578                  |       | 2001            |       | 2001         |       |
| Walnut Creek                  |       | Walnut Creek  Business Park #2 |       | Industrial   |       |             |       | 456              |       | 3,808           |       | 46                            |       | 456               |       | 3,854        |       | 4,310      |       | 521                  |       | 2001            |       | 2001         |       |
| Walnut Creek                  |       | Walnut Creek  Business Park #3 |       | Industrial   |       |             |       | 679              |       | 4,374           |       | 1,213                         |       | 679               |       | 5,587        |       | 6,266      |       | 452                  |       | 2001            |       | 2001         |       |
| Walnut Creek                  |       | Walnut Creek IV                |       | Industrial   |       |             |       | 2,038            |       | 2,714           |       | —                        |       | 2,038             |       | 2,714        |       | 4,752      |       | 67                   |       | 2004            |       | 2004         |       |
|                          |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **ROMEOVILLE, ILLINOIS**      |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Crossroads Business Park      |       | Chapco Carton  Company         |       | Industrial   |       |             |       | 917              |       | 5,224           |       | 42                            |       | 917               |       | 5,266        |       | 6,183      |       | 385                  |       | 1999            |       | 2002         |       |
|                          |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **ROSWELL, GEORGIA**          |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Hembree Crest                 |       | 11545 Wills Road               |       | Industrial   |       |             |       | 1,225            |       | 6,479           |       | 158                           |       | 1,225             |       | 6,637        |       | 7,862      |       | 899                  |       | 1998            |       | 1999         |       |
| Hembree Park                  |       | 105 Hembree Park  Drive        |       | Industrial   |       |             |       | 288              |       | 1,796           |       | 287                           |       | 288               |       | 2,083        |       | 2,371      |       | 282                  |       | 1988            |       | 1999         |       |
| Hembree Park                  |       | 150 Hembree Park  Drive        |       | Industrial   |       |             |       | 824              |       | 3,761           |       | 256                           |       | 824               |       | 4,017        |       | 4,841      |       | 642                  |       | 1985            |       | 1999         |       |
| Hembree Park                  |       | 200 Hembree Park  Drive        |       | Industrial   |       |             |       | 160              |       | 2,064           |       | 370                           |       | 160               |       | 2,434        |       | 2,594      |       | 391                  |       | 1985            |       | 1999         |       |
| Hembree Park                  |       | 645 Hembree  Parkway           |       | Industrial   |       |             |       | 248              |       | 2,627           |       | 433                           |       | 248               |       | 3,060        |       | 3,308      |       | 617                  |       | 1986            |       | 1999         |       |
| Hembree Park                  |       | 655 Hembree  Parkway           |       | Industrial   |       |             |       | 248              |       | 2,762           |       | 219                           |       | 248               |       | 2,981        |       | 3,229      |       | 452                  |       | 1986            |       | 1999         |       |
| Hembree Park                  |       | 250 Hembree Park  Drive        |       | Industrial   |       |             |       | 686              |       | 5,269           |       | 428                           |       | 686               |       | 5,697        |       | 6,383      |       | 861                  |       | 1996            |       | 1999         |       |
| Hembree Park                  |       | 660 Hembree Park  Drive        |       | Industrial   |       |             |       | 785              |       | 5,083           |       | 377                           |       | 785               |       | 5,460        |       | 6,245      |       | 768                  |       | 1998            |       | 1999         |       |
| Hembree Park                  |       | 245 Hembree Park  Drive        |       | Industrial   |       |             |       | 616              |       | 6,388           |       | 949                           |       | 616               |       | 7,337        |       | 7,953      |       | 1,976                |       | 1999            |       | 1999         |       |
| Mansell Commons               |       | 993 Mansell Road               |       | Industrial   |       |             |       | 136              |       | 1,288           |       | 6                             |       | 136               |       | 1,294        |       | 1,430      |       | 176                  |       | 1987            |       | 1999         |       |
| Mansell Commons               |       | 995 Mansell Road               |       | Industrial   |       |             |       | 80               |       | 917             |       | 47                            |       | 80                |       | 964          |       | 1,044      |       | 155                  |       | 1987            |       | 1999         |       |
| Mansell Commons               |       | 997 Mansell Road               |       | Industrial   |       |             |       | 72               |       | 666             |       | 48                            |       | 72                |       | 714          |       | 786        |       | 121                  |       | 1987            |       | 1999         |       |
| Mansell Commons               |       | 999 Mansell Road               |       | Industrial   |       |             |       | 104              |       | 955             |       | 10                            |       | 104               |       | 965          |       | 1,069      |       | 131                  |       | 1987            |       | 1999         |       |
| Mansell Commons               |       | 1003 Mansell Road              |       | Industrial   |       |             |       | 136              |       | 1,365           |       | 127                           |       | 136               |       | 1,492        |       | 1,628      |       | 271                  |       | 1987            |       | 1999         |       |
| Mansell Commons               |       | 1005 Mansell Road              |       | Industrial   |       |             |       | 72               |       | 948             |       | 55                            |       | 72                |       | 1,003        |       | 1,075      |       | 145                  |       | 1987            |       | 1999         |       |
| Mansell Commons               |       | 1007 Mansell Road              |       | Industrial   |       |             |       | 168              |       | 2,135           |       | 381                           |       | 168               |       | 2,516        |       | 2,684      |       | 449                  |       | 1987            |       | 1999         |       |
| Mansell Commons               |       | 1009 Mansell Road              |       | Industrial   |       |             |       | 264              |       | 2,546           |       | 359                           |       | 264               |       | 2,905        |       | 3,169      |       | 458                  |       | 1986            |       | 1999         |       |
| Mansell Commons               |       | 1011 Mansell Road              |       | Industrial   |       |             |       | 256              |       | 2,662           |       | 401                           |       | 256               |       | 3,063        |       | 3,319      |       | 597                  |       | 1984            |       | 1999         |       |
