**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  Securities Exchange Act of 1934**     |
|--------|-------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|
|   |
|   | **For the fiscal year ended December 31, 2003** |
|   |
| **OR** |
|   |
|   | **o**                                           |                                                                                                                                                             | **Transition report pursuant to section 13 or 15(d) of the  Securities Exchange Act of 1934** |
|   |                                            |                                                                                                                                                             |
|   |                                            | **For the transition period from            to            ** |
|        |                                                 |                                                                                                                                                                  |                                                                                               |  |

 

**Commission file number  0-20625**

 

**DUKE REALTY LIMITED PARTNERSHIP**

 

| State of Incorporation: |   | IRS Employer ID Number: |
|-------------------------|--------|-------------------------|
| **Indiana**             |   | **35-1898425**          |

 

**600 East 96th Street, Suite 100Indianapolis, Indiana 46240**

 

Telephone:   **(317)  808-6000**

 

Securities registered pursuant to Section 12(b) of the Act:  **None**

 

Securities registered pursuant to Section 12(g) of the Act:  **None**

 

Indicate by check mark whetherthe Registrant (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the Registrant was required to file such reports),and (2) has been subject to such filing requirements for the past 90 days.  Yes  ý   No  o

 

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 Regulation S-K is notcontained herein, and will not be contained, to the best of Registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment to this Form10-K.  ý

 

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

 

The aggregate market value ofthe Limited Partner Units held by non-affiliates of Registrant is $259.7million based on the last reported sale price of the common shares of DukeRealty Corporation into which Limited Partner Units are exchangeable, on June30, 2003.

 

The aggregate number of LimitedPartnership Units outstanding as of February 26, 2004, was 151,972,229.

 

**Documents Incorporated by Reference**

 

Portions of the registrant’sGeneral Partner’s Proxy Statement for its 2004 Annual Meeting of Shareholdersto be held on April 26, 2004, are incorporated by reference in Part III of thisAnnual Report on Form 10-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                                            |   |
|         |   | Executive Officers of the General Partner                                                       |   |
|         |   |                                                                                            |   |
| PART II      |   |                                                                                            |
|         |   |                                                                                            |   |
|         | 5.     | Market for the Registrant’s Common Equity  and Related Stockholder Matters                 |   |
|         | 6.     | Selected Consolidated 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                                                              |   |
|         |   |                                                                                            |   |
| 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, Financial Statement Schedules and  Reports on Form 8-K                                |   |
|         |   |                                                                                            |   |
| Signatures   |   |                                                                                            |
|              |        |                                                                                                 |        |  |

 

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**PART I**

 

**Item1.  Business**

 

**RiskFactors**

 

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

 

**Background**

 

The Partnership was formed on October 4, 1993, when Duke RealtyCorporation (the “Predecessor” or 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 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”) underprovisions of the Internal Revenue Code. The General Partner is the solegeneral partner of the Partnership, owning 90.6% of the common Partnershipinterest as of December 31, 2003 (“General Partner Units”). The remaining 9.4%of the Partnership’s common interest is owned by limited partners (“LimitedPartner Units” and, together with the General Partner Units, the “CommonUnits”). The Limited Partner Units are exchangeable for shares of the GeneralPartner’s common stock on a one-for-one basis subject generally to a one-yearholding period.  As of December 31,2003, the Partnership owns interest in a diversified portfolio of 899 rentalproperties (including 15 properties totaling 2.8 million square feet underdevelopment) which encompass over 109.0 million rentable square feet and areleased by a diverse and stable base of approximately 4,100 tenants whosebusinesses include manufacturing, retailing, wholesale trade, distribution andprofessional services. The Partnership also owns or controls nearly 3,800 acresof unencumbered land ready for development.

 

ThePartnership, through its Service Operations, also provides, on a fee basis,leasing, property and asset management, development, construction,build-to-suit, and other tenant-related services for approximately 300 tenantsin over 8.4 million square feet of space at properties owned by third-party clients.With 13 primary operating platforms, the Partnership concentrates itsactivities in the Midwest and Southeast United States. See Item 7,“Management’s Discussion and Analysis of Financial Condition and Results ofOperations” and Item 8, “Financial Statements and Supplementary Data” forfinancial information. The Partnership conducts its Service Operations throughDuke Realty Services Limited Partnership (“DRSLP”) and Duke ConstructionLimited Partnership (“DCLP”). All references to the “Partnership” in this Form10-K Report include the Partnership and those entities owned or controlled bythe Partnership, unless the context indicates otherwise.

 

ThePartnership’s headquarters and executive offices are located in Indianapolis,Indiana. In addition, the Partnership has twelve regional offices located inAtlanta, 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. ThePartnership had 1,011 employees as of December 31, 2003.

 

**BusinessStrategy**

 

The Partnership’s business objective is toincrease its Funds From Operations (“FFO”) by (i) maintaining and increasingproperty occupancy and rental rates through the management of its portfolio ofexisting properties; (ii) expanding existing properties; (iii) developing andacquiring new properties; and (iv) providing a full line of real estateservices to the Partnership’s tenants and to third-parties. FFO is used byindustry analysts and investors as a supplemental operating performance measureof an equity REIT. FFO is calculated in accordance with the definition that wasadopted by the Board of Governors of the National

 

1

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Association of Real Estate Investment Trusts(“NAREIT”). FFO, as defined by NAREIT, represents net income (loss) determinedin accordance with accounting principles generally accepted in the UnitedStates (“GAAP”), excluding extraordinary items as defined under GAAP and gainsor losses from sales of previously depreciated operating real estate assets,plus certain non-cash items such as real estate asset depreciation andamortization, and after adjustment for unconsolidated partnerships and jointventures.

 

Historical cost accounting forreal estate assets in accordance with GAAP implicitly assumes that the value ofreal estate assets diminished predictably over time. Since real estate valuesinstead have historically risen or fallen with market conditions, many industryinvestors and analysts have considered presentation of operating results forreal estate companies that use historical cost accounting to be insufficient bythemselves. Thus, NAREIT created FFO as a supplemental measure of REIToperating performance that excludes historical cost depreciation, among otheritems, from GAAP net income. Management believes that the use of FFO, combinedwith the required primary GAAP presentations, has improved the understanding ofoperating results of REITs among the investing public and made comparisons ofREIT operating results more meaningful. Management generally considers FFO tobe a useful measure for reviewing comparative operating and financialperformance (although FFO should be reviewed in conjunction with net incomewhich remains the primary measure of performance) because, by excluding gainsor losses related to sales of previously depreciated operating real estateassets and excluding real estate asset depreciation and amortization, FFOassists in comparing the operating performance of a company’s real estatebetween periods or as compared to different companies.

 

As a fullyintegrated commercial real estate firm, the Partnership believes that itsin-house leasing, management, development and construction services and thePartnership’s significant base of commercially zoned and unencumbered land inexisting business parks should give the Partnership a competitive advantage inits future development activities.

 

The Partnershipbelieves that the analysis of real estate opportunities and risks can be donemost effectively at regional or local levels. As a result, the Partnershipintends to continue its emphasis on increasing its market share and effectiverents in its primary markets where it owns properties. The Partnership alsoexpects to utilize its nearly 3,800 acres of unencumbered land and its manybusiness relationships with nearly 4,100 commercial tenants to expand itsbuild-to-suit business (development projects substantially pre-leased to asingle tenant) and to pursue other development and acquisition opportunities inits primary markets. The Partnership believes that this regional focus willallow it to assess market supply and demand for real estate more effectively aswell as to capitalize on its strong relationships with its tenant base. Inaddition, the Partnership seeks to further capitalize on strong customerrelationships to provide third party construction and build-for-sale servicesoutside its primary markets.

 

ThePartnership’s policy is to seek to develop and acquire Class A commercialproperties located in markets with high growth potential for Fortune 500companies and other quality regional and local firms. The Partnership’sindustrial and suburban office development focuses on business parks andmixed-use developments suitable for multiple projects on a single site wherethe Partnership can create and control the business environment. These businessparks and mixed-use developments generally include restaurants and otheramenities, which the Partnership believes will create an atmosphere that isparticularly efficient and desirable. The Partnership’s retail developmentfocuses on lifestyle, community and neighborhood centers in its existingmarkets and is developed primarily fro held-for-sale opportunities. As a fullyintegrated real estate company, the Partnership is able to arrange for orprovide to its industrial, office and retail tenants not only well located andwell maintained facilities, but also additional services such as build-to-suitconstruction, tenant finish construction, expansion flexibility and advertisingand marketing services.

 

All of thePartnership’s properties are located in areas that include competitiveproperties. Institutional investors, other REITs or local real estate operatorsgenerally own such properties; however, no single competitor or small group ofcompetitors is dominant in the Partnership’s current markets. The supply anddemand of similar available rental properties may affect the rental rates thePartnership will receive on its properties.

 

2

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**FinancingStrategy**

 

The Partnership seeks to maintain a well-balanced, conservative andflexible capital structure by: (i) extending and sequencing the maturity datesof its debt; (ii) borrowing primarily at fixed rates; (iii) generally pursuingcurrent and future long-term debt financings and refinancing on an unsecuredbasis; and (iv) maintaining conservative debt service and fixed charge coverageratios. Management believes that these strategies have enabled and shouldcontinue to enable the Partnership to access capital markets for theirlong-term requirements such as debt refinancing and financing development andacquisitions of additional rental properties. In addition, as discussed underItem 7, “Management’s Discussion and Analysis of Financial Condition andResults of Operations,” the Partnership has a $500 million unsecured line ofcredit available for short-term fundings of development and acquisition ofadditional rental properties. In addition, the Partnership pursues favorableopportunities to dispose of assets that no longer meet the Partnership’slong-term investment criteria and re-deploy the proceeds into new investmentsthat the Partnership believes have excellent long-term growth prospects. ThePartnership’s debt to total market capitalization ratio (total marketcapitalization is defined as the total market value of all outstanding CommonUnits and Preferred equity plus outstanding indebtedness) at December 31, 2003was 30.8%. The Partnership’s ratio of earnings to debt service and ratio ofearnings to fixed charges for the year ended December 31, 2003 were 2.10x and1.81x, 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 depreciableproperty dispositions, net of impairment adjustments. Debt service consists ofinterest expense and recurring principal amortization (excluding maturities)and excludes amortization of debt issuance costs. In computing the ratio ofearnings to fixed charges, earnings have been calculated by adding fixedcharges, excluding capitalized interest, to income from continuing operationsbefore earnings or losses from the sale of land and depreciable propertydispositions, net of impairment adjustments. Fixed charges consist of interestcosts, whether expensed or capitalized, the interest component of rentalexpense, amortization of debt issuance costs and distribution requirements forpreferred limited partner interest (“Preferred Units”).

 

**CorporateGovernance**

As a limited partnership that has one general partner owning over 90%of the partnership interest, the governance of the Partnership is necessarilylinked to the corporate governance of the General Partner.  The General Partner has and continues to bea leader in issues important to investors such as disclosure and corporategovernance initiatives. Summarized below are highlights of the GeneralPartner’s Corporate Governance Initiatives.

 
| **Board Composition** |   | General Partner’s Board is controlled by supermajority (67%+) 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                                                               |

 

3

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|          |   | 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                      |

 

The GeneralPartner’s Code of Conduct and its Corporate Governance Guidelines are availablein the investor information/corporate governance section of the GeneralPartner’s website at www.dukerealty.com. A copy of these documents may also be obtained without charge by writingto Duke Realty Corporation, 600 East 96th Street, Suite 100,Indianapolis, Indiana 46240, Attention: Investor Relations.

 

**Other**

 

For additionalinformation regarding the Partnership’s investments and operations, see Item 7,“Management’s Discussion and Analysis of Financial Condition and Results ofOperations,” and Item 8, “Financial Statements and Supplementary Data.” Foradditional information about the Partnership’s business segments, see Item 8,“Financial Statements and Supplementary Data.”

 

In addition to this AnnualReport, the General Partner and the Partnership file quarterly and specialreports, proxy statements and other information with the SEC. All documentsthat are filed with the SEC by the Partnership are available free of charge onthe SEC website, which is http://www.sec.gov. You may also read and copy anydocument filed at the public reference facilities of the SEC at 450 FifthStreet, N.W., Washington, D.C. 25049. Please call the SEC at (800) SEC-0330 for further information about thepublic reference facilities. These documents also may be accessed through theSEC’s electronic data gathering, analysis and retrieval system (“EDGAR”) viaelectronic means, including the SEC’s home page on the Internet(http://www.sec.gov). In addition, since some of the General Partner’ssecurities are listed on the New York Stock Exchange, you can read its SECfilings at the offices of the New York Stock Exchange, 20 Broad Street, NewYork, New York 10005.

# ** **

**Item2.  Properties**

 

**Product Review**

 

As of December31, 2003, the Partnership owns an interest in a diversified portfolio of 899commercial properties encompassing over 109.0 million net rentable square feet(including 15 properties comprising 2.8 million square feet under development)and nearly 3,800 acres of land for future development.

 

**Industrial Properties:**The Partnership owns interests in 642 industrial properties encompassingapproximately 81.3 million square feet (74% of total square feet) morespecifically described as follows:

•                  **Bulk Warehouses** – Industrialwarehouse/distribution buildings with clear ceiling heights of 20 feet or more.The Partnership owns 425 buildings totaling 68.1 million square feet of suchproperties.

•                  **Service Centers** – Also known as flexbuildings or light industrial, this product type has 12-18 foot clear ceilingheights and a combination of drive-up and dock-height loading access. ThePartnership owns 217 buildings totaling 13.2 million square feet of suchproperties.

 

**Office Properties:**  The Partnership owns interests in 250 officebuildings totaling approximately 26.9 million square feet (25% of total squarefeet) more specifically described as follows:

•      **SuburbanOffice** – The Partnership owns 246 suburban office buildings totaling26.0 million square feet.

•      **CBD Office**– The Partnership owns four downtown office projects totaling approximately861,000 square feet.

 

4

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**Retail Properties:**  The Partnership owns interests in 7 retailprojects totaling approximately 800,000 square feet (1% of total square feet).These properties encompass both power and neighborhood shopping centers.

 

**Land:**  The Partnership owns or controls more than3,800 acres of land located primarily in its existing business parks. The landis ready for immediate use and is unencumbered by debt. Over 60.0 millionsquare feet of additional space can be developed on these sites substantiallyand all of the land is zoned for either office, industrial or retaildevelopment.

 

**Service Operations:**  The Partnership provides property and assetmanagement, development, leasing and construction services to third partyowners in addition to its own properties. The Partnership’s current propertymanagement base for third parties includes over 8.4 million square feet ofproperties serving approximately 300 tenants.

 

**PropertyDescriptions**

 

The following schedulerepresents the geographic highlights of the Partnership’s properties in itsprimary markets.

 

5

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Duke Realty Limited Partnership

Geographic Highlights

In Service Properties as of December 31, 2003

 
|               |   |                 |   |       |   |         |   |    |   |                     |   |        |   |   |   | **Annual  Net  Effective  Rent (2)** |        | **Percent  of  Annual Net  Effective  Rent** |   |
|--------------------|--------|----------------------|--------|------------|--------|--------------|--------|---------|--------|--------------------------|--------|-------------|--------|--------|--------|--------------------------------------|-------------|----------------------------------------------|--------|
|               |   | **Square  Feet (1)** |   |       |   |
|               |   | **Industrial**       |   | **Office** |   |         |   |    |   | **Percent  of  Overall** |   |        |   |
|               |   | **Service  Center**  |   | **Bulk**   |   | **Suburban** |   | **CBD** |   | **Retail**               |   | **Overall** |   |   |   |                                 |
| **Primary Market** |   |                 |   |       |   |         |   |    |   |                     |   |        |   |   |   |                                 |        |                                         |   |
|               |   |                 |   |       |   |         |   |    |   |                     |   |        |   |   |   |                                 |        |                                         |   |
| Atlanta            |   | 3,214,230            |   | 8,859,456  |   | 2,247,270    |   | —  |   | 4,115                    |   | 14,325,071  |   | 13.48  | %      | 80,590,375                           |        | 13.66                                        | %      |
| Indianapolis       |   | 1,608,384            |   | 17,721,945 |   | 2,726,050    |   | 161,984 |   | 82,374                   |   | 22,300,737  |   | 20.99  | %      | 75,960,615                           |        | 12.89                                        | %      |
| Cincinnati         |   | 1,240,393            |   | 7,873,090  |   | 3,632,071    |   | 699,402 |   | 601,537                  |   | 14,046,493  |   | 13.22  | %      | 74,036,670                           |        | 12.56                                        | %      |
| St. Louis          |   | 1,334,011            |   | 2,942,200  |   | 3,516,953    |   | —  |   | —                   |   | 7,793,164   |   | 7.34   | %      | 67,121,068                           |        | 11.39                                        | %      |
| Columbus           |   | 82,520               |   | 4,376,427  |   | 3,231,852    |   | —  |   | —                   |   | 7,690,799   |   | 7.24   | %      | 46,145,229                           |        | 7.83                                         | %      |
| Cleveland          |   | 60,600               |   | 3,358,888  |   | 2,173,613    |   | —  |   | —                   |   | 5,593,101   |   | 5.27   | %      | 42,132,283                           |        | 7.15                                         | %      |
| Minneapolis        |   | 2,117,291            |   | 3,563,091  |   | 975,323      |   | —  |   | —                   |   | 6,655,705   |   | 6.27   | %      | 41,466,448                           |        | 7.04                                         | %      |
| Raleigh            |   | 1,159,756            |   | 1,513,910  |   | 2,237,183    |   | —  |   | —                   |   | 4,910,849   |   | 4.62   | %      | 39,990,134                           |        | 6.78                                         | %      |
| Nashville          |   | 1,285,261            |   | 3,335,928  |   | 785,634      |   | —  |   | —                   |   | 5,406,823   |   | 5.09   | %      | 38,270,740                           |        | 6.49                                         | %      |
| Chicago            |   | 276,344              |   | 4,121,431  |   | 1,718,207    |   | —  |   | 50,572                   |   | 6,166,554   |   | 5.81   | %      | 35,514,517                           |        | 6.03                                         | %      |
| Central Florida    |   | 350,493              |   | 2,628,772  |   | 1,277,439    |   | —  |   | —                   |   | 4,256,704   |   | 4.01   | %      | 25,574,217                           |        | 4.34                                         | %      |
| Dallas             |   | 470,754              |   | 5,337,053  |   | 152,000      |   | —  |   | —                   |   | 5,959,807   |   | 5.61   | %      | 13,441,731                           |        | 2.28                                         | %      |
| South Florida      |   | —               |   | —     |   | 677,806      |   | —  |   | —                   |   | 677,806     |   | 0.64   | %      | 8,598,504                            |        | 1.46                                         | %      |
| Other (3)          |   | —               |   | 436,139    |   | —       |   | —  |   | —                   |   | 436,139     |   | 0.41   | %      | 557,914                              |        | 0.09                                         | %      |
|               |   |                 |   |       |   |         |   |    |   |                     |   |        |   |   |   |                                 |        |                                         |   |
| Total              |   | 13,200,037           |   | 66,068,330 |   | 25,351,401   |   | 861,386 |   | 738,598                  |   | 106,219,752 |   | 100.00 | %      | $                                    | 589,400,445 |                                         | 100.00 | % |
|               |   |                 |   |       |   |         |   |    |   |                     |   |        |   |   |   |                                 |        |                                         |   |
|               |   | 12.43                | %      | 62.21      | %      | 23.87        | %      | 0.81    | %      | 0.70                     | %      | 100.00      | %      |   |   |                                 |        |                                         |   |
|                    |        |                      |        |            |        |              |        |         |        |                          |        |             |        |        |        |                                      |             |                                              |        |  |

 
|                |   | **Occupancy %**    |   |
|---------------------|--------|--------------------|--------|
|                |   | **Industrial**     |   | **Office** |   |   |   |   |   |
|                |   | **Service Center** |   | **Bulk** |   | **Suburban** |   | **CBD** |   | **Retail** |   | **Overall** |   |
| **Primary  Market** |   |               |   |   |   |   |   |   |   |   |   |   |   |
|                |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Atlanta             |   | 84.93              | %      | 84.71 | % | 91.86 | % | — |   | 100.00 | % | 85.89 | % |
| Indianapolis        |   | 87.40              | %      | 96.57 | % | 87.59 | % | 94.72 | % | 99.95 | % | 94.81 | % |
| Cincinnati          |   | 79.94              | %      | 91.95 | % | 87.47 | % | 93.65 | % | 98.21 | % | 90.09 | % |
| St. Louis           |   | 90.48              | %      | 95.28 | % | 88.21 | % | — |   | — |   | 91.27 | % |
| Columbus            |   | 100.00             | %      | 71.83 | % | 87.32 | % | — |   | — |   | 78.64 | % |
| Cleveland           |   | 100.00             | %      | 93.45 | % | 83.42 | % | — |   | — |   | 89.63 | % |
| Minneapolis         |   | 88.57              | %      | 92.28 | % | 86.90 | % | — |   | — |   | 90.31 | % |
| Raleigh             |   | 74.00              | %      | 91.86 | % | 81.69 | % | — |   | — |   | 83.01 | % |
| Nashville           |   | 86.38              | %      | 89.95 | % | 81.99 | % | — |   | — |   | 87.95 | % |
| Chicago             |   | 89.05              | %      | 93.74 | % | 83.02 | % | — |   | 100.00 | % | 90.60 | % |
| Central Florida     |   | 86.70              | %      | 84.38 | % | 74.15 | % | — |   | — |   | 81.50 | % |
| Dallas              |   | 95.09              | %      | 94.96 | % | 100.00 | % | — |   | — |   | 95.10 | % |
| South Florida       |   | —             |   | — |   | 83.47 | % | — |   | — |   | 83.47 | % |
| Other (3)           |   | —             |   | 100.00 | % | — |   | — |   | — |   | 100.00 | % |
|                |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Total               |   | 85.75              | %      | 91.13 | % | 85.90 | % | 93.85 | % | 98.54 | % | 89.29 | % |

 

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

 

(2)          Represents theaverage annual rental property revenue due from tenants in occupancy as of thedate of this report, excluding additional rent due as operating expensereimbursements, landlord allowances for operating expenses and percentagerents.  Joint Venture properties areshown at the Partnership’s ownership percentage. 

 

(3)          Representsproperties not located in the Partnership’s primary markets.  These properties are located in similarmidwest or southeast markets.

 

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**Item3.  Legal Proceedings**

 

Broadband Office, Inc. and Official Committeeof Unsecured Creditors of Broadband Office, Inc. recently filed a complaintagainst a group of real estate investment trusts and real estate operatingcompanies and certain affiliated entities and individuals in connection withthe formation and management of Broadband Office. Among the defendants are theGeneral Partner, the Partnership and Mr. Dennis Oklak, one of the GeneralPartner’s executive officers. The complaint alleges various breaches ofpurported fiduciary duties by the defendants, seeks recharacterization or equitablesubordination of debt, seeks recovery of alleged avoidable transfers, appearsto seek to hold them liable for, among other things, the debt of BroadbandOffice under alter-ego, veil-piercing and partnership theories, and seeks otherrelief under other theories. The complaint seeks aggregate damages in excess of$300 million from all of the defendants. The Partnership believes that it andMr. Oklak have meritorious defenses to the plaintiff’s allegations and intendsto vigorously defend this litigation. Due to the inherent uncertainties of thelitigation process and the judicial system, the Partnership is not able topredict the outcome of this litigation. If this litigation is not resolved inthe Partnership’s favor, it could have a material adverse effect on itsbusiness, financial condition and results of operations.

 

**Item4.  Submission of Matters to a Vote ofSecurity Holders**

 

No matterswere submitted to a vote of security holders during the fourth quarter of theyear ended December 31, 2003.

 

**EXECUTIVE OFFICERS OF THE GENERAL PARTNER**

 

***RobertM. Chapman, age 50***.  Mr. Chapman has served as Senior Executive Vice President, RealEstate Operations, since November 2003. From 2000 through November 2003, Mr.Chapman served as the General Partner’s Executive Vice President, SouthernRegion, responsible for the General Partner’s Atlanta, Orlando, Tampa, Raleigh,Nashville and Dallas property portfolios. Mr. Chapman was Executive VicePresident of the Atlanta/Texas region from 1999 to 2000, and Executive Vice Presidentof Acquisitions and Dispositions from 1997 to 1999. Before joining the GeneralPartner in 1997, he served as Senior Vice President and Portfolio Manager forThe RREEF Funds, and held positions at Gerald Hines Interests and LincolnProperty Company.

 

***MatthewA. Cohoat, age 44***. Mr. Cohoat was named ExecutiveVice President and Chief Financial Officer of the General Partner on January 1,2004. From 1990 through 2003, Mr. Cohoat held various positions in the GeneralPartner’s accounting group, most recently that of Senior Vice President andCorporate Controller. From 1982 until 1990 he was employed by Ernst &Young, LLP.

 

***JamesB. Conner, age 45***. Mr. Connor has served as RegionalExecutive Vice President for the General Partner’s Chicago Region, which includesits Chicago, Minneapolis, St. Louis and Nashville portfolios, since December2003. Mr. Connor served as Senior Vice President responsible for the GeneralPartner’s Chicago Operations since joining the Company in 1998. Prior tojoining the General Partner, Mr. Connor held several executive and brokeragepositions with Cushman & Wakefield, most recently serving as SeniorManaging Director for the Midwest area.

 

***HowardL. Feinsand, age 56***.  Mr. Feinsand has servedas the General Partner’s Executive Vice President and General Counsel since1999. Mr. Feinsand served on the General Partner’s Board of Directors from 1988to January 2003. From 1996 until 1999, Mr. Feinsand was the founder andprincipal of Choir Capital Ltd. From 1995 until 1996, he was Managing Directorof Citicorp North America, Inc.  He was the Senior Vice President andManager-Capital Markets, Pricing and Investor Programs of GE Capital AviationServices, Inc. from 1989 to 1995. From 1971 through 1989, Mr. Feinsandpracticed law in New York City.

 

***RobertD. Fessler, age 46***. Mr. Fessler has served as ExecutiveVice President of the General Partner’s Atlanta Region, which includes itsAtlanta, Raleigh, Florida and Dallas portfolios since July 2003.  Mr. Fessler was Senior Vice President of CincinnatiOperations from 2001 to July 2003, led the Cincinnati Industrial Group from1988 through 2001 and was a leasing representative from 1987 to 1988.  Prior to

 

7

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joining the General Partner,Mr. Fessler worked for the Trammell Crow Company and General Electric Company.

 

***JohnW. Guinee III, age 48***. Mr. Guinee has served asExecutive Vice President and Chief Investment Officer of the General Partnersince February 2003. From 1997 through 2001, Mr. Guinee was Executive VicePresident and the Chief Investment Officer of Charles E. Smith ResidentialRealty. From 1985 through 1997, he was Managing Director of LaSalle Advisors(Alex. Brown Kleinwort Benson prior to a merger). From 1982 through 1985, Mr.Guinee was a development manager with Gerald D. Hines Interests in SanFrancisco.

 

***ThomasL. Hefner, age 57***.  Mr. Hefner has served as Chief Executive Officer of the GeneralPartner since 1993 and as its Chairman since 1998.  Mr. Hefner has served as a Director of the General Partner since1993.

 

***StevenR. Kennedy, age 47***. Mr. Kennedy was namedExecutive Vice President, Construction on January 1, 2004. From 1986 until2004, he served the General Partner in various capacities in the constructiongroup, most recently as Senior Vice President. Prior to joining the General Partner, Mr. Kennedy was employed as aproject manager for Charles Pankow Builders, Inc., a West Coast-baseddesign-build and general contractor.

 

***DennisD. Oklak, age 50***. Mr. Oklak was named President and Chief Operating Officer of the GeneralPartner in January 2003. He had been Co-Chief Operating Officer of the GeneralPartner since April 2002.  Mr. Oklakjoined the General Partner in 1986 as Tax Manager and was later namedController of the General Partner’s development companies before being namedVice President and Treasurer. In that position, he served as the ChiefAccounting Officer with responsibility for financial reporting in publicofferings of securities; assisting the vice presidents of each business unitwith deal structuring; and supervising all financial aspects of the GeneralPartner. Mr. Oklak assumed the position of Executive Vice President and ChiefAdministrative Officer of the General Partner in 1997 and supervisedaccounting, tax, information technology, human resources and tenant services.

 

***Christopher L.Seger, age 36***. Mr. Seger was appointed ExecutiveVice President, National Development/Construction of the General Partner inDecember 2003. From 2001 to 2003, Mr. Seger was Senior Vice President of theGeneral Partner’s Florida Group, with responsibility for its office andindustrial portfolio in Central and South Florida.  From 1999 to 2001, Mr. Seger was Senior Vice President of the GeneralPartner’s Indiana Office Group; and from 1993 to 1999 served in the GeneralPartner’s Acquisitions and Leasing groups.

 

**PARTII**

 

**Item5.  Market for the Registrant’s CommonEquity and Related Stockholder Matters**

 

There is no established public trading marketfor the Common Units.  The followingtable sets forth the cash distributions paid during each quarter.  As of February 26, 2004 there were 175record holders of Common Units.

 
| **Quarter Ended** |   | **2003  Distributions  per Common Unit** |     | **2002  Distributions  per Common Unit** |   |
|-------------------|--------|------------------------------------------|----------|------------------------------------------|--------|
|              |   |                                     |     |                                     |   |
| December 31       |   | **$**                                    | **.460** |                                     | $      | .455 |   |
| September 30      |   | **.460**                                 |     | .455                                     |   |
| June 30           |   | **.455**                                 |     | .450                                     |   |
| March 31          |   | **.455**                                 |     | .450                                     |   |
|                   |        |                                          |          |                                          |        |  |  |

 

On January 28, 2004, the Partnership declareda quarterly cash distribution of $.46 per Common Unit, payable on February 27,2004, to Common Unitholders of record on February 12, 2004.

 

**Item 6. Selected Consolidated Financial Data**

 

The following sets forth selectedconsolidated financial and operating information on a historical basis for thePartnership for each of the years in the five-year period ended December 31,2003. The following

 

8

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information should be read in conjunctionwith Item 7, “Management’s Discussion and Analysis of Financial Condition andResults of Operations” and Item 8, “Financial Statements and SupplementaryData” included in this Form 10-K (in thousands, except per units amounts):

 
|                                                         |   | **2003**      |          | **2002**  |   | **2001**  |   | **2000**  |      | **1999**  |   |
|--------------------------------------------------------------|--------|---------------|---------------|-----------|--------|-----------|--------|-----------|-----------|-----------|--------|
| **Results of Operations:**                                   |   |          |          |      |   |      |   |      |      |      |   |
| Revenues:                                                    |   |          |          |      |   |      |   |      |      |      |   |
| Rental Operations                                            |   | **$**         | **730,437**   |      | $      | 698,107   |   | $         | 701,014   |      | $      | 693,983 |   | $ | 523,929 |   |
| Service Operations                                           |   | **58,496**    |          | 67,860    |   | 80,459    |   | 82,799    |      | 54,031    |   |
| **Total Revenues from Continuing Operations**                |   | **$**         | **788,933**   |      | $      | 765,967   |   | $         | 781,473   |      | $      | 776,782 |   | $ | 577,960 |   |
|                                                         |   |          |          |      |   |      |   |      |      |      |   |
| **Net Income Available for Common Units**                    |   | **$**         | **179,587**   |      | $      | 171,601   |   | $         | 259,892   |      | $      | 245,029 |   | $ | 159,447 |   |
|                                                         |   |          |          |      |   |      |   |      |      |      |   |
| **Per Unit Data :**                                          |   |          |          |      |   |      |   |      |      |      |   |
| Basic Income per Common Unit:                                |   |          |          |      |   |      |   |      |      |      |   |
| Continuing Operations                                        |   | **$**         | **1.09**      |      | $      | 1.11      |   | $         | 1.71      |      | $      | 1.66 |   | $ | 1.30 |   |
| Discontinued Operations                                      |   | **.11**       |          | .04       |   | .05       |   | .02       |      | .03       |   |
| Diluted Income per Common Unit:                              |   |          |          |      |   |      |   |      |      |      |   |
| Continuing Operations                                        |   | **1.08**      |          | 1.10      |   | 1.69      |   | 1.64      |      | 1.29      |   |
| Discontinued Operations                                      |   | **.11**       |          | .04       |   | .05       |   | .02       |      | .03       |   |
| Dividends paid per Common Unit                               |   | **1.83**      |          | 1.81      |   | 1.76      |   | 1.64      |      | 1.46      |   |
| Weighted Average Common Units Outstanding                    |   | **150,280**   |          | 149,423   |   | 147,961   |   | 145,906   |      | 119,467   |   |
| Weighted Average Common and Dilutive  Potential Common Units |   | **151,141**   |          | 150,839   |   | 151,710   |   | 147,441   |      | 120,511   |   |
|                                                         |   |          |          |      |   |      |   |      |      |      |   |
| **Balance Sheet Data (at December 31):**                     |   |          |          |      |   |      |   |      |      |      |   |
|                                                         |   |          |          |      |   |      |   |      |      |      |   |
| Total Assets                                                 |   | **$**         | **5,558,711** |      | $      | 5,347,055 |   | $         | 5,330,246 |      | $      | 5,461,233 |   | $ | 5,487,284 |   |
| Total Debt                                                   |   | **2,335,536** |          | 2,106,285 |   | 1,814,856 |   | 1,973,215 |      | 2,113,476 |   |
| Total Preferred Equity                                       |   | **511,785**   |          | 415,466   |   | 583,419   |   | 689,216   |      | 690,340   |   |
| Total Partners’ Equity                                  |   | **2,878,320** |          | 2,919,843 |   | 3,179,232 |   | 3,147,598 |      | 3,101,989 |   |
| Total Common Unit’s Outstanding                         |   | **150,628**   |          | 149,907   |   | 148,438   |   | 146,911   |      | 144,803   |   |
|                                                         |   |          |          |      |   |      |   |      |      |      |   |
| **Other Data:**                                              |   |          |          |      |   |      |   |      |      |      |   |
| Funds From Operations (1)                                    |   | **$**         | **372,519**   |      | $      | 358,871   |   | $         | 388,355   |      | $      | 365,129 |   | $ | 267,243 |   |
| Cash Flow Provided by (Used by):                             |   |          |          |      |   |      |   |      |      |      |   |
| Operating activities                                         |   | **$**         | **368,088**   |      | $      | 568,973   |   | $         | 348,680   |      | $      | 363,610 |   | $ | 316,286 |   |
| Investing activities                                         |   | **(319,579**  | )             | (337,247  | )      | 93,488    |   | (11,972   | )         | (740,847  | )      |
| Financing activities                                         |   | **(52,943**   | )             | (225,050  | )      | (470,915  | )      | (330,952  | )         | 436,449   |   |

 

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(1) Funds From Operations (“FFO”) is used byindustry analysts and investors as a supplemental operating performance measureof an equity real estate investment trust (“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 adjustment for unconsolidated partnerships and joint ventures.

 

Historical cost accounting for real estateassets in accordance with GAAP implicitly assumes that the value of real estateassets diminished predictably over time. Since real estate values instead havehistorically risen or fallen with market conditions, many industry investorsand analysts have considered the presentation of operating results for realestate companies that use historical cost accounting to be insufficient bythemselves. Thus, NAREIT created FFO as a supplemental measure of REIToperating performance that excludes historical cost depreciation, among otheritems, from GAAP net income. Management believes that the use of FFO, combinedwith the required primary GAAP presentations, has improved the understanding ofoperating results of REITs among the investing public and made comparisons ofREIT operating results more meaningful. As a REIT subsidiary, the Partnership’smanagement 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.

 

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**Item7.  Management’s Discussion and Analysisof Financial Condition and Results of Operations**

 

**Cautionary Statement Regarding ForwardLooking Statements**

 

Certain statements in this Annual Report,including those related to the Partnership’s future operations, constitute“forward-looking statements” within the meaning of Section 27A of theSecurities Act of 1933, as amended, and Section 21E of the Securities ExchangeAct of 1934, as amended. These forward-looking statements involve known andunknown risks, uncertainties and other important factors that could cause theactual results, performance or achievements of the Partnership, or industryresults, to differ materially from any predictions of future results,performance or achievements that we express or imply in this report. Some ofthe risks, uncertainties and other important factors that may affect futureresults include, among others:

 

•  General economic and businessconditions;

•  The General Partner’scontinued qualification as a real estate investment trust;

•  Competition for tenants anddecrease in property occupancy;

•  Potential increases in realestate construction costs;

•  Potential changes in interestrates;

•  Continuing ability tofavorably raise debt and equity in the capital markets; and

•  Other risks inherent in thereal estate business including tenant defaults, potential liability relating toenvironmental matters and liquidity of real estate investments.

 

This list of risks and uncertainties,however, is not intended to be exhaustive. The Partnership has on file with theSecurities and Exchange Commission (“SEC”) a Current Report on Form 8-K datedSeptember 5, 2003, with additional risk factor information.

 

The words “believe,” “estimate,” “expect,”“anticipate” and similar expressions or statements regarding future periods areintended to identify forward-looking statements. Although we believe that theplans, expectations and results expressed in or suggested by our forward-lookingstatements are reasonable, all forward-looking statements are inherentlyuncertain as they involve substantial risks and uncertainties beyond thePartnership’s control. New factors emerge from time to time, and it is notpossible for us to predict the nature or assess the potential impact of eachnew factor on the Partnership’s business. Given these uncertainties, we cautionyou not to place undue reliance on these forward-looking statements. ThePartnership undertakes no obligation to update or revise any of itsforward-looking statements for events or circumstances that arise after thestatement is made.

 

**BusinessOverview**

 

As of December 31, 2003, the Partnership:

 

•                  Owned or jointlycontrolled 899 industrial, office and retail properties (including propertiesunder development), consisting of over 109.0 million square feet primarilylocated in 10 states; and

•                  Owned or jointlycontrolled approximately 3,800 acres of land with an estimated futuredevelopment potential of more than 60.0 million square feet of industrial,office and retail properties.

 

The Partnership provides the followingservices for its properties and for certain properties owned by third parties:

•                  leasing;

•                  management;

•                  construction;

•                  development; and

•                  othertenant-related services.

 

The Partnership’s operating results dependprimarily upon rental income from its office, industrial and retail properties(“Rental Operations”). The following highlights the areas of Rental Operationsthat the Partnership considers critical for future revenue growth (all squarefootage totals and occupancy percentages reflect both wholly-owned propertiesand properties in joint ventures):

 

10

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***Same PropertyPerformance:*** The Partnership tracks same propertyperformance, which measures the performance of properties that were in-servicefor all reported portions of a two-year period by comparing the results of thesecond year with the results of the first year. In 2003, net operating incomefrom the same property portfolio decreased by 3.5% from 2002, compared to .3%growth in 2002 over 2001. The current year decline is a result of a decrease of$8.8 million in same property lease termination fees compared to 2002. Inaddition to the decrease in lease termination fees, the Partnership increasedthe use of free rent concessions in 2003 as an incentive to attract qualitytenants.

 

***Occupancy Analysis:***The ability to maintain occupancy rates is a principal driver of thePartnership’s results of operations. The following table sets forth informationregarding the Partnership’s in-service portfolio of rental properties as ofDecember 31, 2003 and 2002 (square feet in thousands):

 
|            |   | **Total  Square Feet** |   | **Percent of  Total Square Feet** |   | **Percent  Occupied** |       |
|-----------------|--------|------------------------|--------|-----------------------------------|--------|-----------------------|------------|
| **Type**        |   | **2003**               |   | **2002**                          |   | **2003**              |       | **2002** |   | **2003** |   | **2002** |   |
| **Industrial**  |   |                   |   |                              |   |                  | ** ** |   |   |   | ** ** |   |   |
| Service Centers |   | **13,200**             |   | 13,758                            |   | **12.4**              | **%**      | 13.0 | % | **85.8** | **%** | 87.4 | % |
| Bulk            |   | **66,068**             |   | 66,021                            |   | **62.2**              | **%**      | 62.8 | % | **91.1** | **%** | 87.1 | % |
| **Office**      |   | **26,213**             |   | 24,578                            |   | **24.7**              | **%**      | 23.4 | % | **86.2** | **%** | 86.5 | % |
| **Retail**      |   | **739**                |   | 839                               |   | **.7**                | **%**      | 0.8 | % | **98.5** | **%** | 98.5 | % |
| Total           |   | **106,220**            |   | 105,196                           |   | **100.0**             | **%**      | 100.0 | % | **89.3** | **%** | 87.1 | % |

 

The overall increase in occupancy for 2003was the result of increased activity primarily in the bulk industrial product,fewer lease terminations through lease buyouts and fewer tenant bankruptcies.An improving economy coupled with increased business spending and aggressiveleasing led to the overall occupancy increase. The current year decrease inService Centers’ occupancy was mainly the result of a tenant terminating241,000 square feet through a lease buyout in December 2003 in exchange for atermination payment of $3.0 million.

 

***Lease Expiration andRenewals:*** The Partnership’s ability to maintainand grow its occupancy rates primarily depends upon its continuing ability tore-lease expiring space. The following table reflects the Partnership’sin-service lease expiration schedule as of December 31, 2003, by product type.The table indicates square footage and annualized net effective rents (based onDecember 2003 rental revenue) under expiring leases (in thousands):

 
|                        |   | **Total Portfolio** |   | **Industrial** |    | **Office** |   | **Retail**       |   |
|-----------------------------|--------|---------------------|--------|----------------|---------|------------|--------|------------------|--------|
| **Year of  Expiration**     |   | **Square  Feet**    |   | **Dollars**    |    | **%**      |   | **Square  Feet** |   | **Dollars** |   | **Square  Feet** |   | **Dollars** |   | **Square  Feet** |   | **Dollars** |   |
|                        |   |                |   |           |    |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
| 2004                        |   | 11,717              |   | $              | 77,603  |       | 11     | %                | 9,092  |   | $ | 41,621 |   | 2,625 |   | $ | 35,982 |   | — |   | $ | — |   |
| 2005                        |   | 13,124              |   | 91,409         |    | 14         | %      | 10,289           |   | 50,825 |   | 2,799 |   | 40,084 |   | 36 |   | 500 |   |
| 2006                        |   | 10,827              |   | 76,367         |    | 12         | %      | 8,507            |   | 44,545 |   | 2,318 |   | 31,789 |   | 2 |   | 33 |   |
| 2007                        |   | 11,192              |   | 77,080         |    | 12         | %      | 8,490            |   | 41,276 |   | 2,677 |   | 35,527 |   | 25 |   | 277 |   |
| 2008                        |   | 13,122              |   | 79,650         |    | 12         | %      | 10,538           |   | 46,383 |   | 2,563 |   | 32,904 |   | 21 |   | 363 |   |
| 2009                        |   | 8,797               |   | 58,830         |    | 9          | %      | 6,727            |   | 31,021 |   | 2,050 |   | 27,421 |   | 20 |   | 388 |   |
| 2010                        |   | 6,956               |   | 52,659         |    | 8          | %      | 5,053            |   | 25,392 |   | 1,889 |   | 27,031 |   | 14 |   | 236 |   |
| 2011                        |   | 3,783               |   | 32,904         |    | 5          | %      | 2,461            |   | 12,290 |   | 1,306 |   | 20,369 |   | 16 |   | 245 |   |
| 2012                        |   | 4,597               |   | 28,389         |    | 4          | %      | 3,547            |   | 13,655 |   | 1,043 |   | 14,401 |   | 7 |   | 333 |   |
| 2013                        |   | 3,725               |   | 38,629         |    | 6          | %      | 1,673            |   | 7,888 |   | 1,989 |   | 29,826 |   | 63 |   | 915 |   |
| 2014 and Thereafter         |   | 7,002               |   | 44,952         |    | 7          | %      | 5,151            |   | 21,266 |   | 1,327 |   | 20,150 |   | 524 |   | 3,536 |   |
|                        |   | 94,842              |   | $              | 658,472 |       | 100    | %                | 71,528 |   | $ | 336,162 |   | 22,586 |   | $ | 315,484 |   | 728 |   | $ | 6,826 |   |
|                        |   |                |   |           |    |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Total Portfolio Square Feet |   | 106,220             |   |           |    |       |   | 79,269           |   |   |   |   |   | 26,212 |   |   |   | 739 |   |
|                        |   |                |   |           |    |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Percent Occupied            |   | 89.3                | %      |           |    |       |   | 90.2             | %      |   |   |   |   | 86.2 | % |   |   | 98.5 | % |

 

ThePartnership renewed 72.3% of its leases up for renewal in 2003, totaling 8.1million square feet on which it attained a 1.4% growth in net effective rents.The relatively flat growth in rental rates is indicative of excess vacancies inmany of the Partnership’s markets requiring competitive pricing strategies toretain current tenants.

 

The averageterm of renewals decreased to 3.5 years in 2003, from 4.4 years in 2002. The Partnershipis currently renewing tenants for shorter terms in anticipation of bettermarket rates for future renewal periods.

 

ThePartnership’s lease renewal percentages over the past three years have remainedrelatively consistent at a 70-75% success rate despite the relatively weakmarket conditions. The Partnership does not currently expect its renewalpercentage in 2004 to significantly differ from that experienced in 2003.

 

11

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***Future Development:***Another source of growth in earnings for the Partnership is the development ofadditional rental properties. The Partnership had approximately 2.8 millionsquare feet of properties under development at December 31, 2003 with totalprojected costs of approximately $160.3 million. The total projected costs ofproperties under development at December 31, 2002 was $195.0 million. The lowervolume reflects the relative slowdown in business expansion in response to theoverall weakened economy, and the Partnership’s plan to limit the developmentof speculative properties until activity increases.

 

The properties underdevelopment are expected to provide future Rental Operations growth as they areplaced in service or, for those properties that are being developed for sale,earnings through Service Operations upon their eventual sale. A summary of theproperties under development as of December 31, 2003, follows (in thousands,except percent leased and stabilized returns):

 
| **Anticipated  In-Service  Date** |   | **Square  Feet** |   | **Percent  Leased** |   | **Project  Costs** |    | **Anticipated  Stabilized  Return** |   |
|-----------------------------------|--------|------------------|--------|---------------------|--------|--------------------|---------|-------------------------------------|--------|
| Held for Rental:                  |   |             |   |                |   |               |    |                                |   |
|                              |   |             |   |                |   |               |    |                                |   |
| 1st Quarter 2004                  |   | 1,485            |   | 64                  | %      | $                  | 59,738  |                                | 9.9    | % |
| 2nd Quarter 2004                  |   | 225              |   | 36                  | %      | 16,257             |    | 11.0                                | %      |
| 3rd Quarter 2004                  |   | 200              |   | 53                  | %      | 11,997             |    | 9.9                                 | %      |
| Thereafter                        |   | 193              |   | 100                 | %      | 6,475              |    | 9.9                                 | %      |
|                              |   | 2,103            |   | 63                  | %      | $                  | 94,467  |                                | 10.1   | % |
| Held-for-sale:                    |   |             |   |                |   |               |    |                                |   |
|                              |   |             |   |                |   |               |    |                                |   |
| 1st Quarter 2004                  |   | 422              |   | 100                 | %      | $                  | 37,110  |                                | 9.0    | % |
| 2nd Quarter 2004                  |   | 26               |   | 100                 | %      | 2,567              |    | 11.6                                | %      |
| 3rd Quarter 2004                  |   | 262              |   | 100                 | %      | 26,143             |    | 10.1                                | %      |
| Thereafter                        |   | —           |   | —              |   | —             |    | —                              |   |
|                              |   | 710              |   | 100                 | %      | $                  | 65,820  |                                | 9.5    | % |
|                              |   |             |   |                |   |               |    |                                |   |
| Total                             |   | 2,813            |   | 73                  | %      | $                  | 160,287 |                                | 9.9    | % |

 

***Acquisition and Disposition Activity:***The Partnership has an active capitalrecycling program based upon a strategy to dispose of non-strategic assets andutilize the proceeds to fund new development and acquisitions of more desirableproperties. Through this program, the Partnership is continually improving theoverall quality of itsinvestment portfolio. During 2000 and 2001, the Partnership disposed of over $1billion of properties, which generated substantially greater proceeds than wererequired to fund new development and acquisitions. The excess proceeds wereutilized to pay down Partnership debt, which has reduced the Partnership’sdebt-to-total market capitalization ratio to a conservative 30.8% at December31, 2003.

 

Dispositions of held-for-rentalproperties slowed in 2003 and 2002, totaling $126 million and $41 million,respectively, as the slower business climate limited reinvestment opportunities.The disposition proceeds were used to partially fund 2003 and 2002 acquisitionsof $232 million and $114 million, respectively. The Partnership will continueto pursue both disposition and acquisition opportunities that arise in 2004.While management expects the volume of acquisitions to exceed dispositions,management cannot predict when or if these opportunities will arise.

 

**FundsFrom Operations**

 

Funds From Operations (“FFO”) is used byindustry analysts and investors as a supplemental operating performance measureof an equity real estate investment trust (“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 of America(“GAAP”), excluding extraordinary items as defined under GAAP and gains orlosses from sales of previously depreciated operating real estate assets, pluscertain non-cash items such as real estate asset depreciation and amortization,and after adjustment for unconsolidated partnerships and joint ventures.

 

Historical cost accounting for real estateassets in accordance with GAAP implicitly assumes that the value of real estateassets diminishes predictably over time. Since real estate values instead havehistorically risen or

 

12

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fallen with market conditions, many industryinvestors and analysts have considered the presentation of operating resultsfor real estate companies that use historical cost accounting to beinsufficient by themselves. Thus, NAREIT created FFO as a supplemental measureof REIT operating performance that excludes historical cost depreciation, amongother items, from GAAP net income. Management believes that the use of FFO,combined with the required primary GAAP presentations, has improved theunderstanding of operating results of REITs among the investing public and madecomparisons of REIT operating results more meaningful. As a REIT subsidiary,the Partnership’s management considers FFO to be a useful measure for reviewingcomparative operating and financial performance (although FFO should be reviewedin 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.

 

The following table summarizes thecalculation of FFO for the years ended December 31 (in thousands):

 
|                                               |   | **2003**    |        | **2002**   |   | **2001** |   |
|----------------------------------------------------|--------|-------------|-------------|------------|--------|----------|--------|
|                                               |   |        | ** **  |       |   |     |   |
| Net income available for common units              |   | **$**       | **179,587** | ** ** | $      | 171,601  |   | $ | 259,892 |   |
| Add back (deduct):                                 |   |        | ** **  |       |   |     |   |
| Depreciation and amortization                      |   | **196,234** | ** **  | 175,621    |   | 159,714  |   |
| Share of adjustments for unconsolidated  companies |   | **18,839**  | ** **  | 17,598     |   | 14,177   |   |
| Loss (Earnings) from depreciated property  sales   |   | **(22,141** | **)**       | (5,949     | )      | (45,428  | )      |
| **Funds From Operations**                          |   | **$**       | **372,519** | ** ** | $      | 358,871  |   | $ | 388,355 |   |

 

FundsFrom Operations for 2002 and 2001 have been restated to include the effects of thePartnership’s adoption of the SEC’s July 31, 2003 Staff Policy Statement thatclarifies the application of FASB-EITF Topic D-42, “The Effect on theCalculation of Earnings per Share for the Redemption or Induced Conversion ofPreferred Stock.” See discussion of Restatement of Net Income below.Additionally, the Partnership has restated 2002 and 2001 FFO through theadoption of recent guidance from the SEC requiring the inclusion of impairmentadjustments in the calculation of FFO.

 

**Results of Operations**

 

A summary of the Partnership’soperating results and property statistics for each of the years in thethree-year period ended December 31, 2003, follows (in thousands, except numberof properties and per unit amounts):

 
|                                                         |   | **2003**    |        | **2002** |   | **2001** |   |
|--------------------------------------------------------------|--------|-------------|-------------|----------|--------|----------|--------|
| Rental Operations revenues                                   |   | **$**       | **730,437** |     | $      | 698,107  |   | $ | 701,014 |   |
| Service Operations revenues                                  |   | **58,496**  |        | 67,860   |   | 80,459   |   |
| Earnings from Rental Operations                              |   | **185,043** |        | 216,650  |   | 250,902  |   |
| Earnings from Service Operations                             |   | **21,118**  |        | 29,520   |   | 35,115   |   |
| Operating income                                             |   | **184,819** |        | 221,466  |   | 270,478  |   |
| Net income available for common units                        |   | **179,587** |        | 171,601  |   | 259,892  |   |
| Weighted average common units outstanding                    |   | **150,280** |        | 149,423  |   | 147,961  |   |
| Weighted average common and dilutive  potential common units |   | **151,141** |        | 150,839  |   | 151,710  |   |
| Basic income per common unit:                                |   |        |        |     |   |     |   |
| Continuing operations                                        |   | **$**       | **1.09**    |     | $      | 1.11     |   | $ | 1.71 |   |
| Discontinued operations                                      |   | **$**       | **.11**     |     | $      | .04      |   | $ | .05 |   |
| Diluted  income per common unit:                             |   |        |        |     |   |     |   |
| Continuing operations                                        |   | **$**       | **1.08**    |     | $      | 1.10     |   | $ | 1.69 |   |
| Discontinued operations                                      |   | **.11**     |        | .04      |   | .05      |   |
| Number of in-service properties at end of  year              |   | **884**     |        | 910      |   | 888      |   |
| In-service square footage at end of year                     |   | **106,220** |        | 105,196  |   | 102,982  |   |
| Under development square footage at end of  year             |   | **2,813**   |        | 3,058    |   | 4,701    |   |

 

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

 

Rental Income from Continuing Operations

Rental income from continuing operations increased from $670.9 millionin 2002 to $706.7 million in 2003.  Thefollowing table reconciles rental income by reportable segment to thePartnership’s total reported rental income from continuing operations for theyears ended December 31, 2003 and 2002 (in thousands):

 

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|       |   | **2003**    |        | **2002** |   |
|------------|--------|-------------|-------------|----------|--------|
| Office     |   | **$**       | **421,660** |     | $      | 395,542 |   |
| Industrial |   | **273,307** |        | 264,572  |   |
| Retail     |   | **7,999**   |        | 6,885    |   |
| Other      |   | **3,783**   |        | 3,928    |   |
| Total      |   | **$**       | **706,749** |     | $      | 670,927 |   |

 

Although the Partnership’sthree reportable segments comprising Rental Operations (office, industrial andretail) are all within the real estate industry, they are not necessarilyaffected by the same economic and industry conditions. For example, thePartnership’s retail segment experienced high occupancies and strong overallperformance during 2003, while the Partnership’s office and industrial segmentsreflected the weaker economic environment for those property types. The primarycauses of the increase in rental income from continuing operations, withspecific references to a particular segment when applicable, are summarizedbelow:

 

•                  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%. Increased occupancy continues to bemanagement’s primary focus for 2004.

•                  Leasetermination fees totaled $27.4 million in 2002 compared to $17.2 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 the Partnership’s tenants. Although there is no way to predict theamount of future lease termination fees, management believes that the amount ofthese fees will continue to decline in 2004.

•                  During the yearended 2003, the Partnership acquired $232 million of properties totaling 2.1million square feet. The acquisitions were primarily Class A office buildingsin existing markets with overall occupancy near 90%. Revenues associated withthese acquisitions totaled $10.2 million in 2003.  In addition, revenues from 2002 acquisitions totaled $15.8million in 2003 compared to $4.8 million in 2002. This significant increase isprimarily due to a large office acquisition that closed at the end of December2002.

•                  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 inEarnings of Unconsolidated Companies

Equity in earnings representsthe Partnership’s share of net income from investments in unconsolidatedcompanies. These joint ventures generally own and operate rental properties andhold land for development. These earnings decreased from $27.2 million in 2002to $23.6 million in 2003.  This decreaseis a result of the following significant activity:

 

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

•                  In 2003, thePartnership’s total investment in joint ventures decreased. This decrease wasthe result of the Partnership acquiring its partner’s interest in three jointventures, selling its interest in two and one venture being dissolved in thecurrent year. While the number of joint ventures decreased, the joint ventures’occupancy increased from 93.2% to 94.0% in 2003.

 

14

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RentalExpenses and Real Estate Taxes

The following table reconcilesrental expenses and real estate taxes by reportable segment to thePartnership’s total reported amounts in the statement of operations for theyears ended December 31, 2003 and 2002 (in 000’s):

 
|               |   | **2003**   |        | **2002** |   |
|--------------------|--------|------------|-------------|----------|--------|
| Rental Expenses:   |   |       |        |     |   |
| Office             |   | **$**      | **104,447** |     | $      | 92,401 |   |
| Industrial         |   | **36,954** |        | 30,252   |   |
| Retail             |   | **926**    |        | 494      |   |
| Other              |   | **1,689**  |        | 1,394    |   |
| Total              |   | **$**      | **144,016** |     | $      | 124,541 |   |
|               |   |       |        |     |   |
| Real Estate Taxes: |   |       |        |     |   |
| Office             |   | **$**      | **43,049**  |     | $      | 38,608 |   |
| Industrial         |   | **31,123** |        | 29,206   |   |
| Retail             |   | **477**    |        | 445      |   |
| Other              |   | **4,128**  |        | 3,044    |   |
| Total              |   | **$**      | **78,777**  |     | $      | 71,303 |   |

 

The increased rental and realestate tax expenses for 2003, as compared to 2002, was the result of thePartnership’s increase in average in-service square fee and occupancy.  These increases resulted from thePartnership’s acquisition activities and developments placed in service in2003.

 

InterestExpense

The Partnership’s interestexpense increased from $114.7 million in 2002 to $129.1 million in 2003.  Although the Partnership benefited fromsignificantly lower interest rates during the year, interest expense increasedbecause of increased borrowings during the year and a decrease in the amount ofinterest that was capitalized. The increased borrowings reflected the fundingof the Partnership’s developments during the year and the excess of propertiesacquired over those disposed. Interest capitalized for 2003 was significantlylower than 2002 as development activity for 2003 was substantially slower thanprior years. Development starts for 2003 totaled only $108 million compared toapproximately $225 million for 2002. Other significant factors impactinginterest expense for 2003 are summarized as follows (in thousands):

 

•                  The Partnershipcontinued to replace secured debt financing with unsecured debt, and paid offover $120 million of secured loans throughout 2003. The payoffs includedsecured loans due in 2003 and those due in 2004 and beyond for which thePartnership was able to take advantage of expired or negotiated lowerpre-payment penalties and utilize lower financing costs from unsecured debtofferings or the unsecured line of credit.

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

•                  The Partnershiputilized its $500 million unsecured line of credit more heavily in 2003 than itdid during 2002 in order to take advantage of the historically low borrowingcosts. The balance on the line of credit was $351 million at December 31, 2003compared to $281 million at December 31, 2002.

 

Depreciation and Amortization Expense

Depreciationand amortization expense for 2003 increased by over $22.5 million compared to2002 because of an increase in tenant improvements and leasing costs. Asdiscussed earlier, the Partnership experienced higher overall occupancy andmore acquisition activity in 2003, which resulted in increased capitalexpenditures for tenant improvements and deferred lease commissions as well asincreases in held for investment property basis. The following highlights thesignificant changes in depreciable and amortizable property during 2003:

 

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

 

15

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•                  The Partnershipincurred tenant improvement costs of $91.3 million in 2003.

•                  The Partnershipincurred lease commissions of $41.6 million in 2003.

 

Also contributing to theincreased expense in 2003 was the effect of Statement of Financial AccountingStandards No. 141, *Business Combinations* (“SFAS 141”), on acquisitions. Thisaccounting pronouncement requires the allocation of a portion of a property’spurchase price to intangible assets for leases acquired and in-place at theclosing date of the acquisition. These intangible assets are amortized over theremaining life of the leases (generally 3-5 years) as compared to the buildingbasis portion of the acquisition, which is depreciated over 40 years. Theamortization associated with the acquired lease intangible assets recorded on2003 acquisitions totaled $4.2 million.

 

## **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:

 

•                  The Partnershipexperienced more than a 2% decrease in its overall gross profit marginpercentage in its general contractor business in 2003 because of morecompetitive pricing in many of its markets. However, despite this decrease, the Partnership was able to increase itsnet general contractor revenues from $21.9 million in 2002 to $26.8 million in2003 because of a significant increase in volume. This volume increase wasattributable to the low cost of financing available to businesses, therebymaking it more attractive for them to own instead of lease facilities. ThePartnership has a substantial backlog of $175.6 million for third party work asof December 31, 2003 that will carry into 2004.

•                  Propertymanagement, maintenance and leasing fee revenues have remained fairly constantbetween 2002 and 2003 as the number of properties managed by the Partnershiphas not changed significantly.

•                  Constructionmanagement and development activity income represents construction anddevelopment fees earned on projects where the Partnership acts as theconstruction manager along with profits from the Partnership’s held-for-saleprogram under which the Partnership develops a property with the intent to sellupon completion. The decrease in revenues from $29.4 million in 2002 to $15.5million in 2003 is primarily due to fewer properties being sold in 2003 fromthe held-for-sale program. During 2002, the Partnership sold eightheld-for-sale properties for a pre-tax gain of $28.2 million compared to thesale of four properties in 2003 for a pre-tax gain of $15.4 million in 2003.Profit margins on held-for-sale transactions fluctuate by sale depending on thetype of property being sold, the strength of the underlying tenant and thenature of the sale, such as a pre-contracted purchase price for a primarytenant versus a sale on the open market.

 

Service Operations expenses decreased from $38.3 million in 2002 to$37.4 million in 2003.  Included inthese amounts are income taxes which decreased to $5.7 million in 2003 from$8.4 million in 2002 primarily as a result of lower income from the dispositionof held-for-sale properties. Other Service Operations expenses increased byapproximately $2.0 million in 2003 over 2002. This increase was drivenprimarily from the costs associated with increased third party constructionvolume.

 

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 is primarilyattributable to an increase in construction volume for third party projectsresulting in a greater allocation of overhead to Service Operations operatingexpenses.

 

Other Incomeand Expenses

Gain on sale of land anddepreciable property dispositions, net of impairment adjustment, is comprisedof the following amounts in 2003 and 2002:

 

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|                                     |   | **2003**  |       | **2002**   |   |
|------------------------------------------|--------|-----------|------------|------------|--------|
|                                     |   |      |       |       |   |
| Gain on sales of depreciable properties  |   | **$**     | **0**      | ** ** | $      | 4,491 |   |
| Gain on sale of joint venture  interests |   | **8,639** | ** ** | 0          |   |
| Gain on land sales                       |   | **7,695** | ** ** | 4,478      |   |
| Impairment adjustment                    |   | **(560**  | **)**      | (6,629     | )      |
|                                     |   |      | ** ** |       |   |
| Total                                    |   | **$**     | **15,774** | ** ** | $      | 2,340 |   |

 

Gain on sales of depreciableproperties represent sales of previously held for investment rental propertieswhich did not qualify to be classified as discontinued operations under SFAS144 (see discussion under Discontinued Operations below). There were no suchsales in 2003.

 

In 2003, the Partnership soldits interests in two joint ventures that owned and operated depreciableinvestment property. The Partnership owned 50% of each of these joint ventures.

 

Gain on land sales representssales of undeveloped land owned by the Partnership. The Partnership pursuesopportunities to dispose of land in markets with a high concentration ofundeveloped land and those markets where the land no longer meets strategicdevelopment plans of the Partnership.

 

The Partnership recorded$560,000 of impairment charges on three land parcels that were sold in 2003.The Partnership has analyzed each of its in-service properties and hasdetermined that there are no additional valuation adjustments that need to bemade as of December 31, 2003. The $6.6 million adjustment recorded in 2002 wasassociated with four properties determined to be impaired.

 

Other revenue and expenses iscomprised primarily of the write-off of contract development costs forabandoned development projects and gains on terminations of interest rateswaps. In 2003, the Partnership recorded contract development expenses of $1.0 millioncompared to $1.2 million in 2002. The Partnership accumulates costs ofpotential projects as an asset until such time as the costs are capitalizedinto a new project or expensed for a failed project.

 

In2003, the Partnership terminated four forward starting interest rate swapagreements for a net gain of $643,000. The swap agreements were entered into ashedges for future anticipated debt issuances. These agreements were terminatedas a result of the Partnership’s capital needs being met through the GeneralPartner’s issuance of the Series J Preferred Stock in lieu of the contemplateddebt issuances and the contribution of the net proceeds of such offering to thePartnership in return for the issuance of Series J Preferred Units. In 2002, a$1.4 million gain was recognized in connection with a swap that did not qualifyfor hedge accounting. The Partnership has no swaps or other derivativeinstruments outstanding at December 31, 2003. See discussion of thePartnership’s use of derivative instruments in the footnotes to the financialstatements.

 

DiscontinuedOperations

The Partnership adoptedStatement of Financial Accounting Standard No. 144, *Accounting for the Impairment orDisposal of Long-Lived Assets*(“SFAS 144”), on January 1, 2002. SFAS144 requires the Partnership to report in discontinued operations the resultsof operations of a property that has either been disposed or is classified asheld-for-sale, unless certain conditions are met.

 

At December31, 2003, the Partnership classified the results of operations and gains orlosses of 45 buildings as discontinued operations. Of these buildings, 2 weresold in 2002 and 42 were sold in 2003. Impairment charges of $500,000 were recognized in 2003 relating to asingle property that was sold in 2003. As a result of the sale, these charges were classified in discontinuedoperations for 2003.  One property isowned at December 31, 2003, and is under contract to sell in 2004. Impairmentcharges totaling $2.7 million that were recognized in 2002 have been reclassedto discontinued operations as the properties to which they pertain were sold in2003. Beginning in 2002, results of operations and any gains or losses on allsales of depreciable properties are classified in discontinued operations.

 

17

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**Comparison of Year Ended December 31, 2002 toYear Ended December 31, 2001**

 

Rental Income from Continuing Operations

Rental income from continuing operations increased from $669.6 millionin 2001 to $670.9 million in 2002.  Thefollowing table reconciles rental income by reportable segment to thePartnership’s total reported rental income from continuing operations for theyears ended December 31, 2002 and 2001 (in thousands):

 
|       |   | **2002**    |        | **2001** |   |
|------------|--------|-------------|-------------|----------|--------|
| Office     |   | **$**       | **395,542** |     | $      | 374,805 |   |
| Industrial |   | **264,572** |        | 272,891  |   |
| Retail     |   | **6,885**   |        | 18,165   |   |
| Other      |   | **3,928**   |        | 3,762    |   |
| Total      |   | **$**       | **670,927** |     | $      | 669,623 |   |

 

The following significantfluctuations are the primary causes of the increase in rental income fromcontinuing operations for all three segments, with specific references to aparticular segment when applicable:

 

•                  Throughout 2002,in-service occupancy decreased from 88.6% at the end of 2001 to 87.1% at theend of 2002.  The decline was the result of the weakened economy andits effect on business in the Partnership’s markets. These markets experienceda shortage of demand compared to the supply of office and industrial spaceresulting from downsizing of leased space for existing tenants, the lack of newbusiness growth, and the tendency of existing businesses to hold off on growthplans until the economy improves.

•                  Leasetermination fees totaled $27.4 million in 2002 compared to $17.9 million in2001. In 2002, there were significant individual termination fees received,particularly in the office portfolio, where $21.1 million of termination feeswere recognized compared to $12.1 million in 2001. This trend was consistentwith the continuing decline in occupancy for office space in many of thePartnership’s markets.

•                  In August of 2001,the Partnership sold 21 properties or approximately 75% of its retailportfolio. As a result of this sale, the Partnership had eight months ofoperations associated with these properties in 2001.

 

Equity in Earnings of Unconsolidated Companies

Equity inearnings decreased from $31.4 million in 2001 to $27.2 million for 2002 as aresult of the following:

 

•                  ThePartnership’s share of lease termination fees for 2001 was approximately $2.1million, compared to approximately $658,000 in 2002.

•                  During 2002, a50% joint venture had increased interest expense of approximately $900,000 as aresult of $71.0 million in debt issued during the second quarter of 2001.

 

Rental Expenses and Real Estate Taxes

The followingtable reconciles rental expenses and real estate taxes by reportable segment tothe Partnership’s total reported amounts in the statement of operations for theyears ended December 31, 2002 and 2001 (in 000’s):

 
|               |   | **2002**   |        | **2001** |   |
|--------------------|--------|------------|-------------|----------|--------|
| Rental Expenses:   |   |       |        |     |   |
| Office             |   | **$**      | **92,401**  |     | $      | 86,782 |   |
| Industrial         |   | **30,252** |        | 28,214   |   |
| Retail             |   | **494**    |        | 1,619    |   |
| Other              |   | **1,394**  |        | 1,797    |   |
| Total              |   | **$**      | **124,541** |     | $      | 118,412 |   |
|               |   |       |        |     |   |
| Real Estate Taxes: |   |       |        |     |   |
| Office             |   | **$**      | **38,608**  |     | $      | 33,893 |   |
| Industrial         |   | **29,206** |        | 29,520   |   |
| Retail             |   | **445**    |        | 1,553    |   |
| Other              |   | **3,044**  |        | 3,281    |   |
| Total              |   | **$**      | **71,303**  |     | $      | 68,247 |   |

 

18

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The Partnership’s threereportable segments comprising Rental Operations (office, industrial andretail) are all within the real estate industry. The increased rental and realestate tax expense were the result of the Partnership’s increased real estateassets associated with current year developments and acquisitions.

 

Depreciationand Amortization

Depreciation and amortizationexpense for the year ended December 31, 2002, increased over the prior yearthrough an increase in the Partnership’s building asset basis, increasedinvestments in tenant improvements and the expensing of undepreciated tenantimprovements associated with the early terminations of tenants.

 

InterestExpense

The $5.2 million increase ininterest expense is attributable to the following:

 

•                  Interestcapitalized on development projects decreased from $25.9 million in 2001 to$13.5 million in 2002 because of decreased development activity by thePartnership in response to soft demand in most of the Partnership’s markets.

•                  Interest expenseon corporate unsecured debt increased from $98.7 million in 2001 to $100.8million in 2002. The Partnership issued $150 million of ten-year unsecured debtin August 2002 at an effective interest rate of 5.88% and $50 million often-year unsecured debt in September 2002 at an effective interest rate of5.45%. Also in 2002, the Partnership paid off $50 million of debt that maturedin September, which had an effective rate of 7.31%.

•                  Interest expenseon the Partnership’s secured debt decreased from $30.8 million in 2001 to $22.9million in 2002 as the Partnership paid off $13.5 million of secured debtthroughout 2002 and experienced lower borrowings on its secured line of creditduring 2002 compared to 2001. Additionally, the Partnership paid off approximately $128.5 million ofsecured debt throughout 2001.

•                  Interest expenseon the Partnership’s $500 million unsecured line of credit decreased byapproximately $1.1 million in 2002 compared to 2001 as the Partnershipmaintained lower balances on the line throughout most of 2002.

 

## **Service Operations**

Service Operations primarily consist of leasing, management,construction and development services for joint venture properties andproperties owned by third parties. Service Operations revenues decreased from$80.5 million for the year ended December 31, 2001, to $67.9 million for theyear ended December 31, 2002. The prolonged effect of the slow economy has beenthe primary factor in the overall decrease in revenues. The Partnershipexperienced a decrease of $12.7 million in net general contractor revenuesbecause of a decrease in the volume of construction in 2002, compared to 2001,as well as slightly lower profit margins.

 

Property management, maintenance and leasing fee revenues decreasedfrom $22.8 million in 2001 to $14.3 million in 2002 primarily because of adecrease in landscaping maintenance revenue resulting from the sale of thelandscaping operations in the third quarter of 2001.

 

Construction management and developmentactivity income represents construction and development fees earned on projectswhere the Partnership acts as the construction manager along with profits fromthe Partnership’s held-for-sale program under which the Partnership develops aproperty for sale upon completion. The increase in revenues of $10.3 millionwas 2002 is primarily due to an increase in volume of the sale of propertiesfrom the held-for-sale program.

 

Service Operations expenses decreased from$45.3 million in 2001 to $38.3 million in 2002. The decrease was attributableto the decrease in construction and development activity and the reducedoverhead costs as a result of the sale of the landscape business in 2001.

 

General and Administrative Expense

General and Administrative Expense increased from $15.5 million in 2001to $24.7 million for the year ended December 31, 2002. The Partnership wassuccessful in reducing total operating and administration

 

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costs; however, reducedconstruction and development activities resulted in a greater amount ofoverhead being charged to general and administrative expense instead of beingcapitalized into development projects or charged to Service Operations.

 

Other Incomeand Expenses

Gain on sale of land anddepreciable property dispositions, net of impairment adjustment, was comprisedof the following amounts in 2002 and 2001:

 
|                                    |   | **2002**   |       | **2001**   |   |
|-----------------------------------------|--------|------------|------------|------------|--------|
|                                    |   |       |       |       |   |
| Gain on sales of depreciable properties |   | **$**      | **4,491**  | ** ** | $      | 45,428 |   |
| Gain on land sales                      |   | **4,478**  | ** ** | 5,080      |   |
| Impairment adjustment                   |   | **(6,629** | **)**      | (4,800     | )      |
|                                    |   |       | ** ** |       |   |
| Total                                   |   | **$**      | **2,430**  | ** ** | $      | 45,708 |   |

 

Gain on sales of depreciable properties represent sales of previouslyheld for investment rental properties. Beginning in 2000 and continuing into2001, the Partnership pursued favorable opportunities to dispose of real estateassets that no longer met long-term investment objectives. In 2002, thePartnership significantly reduced the amount of its property sales.

 

Gain on land sales representssales of undeveloped land owned by the Partnership. The Partnership pursuesopportunities to dispose of land in markets with a high concentration ofundeveloped land and those markets where the land no longer meets strategicdevelopment plans of the Partnership.

 

Other revenue for the year ended December 31, 2002, includes $1.4million of gain related to an interest rate swap that did not qualify for hedgeaccounting.

 

**Restatementof Net Income**

 

In July of 2003, the SEC issueda Staff Policy Statement that clarified the application of FASB-EITF Topic D-42(Topic D-42), “The Effect on the Calculation of Earnings per Share for theRedemption or Induced Conversion of Preferred Equity.” Under Topic D-42, thedifference between the amounts paid to the holders of preferred equity uponredemption and the carrying amount of the preferred equity on the issuer’sbalance sheet must be subtracted from net income when computing earnings pershare. The Staff Policy Statement clarified that, in computing the reduction innet income, the carrying amount of the preferred equity should be reduced bythe issuance costs of the preferred equity. As a result of this clarification,the Partnership’s net income per unit was restated for 2002 and 2001. Theimpact of this restatement is summarized as follows:

 
|                                          |   | **Twelve Months Ended December 31,** |   |
|-----------------------------------------------|--------|--------------------------------------|--------|
|                                          |   | **2002**                             |   | **2001** |   |
| Net income available for common  unitholders: |   |                                 |   |   |   |
| Prior to Topic D-42                           |   | 179,746                              |   | $ | 262,430 |   |
| Post adoption of Topic D-42                   |   | 171,601                              |   | $ | 259,892 |   |
|                                          |   |                                 |   |   |   |
| Basic net income per common unit:             |   |                                 |   |   |   |
| Prior to Topic D-42                           |   | $                                    | 1.20   |   | $ | 1.77 |   |
| Post adoption of Topic D-42                   |   | $                                    | 1.15   |   | $ | 1.76 |   |
|                                          |   |                                 |   |   |   |
| Diluted net income per common unit:           |   |                                 |   |   |   |
| Prior to Topic D-42                           |   | $                                    | 1.19   |   | $ | 1.75 |   |
| Post adoption of Topic D-42                   |   | $                                    | 1.14   |   | $ | 1.74 |   |

 

# **CriticalAccounting Policies**

 

The preparation of thePartnership’s consolidated financial statements in conformity with accountingprinciples generally accepted in the United States (GAAP) requires us to makeestimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expensesduring the reported period. The Partnership’s estimates, judgments andassumptions are continually evaluated based upon available information andexperience. Note 1 to the Consolidated Financial Statements includes furtherdiscussion of the Partnership’s significant accounting policies.

 

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The Partnership’s managementhas assessed the accounting policies used in the preparation of its financialstatements and discussed them with the General Partner’s Audit Committee andindependent auditors. The following accounting policies are considered criticalbased upon materiality to the financial statements, degree of judgment involvedin estimating reported amounts and sensitivity to changes in industry andeconomic conditions:

 

*Accounting for Joint Ventures:* The Partnership has equity interestsranging from 10-95% in joint ventures that own and operate rental propertiesand hold land for development. The Partnership consolidates those jointventures that it controls through majority ownership interests or substantialparticipating rights. Control is further demonstrated by the ability of thegeneral partner to manage day-to-day operations, refinance debt and sell theassets of the joint venture without the consent of the limited partner andinability of the limited partner to replace the general partner. ThePartnership uses the equity method of accounting for those joint ventures wherethe Partnership does not have control over operating and financial polices.Under the equity method of accounting, the assets and liabilities of jointventures for which the Partnership uses the equity method are not included onthe Partnership’s balance sheet.

 

*Cost Capitalization:*Direct and certain indirect costs, including interest, clearly associated withthe development, construction, leasing or expansion of real estate investmentsare capitalized as a cost of the property. The following discusses thesignificant categories of costs incurred by the Partnership:

 

Within the Rental Operations ofthe Partnership, direct and indirect costs are capitalized under the guidelinesof SFAS 67, *Accountingfor Costs and Initial Rental Operations of Real Estate Projects*(“SFAS 67”), and interest costs arecapitalized under the guidelines of SFAS 34, “*Capitalization of Interest Cost*”(“SFAS 34”). The Partnership capitalizes these project costs associated withthe initial construction of a property up to the time the property issubstantially complete and ready for its intended use. The Partnership believesthe completion of the building shell is the proper basis for determining substantialcompletion and that this basis is the most widely accepted standard in the realestate industry. The interest rate used to capitalize costs is based upon thePartnership’s average borrowing rate on existing debt.

 

In addition, the Partnershipcapitalizes costs, including interest costs, on vacant space during 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. The Partnership ceases capitalization of all project costson extended lease-up periods after the shorter of a one-year period after thecompletion of the building shell or when the property attains a 90% occupancy.The Partnership follows guidelines in SFAS 34 and SFAS

67 in determining the capitalizationof project costs during the lease-up period of a property and believes thatthis treatment is consistent with real estate industry standards for projectcost capitalization.

 

All direct construction anddevelopment costs associated with the development of a new property arecapitalized. In addition, all leasing commissions paid to third parties for newleases or lease renewals are capitalized. A portion of the Partnership’sindirect costs associated with its construction/ development and leasing effortsare capitalized. In assessing the amount of indirect costs to be capitalized,the Partnership first allocates payroll costs, on a department-by-departmentbasis, among activities for which capitalization is warranted (i.e.,construction, development and leasing) and those for which capitalization isnot warranted (e.g., 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 its executiveofficers.