| North Meadow                  |       | 1100 Northmeadow  Parkway      |       | Industrial   |       |             |       | 552              |       | 3,966           |       | 417                           |       | 557               |       | 4,378        |       | 4,935      |       | 641                  |       | 1989            |       | 1999         |       |
| North Meadow                  |       | 1150 Northmeadow  Parkway      |       | Industrial   |       |             |       | 464              |       | 3,239           |       | 186                           |       | 464               |       | 3,425        |       | 3,889      |       | 555                  |       | 1988            |       | 1999         |       |
| North Meadow                  |       | 1125 Northmeadow  Parkway      |       | Industrial   |       |             |       | 320              |       | 3,647           |       | 396                           |       | 320               |       | 4,043        |       | 4,363      |       | 671                  |       | 1987            |       | 1999         |       |
| North Meadow                  |       | 1175 Northmeadow  Parkway      |       | Industrial   |       |             |       | 328              |       | 3,418           |       | 695                           |       | 328               |       | 4,113        |       | 4,441      |       | 671                  |       | 1987            |       | 1999         |       |
| North Meadow                  |       | 1250 Northmeadow  Parkway      |       | Industrial   |       |             |       | 312              |       | 4,370           |       | 431                           |       | 312               |       | 4,801        |       | 5,113      |       | 800                  |       | 1989            |       | 1999         |       |
| North Meadow                  |       | 1225 Northmeadow  Parkway      |       | Industrial   |       |             |       | 336              |       | 3,518           |       | 235                           |       | 336               |       | 3,753        |       | 4,089      |       | 575                  |       | 1989            |       | 1999         |       |
| North Meadow                  |       | 1325 Northmeadow  Parkway      |       | Industrial   |       |             |       | 472              |       | 6,448           |       | 375                           |       | 472               |       | 6,823        |       | 7,295      |       | 1,148                |       | 1990            |       | 1999         |       |
| North Meadow                  |       | 1335 Northmeadow  Parkway      |       | Industrial   |       |             |       | 946              |       | 8,195           |       | 276                           |       | 946               |       | 8,471        |       | 9,417      |       | 1,215                |       | 1996            |       | 1999         |       |
| North Meadow                  |       | 11390 Old Roswell  Road        |       | Industrial   |       |             |       | 530              |       | 3,595           |       | 14                            |       | 530               |       | 3,609        |       | 4,139      |       | 499                  |       | 1997            |       | 1999         |       |
| North Meadow                  |       | 1400 Hembree Road              |       | Industrial   |       |             |       | 545              |       | 3,267           |       | 41                            |       | 545               |       | 3,308        |       | 3,853      |       | 458                  |       | 1998            |       | 1999         |       |
| North Meadow                  |       | 235 Hembree                    |       | Industrial   |       |             |       | 694              |       | 5,711           |       | 174                           |       | 694               |       | 5,885        |       | 6,579      |       | 769                  |       | 1999            |       | 1999         |       |
| North Meadow                  |       | 1115 Northmeadow  Pkwy         |       | Industrial   |       |             |       | 705              |       | 3,272           |       | 16                            |       | 705               |       | 3,288        |       | 3,993      |       | 451                  |       | 1999            |       | 1999         |       |
| North Meadow                  |       | 1200 Northmeadow  Pkwy         |       | Industrial   |       |             |       | 423              |       | 3,077           |       | 64                            |       | 423               |       | 3,141        |       | 3,564      |       | 816                  |       | 2000            |       | 2000         |       |
| Other North Central Prop.     |       | 10745 Westside  Parkway        |       | Office       |       |             |       | 925              |       | 7,177           |       | 292                           |       | 925               |       | 7,469        |       | 8,394      |       | 1,168                |       | 1995            |       | 1999         |       |
|                          |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **SEVEN HILLS, OHIO**         |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Rock Run                      |       | Rock Run - North               |       | Office       |       | 2,146            |       | 837              |       | 5,654           |       | 539                           |       | 960               |       | 6,070        |       | 7,030      |       | 1,415                |       | 1984            |       | 1996         |       |
| Rock Run                      |       | Rock Run - Center              |       | Office       |       | 2,675            |       | 1,046            |       | 6,991           |       | 686                           |       | 1,169             |       | 7,554        |       | 8,723      |       | 1,789                |       | 1985            |       | 1996         |       |
| Rock Run                      |       | Rock Run - South               |       | Office       |       | 2,152            |       | 877              |       | 5,925           |       | 369                           |       | 1,000             |       | 6,171        |       | 7,171      |       | 1,411                |       | 1986            |       | 1996         |       |
|                          |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **SHARONVILLE, OHIO**         |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Enterprise Park               |       | Enterprise Bldg 1              |       | Industrial   |       |             |       | 1,030            |       | 6,054           |       | 552                           |       | 1,051             |       | 6,585        |       | 7,636      |       | 1,759                |       | 1990            |       | 1993         |       |
| Enterprise Park               |       | Enterprise Bldg 2              |       | Industrial   |       |             |       | 733              |       | 3,952           |       | 790                           |       | 747               |       | 4,728        |       | 5,475      |       | 1,515                |       | 1990            |       | 1993         |       |
| Enterprise Park               |       | Enterprise Bldg A              |       | Industrial   |       |             |       | 119              |       | 728             |       | 128                           |       | 119               |       | 856          |       | 975        |       | 219                  |       | 1987            |       | 1995         |       |
| Enterprise Park               |       | Enterprise Bldg B              |       | Industrial   |       |             |       | 119              |       | 1,249           |       | 47                            |       | 119               |       | 1,296        |       | 1,415      |       | 316                  |       | 1988            |       | 1995         |       |
| Enterprise Park               |       | Enterprise Bldg D              |       | Industrial   |       |             |       | 243              |       | 2,014           |       | 39                            |       | 243               |       | 2,053        |       | 2,296      |       | 466                  |       | 1989            |       | 1995         |       |

 

76

----

 
| ** **                    | ** ** | ** **                     | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Cost Capitalized**          | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
|-------------------------------|------------|--------------------------------|------------|--------------|------------|------------------|------------|------------------|------------|-----------------|------------|-------------------------------|------------|-------------------|------------|--------------|------------|------------|------------|----------------------|------------|-----------------|------------|--------------|------------|
| ** **                    | ** ** | ** **                     | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Subsequent to**             | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
| ** **                    | ** ** | ** **                     | ** ** | **Building** | ** ** | ** **       | ** ** | **Initial Cost** | ** ** | **Development** | ** ** | **Gross Book Value 12/31/04** | ** ** | **Accumulated**   | ** ** | **Year**     | ** ** | **Year**   | ** ** |
| **Development**               | ** ** | **Name**                       | ** ** | **Type**     | ** ** | **Encumbrances** | ** ** | **Land**         | ** ** | **Buildings**   | ** ** | **or Acquisition**            | ** ** | **Land/Land Imp** | ** ** | **Bldgs/TI** | ** ** | **Total**  | ** ** | **Depreciation (1)** | ** ** | **Constructed** | ** ** | **Acquired** | ** ** |
| Mosteller Dist. Center        |       | Mosteller  Distribution Ctr I  |       | Industrial   |       |             |       | 1,327            |       | 6,351           |       | 1,946                         |       | 1,327             |       | 8,297        |       | 9,624      |       | 2,068                |       | 1957            |       | 1996         |       |
| Mosteller Dist. Center        |       | Mosteller  Distribution Ctr II |       | Industrial   |       |             |       | 828              |       | 4,813           |       | 928                           |       | 828               |       | 5,741        |       | 6,569      |       | 1,533                |       | 1997            |       | 1997         |       |
| Perimeter Park                |       | Perimeter Park  Bldg A         |       | Industrial   |       |             |       | 229              |       | 1,353           |       | 290                           |       | 229               |       | 1,643        |       | 1,872      |       | 372                  |       | 1991            |       | 1996         |       |
| Perimeter Park                |       | Perimeter Park  Bldg B         |       | Industrial   |       |             |       | 244              |       | 1,077           |       | 87                            |       | 244               |       | 1,164        |       | 1,408      |       | 252                  |       | 1991            |       | 1996         |       |
|                          |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **SOLON, OHIO**               |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Fountain Parkway              |       | Fountain Parkway  Bldg 2       |       | Industrial   |       |             |       | 1,138            |       | 8,827           |       | 65                            |       | 1,138             |       | 8,892        |       | 10,030     |       | 1,421                |       | 1998            |       | 1999         |       |
| Fountain Parkway              |       | Fountain Parkway  Bldg 1       |       | Industrial   |       |             |       | 527              |       | 2,939           |       | 41                            |       | 527               |       | 2,980        |       | 3,507      |       | 540                  |       | 1997            |       | 1998         |       |
| Solon                         |       | 30600 Carter                   |       | Industrial   |       |             |       | 819              |       | 3,465           |       | 403                           |       | 821               |       | 3,866        |       | 4,687      |       | 730                  |       | 1971            |       | 1997         |       |
| Solon                         |       | 6230 Cochran                   |       | Industrial   |       |             |       | 600              |       | 2,519           |       | 425                           |       | 602               |       | 2,942        |       | 3,544      |       | 484                  |       | 1977            |       | 1997         |       |
| Solon                         |       | 5821 Harper                    |       | Industrial   |       |             |       | 554              |       | 2,326           |       | 192                           |       | 555               |       | 2,517        |       | 3,072      |       | 444                  |       | 1970            |       | 1997         |       |
| Solon                         |       | 6161 Cochran                   |       | Industrial   |       |             |       | 395              |       | 1,667           |       | 375                           |       | 396               |       | 2,041        |       | 2,437      |       | 425                  |       | 1978            |       | 1997         |       |
| Solon                         |       | 5901 Harper                    |       | Industrial   |       |             |       | 349              |       | 1,448           |       | 173                           |       | 350               |       | 1,620        |       | 1,970      |       | 298                  |       | 1970            |       | 1997         |       |
| Solon                         |       | 6661 Cochran                   |       | Industrial   |       |             |       | 244              |       | 1,022           |       | 116                           |       | 245               |       | 1,137        |       | 1,382      |       | 222                  |       | 1979            |       | 1997         |       |
| Solon                         |       | 6521 Davis                     |       | Industrial   |       |             |       | 128              |       | 544             |       | 524                           |       | 128               |       | 1,068        |       | 1,196      |       | 160                  |       | 1979            |       | 1997         |       |
| Solon                         |       | 30301 Carter  Street           |       | Industrial   |       |             |       | 650              |       | 4,480           |       | 468                           |       | 650               |       | 4,948        |       | 5,598      |       | 739                  |       | 1972            |       | 1999         |       |
|                          |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **ST. LOUIS PARK, MINNESOTA** |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Cedar Lake Business Center    |       | Cedar Lake  Business Center    |       | Industrial   |       |             |       | 332              |       | 1,948           |       | 414                           |       | 332               |       | 2,362        |       | 2,694      |       | 403                  |       | 1976            |       | 1997         |       |
| Minneapolis-West              |       | 1600 Tower                     |       | Office       |       |             |       | 2,321            |       | 32,034          |       | 4,255                         |       | 2,321             |       | 36,289       |       | 38,610     |       | 6,055                |       | 2000            |       | 2000         |       |
| Outside of a Development Park |       | North Plaza                    |       | Office       |       |             |       | 374              |       | 1,669           |       | 195                           |       | 374               |       | 1,864        |       | 2,238      |       | 835                  |       | 1966            |       | 1998         |       |