 

To ensure that an appropriateamount of costs are capitalized, the amount of capitalized costs that areallocated to a specific project are limited to amounts using standardsdeveloped by the Partnership. These standards consist of a percentage of thetotal development costs of a project and a percentage of the total gross lease

 

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amount payable under a specificlease. These standards are derived after considering both the amount of coststhat would need to be paid by the Partnership if the services were performed bythird parties, and the amounts that would be allocated if the personnel in thedepartments were working at full capacity. The use of these standards ensuresthat overhead costs attributable to downtime or to unsuccessful projects orleasing activities are not capitalized by the Partnership.

 

*Impairment of Real Estate Investments:*The Partnership evaluates its real estate investments upon occurrence ofsignificant changes in the operations, but not less than annually, to assesswhether any impairment indications are present that affect the recovery of therecorded value. If any real estate investment is considered impaired, a loss isprovided to reduce the carrying value of the asset to its estimated fair value.The Partnership utilizes the guidelines established under SFAS 144 to determineif impairment conditions exist. Under SFAS 144, the Partnership reviews theexpected undiscounted cash flows of each property in its 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, the Partnership assesses otherfactors such as changes in business climate and legal factors that may affectthe ultimate value of the property. These assumptions are subjective and theanticipated cash flows may not ultimately be achieved.

 

Real estate assets to bedisposed of are reported at the lower of their carrying value amount or thefair value less estimated cost to sell.

 

*Acquisition of Real Estate Property.* The Partnership treats each materialproperty acquisition as a “business” within the scope of SFAS 141. Inaccordance with that statement, the Partnership allocates the purchase price ofacquired properties to net tangible and identified intangible assets based ontheir respective fair value.

 

The allocation to tangibleassets (building 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 similar leases.The remaining purchase price is allocated among three categories of intangibleassets consisting of the above or below market component of in–place leases,the value of in-place leases 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 term,and (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:*The Partnership is subject to tenant defaults and bankruptcies that couldaffect the collection of outstanding receivables. In order to mitigate theserisks, the Partnership performs in-house credit review and analysis on majorexisting tenants and all significant leases before they are executed. ThePartnership has established the following procedures and policies to evaluatethe collectibility of outstanding receivables and record allowances:

 

•                  The Partnershipmaintains a tenant “watch list” containing a list of significant tenants forwhich the payment of receivables and future rent may be at risk. Variousfactors such as late rent payments, lease or debt instrument defaults, andindications of a deteriorating financial position are considered whendetermining whether to include a tenant on the watch list.

 

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•                  As a matter ofpolicy, the Partnership reserves the entire receivable balance, includingstraight-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. In addition, a generalreserve for straight-line rent receivables is provided in an amount equal to 1%to 2% of the outstanding balance.

 

*Revenue Recognition on ConstructionContracts:* The Partnership recognizes income onconstruction contracts where the Partnership serves as a general contractor onthe percentage of completion method. Using this method, profits are recorded onthe basis of the Partnership’s estimates of the overall profit and percentageof completion of individual contracts. A portion of the estimated profits isaccrued based upon the Partnership’s estimates of the percentage of completionof the construction contract. Cumulative revenues recognized may be less orgreater than cumulative costs and profits billed at any point in time during acontract’s term. This revenue recognition method involves inherent risksrelating to profit and cost estimates with those risks reduced through approvaland monitoring processes.

 

With regards to criticalaccounting policies, management has discussed the following with the AuditCommittee of the General Partner’s Board of Directors:

 

•                  Criteria foridentifying and selecting;

•                  Methodology inapplying; and

•                  Impact on thefinancial statements.

 

The Audit Committee of theGeneral Partner has reviewed the critical accounting policies identified by thePartnership.

 

# **Liquidity and Capital Resources**

 

**Sourcesof Liquidity**

 

ThePartnership expects to meet its liquidity requirements over the next twelvemonths, including payments of distributions to unitholders as well as recurringcapital expenditures relating to maintaining the Partnership’s current realestate assets, primarily through the following:

 

•                  working capital;and

•      netcash provided by operating activities

 

Although thePartnership historically has not used any other sources of funds to pay forrecurring capital expenditures on its current real estate investments, the useof borrowings or property disposition proceeds may be needed to fund suchexpenditures during periods of high leasing volume. This situation could arisein 2004 if the Partnership experiences a significant increase in its occupancy.

 

ThePartnership expects to meet its long-term liquidity requirements, such asscheduled mortgage debt maturities, preferred equity redemptions, theretirement of unsecured notes and amounts outstanding under the unsecuredcredit facility, property acquisitions, financing of development activities andother non-recurring capital improvements, primarily from the following sources:

 

•      issuanceof additional unsecured notes;

•      issuanceof additional General Partner preferred equity;

•      undistributedcash provided by operating activities, if any; and

•      proceedsreceived from real estate dispositions.

 

### ***RentalOperations***

The Partnershipbelieves that its principal source of liquidity, cash flows from RentalOperations, provides a stable source of cash to fund operational expenses. ThePartnership believes that this cash-based revenue stream is substantiallyaligned with revenue recognition (except for periodic straight-line rentalincome

 

23

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accruals) ascash receipts from the leasing of rental properties are generally received inadvance of or in a short time following the actual revenue recognition. ThePartnership is subject to risks of decreased occupancy through marketconditions as well as tenant defaults and bankruptcies, and potential reductionin rental rates upon renewal or re-letting of properties, which would result inreduced cash flow from operations. However, management believes that theserisks are mitigated by the Partnership’s strong market presence in most of itslocations and the fact that the Partnership performs in-house credit review andanalysis on major tenants and all significant leases before they are executed.

 

*Credit Facilities*

The Partnership had the following line ofcredit available (in thousands):

 
| **Description**          |   | **Borrowing  Capacity** |    | **Maturity  Date** |          | **Interest  Rate** |         | **Amount  Outstanding  at December  31, 2003** |   |
|--------------------------|--------|-------------------------|---------|--------------------|---------------|--------------------|--------------|------------------------------------------------|--------|
| Unsecured Line of Credit |   | $                       | 500,000 |               | February 2004 |               | LIBOR + .65% |                                           | $      | 351,000 |   |
|                          |        |                         |         |                    |               |                    |              |                                                |        |  |  |

 

The line of credit is used to funddevelopment activities to acquire additional rental properties and to provideworking capital.

 

In January 2004, the Partnership renewed the unsecuredline of credit, extending the maturity date to January 2007 and lowering theinterest rate from LIBOR + .65% to LIBOR + .60%.

 

The line of credit contains financialcovenants that require the Partnership to meet defined levels of performance.As of December 31, 2003, the Partnership is in compliance with all suchcovenants and expects to remain in compliance for the foreseeable future.

 

*Debt and Equity Securities*

The Partnership currently has on file withthe SEC an effective shelf registration statement that permits the Partnershipto sell up to an additional $670 million of unsecured debt securities as ofDecember 31, 2003.  In addition, theGeneral Partner has on file with the SEC an effective shelf registrationstatement that permits the General Partner to sell up to an additional $400.7million of common and preferred stock as of December 31, 2003. Fromtime-to-time, the Partnership and the General Partner expect to issueadditional securities under these registration statements to fund developmentand acquisition of additional rental properties and to fund the repayment ofthe credit facilities and other long-term debt upon maturity.

 

The indenture governing the Partnership’sunsecured notes also requires the Partnership to comply with financial ratiosand other covenants regarding the operations of the Partnership. ThePartnership is currently in compliance with all such covenants and expects toremain in compliance for the foreseeable future.

 

In January 2004, thePartnership completed a $125 million unsecured debt offering at an effectiveinterest rate of 3.4%, due January 2008.

 

*Sale of Real Estate Assets*

The Partnership utilizes sales of real estateassets as an additional source of liquidity. During 2000 and 2001, thePartnership engaged in a capital-recycling program that resulted in sales ofover $1 billion of real estate assets. In 2002 and 2003, volume wassubstantially reduced as capital needs were met through other sources and theslower business climate provided fewer opportunities to profitably reinvestsale proceeds. The Partnership continues to pursue opportunities to sell realestate assets when beneficial to the long-term strategy of the Partnership.

 

**Usesof Liquidity**

 

The Partnership’s principal uses of liquidityinclude the following:

 

•                  Propertyinvestments;

•                  Recurringleasing/capital costs;

 

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•                  Distributions tounitholders;

•      Long-termdebt maturities; and

•      Othercontractual obligations.

 

*Property Investments*

The Partnership evaluates development andacquisition opportunities based upon market outlook, supply, and long-termgrowth potential.

 

*Recurring expenditures*

A summary of the Partnership’srecurring capital expenditures is as follows for the year ended December31,  (in thousands):

 
|                  |   | **2003**   |       | **2002** |   | **2001** |   |
|-----------------------|--------|------------|------------|----------|--------|----------|--------|
|                  |   |       |       |     |   |     |   |
| Tenant improvements   |   | **$**      | **35,972** |     | $      | 28,011   |   | $ | 18,416 |   |
| Leasing costs         |   | **20,932** |       | 17,975   |   | 13,845   |   |
| Building improvements |   | **19,544** |       | 13,373   |   | 10,873   |   |
| Totals                |   | **$**      | **76,448** |     | $      | 59,359   |   | $ | 43,134 |   |

 

*Dividends and Distributions*

In order to qualify as a REIT for federalincome tax purposes, the General Partner must currently distribute at least 90%of its taxable income to its shareholders. The Partnership paid distributionsper Common Unit of $1.83, $1.81 and $1.76 for the years ended December 31,2003, 2002 and 2001, respectively. The Partnership expects to continue todistribute taxable earnings at least to the extent necessary for the GeneralPartner to maintain its REIT status. However, distributions are declared at thediscretion of the General Partner’s Board of Directors and are subject toactual cash available for distribution, the Partnership’s financial condition,capital requirements and such other factors as the General Partner’s Board ofDirectors deems relevant.

 

*Debt Maturities*

Debt outstanding at December 31, 2003,totaled $2.3 billion with a weighted average interest rate of 5.65% maturing atvarious dates through 2028. The Partnership had $2.1 billion of unsecured debtand $208.6 million of secured debt outstanding at December 31, 2003. Scheduledprincipal amortization of such debt totaled $9.0 million for the year endedDecember 31, 2003.

 

Following is a summary of the scheduledfuture amortization and maturities of the Partnership’s indebtedness at December31, 2003, including the $351 million outstanding on the unsecured line ofcredit in 2007 maturities to reflect the January 2004 renewal (in thousands):

 
|       |   | **Future  Repayments**      |   |           |   | **Weighted****Average** |   |
|------------|--------|-----------------------------|--------|----------------|--------|-------------------------|--------|
| **Year**   |   | **Scheduled  Amortization** |   | **Maturities** |   | **Total**               |   | **Interest  Rate of  Future Repayments** |   |
|       |   |                        |   |           |   |                    |   |   |   |
| 2004       |   | $                           | 8,064  |           | $      | 166,834                 |   | $ | 174,898 |   | 7.37 | % |
| 2005       |   | 7,749                       |   | 205,980        |   | 213,729                 |   | 7.21 | % |
| 2006       |   | 7,326                       |   | 180,186        |   | 187,512                 |   | 6.00 | % |
| 2007       |   | 5,842                       |   | 565,615        |   | 571,457                 |   | 3.21 | % |
| 2008       |   | 4,922                       |   | 134,028        |   | 138,950                 |   | 6.31 | % |
| 2009       |   | 4,694                       |   | 275,000        |   | 279,694                 |   | 7.38 | % |
| 2010       |   | 4,076                       |   | 175,000        |   | 179,076                 |   | 5.38 | % |
| 2011       |   | 3,334                       |   | 175,000        |   | 178,334                 |   | 6.94 | % |
| 2012       |   | 1,944                       |   | 200,000        |   | 201,944                 |   | 5.85 | % |
| 2013       |   | 1,581                       |   | 150,000        |   | 151,581                 |   | 4.62 | % |
| Thereafter |   | 8,361                       |   | 50,000         |   | 58,361                  |   | 6.64 | % |
|       |   | $                           | 57,893 |           | $      | 2,277,643               |   | $ | 2,335,536 |   | 5.65 | % |

 

**Historical Cash Flows**

 

A comparison of thePartnership’s historical cash flows for 2003, 2002 and 2001 is as follows (inmillions):

 

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|                                              |   | **Years  Ended December 31,** |       |
|---------------------------------------------------|--------|-------------------------------|------------|
|                                              |   | **2003**                      |       | **2002** |   | **2001** |   |
| Net cash provided by Operating Activities         |   | **$**                         | **368.1**  | ** ** | $ | 569.0 |   | $ | 348.7 |   |
|                                              |   |                          | ** ** |   |   |   |   |
| Net Cash Provided (Used) by Investing  Activities |   | **(319.6**                    | **)**      | (337.2 | ) | 93.5 |   |
|                                              |   |                          | ** ** |   |   |   |   |
| Net Cash Used for Financing Activities            |   | **(52.9**                     | **)**      | (225.1 | ) | (470.9 | ) |
|                                                   |        |                               |            |  |  |  |  |  |  |  |

 

*Operating Activities*

Cash flows from operatingactivities provide the cash necessary to meet normal, operationalrequirements.  The receipt of rentalincome from Rental Operations continues to provide the primary source ofrevenues and operating cash flows for the Partnership. However, in 2002, asexplained in more detail below, the Partnership had a large number of sales ofbuildings developed with the intent to sell, resulting in a significant sourceof operational cash flows and revenues in 2002 compared to 2001 and 2003. Whilethe Partnership continues to pursue these opportunities, revenues from rentaloperations will continue to be the primary source of revenue of thePartnership. Management continues to focus on increasing occupancy as itsprimary objective for 2004.

 

•                  The Partnershipsold eight build-for-sale properties in 2002 generating sales proceeds of$196.9 million. In contrast, four properties were sold in 2003 with grossproceeds of $50.1 million, and eleven properties were sold in 2001 with grossproceeds of $102.2 million.

•                  The Partnershiphas a backlog of build-for-sale buildings as of December 31, 2003, withprojected project costs of $65.8 million that it anticipates selling throughout2004.

 

*Investing Activities*

Investing activities are one ofthe primary uses of the Partnership’s liquidity. Development and acquisitionactivity is necessary to generate additional rental revenues and provide cashflows for operational requirements. Highlights of significant cash uses are asfollows:

 

•                  Developmentcosts decreased from $251.4 million in 2001 and $158.1 million in 2002 to$129.2 million in 2003. This trend is reflective of the weakened economy andexcess supply over demand in many of the Partnership’s markets. New developments,particularly speculative office, have been limited by management in an effortto focus on lease-ups of existing properties in most markets.

•                  Acquisitions ofreal estate have increased significantly since 2001 as the Partnershipcontinues to view acquisitions in current markets as sources for growthopportunities.

•                  Recurring costsfor tenant improvements, lease commissions and building improvements have alsocontinued to increase over the past three years in direct relation to there-leasing of vacant space. As occupancy fell to a low in 2001, managementfocused its attention over the past two years on improving and re-letting itsexisting spaces. Towards the latter half of 2003, occupancy improved in thePartnership’s in-service portfolio. Management anticipates these costs toremain high in 2004 as occupancy trends upward, but occupancy trends are notpredictable.

•                  Proceeds fromproperty sales increased in 2003 over 2002 as the Partnership again looked todispose of non-strategic assets. The Partnership experienced significant salesin 2000 and 2001 as efforts were made to de-leverage the balance sheet inanticipation of a slowed economy in 2001 and 2002. This strategy has created alow debt to market capitalization for the Partnership as of the end of 2003.Sales of property will continue to be utilized as part of the Partnership’scapital recycling program to fund acquisitions and new development.

 

*Financing Activities*

The Partnership increased itsborrowings under both its unsecured line of credit and in the public debtmarkets as a source of capital over the past two years. In order to enhance itsflexibility with respect to its properties, the Partnership has continued toreplace secured debt with unsecured debt. The low leverage resulting from thelarge volume of property dispositions in 2000 and 2001 provided the Partnershipwith the opportunity to borrow funds at very attractive rates. Highlights ofsignificant financing activities are as follows:

 

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•                  The Partnershipreceived $425.0 million in proceeds from unsecured debt offerings in 2003 andrepaid $135.5 million of secured debt in accordance with the strategy outlinedabove. The Partnership has obtained very low coupon rates on its newly issueddebt and has staggered the maturity dates over the next 10 years, with nosingle year having disproportionate maturities.

•                  Borrowings onthe unsecured line of credit have increased since 2001 as the Partnership hastaken advantage of lower interest rates and excess capacity to funddevelopment, acquisition and working capital needs. The Partnership renewed itsunsecured line in January 2004, extending the due date to 2007 and lowering theinterest rate from LIBOR + .65% to LIBOR + .60%.

 

Credit Ratings

 

The General Partner and thePartnership are currently assigned investment grade corporate credit ratings onits senior unsecured notes from Fitch Ratings, Moody’s Investor Service andStandard 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. These ratings could change based upon, among otherthings, the Partnership’s results of operations and financial condition.

 

The General Partner and thePartnership also have received investment grade credit ratings from the samerating agencies on its preferred stock. Fitch and Standard and Poor’s have assigned a Preferred Stock rating ofBBB and Moody’s Investors has assigned a Preferred Stock rating of Baa2. Theseratings could change based upon, among other things, the Partnership’s resultsof operations and financial condition.

 

FinancialInstruments

 

In December 2002, thePartnership simultaneously entered into two $50 million forward-startinginterest rate swaps as a hedge to effectively fix the rate on unsecured debtfinancings expected in 2003. The fair value of the swaps was a liability of$2.1 million as of December 31, 2002, and was recorded in other liabilities inthe accompanying balance sheet.

 

In February 2003, thePartnership simultaneously entered into two additional $25 millionforward-starting interest rate swaps as a hedge to effectively fix the rate onunsecured debt financings expected in 2003. All four swaps qualified for hedgeaccounting under Statement of Financial Accounting Standards No. 133, *Accountingfor Derivative Instruments and Hedging Activities*, as amended (“SFAS 133”); therefore, changes in fair value were recorded inother comprehensive income.

 

In July 2003, the Partnershipterminated the swaps for a net gain of $643,000, which is included in otherrevenue in the Statements of Operations. The swaps were terminated because thePartnership’s capital needs were met through the issuance of the GeneralPartner’s Series J Preferred Stock in lieu of the previously contemplated issuance of debt. The proceeds of theSeries J Preferred Stock were contributed to the Partnership.

 

In July 2001, the Partnershipterminated three interest rate swaps that were tied to an $85 million unsecuredterm loan. The swaps qualified for hedge accounting under SFAS 133. The cost to terminate the swaps was$548,000, which was recorded as interest expense.

 

In May 2003, the FASB issuedStatement No. 150 *Accounting for Certain Financial Instruments with Characteristics ofboth Liabilities and Equity* (“SFAS 150”). SFAS 150 establishesstandards for classifying and measuring as liabilities certain financialinstruments that embody obligations of the issuer and have characteristics ofboth liabilities and equity. SFAS 150 is effective for all financialinstruments created or modified after May 31, 2003, and otherwise is effectiveJuly 1, 2003. The Partnership includes the operations of five joint ventures inits consolidated financial statements. These joint ventures are partially ownedby unaffiliated parties that have noncontrolling interests. SFAS 150 requiresthe disclosure of the estimated settlement value of these noncontrollinginterests. As of December 31, 2003, the estimated settlement value of thesenoncontrolling interests was approximately $4.3 million as compared to theminority interest liability recorded on the Partnership’s books for these jointventures of $1.2 million.

 

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# **OffBalance Sheet Arrangements**

 

# ***Investments in Unconsolidated Companies***

The Partnership has equityinterests ranging from 10 – 64% in unconsolidated joint ventures that own andoperate rental properties and hold land for development. The equity method ofaccounting is used for these investments in which the Partnership has theability to exercise significant influence, but not control, over operating andfinancial policies. As a result, the assets and liabilities of these jointventures are not included on the Partnership’s balance sheet.

 

The Partnership’s investment inunconsolidated companies represents less than 6% of the Partnership’s totalassets as of December 31, 2003. These investments provide several benefits tothe Partnership including increased market share, tenant and propertydiversification and an additional source of capital to fund real estateprojects.

 

The following tables presents summarizedfinancial information for the unconsolidated companies for the years endedDecember 31, 2003 and 2002 (in thousands, except percentages):

 
|                                         |   | **Dugan  Realty, LLC** |        | **Dugan  Texas, LLC** |   | **Dugan  Office, LLC** |       | **Other Industrial  and Office  Joint Ventures** |        | **Total**  |       |
|----------------------------------------------|--------|------------------------|-------------|-----------------------|--------|------------------------|------------|--------------------------------------------------|-------------|------------|------------|
|                                         |   | **2003**               |        | **2002**              |   | **2003**               |       | **2002**                                         |        | **2003**   |       | **2002** |   | **2003** |   | **2002** |   | **2003** |   | **2002** |   |
| Land, buildings and tenant improvements, net |   | **$**                  | **727,411** | ** **            | $      | 739,372                |       | **$**                                            | **209,602** | ** ** | $          | 214,796 |   | **$** | **91,170** | ** ** | $ | 94,718 |   | **$** | **145,049** | ** ** | $ | 183,140 |   | **$** | **1,173,232** | ** ** | $ | 1,232,026 |   |
| Land held for development                    |   | **17,663**             | ** **  | 18,763                |   | **12,710**             | ** ** | 9,148                                            |        | **4,293**  | ** ** | 4,294 |   | **16,662** | ** ** | 6,643 |   | **51,328** | ** ** | 38,848 |   |
| Other assets                                 |   | **29,213**             | ** **  | 26,372                |   | **16,535**             | ** ** | 17,427                                           |        | **2,934**  | ** ** | 4,654 |   | **13,514** | ** ** | 19,137 |   | **62,196** | ** ** | 67,590 |   |
|                                         |   | **$**                  | **774,287** |                  | $      | 784,507                |       | **$**                                            | **238,847** | ** ** | $          | 241,371 |   | **$** | **98,397** | ** ** | $ | 103,666 |   | **$** | **175,225** | ** ** | $ | 208,920 |   | **$** | **1,286,756** | ** ** | $ | 1,338,464 |   |
|                                         |   |                   | ** **  |                  |   |                   | ** ** |                                             |        |       | ** ** |   |   |   | ** ** |   |   |   | ** ** |   |   |
| Property indebtedness                        |   | **$**                  | **409,349** | ** **            | $      | 408,305                |       | **$**                                            | **16,035**  | ** ** | $          | 17,200 |   | **$** | **69,160** | ** ** | $ | 69,936 |   | **$** | **83,188** | ** ** | $ | 84,452 |   | **$** | **577,732** | ** ** | $ | 579,893 |   |
| Other liabilities                            |   | **18,232**             | ** **  | 17,533                |   | **9,342**              | ** ** | 7,851                                            |        | **3,460**  | ** ** | 3,790 |   | **10,657** | ** ** | 22,883 |   | **41,691** | ** ** | 52,057 |   |
|                                         |   | **427,581**            |        | 425,838               |   | **25,377**             | ** ** | 25,051                                           |        | **72,620** | ** ** | 73,726 |   | **93,845** | ** ** | 107,335 |   | **619,423** | ** ** | 631,950 |   |
| Owner’s equity                          |   | **346,706**            | ** **  | 358,669               |   | **213,470**            | ** ** | 216,320                                          |        | **25,777** | ** ** | 29,940 |   | **81,380** | ** ** | 101,585 |   | **667,333** | ** ** | 706,514 |   |
|                                         |   | **$**                  | **774,287** |                  | $      | 784,507                |       | **$**                                            | **238,847** | ** ** | $          | 241,371 |   | **$** | **98,397** | ** ** | $ | 103,666 |   | **$** | **175,225** | ** ** | $ | 208,920 |   | **$** | **1,286,756** | ** ** | $ | 1,338,464 |   |
|                                         |   |                   | ** **  |                  |   |                   | ** ** |                                             |        |       | ** ** |   |   |   | ** ** |   |   |   | ** ** |   |   |
| Rental income                                |   | **$**                  | **97,150**  | ** **            | $      | 94,176                 |       | **$**                                            | **28,248**  | ** ** | $          | 26,636 |   | **$** | **18,202** | ** ** | $ | 17,280 |   | **$** | **26,627** | ** ** | $ | 31,591 |   | **$** | **170,227** | ** ** | $ | 169,683 |   |
|                                         |   |                   | ** **  |                  |   |                   | ** ** |                                             |        |       | ** ** |   |   |   | ** ** |   |   |   | ** ** |   |   |
| Net income                                   |   | **$**                  | **23,397**  | ** **            | $      | 28,164                 |       | **$**                                            | **12,688**  | ** ** | $          | 13,308 |   | **$** | **1.536** | ** ** | $ | 1,660 |   | **$** | **3,444** | ** ** | $ | 7,881 |   | **$** | **41,065** | ** ** | $ | 51,013 |   |
|                                         |   |                   | ** **  |                  |   |                   | ** ** |                                             |        |       | ** ** |   |   |   | ** ** |   |   |   | ** ** |   |   |
| Total square feet                            |   | **22,761**             | ** **  | 22,757                |   | **5,808**              | ** ** | 5,878                                            |        | **652**    | ** ** | 648 |   | **4,465** | ** ** | 5,452 |   | **33,686** | ** ** | 34,735 |   |
|                                         |   |                   | ** **  |                  |   |                   | ** ** |                                             |        |       | ** ** |   |   |   | ** ** |   |   |   | ** ** |   |   |
| Percent leased                               |   | **94.8**               | **%**       | 94.1                  | %      | **95.0**               | **%**      | 95.3                                             | %           | **87.4**   | **%**      | 95.3 | % | **89.4** | **%** | 87.2 | % | **94.0** | **%** | 93.2 | % |
|                                         |   |                   | ** **  |                  |   |                   | ** ** |                                             |        |       | ** ** |   |   |   | ** ** |   |   |   | ** ** |   |   |
| 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*

ThePartnership does 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 or otherspecific purposes.

 

*Contractual Obligations*

As of December31, 2003, the Partnership is subject to certain contractual payment obligationsas described in the schedule below (in thousands):

 
|                                                        |   | **Payments due by Period** |      |
|-------------------------------------------------------------|--------|----------------------------|-----------|
| **Contractual  Obligations**                                |   | **Total**                  |      | **2004** |   | **2005** |   | **2006** |   | **2007** |   | **2008** |   | **Thereafter** |   |
| Long-term debt (1)                                          |   | $                          | 1,984,536 |   | $ | 174,898 |   | $ | 213,729 |   | $ | 187,512 |   | $ | 220,458 |   | $ | 138,950 |   | $ | 1,048,989 |   |
| Line of credit (2)                                          |   | 351,000                    |      | — |   | — |   | — |   | 351,000 |   | — |   | — |   |
| Share of mortgage debt of unconsolidated joint ventures (3) |   | 278,732                    |      | 29,246 |   | 65,214 |   | 5,627 |   | 45,920 |   | 985 |   | 131,740 |   |
| Capital leases                                              |   | 2,003                      |      | 501 |   | 501 |   | 501 |   | 500 |   | — |   | — |   |
| Ground leases                                               |   | 5,657                      |      | 344 |   | 344 |   | 355 |   | 359 |   | 359 |   | 3,896 |   |
| Development and construction backlog costs (4)              |   | 196,553                    |      | 196,553 |   | — |   | — |   | — |   | — |   | — |   |
| Future land acquisitions (5)                                |   | 13,816                     |      | 13,816 |   | — |   | — |   | — |   | — |   | — |   |
| Other (6)                                                   |   | 5,531                      |      | 996 |   | 943 |   | 713 |   | 540 |   | 327 |   | 2,012 |   |
| **Total  Contractual Obligations**                          |   | $                          | 2,837,828 |   | $ | 416,354 |   | $ | 280,731 |   | $ | 194,708 |   | $ | 618,777 |   | $ | 140,621 |   | $ | 1,186,637 |   |
|                                                             |        |                            |           |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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(1)          This long term debt consists of both securedand unsecured debt.

(2)          In January 2004, the maturity of thePartnership’s line-of-credit was extended to 2007.

(3)          The Partnership has guaranteed $92.0 millionof the total $278.7 million Partnership share of unconsolidated joint venturedebt.

(4)          Estimated remaining costs on the completionof held-for-rental, held-for-sale and third-party construction projects.

(5)          These land acquisitions are subject to thecompletion of due diligence requirements, resolution of certain contingenciesand completion of customary closing conditions. If the Partnership were toterminate these contracts, the Partnership would forfeit its total escrowamount of $100,000 and would have no further contractual obligations.

(6)          This amount consists of operating leases andinfrastructure development commitments.

 

28

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**RelatedParty Transactions**

 

ThePartnership provides property management, leasing, construction and othertenant related services to properties in which certain executives haveownership interests. The Partnership had an option to acquire the executiveofficers’ interests in these properties. Two of these properties, the Bank OneTowers office buildings in Cincinnati, Ohio, were acquired in August 2003 at aprice of $45.5 million. The terms of this acquisition were reviewed andapproved by the independent members of the General Partner’s Board ofDirectors. The options on the remaining properties expired in October 2003, asthe independent members of the General Partner’s Board of Directors determinedthat it was not in the best interests of the Partnership to exercise theoptions.

 

ThePartnership received fees totaling $1.2 million, $1.4 million and $1.7 millionin 2003, 2002 and 2001, respectively, for services provided to theseproperties. The fees charged by the Partnership for such services areequivalent to those charged to third-party owners for similar services.

 

ThePartnership provides property management, leasing, construction and othertenant related services to unconsolidated companies in which the Partnershiphas equity interests. For the years ended December 31, 2003, 2002 and 2001,respectively, the Partnership received management fees of $4.9 million, $4.9million and $4.7 million, leasing fees of $2.3 million, $2.5 million and $2.8million and construction and development fees of $1.4 million, $4.5 million and$5.2 million from these unconsolidated companies. These fees were charged at marketrates and the Partnership eliminates its ownership percentage of these fees inthe consolidated financials.

 

In 2002, the Partnershipreceived lease termination fees totaling $7.7 million from a tenant that is asubsidiary of Progress Energy, Inc. William Cavanaugh III is President andChief Executive Officer of Progress Energy, Inc. and a member of the GeneralPartner’s Board of Directors. The General Partner’s independent directorsapproved the transaction and management believes that the amount receivedapproximates a value that would have been charged to tenants with similar leaseterms and commitments.

 

The Partnership has otherrelated party transactions that are insignificant and are at terms thatmanagement considers to be arm’s-length and equal to those negotiated withindependent parties.

 

**Commitmentsand Contingencies**

 

The Partnership has the following commitmentsand contingencies in addition to those previously disclosed:

 

In 1998 and 1999, certain members ofmanagement and the General Partner’s Board of Directors purchased $69 millionof common stock in connection with an Executive and Senior Officer StockPurchase Plan. The purchases were financed by five-year personal loans fromfinancial institutions. As of December 31, 2003, the outstanding balance onthese loans was $11.7 million as some participants have exited the program andrepaid their principal balance. These loans were secured by common shares witha fair market value of $18.2 million purchased through this program and ownedby the remaining plan participants at December 31, 2003. As a condition of thefinancing agreement with the financial institution, the Partnership guaranteedthe repayment of principal, interest and other obligations for eachparticipant, but is fully indemnified by the participants. In the opinion ofmanagement, it is not probable that the Partnership will be required to satisfythese guarantees.

 

In October 2000, the Partnership sold orcontributed industrial properties and undeveloped land with a fair value of$487 million to a joint venture (Dugan Realty LLC) in which the Partnership hasa 50% 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, the Partnership received $363.9 millionof proceeds. The joint venture partially financed this transaction with $350million of secured mortgage debt, the repayment of which was directly orindirectly guaranteed by the Partnership. The guarantee associated with $260million of such debt expired in December 2003 without the Partnership beingrequired to satisfy the guarantee. The remaining $90 million of such debt isstill guaranteed by the Partnership. In connection with this transaction, thejoint venture partners were given an option to put up to a $50 million interestin the joint venture to the Partnership in exchange for common stock of thePartnership or cash (at

 

29

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the option of the Partnership), subject tocertain timing and other restrictions. As a result of this put option, thePartnership deferred $10.2 million of gain on sale of depreciated property andrecorded a $50 million liability.

 

The Partnership has guaranteed the repaymentof $3.5 million of economic development bonds issued by the City of Carmel,Indiana. The Partnership will be required to make payments under its guaranteeto the extent that incremental taxes from one of its office park developmentsare not sufficient to pay the bond debt service. Management does not believethat it is probable that the Partnership will be required to make anysignificant payments in satisfaction of this guarantee.

 

The Partnership has also guaranteed therepayment of a $2 million mortgage loan encumbering the real estate of one itsunconsolidated joint ventures. Management believes that the value of the realestate exceeds the loan balance and that the Partnership will not be requiredto satisfy this guarantee.

 

The Partnership has entered into agreements,subject to the completion of due diligence requirements, resolution of certaincontingencies and completion of customary closing conditions, for the futureacquisition of land totaling $13.8 million. The acquisitions are scheduled toclose periodically through 2004 and will be paid for by cash.

 

The Partnership renewed all of its majorinsurance policies in 2003. These policies include coverage for acts ofterrorism for its properties. The Partnership believes that this insurance providesadequate coverage against normal insurance risks and that any loss experiencedwould not have a significant impact on the Partnership’s liquidity, financialposition, or results of operations.

 

Broadband Office, Inc. and Official Committeeof Unsecured Creditors of Broadband Office, Inc. recently filed a complaintagainst a group of real estate investment trusts and real estate operatingcompanies and certain affiliated entities and individuals in connection withthe formation and management of Broadband Office. Among the defendants are theGeneral Partner, the Partnership and Mr. Dennis Oklak, one of the GeneralPartner’s executive officers. The complaint alleges various breaches ofpurported fiduciary duties by the defendants, seeks recharacterization orequitable subordination of debt, seeks recovery of alleged avoidable transfers,appears to seek to hold them liable for, among other things, the debt ofBroadband Office under alter-ego, veil-piercing and partnership theories, andseeks other relief under other theories. The complaint seeks aggregate damagesin excess of $300 million from all of the defendants. The Partnership believesthat it has meritorious defenses to the plaintiff’s allegations and intends tovigorously defend this litigation. Due to the inherent uncertainties of thelitigation process and the judicial system, the Partnership is not able topredict the outcome of this litigation. If this litigation is not resolved inthe Partnership’s favor, it could have a material adverse effect on itsbusiness, financial condition and results of operations.

 

The Partnership is subject to various legalproceedings and claims 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 affectthe Partnership’s consolidated financial statements or results of operations.

 

# **RecentAccounting Pronouncements**

 

In January 2003, FASB issuedInterpretation 46, Consolidation of Variable Interest Entities (“Interpretation46”), which addresses the consolidation of certain entities in which a companyhas a controlling financial interest through means other than voting rights.This interpretation was revised in December 2003.  For calendar year companies, Interpretation 46 contains aneffective date of December 31, 2003 for special purpose entities and periodsending after March 15, 2004 for all other entities. The Partnership does notown interests in special purpose entities and management does not believe thatthe adoption of Interpretation 46 will have a material impact on thePartnership’s financial statements.

 

**Item7A.  Quantitative and QualitativeDisclosure About Market Risks**

 

The Partnership is exposed to interest ratechanges primarily as a result of its line of credit and long-term debtborrowings. The Partnership’s interest rate risk management objective is tolimit the impact of interest rate

 

30

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changes on earnings and cashflows and to lower its overall borrowing costs. To achieve its objectives thePartnership borrows primarily at fixed rates and may enter into derivativefinancial instruments such as interest rate swaps, caps and treasury locks inorder to mitigate its interest rate risk on a related financial instrument. ThePartnership does not enter into derivative or interest rate transactions forspeculative purposes.

 

ThePartnership’s interest rate risk is monitored using a variety of techniques.The table 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.

 
|                                      |   | **2004** |    | **2005** |   | **2006** |   | **2007** |    | **2008** |   | **Thereafter** |   | **Total** |    | **Fair****Value** |   |
|-------------------------------------------|--------|----------|---------|----------|--------|----------|--------|----------|---------|----------|--------|----------------|--------|-----------|---------|-------------------|--------|
|                                      |   |     |    |     |   |     |   |     |    |     |   |           |   |      |    |              |   |
| Fixed rate secured debt                   |   | $        | 23,924  |     | $      | 12,760   |   | $        | 46,491  |     | $      | 19,490         |   | $         | 38,094  |              | $      | 12,701 |   | $ | 153,460 |   | $ | 167,586 |   |
| Weighted average interest rate            |   | 7.97     | %       | 7.03     | %      | 7.21     | %      | 7.65     | %       | 5.25     | %      | 7.86           | %      |      |    |              |   |
|                                      |   |     |    |     |   |     |   |     |    |     |   |           |   |      |    |              |   |
| Variable rate Treasury based secured debt |   | $        | 711     |     | $      | 741      |   | $        | 40,781  |     | $      | 811            |   | $         | 856     |              | $      | 11,289 |   | $ | 55,189 |   | $ | 55,189 |   |
| Weighted average interest rate            |   | 1.18     | %       | 1.18     | %      | 2.89     | %      | 1.17     | %       | 1.16     | %      | 1.09           | %      |      |    |              |   |
|                                      |   |     |    |     |   |     |   |     |    |     |   |           |   |      |    |              |   |
| Unsecured notes                           |   | $        | 150,264 |     | $      | 200,227  |   | $        | 100,240 |     | $      | 200,156        |   | $         | 100,000 |              | $      | 1,025,000 |   | $ | 1,775,887 |   | $ | 1,943,222 |   |
| Weighted average interest rate            |   | 7.30     | %       | 7.24     | %      | 6.72     | %      | 5.31     | %       | 6.76     | %      | 6.27           | %      |      |    |              |   |
|                                      |   |     |    |     |   |     |   |     |    |     |   |           |   |      |    |              |   |
| Unsecured line of credit                  |   | $        | —  |     | $      | —   |   | $        | —  |     | $      | 351,000        |   | $         | —  |              | $      | — |   | $ | 351,000 |   | $ | 351,000 |   |
| Weighted average interest rate            |   | N/A      |    | N/A      |   | N/A      |   | 1.77     | %       | N/A      |   | N/A            |   |      |    |              |   |

 

As the table incorporates only those exposures that exist as ofDecember 31, 2003, it does not consider those exposures or positions that couldarise after that date. As a result, the Partnership’s ultimate realized gain orloss with respect to interest rate fluctuations will depend on the exposuresthat arise during the period, the Partnership’s hedging strategies at thattime, and interest rates.

 

The Partnership’s unsecured line of credit was renewed in January 2004with the maturity date being extended to January 2007.  The table above reflects the 2007 maturitydate.

 

**Item8.  Financial Statements andSupplementary Data**

 

The financialstatements and supplementary data are included under Item 15 of this Report.

 

**Item9.  Changes in and Disagreements withAccountants on Accounting and Financial Disclosure**

 

None.

 

**PartIII**

 

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

 

The Partnership maintainsdisclosure controls and procedures that are designed to ensure that informationrequired to be disclosed in our annual and periodic reports filed with the SECis recorded, processed, summarized and reported within the time periodsspecified in the SEC’s rules and forms. These disclosure controls andprocedures are further designed to ensure that such information is accumulatedand communicated to our management, including our chief executive officer andchief financial officer, to allow timely decisions regarding requireddisclosure.

 

Based on the most recentevaluation, which was completed as of December 31, 2003, the General Partner’schief executive officer, chief operating officer and chief financial officerbelieve that the disclosure controls and procedures are effective. There havebeen no significant changes in the Partnership’s internal controls overfinancial reporting or in other factors that could significantly affect theinternal controls over financial reporting subsequent to the date theevaluation was completed.

 

**Item10.  Directors and Executive Officers ofthe Registrant**

 

ThePartnership does not have any directors or officers. The information requiredby Item 10 for Directors and Certain Executive Officers is contained in adefinitive proxy statement for the General Partner, which herein isincorporated by reference.

 

31

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**Item11.  Executive Compensation**

 

Theinformation required by Item 11 is contained in a definitive proxy statementfor the General Partner, which herein is incorporated by reference.

 

**Item12. Security Ownership of Certain Beneficial Owners and Management and RelatedUnitholder Matters**

 

Theinformation required by Item 12 is contained in a definitive proxy statementfor the General Partner, which herein is incorporated by reference.

 

**Item13.  Certain Relationships and RelatedTransactions**

 

Theinformation required by Item 13 is contained in a definitive proxy statementfor the General Partner, which herein is incorporated by reference.

 

**Item14.  Principal Accountant Fees andServices**

 

Theinformation required by Item 14 is contained in a definitive proxy statementfor the General Partner, which herein is incorporated by reference.

 

**PartIV**

 

**Item15.  Exhibits****, Financial Statement Schedules, and Reports on Form8-K**

 

**(a)   Thefollowing documents are filed as part of this Form 10-K:**

 

**1.****              ConsolidatedFinancial Statements**

 

The following Consolidated FinancialStatements of the Partnership, together with the Independent Auditors’ Report,are listed below:

 
| Independent Auditors’ Report                                                               |
|-------------------------------------------------------------------------------------------------|
| Consolidated Balance Sheets, December 31, 2003 and 2002                                         |
| Consolidated Statements of Operations,  Years Ended December 31, 2003, 2002 and 2001            |
| Consolidated Statements of Cash Flows,  Years Ended December 31, 2003, 2002 and 2001            |
| Consolidated Statements of Partners’  Equity, Years Ended December 31, 2003, 2002 and 2001 |
| Notes to Consolidated Financial Statements                                                      |

 

**2.****              ConsolidatedFinancial Statement Schedules**

 

Schedule III – Real Estate and Accumulated Depreciation

 

**3.****              Exhibits**

 

The following exhibits are filed with this Annual Report Form 10-K orincorporated herein by reference to the listed document previously filed withthe 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 21, 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.                                |

 

32

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| 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.                                                      |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                      |
| 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  Supplement to 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  Supplement to Indenture, incorporated by reference to Exhibit 4 to the Partnership’s  Current Report on Form 8-K filed July 12, 1996.                                                                                        |
|   |   |                                                                                                                                                                                                                                      |
| 4.8    |   | Third  Supplement to Indenture, incorporated by reference to Exhibit 4 to the  Partnership’s Current Report on Form 8-K filed May 20, 1997.                                                                                          |
|   |   |                                                                                                                                                                                                                                      |
| 4.9    |   | Fourth  Supplement to 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  Supplement to Indenture, incorporated by reference to Exhibit 4 to the  Partnership’s Current Report on Form 8-K filed June 1, 1998.                                                                                          |
|   |   |                                                                                                                                                                                                                                      |
| 4.11   |   | Sixth  Supplement to Indenture, incorporated by reference to Exhibit 4 to the  Partnership’s Current Report on Form 8-K filed February 12, 1999.                                                                                     |
|   |   |                                                                                                                                                                                                                                      |
| 4.12   |   | Seventh  Supplement to Indenture, incorporated by reference to Exhibit 4 to the  Partnership’s Current Report on Form 8-K filed June 29, 1999.                                                                                       |
|   |   |                                                                                                                                                                                                                                      |
| 4.13   |   | Eighth  Supplement to Indenture, incorporated by reference to Exhibit 4 to the  Partnership’s Current Report on Form 8-K filed November 15, 1999.                                                                                    |
|   |   |                                                                                                                                                                                                                                      |
| 4.14   |   | Ninth  supplement to Indenture, incorporated by reference to Exhibit 4 to the  Partnership’s Current Report on Form 8-K filed March 2, 2001.                                                                                         |
|   |   |                                                                                                                                                                                                                                      |
| 4.15   |   | Tenth  supplement to Indenture, incorporated by reference to Exhibit 4 to the  Partnership’s Current Report on Form 8-K filed August 13, 2002.                                                                                       |
|   |   |                                                                                                                                                                                                                                      |
| 4.16   |   | Eleventh  supplement to Indenture, incorporated by reference to Exhibit 4 to the  Partnership’s Current Report on Form 8-K filed August 26, 2002.                                                                                    |
|   |   |                                                                                                                                                                                                                                      |
| 4.17   |   | Twelfth  supplement to Indenture, incorporated by reference to Exhibit 4 to  Partnership’s Current Report on Form 8-K filed January 16, 2002.                                                                                        |
|   |   |                                                                                                                                                                                                                                      |
| 4.18   |   | Thirteenth  Supplement to Indenture, incorporated by Reference to Exhibit 4 to  Partnership’s Current Report on Form 8-K filed May 22, 2003.                                                                                         |
|   |   |                                                                                                                                                                                                                                      |
| 4.19   |   | Fourteenth  Supplement to Indenture, incorporated by Reference to Exhibit 4 to  Partnership’s Current Report on Form 8-K filed October 24, 2003.                                                                                     |
|   |   |                                                                                                                                                                                                                                      |
| 4.20   |   | Fifteenth  Supplement to Indenture, incorporated by Reference to Exhibit 4 to  Partnership’s Current Report on Form 8-K filed January 9, 2004.                                                                                       |
|   |   |                                                                                                                                                                                                                                      |
| 4.21   |   | Sixteenth  Supplement to Indenture, incorporated by Reference to Exhibit 4 to  Partnership’s Current Report on Form 8-K filed January 23, 2004.                                                                                      |
|   |   |                                                                                                                                                                                                                                      |
| 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. |

 

33

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| 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.#                                                                                |
|   |   |                                                                                                                                                                                                                                                                                             |
| 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.                                                                                                                                                                               |

 

34

----

 
| 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.#                                      |
|   |   |                                                                                                                                                                                                                                                                                  |
| 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  |   | 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.#                                                                       |
|   |   |                                                                                                                                                                                                                                                                                  |
| 10.31  |   | 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.#                                                           |
|   |   |                                                                                                                                                                                                                                                                                  |
| 10.32  |   | 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.#                                                           |

 

35

----

 
| 10.33  |   | 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.#                                                                                                                               |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                        |
| 10.34  |   | 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.#                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                        |
| 10.35  |   | 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.#                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                        |
| 10.36  |   | 1999  Directors’ Stock Option and Dividend Increase Unit Plan, incorporated by  reference to Annex F to the Prospectus in the Merger Registration Statement.#                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                        |
| 10.37  |   | 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.#                                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                        |
| 10.38  |   | 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.#                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                        |
| 10.39  |   | 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.#                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                        |
| 10.40  |   | 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.                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                        |
| 10.41  |   | 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.                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                        |
| 10.42  |   | 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.*                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                        |
| 10.43  |   | 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   |   | Certification  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                        |
| 31.2   |   | Certification  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                        |
| 31.3   |   | Certification  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                        |
| 32.1   |   | Certification  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                        |
| 32.2   |   | Certification  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                                                                                                                  |

 

36

----

 
| 32.3   |   | Certification  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* |
|--------|--------|----------------------------------------------------------------------------|
|   |   |                                                                       |
| 99.1   |   | Selected  Quarterly Financial Information.*                                |

 

----

# Represents management contract or compensatory plan or arrangement.

 

The Partnership will furnish to any security holder, upon writtenrequest, copies of any exhibit incorporated by reference, for a fee of 15 centsper page, to cover the costs of furnishing the exhibits. Written request shouldinclude a representation that the person making the request was the beneficial ownerof securities entitled to vote at the Annual Meeting of Shareholders of theGeneral Partner.

 

**(b)           Reportson Form 8-K**

 

A current report was filed onForm 8-K, dated January 22, 2004, reporting under items 5 and 7 the executionof a new $500 million revolving line of credit.

 

A current report was filed onForm 8-K, dated January 16, 2004, setting forth under item 5 the issuance of$125,000,000 aggregate principal amount of Notes due in 2008 at 3.35%.

 

**(c)           Exhibits**

 

The exhibits required to befiled with this Form 10-K pursuant to Item 601 of Regulation S-K or listedunder “Exhibits” in Part IV, Item 14(a)(3) of Form 10-K, which are incorporatedherein by reference.

 

**(d)           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.

 

37

----

**Independent Auditors’ Report**

 

The Partners

Duke Realty LimitedPartnership:

 

We have audited theconsolidated balance sheets of Duke Realty Limited Partnership and Subsidiariesas of December 31, 2003 and 2002, and the related consolidated statements of operations,cash flows and partners’ equity for each of the years in the three-year periodended December 31, 2003. In connection with our audits of the consolidatedfinancial statements, we also have audited the financial statement scheduleIII. These consolidated financial statements and the financial statementschedule are the responsibility of the Partnership’s management. Ourresponsibility is to express an opinion on the consolidated financialstatements and the financial statement schedule based on our audits.

 

We conducted our audits inaccordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An auditalso 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, 2003 and 2002, and the results of theiroperations and their cash flows for each of the years in the three-year periodended December 31, 2003, in conformity with accounting principles generallyaccepted in the United States of America. Also, in our opinion, the relatedfinancial statement schedule III, when considered in relation to the basicconsolidated financial statements taken as a whole, presents fairly, in allmaterial respects, the information set forth therein.

 

 

**KPMG LLP**

Indianapolis, Indiana

January 28, 2004

 

 

 

38

----

 

**DUKE REALTY LIMITED PARTNERSHIP ANDSUBSIDIARIES**

**ConsolidatedBalance Sheets**

**As of December 31**

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

 
|                                                                                       |   | **2003**       |          | **2002**   |       |
|--------------------------------------------------------------------------------------------|--------|----------------|---------------|------------|------------|
| **ASSETS**                                                                                 |   |           | ** **    |       | ** ** |
|                                                                                       |   |           | ** **    |       |       |
| Real estate  investments:                                                                  |   |           | ** **    |       |       |
| Land and  improvements                                                                     |   | **$**          | **641,544**   | ** ** | $          | 608,995 |   |
| Buildings and  tenant improvements                                                         |   | **4,452,624**  | ** **    | 4,237,360  |       |
| Construction  in progress                                                                  |   | **119,441**    | ** **    | 85,756     |       |
| Investments in  unconsolidated companies                                                   |   | **295,837**    | ** **    | 315,589    |       |
| Land held for  development                                                                 |   | **314,446**    | ** **    | 326,250    |       |
|                                                                                       |   | **5,823,892**  |          | 5,573,950  |       |
| Accumulated  depreciation                                                                  |   | **(677,357**   | **)**         | (555,858   | )          |
|                                                                                       |   |           | ** **    |       |       |
| Net real  estate investments                                                               |   | **5,146,535**  | ** **    | 5,018,092  |       |
|                                                                                       |   |           | ** **    |       |       |
| Cash and cash  equivalents                                                                 |   | **12,****695** | ** **    | 17,129     |       |
| Accounts  receivable, net of allowance of $2,430 and $2,008                                |   | **16,215**     | ** **    | 15,415     |       |
| Straight-line  rent receivable, net of allowance of $1,240 and $2,491                      |   | **71****,049** | ** **    | 52,062     |       |
| Receivables on  construction contracts                                                     |   | **44,905**     | ** **    | 23,181     |       |
| Deferred  financing costs, net of accumulated amortization of $10,703 and $15,390          |   | **13,358**     | ** **    | 11,431     |       |
| Deferred  leasing and other costs, net of accumulated amortization of $67,317 and  $50,543 |   | **158,562**    | ** **    | 112,772    |       |
| Escrow  deposits and other assets                                                          |   | **95,392**     | ** **    | 96,973     | ** ** |
|                                                                                       |   | **$**          | **5,558,711** | ** ** | $          | 5,347,055 |   |
| **LIABILITIES AND  PARTNERS’ EQUITY**                                                 |   |           | ** **    |       |       |
|                                                                                       |   |           | ** **    |       |       |
| Indebtedness:                                                                              |   |           | ** **    |       |       |
| Secured debt                                                                               |   | **$**          | **208,649**   | ** ** | $          | 299,147 |   |
| Unsecured  notes                                                                           |   | **1,775,887**  | ** **    | 1,526,138  |       |
| Unsecured lines  of credit                                                                 |   | **351,000**    | ** **    | 281,000    |       |
|                                                                                       |   | **2,335,536**  |          | 2,106,285  |       |
|                                                                                       |   |           | ** **    |       |       |
| Construction  payables and amounts due subcontractors                                      |   | **60,789**     | ** **    | 43,232     |       |
| Accounts  payable                                                                          |   | **2****,268**  | ** **    | 548        |       |
| Accrued  expenses:                                                                         |   |           | ** **    |       |       |
| Real estate  taxes                                                                         |   | **52****,955** | ** **    | 51,472     |       |
| Interest                                                                                   |   | **33****,259** | ** **    | 27,374     |       |
| Other                                                                                      |   | **49,029**     | ** **    | 52,485     |       |
| Other  liabilities                                                                         |   | **107,321**    | ** **    | 106,893    |       |
| Tenant  security deposits and prepaid rents                                                |   | **37,975**     | ** **    | 33,710     |       |
| Total  liabilities                                                                         |   | **2,679,132**  | ** **    | 2,421,999  |       |
|                                                                                       |   |           | ** **    |       |       |
| Minority  interest                                                                         |   | **1,259**      | ** **    | 5,213      |       |
|                                                                                       |   |           | ** **    |       |       |
| Partners’ equity:                                                                     |   |           | ** **    |       |       |
| General  Partner                                                                           |   |           | ** **    |       |       |
| Common equity                                                                              |   | **2,153,844**  | ** **    | 2,203,060  |       |
| Preferred  equity (liquidation preference of ($540,507)                                    |   | **511,785**    | ** **    | 415,466    |       |
|                                                                                       |   | **2,665,629**  | ** **    | 2,618,526  |       |
| Limited  Partners’ common equity                                                      |   | **212,691**    | ** **    | 235,473    |       |
| Limited  Partners’ preferred equity                                                   |   | —         | ** **    | 67,955     |       |
| Accumulated  other comprehensive income                                                    |   | **—**     | ** **    | (2,111     | )          |
| Total  Partners’ equity                                                               |   | **2,878,320**  | ** **    | 2,919,843  |       |
|                                                                                       |   | **$**          | **5,558,711** | ** ** | $          | 5,347,055 |   |

 

See accompanying Notes toConsolidated Financial Statements.

 

39

----

 

**DUKE REALTY LIMITEDPARTNERSHIP AND SUBSIDIARIES**

**ConsolidatedStatements of Operations**

**For the Years EndedDecember 31**

**(in thousands, exceptper unit amounts)**

 
|                                                                                             |   | **2003**        |        | **2002**   |   | **2001** |   |
|--------------------------------------------------------------------------------------------------|--------|-----------------|-------------|------------|--------|----------|--------|
| **RENTAL OPERATIONS:**                                                                           |   |            | ** **  |       |   |     |   |
| Revenues:                                                                                        |   |            | ** **  |       |   |     |   |
| Rental income  from continuing operations                                                        |   | **$**           | **706,749** | ** ** | $      | 670,927  |   | $ | 669,623 |   |
| Equity in  earnings of unconsolidated companies                                                  |   | **23,688**      | ** **  | 27,180     |   | 31,391   |   |
|                                                                                             |   | **730,437**     |        | 698,107    |   | 701,014  |   |
| Operating  expenses:                                                                             |   |            | ** **  |       |   |     |   |
| Rental  expenses                                                                                 |   | **144,016**     | ** **  | 124,541    |   | 118,412  |   |
| Real estate  taxes                                                                               |   | **78,777**      | ** **  | 71,303     |   | 68,247   |   |
| Interest  expense                                                                                |   | **129,160**     | ** **  | 114,675    |   | 109,544  |   |
| Depreciation  and amortization                                                                   |   | **193,441**     | ** **  | 170,938    |   | 153,909  |   |
|                                                                                             |   | **545,394**     |        | 481,457    |   | 450,112  |   |
| Earnings from  continuing rental operations                                                      |   | **185,043**     | ** **  | 216,650    |   | 250,902  |   |
|                                                                                             |   |            | ** **  |       |   |     |   |
| **SERVICE OPERATIONS:**                                                                          |   |            | ** **  |       |   |     |   |
| Revenues:                                                                                        |   |            | ** **  |       |   |     |   |
| General  contractor gross revenue                                                                |   | **286,689**     | ** **  | 194,439    |   | 264,455  |   |
| General  contractor costs                                                                        |   | **(259,930**    | **)**       | (172,559   | )      | (229,845 | )      |
| Net general  contractor revenue                                                                  |   | **26,759**      | ** **  | 21,880     |   | 34,610   |   |
|                                                                                             |   |            | ** **  |       |   |     |   |
| Property  management, maintenance and leasing fees                                               |   | **14,731**      | ** **  | 14,301     |   | 22,824   |   |
| Construction  management and development activity income                                         |   | **15,486**      | ** **  | 29,428     |   | 19,142   |   |
| Other income                                                                                     |   | **1,520**       | ** **  | 2,251      |   | 3,883    |   |
| Total revenue                                                                                    |   | **58,496**      | ** **  | 67,860     |   | 80,459   |   |
|                                                                                             |   |            | ** **  |       |   |     |   |
| Operating  expenses                                                                              |   | **37,378**      | ** **  | 38,340     |   | 45,344   |   |
|                                                                                             |   |            | ** **  |       |   |     |   |
| Earnings from  service operations                                                                |   | **21,118**      | ** **  | 29,520     |   | 35,115   |   |
|                                                                                             |   |            | ** **  |       |   |     |   |
| General and  administrative expense                                                              |   | **(21,342**     | **)**       | (24,704    | )      | (15,539  | )      |
|                                                                                             |   |            | ** **  |       |   |     |   |
| Operating  income                                                                                |   | **184,819**     | ** **  | 221,466    |   | 270,478  |   |
|                                                                                             |   |            | ** **  |       |   |     |   |
| **OTHER INCOME  (EXPENSE):**                                                                     |   |            | ** **  |       |   |     |   |
| Interest  income                                                                                 |   | **3,590**       | ** **  | 3,783      |   | 5,037    |   |
| Earnings from  sale of land and depreciable property dispositions, net of impairment  adjustment |   | **15,774**      | ** **  | 2,340      |   | 45,708   |   |
| Other revenue (expense)                                                                          |   | **(734**        | **)**       | 182        |   | (2,582   | )      |
| Other minority  interest in earnings of subsidiaries                                             |   | **(586**        | **)**       | (1,093     | )      | (2,411   | )      |
| Income from  continuing operations                                                               |   | **202****,863** | ** **  | 226,678    |   | 316,230  |   |
|                                                                                             |   |            | ** **  |       |   |     |   |
| Discontinued  operations:                                                                        |   |            | ** **  |       |   |     |   |
| Net income  from discontinued operations                                                         |   | **2,947**       | ** **  | 5,698      |   | 7,050    |   |
| Gain on sale  of discontinued operations, net of impairment adjustment                           |   | **13,002**      | ** **  | (17        | )      | —   |   |
| Income from  discontinued operations                                                             |   | **15,949**      | ** **  | 5,681      |   | 7,050    |   |
|                                                                                             |   |            | ** **  |       |   |     |   |
| Net income                                                                                       |   | **218****,812** | ** **  | 232,359    |   | 323,280  |   |
| Dividends on  preferred units                                                                    |   | **(39,225**     | **)**       | (52,613    | )      | (60,850  | )      |
| Adjustment for  redemption of preferred units                                                    |   | **—**      | ** **  | (8,145     | )      | (2,538   | )      |
| Net income  available for common unitholders                                                     |   | **$**           | **179,587** | ** ** | $      | 171,601  |   | $ | 259,892 |   |
|                                                                                             |   |            | ** **  |       |   |     |   |
| Basic net  income per common units:                                                              |   |            | ** **  |       |   |     |   |
| Continuing  operations                                                                           |   | **$**           | **1.09**    | ** ** | $      | 1.11     |   | $ | 1.71 |   |
| Discontinued  operations                                                                         |   | **.11**         | ** **  | .04        |   | .05      |   |
| Total                                                                                            |   | **$**           | **1.20**    | ** ** | $      | 1.15     |   | $ | 1.76 |   |
| Diluted net  income per common units:                                                            |   |            | ** **  |       |   |     |   |
| Continuing  operations                                                                           |   | **$**           | **1.08**    | ** ** | $      | 1.10     |   | $ | 1.69 |   |
| Discontinued  operations                                                                         |   | **.11**         | ** **  | .04        |   | .05      |   |
| Total                                                                                            |   | **$**           | **1.19**    | ** ** | $      | 1.14     |   | $ | 1.74 |   |
|                                                                                             |   |            | ** **  |       |   |     |   |
| Weighted  average number of common units outstanding                                             |   | **150,280**     | ** **  | 149,423    |   | 147,961  |   |
| Weighted  average number of common and dilutive potential common units                           |   | **151,141**     | ** **  | 150,839    |   | 151,710  |   |

 

See accompanying Notes toConsolidated Financial Statements.

 

40

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**DUKE REALTY LIMITEDPARTNERSHIP AND SUBSIDIARIES**

**Consolidated Statements of Cash Flows**

**For the Years Ended December 31**

**(in thousands)**

 
|                                                                                                         |   | **2003**     |        | **2002**   |   | **2001** |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------------|-------------|------------|--------|----------|--------|
| Cash flows from operating activities:                                                                        |   |         | ** **  |       |   |     |   |
| Net income                                                                                                   |   | **$**        | **218,812** | ** ** | $      | 232,359  |   | $ | 323,280 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities:                           |   |         | ** **  |       |   |     |   |
| Depreciation of  buildings and tenant improvements                                                           |   | **168,959**  | ** **  | 154,565    |   | 138,723  |   |
| Amortization of  deferred leasing and other costs                                                            |   | **27,275**   | ** **  | 21,056     |   | 20,991   |   |
| Amortization of  deferred financing costs                                                                    |   | **3,626**    | ** **  | 3,725      |   | 4,589    |   |
| Minority  interest in earnings                                                                               |   | **586**      | ** **  | 1,093      |   | 2,411    |   |
| Straight-line  rent adjustment                                                                               |   | **(22,387**  | **)**       | (12,500    | )      | (12,593  | )      |
| Earnings from  land and depreciated property sales                                                           |   | **(28,776**  | **)**       | (1,048     | )      | (45,708  | )      |
| Build-to-suit  operations, net                                                                               |   | **(20,899**  | **)**       | 168,199    |   | (79,912  | )      |
| Construction  contracts, net                                                                                 |   | **(3,210**   | **)**       | (11,656    | )      | 9,651    |   |
| Other accrued  revenues and expenses, net                                                                    |   | **15,319**   | ** **  | 8,605      |   | (10,908  | )      |
| Operating  distributions received in excess of (less than) equity in earnings from  unconsolidated companies |   | **8,783**    | ** **  | 4,575      |   | (1,844   | )      |
| **Net cash provided  by operating activities**                                                               |   | **368,088**  | ** **  | 568,973    |   | 348,680  |   |
|                                                                                                         |   |         | ** **  |       |   |     |   |
| Cash flows from  investing activities:                                                                       |   |         | ** **  |       |   |     |   |
| Development of  real estate investments                                                                      |   | **(129,199** | **)**       | (158,131   | )      | (251,405 | )      |
| Acquisition of  real estate investments                                                                      |   | **(201,819** | **)**       | (98,062    | )      | (13,927  | )      |
| Acquisition of land held for development and infrastructure costs                                            |   | **(32,944**  | **)**       | (27,182    | )      | (92,203  | )      |
| Recurring  tenant improvements                                                                               |   | **(35,972**  | **)**       | (28,011    | )      | (18,416  | )      |
| Recurring  leasing costs                                                                                     |   | **(20,932**  | **)**       | (17,975    | )      | (13,845  | )      |
| Recurring  building improvements                                                                             |   | **(19,544**  | **)**       | (13,373    | )      | (10,873  | )      |
| Other deferred leasing costs                                                                                 |   | **(17,167**  | **)**       | (18,219    | )      | (10,621  | )      |
| Other deferred  costs and other assets                                                                       |   | **(24,412**  | **)**       | (17,350    | )      | 3,223    |   |
| Tax deferred  exchange escrow, net                                                                           |   | —       | ** **  | —     |   | 27,260   |   |
| Proceeds from  land and depreciated property sales, net                                                      |   | **167,891**  | ** **  | 52,186     |   | 436,113  |   |
| Capital distributions  from unconsolidated companies                                                         |   | —       | ** **  | —     |   | 59,249   |   |
| Advances to  unconsolidated companies                                                                        |   | **(5,481**   | **)**       | (11,130    | )      | (21,067  | )      |
| **Net cash provided  (used) by investing activities**                                                        |   | **(319,579** | **)**       | (337,247   | )      | 93,488   |   |
|                                                                                                         |   |         | ** **  |       |   |     |   |
| Cash flows from financing activities:                                                                        |   |         | ** **  |       |   |     |   |
| Contribution  from General Partner, common units                                                             |   | **14,026**   | ** **  | 22,651     |   | 36,483   |   |
| Contribution  from General Partner, preferred units                                                          |   | **96,700**   | ** **  | —     |   | 72,210   |   |
| Payments for exercise of warrants                                                                            |   | **(4,692**   | **)**       | **—** |   | —   |   |
| Proceeds from  indebtedness                                                                                  |   | **425,000**  | ** **  | 200,000    |   | 175,000  |   |
| Payments on  unsecured debt                                                                                  |   | **(175,000** | **)**       | —     |   | —   |   |
| Proceeds from  debt refinancing                                                                              |   | **38,340**   | ** **  | —     |   | —   |   |
| Proceeds from  issuance of secured debt                                                                      |   | **40,000**   | ** **  | —     |   | —   |   |
| Payments for  redemption of preferred units                                                                  |   | **(65,020**  | **)**       | (202,953   | )      | (75,018  | )      |
| Payments on  indebtedness including principal amortization                                                   |   | **(143,542** | **)**       | (71,953    | )      | (223,578 | )      |
| Borrowings  (payments) on lines of credit, net                                                               |   | **46,105**   | ** **  | 157,305    |   | (125,067 | )      |
| Distributions to common unitholders                                                                          |   | **(275,282** | **)**       | (271,659   | )      | (262,237 | )      |
| Distributions  to preferred unitholders                                                                      |   | **(42,180**  | **)**       | (54,613    | )      | (61,418  | )      |
| Distributions to minority interest                                                                           |   | **(1,531**   | **)**       | (565       | )      | (2,023   | )      |
| Deferred  financing costs                                                                                    |   | **(5,867**   | **)**       | (3,263     | )      | (5,267   | )      |
| **Net cash provided  by financing activities**                                                               |   | **(52,943**  | **)**       | (225,050   | )      | (470,915 | )      |
|                                                                                                         |   |         | ** **  |       |   |     |   |
| **Net increase  (decrease) in cash and cash equivalents**                                                    |   | **(4,434**   | **)**       | 6,676      |   | (28,747  | )      |
|                                                                                                         |   |         | ** **  |       |   |     |   |
| Cash and cash  equivalents at beginning of year                                                              |   | **17,129**   | ** **  | 10,453     |   | 39,200   |   |
| Cash and cash  equivalents at end of year                                                                    |   | **$**        | **12,695**  | ** ** | $      | 17,129   |   | $ | 10,453 |   |
| Other non-cash  items:                                                                                       |   |         | ** **  |       |   |     |   |
| Assumption of  debt for real estate acquisitions                                                             |   | **$**        | **—**  | ** ** | $      | 9,566    |   | $ | 16,403 |   |
| Contributions  of property to unconsolidated companies                                                       |   | **$**        | **5,009**   | ** ** | $      | —   |   | $ | 4,501 |   |
| Conversion of  Limited Partner Units to common shares of General Partner                                     |   | **$**        | **9,984**   | ** ** | $      | 13,226   |   | $ | 4,259 |   |
| Issuance of  Limited Partner Units for real estate acquisitions                                              |   | **$**        | **3,187**   | ** ** | $      | 4,686    |   | $ | 3,787 |   |
| Transfer of  debt in sale of depreciated property                                                            |   | **$**        | **—**  | ** ** | $      | 2,432    |   | $ | 16,000 |   |
| Redemption of  Limited Partner Units for depreciated property                                                |   | **$**        | **—**  | ** ** | $      | —   |   | $ | 13,445 |   |
| Acquisition of  partners’ interest in unconsolidated companies                                          |   | **$**        | **20,630**  | ** ** | $      | 12,149   |   | $ | 18,049 |   |

 

Seeaccompanying Notes to Consolidated Financial Statements.

 

41

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**DUKE REALTY LIMITED PARTNERSHIP ANDSUBSIDIARIES**

**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 (Loss)** |        | **Total**  |       |
|--------------------------------------------------------------------------|--------|-----------------------|---------------|---------------------------------------------|------------|-------------------------------------------------|------------|------------------------------------------------------|-------------|------------|------------|
| **Common  Equity**                                                       |   | **Preferred  Equity** |
|                                                                     |   |                  |          |                                        |       |                                            |       |                                                 |        |       |       |   |   |
| **Balance at December  31, 2000**                                        |   | **2,128,138**         | ** **    | **586,261**                                 | ** ** | **330,244**                                     | ** ** | **102,955**                                          | ** **  | **—** | ** ** | **3,147,598** |   |
| Comprehensive  income:                                                   |   |                  |          |                                        |       |                                            |       |                                                 |        |       |       |   |   |
| Net income                                                               |   | 229,399               |          | 53,010                                      |       | 32,463                                          |       | 8,408                                                |        | —     |       | 323,280 |   |
| Distributions  to preferred unitholders                                  |   | —                |          | (53,010                                     | )          | —                                          |       | (8,408                                               | )           | —     |       | (61,418 | ) |
| Transition  adjustment resulting from adoption of FASB No. 133           |   | —                |          | —                                      |       | —                                          |       | —                                               |        | 398        |       | 398 |   |
| Gains (losses)  on derivative instruments                                |   | —                |          | —                                      |       | —                                          |       | —                                               |        | (1,138     | )          | (1,138 | ) |
| Settlement of  derivative instrument                                     |   | —                |          | —                                      |       | —                                          |       | —                                               |        | 548        |       | 548 |   |
| Comprehensive  income available for common unitholders                   |   |                  |          |                                        |       |                                            |       |                                                 |        |       |       | 261,670 |   |
| Capital  contribution from General Partner                               |   | 37,845                |          | 72,210                                      |       | —                                          |       | —                                               |        | —     |       | 110,055 |   |
| Acquisition of  partnership interest for common stock of General Partner |   | 36,351                |          | —                                      |       | (32,092                                         | )          | —                                               |        | —     |       | 4,259 |   |
| Acquisition of  partnership interest for real estate investments         |   | —                |          | —                                      |       | (13,445                                         | )          | —                                               |        | —     |       | (13,445 | ) |
| Acquisition of  property in exchange for Limited Partner Units           |   | —                |          | —                                      |       | 3,787                                           |       | —                                               |        | —     |       | 3,787 |   |
| Redemption of  Series A Preferred units                                  |   | —                |          | (75,018                                     | )          | —                                          |       | —                                               |        | —     |       | (75,018 | ) |
| Conversion of  Series D Preferred units to common units                  |   | 34                    |          | (34                                         | )          | —                                          |       | —                                               |        | —     |       | — |   |
| Retirement of  common units                                              |   | (437                  | )             | —                                      |       | —                                          |       | —                                               |        | —     |       | (437 | ) |
| Distributions  to partners ($1.76 per Common Unit)                       |   | (228,039              | )             | —                                      |       | (34,198                                         | )          | —                                               |        | —     |       | (262,237 | ) |
| **Balance at December  31, 2001**                                        |   | **$**                 | **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                                        | )          | —                                          |       | —                                               |        | —     |       | — |   |
| Tax benefits  from Employee Stock Plans                                  |   | 542                   |          | —                                      |       | —                                          |       | —                                               |        | —     |       | 542 |   |
| Exercise of  General Partner Warrants                                    |   | (4,692                | )             | —                                      |       | —                                          |       | —                                               |        | —     |       | (4,692 | ) |
| 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** |   |
|                                                                     |   |                  |          |                                        |       |                                            |       |                                                 |        |       |       |   |   |
| **Common Units  outstanding at December 31, 2003**                       |   | 136,594               |          |                                        |       | 14,411                                          |       |                                                 |        |       |       | 150,705 |   |

 

See accompanying Notes toConsolidated Financial Statements.

 

42

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**DUKE REALTY LIMITED PARTNERSHIP ANDSUBSIDIARIES**

 

Notes to Consolidated FinancialStatements

 

**(1)****                                 The Partnership**

 

Duke Realty Limited Partnership (the“Partnership”) was formed on October 4, 1993, when Duke Realty Corporation (the“General Partner”) contributed all of its properties and related assets andliabilities, along with the net proceeds of $309.2 million from the issuance ofan additional 14,000,833 shares of the General Partner through an offering tothe Partnership. Simultaneously, the Partnership completed the acquisition ofDuke 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. The General Partner is the sole general partnerof the Partnership, owning 90.6% of the common partnership interests as ofDecember 31, 2003 (“General Partner Units”). The remaining 9.4% of thePartnership’s common interest is owned by limited partners (“Limited PartnerUnits” and, together with the General Partner Units, the “Common Units”). The Limited Partner Units are exchangeable forshares of the General Partner’s common stock on a one-for-one basis subjectgenerally to a one-year holding period.

 

The Partnership owns and operates a portfolioof industrial, office and retail properties in the midwestern and southeasternUnited States and provides real estate services to third-party owners. ThePartnership conducts Service Operations through Duke Realty Services LimitedPartnership (“DRSLP”) and Duke Construction Limited Partnership (“DCLP”).

 

**(2)****                                 Summary of Significant Accounting Policies**

 

**Principles of Consolidation**

 

The consolidated financial statements includethe accounts of the Partnership and its controlled subsidiaries. The equityinterests in these controlled subsidiaries not owned by the Partnership arereflected as minority interests in the consolidated financial statements. Allsignificant intercompany balances and transactions have been eliminated in theconsolidated financial statements. Investments in entities that the Partnershipdoes not control through majority voting interest or where the other owner hassubstantial participating rights are not consolidated and are reflected asinvestments in unconsolidated companies under the equity method of reporting.

 

**Reclassifications**

 

Certain 2001 and 2002 balances have beenreclassified to conform to the 2003 presentation.

 

**Real Estate Investments**

 

Rental real property, including land, landimprovements, buildings and building improvements, are included in real estateinvestments and are generally stated at cost. Buildings and land improvementsare depreciated on the straight-line method over their estimated life not toexceed 40 and 15 years, respectively, and tenant improvement costs aredepreciated using the straight-line method over the term of the related lease.

 

Direct and indirect costs, including interestand real estate taxes associated with the development, construction, leasing orexpansion of real estate investments, are capitalized as a cost of theproperty.  Indirect costs include anestimate of internal costs associated with the development and leasing of realestate investments. All external costs associated with the acquisition of realestate investments are capitalized as a cost of the property.

 

Construction in process and land held fordevelopment are included in real estate investments and are stated at cost.Real estate investments also include the Partnership’s equity interests inunconsolidated joint ventures that own and operate rental properties and holdland for development. The equity method of accounting is used for theseinvestments in which the Partnership has the ability to exercise significantinfluence, but not control, over operating and financial policies. Anydifference between the carrying amount

 

43

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of these investments and the underlyingequity in net assets is amortized to equity in earnings of unconsolidatedcompanies over the depreciable life of the property, generally 40 years.

 

The Partnership adopted Statement ofFinancial Accounting Standard No. 144, *Accountingfor the Impairment or Disposal of Long Lived Assets* (“SFAS144”), in2002.  In accordance with thisstatement, properties held for rental are individually evaluated for impairmentwhen conditions 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 is 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 its estimated fair market value, less costs to sell. Once a propertyis designated as held for disposal, no further depreciation expense isrecorded.

 

In accordance with Statement of Financial Accounting Standard No.141, *Business Combinations* (“SFAS 141”), the Partnership allocates the purchaseprice of acquired properties to net tangible and identified intangible assetsbased on their respective fair values. The allocation to tangible assets(building and land) is based upon management’s determination of the value ofthe property as if it were vacant using discounted cash flow models similar tothose used by independent appraisers. Factors considered by management includean estimate of carrying costs during the expected lease-up periods consideringcurrent market conditions, and costs to execute similar leases. The remainingpurchase price is allocated among three categories of intangible assetsconsisting of the above or below market component of in—place leases, the valueof in-place leases and the value of customer relationships.

 

The value allocable to the above or below market component of anacquired in-place lease is determined based upon the present value (using adiscount rate which reflects the risks associated with the acquired leases) ofthe difference between (i) the contractual amounts to be paid pursuant to thelease over its remaining term, and (ii) management’s estimate of the amountsthat would be paid using fair market rates over the remaining term of thelease. The amounts allocated to above or below market leases are included indeferred leasing and other costs in the balance sheet and are amortized torental income over the remaining terms of the respective leases.

 

The total amount of intangible assets is further allocated to in-placelease values and to customer relationship values based upon management’sassessment of their respective values. These intangible assets are included indeferred leasing and other costs in the balance sheet and are depreciated overthe remaining term of the existing lease, or the anticipated life of thecustomer relationship, as applicable.

 

**Cash Equivalents**

 

Highly liquid investments with a maturity ofthree months or less when purchased are classified as cash equivalents.

 

**Deferred Costs**

 

Costs incurred in connection with obtainingfinancing are amortized to interest expense on the straight-line method, whichapproximates a constant spread over the term of the related loan. All directand indirect costs, including estimated internal costs, associated with theleasing of real estate investments owned by the Partnership are capitalized andamortized over the term of the related lease. Unamortized costs are charged toexpense upon the early termination of the lease or upon early payment of thefinancing.

 

44

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**Revenues**

 

Rental Operations

 

Rental income from leases with scheduledrental increases during their terms is recognized on a straight-line basis.

 

Service Operations

 

Management fees are based on a percentage ofrental receipts of properties managed and are recognized as the rental receiptsare collected. Maintenance fees are based upon established hourly rates and arerecognized as the services are performed. Construction management anddevelopment fees represent fee based third party contracts and are recognizedas earned based on the terms of the contract, which approximates the percentageof completion method.

 

The Partnership recognizes income on constructioncontracts where the Partnership serves as a general contractor on thepercentage of completion method. Using this method, profits are recorded basedon the Partnership’s estimates of the percentage of completion of individualcontracts, commencing when the work performed under the contracts reach a pointwhere the final costs can be estimated with reasonable accuracy. The percentageof completion estimates are based on a comparison of the contract expendituresincurred to the estimated final costs. Changes in job performance, jobconditions and estimated profitability may result in revisions to costs andincome and recognized in the period in which the revisions are determined.

 

Property Sales

 

Gains from sales of depreciated property arerecognized in accordance with Statement of Financial Accounting Standard 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.

 

Gains or losses from the sale of propertythat were developed with the intent to sell and not for long-term rental arerecognized in accordance with SFAS 66 and are included in constructionmanagement and development activity income in the Statement of Operations.

 

**Net Income Per Common Unit**

 

Basic net income per common unit is computedby dividing net income available for common units by the weighted averagenumber of common units outstanding for the period. Diluted net income percommon unit is****computed by dividing the sum of net income available forcommon unitholders by the sum of the weighted average number of common unitsand outstanding, including any dilutive potential common units for the period.