| Outside of a Development Park |       | South Plaza                    |       | Office       |       |             |       | 397              |       | 1,742           |       | 213                           |       | 397               |       | 1,955        |       | 2,352      |       | 883                  |       | 1966            |       | 1998         |       |
| Travelers Park                |       | Travelers Express  Tower       |       | Office       |       |             |       | 3,039            |       | 36,228          |       | 1,527                         |       | 3,091             |       | 37,703       |       | 40,794     |       | 5,505                |       | 1987            |       | 1999         |       |
| Novartis                      |       | Novartis  Warehouse            |       | Industrial   |       |             |       | 2,005            |       | 11,017          |       | 443                           |       | 2,005             |       | 11,460       |       | 13,465     |       | 1,920                |       | 1960            |       | 1998         |       |
| SW Submkt-Minneapolis West BC |       | 5219 Building                  |       | Office       |       |             |       | 99               |       | 574             |       | 84                            |       | 102               |       | 655          |       | 757        |       | 275                  |       | 1965            |       | 1998         |       |
|                          |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **ST. LOUIS, MISSOURI**       |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Craig Park Center             |       | Craig Park Center              |       | Industrial   |       |             |       | 254              |       | 2,332           |       | 430                           |       | 254               |       | 2,762        |       | 3,016      |       | 469                  |       | 1984            |       | 1998         |       |
| Outside of a Development Park |       | Hawthorn Office#1              |       | Office       |       |             |       | 2,600            |       | 15,328          |       | 152                           |       | 2,600             |       | 15,480       |       | 18,080     |       | 1,174                |       | 1997            |       | 2002         |       |
| Lakeside Crossing             |       | Lakeside Crossing  I           |       | Industrial   |       |             |       | 574              |       | 2,286           |       | 117                           |       | 574               |       | 2,403        |       | 2,977      |       | 183                  |       | 2001            |       | 2002         |       |
| Lakeside Crossing             |       | Lakeside Crossing  2           |       | Industrial   |       |             |       | 1,118            |       | 2,224           |       | —                        |       | 1,118             |       | 2,224        |       | 3,342      |       | 299                  |       | 2002            |       | 2002         |       |
| Lakeside Crossing             |       | Lakeside Crossing  3           |       | Industrial   |       |             |       | 1,851            |       | 4,906           |       | 625                           |       | 1,851             |       | 5,531        |       | 7,382      |       | 428                  |       | 2001            |       | 2002         |       |
| Lakeside Crossing             |       | Lakeside Crossing  5           |       | Office       |       |             |       | 883              |       | 1,899           |       | —                        |       | 883               |       | 1,899        |       | 2,782      |       | 119                  |       | 2003            |       | 2003         |       |
| Lakeside Crossing             |       | Lakeside Crossing  6           |       | Industrial   |       |             |       | 1,074            |       | 2,143           |       | 712                           |       | 1,507             |       | 2,422        |       | 3,929      |       | 220                  |       | 2002            |       | 2002         |       |
| Laumeier Office Park          |       | Laumeier I                     |       | Office       |       |             |       | 1,384            |       | 10,175          |       | 1,858                         |       | 1,384             |       | 12,033       |       | 13,417     |       | 3,217                |       | 1987            |       | 1995         |       |
| Laumeier Office Park          |       | Laumeier II                    |       | Office       |       |             |       | 1,421            |       | 10,129          |       | 1,249                         |       | 1,421             |       | 11,378       |       | 12,799     |       | 2,818                |       | 1988            |       | 1995         |       |
| Laumeier Office Park          |       | Laumeier IV                    |       | Office       |       |             |       | 1,029            |       | 7,439           |       | 952                           |       | 1,029             |       | 8,391        |       | 9,420      |       | 1,707                |       | 1987            |       | 1998         |       |
| Maryville Center              |       | 500-510 Maryville  Centre      |       | Office       |       |             |       | 3,402            |       | 24,823          |       | 1,260                         |       | 3,402             |       | 26,083       |       | 29,485     |       | 4,751                |       | 1984            |       | 1997         |       |
| Maryville Center              |       | 530 Maryville  Centre          |       | Office       |       | 6,463            |       | 2,219            |       | 15,797          |       | 1,562                         |       | 2,219             |       | 17,359       |       | 19,578     |       | 3,476                |       | 1990            |       | 1997         |       |
| Maryville Center              |       | 550 Maryville  Centre          |       | Office       |       |             |       | 1,996            |       | 12,596          |       | 122                           |       | 1,996             |       | 12,718       |       | 14,714     |       | 2,276                |       | 1988            |       | 1997         |       |
| Maryville Center              |       | 635-645 Maryville  Centre      |       | Office       |       |             |       | 3,048            |       | 18,569          |       | 743                           |       | 3,048             |       | 19,312       |       | 22,360     |       | 3,527                |       | 1987            |       | 1997         |       |
| Maryville Center              |       | 655 Maryville  Centre          |       | Office       |       |             |       | 1,860            |       | 13,336          |       | 194                           |       | 1,860             |       | 13,530       |       | 15,390     |       | 2,421                |       | 1994            |       | 1997         |       |
| Maryville Center              |       | 540 Maryville  Centre          |       | Office       |       |             |       | 2,219            |       | 15,019          |       | 649                           |       | 2,219             |       | 15,668       |       | 17,887     |       | 3,158                |       | 1990            |       | 1997         |       |
| Maryville Center              |       | 520 Maryville  Centre          |       | Office       |       |             |       | 2,404            |       | 14,493          |       | 407                           |       | 2,404             |       | 14,900       |       | 17,304     |       | 2,181                |       | 1998            |       | 1999         |       |
| Maryville Center              |       | 700 Maryville  Centre          |       | Office       |       |             |       | 4,556            |       | 28,852          |       | 108                           |       | 4,556             |       | 28,960       |       | 33,516     |       | 4,612                |       | 1999            |       | 2000         |       |