 

The following table reconciles the componentsof basic and diluted net income per common unit (in thousands):

 

45

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|                                                                               |   | **2003**    |    | **2002** |   | **2001** |   |
|------------------------------------------------------------------------------------|--------|-------------|---------|----------|--------|----------|--------|
| Basic net  income available for common units                                       |   | **$**       | 179,587 |     | $      | 171,601  |   | $ | 259,892 |   |
| Joint venture  partner convertible ownership net income                            |   | —      |    | —   |   | 3,423    |   |
| Diluted net  income available for common units and dilutive potential common units |   | **$**       | 179,587 |     | $      | 171,601  |   | $ | 263,315 |   |
|                                                                               |   |        |    |     |   |     |   |
| Weighted  average number of common units outstanding                               |   | **150,280** |    | 149,423  |   | 147,961  |   |
| Joint venture  partner convertible ownership common unit equivalents               |   | —      |    | —   |   | 2,092    |   |
| Dilutive units  for stock-based compensation plans                                 |   | **861**     |    | 1,416    |   | 1,657    |   |
| Weighted  average number of common units and dilutive potential common units       |   | **151,141** |    | 150,839  |   | 151,710  |   |

 

The Partnership’s outstanding Series DConvertible Preferred Units was anti-dilutive for the years ended December 31,2003, 2002 and 2001; therefore, no conversion to common units is included inweighted average dilutive potential common units. In September 2002, thePartnership redeemed the Series G Convertible Preferred Units at their parvalue of $35.0 million. These Units were anti-dilutive for the years endedDecember 31, 2002 and 2001; therefore, no conversion to common shares wasincluded in weighted average dilutive potential common shares.

 

A joint venture partner in one of the Partnership’sunconsolidated companies has the option to convert a portion of its ownershipto the General Partner’s common shares, which would require the issuance ofadditional Common units to the General Partner. The effect of this option onearnings per unit was anti-dilutive for the years ended December 31, 2003 and2002 and was dilutive for the year ended December 31, 2001; therefore,conversion to common units was included in weighted dilutive potential commonunits for that year.

 

**Federal Income Taxes**

 

The Partnership recorded federal and state income taxes of $3.7million, $11.2 million and $4.0 million for 2003, 2002 and 2001, respectively,which were primarily attributable to the earnings of the Partnership’s taxableREIT subsidiaries. The taxable REIT subsidiaries had no significant deferredincome tax items.

 

As a partnership, the allocated share of income and loss other than theoperations of the taxable REIT subsidiaries is included in the income taxreturns of the partners; accordingly, no accounting for federal income taxes isrequired in the accompanying consolidated financial statements.

 

**Stock Based Compensation**

 

Under thelimited partnership agreement of the partnership, the Partnership is requiredto issue one Common Unit to the General Partner for each share of common stockissued by the General Partner. Accordingly, the issuance of common shares by the General Partner underits stock based compensation plans requires the issuance of a correspondingnumber of Common Units by the Partnership to the General Partner.

 

ThePartnership applies the recognition and measurement provisions of APB OpinionNo. 25, *Accounting for Stock Issued toEmployees,*and related Interpretations in accounting, for all stockbased awards issued by the General Partner prior to 2002. Accordingly, forstock options granted prior to 2002, no compensation expense is reflected innet income as all options granted had an exercise price equal to the marketvalue of the General Partner’s underlying common stock on the date of thegrant.

 

In 2002, thePartnership prospectively adopted the fair value recognition provisions of SFAS123, *Accounting for Stock-Based Compensation(*SFAS 123”)*,* for allawards granted after January 1, 2002.

 

Awards under the General Partner’s stock based employee compensationplans generally vest over five years at 20% per year. Therefore, the expenserelated to these plans is less than that which would have been recognized ifthe fair value method had been applied to all awards since the original effectivedate of SFAS 123. The following table illustrates the effect on net income andearnings per share if the fair value method

 

46

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had been applied to all outstanding and unvested awards in each period.

 
|                                                                                                             |   | **2003** |        | **2002**   |   | **2001** |   |
|------------------------------------------------------------------------------------------------------------------|--------|----------|-------------|------------|--------|----------|--------|
|                                                                                                             |   |     | ** **  |       |   |     |   |
| Net income, as reported                                                                                          |   | **$**    | **179,587** | ** ** | $      | 171,601  |   | $ | 259,892 |   |
| Add:   Stock-based employee compensation expense included in net income  determined under fair value method |   | **155**  | ** **  | 224        |   | 0        |   |
| Deduct:   Total stock based compensation expense determined under fair value  method for all awards         |   | **(778** | **)**       | (1,153     | )      | (1,236   | )      |
| Proforma Net Income                                                                                              |   | **$**    | **178,964** | ** ** | $      | 170,672  |   | $ | 258,656 |   |
|                                                                                                             |   |     | ** **  |       |   |     |   |
| Basic net income per unit                                                                                        |   |     | ** **  |       |   |     |   |
| As reported                                                                                                      |   | **$**    | **1.20**    | ** ** | $      | 1.15     |   | $ | 1.76 |   |
| Pro forma                                                                                                        |   | **$**    | **1.19**    | ** ** | $      | 1.14     |   | $ | 1.75 |   |
|                                                                                                             |   |     | ** **  |       |   |     |   |
| Diluted net income per unit                                                                                      |   |     | ** **  |       |   |     |   |
| As reported                                                                                                      |   | **$**    | **1.19**    | ** ** | $      | 1.14     |   | $ | 1.74 |   |
| Pro forma                                                                                                        |   | **$**    | **1.18**    | ** ** | $      | 1.13     |   | $ | 1.73 |   |

 

**Derivative FinancialInstruments**

 

ThePartnership periodically enters into certain interest rate protectionagreements to effectively convert or cap floating rate debt to a fixed rate,and to hedge anticipated future financing transactions. Net amounts paid orreceived under these agreements are recognized as an adjustment to the interestexpense of the corresponding debt. The Partnership does not utilize derivativefinancial instruments for trading or speculative purposes.

 

ThePartnership adopted SFAS 133 *Accounting forDerivative Instruments and Hedging Activities*, as amended (“SFAS133”), on January 1, 2001. SFAS 133 requires that all derivative instruments berecorded on the balance sheet as assets or liabilities at their fair value. Thecumulative effect of adopting SFAS 133 was not material to the Partnership’sfinancial statements on the date of adoption. Derivatives that are not hedgesmust be 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 of the hedge are recognized in other comprehensive income, while theineffective portion of the derivative’s change in fair value is recognized inearnings. The Partnership estimates the fair value of derivative instrumentsusing standard market conventions and techniques such as discounted cash flowanalysis, option pricing models and termination cost at each balance sheetdate.

 

**UseOf Estimates**

 

The preparation of the financial statements requires management to makea number of estimates and assumptions that affect the reported amount of assetsand liabilities and the disclosure of contingent assets and liabilities at thedate of the financial statements and the reported amounts of revenues andexpenses during the period. Actual results could differ from those estimates.

 

**(3)****                                 Related Party Transactions**

 

The Partnership provides property management, leasing, construction andother tenant related services to properties in which certain executives haveownership interests. The Partnership had an option to acquire the executiveofficers’ interests in these properties. Two of these properties, the Bank OneTowers office buildings in Cincinnati, Ohio, were acquired in August 2003 at aprice of $45.5 million. The terms of this acquisition were reviewed andapproved by the independent members of the General Partner’s Board ofDirectors. The options on the remaining properties expired in October 2003, asthe independent members of the General Partner’s Board of Directors determinedthat it was not in the best interests of the Partnership to exercise theoptions.

 

47

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The Partnership received fees totaling $1.2 million, $1.4 million and$1.7 million in 2003, 2002 and 2001, respectively, for services provided tothese properties. The fees charged by the Partnership for such services areequivalent to those charged to third-party owners for similar services.

 

The Partnership provides property management, leasing, construction andother tenant related services to unconsolidated companies in which thePartnership has equity interests. For the years ended December 31, 2003, 2002and 2001, respectively, the Partnership received management fees of $4.9million, $4.9 million and $4.7 million, leasing fees of $2.3 million, $2.5million and $2.8 million and construction and development fees of $1.4 million,$4.5 million and $5.2 million from these unconsolidated companies. These feeswere charged at market rates and the Partnership eliminates its ownershippercentage of these fees in the consolidated financials.

 

In 2002, the Partnership received lease termination fees totaling $7.7million from a tenant that is a subsidiary of Progress Energy, Inc. WilliamCavanaugh III is President and Chief Executive Officer of Progress Energy, Inc.and a member 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.

 

The Partnership has other related party transactions that areinsignificant and are at terms that management considers to be arm’s-length andequal to those negotiated with independent parties.

 

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

 

The Partnership has equity interests ranging from 10 – 64% inunconsolidated joint ventures that own and operate rental properties and holdland for development.

 

Combined summarized financial information for the unconsolidatedcompanies as of December 31, 2003 and 2002, and for the years ended December31, 2003, 2002, and 2001, are as follows (in thousands):

 
|                                          |   | **2003**    |          | **2002** |   | **2001**  |   |
|-----------------------------------------------|--------|-------------|---------------|----------|--------|-----------|--------|
| Land, buildings and tenant improvements,  net |   | **$**       | **1,173,232** |     | $      | 1,232,026 |   |   |   |
| Land held for development                     |   | **51,328**  |          | 38,848   |   |      |   |
| Other assets                                  |   | **62,196**  |          | 67,590   |   |      |   |
|                                          |   | **$**       | **1,286,756** |     | $      | 1,338,464 |   |   |   |
| Property indebtedness                         |   | **$**       | **577,732**   |     | $      | 579,893   |   |   |   |
| Other liabilities                             |   | **41,691**  |          | 52,057   |   |      |   |
|                                          |   | **619,423** |          | 631,950  |   |      |   |
| Owners’ equity                           |   | **667,333** |          | 706,514  |   |      |   |
|                                          |   | **$**       | **1,286,756** |     | $      | 1,338,464 |   |   |   |
| Rental income                                 |   | **$**       | **170,227**   |     | $      | 169,683   |   | $ | 172,257 |   |
| Net income                                    |   | **$**       | **41,065**    |     | $      | 51,013    |   | $ | 58,091 |   |
| Earnings distributions received               |   | **$**       | **30,844**    |     | $      | 29,238    |   | $ | 37,022 |   |

 

The Partnership’s share of the scheduledpayments of long term debt for the unconsolidated joint ventures for each ofthe next five years and thereafter as of December 31, 2003, are as follows (inthousands):

 
| **Year**   |   | **Future  Repayments** |    |
|------------|--------|------------------------|---------|
| 2004       |   | $                      | 29,246  |   |
| 2005       |   | 65,214                 |    |
| 2006       |   | 5,627                  |    |
| 2007       |   | 45,920                 |    |
| 2008       |   | 985                    |    |
| Thereafter |   | 131,740                |    |
|       |   | $                      | 278,732 |   |

 

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

 

48

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During 2003, the Partnership purchased itspartner’s interest in three separate joint ventures. The Partnership had a 50%interest in each of these ventures prior to their acquisition. The Partnershipalso sold its 50% interest in two separate joint ventures to its partners. Inaddition, the Partnership contributed cash and undeveloped land to a jointventure that owns undeveloped land and an office building in return for a 50%interest.

 

In 2002, the Partnership recognized a gain of $1.8 million on the saleof a building that was developed for sale by a joint venture in which thePartnership owned a 50% interest. The gain was included in equity in earningsin the Statement of Operations. The Partnership also bought out its otherpartners’ interest in six separate joint ventures.  The Partnership had a 50% interest in each of these venturesprior to their acquisition.

 

During 2001, the Partnership received approximately $50.0 million incash distributions resulting from secured debt financing within two 50 % ownedjoint ventures. The debt is nonrecourse to the Partnership and is secured byrental properties owned by the joint ventures. In addition, the Partnershiprecognized a gain of $2.9 million from the sale of depreciable property by ajoint venture in which the Partnership owned a 50% interest. The gain isincluded in equity in earnings in the Statement of Operations.

 

**(5)****                                ****Real Estate Investments**

 

The Partnership adopted SFAS No. 144, *Accountingfor the Impairment or Disposal of Long Lived Assets*(“SFAS 144”), onJanuary 1, 2002. SFAS 144 requires the Partnership to report in discontinuedoperations the results of operations of a property which has either beendisposed or is classified as held-for-sale, unless certain conditions are met.

 

The Partnership has classified operations of 45 buildings as discontinued operations in accordancewith SFAS 144. These 45 buildings consist of thirty-four industrial, sevenoffice and four retail properties. As a result, the Partnership classified netincome of $2.9 million, $5.7 million and $7.1 million as net income fromdiscontinued operations for the years ended December 31, 2003, 2002 and 2001,respectively. Forty-two of these properties were sold during 2003, twoproperties were sold during 2002 and one operating property is classified asheld-for-sale at December 31, 2003; therefore, the gains on disposal of theseproperties, net of impairment adjustment, of $13.0 million and ($17,000) forthe year ended December 31, 2003 and 2002, respectively, are also reported indiscontinued operations.

 

The following table illustrates the major classes of assets andoperations affected by the 45 buildings identified as discontinued operationsat December 31, 2003 (in thousands):

 
|                                                         |   | **2003**   |       | **2002**   |   | **2001** |   |
|--------------------------------------------------------------|--------|------------|------------|------------|--------|----------|--------|
|                                                         |   |       | ** ** |       |   |     |   |
| Balance Sheet:                                               |   |       | ** ** |       |   |     |   |
| Real estate investments, net                                 |   | **$**      | **951**    | ** ** | $      | 108,106  |   |   |   |
| Other Assets                                                 |   | **294**    | ** ** | 14,395     |   |     |   |
| Total Assets                                                 |   | **$**      | **1,245**  | ** ** | $      | 122,501  |   |   |   |
| Accrued Expenses                                             |   | **$**      | **32**     | ** ** | $      | 2,192    |   |   |   |
| Other Liabilities                                            |   | **—** | ** ** | 991        |   |     |   |
| Equity                                                       |   | **1,213**  | ** ** | 119,318    |   |     |   |
| Total Liabilities and Equity                                 |   | **$**      | **1,245**  | ** ** | $      | 122,501  |   |   |   |
| Statement of Operations:                                     |   |       | ** ** |       |   |     |   |
| Revenues                                                     |   | **$**      | **12,495** | ** ** | $      | 19,635   |   | $ | 22,335 |   |
| Expenses:                                                    |   |       | ** ** |       |   |     |   |
| Operating                                                    |   | **4,410**  | ** ** | 5,690      |   | 5,445    |   |
| Interest                                                     |   | **2,346**  | ** ** | 3,608      |   | 4,286    |   |
| Depreciation and Amortization                                |   | **2,793**  | ** ** | 4,683      |   | 5,805    |   |
| General and Administrative                                   |   | **24**     | ** ** | 32         |   | 20       |   |
| Operating Income                                             |   | **2,922**  | ** ** | 5,622      |   | 6,779    |   |
| Other Income                                                 |   | **25**     | ** ** | 76         |   | 271      |   |
| Minority interest expense -  operating and other income |   | **(286**   | **)**      | (587       | )      | (873     | )      |
| Income from discontinued operations, before  gain on sale    |   | **2,661**  | ** ** | 5,111      |   | 6,177    |   |
| Gain on sale of property, net of impairment  adjustment      |   | **13,002** | ** ** | (17        | )      | —   |   |
| Minority interest expense – gain on sales               |   | **(1,273** | **)**      | 2          |   | —   |   |
| Income from discontinued operations                          |   | **$**      | **14,390** | ** ** | $      | 5,096    |   | $ | 6,177 |   |

 

49

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The Partnership allocates interest expense to discontinued operationsas permitted under EITF 87-24, *“Allocationof Interest to Discontinued Operations,”*and has included suchinterest expense in computing net income from discontinued operations. Interestexpense allocable to discontinued operations includes interest on the debt for the secured properties and anallocable share of the Partnership’s consolidated unsecured interest expensefor unencumbered properties. The allocation of unsecured interest expense todiscontinued operations was based upon the Gross Book Value of the discontinuedunencumbered operations population as it related to the Partnership’s entireunencumbered population.

 

At December 31, 2003, the Partnership had four office, three industrial and one retail propertiescomprising approximately 785,000 square feet classified as held-for-sale. Withthe exception of one industrial property mentioned above, each of theseproperties was under development on that date and had no operations. Netoperating income (defined as total property revenues, less property expenses,which include real estate taxes, repairs and maintenance, property management,utilities, insurance and other expenses) of the properties held-for-sale forthe years ended December 31, 2003, 2002 and 2001 was approximately $206,000,$89,000 and $88,000, respectively. The net book value of the propertiesheld-for-sale at December 31, 2003, was approximately $47.2 million.

 

In 2003 the Partnership recorded $1.1 million of impairment adjustmentsfor one industrial building and three land parcels that were held-for-sale.These adjustments reflect the write-down of the carrying value of theproperties to their projected sales price, less selling expenses, once itbecame probable that the properties would be sold.  Each of these properties was later sold in 2003.

 

The Partnership recorded a $9.4 million impairment adjustment for sixproperties in 2002. This total consisted of a $7.7 million adjustment for threeindustrial properties and a $1.7 million adjustment for three officeproperties. The properties were identified as impaired upon the comparison oftheir projected undiscounted cash flows to their carrying value. The impairmentadjustment reflects the write-down of the carrying value of the properties totheir estimated fair market value. In estimating fair market value, managementconsiders valuation factors used by independent appraisers, including the salesof comparable properties, replacement cost and the capitalization of futureexpected net operating income.

 

In 2001, the Partnership recorded a $4.8 million impairment adjustmentfor an industrial property that was sold in 2002. This adjustment reflected thewrite-down of the carrying value of that property to an amount equal to itsprojected sales price, less selling expenses, once it became probable the propertywould be sold.

 

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

 

Indebtedness at December 31 consists of the following (in thousands):

 
|                                                                                                                                                                 |   | **2003**  |      | **2002**  |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|-----------|-----------|--------|
| Fixed rate secured debt, weighted average  interest rate of 6.94% at December 31, 2003, and 7.35% at December 31, 2002,  maturity dates ranging from 2004 to 2017    |   | $         | 153,460   |      | $      | 259,376 |   |
|                                                                                                                                                                 |   |      |      |      |   |
| Variable rate secured debt, weighted  average interest rate of 2.42% at December 31, 2003, and 1.71% at December  31, 2002, maturity dates ranging from 2006 to 2025 |   | 55,189    |      | 39,771    |   |
|                                                                                                                                                                 |   |      |      |      |   |
| Fixed rate unsecured notes, weighted  average interest rate of 6.41% at December 31, 2003, and 6.95% at December  31, 2002, maturity dates ranging from 2004 to 2028 |   | 1,775,887 |      | 1,526,138 |   |
|                                                                                                                                                                 |   |      |      |      |   |
| Unsecured line of credit, interest rate of  1.77% at December 31, 2003, and 2.07% at December 31, 2002, maturity date of  2007                                       |   | 351,000   |      | 281,000   |   |
|                                                                                                                                                                 |   | $         | 2,335,536 |      | $      | 2,106,285 |   |

 

The fair value of the Partnership’s indebtedness as of December 31,2003, was $2.5 billion.

 

As of December 31, 2003, the $208.6 million of secured debt wascollateralized by rental properties with a carrying value of $453.7 million andby letters of credit in the amount of $15 million.

 

The Partnership had one unsecured line of credit available at December31, 2003, described as follows (in thousands):

 

50

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| **Description**          |   | **Borrowing  Capacity** |    | **Maturity  Date** |           | **Interest  Rate** |         | **Outstanding  at December  31, 2003** |   |
|--------------------------|--------|-------------------------|---------|--------------------|----------------|--------------------|--------------|----------------------------------------|--------|
| Unsecured Line of Credit |   | $                       | 500,000 |               | February  2004 |               | LIBOR + .65% |                                   | $      | 351,000 |   |
|                          |        |                         |         |                    |                |                    |              |                                        |        |  |  |

 

In January 2004, the line of credit was extended through January 2007at an interest rate of LIBOR plus .60%. The line of credit is used to funddevelopment activities and acquire additional rental properties and to provideworking capital.

 

At December 31, 2003, the scheduled amortization and maturities of allindebtedness for the next five years and thereafter were as follows (inthousands):

 
| **Year**   |   | **Amount** |      |
|------------|--------|------------|-----------|
| 2004       |   | $          | 174,898   |   |
| 2005       |   | 213,729    |      |
| 2006       |   | 187,512    |      |
| 2007       |   | 571,458    |      |
| 2008       |   | 138,950    |      |
| Thereafter |   | 1,048,989  |      |
|       |   | $          | 2,335,536 |   |

 

The amount of interest paid in 2003, 2002, and 2001 was $130.1 million,$125.9 million and $140.5 million, respectively. The amount of interestcapitalized in 2003, 2002 and 2001 was $6.7 million, $13.5 million and $25.9million, respectively.

 

In January 2004, the Partnership issued $125.0 million of unsecureddebt having an effective interest rate of 3.36% due 2008.

 

The indenture governing the Partnership’s unsecured notes also requiresthe Partnership to comply with financial ratios and other covenants regardingthe operations of the Partnership. At December 31, 2003, the Partnership is incompliance with all such covenants and expects to remain in compliance for theforeseeable future.

 

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

 

The Partnership is engaged in four operating segments: the ownershipand rental of office, industrial and retail real estate investments(collectively, “Rental Operations”), and the providing of various real estateservices such as property management, maintenance, leasing, development andconstruction management to third-party property owners (“Service Operations”).The Partnership’s 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-segment revenue consists mainly of equity in earnings ofunconsolidated companies. Non-segment assets consist of corporate assetsincluding cash, deferred financing costs and investments in unconsolidatedcompanies. Interest expense and other non-property specific revenues andexpenses are not allocated to individual segments in determining thePartnership’s performance measure.

 

The Partnership assesses and measures segment operating results basedupon an industry performance measure referred to as Funds From Operations(“FFO”), which management believes is a useful indicator of the Partnership’soperating performance. FFO is used by industry analysts and investors as asupplemental operating performance measure of an equity real estate investmenttrust (“REIT”). FFO is calculated in accordance with the definition that wasadopted by the Board of Governors of the National Association of Real EstateInvestment Trusts (“NAREIT”). FFO, as defined by NAREIT, represents net income(loss) determined in accordance with accounting principles generally acceptedin the United States of America (“GAAP”), excluding extraordinary items asdefined under GAAP and gains or losses from sales of previously depreciatedoperating real estate assets, plus certain non-cash items such as real estateasset depreciation and amortization, and after adjustment for unconsolidatedpartnerships and joint ventures.

 

51

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The revenues and FFO for each of the reportable segments for the yearsended December 31, 2003, 2002, and 2001, and the assets of each reportablesegment as of December 31, 2003 and 2002 are summarized as follows (inthousands):

 
|                                                                        |   | **2003**     |        | **2002**   |   | **2001** |   |
|-----------------------------------------------------------------------------|--------|--------------|-------------|------------|--------|----------|--------|
| Revenues                                                                    |   |         | ** **  |       |   |     |   |
| Rental Operations:                                                          |   |         | ** **  |       |   |     |   |
| Office                                                                      |   | **$**        | **421,660** | ** ** | $      | 396,022  |   | $ | 377,187 |   |
| Industrial                                                                  |   | **273,307**  | ** **  | 265,129    |   | 274,495  |   |
| Retail                                                                      |   | **7,999**    | ** **  | 6,885      |   | 18,165   |   |
| Service Operations                                                          |   | **58,496**   | ** **  | 68,580     |   | 80,459   |   |
| Total Segment Revenues                                                      |   | **761,462**  | ** **  | 736,616    |   | 750,306  |   |
| Non-Segment Revenue                                                         |   | **27,471**   | ** **  | 30,036     |   | 31,167   |   |
| Consolidated Revenue from continuing  operations                            |   | **788,933**  | ** **  | 766,652    |   | 781,473  |   |
| Discontinued Operations                                                     |   | **12,495**   | ** **  | 20,910     |   | 22,335   |   |
| Consolidated Revenue                                                        |   | **$**        | **801,428** | ** ** | $      | 787,562  |   | $ | 803,808 |   |
|                                                                        |   |         | ** **  |       |   |     |   |
| Funds From Operations                                                       |   |         | ** **  |       |   |     |   |
| Rental Operations:                                                          |   |         | ** **  |       |   |     |   |
| Office                                                                      |   | **$**        | **274,164** | ** ** | $      | 264,533  |   | $ | 254,130 |   |
| Industrial                                                                  |   | **205,231**  | ** **  | 205,115    |   | 215,156  |   |
| Retail                                                                      |   | **6,593**    | ** **  | 5,947      |   | 14,993   |   |
| Services Operations                                                         |   | **21,118**   | ** **  | 29,520     |   | 35,115   |   |
| Total Segment FFO                                                           |   | **507,106**  | ** **  | 505,115    |   | 519,394  |   |
|                                                                        |   |         |        |       |   |     |   |
| Non-Segment FFO:                                                            |   |         | ** **  |       |   |     |   |
| Interest expense                                                            |   | **(129,160** | **)**       | (114,675   | )      | (109,544 | )      |
| Interest income                                                             |   | **3,590**    | ** **  | 3,783      |   | 5,037    |   |
| General and administrative expense                                          |   | **(21,342**  | **)**       | (24,704    | )      | (15,539  | )      |
| Gain on land sales                                                          |   | **7,135**    | ** **  | 4,478      |   | 5,080    |   |
| Impairment charges on depreciable property                                  |   | **(500**     | **)**       | (9,379     | )      | (4,800   | )      |
| Other expenses                                                              |   | **(2,765**   | **)**       | (330       | )      | (3,899   | )      |
| Minority interest in earnings of  subsidiaries                              |   | **(586**     | **)**       | (1,093     | )      | (2,411   | )      |
| Joint Venture FFO                                                           |   | **42,526**   | ** **  | 44,778     |   | 45,570   |   |
| Dividends on preferred units                                                |   | **(39,225**  | **)**       | (52,613    | )      | (60,850  | )      |
| Adjustment for redemption of preferred  units                               |   | **—**   | ** **  | (8,145     | )      | (2,538   | )      |
| Discontinued operations                                                     |   | **5,740**    | ** **  | 11,656     |   | 12,855   |   |
| Consolidated FFO                                                            |   | **372,519**  | ** **  | 358,871    |   | 388,355  |   |
|                                                                        |   |         | ** **  |       |   |     |   |
| Depreciation and amortization on continuing  operations                     |   | **(193,441** | **)**       | (170,938   | )      | (153,909 | )      |
| Depreciation and amortization on  discontinued operations                   |   | **(2,793**   | **)**       | (4,683     | )      | (5,805   | )      |
| Share of joint venture adjustments                                          |   | **(18,839**  | **)**       | (17,598    | )      | (14,177  | )      |
| Earnings (loss) from depreciated property  sales on continuing operations   |   | **—**   | ** **  | 7,241      |   | 45,428   |   |
| Earnings (loss) from depreciated property  sales on discontinued operations |   | **22,141**   | ** **  | (1,292     | )      | —   |   |
| Net income available for common unitholders                                 |   | **$**        | **179,587** | ** ** | $      | 171,601  |   | $ | 259,892 |   |

 
|                 |   | **December  31,  2003** |          | **December  31,  2002** |   |
|----------------------|--------|-------------------------|---------------|-------------------------|--------|
| Assets               |   |                    |          |                    |   |
| Rental Operations    |   |                    |          |                    |   |
| Office               |   | **$**                   | **2,884,834** |                    | $      | 2,677,427 |   |
| Industrial           |   | **2,177,483**           |          | 2,144,686               |   |
| Retail               |   | **47,293**              |          | 71,072                  |   |
| Service Operations   |   | **111,318**             |          | 91,399                  |   |
| Total Segment Assets |   | **5,220,928**           |          | 4,984,584               |   |
| Non-Segment Assets   |   | **337,783**             |          | 362,471                 |   |
| Consolidated Assets  |   | **$**                   | **5,558,711** |                    | $      | 5,347,055 |   |

 

In addition torevenues and FFO, the Partnership also reviews its recurring capitalexpenditures in measuring the performance of its individual segments. Theserecurring capital expenditures consist of tenant improvements, leasingcommissions and building improvements. These expenditures are reviewed by thePartnership to determine the costs associated with re-leasing vacant space. ThePartnership’s recurring capital expenditures by segment are summarized asfollows for the years ended December 31, 2003, 2002 and 2001, respectively (inthousands):

 
|                           |   | **2003**   |       | **2002**   |   | **2001** |   |
|--------------------------------|--------|------------|------------|------------|--------|----------|--------|
| Recurring Capital Expenditures |   |       | ** ** |       |   |     |   |
| Office                         |   | **$**      | **44,602** | ** ** | $      | 31,616   |   | $ | 20,426 |   |
| Industrial                     |   | **31,711** | ** ** | 27,398     |   | 22,176   |   |
| Retail                         |   | **135**    | ** ** | 345        |   | 532      |   |
| Total                          |   | **$**      | **76,448** | ** ** | $      | 59,359   |   | $ | 43,134 |   |

 

52

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

 

Future minimum rents due to the Partnership under non-cancelableoperating leases at December 31, 2003, are as follows (in thousands):

 
| **Year**   |   | **Amount** |      |
|------------|--------|------------|-----------|
|       |   |       |      |
| 2004       |   |       | $         | 558,432 |   |
| 2005       |   |       | 505,625   |   |
| 2006       |   |       | 434,301   |   |
| 2007       |   |       | 368,852   |   |
| 2008       |   |       | 298,722   |   |
| Thereafter |   |       | 912,439   |   |
|       |   | $          | 3,078,371 |   |

 

In addition to minimum rents, certain leases require reimbursements ofspecified operating expenses that amounted to $130.3 million, $120.1 million,and $115.7 million for the years ended December 31, 2003, 2002 and 2001,respectively.

 

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

 

The Partnership maintains a 401(k) plan for its full-time employees.The Partnership makes matching contributions up to an amount equal to threepercent of the employees’ salary and may also make annual discretionarycontributions. The total expense recognized by the Partnership for this planwas $1.6 million, $1.7 million and $1.3 million for the years ended 2003, 2002and 2001, respectively.

 

The Partnership makes contributions to a contributory health andwelfare plan as necessary to fund claims not covered by employee contributions.The total expense recognized by the Partnership related to this plan was $6.4million, $4.9 million and $5.6 million for 2003, 2002 and 2001, respectively.These expense amounts include estimates based upon the historical experience ofclaims incurred but not reported as of year-end.

 

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

 

The General Partner periodically accesses the public equity markets tofund the development and acquisition of additional rental properties or to paydown debt. The proceeds of these offerings are contributed to the Partnershipin exchange for an additional interests in the Partnership.

 

The following series of preferred units were outstanding as of December31, 2003 (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 D Preferred |   | 533                    |   | 7.375              | %      | December 31, 2003    |   | 133,257                     |    | Yes             |   |
| Series E Preferred |   | 400                    |   | 8.250              | %      | January 20, 2004     |   | 100,000                     |    | No              |   |
| Series I Preferred |   | 300                    |   | 8.450              | %      | February 6, 2006     |   | 75,000                      |    | No              |   |
| Series J Preferred |   | 400                    |   | 6.6250             | %      | August 29, 2008      |   | 100,000                     |    | No              |   |
|                    |        |                        |        |                    |        |                      |        |                             |         |                 |        |  |

 

All series of preferred equity require cumulative distributions andhave no stated maturity date (although the General Partner may redeem them onor following their optional redemption dates).

 

The Series B, Series E, Series I and Series J Preferred units may beredeemed only at the General Partner’s option, in whole or in part. The SeriesD Preferred units may be redeemed at the General Partner’s option in whole orin part, as well as at the option of a shareholder’s estate, upon the death ofa shareholder.

 

The General Partner issued $100 million of Series J Preferred units inAugust 2003.

 

The Series D Preferred units are convertible at a conversion rate of..93677 General Partner common shares for each preferred unit outstanding.

 

53

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The distribution rate on the Series B Preferred units increases to9.99% after September 12, 2012. The General Partner repurchased 355,000 sharesis Series B Preferred stock in September 2002, which resulted in the repurchaseof 355,000 Series B Preferred units by the Partnership from the GeneralPartner. The repurchase transaction was initiated by a group of Series BPreferred stockholders who voluntarily approached the General Partner with anopportunity for the General Partner to buyback these shares before theirearliest stated redemption date.

 

The General Partner and the Partnership redeemed its $150.0 millionSeries F Preferred units in October 2002 at par value. Effective August 31,2002, the Partnership terminated a shareholder rights plan that had includedthe potential issuance of Series C Junior Preferred units.

 

The General Partner and the Partnership redeemed the $100.0 millionSeries E Preferred units on January 20, 2004, at par value.

 

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

 

At December 31, 2003, the General Partner had nine stock-based employeecompensation plans that are described more fully below. The General Partner isauthorized to issue up to 7,812,984 shares of the General Partner’s stock underthese Plans.

 

Fixed Stock Option Plans

 

The General Partner had options outstanding under six fixed stockoption plans as of December 31, 2003. Additional grants may be made under threeof those plans.

 

A summary of the status of the fixed stock option plans as of December31, 2003, 2002 and 2001 and changes during the years ended on those datesfollows:

 
|                                                            |   | **2003**      |       | **2002**                               |      | **2001**   |      |
|-----------------------------------------------------------------|--------|---------------|------------|----------------------------------------|-----------|------------|-----------|
|                                                            |   | **Shares**    |       | **Weighted  Average  Exercise  Price** |      | **Shares** |      | **Weighted  Average  Exercise  Price** |   | **Shares** |   | **Weighted  Average  Exercise  Price** |   |
| Outstanding, beginning of year                                  |   | **3,920,198** | ** ** | **$**                                  | **22.09** |       | 4,691,659 |   | $ | 21.12 |   | 5,235,464 |   | $ | 19.52 |   |
| Granted                                                         |   | **609,390**   | ** ** | **25.48**                              |      | 676,038    |      | 23.37 |   | 718,320 |   | 24.98 |   |
| Exercised                                                       |   | **(773,625**  | **)**      | **21.87**                              |      | (1,203,534 | )         | 18.82 |   | (982,243 | ) | 15.21 |   |
| Forfeited                                                       |   | **(169,603**  | **)**      | **23.63**                              |      | (243,965   | )         | 22.96 |   | (279,882 | ) | 21.84 |   |
| Outstanding, end of year                                        |   | **3,586,360** | ** ** | **22.65**                              |      | 3,920,198  |      | 22.09 |   | 4,691,659 |   | 21.12 |   |
| Options exercisable, end of year                                |   | **2,014,875** | ** ** |                                   |      | 2,297,500  |      |   |   | 2,965,930 |   |   |   |
|                                                            |   |          | ** ** |                                   |      |       |      |   |   |   |   |   |   |
| Weighted-average fair value of options  granted during the year |   | **$**         | **1.81**   | ** **                             |      |       | $         | 2.05 |   |   |   | $ | 2.19 |   |   |   |
|                                                                 |        |               |            |                                        |           |            |           |  |  |  |  |  |  |  |  |  |  |  |  |

 

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

 
|                    |   | **2003**    |       | **2002** |   | **2001** |   |
|-------------------------|--------|-------------|------------|----------|--------|----------|--------|
| Dividend yield          |   | **7.25**    | **%**      | 7.25     | %      | 7.50     | %      |
| Volatility              |   | **20.0**    | **%**      | 20.0     | %      | 20.1     | %      |
| Risk-free interest rate |   | **3.2**     | **%**      | 4.7      | %      | 5.0      | %      |
| Expected life           |   | **6 years** | ** ** | 6 years  |   | 6 years  |   |

 

The options outstanding at December 31, 2003, under the fixed stockoption plans have a range of exercise prices from $12.94 to $29.23 with aweighted average exercise price of $22.65 and a weighted average remainingcontractual life of 6.17 years. The options exercisable at December 31, 2003have a weighted average exercise price of $21.61.

 

Each option’s maximum term is ten years. With limited exceptions,options vest at 20% per year, or, if earlier, upon the death, retirement ordisability of the optionee or a change in control of the General Partner.

 

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Performance Based Stock Plans

 

Performance shares are granted under the 2000 Performance Share Plan,with each performance share economically equivalent to one share of the GeneralPartner’s common stock. The performance shares vest over a 5-year period withthe vesting percentage for a year dependent upon the General Partner’sattainment of certain predefined levels of earnings growth for such year. Thevalue of vested performance shares are payable in cash upon the retirement ortermination of employment of the participant. At December 31, 2003, planparticipants had the right to receive up to 64,849 performance shares, of which33,350 were vested and 31,499 were contingent upon future earnings achievement.

 

The amount of compensation cost was based upon the intrinsic value ofthe vested performance shares at the end of each applicable reporting period.The compensation cost that was charged against income for this plan was$529,000, $96,000 and $201,000 for 2003, 2002 and 2001, respectively.

 

In October 2002, the General Partner amended its Shareholder Value Plan(“SVP Plan”) and Dividend Increase Unit Plans (“DIU Plans”) by requiring thatall payouts under these two plans to be in cash only. Payments made under theSVP 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 $1.6 million, $4.6 million and $6.0 million for 2003, 2002 and 2001,respectively.

 

Directors Stock Payment Plan

 

Under the General Partner’s 1999 Directors’ Stock Payment Plan,non-employee members of the General Partner’s Board of Directors are entitledto 1,200 shares of its common shares per year as partial compensation forservices as a board member. The shares are fully vested when issued and thePartnership records the value of the shares as an expense. The amount of thatexpense was $415,000, $274,000 and $260,000 for 2003, 2002 and 2001,respectively.

 

Employee Stock Purchase Plan

 

Under the General Partner’s Employee Stock Purchase Plan, employees areentitled to purchase the General Partner’s common stock at a 15% discountthrough payroll deductions. Under SFAS 123, the Partnership is required torecord the amount of the discount as compensation expense. The amount of thatexpense for 2003 and 2002 was $219,000 and $181,000, respectively.

 

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

 

In December 2002, the Partnership simultaneously entered into two $50million forward-starting interest rate swaps as a hedge to effectively fix therate on unsecured debt financings expected in 2003. The fair value of the swapswas a liability of $2.1 million as of December 31, 2002, and was recorded inother liabilities in the accompanying balance sheet.

 

In February 2003, the Partnership simultaneously entered into twoadditional $25 million forward-starting interest rate swaps as a hedge toeffectively fix the rate on unsecured debt financings expected in 2003. Allfour swaps qualified for hedge accounting under SFAS 133; therefore, changes infair value were recorded in other comprehensive income.

 

In July 2003, the Partnership terminated the swaps for a net gain of$643,000, which is included in other revenue in the Statements of Operations.The swaps were terminated because the Partnership’s capital needs were metthrough the issuance of the Series J Preferred equity in lieu of the previouslycontemplated issuance of debt.

 

55

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During the years ended December 31, 2002 and 2001, the Partnershiprecorded a $1.4 million gain and a $1.4 million loss, respectively, associatedwith an interest rate contract that did not qualify for hedge accounting.  The contract expired on December 30, 2002.

 

In July 2001, the Partnership terminated three interest rate swaps thatwere tied to an $85 million unsecured term loan. The swaps qualified for hedgeaccounting under SFAS 133. The costs toterminate the swaps was $548,000, which was recorded as interest expense andreversed out of other comprehensive income.

 

In May 2003, the FASB issued SFAS No. 150 *Accounting for Certain Financial Instruments with Characteristics ofboth Liabilities and Equity* (“SFAS 150”). SFAS 150 establishesstandards for classifying and measuring as liabilities certain financialinstruments that embody obligations of the issuer and have characteristics ofboth liabilities and equity. SFAS 150 is effective for all financialinstruments created or modified after May 31, 2003, and otherwise is effectiveJuly 1, 2003. The Partnership includes the operations of five joint ventures inits consolidated financial statements. These joint ventures are partially ownedby unaffiliated parties that have noncontrolling interests. SFAS 150 requiresthe disclosure of the estimated settlement value of these noncontrollinginterests. As of December 31, 2003, the estimated settlement value of thesenoncontrolling interests was approximately $4.3 million as compared to theminority interest liability recorded on the Partnership’s books for these jointventures of $1.2 million.

 

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

 

In July of 2003, the SEC issued a Staff Policy Statement that clarifiedthe application of FASB-EITF Topic D-42 (Topic D-42), “The Effect on theCalculation of Earnings per Share for the Redemption or Induced Conversion ofPreferred Equity.” Under Topic D-42, the difference between the amounts paid tothe holders of preferred equity upon redemption and the carrying amount of thepreferred equity on the issuer’s balance sheet must be subtracted from netincome when computing earnings per share. The Staff Policy Statement clarifiedthat, in computing the reduction in net income, the carrying amount of thepreferred equity should be reduced by the issuance costs of the preferredequity. As a result of this clarification, the Partnership’s net income perunit was restated for 2002 and 2001. The impact of this restatement issummarized as follows:

 
|                                          |   | **Twelve  Months Ended December 31,** |   |
|-----------------------------------------------|--------|---------------------------------------|--------|
|                                          |   | **2002**                              |   | **2001** |   |
| Net income available for common  unitholders: |   |                                  |   |   |   |
| Prior to Topic D-42                           |   | 179,746                               |   | $ | 262,430 |   |
| Post adoption of Topic D-42                   |   | 171,601                               |   | $ | 259,892 |   |
|                                          |   |                                  |   |   |   |
| Basic net income per common unit:             |   |                                  |   |   |   |
| Prior to Topic D-42                           |   | $                                     | 1.20   |   | $ | 1.77 |   |
| Post adoption of Topic D-42                   |   | $                                     | 1.15   |   | $ | 1.76 |   |
|                                          |   |                                  |   |   |   |
| Diluted net income per common unit:           |   |                                  |   |   |   |
| Prior to Topic D-42                           |   | $                                     | 1.19   |   | $ | 1.75 |   |
| Post adoption of Topic D-42                   |   | $                                     | 1.14   |   | $ | 1.74 |   |

 

In January 2003, FASB issued Interpretation 46, Consolidation ofVariable Interest Entities (“Interpretation 46”), which addresses theconsolidation of certain entities in which a company has a controllingfinancial interest through means other than voting rights. This interpretationwas revised in December 2003.  Forcalendar year companies, Interpretation 46 contains an effective date ofDecember 31, 2003 for special purpose entities and periods ending after March15, 2004 for all other entities. The Partnership does not own interests inspecial purpose entities and management does not believe that the adoption ofInterpretation 46 will have a material impact on the Partnership’s financialstatements.

 

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

 

In 1998 and 1999, certain members of management and the Board ofDirectors of the General Partner purchased $69 million of common stock inconnection with an Executive and Senior Officer Stock Purchase

 

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Plan. The purchases were financed by five-year personal loans at marketinterest rates from financial institutions. As of December 31, 2003, theoutstanding balance on these loans was $11.7 million as some participants haveexited the program and repaid their principal balance. These loans were securedby common shares with a fair market value of 18.2 million purchased throughthis program and owned by the remaining plan participants at December 31, 2003.As a condition of the financing agreement with the financial institution, thePartnership guaranteed repayment of principal, interest and other obligationsfor each participant, but is fully indemnified by the participants. In theopinion of management, it is not probable that the Partnership will be requiredto satisfy these guarantees.

 

In October 2000, the Partnership sold or contributed industrialproperties and undeveloped land with a fair value of $487 million to a jointventure (Dugan Realty LLC) in which the Partnership has a 50% interest andrecognized a net gain of $35.2 million. This transaction expanded an existingjoint venture with an institutional real estate investor. As a result of thetotal transactions, the Partnership received $363.9 million of proceeds. Thejoint venture partially financed this transaction with $350 million of securedmortgage debt, the repayment of which was directly or indirectly guaranteed bythe Partnership. The guarantee associated with $260 million of such debtexpired in December 2003 without the Partnership being required to satisfy theguarantee. The remaining $90 million of such debt is still guaranteed by thePartnership. In connection with this transaction, the joint venture partnerswere given an option to put up to a $50 million interest in the joint ventureto the Partnership in exchange for common stock of the Partnership or cash (atthe option of the Partnership), subject to certain timing and otherrestrictions. As a result of this put option, the Partnership deferred $10.2million of gain on sale of depreciated property and recorded a $50 millionliability.

 

The Partnership has guaranteed the repayment of $3.5 million ofeconomic development bonds issued by the City of Carmel, Indiana. ThePartnership will be required to make payments under its guarantee to the extentthat incremental taxes from one of its office park developments are notsufficient to pay the bond debt service. Management does not believe that it is probable that the Partnershipwill be required to make any significant payments in satisfaction of thisguarantee.

 

The Partnership has also guaranteed the repayment of a $2 millionmortgage loan encumbering the real estate of one its unconsolidated jointventures. Management believes that the value of the real estate exceeds theloan balance and that the Partnership will not be required to satisfy thisguarantee.

 

The Partnership has entered into agreements, subject to the completionof due diligence requirements, resolution of certain contingencies andcompletion of customary closing conditions, for the future acquisition of landtotaling $13.8 million. The acquisitions are scheduled to close periodicallythrough 2004 and will be paid for by cash.

 

The Partnership renewed all of its major insurance policies in 2003.These policies include coverage for acts of terrorism for its properties. ThePartnership believes that this insurance provides adequate coverage againstnormal insurance risks and that any loss experienced would not have asignificant impact on the Partnership’s liquidity, financial position, orresults of operations.

 

Broadband Office, Inc. and Official Committee of Unsecured Creditors ofBroadband Office, Inc. recently filed a complaint against a group of realestate investment trusts and real estate operating companies and certainaffiliated entities and individuals in connection with the formation andmanagement of Broadband Office. Among the defendants are the General Partner,the Partnership and Mr. Dennis Oklak, one of the General Partner’s executiveofficers. The complaint alleges various breaches of purported fiduciary dutiesby the defendants, seeks recharacterization or equitable subordination of debt,seeks recovery of alleged avoidable transfers, appears to seek to hold themliable for, among other things, the debt of Broadband Office under alter-ego,veil-piercing and partnership theories, and seeks other relief under othertheories. The complaint seeks aggregate damages in excess of $300 million fromall of the defendants. The Partnership

 

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believes that it has meritorious defenses to the plaintiff’sallegations and intends to vigorously defend this litigation. Due to theinherent uncertainties of the litigation process and the judicial system, thePartnership is not able to predict the outcome of this litigation. If thislitigation is not resolved in the Partnership’s favor, it could have a materialadverse effect on its business, financial condition and results of operations.

 

The Partnership is subject to various legal proceedings and claims thatarise in the ordinary course of business. In the opinion of management, theamount of any ultimate liability with respect to these actions will notmaterially affect the Partnership’s consolidated financial statements orresults of operations.

 

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| **DUKE REALTY LIMITED PARTNERSHIP**           |   | **Schedule 3** |
|-----------------------------------------------|--------|----------------|
| **REAL ESTATE AND  ACCUMULATED DEPRECIATION** |   |           |
| **DECEMBER 31, 2003**                         |   |           |
| **(IN THOUSANDS)**                            |   |           |

 
| **Development**                 |   | **Name**                       |                | **Building  Type** |   | **Encumbrances** |   | **Initial  Cost** |   | **Cost  Capitalized  Subsequent to  Development** |   | **Gross Book  Value 12/31/03** |   | **Accumulated  Depreciation (1)** |   | **Year  Constructed** |   | **Year  Acquired** |   |
|---------------------------------|--------|--------------------------------|---------------------|--------------------|--------|------------------|--------|-------------------|--------|---------------------------------------------------|--------|--------------------------------|--------|-----------------------------------|--------|-----------------------|--------|--------------------|--------|
| **Land**                        |   | **Buildings**                  | **to  Acquisition** | **Land/Land  Imp** |   | **Bldgs/TI**     |   | **Total**         |
|                            |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **ALPHARETTA, GEORGIA**         |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Brookside Office Park           |   | 3925 Brookside Parkway         |                | Office             |   |             |   | 1,269             |   | 14,749                                            |   | 7                              |   | 1,269                             |   | 14,755                |   | 16,025             |   | 1,666 |   | 1998 |   | 1999 |   |
| Brookside Office Park           |   | 3625 Brookside Parkway         |                | Office             |   |             |   | 1,625             |   | 11,070                                            |   | 2,639                          |   | 1,625                             |   | 13,709                |   | 15,334             |   | 2,665 |   | 1999 |   | 1999 |   |
| Brookside Office Park           |   | Radiant II                     |                | Office             |   |             |   | 831               |   | 7,294                                             |   | 115                            |   | 831                               |   | 7,409                 |   | 8,240              |   | 518 |   | 2000 |   | 2000 |   |
| Brookside Office Park           |   | Brookside II                   |                | Office             |   |             |   | 1,381             |   | 12,278                                            |   | 1,060                          |   | 1,381                             |   | 13,338                |   | 14,720             |   | 1,130 |   | 2000 |   | 2001 |   |
| Hembree Crest                   |   | 11800 Wills Road               |                | Industrial         |   |             |   | 304               |   | 2,152                                             |   | 275                            |   | 304                               |   | 2,427                 |   | 2,731              |   | 357 |   | 1987 |   | 1999 |   |
| Hembree Crest                   |   | 11810 Wills Road               |                | Industrial         |   |             |   | 296               |   | 2,260                                             |   | 240                            |   | 296                               |   | 2,500                 |   | 2,796              |   | 407 |   | 1987 |   | 1999 |   |
| Hembree Crest                   |   | 11820 Wills Road               |                | Industrial         |   |             |   | 488               |   | 2,285                                             |   | 872                            |   | 488                               |   | 3,157                 |   | 3,645              |   | 352 |   | 1987 |   | 1999 |   |
| Hembree Crest                   |   | 11415 Old Roswell Road         |                | Industrial         |   |             |   | 648               |   | 2,463                                             |   | 1,039                          |   | 648                               |   | 3,502                 |   | 4,150              |   | 599 |   | 1991 |   | 1999 |   |
| Hembree Park                    |   | 1750 Founders                  |                | Industrial         |   |             |   | 1,936             |   | 7,794                                             |   | 282                            |   | 1,936                             |   | 8,076                 |   | 10,012             |   | 1,640 |   | 1999 |   | 2000 |   |
| Hembree Park                    |   | NMeadow SC II @ Founders       |                | Industrial         |   |             |   | 1,369             |   | 3,620                                             |   | 985                            |   | 1,369                             |   | 4,605                 |   | 5,974              |   | 275 |   | 2001 |   | 2001 |   |
| North Meadow                    |   | 1350 Northmeadow Parkway       |                | Industrial         |   |             |   | 672               |   | 3,658                                             |   | 260                            |   | 672                               |   | 3,918                 |   | 4,590              |   | 559 |   | 1994 |   | 1999 |   |
| North Meadow                    |   | 11835 Alpharetta Highway       |                | Retail             |   |             |   | 524               |   | 2,869                                             |   | 40                             |   | 524                               |   | 2,909                 |   | 3,433              |   | 321 |   | 1994 |   | 1999 |   |
| Northwinds Pointe               |   | 2550 Northwinds Parkway        |                | Office             |   |             |   | 2,271             |   | 20,070                                            |   | 351                            |   | 2,271                             |   | 20,421                |   | 22,692             |   | 2,319 |   | 1998 |   | 1999 |   |
| Ridgeland                       |   | 1320 Ridgeland Pkwy            |                | Industrial         |   |             |   | 998               |   | 5,890                                             |   | 37                             |   | 998                               |   | 5,927                 |   | 6,924              |   | 656 |   | 1999 |   | 1999 |   |
| Ridgeland                       |   | Ridgeland Business Dist I      |                | Industrial         |   |             |   | 488               |   | 2,966                                             |   | 1,346                          |   | 488                               |   | 4,312                 |   | 4,801              |   | 1,398 |   | 1999 |   | 1999 |   |
| Ridgeland                       |   | Ridgeland Business Dist. II    |                | Industrial         |   |             |   | 579               |   | 2,536                                             |   | 28                             |   | 579                               |   | 2,564                 |   | 3,143              |   | 448 |   | 1999 |   | 2000 |   |
| Windward                        |   | 800 North Point Parkway        |                | Office             |   |             |   | 1,250             |   | 18,274                                            |   | —                         |   | 1,250                             |   | 18,274                |   | 19,524             |   | 392 |   | 1991 |   | 2003 |   |
| Windward                        |   | 900 North Point Parkway        |                | Office             |   |             |   | 1,250             |   | 13,842                                            |   | —                         |   | 1,250                             |   | 13,842                |   | 15,092             |   | 300 |   | 1991 |   | 2003 |   |
|                            |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **ANTIOCH, TENNESSEE**          |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Jackson Business Center         |   | Keebler                        |                | Industrial         |   |             |   | 307               |   | 1,305                                             |   | 20                             |   | 307                               |   | 1,325                 |   | 1,632              |   | 282 |   | 1985 |   | 1995 |   |
|                            |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **ARLINGTON HEIGHTS, ILLINOIS** |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Arlington Business Park         |   | Atrium II                      |                | Office             |   |             |   | 776               |   | 7,230                                             |   | 1,041                          |   | 776                               |   | 8,272                 |   | 9,047              |   | 1,395 |   | 1986 |   | 1998 |   |
|                            |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **ATLANTA, GEORGIA**            |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Druid Chase                     |   | 6 W. Druid Hills Drive         |                | Office             |   |             |   | 473               |   | 6,758                                             |   | 1,469                          |   | 473                               |   | 8,227                 |   | 8,700              |   | 901 |   | 1968 |   | 1999 |   |
| Druid Chase                     |   | 2801 Buford Highway            |                | Office             |   |             |   | 794               |   | 9,905                                             |   | 1,572                          |   | 794                               |   | 11,477                |   | 12,271             |   | 1,431 |   | 1977 |   | 1999 |   |
| Druid Chase                     |   | 1190 W. Druid Hills Drive      |                | Office             |   |             |   | 689               |   | 6,631                                             |   | 784                            |   | 689                               |   | 7,416                 |   | 8,105              |   | 790 |   | 1980 |   | 1999 |   |
| Druid Chase                     |   | 2071 N. Druid Hills Drive      |                | Retail             |   |             |   | 98                |   | 321                                               |   | 0                              |   | 98                                |   | 321                   |   | 419                |   | 36 |   | 1968 |   | 1999 |   |
| Gwinnett Park                   |   | Gwinnett Park Land             |                | Grounds            |   |             |   |              |   |                                              |   | 30                             |   | 30                                |   | —                |   | 30                 |   | 2 |   |   |   | 1999 |   |
|                            |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **AURORA, ILLINOIS**            |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Meridian Business Campus        |   | 535 Exchange                   |                | Industrial         |   |             |   | 386               |   | 925                                               |   | 64                             |   | 386                               |   | 989                   |   | 1,374              |   | 140 |   | 1984 |   | 1999 |   |
| Meridian Business Campus        |   | 515-525 North Enterprise       |                | Industrial         |   |             |   | 342               |   | 1,686                                             |   | 120                            |   | 342                               |   | 1,805                 |   | 2,147              |   | 286 |   | 1984 |   | 1999 |   |
| Meridian Business Campus        |   | 615 Enterprise                 |                | Industrial         |   |             |   | 468               |   | 2,824                                             |   | 527                            |   | 468                               |   | 3,351                 |   | 3,819              |   | 424 |   | 1984 |   | 1999 |   |
| Meridian Business Campus        |   | 3615 Exchange                  |                | Industrial         |   |             |   | 410               |   | 1,610                                             |   | 59                             |   | 410                               |   | 1,669                 |   | 2,079              |   | 242 |   | 1986 |   | 1999 |   |
| Meridian Business Campus        |   | 4000 Sussex                    |                | Industrial         |   |             |   | 417               |   | 1,946                                             |   | 32                             |   | 417                               |   | 1,977                 |   | 2,395              |   | 279 |   | 1990 |   | 1999 |   |
| Meridian Business Campus        |   | 3737 East Exchange             |                | Industrial         |   |             |   | 598               |   | 2,552                                             |   | 27                             |   | 598                               |   | 2,579                 |   | 3,177              |   | 362 |   | 1985 |   | 1999 |   |
| Meridian Business Campus        |   | 444 North Commerce             |                | Industrial         |   |             |   | 722               |   | 5,443                                             |   | 411                            |   | 722                               |   | 5,855                 |   | 6,577              |   | 829 |   | 1985 |   | 1999 |   |
| Meridian Business Campus        |   | Meridian I                     |                | Industrial         |   |             |   | 1,150             |   | 6,703                                             |   | 148                            |   | 1,150                             |   | 6,852                 |   | 8,001              |   | 1,425 |   | 1999 |   | 2000 |   |
| Meridian Business Campus        |   | Meridian II                    |                | Industrial         |   |             |   | 567               |   | 184                                               |   | 1,701                          |   | 567                               |   | 1,885                 |   | 2,451              |   | 26 |   | 2001 |   | 2001 |   |
|                            |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **BEACHWOOD, OHIO**             |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Corporate Exchange              |   | One Corporate Exchange         |                | Office             |   | 5,610            |   | 1,287             |   | 8,764                                             |   | 1,013                          |   | 1,287                             |   | 9,777                 |   | 11,064             |   | 2,001 |   | 1989 |   | 1996 |   |
| Corporate Place                 |   | Corporate Place                |                | Office             |   |             |   | 1,161             |   | 7,872                                             |   | 686                            |   | 1,163                             |   | 8,556                 |   | 9,719              |   | 1,611 |   | 1988 |   | 1996 |   |
|                            |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **BLOOMINGTON, MINNESOTA**      |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Alpha Buildings                 |   | Alpha Business Ctr I&II    |                | Office             |   |             |   | 280               |   | 1,624                                             |   | 271                            |   | 280                               |   | 1,895                 |   | 2,175              |   | 290 |   | 1980 |   | 1999 |   |
| Alpha Buildings                 |   | Alpha Business Ctr  III&IV |                | Industrial         |   |             |   | 341               |   | 1,973                                             |   | 198                            |   | 341                               |   | 2,171                 |   | 2,512              |   | 312 |   | 1980 |   | 1999 |   |
| Alpha Buildings                 |   | Alpha Business Ctr V           |                | Industrial         |   |             |   | 537               |   | 3,107                                             |   | 183                            |   | 538                               |   | 3,290                 |   | 3,827              |   | 422 |   | 1980 |   | 1999 |   |
| Bloomington Industrial Center   |   | Bloomington Industrial  Center |                | Industrial         |   | 1,366            |   | 621               |   | 3,668                                             |   | 770                            |   | 621                               |   | 4,438                 |   | 5,059              |   | 1,016 |   | 1963 |   | 1997 |   |
| Hampshire Dist. Center          |   | Hampshire Dist Center North    |                | Industrial         |   | 2,049            |   | 779               |   | 4,506                                             |   | 130                            |   | 779                               |   | 4,636                 |   | 5,415              |   | 699 |   | 1979 |   | 1997 |   |
| Hampshire Dist. Center          |   | Hampshire Dist Center South    |                | Industrial         |   | 2,453            |   | 901               |   | 5,239                                             |   | 303                            |   | 901                               |   | 5,541                 |   | 6,443              |   | 917 |   | 1979 |   | 1997 |   |
| Hampshire Tech Center           |   | Hampshire Tech Center          |                | Industrial         |   |             |   | 2,124             |   | 13,123                                            |   | 773                            |   | 2,223                             |   | 13,797                |   | 16,020             |   | 2,416 |   | 1998 |   | 1998 |   |
| Lyndale Commons                 |   | Lyndale Commons I              |                | Industrial         |   |             |   | 247               |   | 1,449                                             |   | 134                            |   | 247                               |   | 1,583                 |   | 1,830              |   | 286 |   | 1981 |   | 1998 |   |
| Lyndale Commons                 |   | Lyndale Commons II             |                | Industrial         |   |             |   | 181               |   | 1,056                                             |   | 251                            |   | 183                               |   | 1,305                 |   | 1,488              |   | 261 |   | 1985 |   | 1998 |   |
| Norman Center                   |   | Norman Center 4                |                | Office             |   |             |   | 562               |   | 3,276                                             |   | 247                            |   | 579                               |   | 3,507                 |   | 4,085              |   | 547 |   | 1967 |   | 1998 |   |
| Norman Center Plaza             |   | Norman Pointe I                |                | Office             |   |             |   | 3,660             |   | 28,292                                            |   | 1,895                          |   | 3,673                             |   | 30,174                |   | 33,847             |   | 2,346 |   | 2000 |   | 2000 |   |
|                            |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **BLUE ASH, OHIO**              |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Alliance Woods                  |   | McAuley Place                  |                | Office             |   |             |   | 2,331             |   | 18,677                                            |   | 978                            |   | 2,331                             |   | 19,656                |   | 21,986             |   | 1,371 |   | 2000 |   | 2001 |   |

 

59

----

 
| **Development**              |   | **Name**                        |                | **Building  Type** |   | **Encumbrances** |   | **Initial  Cost** |   | **Cost  Capitalized  Subsequent to  Development** |   | **Gross Book  Value 12/31/03** |   | **Accumulated  Depreciation (1)** |   | **Year  Constructed** |   | **Year  Acquired** |   |
|------------------------------|--------|---------------------------------|---------------------|--------------------|--------|------------------|--------|-------------------|--------|---------------------------------------------------|--------|--------------------------------|--------|-----------------------------------|--------|-----------------------|--------|--------------------|--------|
| **Land**                     |   | **Buildings**                   | **to  Acquisition** | **Land/Land  Imp** |   | **Bldgs/TI**     |   | **Total**         |
| Cornell Commerce Center      |   | Cornell Commerce Center         |                | Industrial         |   |             |   | 495               |   | 4,811                                             |   | 242                            |   | 495                               |   | 5,052                 |   | 5,548              |   | 1,038 |   | 1989 |   | 1996 |   |
| Creek Road                   |   | Creek Road Bldg 1               |                | Industrial         |   |             |   | 103               |   | 833                                               |   | 59                             |   | 103                               |   | 893                   |   | 995                |   | 158 |   | 1971 |   | 1996 |   |
| Creek Road                   |   | Creek Road Bldg 2               |                | Industrial         |   |             |   | 132               |   | 1,155                                             |   | 79                             |   | 132                               |   | 1,234                 |   | 1,365              |   | 223 |   | 1971 |   | 1996 |   |
| Huntington Bank Building     |   | Huntington Bank Building        |                | Office             |   |             |   | 175               |   | 241                                               |   | 0                              |   | 175                               |   | 241                   |   | 416                |   | 43 |   | 1986 |   | 1996 |   |
| Lake Forest/Westlake         |   | Lake Forest Place               |                | Office             |   |             |   | 1,953             |   | 20,289                                            |   | 1,853                          |   | 1,953                             |   | 22,142                |   | 24,095             |   | 4,596 |   | 1985 |   | 1996 |   |
| Lake Forest/Westlake         |   | Westlake Center                 |                | Office             |   |             |   | 2,459             |   | 16,959                                            |   | 1,588                          |   | 2,459                             |   | 18,547                |   | 21,005             |   | 3,649 |   | 1981 |   | 1996 |   |
|                         |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **BOLINGBROOK, ILLINOIS**    |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Bolingbrook (ComEd)          |   | 555 Joliet Road                 |                | Industrial         |   |             |   | 2,184             |   | 9,284                                             |   | 92                             |   | 2,184                             |   | 9,376                 |   | 11,560             |   | 424 |   | 1967 |   | 2002 |   |
|                         |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **BRANDON, FLORIDA**         |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Regency Park North           |   | Regency I                       |                | Office             |   |             |   | 1,048             |   | 4,254                                             |   | 111                            |   | 1,048                             |   | 4,365                 |   | 5,413              |   | 883 |   | 2000 |   | 2000 |   |
| Regency Park North           |   | Regency II                      |                | Office             |   |             |   | 1,411             |   | 3,696                                             |   | (0                             | )      | 1,411                             |   | 3,696                 |   | 5,107              |   | 455 |   | 2001 |   | 2002 |   |
|                         |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **BRASELTON, GEORGIA**       |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Braselton                    |   | Braselton II                    |                | Industrial         |   |             |   | 1,365             |   | 9,528                                             |   | 166                            |   | 1,529                             |   | 9,530                 |   | 11,059             |   | 488 |   | 2001 |   | 2001 |   |
|                         |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **BRENTOOD, TENNESSEE**      |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Brentwood South Bus. Center  |   | 7104 Crossroads Blvd            |                | Industrial         |   |             |   | 1,065             |   | 6,011                                             |   | 479                            |   | 1,065                             |   | 6,489                 |   | 7,555              |   | 772 |   | 1987 |   | 1999 |   |
| Brentwood South Bus. Center  |   | 7106 Crossroads Blvd            |                | Industrial         |   |             |   | 1,065             |   | 2,846                                             |   | 927                            |   | 1,065                             |   | 3,773                 |   | 4,838              |   | 437 |   | 1987 |   | 1999 |   |
| Brentwood South Bus. Center  |   | 7108 Crossroads Blvd            |                | Industrial         |   |             |   | 848               |   | 4,152                                             |   | 313                            |   | 848                               |   | 4,465                 |   | 5,313              |   | 527 |   | 1989 |   | 1999 |   |
| Creekside Crossing           |   | Creekside Crossing One          |                | Office             |   |             |   | 1,900             |   | 8,485                                             |   | 415                            |   | 1,901                             |   | 8,899                 |   | 10,800             |   | 2,113 |   | 1997 |   | 1998 |   |
| Creekside Crossing           |   | Creekside Crossing Two          |                | Office             |   |             |   | 2,087             |   | 9,692                                             |   | 556                            |   | 2,087                             |   | 10,249                |   | 12,335             |   | 2,116 |   | 1999 |   | 2000 |   |
|                         |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **BROOKLYN PARK, MINNESOTA** |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| 7300 Northland Drive         |   | 7300 Northland Drive            |                | Industrial         |   |             |   | 700               |   | 6,547                                             |   | 0                              |   | 703                               |   | 6,544                 |   | 7,247              |   | 1,258 |   | 1980 |   | 1998 |   |
| Crosstown North              |   | Crosstown North Bus. Ctr. 1     |                | Industrial         |   |             |   | 835               |   | 5,480                                             |   | 1,013                          |   | 1,286                             |   | 6,042                 |   | 7,328              |   | 964 |   | 1998 |   | 1999 |   |
| Crosstown North              |   | Crosstown North Bus. Ctr. 2     |                | Industrial         |   |             |   | 449               |   | 2,970                                             |   | 368                            |   | 599                               |   | 3,188                 |   | 3,787              |   | 521 |   | 1998 |   | 1999 |   |
| Crosstown North              |   | Crosstown North Bus. Ctr. 3     |                | Industrial         |   |             |   | 758               |   | 2,753                                             |   | 142                            |   | 837                               |   | 2,815                 |   | 3,652              |   | 826 |   | 1999 |   | 1999 |   |
| Crosstown North              |   | Crosstown North Bus. Ctr. 4     |                | Industrial         |   |             |   | 2,079             |   | 8,165                                             |   | 969                            |   | 2,397                             |   | 8,816                 |   | 11,213             |   | 1,719 |   | 1999 |   | 1999 |   |
| Crosstown North              |   | Crosstown North Bus. Ctr. 5     |                | Industrial         |   |             |   | 1,079             |   | 5,615                                             |   | 212                            |   | 1,354                             |   | 5,552                 |   | 6,906              |   | 985 |   | 1999 |   | 2000 |   |
| Crosstown North              |   | Crosstown North Bus. Ctr. 6     |                | Industrial         |   |             |   | 788               |   | 3,666                                             |   | 1,410                          |   | 1,031                             |   | 4,834                 |   | 5,864              |   | 625 |   | 2000 |   | 2000 |   |
|                         |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **BURNSVILLE, MINNESOTA**    |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
|                         |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **CANAL WINCHESTER, OHIO**   |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Nifco at Canal Winchester    |   | Nifco at Canal Winchester       |                | Industrial         |   |             |   | 400               |   | 3,401                                             |   | 6                              |   | 400                               |   | 3,407                 |   | 3,807              |   | 282 |   | 2000 |   | 2000 |   |
|                         |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **CARMEL, INDIANA**          |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Hamilton Crossing            |   | Hamilton Crossing Bldg 1        |                | Industrial         |   |             |   | 835               |   | 4,915                                             |   | 1,857                          |   | 847                               |   | 6,760                 |   | 7,607              |   | 1,587 |   | 1989 |   | 1993 |   |
| Hamilton Crossing            |   | Hamilton Crossing Bldg 2        |                | Office             |   |             |   | 313               |   | 1,423                                             |   | 832                            |   | 384                               |   | 2,184                 |   | 2,568              |   | 618 |   | 1997 |   | 1997 |   |
| Hamilton Crossing            |   | Hamilton Crossing Bldg 3        |                | Office             |   |             |   | 890               |   | 10,095                                            |   | 414                            |   | 890                               |   | 10,509                |   | 11,399             |   | 1,403 |   | 2000 |   | 2000 |   |
| Hamilton Crossing            |   | Hamilton Crossing Bldg 4        |                | Office             |   |             |   | 515               |   | 6,475                                             |   | 0                              |   | 598                               |   | 6,392                 |   | 6,990              |   | 1,685 |   | 1999 |   | 1999 |   |
| Hamilton Crossing Retail     |   | Hamilton Crossing Retail  Bld 1 |                | Retail             |   |             |   | 728               |   | 6,804                                             |   | 301                            |   | 1,006                             |   | 6,827                 |   | 7,833              |   | 1,027 |   | 1999 |   | 1999 |   |
| Hamilton Crossing Retail     |   | Hampton Inn Land Lease          |                | Grounds            |   |             |   | 137               |   | —                                            |   | 72                             |   | 209                               |   | —                |   | 209                |   | 23 |   | 1999 |   |   |   |
| Hamilton Crossing Retail     |   | Max & Ermas                 |                | Grounds            |   |             |   | 167               |   | —                                            |   | (0                             | )      | 167                               |   | —                |   | 167                |   | — |   | 2000 |   |   |   |
| Meridian Technology Center   |   | Meridian Tech Center            |                | Office             |   |             |   | 600               |   | 2,695                                             |   | 352                            |   | 600                               |   | 3,047                 |   | 3,647              |   | 121 |   | 1986 |   | 2002 |   |
|                         |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **CAROL STREAM, ILLINOIS**   |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Carol Stream Business Park   |   | Carol Stream #4                 |                | Industrial         |   |             |   | 1,973             |   | 8,697                                             |   | —                         |   | 1,973                             |   | 8,697                 |   | 10,670             |   | 58 |   | 1994 |   | 2003 |   |
| Carol Stream Business Park   |   | Carol Stream #5                 |                | Industrial         |   |             |   | 4,553             |   | 7,317                                             |   | —                         |   | 4,553                             |   | 7,317                 |   | 11,870             |   | 74 |   | 1986 |   | 2003 |   |
|                         |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **CARY, NORTH CAROLINA**     |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Regency Forest               |   | 200 Regency Forest Dr.          |                | Office             |   |             |   | 1,230             |   | 13,535                                            |   | 261                            |   | 1,230                             |   | 13,796                |   | 15,026             |   | 1,571 |   | 1999 |   | 1999 |   |
| Regency Forest               |   | 100 Regency Forest Dr.          |                | Office             |   |             |   | 1,538             |   | 10,788                                            |   | 1,954                          |   | 1,618                             |   | 12,662                |   | 14,280             |   | 2,236 |   | 1997 |   | 1999 |   |
| Weston Parkway               |   | 6501 Weston Parkway             |                | Office             |   |             |   | 1,775             |   | 10,700                                            |   | 87                             |   | 1,775                             |   | 10,787                |   | 12,562             |   | 1,222 |   | 1996 |   | 1999 |   |
|                         |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **CELEBRATION, FLORIDA**     |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Celebration Business Center  |   | Celebration Business Center  I  |                | Office             |   |             |   | 1,102             |   | 4,859                                             |   | 879                            |   | 1,308                             |   | 5,533                 |   | 6,840              |   | 1,066 |   | 1997 |   | 1999 |   |
| Celebration Business Center  |   | Celebration Business Center  II |                | Office             |   |             |   | 771               |   | 3,590                                             |   | 190                            |   | 961                               |   | 3,590                 |   | 4,551              |   | 453 |   | 1997 |   | 1999 |   |
| Celebration Business Center  |   | Celebration Office Center I     |                | Office             |   |             |   | 1,382             |   | 7,957                                             |   | 14                             |   | 1,382                             |   | 7,971                 |   | 9,353              |   | 1,406 |   | 2000 |   | 2000 |   |
| Celebration Business Center  |   | Celebration Office Center  II   |                | Office             |   |             |   | 1,382             |   | 6,264                                             |   | 171                            |   | 1,382                             |   | 6,435                 |   | 7,818              |   | 454 |   | 2001 |   | 2001 |   |

 