| Maryville Center              |       | 533 Maryville  Centre          |       | Office       |       |             |       | 3,230            |       | 18,083          |       | 107                           |       | 3,230             |       | 18,190       |       | 21,420     |       | 2,475                |       | 2000            |       | 2000         |       |
| Maryville Center              |       | 555 Maryville  Centre          |       | Office       |       |             |       | 3,226            |       | 15,860          |       | 1,460                         |       | 3,226             |       | 17,320       |       | 20,546     |       | 1,555                |       | 2000            |       | 2001         |       |
| Maryville Center              |       | 625 Maryville  Centre          |       | Office       |       | 5,124            |       | 2,509            |       | 11,216          |       | 257                           |       | 2,509             |       | 11,473       |       | 13,982     |       | 1,123                |       | 1996            |       | 2002         |       |
| Maryville Center              |       | Maryville Centre  Grounds      |       | Grounds      |       |             |       | —           |       | —          |       | —                        |       | —            |       | —       |       | —     |       | 24                   |       |            |       | 1997         |       |
| St. Louis Business Center     |       | St. Louis  Business Center A   |       | Industrial   |       |             |       | 194              |       | 1,795           |       | 487                           |       | 194               |       | 2,282        |       | 2,476      |       | 419                  |       | 1987            |       | 1998         |       |
| St. Louis Business Center     |       | St. Louis  Business Center B   |       | Industrial   |       |             |       | 250              |       | 2,301           |       | 817                           |       | 250               |       | 3,118        |       | 3,368      |       | 603                  |       | 1986            |       | 1998         |       |
| St. Louis Business Center     |       | St. Louis  Business Center C   |       | Industrial   |       |             |       | 166              |       | 1,537           |       | 361                           |       | 166               |       | 1,898        |       | 2,064      |       | 420                  |       | 1986            |       | 1998         |       |
| St. Louis Business Center     |       | St. Louis  Business Center D   |       | Industrial   |       |             |       | 168              |       | 1,552           |       | 272                           |       | 168               |       | 1,824        |       | 1,992      |       | 319                  |       | 1987            |       | 1998         |       |
| Southridge                    |       | Southridge  Business Center    |       | Industrial   |       |             |       | 1,158            |       | 4,258           |       | 794                           |       | 1,158             |       | 5,052        |       | 6,210      |       | 290                  |       | 2002            |       | 2002         |       |
| West Port Center              |       | Westport Center I              |       | Industrial   |       |             |       | 1,707            |       | 5,453           |       | 298                           |       | 1,707             |       | 5,751        |       | 7,458      |       | 1,103                |       | 1998            |       | 1998         |       |
| West Port Center              |       | Westport Center  II            |       | Industrial   |       |             |       | 914              |       | 2,902           |       | 226                           |       | 914               |       | 3,128        |       | 4,042      |       | 1,241                |       | 1998            |       | 1998         |       |
| West Port Center              |       | Westport Center  III           |       | Industrial   |       |             |       | 1,206            |       | 3,018           |       | 482                           |       | 1,206             |       | 3,500        |       | 4,706      |       | 841                  |       | 1998            |       | 1999         |       |
| West Port Center              |       | Westport Center  IV            |       | Industrial   |       |             |       | 1,440            |       | 5,585           |       | —                        |       | 1,440             |       | 5,585        |       | 7,025      |       | 1,275                |       | 2000            |       | 2000         |       |
| West Port Center              |       | Westport Center V              |       | Industrial   |       |             |       | 493              |       | 1,614           |       | —                        |       | 493               |       | 1,614        |       | 2,107      |       | 390                  |       | 1999            |       | 2000         |       |
| West Port Center              |       | Westport Place                 |       | Office       |       |             |       | 1,990            |       | 7,876           |       | 285                           |       | 1,990             |       | 8,161        |       | 10,151     |       | 2,544                |       | 1999            |       | 2000         |       |
| Westmark                      |       | Westmark                       |       | Office       |       |             |       | 1,497            |       | 11,002          |       | 1,670                         |       | 1,681             |       | 12,488       |       | 14,169     |       | 3,374                |       | 1987            |       | 1995         |       |
| Westview Place                |       | Westview Place                 |       | Office       |       |             |       | 669              |       | 9,474           |       | 1,924                         |       | 669               |       | 11,398       |       | 12,067     |       | 2,971                |       | 1988            |       | 1995         |       |
| Woodsmill Commons             |       | Woodsmill Commons  II          |       | Office       |       |             |       | 1,718            |       | 7,515           |       | —                        |       | 1,718             |       | 7,515        |       | 9,233      |       | 204                  |       | 1985            |       | 2003         |       |
| Woodsmill Commons             |       | Woodsmill Commons  I           |       | Office       |       |             |       | 1,836            |       | 7,328           |       | —                        |       | 1,836             |       | 7,328        |       | 9,164      |       | 208                  |       | 1985            |       | 2003         |       |
|                          |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **ST. PAUL, MINNESOTA**       |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| University Crossing           |       | University  Crossing           |       | Industrial   |       |             |       | 874              |       | 5,101           |       | 874                           |       | 911               |       | 5,938        |       | 6,849      |       | 1,261                |       | 1990            |       | 1998         |       |
|                          |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **ST. PETERS, MISSOURI**      |       |                           |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Horizon Business Ctr          |       | Horizon Business  Center       |       | Industrial   |       |             |       | 344              |       | 2,501           |       | 190                           |       | 344               |       | 2,691        |       | 3,035      |       | 453                  |       | 1985            |       | 1998         |       |