60

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| **Development**                 |   | **Name**                    |                | **Building  Type** |   | **Encumbrances** |   | **Initial  Cost** |   | **Cost  Capitalized  Subsequent to  Development** |   | **Gross Book  Value 12/31/03** |   | **Accumulated  Depreciation (1)** |   | **Year  Constructed** |   | **Year  Acquired** |   |
|---------------------------------|--------|-----------------------------|---------------------|--------------------|--------|------------------|--------|-------------------|--------|---------------------------------------------------|--------|--------------------------------|--------|-----------------------------------|--------|-----------------------|--------|--------------------|--------|
| **Land**                        |   | **Buildings**               | **to  Acquisition** | **Land/Land  Imp** |   | **Bldgs/TI**     |   | **Total**         |
| **CHANHASSEN, MINNESOTA**       |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Chanhassen Lakes                |   | Chanhassen Lakes I          |                | Industrial         |   |             |   | 357               |   | 2,078                                             |   | 689                            |   | 370                               |   | 2,755                 |   | 3,125              |   | 576 |   | 1983 |   | 1998 |   |
| Chanhassen Lakes                |   | Chanhassen Lakes II         |                | Industrial         |   |             |   | 438               |   | 2,542                                             |   | 481                            |   | 453                               |   | 3,009                 |   | 3,461              |   | 428 |   | 1986 |   | 1998 |   |
|                            |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **CHAPEL HILL, NORTH CAROLINA** |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Governors Village               |   | Governors Village           |                | Office             |   |             |   | 515               |   | 5,669                                             |   | —                         |   | 515                               |   | 5,669                 |   | 6,184              |   | 392 |   | 2000 |   | 2001 |   |
|                            |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **CHICAGO, ILLINOIS**           |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
|                            |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **CINCINNATI, OHIO**            |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| 312 Elm                         |   | 312 Elm                     |                | Office             |   | 37,815           |   | 4,750             |   | 47,312                                            |   | 3,123                          |   | 5,428                             |   | 49,757                |   | 55,185             |   | 12,868 |   | 1992 |   | 1993 |   |
| 312 Plum                        |   | 312 Plum                    |                | Office             |   |             |   | 2,539             |   | 24,862                                            |   | 2,225                          |   | 2,590                             |   | 27,036                |   | 29,625             |   | 7,067 |   | 1987 |   | 1993 |   |
| Bank One Towers                 |   | Bank One Towers             |                | Office             |   |             |   | 4,891             |   | 38,096                                            |   | —                         |   | 4,891                             |   | 38,096                |   | 42,987             |   | 461 |   | 1989 |   | 2003 |   |
| Blue Ash Office Center          |   | Blue Ash Office Ctr VI      |                | Office             |   |             |   | 518               |   | 2,852                                             |   | 310                            |   | 518                               |   | 3,162                 |   | 3,680              |   | 516 |   | 1989 |   | 1997 |   |
| Executive Plaza                 |   | Executive Plaza I           |                | Office             |   |             |   | 728               |   | 5,547                                             |   | 404                            |   | 728                               |   | 5,952                 |   | 6,679              |   | 1,105 |   | 1980 |   | 1996 |   |
| Executive Plaza                 |   | Executive Plaza II          |                | Office             |   |             |   | 728               |   | 5,642                                             |   | 517                            |   | 728                               |   | 6,160                 |   | 6,887              |   | 1,016 |   | 1981 |   | 1996 |   |
| Executive Plaza                 |   | Executive Plaza III         |                | Office             |   |             |   | 509               |   | 5,025                                             |   | 1,143                          |   | 509                               |   | 6,167                 |   | 6,677              |   | 1,589 |   | 1998 |   | 1998 |   |
| Governors Hill                  |   | 8790 Governor’s Hill   |                | Office             |   |             |   | 400               |   | 4,796                                             |   | 635                            |   | 408                               |   | 5,422                 |   | 5,830              |   | 1,394 |   | 1985 |   | 1993 |   |
| Governors Hill                  |   | 8800 Governor’s Hill   |                | Office             |   |             |   | 225               |   | 2,309                                             |   | 23                             |   | 231                               |   | 2,326                 |   | 2,557              |   | 1,020 |   | 1985 |   | 1986 |   |
| Governors Hill                  |   | 8600 Governor’s Hill   |                | Office             |   |             |   | 1,220             |   | 19,007                                            |   | 2,043                          |   | 1,245                             |   | 21,024                |   | 22,269             |   | 5,007 |   | 1986 |   | 1993 |   |
| Iams Industrial Park            |   | Cincinnati Bell Supply      |                | Industrial         |   |             |   | 606               |   | 3,251                                             |   | 0                              |   | 606                               |   | 3,252                 |   | 3,857              |   | 311 |   | 1999 |   | 2000 |   |
| Kenwood Commons                 |   | 8230 Kenwood Commons        |                | Office             |   | 4,163            |   | 638               |   | 3,308                                             |   | 811                            |   | 638                               |   | 4,120                 |   | 4,757              |   | 2,279 |   | 1986 |   | 1986 |   |
| Kenwood Commons                 |   | 8280 Kenwood Commons        |                | Office             |   | 2,537            |   | 638               |   | 1,863                                             |   | 341                            |   | 638                               |   | 2,205                 |   | 2,842              |   | 993 |   | 1986 |   | 1986 |   |
| Kenwood Executive Center        |   | Kenwood Executive Center    |                | Office             |   |             |   | 606               |   | 4,052                                             |   | 436                            |   | 606                               |   | 4,489                 |   | 5,094              |   | 722 |   | 1981 |   | 1997 |   |
| Kenwood MOB                     |   | Kenwood MOB                 |                | Office             |   |             |   | 7,823             |   | 37                                                |   | —                         |   | 7,860                             |   | 7,860                 |   | 868                |   | 1994 |   | 1999 |   |   |   |
| One Ashview Place               |   | One Ashview Place           |                | Office             |   |             |   | 1,204             |   | 12,674                                            |   | 2,783                          |   | 1,204                             |   | 15,457                |   | 16,661             |   | 2,346 |   | 1989 |   | 1997 |   |
| Park 50                         |   | Dun & Bradstreet Bldg   |                | Office             |   |             |   | 270               |   | 2,730                                             |   | 458                            |   | 466                               |   | 2,993                 |   | 3,458              |   | 1,276 |   | 1972 |   | 1986 |   |
| Pfeiffer Place                  |   | Pfeiffer Place              |                | Office             |   |             |   | 3,608             |   | 14,988                                            |   | 880                            |   | 3,608                             |   | 15,867                |   | 19,476             |   | 1,204 |   | 2001 |   | 2001 |   |
| Pfeiffer Woods                  |   | Pfeiffer Woods              |                | Office             |   |             |   | 1,450             |   | 12,360                                            |   | 235                            |   | 1,450                             |   | 12,595                |   | 14,045             |   | 1,382 |   | 1998 |   | 1999 |   |
| Remington Office Park           |   | Remington Park Bldg A       |                | Office             |   |             |   | 560               |   | 1,472                                             |   | 199                            |   | 560                               |   | 1,671                 |   | 2,231              |   | 303 |   | 1982 |   | 1997 |   |
| Remington Office Park           |   | Remington Park Bldg B       |                | Office             |   |             |   | 560               |   | 1,563                                             |   | 353                            |   | 560                               |   | 1,916                 |   | 2,476              |   | 318 |   | 1982 |   | 1997 |   |
| Triangle Office Park            |   | Triangle Office Park        |                | Office             |   | 4,690            |   | 1,018             |   | 11,511                                            |   | 25                             |   | 1,018                             |   | 11,536                |   | 12,555             |   | 5,025 |   | 1965 |   | 1986 |   |
| World Park                      |   | World Park Bldg 5           |                | Industrial         |   |             |   | 270               |   | 3,406                                             |   | 81                             |   | 276                               |   | 3,481                 |   | 3,757              |   | 1,301 |   | 1987 |   | 1988 |   |
| World Park                      |   | World Park Bldg 6           |                | Industrial         |   |             |   | 378               |   | 3,860                                             |   | 134                            |   | 385                               |   | 3,987                 |   | 4,372              |   | 1,500 |   | 1987 |   | 1988 |   |
| World Park                      |   | World Park Bldg 7           |                | Industrial         |   |             |   | 525               |   | 4,538                                             |   | 144                            |   | 537                               |   | 4,670                 |   | 5,207              |   | 1,717 |   | 1987 |   | 1988 |   |
| Zussman Building                |   | Zussman Bldg                |                | Office             |   |             |   | 339               |   | 6,887                                             |   | 882                            |   | 346                               |   | 7,762                 |   | 8,108              |   | 3,155 |   | 1986 |   | 1993 |   |
|                            |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **COLUMBUS, OHIO**              |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Easton                          |   | Easton Way One              |                | Office             |   |             |   | 1,874             |   | 10,396                                            |   | 415                            |   | 1,874                             |   | 10,811                |   | 12,685             |   | 1,641 |   | 2000 |   | 2000 |   |
| Easton                          |   | Easton Way Two              |                | Office             |   |             |   | 2,005             |   | 10,335                                            |   | 499                            |   | 2,005                             |   | 10,834                |   | 12,839             |   | 964 |   | 2001 |   | 2001 |   |
| Easton                          |   | Easton Way Three            |                | Office             |   |             |   | 2,504             |   | 7,438                                             |   | —                         |   | 2,504                             |   | 7,438                 |   | 9,941              |   | 66 |   | 2002 |   | 2003 |   |
| Easton Oval                     |   | One Easton Oval             |                | Office             |   |             |   | 2,789             |   | 12,176                                            |   | 266                            |   | 2,789                             |   | 12,442                |   | 15,230             |   | 3,056 |   | 1998 |   | 1999 |   |
| Easton Oval                     |   | Two Easton Oval             |                | Office             |   |             |   | 2,489             |   | 16,882                                            |   | 748                            |   | 2,489                             |   | 17,630                |   | 20,119             |   | 2,473 |   | 1996 |   | 1998 |   |
| Polaris                         |   | 1000 Polaris Parkway        |                | Office             |   |             |   | 1,200             |   | 6,636                                             |   | 1,458                          |   | 1,293                             |   | 8,001                 |   | 9,294              |   | 1,178 |   | 1992 |   | 1999 |   |
| Westbelt Drive                  |   | 2190-2200 Westbelt Drive    |                | Industrial         |   |             |   | 300               |   | 1,971                                             |   | 84                             |   | 300                               |   | 2,056                 |   | 2,356              |   | 282 |   | 1986 |   | 1998 |   |
| Westbelt West                   |   | Westbelt West #1            |                | Industrial         |   |             |   | 432               |   | 4,188                                             |   | 872                            |   | 432                               |   | 5,061                 |   | 5,492              |   | 1,004 |   | 1999 |   | 1999 |   |
| Westbelt West                   |   | Westbelt West #2            |                | Industrial         |   |             |   | 509               |   | 5,246                                             |   | 323                            |   | 509                               |   | 5,568                 |   | 6,077              |   | 745 |   | 1999 |   | 2000 |   |
| Zane Trace                      |   | 3800 Zane Trace Drive       |                | Industrial         |   |             |   | 170               |   | 2,109                                             |   | 316                            |   | 170                               |   | 2,425                 |   | 2,595              |   | 527 |   | 1978 |   | 1994 |   |
| Zane Trace                      |   | 3635 Zane Trace Drive       |                | Industrial         |   |             |   | 236               |   | 1,820                                             |   | 176                            |   | 236                               |   | 1,996                 |   | 2,231              |   | 275 |   | 1980 |   | 1998 |   |
|                            |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **CREVE COUER, MISSOURI**       |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Twin Oaks Office Ctr            |   | Twin Oaks                   |                | Office             |   |             |   | 566               |   | 8,333                                             |   | 1,398                          |   | 566                               |   | 9,731                 |   | 10,297             |   | 1,536 |   | 1995 |   | 1997 |   |
|                            |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **CRYSTAL, MINNESOTA**          |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Crystal Industrial Center       |   | Crystal Industrial Center   |                | Industrial         |   |             |   | 456               |   | 2,629                                             |   | 374                            |   | 480                               |   | 2,979                 |   | 3,459              |   | 623 |   | 1974 |   | 1997 |   |
|                            |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **DAVENPORT, FLORIDA**          |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| FL Central Park North           |   | Park 27 Distribution Center |                | Industrial         |   |             |   | 1,678             |   | 6,871                                             |   | —                         |   | 1,678                             |   | 6,871                 |   | 8,548              |   | 174 |   | 2002 |   | 2002 |   |
|                            |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **DES PLAINES, ILLINOIS**       |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| 105 East Oakton                 |   | 105 East Oakton             |                | Industrial         |   |             |   | 1,132             |   | 4,290                                             |   | 370                            |   | 1,132                             |   | 4,660                 |   | 5,792              |   | 726 |   | 1974 |   | 1999 |   |
| Deckbrand Building              |   | Wolf Road Building          |                | Industrial         |   |             |   | 179               |   | 1,637                                             |   | 352                            |   | 179                               |   | 1,989                 |   | 2,168              |   | 268 |   | 1966 |   | 1998 |   |
|                            |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **DOWNERS GROVE, ILLINOIS**     |   |                        |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Executive Towers                |   | Executive Towers I          |                | Office             |   |             |   | 2,652             |   | 24,524                                            |   | 3,403                          |   | 2,652                             |   | 27,927                |   | 30,579             |   | 4,824 |   | 1983 |   | 1997 |   |

 

61

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| **Development**            |   | **Name**                        |                | **Building  Type** |   | **Encumbrances** |   | **Initial Cost** |   | **Cost  Capitalized  Subsequent to  Development** |   | **Gross Book  Value 12/31/03** |   | **Accumulated  Depreciation (1)** |   | **Year  Constructed** |   | **Year  Acquired** |   |
|----------------------------|--------|---------------------------------|---------------------|--------------------|--------|------------------|--------|------------------|--------|---------------------------------------------------|--------|--------------------------------|--------|-----------------------------------|--------|-----------------------|--------|--------------------|--------|
| **Land**                   |   | **Buildings**                   | **to  Acquisition** | **Land/Land  Imp** |   | **Bldgs/TI**     |   | **Total**        |
| Executive Towers           |   | Executive Towers II             |                | Office             |   |             |   | 3,386            |   | 31,916                                            |   | 6,524                          |   | 3,386                             |   | 38,440                |   | 41,826             |   | 7,416 |   | 1984 |   | 1997 |   |
| Executive Towers           |   | Executive Towers III            |                | Office             |   |             |   | 3,512            |   | 32,989                                            |   | 5,073                          |   | 3,512                             |   | 38,061                |   | 41,574             |   | 6,090 |   | 1987 |   | 1997 |   |
|                       |   |                            |                |               |   |             |   |             |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **DUBLIN, OHIO**           |   |                            |                |               |   |             |   |             |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Groveport                  |   | Groveport CC Common Area        |                | N/A                |   |             |   |             |   | —                                            |   | 47                             |   | —                            |   | 47                    |   | 47                 |   | 24 |   |   |   |   |   |
| Scioto Corporate Center    |   | Scioto Corporate Center         |                | Office             |   |             |   | 1,100            |   | 3,367                                             |   | 800                            |   | 1,100                             |   | 4,167                 |   | 5,267              |   | 870 |   | 1987 |   | 1996 |   |
| Tuttle Crossing            |   | Metrocenter III                 |                | Office             |   |             |   | 887              |   | 3,015                                             |   | 489                            |   | 887                               |   | 3,504                 |   | 4,390              |   | 663 |   | 1983 |   | 1996 |   |
| Tuttle Crossing            |   | Qwest (LCI                      | )                   | Office             |   |             |   | 2,618            |   | 19,002                                            |   | 960                            |   | 2,670                             |   | 19,910                |   | 22,581             |   | 5,181 |   | 1990 |   | 1993 |   |
| Tuttle Crossing            |   | Sterling 1                      |                | Office             |   |             |   | 1,494            |   | 12,907                                            |   | 413                            |   | 1,524                             |   | 13,290                |   | 14,814             |   | 3,325 |   | 1990 |   | 1993 |   |
| Tuttle Crossing            |   | 4700 Lakehurst Ct.              |                | Office             |   |             |   | 717              |   | 2,482                                             |   | 400                            |   | 717                               |   | 2,883                 |   | 3,600              |   | 886 |   | 1994 |   | 1994 |   |
| Tuttle Crossing            |   | Sterling 2                      |                | Office             |   |             |   | 605              |   | 5,902                                             |   | 81                             |   | 605                               |   | 5,983                 |   | 6,588              |   | 1,277 |   | 1995 |   | 1995 |   |
| Tuttle Crossing            |   | John Alden Life Ins.            |                | Office             |   |             |   | 1,066            |   | 7,753                                             |   | 219                            |   | 1,066                             |   | 7,972                 |   | 9,038              |   | 1,689 |   | 1995 |   | 1995 |   |
| Tuttle Crossing            |   | 5555 Glendon Court              |                | Office             |   |             |   | 1,600            |   | 10,933                                            |   | 1,122                          |   | 1,767                             |   | 11,889                |   | 13,655             |   | 4,975 |   | 1995 |   | 1995 |   |
| Tuttle Crossing            |   | Sterling 3                      |                | Office             |   |             |   | 1,601            |   | 8,768                                             |   | 71                             |   | 1,601                             |   | 8,839                 |   | 10,440             |   | 2,596 |   | 1996 |   | 1996 |   |
| Tuttle Crossing            |   | Compmanagement                  |                | Office             |   |             |   | 867              |   | 4,437                                             |   | 545                            |   | 867                               |   | 4,982                 |   | 5,849              |   | 1,017 |   | 1997 |   | 1997 |   |
| Tuttle Crossing            |   | Sterling 4                      |                | Office             |   |             |   | 483              |   | 9,399                                             |   | 892                            |   | 483                               |   | 10,291                |   | 10,774             |   | 2,019 |   | 1998 |   | 1998 |   |
| Tuttle Crossing            |   | Xerox Bldg-5555 Parkcenter  Cir |                | Office             |   |             |   | 1,580            |   | 9,406                                             |   | 560                            |   | 1,580                             |   | 9,966                 |   | 11,546             |   | 2,486 |   | 1992 |   | 1994 |   |
| Tuttle Crossing            |   | Parkwood Place                  |                | Office             |   |             |   | 1,690            |   | 11,637                                            |   | 895                            |   | 1,690                             |   | 12,533                |   | 14,222             |   | 2,860 |   | 1997 |   | 1997 |   |
| Tuttle Crossing            |   | Nationwide                      |                | Office             |   |             |   | 4,815            |   | 19,322                                            |   | 72                             |   | 4,815                             |   | 19,394                |   | 24,209             |   | 5,648 |   | 1996 |   | 1996 |   |
| Tuttle Crossing            |   | Emerald II                      |                | Office             |   |             |   | 495              |   | 3,181                                             |   | 0                              |   | 495                               |   | 3,181                 |   | 3,676              |   | 680 |   | 1998 |   | 1998 |   |
| Tuttle Crossing            |   | Atrium II, Phase I              |                | Office             |   |             |   | 1,649            |   | 10,077                                            |   | 175                            |   | 1,649                             |   | 10,252                |   | 11,901             |   | 1,814 |   | 1997 |   | 1998 |   |
| Tuttle Crossing            |   | Atrium II, Phase II             |                | Office             |   |             |   | 1,597            |   | 10,350                                            |   | 922                            |   | 1,597                             |   | 11,272                |   | 12,869             |   | 3,406 |   | 1998 |   | 1999 |   |
| Tuttle Crossing            |   | Blazer I                        |                | Office             |   |             |   | 904              |   | 5,759                                             |   | 580                            |   | 904                               |   | 6,339                 |   | 7,243              |   | 1,854 |   | 1999 |   | 1999 |   |
| Tuttle Crossing            |   | Parkwood II                     |                | Office             |   |             |   | 1,848            |   | 14,091                                            |   | 56                             |   | 1,848                             |   | 14,148                |   | 15,996             |   | 2,134 |   | 2000 |   | 2000 |   |
| Tuttle Crossing            |   | Blazer II                       |                | Office             |   |             |   | 1,016            |   | 6,933                                             |   | 139                            |   | 1,016                             |   | 7,073                 |   | 8,089              |   | 1,053 |   | 2000 |   | 2000 |   |
| Tuttle Crossing            |   | Emerald III                     |                | Office             |   |             |   | 1,685            |   | 9,907                                             |   | 120                            |   | 1,694                             |   | 10,019                |   | 11,712             |   | 949 |   | 2001 |   | 2001 |   |
|                       |   |                            |                |               |   |             |   |             |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **DULUTH, GEORGIA**        |   |                            |                |               |   |             |   |             |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Breckinridge               |   | 2825 Breckinridge Blvd          |                | Industrial         |   |             |   | 317              |   | 3,634                                             |   | 174                            |   | 317                               |   | 3,807                 |   | 4,125              |   | 474 |   | 1986 |   | 1999 |   |
| Breckinridge               |   | 2875 Breckinridge Blvd          |                | Industrial         |   |             |   | 476              |   | 4,809                                             |   | 25                             |   | 476                               |   | 4,834                 |   | 5,310              |   | 538 |   | 1986 |   | 1999 |   |
| Breckinridge               |   | 2885 Breckinridge Blvd          |                | Industrial         |   |             |   | 487              |   | 6,910                                             |   | 561                            |   | 487                               |   | 7,471                 |   | 7,957              |   | 1,039 |   | 1997 |   | 1999 |   |
| Business Park At Sugarloaf |   | 2775 Premiere Parkway           |                | Industrial         |   |             |   | 560              |   | 4,709                                             |   | 11                             |   | 560                               |   | 4,720                 |   | 5,280              |   | 527 |   | 1997 |   | 1999 |   |
| Business Park At Sugarloaf |   | 3079 Premiere Parkway           |                | Industrial         |   |             |   | 776              |   | 6,538                                             |   | 406                            |   | 776                               |   | 6,945                 |   | 7,720              |   | 831 |   | 1998 |   | 1999 |   |
| Business Park At Sugarloaf |   | Sugarloaf Office I              |                | Industrial         |   |             |   | 1,042            |   | 8,650                                             |   | 662                            |   | 1,042                             |   | 9,311                 |   | 10,354             |   | 1,063 |   | 1998 |   | 1999 |   |
| Business Park At Sugarloaf |   | Sugarloaf Office II             |                | Industrial         |   |             |   | 972              |   | 4,066                                             |   | 33                             |   | 972                               |   | 4,099                 |   | 5,071              |   | 130 |   | 1999 |   | 2002 |   |
| Business Park At Sugarloaf |   | Sugarloaf Office III            |                | Industrial         |   |             |   | 696              |   | 3,773                                             |   | 29                             |   | 696                               |   | 3,801                 |   | 4,497              |   | 112 |   | 1999 |   | 2002 |   |
| Business Park At Sugarloaf |   | Sugarloaf Office IV             |                | Industrial         |   |             |   | 623              |   | 3,938                                             |   | 0                              |   | 623                               |   | 3,938                 |   | 4,561              |   | 853 |   | 2000 |   | 2000 |   |
| Business Park At Sugarloaf |   | Sugarloaf Office V              |                | Industrial         |   |             |   | 744              |   | 3,980                                             |   | 374                            |   | 744                               |   | 4,354                 |   | 5,098              |   | 675 |   | 2001 |   | 2001 |   |
| Business Park At Sugarloaf |   | 2850 Premiere Parkway           |                | Industrial         |   |             |   | 621              |   | 4,592                                             |   | 0                              |   | 621                               |   | 4,592                 |   | 5,213              |   | 134 |   | 1997 |   | 2002 |   |
| Business Park At Sugarloaf |   | 2855 Premiere Parkway           |                | Industrial         |   |             |   | 765              |   | 3,986                                             |   | 186                            |   | 765                               |   | 4,173                 |   | 4,938              |   | 608 |   | 1999 |   | 1999 |   |
| Business Park At Sugarloaf |   | 6655 Sugarloaf                  |                | Industrial         |   |             |   | 1,651            |   | 6,474                                             |   | 4                              |   | 1,651                             |   | 6,478                 |   | 8,129              |   | 336 |   | 1998 |   | 2001 |   |
| Crestwood Pointe           |   | 3805 Crestwood Parkway          |                | Office             |   |             |   | 877              |   | 15,197                                            |   | 530                            |   | 877                               |   | 15,728                |   | 16,604             |   | 1,823 |   | 1997 |   | 1999 |   |
| Crestwood Pointe           |   | 3885 Crestwood Parkway          |                | Office             |   |             |   | 878              |   | 14,187                                            |   | 920                            |   | 878                               |   | 15,107                |   | 15,985             |   | 2,224 |   | 1998 |   | 1999 |   |
| Hampton Green              |   | Hampton Green Off I             |                | Office             |   |             |   | 1,388            |   | 12,400                                            |   | 224                            |   | 1,388                             |   | 12,625                |   | 14,012             |   | 1,268 |   | 2000 |   | 2000 |   |
| River Green                |   | 3450 River Green Court          |                | Industrial         |   |             |   | 194              |   | 2,197                                             |   | 195                            |   | 194                               |   | 2,392                 |   | 2,586              |   | 356 |   | 1989 |   | 1999 |   |
|                       |   |                            |                |               |   |             |   |             |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **EAGAN, MINNESOTA**       |   |                            |                |               |   |             |   |             |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Apollo Distribution Center |   | Apollo Industrial Ctr I         |                | Industrial         |   |             |   | 866              |   | 4,992                                             |   | 1,031                          |   | 882                               |   | 6,007                 |   | 6,889              |   | 974 |   | 1997 |   | 1997 |   |
| Apollo Distribution Center |   | Apollo Industrial Ctr II        |                | Industrial         |   |             |   | 474              |   | 3,156                                             |   | 0                              |   | 474                               |   | 3,156                 |   | 3,629              |   | 604 |   | 2000 |   | 2000 |   |
| Apollo Distribution Center |   | Apollo Industrial Ctr III       |                | Industrial         |   |             |   | 1,432            |   | 6,933                                             |   | (0                             | )      | 1,432                             |   | 6,933                 |   | 8,365              |   | 731 |   | 2000 |   | 2000 |   |
| Eagandale Crossing         |   | Eagandale Crossing              |                | Industrial         |   |             |   | 974              |   | 4,846                                             |   | 82                             |   | 987                               |   | 4,914                 |   | 5,901              |   | 1,939 |   | 1998 |   | 1998 |   |
| Eagandale Tech Center      |   | Eagandale Tech Center           |                | Industrial         |   |             |   | 987              |   | 5,731                                             |   | 535                            |   | 997                               |   | 6,256                 |   | 7,254              |   | 1,077 |   | 1998 |   | 1998 |   |
| Lunar Pointe               |   | Lunar Pointe                    |                | Industrial         |   |             |   | 982              |   | 4,462                                             |   | 245                            |   | 982                               |   | 4,707                 |   | 5,689              |   | 13 |   | 2001 |   | 2001 |   |
| Silverbell Commons         |   | Silverbell Commons              |                | Industrial         |   |             |   | 1,807            |   | 6,826                                             |   | 520                            |   | 1,807                             |   | 7,346                 |   | 9,153              |   | 1,155 |   | 1999 |   | 1999 |   |
| Trapp Road                 |   | Trapp Road Commerce I           |                | Industrial         |   |             |   | 671              |   | 3,906                                             |   | 351                            |   | 700                               |   | 4,228                 |   | 4,927              |   | 749 |   | 1996 |   | 1998 |   |
| Trapp Road                 |   | Trapp Road Commerce II          |                | Industrial         |   |             |   | 1,250            |   | 7,043                                             |   | 312                            |   | 1,266                             |   | 7,339                 |   | 8,605              |   | 1,122 |   | 1998 |   | 1998 |   |
|                       |   |                            |                |               |   |             |   |             |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **EARTH CITY, MISSOURI**   |   |                            |                |               |   |             |   |             |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Earth City                 |   | 3322 NGIC                       |                | Office             |   | 6,099            |   | 2,615            |   | 10,927                                            |   | 1,226                          |   | 2,615                             |   | 12,153                |   | 14,769             |   | 2,117 |   | 1987 |   | 1997 |   |
| Earth City                 |   | Corporate Center, Earth  City   |                | Industrial         |   |             |   | 783              |   | 4,543                                             |   | 715                            |   | 783                               |   | 5,258                 |   | 6,040              |   | 1,025 |   | 2000 |   | 2000 |   |
|                       |   |                            |                |               |   |             |   |             |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **EAST POINTE, GEORGIA**   |   |                            |                |               |   |             |   |             |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Camp Creek                 |   | Camp Creek Bldg 1400            |                | Industrial         |   |             |   | 561              |   | 3,418                                             |   | 128                            |   | 561                               |   | 3,546                 |   | 4,107              |   | 299 |   | 1988 |   | 2001 |   |
| Camp Creek                 |   | Camp Creek Bldg 1800            |                | Industrial         |   |             |   | 462              |   | 3,034                                             |   | (0                             | )      | 462                               |   | 3,034                 |   | 3,496              |   | 384 |   | 1989 |   | 2001 |   |

 

62

----

 
| **Development**             |   | **Name**                       |                | **Building  Type** |   | **Encumbrances** |   | **Initial  Cost** |   | **Cost  Capitalized  Subsequent to  Development** |   | **Gross Book  Value 12/31/03** |   | **Accumulated  Depreciation (1)** |   | **Year  Constructed** |   | **Year  Acquired** |   |
|-----------------------------|--------|--------------------------------|---------------------|--------------------|--------|------------------|--------|-------------------|--------|---------------------------------------------------|--------|--------------------------------|--------|-----------------------------------|--------|-----------------------|--------|--------------------|--------|
| **Land**                    |   | **Buildings**                  | **to  Acquisition** | **Land/Land  Imp** |   | **Bldgs/TI**     |   | **Total**         |
| Camp Creek                  |   | Camp Creek Bldg 2000           |                | Industrial         |   |             |   | 395               |   | 2,301                                             |   | 17                             |   | 395                               |   | 2,318                 |   | 2,713              |   | 173 |   | 1989 |   | 2001 |   |
| Camp Creek                  |   | Camp Creek Bldg 2400           |                | Industrial         |   |             |   | 296               |   | 1,851                                             |   | 47                             |   | 296                               |   | 1,898                 |   | 2,194              |   | 195 |   | 1988 |   | 2001 |   |
| Camp Creek                  |   | Camp Creek Bldg 2600           |                | Industrial         |   |             |   | 364               |   | 2,356                                             |   | 21                             |   | 364                               |   | 2,377                 |   | 2,741              |   | 232 |   | 1990 |   | 2001 |   |
|                        |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **EDEN PRAIRIE, MINNESOTA** |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Edenvale Executive Center   |   | Edenvale Executive Center      |                | Industrial         |   |             |   | 1,184             |   | 6,755                                             |   | 675                            |   | 1,185                             |   | 7,430                 |   | 8,614              |   | 959 |   | 1987 |   | 1999 |   |
| Golden Triangle Tech Center |   | Golden Triangle Tech Ctr       |                | Industrial         |   |             |   | 1,446             |   | 8,305                                             |   | 284                            |   | 1,458                             |   | 8,577                 |   | 10,035             |   | 1,183 |   | 1997 |   | 1998 |   |
| Valley Gate/Green           |   | Valley Gate North              |                | Industrial         |   |             |   | 548               |   | 3,145                                             |   | 574                            |   | 556                               |   | 3,711                 |   | 4,267              |   | 634 |   | 1986 |   | 1999 |   |
|                        |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **EDINA, MINNESOTA**        |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Edina Interchange           |   | Edina Interchange I            |                | Industrial         |   | 1,471            |   | 630               |   | 3,660                                             |   | 373                            |   | 630                               |   | 4,033                 |   | 4,663              |   | 724 |   | 1995 |   | 1997 |   |
| Edina Interchange           |   | Edina Interchange II           |                | Industrial         |   | 949              |   | 432               |   | 2,512                                             |   | 65                             |   | 432                               |   | 2,577                 |   | 3,009              |   | 403 |   | 1980 |   | 1997 |   |
| Edina Interchange           |   | Edina Interchange III          |                | Industrial         |   | 1,071            |   | 487               |   | 2,833                                             |   | 71                             |   | 487                               |   | 2,904                 |   | 3,391              |   | 459 |   | 1981 |   | 1997 |   |
|                        |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **FAIRFIELD, OHIO**         |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Faifield Business Center    |   | Fairfield Bus. Ctr. D          |                | Industrial         |   |             |   | 135               |   | 1,749                                             |   | 153                            |   | 135                               |   | 1,903                 |   | 2,038              |   | 416 |   | 1990 |   | 1995 |   |
| Faifield Business Center    |   | Fairfield Bus. Ctr. E          |                | Industrial         |   |             |   | 398               |   | 2,603                                             |   | 40                             |   | 398                               |   | 2,644                 |   | 3,042              |   | 518 |   | 1990 |   | 1995 |   |
| University Moving           |   | Thunderbird Bldg 1             |                | Industrial         |   |             |   | 248               |   | 1,764                                             |   | 146                            |   | 248                               |   | 1,911                 |   | 2,159              |   | 417 |   | 1991 |   | 1995 |   |
|                        |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **FENTON, MISSOURI**        |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Fenton Interstate Buildings |   | Fenton Interstate Building  C  |                | Industrial         |   |             |   | 519               |   | 1,987                                             |   | 102                            |   | 519                               |   | 2,088                 |   | 2,608              |   | 266 |   | 1986 |   | 1999 |   |
| Fenton Interstate Buildings |   | Fenton Interstate Building  D  |                | Industrial         |   |             |   | 1,286             |   | 5,193                                             |   | 206                            |   | 1,286                             |   | 5,399                 |   | 6,685              |   | 796 |   | 1987 |   | 1999 |   |
| Fenton Interstate Buildings |   | Fenton Industrial Bldg A       |                | Industrial         |   |             |   | 603               |   | 2,631                                             |   | 0                              |   | 603                               |   | 2,632                 |   | 3,234              |   | 323 |   | 1987 |   | 2000 |   |
| Fenton Interstate Buildings |   | Fenton Industrial Bldg B       |                | Industrial         |   |             |   | 702               |   | 2,330                                             |   | 40                             |   | 702                               |   | 2,371                 |   | 3,073              |   | 244 |   | 1986 |   | 2000 |   |
| Southport                   |   | Southport II                   |                | Industrial         |   |             |   | 151               |   | 664                                               |   | 58                             |   | 151                               |   | 721                   |   | 872                |   | 117 |   | 1978 |   | 1997 |   |
| Southport                   |   | Southport Commerce Ctr         |                | Industrial         |   |             |   | 233               |   | 1,021                                             |   | 159                            |   | 233                               |   | 1,180                 |   | 1,413              |   | 198 |   | 1978 |   | 1997 |   |
|                        |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **FISHERS, INDIANA**        |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Exit 5                      |   | Exit 5 Bldg I                  |                | Industrial         |   |             |   | 833               |   | 2,705                                             |   | 101                            |   | 822                               |   | 2,817                 |   | 3,639              |   | 412 |   | 1999 |   | 1999 |   |
| Exit 5                      |   | Exit 5 Bldg. II                |                | Industrial         |   |             |   | 760               |   | 4,634                                             |   | 159                            |   | 749                               |   | 4,804                 |   | 5,553              |   | 895 |   | 1999 |   | 2000 |   |
|                        |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **FRANKLIN, TENNESSEE**     |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Aspen Grove Business Center |   | 277 Mallory Station            |                | Industrial         |   |             |   | 936               |   | 6,556                                             |   | 234                            |   | 936                               |   | 6,790                 |   | 7,727              |   | 791 |   | 1996 |   | 1999 |   |
| Aspen Grove Business Center |   | 320 Premier Court              |                | Industrial         |   |             |   | 1,151             |   | 6,539                                             |   | 373                            |   | 1,151                             |   | 6,912                 |   | 8,063              |   | 784 |   | 1996 |   | 1999 |   |
| Aspen Grove Business Center |   | 305 Seaboard Lane              |                | Industrial         |   |             |   | 970               |   | 6,336                                             |   | 566                            |   | 970                               |   | 6,902                 |   | 7,872              |   | 1,574 |   | 1998 |   | 1999 |   |
| Aspen Grove Business Center |   | Aspen Grove 4                  |                | Industrial         |   |             |   | 492               |   | 2,416                                             |   | 4                              |   | 492                               |   | 2,420                 |   | 2,912              |   | 113 |   | 2002 |   | 2002 |   |
| Aspen Grove Business Center |   | 416 Mary Lindsay Polk Dr       |                | Industrial         |   |             |   | 943               |   | 5,304                                             |   | 756                            |   | 943                               |   | 6,060                 |   | 7,003              |   | 810 |   | 1996 |   | 1999 |   |
| Aspen Grove Business Center |   | 318 Seaboard Lane Bldg 200     |                | Industrial         |   |             |   | 240               |   | 1,390                                             |   | 555                            |   | 240                               |   | 1,945                 |   | 2,185              |   | 450 |   | 1999 |   | 1999 |   |
| Aspen Grove Business Center |   | 341 Cool Springs Blvd          |                | Office             |   |             |   | 950               |   | 7,522                                             |   | 1,689                          |   | 950                               |   | 9,211                 |   | 10,161             |   | 1,569 |   | 1999 |   | 1999 |   |
| Aspen Grove Business Center |   | 318 Seaboard Lane Bldg 100     |                | Industrial         |   |             |   | 301               |   | 1,684                                             |   | 745                            |   | 301                               |   | 2,429                 |   | 2,730              |   | 716 |   | 1999 |   | 1999 |   |
| Aspen Grove Business Center |   | Aspen Grove Flex Ctr III       |                | Industrial         |   |             |   | 327               |   | 2,037                                             |   | 303                            |   | 327                               |   | 2,340                 |   | 2,667              |   | 90 |   | 2001 |   | 2001 |   |
| Aspen Grove Business Center |   | Aspen Grove Flex Ctr IV        |                | Industrial         |   |             |   | 205               |   | 1,535                                             |   | 148                            |   | 205                               |   | 1,683                 |   | 1,888              |   | 259 |   | 2001 |   | 2001 |   |
| Brentwood South Bus. Center |   | 119 Seaboard Lane              |                | Industrial         |   |             |   | 569               |   | 2,442                                             |   | 22                             |   | 569                               |   | 2,464                 |   | 3,034              |   | 274 |   | 1990 |   | 1999 |   |
| Brentwood South Bus. Center |   | 121 Seaboard Lane              |                | Industrial         |   |             |   | 445               |   | 1,936                                             |   | (0                             | )      | 445                               |   | 1,936                 |   | 2,381              |   | 216 |   | 1990 |   | 1999 |   |
| Brentwood South Bus. Center |   | 123 Seaboard Lane              |                | Industrial         |   |             |   | 489               |   | 1,248                                             |   | 415                            |   | 489                               |   | 1,663                 |   | 2,152              |   | 201 |   | 1990 |   | 1999 |   |
|                        |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **FRIDLEY, MINNESOTA**      |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| River Road                  |   | River Road Business Ctr. S.    |                | Industrial         |   | 3,415            |   | 1,083             |   | 6,400                                             |   | 549                            |   | 1,112                             |   | 6,920                 |   | 8,032              |   | 1,053 |   | 1986 |   | 1999 |   |
|                        |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **FT. LAUDERDALE, FLORIDA** |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Sawgrass                    |   | Sawgrass — Building 1     |                | Office             |   |             |   | 1,211             |   | 6,424                                             |   | 75                             |   | 1,211                             |   | 6,499                 |   | 7,710              |   | 1,439 |   | 1999 |   | 2000 |   |
| Beacon Pointe At Weston     |   | Beacon Pointe@Weston Bldg 2    |                | Office             |   |             |   | 2,183             |   | 10,830                                            |   | —                         |   | 2,183                             |   | 10,830                |   | 13,013             |   | 151 |   | 200 |   | 2003 |   |
| Beacon Pointe At Weston     |   | Beacon Pointe@Weston Bldg 3    |                | Office             |   |             |   | 2,183             |   | 11,531                                            |   | —                         |   | 2,183                             |   | 11,531                |   | 13,713             |   | 159 |   | 2001 |   | 2003 |   |
| Beacon Pointe At Weston     |   | Beacon Pointe@Weston Bldg 1    |                | Office             |   |             |   | 2,580             |   | 10,020                                            |   | —                         |   | 2,580                             |   | 10,020                |   | 12,600             |   | 137 |   | 1999 |   | 2003 |   |
| Beacon Pointe At Weston     |   | Beacon Pointe @ Weston Land    |                | Grounds            |   |             |   | —            |   | 9                                                 |   | —                         |   | —                            |   | 9                     |   | 9                  |   | — |   |   |   | 2003 |   |
|                        |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **GENEVA, IL**              |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Geneva                      |   | The Shoppes at Geneva  Commons |                | Retail             |   |             |   | 2,871             |   | 3,984                                             |   | —                         |   | 2,871                             |   | 3,984                 |   | 6,855              |   | — |   | 2003 |   | 2003 |   |
|                        |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **GLENWILLOW, OHIO**        |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Emerald Valley              |   | Emerald Valley Bldg 1          |                | Industrial         |   |             |   | 555               |   | 6,434                                             |   | 132                            |   | 556                               |   | 6,565                 |   | 7,121              |   | 705 |   | 1999 |   | 1999 |   |
| Emerald Valley              |   | Emerald Valley Bldg 2          |                | Industrial         |   |             |   | 519               |   | 5,052                                             |   | 672                            |   | 519                               |   | 5,724                 |   | 6,243              |   | 123 |   | 2001 |   | 2002 |   |

 