 

77

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| ** **                    | ** ** | ** **                      | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Cost Capitalized**          | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
|-------------------------------|------------|---------------------------------|------------|--------------|------------|------------------|------------|------------------|------------|-----------------|------------|-------------------------------|------------|-------------------|------------|--------------|------------|------------|------------|----------------------|------------|-----------------|------------|--------------|------------|
| ** **                    | ** ** | ** **                      | ** ** | ** **   | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | **Subsequent to**             | ** ** | ** **        | ** ** | ** **   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **      | ** ** | ** **   | ** ** |
| ** **                    | ** ** | ** **                      | ** ** | **Building** | ** ** | ** **       | ** ** | **Initial Cost** | ** ** | **Development** | ** ** | **Gross Book Value 12/31/04** | ** ** | **Accumulated**   | ** ** | **Year**     | ** ** | **Year**   | ** ** |
| **Development**               | ** ** | **Name**                        | ** ** | **Type**     | ** ** | **Encumbrances** | ** ** | **Land**         | ** ** | **Buildings**   | ** ** | **or Acquisition**            | ** ** | **Land/Land Imp** | ** ** | **Bldgs/TI** | ** ** | **Total**  | ** ** | **Depreciation (1)** | ** ** | **Constructed** | ** ** | **Acquired** | ** ** |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **STRONGSVILLE, OHIO**        |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Commerce Parkway              |       | Commerce Parkway  Bldg 1, 142   |       | Industrial   |       |             |       | 594              |       | 3,775           |       | 1,026                         |       | 594               |       | 4,801        |       | 5,395      |       | 390                  |       | 2002            |       | 2002         |       |
| Westwood                      |       | Dyment                          |       | Industrial   |       |             |       | 816              |       | 5,418           |       | 60                            |       | 816               |       | 5,478        |       | 6,294      |       | 1,026                |       | 1988            |       | 1997         |       |
| Alameda Drive                 |       | 12200 Alameda  Drive            |       | Industrial   |       |             |       | 364              |       | 2,418           |       | 538                           |       | 367               |       | 2,953        |       | 3,320      |       | 480                  |       | 1972            |       | 1997         |       |
| Park 82                       |       | Park 82 Bldg 2                  |       | Industrial   |       |             |       | 294              |       | 2,968           |       | 343                           |       | 294               |       | 3,311        |       | 3,605      |       | 549                  |       | 1998            |       | 1998         |       |
| Park 82                       |       | Park 82 Bldg 1                  |       | Industrial   |       |             |       | 215              |       | 2,015           |       | 120                           |       | 215               |       | 2,135        |       | 2,350      |       | 349                  |       | 1998            |       | 1998         |       |
| Park 82                       |       | Park 82 Bldg 3                  |       | Industrial   |       |             |       | 270              |       | 2,760           |       | 841                           |       | 270               |       | 3,601        |       | 3,871      |       | 755                  |       | 1999            |       | 1999         |       |
| Park 82                       |       | Park 82 Bldg 4                  |       | Industrial   |       |             |       | 357              |       | 5,430           |       | 95                            |       | 357               |       | 5,525        |       | 5,882      |       | 803                  |       | 2000            |       | 2000         |       |
| Park 82                       |       | Park 82 Bldg 5                  |       | Industrial   |       |             |       | 349              |       | 4,477           |       | 220                           |       | 349               |       | 4,697        |       | 5,046      |       | 559                  |       | 2000            |       | 2000         |       |
| Sprague Rd. Industrial        |       | Mohawk Dr. Bldg.  1             |       | Industrial   |       |             |       | 564              |       | 4,495           |       | —                        |       | 564               |       | 4,495        |       | 5,059      |       | 458                  |       | 2000            |       | 2000         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **SUNRISE, FLORIDA**          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Sawgrass                      |       | Sawgrass -  Building 1          |       | Office       |       |             |       | 1,211            |       | 7,834           |       | —                        |       | 1,211             |       | 7,834        |       | 9,045      |       | 2,004                |       | 1999            |       | 2000         |       |
| Sawgrass                      |       | Sawgrass Commerce  Ctr Phase II |       | Office       |       |             |       | 1,147            |       | 5,241           |       | —                        |       | 1,147             |       | 5,241        |       | 6,388      |       | 297                  |       | 2000            |       | 2001         |       |
| Sawgrass                      |       | Sawgrass Pointe                 |       | Office       |       |             |       | 3,484            |       | 21,892          |       | 2,552                         |       | 3,484             |       | 24,444       |       | 27,928     |       | 1,954                |       | 2001            |       | 2002         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **SUWANEE, GEORGIA**          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Northbrook                    |       | Northbrook  Business Dist II    |       | Industrial   |       |             |       | 267              |       | 2,235           |       | 655                           |       | 267               |       | 2,890        |       | 3,157      |       | 366                  |       | 2000            |       | 2000         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **TAMPA, FLORIDA**            |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Fairfield Distribution Center |       | Fairfield  Distribution Ctr I   |       | Industrial   |       |             |       | 483              |       | 2,666           |       | 37                            |       | 487               |       | 2,699        |       | 3,186      |       | 377                  |       | 1998            |       | 1999         |       |
| Fairfield Distribution Center |       | Fairfield  Distribution Ctr II  |       | Industrial   |       |             |       | 530              |       | 4,913           |       | 11                            |       | 534               |       | 4,920        |       | 5,454      |       | 683                  |       | 1998            |       | 1999         |       |
| Fairfield Distribution Center |       | Fairfield Distribution  Ctr III |       | Industrial   |       |             |       | 334              |       | 2,778           |       | 40                            |       | 338               |       | 2,814        |       | 3,152      |       | 387                  |       | 1999            |       | 1999         |       |
| Fairfield Distribution Center |       | Fairfield  Distribution Ctr IV  |       | Industrial   |       |             |       | 600              |       | 2,584           |       | 839                           |       | 604               |       | 3,419        |       | 4,023      |       | 886                  |       | 1999            |       | 1999         |       |
| Fairfield Distribution Center |       | Fairfield  Distribution Ctr V   |       | Industrial   |       |             |       | 488              |       | 3,561           |       | 85                            |       | 488               |       | 3,646        |       | 4,134      |       | 626                  |       | 2000            |       | 2000         |       |
| Fairfield Distribution Center |       | Fairfield  Distribution Ctr VI  |       | Industrial   |       |             |       | 555              |       | 4,548           |       | 301                           |       | 555               |       | 4,849        |       | 5,404      |       | 571                  |       | 2001            |       | 2001         |       |
| Fairfield Distribution Center |       | Fairfield  Distribution Ctr VII |       | Industrial   |       |             |       | 394              |       | 4,067           |       | 593                           |       | 394               |       | 4,660        |       | 5,054      |       | 1,005                |       | 2001            |       | 2001         |       |
| Fairfield Distribution Center |       | Fairfield VIII                  |       | Industrial   |       |             |       | 1,082            |       | 2,490           |       | —                        |       | 1,082             |       | 2,490        |       | 3,572      |       | 49                   |       | 2004            |       | 2004         |       |
| Highland Oaks                 |       | Highland Oaks I                 |       | Office       |       |             |       | 1,525            |       | 14,217          |       | 588                           |       | 1,525             |       | 14,805       |       | 16,330     |       | 2,831                |       | 1999            |       | 1999         |       |
| Highland Oaks                 |       | Highland Oaks II                |       | Office       |       |             |       | 1,605            |       | 11,930          |       | 1,888                         |       | 1,605             |       | 13,818       |       | 15,423     |       | 1,992                |       | 1999            |       | 2000         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **TWINSBURG, OHIO**           |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Enterprise Parkway            |       | Enterprise  Parkway #1          |       | Industrial   |       |             |       | 198              |       | 1,604           |       | 193                           |       | 198               |       | 1,797        |       | 1,995      |       | 290                  |       | 1974            |       | 1998         |       |
| Enterprise Parkway            |       | Enterprise  Parkway Bldg 2      |       | Industrial   |       |             |       | 610              |       | 7,429           |       | —                        |       | 610               |       | 7,429        |       | 8,039      |       | 972                  |       | 2000            |       | 2000         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **WEST CHESTER, OHIO**        |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Centre Pointe Office Park     |       | Centre Pointe 1                 |       | Office       |       |             |       | 2,501            |       | 9,433           |       | —                        |       | 2,501             |       | 9,433        |       | 11,934     |       | 219                  |       | 2000            |       | 2004         |       |
| Centre Pointe Office Park     |       | Centre Pointe 2                 |       | Office       |       |             |       | 2,056            |       | 9,950           |       | —                        |       | 2,056             |       | 9,950        |       | 12,006     |       | 229                  |       | 2001            |       | 2004         |       |
| Centre Pointe Office Park     |       | Centre Pointe 3                 |       | Office       |       |             |       | 2,048            |       | 9,829           |       | —                        |       | 2,048             |       | 9,829        |       | 11,877     |       | 224                  |       | 2002            |       | 2004         |       |
| World Park Union Centre       |       | WP@Union Ctr Bldg  11           |       | Industrial   |       |             |       | 2,592            |       | 6,716           |       | —                        |       | 2,592             |       | 6,716        |       | 9,308      |       | 123                  |       | 2004            |       | 2004         |       |
| World Park Union Centre       |       | World Park at  Union Ctr 12     |       | Industrial   |       |             |       | 306              |       | 3,510           |       | 13                            |       | 306               |       | 3,523        |       | 3,829      |       | 957                  |       | 2000            |       | 2000         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **WESTERVILLE, OHIO**         |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Westerville Executive Campus  |       | Liebert                         |       | Office       |       |             |       | 755              |       | 3,612           |       | 877                           |       | 755               |       | 4,489        |       | 5,244      |       | 884                  |       | 1999            |       | 1999         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **WESTMONT, ILLINOIS**        |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Oakmont Corporate Center      |       | Oakmont Tech  Center            |       | Industrial   |       |             |       | 1,501            |       | 8,750           |       | 659                           |       | 1,703             |       | 9,207        |       | 10,910     |       | 1,400                |       | 1989            |       | 1998         |       |
| Oakmont Corporate Center      |       | Oakmont Circle  Office          |       | Office       |       |             |       | 3,177            |       | 14,275          |       | 1,209                         |       | 3,528             |       | 15,133       |       | 18,661     |       | 2,632                |       | 1990            |       | 1998         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| **WILSON, NORTH CAROLINA**    |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
| Wilson Development            |       | Cott Beverages                  |       | Industrial   |       |             |       | 307              |       | 3,393           |       | —                        |       | 307               |       | 3,393        |       | 3,700      |       | —               |       | 1996            |       | 2004         |       |
|                          |       | Eliminations                    |       |         |       |             |       |             |       |            |       | (27,711                       | )          | (206              | )          | (27,505      | )          | (27,711    | )          | (13,413              | )          |            |       |         |       |
|                          |       |                            |       |         |       |             |       |             |       |            |       |                          |       |              |       |         |       |       |       |                 |       |            |       |         |       |
|                          |       |                            |       |         |       | $                | 203,081    |             | $          | 693,657         |       | $                             | 4,361,414  |              | $          | 322,023      |       | $          | 710,379    |                 | $          | 4,666,715       |       | $            | 5,377,094  |   | $ | 788,900 |   |   |   |   |   |
|                               |            |                                 |            |              |            |                  |            |                  |            |                 |            |                               |            |                   |            |              |            |            |            |                      |            |                 |            |              |            |  |  |  |  |  |  |  |  |

 

----

(1)                                  Depreciationof real estate is computed using the straight-line method over 40 years forbuildings, 15 years for land improvements and shorter periods based on leaseterms (generally 3 to 10 years) for tenant improvements.

 

78

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| ** **                                 | ** ** | **Real Estate Assets** | ** ** | **Accumulated Depreciation** | ** ** |
|--------------------------------------------|------------|------------------------|------------|------------------------------|------------|
| ** **                                 | ** ** | **2004**               | ** ** | **2003**                     | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
|                                       |       |                   |       |                         |       |   |   |   |   |   |   |   |   |
| Balance at beginning of year               |       | $                      | 5,094,168  |                         | $          | 4,846,355 |   | $ | 4,652,853 |   | $ | 677,357 |   | $ | 555,858 |   | $ | 425,721 |   |
| Acquisitions                               |       | 213,500                |       | 233,248                      |       | 137,706 |   | — |   | — |   | — |   |
| Construction costs and tenant improvements |       | 291,850                |       | 188,449                      |       | 275,020 |   | — |   | — |   | — |   |
| Depreciation expense                       |       |                   |       | —                       |       | — |   | 185,091 |   | 168,959 |   | 154,565 |   |
| Acquisition of minority interest           |       | 11,408                 |       | 9,984                        |       | 13,163 |   |   |   | — |   | — |   |
|                                       |       | 5,610,926              |       | 5,278,036                    |       | 5,078,742 |   | 862,448 |   | 724,817 |   | 580,286 |   |
|                                       |       |                   |       |                         |       |   |   |   |   |   |   |   |   |
| Deductions during year:                    |       |                   |       |                         |       |   |   |   |   |   |   |   |   |
| Cost of real estate sold or contributed    |       | (180,982               | )          | (150,874                     | )          | (204,248 | ) | (20,878 | ) | (14,966 | ) | (5,668 | ) |
| Impairment Allowance                       |       | (180                   | )          | (500                         | )          | (9,379 | ) |   |   |   |   |   |   |
| Write-off of fully amortized assets        |       | (52,670                | )          | (32,494                      | )          | (18,760 | ) | (52,670 | ) | (32,494 | ) | (18,760 | ) |
| Balance at end of year                     |       | $                      | 5,377,094  |                         | $          | 5,094,168 |   | $ | 4,846,355 |   | $ | 788,900 |   | $ | 677,357 |   | $ | 555,858 |   |

 

79

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**SIGNATURES**

 

Pursuant to therequirements of Section 13 or 15(d) of the Securities Exchange Act of1934, the registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized.

 
|                | DUKE REALTY  LIMITED PARTNERSHIP |
|---------------------|----------------------------------|
|                | By: DUKE REALTY  CORPORATION     |
|                |                             | Its General  Partner |
|                |                             |   |   |
|                |                             |   |   |
| March 7,  2005 |                             |   | By: |   | /s/ Dennis D.  Oklak |   |
|                |                             | Dennis D. Oklak |
|                |                             | President and  Chief Executive |
|                |                             | Officer of the  General Partner |
|                |                             |   |   |
|                | By:                              |   | /s/ Matthew A.  Cohoat |   |
|                |                             | Matthew A.  Cohoat |
|                |                             | Executive Vice  President and |
|                |                             | Chief Financial  Officer |
|                |                             | of the General  Partner |
|                |                             | (Principal  Financial Officer) |
|                     |                                  |  |  |  |  |  |  |  |  |  |  |  |

 

Pursuant to therequirements of the Securities Exchange Act of 1934, this report has beensigned below by the following persons on behalf of the registrant and in thecapacities and on the dates indicated.

 
| **Signature**                | ** ** | **Date** | ** ** | **Title**                           |
|------------------------------|------------|----------|------------|-------------------------------------|
|                         |       |     |       |                                |
|                         |       |     |       |                                |
| /s/ Thomas L.  Hefner *      |       | 3/7/05   |       | Chairman of the  Board and Director |
| Thomas L. Hefner             |       |     |       | of the General Partner              |
|                         |       |     |       |                                |
| /s/ Dennis D.  Oklak         |       | 3/7/05   |       | President, Chief  Executive Officer |
| Dennis D. Oklak              |       |     |       | and Director of the General Partner |
|                         |       |     |       |                                |
| /s/ Barrington  H. Branch*   |       | 3/7/05   |       | Director of the  General Partner    |
| Barrington H.  Branch        |       |     |       |                                |
|                         |       |     |       |                                |
| /s/ Geoffrey  Button *       |       | 3/7/05   |       | Director of the  General Partner    |
| Geoffrey Button              |       |     |       |                                |
|                         |       |     |       |                                |
| /s/ William  Cavanaugh, III* |       | 3/7/05   |       | Director of the  General Partner    |
| William  Cavanaugh, III      |       |     |       |                                |
|                         |       |     |       |                                |
| /s/ Ngaire E.  Cuneo *       |       | 3/7/05   |       | Director of the  General Partner    |
| Ngaire E. Cuneo              |       |     |       |                                |
|                         |       |     |       |                                |
| /s/ Charles R.  Eitel*       |       | 3/7/05   |       | Director of the  General Partner    |
| Charles R. Eitel             |       |     |       |                                |

 

80

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| /s/ Dr. R. Glenn  Hubbard*  |   | 3/7/05 |   | Director of the  General Partner |
|-----------------------------|--------|--------|--------|----------------------------------|
| Dr. R. Glenn  Hubbard       |   |   |   |                             |
|                        |   |   |   |                             |
| /s/ Dr. Martin  C. Jischke* |   | 3/7/05 |   | Director of the  General Partner |
| Dr. Martin C.  Jischke      |   |   |   |                             |
|                        |   |   |   |                             |
| /s/ L. Ben Lytle  *         |   | 3/7/05 |   | Director of the  General Partner |
| L. Ben Lytle                |   |   |   |                             |
|                        |   |   |   |                             |
| /s/ William O.  McCoy *     |   | 3/7/05 |   | Director of the  General Partner |
| William O. McCoy            |   |   |   |                             |
|                        |   |   |   |                             |
| /s/ John W.  Nelley, Jr. *  |   | 3/7/05 |   | Director of the  General Partner |
| John W. Nelley,  Jr.        |   |   |   |                             |
|                        |   |   |   |                             |
| /s/ James E.  Rogers *      |   | 3/7/05 |   | Director of the  General Partner |
| James E. Rogers             |   |   |   |                             |
|                        |   |   |   |                             |
| /s/ Jack R. Shaw  *         |   | 3/7/05 |   | Director of the  General Partner |
| Jack R. Shaw                |   |   |   |                             |
|                        |   |   |   |                             |
| /s/ Robert J.  Woodward *   |   | 3/7/05 |   | Director of the  General Partner |
| Robert J.  Woodward         |   |   |   |                             |

 

 

----

| * By Dennis D.  Oklak, Attorney-in-Fact |   | /s/  Dennis  D. Oklak |   |
|-----------------------------------------|--------|----------------------------|--------|

 

81

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