63

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| **Development**              |   | **Name**                      |                | **Building  Type** |   | **Encumbrances** |   | **Initial  Cost** |   | **Cost  Capitalized  Subsequent to  Development** |   | **Gross Book  Value 12/31/03** |   | **Accumulated  Depreciation (1)** |   | **Year  Constructed** |   | **Year  Acquired** |   |
|------------------------------|--------|-------------------------------|---------------------|--------------------|--------|------------------|--------|-------------------|--------|---------------------------------------------------|--------|--------------------------------|--------|-----------------------------------|--------|-----------------------|--------|--------------------|--------|
| **Land**                     |   | **Buildings**                 | **to  Acquisition** | **Land/Land  Imp** |   | **Bldgs/TI**     |   | **Total**         |
| **GOLDEN VALLEY, MINNESOTA** |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Golden Hills                 |   | Golden Hills 1                |                | Industrial         |   |             |   | 1,081             |   | 6,298                                             |   | 346                            |   | 1,105                             |   | 6,619                 |   | 7,725              |   | 969 |   | 1996 |   | 1998 |   |
| Golden Hills                 |   | Golden Hills 2                |                | Industrial         |   |             |   | 1,741             |   | 4,341                                             |   | 397                            |   | 1,742                             |   | 4,737                 |   | 6,479              |   | 1,406 |   | 1999 |   | 1999 |   |
| Golden Hills                 |   | Golden Hills 3                |                | Industrial         |   |             |   | 1,813             |   | 4,875                                             |   | 370                            |   | 1,815                             |   | 5,243                 |   | 7,058              |   | 1,326 |   | 1999 |   | 1999 |   |
| 5075 Building                |   | 5075 Building                 |                | Office             |   |             |   | 506               |   | 2,393                                             |   | 340                            |   | 539                               |   | 2,700                 |   | 3,239              |   | 449 |   | 1965 |   | 1998 |   |
| Tyrol West                   |   | Tyrol West                    |                | Office             |   |             |   | 350               |   | 2,016                                             |   | 327                            |   | 380                               |   | 2,313                 |   | 2,693              |   | 389 |   | 1968 |   | 1998 |   |
| Sandburg Industrial Center   |   | Sandburg Industrial Center    |                | Industrial         |   |             |   | 451               |   | 2,629                                             |   | 396                            |   | 451                               |   | 3,024                 |   | 3,476              |   | 577 |   | 1973 |   | 1997 |   |
|                         |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **GREENWOOD, INDIANA**       |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| South Park-Indiana           |   | South Park Bldg 1             |                | Office             |   |             |   | 287               |   | 2,577                                             |   | 380                            |   | 292                               |   | 2,952                 |   | 3,244              |   | 792 |   | 1989 |   | 1993 |   |
| South Park-Indiana           |   | South Park Bldg 2             |                | Industrial         |   |             |   | 334               |   | 3,444                                             |   | 793                            |   | 341                               |   | 4,230                 |   | 4,571              |   | 1,282 |   | 1990 |   | 1993 |   |
| South Park-Indiana           |   | South Park Bldg 3             |                | Office             |   |             |   | 208               |   | 2,390                                             |   | 673                            |   | 212                               |   | 3,059                 |   | 3,271              |   | 719 |   | 1990 |   | 1993 |   |
| South Park-Indiana           |   | Brylane Parking Lot           |                | Grounds            |   |             |   | 54                |   | —                                            |   | 3                              |   | 57                                |   | —                |   | 57                 |   | 25 |   |   |   | 1994 |   |
|                         |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **GROVE CITY, OHIO**         |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| South Pointe                 |   | South Pointe Bldg D           |                | Industrial         |   |             |   | 276               |   | 3,194                                             |   | 159                            |   | 276                               |   | 3,353                 |   | 3,629              |   | 673 |   | 1997 |   | 1997 |   |
| South Pointe                 |   | South Pointe Bldg E           |                | Industrial         |   |             |   | 279               |   | 2,466                                             |   | 754                            |   | 279                               |   | 3,220                 |   | 3,498              |   | 859 |   | 1997 |   | 1997 |   |
|                         |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **GROVEPORT, OHIO**          |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| 6600 Port Road               |   | 6600 Port Road                |                | Industrial         |   |             |   | 2,725             |   | 23,622                                            |   | 929                            |   | 2,850                             |   | 24,427                |   | 27,276             |   | 3,924 |   | 1995 |   | 1997 |   |
| Groveport Commerce Ctr       |   | Groveport Comm Ctr #2         |                | Industrial         |   |             |   | 1,049             |   | 7,633                                             |   | 1,031                          |   | 1,065                             |   | 8,648                 |   | 9,713              |   | 1,218 |   | 1999 |   | 1999 |   |
| Groveport Commerce Ctr       |   | Groveport Comm Ctr #3         |                | Industrial         |   |             |   | 510               |   | 3,896                                             |   | 539                            |   | 510                               |   | 4,434                 |   | 4,944              |   | 447 |   | 1999 |   | 2000 |   |
| Groveport Commerce Ctr       |   | Groveport Comm Ctr #4         |                | Industrial         |   |             |   | 1,114             |   | 8,717                                             |   | 29                             |   | 1,132                             |   | 8,728                 |   | 9,860              |   | 1,049 |   | 2000 |   | 2000 |   |
| Groveport Commerce Ctr       |   | Groveport Commerce Ctr.  #345 |                | Industrial         |   |             |   | 1,045             |   | 7,372                                             |   | 577                            |   | 1,045                             |   | 7,950                 |   | 8,994              |   | 843 |   | 2000 |   | 2000 |   |
|                         |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **HEBRON, KENTUCKY**         |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| KY, Southpark                |   | Ky. Southpark Bldg 4          |                | Industrial         |   |             |   | 779               |   | 3,381                                             |   | 51                             |   | 779                               |   | 3,432                 |   | 4,211              |   | 807 |   | 1994 |   | 1994 |   |
| KY, Southpark                |   | CR Services                   |                | Industrial         |   |             |   | 1,085             |   | 4,233                                             |   | 1,205                          |   | 1,085                             |   | 5,438                 |   | 6,523              |   | 1,256 |   | 1994 |   | 1994 |   |
|                         |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **HIGHLAND HILLS, OHIO**     |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Metropolitan Plaza           |   | Metropolitan Plaza            |                | Office             |   |             |   | 2,310             |   | 13,521                                            |   | —                         |   | 2,310                             |   | 13,521                |   | 15,831             |   | — |   | 2000 |   | 2003 |   |
|                         |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **HIGHLAND HEIGHTS, OHIO**   |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Avion Park                   |   | 5335 Avion Park Drive         |                | Industrial         |   |             |   | 606               |   | 2,534                                             |   | 7                              |   | 606                               |   | 2,542                 |   | 3,148              |   | 124 |   | 1994 |   | 2002 |   |
|                         |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **HOPKINS, MINNESOTA**       |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Cornerstone Business Center  |   | Cornerstone Business Center   |                | Industrial         |   | 5,716            |   | 1,469             |   | 8,482                                             |   | 237                            |   | 1,543                             |   | 8,644                 |   | 10,187             |   | 1,357 |   | 1996 |   | 1997 |   |
| Westside Business Park       |   | Westside Business Park        |                | Industrial         |   |             |   | 1,176             |   | 6,865                                             |   | 1,354                          |   | 1,170                             |   | 8,225                 |   | 9,395              |   | 1,301 |   | 1987 |   | 1997 |   |
|                         |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **INDEPENDENCE, OHIO**       |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| 6111 Oak Tree                |   | Oak Tree Place                |                | Office             |   |             |   | 703               |   | 4,687                                             |   | 416                            |   | 703                               |   | 5,103                 |   | 5,806              |   | 850 |   | 1979 |   | 1997 |   |
| Corporate Plaza              |   | Corporate Plaza I             |                | Office             |   | 8,348            |   | 2,116             |   | 14,240                                            |   | 509                            |   | 2,116                             |   | 14,750                |   | 16,865             |   | 2,893 |   | 1989 |   | 1996 |   |
| Corporate Plaza              |   | Corporate Plaza II            |                | Office             |   | 7,467            |   | 1,841             |   | 12,411                                            |   | 807                            |   | 1,841                             |   | 13,218                |   | 15,058             |   | 2,816 |   | 1991 |   | 1996 |   |
| Freedom Square               |   | Freedom Square I              |                | Office             |   |             |   | 595               |   | 4,007                                             |   | 308                            |   | 600                               |   | 4,311                 |   | 4,911              |   | 878 |   | 1980 |   | 1996 |   |
| Freedom Square               |   | Freedom Square II             |                | Office             |   | 7,081            |   | 1,746             |   | 11,813                                            |   | 641                            |   | 1,746                             |   | 12,454                |   | 14,200             |   | 2,509 |   | 1987 |   | 1996 |   |
| Freedom Square               |   | Freedom Square III            |                | Office             |   |             |   | 701               |   | 6,378                                             |   | 0                              |   | 701                               |   | 6,378                 |   | 7,079              |   | 1,291 |   | 1997 |   | 1997 |   |
| Park Center                  |   | Park Center Bldg I            |                | Office             |   |             |   | 2,193             |   | 14,027                                            |   | 556                            |   | 2,193                             |   | 14,583                |   | 16,776             |   | 3,455 |   | 1998 |   | 1998 |   |
| Park Center                  |   | Park Center Bldg II           |                | Office             |   |             |   | 2,190             |   | 13,782                                            |   | 201                            |   | 2,190                             |   | 13,982                |   | 16,173             |   | 2,935 |   | 1999 |   | 1999 |   |
| Park Center                  |   | Park Center Bldg III          |                | Office             |   |             |   | 2,190             |   | 12,891                                            |   | 1,383                          |   | 2,190                             |   | 14,274                |   | 16,464             |   | 1,899 |   | 2000 |   | 2000 |   |
|                         |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **INDIANAPOLIS, INDIANA**    |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Franklin Road Business Park  |   | Franklin Road Bus. Ctr.       |                | Industrial         |   |             |   | 594               |   | 10,775                                            |   | 408                            |   | 594                               |   | 11,183                |   | 11,778             |   | 2,750 |   | 1962 |   | 1995 |   |
| Hillsdale                    |   | Hillsdale Bldg 4              |                | Industrial         |   |             |   | 366               |   | 5,147                                             |   | 625                            |   | 366                               |   | 5,773                 |   | 6,138              |   | 1,376 |   | 1987 |   | 1993 |   |
| Hillsdale                    |   | Hillsdale Bldg 5              |                | Industrial         |   |             |   | 251               |   | 3,250                                             |   | 587                            |   | 251                               |   | 3,838                 |   | 4,089              |   | 1,027 |   | 1987 |   | 1993 |   |
| Hillsdale                    |   | Hillsdale Bldg 6              |                | Industrial         |   |             |   | 315               |   | 4,334                                             |   | 1,451                          |   | 315                               |   | 5,786                 |   | 6,100              |   | 1,371 |   | 1987 |   | 1993 |   |
| KATC - North                 |   | 3520 Commerce Crossing        |                | Office             |   |             |   | 950               |   | 2,063                                             |   | 36                             |   | 950                               |   | 2,099                 |   | 3,049              |   | 544 |   | 1976 |   | 1993 |   |
| KATC - South                 |   | 8465 Keystone Crossing        |                | Office             |   |             |   | 89                |   | 1,389                                             |   | 215                            |   | 89                                |   | 1,604                 |   | 1,693              |   | 374 |   | 1983 |   | 1995 |   |
| Keystone Crossing            |   | 8555 Keystone Crossing        |                | Office             |   |             |   | —            |   | 6,061                                             |   | 581                            |   | —                            |   | 6,642                 |   | 6,642              |   | 1,265 |   | 1985 |   | 1997 |   |
| Nampac Building              |   | 6061 Guion Rd                 |                | Industrial         |   |             |   | 274               |   | 1,809                                             |   | 105                            |   | 274                               |   | 1,915                 |   | 2,189              |   | 426 |   | 1974 |   | 1995 |   |
| 4750 Kentucky Avenue         |   | 4750 Kentucky Avenue          |                | Industrial         |   |             |   | 246               |   | 2,392                                             |   | 220                            |   | 246                               |   | 2,612                 |   | 2,858              |   | 466 |   | 1974 |   | 1996 |   |
| Software Artistry            |   | River Road Bldg I             |                | Office             |   |             |   | 856               |   | 7,766                                             |   | 693                            |   | 856                               |   | 8,459                 |   | 9,315              |   | 1,669 |   | 1997 |   | 1998 |   |
| 4316 West Minnesota          |   | 4316 West Minnesota           |                | Industrial         |   |             |   | 287               |   | 2,291                                             |   | 294                            |   | 287                               |   | 2,585                 |   | 2,872              |   | 461 |   | 1970 |   | 1996 |   |
| One North Capital            |   | One North Capital             |                | Office             |   |             |   | 1,439             |   | 9,696                                             |   | 20                             |   | 1,439                             |   | 9,717                 |   | 11,156             |   | 1,349 |   | 1980 |   | 1998 |   |
| Park 100                     |   | Silver Burdett                |                | Industrial         |   |             |   | 1,414             |   | 13,859                                            |   | (0                             | )      | 1,667                             |   | 13,606                |   | 15,273             |   | 2,941 |   | 1994 |   | 1995 |   |
| Park 100                     |   | Park 100 Bldg 98              |                | Industrial         |   |             |   | 273               |   | 8,336                                             |   | 1,551                          |   | 273                               |   | 9,886                 |   | 10,159             |   | 2,042 |   | 1968 |   | 1994 |   |

 

64

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| **Development**            |   | **Name**                       |                | **Building  Type** |   | **Encumbrances** |   | **Initial  Cost** |   | **Cost  Capitalized  Subsequent to  Development** |   | **Gross Book  Value 12/31/03** |   | **Accumulated  Depreciation (1)** |   | **Year  Constructed** |   | **Year  Acquired** |   |
|----------------------------|--------|--------------------------------|---------------------|--------------------|--------|------------------|--------|-------------------|--------|---------------------------------------------------|--------|--------------------------------|--------|-----------------------------------|--------|-----------------------|--------|--------------------|--------|
| **Land**                   |   | **Buildings**                  | **to  Acquisition** | **Land/Land  Imp** |   | **Bldgs/TI**     |   | **Total**         |
| Park 100                   |   | Park 100 Bldg 100              |                | Industrial         |   |             |   | 103               |   | 2,482                                             |   | 512                            |   | 103                               |   | 2,994                 |   | 3,098              |   | 803 |   | 1995 |   | 1995 |   |
| Park 100                   |   | Park 100 Bldg 107              |                | Industrial         |   |             |   | 99                |   | 1,709                                             |   | 111                            |   | 99                                |   | 1,821                 |   | 1,920              |   | 377 |   | 1984 |   | 1995 |   |
| Park 100                   |   | Park 100 Bldg 109              |                | Industrial         |   |             |   | 240               |   | 1,850                                             |   | 53                             |   | 246                               |   | 1,897                 |   | 2,143              |   | 806 |   | 1985 |   | 1986 |   |
| Park 100                   |   | Park 100 Bldg 116              |                | Office             |   |             |   | 341               |   | 3,224                                             |   | 175                            |   | 348                               |   | 3,391                 |   | 3,739              |   | 1,163 |   | 1988 |   | 1988 |   |
| Park 100                   |   | Park 100 Bldg 118              |                | Office             |   |             |   | 226               |   | 2,433                                             |   | 447                            |   | 230                               |   | 2,876                 |   | 3,106              |   | 770 |   | 1988 |   | 1993 |   |
| Park 100                   |   | Park 100 Bldg 119              |                | Office             |   |             |   | 388               |   | 3,736                                             |   | 1,310                          |   | 500                               |   | 4,933                 |   | 5,433              |   | 1,285 |   | 1989 |   | 1993 |   |
| Park 100                   |   | Park 100 Bldg 122              |                | Industrial         |   |             |   | 284               |   | 3,763                                             |   | 192                            |   | 290                               |   | 3,950                 |   | 4,239              |   | 1,021 |   | 1990 |   | 1993 |   |
| Park 100                   |   | Park 100 Bldg 124              |                | Office             |   |             |   | 227               |   | 2,760                                             |   | 1                              |   | 227                               |   | 2,761                 |   | 2,989              |   | 181 |   | 1992 |   | 2002 |   |
| Park 100                   |   | Park 100 Bldg 127              |                | Industrial         |   |             |   | 96                |   | 1,944                                             |   | 302                            |   | 96                                |   | 2,246                 |   | 2,342              |   | 618 |   | 1995 |   | 1995 |   |
| Park 100                   |   | Ups Parking                    |                | Grounds            |   |             |   | 270               |   | —                                            |   | 0                              |   | 270                               |   | —                |   | 270                |   | 51 |   |   |   | 1997 |   |
| Park 100                   |   | Norgate Ground Lease           |                | Grounds            |   |             |   | 51                |   | —                                            |   | 0                              |   | 51                                |   | —                |   | 51                 |   | — |   |   |   | 1995 |   |
| Park 100                   |   | Zollman Ground Lease           |                | Grounds            |   |             |   | 115               |   | —                                            |   | (0                             | )      | 115                               |   | —                |   | 115                |   | — |   |   |   | 1994 |   |
| Park 100                   |   | Becton Dickinson Lot           |                | Grounds            |   |             |   | —            |   | —                                            |   | 13                             |   | 13                                |   | —                |   | 13                 |   | 5 |   |   |   | 1993 |   |
| Park Fletcher              |   | Park Fletcher Bldg 14          |                | Industrial         |   |             |   | 76                |   | 740                                               |   | 65                             |   | 76                                |   | 805                   |   | 881                |   | 165 |   | 1978 |   | 1996 |   |
| Parkwood Crossing          |   | One Parkwood                   |                | Office             |   |             |   | 1,018             |   | 10,247                                            |   | 390                            |   | 1,028                             |   | 10,627                |   | 11,654             |   | 2,130 |   | 1989 |   | 1995 |   |
| Parkwood Crossing          |   | Two Parkwood                   |                | Office             |   |             |   | 861               |   | 7,652                                             |   | 40                             |   | 871                               |   | 7,683                 |   | 8,554              |   | 2,442 |   | 1996 |   | 1996 |   |
| Parkwood Crossing          |   | Three Parkwood                 |                | Office             |   |             |   | 1,377             |   | 9,811                                             |   | 253                            |   | 1,387                             |   | 10,055                |   | 11,441             |   | 2,264 |   | 1997 |   | 1997 |   |
| Parkwood Crossing          |   | Four Parkwood                  |                | Office             |   |             |   | 1,489             |   | 11,226                                            |   | 0                              |   | 1,537                             |   | 11,179                |   | 12,716             |   | 2,206 |   | 1998 |   | 1998 |   |
| Parkwood Crossing          |   | Five Parkwood                  |                | Office             |   |             |   | 1,485             |   | 13,690                                            |   | 445                            |   | 1,528                             |   | 14,093                |   | 15,620             |   | 3,001 |   | 1999 |   | 1999 |   |
| Parkwood Crossing          |   | Six Parkwood                   |                | Office             |   |             |   | 1,960             |   | 15,700                                            |   | 363                            |   | 1,960                             |   | 16,063                |   | 18,023             |   | 2,064 |   | 2000 |   | 2000 |   |
| Parkwood Crossing          |   | Parkwood Crossing East Bldg  8 |                | Office             |   |             |   | 5,593             |   | 14,800                                            |   | —                         |   | 5,593                             |   | 14,800                |   | 20,393             |   | 279 |   | 2002 |   | 2002 |   |
| Woodfield                  |   | Two Woodfield Crossing         |                | Office             |   |             |   | 719               |   | 9,516                                             |   | 1,218                          |   | 733                               |   | 10,719                |   | 11,452             |   | 2,846 |   | 1987 |   | 1993 |   |
| Woodfield                  |   | Three Woodfield Crossing       |                | Office             |   |             |   | 3,767             |   | 21,323                                            |   | 2,930                          |   | 3,843                             |   | 24,177                |   | 28,020             |   | 6,733 |   | 1989 |   | 1993 |   |
| Woodland Corporate Park    |   | Woodland Corporate Park I      |                | Office             |   |             |   | 290               |   | 4,630                                             |   | 635                            |   | 320                               |   | 5,235                 |   | 5,555              |   | 1,248 |   | 1998 |   | 1998 |   |
| Woodland Corporate Park    |   | Woodland Corporate Park II     |                | Office             |   |             |   | 271               |   | 3,644                                             |   | 827                            |   | 297                               |   | 4,444                 |   | 4,741              |   | 731 |   | 1999 |   | 1999 |   |
| Woodland Corporate Park    |   | Woodland Corporate Park III    |                | Office             |   |             |   | 1,227             |   | 4,455                                             |   | 72                             |   | 1,227                             |   | 4,527                 |   | 5,754              |   | 710 |   | 1999 |   | 2000 |   |
| Woodland Corporate Park    |   | Woodland Corporate Park IV     |                | Office             |   |             |   | 715               |   | 7,288                                             |   | 155                            |   | 715                               |   | 7,443                 |   | 8,159              |   | 914 |   | 2000 |   | 2000 |   |
| Woodland Corporate Park    |   | Woodland Corporate Park V      |                | Office             |   |             |   | 768               |   | 10,002                                            |   | —                         |   | 768                               |   | 10,002                |   | 10,770             |   | 277 |   | 2002 |   | 2002 |   |
|                       |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **JACKSONVILLE, FLORIDA**  |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
|                       |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **KENNESAW, GEORGIA**      |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Town Point                 |   | 3391 Town Point Drive          |                | Office             |   |             |   | 797               |   | 8,474                                             |   | 1,155                          |   | 797                               |   | 9,629                 |   | 10,426             |   | 1,897 |   | 1999 |   | 1999 |   |
|                       |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **LAKE FOREST, ILLINOIS**  |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Bradley Business Center    |   | Ballard Drive Building         |                | Industrial         |   |             |   | 186               |   | 1,761                                             |   | 299                            |   | 186                               |   | 2,060                 |   | 2,246              |   | 289 |   | 1985 |   | 1998 |   |
| Bradley Business Center    |   | Laurel Drive Building          |                | Industrial         |   |             |   | 98                |   | 913                                               |   | 53                             |   | 98                                |   | 965                   |   | 1,064              |   | 140 |   | 1981 |   | 1998 |   |
| Bradley Business Center    |   | 13825 W. Laurel Dr.            |                | Industrial         |   |             |   | 750               |   | 1,886                                             |   | 916                            |   | 750                               |   | 2,803                 |   | 3,553              |   | 514 |   | 1978 |   | 1999 |   |
| Conway Park                |   | One Conway Park                |                | Office             |   |             |   | 1,901             |   | 18,399                                            |   | 944                            |   | 1,901                             |   | 19,344                |   | 21,245             |   | 3,188 |   | 1989 |   | 1998 |   |
|                       |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **LAKE MARY, FLORIDA**     |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Northpoint                 |   | Northpoint Center I            |                | Office             |   |             |   | 1,087             |   | 11,546                                            |   | 200                            |   | 1,087                             |   | 11,746                |   | 12,833             |   | 2,574 |   | 1998 |   | 1999 |   |
| Northpoint                 |   | Northpoint Center II           |                | Office             |   |             |   | 1,202             |   | 10,891                                            |   | 71                             |   | 1,202                             |   | 10,962                |   | 12,164             |   | 1,818 |   | 1999 |   | 2000 |   |
| Northpoint                 |   | Northpoint III                 |                | Office             |   |             |   | 1,552             |   | 11,034                                            |   | 25                             |   | 1,552                             |   | 11,059                |   | 12,611             |   | 901 |   | 2001 |   | 2001 |   |
| Northpoint                 |   | Northpoint IV                  |                | Office             |   |             |   | 1,605             |   | 8,583                                             |   | 1,029                          |   | 1,605                             |   | 9,612                 |   | 11,217             |   | 85 |   | 2002 |   | 2002 |   |
| Technology Park            |   | Technology Park I              |                | Industrial         |   |             |   | 641               |   | 3,530                                             |   | 210                            |   | 640                               |   | 3,742                 |   | 4,382              |   | 498 |   | 1986 |   | 1999 |   |
| Technology Park            |   | Technology Park II             |                | Industrial         |   |             |   | 835               |   | 4,318                                             |   | 280                            |   | 835                               |   | 4,598                 |   | 5,433              |   | 581 |   | 1998 |   | 1999 |   |
| Technology Park            |   | Technology Park III            |                | Industrial         |   |             |   | 477               |   | 3,859                                             |   | 113                            |   | 477                               |   | 3,972                 |   | 4,449              |   | 527 |   | 1998 |   | 1999 |   |
| Technology Park            |   | Technology Park IV             |                | Industrial         |   |             |   | 669               |   | 2,930                                             |   | 285                            |   | 669                               |   | 3,215                 |   | 3,884              |   | 462 |   | 1999 |   | 1999 |   |
| Technology Park            |   | Technology Park V              |                | Industrial         |   |             |   | 547               |   | 2,900                                             |   | 244                            |   | 547                               |   | 3,143                 |   | 3,691              |   | 386 |   | 1999 |   | 1999 |   |
|                       |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **LAKELAND, FLORIDA**      |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Lakeland Interstate Park   |   | Lakeland Interstate Park I     |                | Industrial         |   |             |   | 864               |   | 4,267                                             |   | 290                            |   | 864                               |   | 4,557                 |   | 5,421              |   | 269 |   | 2001 |   | 2001 |   |
|                       |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **LAWRENCEVILLE, GEORGIA** |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Hillside at Huntcrest      |   | Huntcrest I                    |                | Office             |   |             |   | 1,193             |   | 10,997                                            |   | —                         |   | 1,193                             |   | 10,997                |   | 12,190             |   | 997 |   | 2000 |   | 2001 |   |
| Hillside at Huntcrest      |   | Huntcrest II                   |                | Office             |   |             |   | 927               |   | 11,550                                            |   | —                         |   | 927                               |   | 11,550                |   | 12,477             |   | 1,300 |   | 2000 |   | 2001 |   |
| Hillside at Huntcrest      |   | Huntcrest III                  |                | Office             |   |             |   | 1,358             |   | 12,956                                            |   | —                         |   | 1,358                             |   | 12,956                |   | 14,313             |   | 439 |   | 2001 |   | 2002 |   |
|                       |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **LEBANON, INDIANA**       |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Lebanon Bus. Park          |   | Lebanon Building 4             |                | Industrial         |   |             |   | 305               |   | 9,717                                             |   | 90                             |   | 305                               |   | 9,806                 |   | 10,111             |   | 1,608 |   | 1997 |   | 1997 |   |
| Lebanon Bus. Park          |   | Lebanon Building 9             |                | Industrial         |   |             |   | 554               |   | 6,931                                             |   | 666                            |   | 554                               |   | 7,597                 |   | 8,151              |   | 885 |   | 1999 |   | 1999 |   |
| Lebanon Bus. Park          |   | Lebanon Building 11            |                | Industrial         |   |             |   | 480               |   | 5,202                                             |   | —                         |   | 480                               |   | 5,202                 |   | 5,682              |   | 129 |   | 2003 |   | 2003 |   |
| Lebanon Bus. Park          |   | Lebanon Bldg 13                |                | Industrial         |   |             |   | 561               |   | 6,579                                             |   | —                         |   | 561                               |   | 6,579                 |   | 7,140              |   | 27 |   | 2003 |   | 2003 |   |

 

65

----

 
| **Development**                |   | **Name**                        |                | **Building  Type** |   | **Encumbrances** |   | **Initial  Cost** |   | **Cost  Capitalized  Subsequent to  Development** |   | **Gross Book  Value 12/31/03** |   | **Accumulated  Depreciation (1)** |   | **Year  Constructed** |   | **Year  Acquired** |   |
|--------------------------------|--------|---------------------------------|---------------------|--------------------|--------|------------------|--------|-------------------|--------|---------------------------------------------------|--------|--------------------------------|--------|-----------------------------------|--------|-----------------------|--------|--------------------|--------|
| **Land**                       |   | **Buildings**                   | **to  Acquisition** | **Land/Land  Imp** |   | **Bldgs/TI**     |   | **Total**         |
| Lebanon Bus. Park              |   | Lebanon Bldg 12                 |                | Industrial         |   |             |   | 1,517             |   | 16,929                                            |   | —                         |   | 1,517                             |   | 16,929                |   | 18,447             |   | — |   | 2002 |   | 2002 |   |
|                           |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **LEWIS CENTER, OHIO**         |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Orange Point Commerce Park     |   | Orange Point #73                |                | Industrial         |   |             |   | 551               |   | 3,281                                             |   | 232                            |   | 551                               |   | 3,514                 |   | 4,065              |   | 315 |   | 2001 |   | 2001 |   |
| Orange Point Commerce Park     |   | Orange Point 144                |                | Industrial         |   |             |   | 886               |   | 4,970                                             |   | 19                             |   | 886                               |   | 4,989                 |   | 5,875              |   | 506 |   | 2001 |   | 2001 |   |
|                           |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **MARIETTA, GEORGIA**          |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Franklin Forest                |   | 805 Franklin Court              |                | Industrial         |   |             |   | 313               |   | 1,937                                             |   | 58                             |   | 313                               |   | 1,994                 |   | 2,308              |   | 232 |   | 1983 |   | 1999 |   |
| Franklin Forest                |   | 810 Franklin Court              |                | Industrial         |   |             |   | 255               |   | 1,658                                             |   | 64                             |   | 255                               |   | 1,722                 |   | 1,976              |   | 204 |   | 1983 |   | 1999 |   |
| Franklin Forest                |   | 811 Livingston Court            |                | Industrial         |   |             |   | 193               |   | 1,428                                             |   | 264                            |   | 193                               |   | 1,691                 |   | 1,884              |   | 242 |   | 1983 |   | 1999 |   |
| Franklin Forest                |   | 825 Franklin Court              |                | Industrial         |   |             |   | 358               |   | 562                                               |   | 1,118                          |   | 358                               |   | 1,681                 |   | 2,038              |   | 252 |   | 1983 |   | 1999 |   |
| Franklin Forest                |   | 830 Franklin Court              |                | Industrial         |   |             |   | 133               |   | 759                                               |   | 28                             |   | 133                               |   | 787                   |   | 920                |   | 87 |   | 1983 |   | 1999 |   |
| Franklin Forest                |   | 835 Franklin Court              |                | Industrial         |   |             |   | 393               |   | 637                                               |   | 1,023                          |   | 393                               |   | 1,659                 |   | 2,053              |   | 253 |   | 1983 |   | 1999 |   |
| Franklin Forest                |   | 840 Franklin Court              |                | Industrial         |   |             |   | 242               |   | 893                                               |   | 6                              |   | 242                               |   | 899                   |   | 1,140              |   | 100 |   | 1983 |   | 1999 |   |
| Franklin Forest                |   | 821 Livingston Court            |                | Industrial         |   |             |   | 145               |   | 975                                               |   | 100                            |   | 145                               |   | 1,076                 |   | 1,221              |   | 130 |   | 1983 |   | 1999 |   |
| Franklin Forest                |   | 841 Livingston Court            |                | Industrial         |   |             |   | 275               |   | 2,736                                             |   | 6                              |   | 275                               |   | 2,743                 |   | 3,017              |   | 306 |   | 1983 |   | 1999 |   |
| Northwest Business Center      |   | 1335 Capital Circle             |                | Industrial         |   |             |   | 416               |   | 2,112                                             |   | 136                            |   | 416                               |   | 2,247                 |   | 2,664              |   | 257 |   | 1985 |   | 1999 |   |
| Northwest Business Center      |   | 1337-41-51 Capital Circle       |                | Industrial         |   |             |   | 558               |   | 5,364                                             |   | 773                            |   | 558                               |   | 6,138                 |   | 6,695              |   | 770 |   | 1985 |   | 1999 |   |
| Northwest Business Center      |   | 2260 Northwest Parkway          |                | Industrial         |   |             |   | 320               |   | 1,826                                             |   | 693                            |   | 320                               |   | 2,518                 |   | 2,838              |   | 322 |   | 1982 |   | 1999 |   |
| Northwest Business Center      |   | 2252 Northwest Parkway          |                | Industrial         |   |             |   | 92                |   | 982                                               |   | 85                             |   | 92                                |   | 1,066                 |   | 1,158              |   | 131 |   | 1982 |   | 1999 |   |
| Northwest Business Center      |   | 2242 Northwest Parkway          |                | Industrial         |   |             |   | 175               |   | 1,444                                             |   | 142                            |   | 175                               |   | 1,586                 |   | 1,760              |   | 184 |   | 1982 |   | 1999 |   |
| Northwest Business Center      |   | 2256 Northwest Parkway          |                | Industrial         |   |             |   | 85                |   | 916                                               |   | 108                            |   | 85                                |   | 1,024                 |   | 1,108              |   | 129 |   | 1982 |   | 1999 |   |
| Northwest Business Center      |   | 2244 Northwest Parkway          |                | Industrial         |   |             |   | 47                |   | 492                                               |   | 67                             |   | 47                                |   | 559                   |   | 606                |   | 79 |   | 1982 |   | 1999 |   |
| Northwest Business Center      |   | 2150 Northwest Parkway          |                | Industrial         |   |             |   | 294               |   | 3,087                                             |   | 206                            |   | 294                               |   | 3,292                 |   | 3,587              |   | 414 |   | 1982 |   | 1999 |   |
| Northwest Business Center      |   | 2152 Northwest Parkway          |                | Industrial         |   |             |   | 161               |   | 1,637                                             |   | 72                             |   | 161                               |   | 1,709                 |   | 1,871              |   | 200 |   | 1982 |   | 1999 |   |
| Northwest Business Center      |   | 2130 Northwest Parkway          |                | Industrial         |   |             |   | 353               |   | 2,885                                             |   | 406                            |   | 353                               |   | 3,291                 |   | 3,644              |   | 418 |   | 1982 |   | 1999 |   |
| Northwest Business Center      |   | 2270 Northwest Parkway          |                | Industrial         |   | 1,676            |   | 483               |   | 3,887                                             |   | 393                            |   | 483                               |   | 4,279                 |   | 4,762              |   | 493 |   | 1988 |   | 1999 |   |
| Northwest Business Center      |   | 2275 Northwest Parkway          |                | Industrial         |   | 1,108            |   | 327               |   | 2,641                                             |   | 167                            |   | 327                               |   | 2,808                 |   | 3,135              |   | 326 |   | 1988 |   | 1999 |   |
|                           |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **MARYLAND HEIGHTS, MISSOURI** |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Riverport Business Park        |   | Riverport Tower                 |                | Office             |   |             |   | 3,549             |   | 30,135                                            |   | 2,695                          |   | 3,954                             |   | 32,424                |   | 36,378             |   | 5,297 |   | 1991 |   | 1997 |   |
| Riverport Business Park        |   | Riverport Distribution A        |                | Industrial         |   |             |   | 242               |   | 2,256                                             |   | 110                            |   | 242                               |   | 2,367                 |   | 2,608              |   | 376 |   | 1990 |   | 1997 |   |
| Riverport Business Park        |   | Express Scripts HQ              |                | Office             |   |             |   | 2,285             |   | 12,476                                            |   | 190                            |   | 2,285                             |   | 12,666                |   | 14,951             |   | 3,234 |   | 1999 |   | 1999 |   |
| Riverport Business Park        |   | Riverport 1                     |                | Industrial         |   |             |   | 900               |   | 4,423                                             |   | 107                            |   | 900                               |   | 4,531                 |   | 5,430              |   | 1,547 |   | 1999 |   | 1999 |   |
| Riverport Business Park        |   | Riverport 2                     |                | Industrial         |   |             |   | 1,238             |   | 7,020                                             |   | 2                              |   | 1,238                             |   | 7,022                 |   | 8,260              |   | 2,119 |   | 2000 |   | 2000 |   |
| Riverport Business Park        |   | Riverport 3                     |                | Industrial         |   |             |   | 1,269             |   | 4,541                                             |   | 1,230                          |   | 1,269                             |   | 5,771                 |   | 7,040              |   | 489 |   | 2001 |   | 2001 |   |
| Riverport Distribution         |   | Express Scripts Service  Center |                | Industrial         |   |             |   | 1,197             |   | 8,786                                             |   | 172                            |   | 1,197                             |   | 8,958                 |   | 10,155             |   | 1,474 |   | 1992 |   | 1997 |   |
| West Port Center               |   | Westport Center I               |                | Industrial         |   |             |   | 1,707             |   | 5,907                                             |   | 0                              |   | 1,707                             |   | 5,908                 |   | 7,614              |   | 1,079 |   | 1998 |   | 1998 |   |
| West Port Center               |   | Westport Center II              |                | Industrial         |   |             |   | 915               |   | 2,885                                             |   | 226                            |   | 914                               |   | 3,112                 |   | 4,026              |   | 1,048 |   | 1998 |   | 1998 |   |
| West Port Center               |   | Westport Center III             |                | Industrial         |   |             |   | 1,207             |   | 2,995                                             |   | 442                            |   | 1,206                             |   | 3,438                 |   | 4,644              |   | 677 |   | 1998 |   | 1999 |   |
|                           |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **MASON, OHIO**                |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Deerfield Crossing             |   | Deerfield Crossing Bldg 1       |                | Office             |   |             |   | 1,493             |   | 14,417                                            |   | 690                            |   | 1,493                             |   | 15,107                |   | 16,600             |   | 3,487 |   | 1999 |   | 1999 |   |
| Deerfield Crossing             |   | Deerfield Crossing Bldg 2       |                | Office             |   |             |   | 1,069             |   | 14,191                                            |   | 170                            |   | 1,069                             |   | 14,361                |   | 15,430             |   | 1,747 |   | 2001 |   | 2001 |   |
| Governor’s Pointe         |   | Governor’s Pointe 4770     |                | Office             |   |             |   | 586               |   | 7,996                                             |   | 120                            |   | 596                               |   | 8,106                 |   | 8,702              |   | 3,052 |   | 1986 |   | 1988 |   |
| Governor’s Pointe         |   | Governor’s Pointe 4700     |                | Industrial         |   |             |   | 584               |   | 5,847                                             |   | 20                             |   | 595                               |   | 5,856                 |   | 6,451              |   | 2,181 |   | 1987 |   | 1988 |   |
| Governor’s Pointe         |   | Governor’s Pointe 4900     |                | Industrial         |   |             |   | 654               |   | 4,378                                             |   | 256                            |   | 673                               |   | 4,615                 |   | 5,288              |   | 1,650 |   | 1987 |   | 1989 |   |
| Governor’s Pointe         |   | Governor’s Pointe 4705     |                | Office             |   |             |   | 719               |   | 7,940                                             |   | 2,317                          |   | 987                               |   | 9,990                 |   | 10,976             |   | 3,223 |   | 1988 |   | 1993 |   |
| Governor’s Pointe         |   | Governor’s Pointe 4605     |                | Office             |   |             |   | 630               |   | 17,727                                            |   | 824                            |   | 909                               |   | 18,272                |   | 19,181             |   | 4,700 |   | 1990 |   | 1993 |   |
| Governor’s Pointe         |   | Governor’s Pointe 8990     |                | Office             |   |             |   | 594               |   | 6,165                                             |   | 436                            |   | 594                               |   | 6,601                 |   | 7,195              |   | 2,002 |   | 1997 |   | 1997 |   |
| Governor’s Pointe         |   | Governor’s Pointe 4660     |                | Office             |   |             |   | 385               |   | 4,811                                             |   | 0                              |   | 529                               |   | 4,667                 |   | 5,196              |   | 990 |   | 1997 |   | 1997 |   |
| Governor’s Pointe         |   | Governor’s Pointe 4680     |                | Office             |   |             |   | 1,115             |   | 8,644                                             |   | 82                             |   | 1,115                             |   | 8,726                 |   | 9,841              |   | 2,085 |   | 1998 |   | 1998 |   |
| Governor’s Pointe         |   | Governor’s Pointe 4690     |                | Office             |   |             |   | 907               |   | 3,469                                             |   | 6                              |   | 907                               |   | 3,474                 |   | 4,381              |   | 246 |   | 2002 |   | 2002 |   |
| Governors Pointe Retail        |   | Bigg’s Supercenter         |                | Retail             |   |             |   | 2,107             |   | 9,979                                             |   | 54                             |   | 4,227                             |   | 7,912                 |   | 12,139             |   | 2,125 |   | 1996 |   | 1996 |   |
| Governors Pointe Retail        |   | Lowes                           |                | Retail             |   |             |   | 3,750             |   | 6,569                                             |   | 216                            |   | 3,750                             |   | 6,784                 |   | 10,534             |   | 1,807 |   | 1997 |   | 1997 |   |
|                           |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **MAYFIELD HEIGHTS, OHIO**     |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Landerbrook Corporate Ctr      |   | Landerbrook Corp. Center  One   |                | Office             |   |             |   | 1,807             |   | 10,700                                            |   | (0                             | )      | 1,808                             |   | 10,699                |   | 12,507             |   | 2,422 |   | 1997 |   | 1997 |   |
| Landerbrook Corporate Ctr      |   | Landerbrook Corp. Center  Two   |                | Office             |   |             |   | 1,382             |   | 10,175                                            |   | 1,620                          |   | 1,382                             |   | 11,795                |   | 13,177             |   | 2,368 |   | 1998 |   | 1998 |   |
| Landerbrook Corporate Ctr      |   | Landerbrook Corp. Center  Three |                | Office             |   |             |   | 1,528             |   | 8,545                                             |   | 4,313                          |   | 1,684                             |   | 12,701                |   | 14,385             |   | 869 |   | 2000 |   | 2001 |   |
|                           |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **MCDONOUGH, GEORGIA**         |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Liberty Dist. Center           |   | 120 Declaration Drive           |                | Industrial         |   |             |   | 615               |   | 8,603                                             |   | 32                             |   | 615                               |   | 8,635                 |   | 9,250              |   | 974 |   | 1997 |   | 1999 |   |
| Liberty Dist. Center           |   | Liberty III                     |                | Industrial         |   |             |   | 2,273             |   | 14,543                                            |   | 423                            |   | 2,273                             |   | 14,966                |   | 17,240             |   | 1,215 |   | 2001 |   | 2001 |   |

 

66

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| **Development**                 |   | **Name**                        |                | **Building  Type** |   | **Encumbrances** |   | **Initial  Cost** |   | **Cost  Capitalized  Subsequent to  Development** |   | **Gross Book  Value 12/31/03** |   | **Accumulated  Depreciation (1)** |   | **Year  Constructed** |   | **Year  Acquired** |   |
|---------------------------------|--------|---------------------------------|---------------------|--------------------|--------|------------------|--------|-------------------|--------|---------------------------------------------------|--------|--------------------------------|--------|-----------------------------------|--------|-----------------------|--------|--------------------|--------|
| **Land**                        |   | **Buildings**                   | **to  Acquisition** | **Land/Land  Imp** |   | **Bldgs/TI**     |   | **Total**         |
| **MENDOTA HEIGHTS, MINNESOTA**  |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Enterprise Industrial Center    |   | Enterprise Industrial  Center   |                | Industrial         |   | 1,957            |   | 864               |   | 5,054                                             |   | 281                            |   | 864                               |   | 5,335                 |   | 6,199              |   | 862 |   | 1979 |   | 1997 |   |
|                            |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **MIDDLETOWN, OHIO**            |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
|                            |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| MILFORD, OHIO                   |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Park 50                         |   | Park 50 Bldg 17                 |                | Office             |   |             |   | 500               |   | 5,488                                             |   | 285                            |   | 510                               |   | 5,763                 |   | 6,273              |   | 2,458 |   | 1985 |   | 1986 |   |
| Park 50                         |   | Park 50 Bldg 20                 |                | Industrial         |   |             |   | 461               |   | 7,077                                             |   | 0                              |   | 469                               |   | 7,069                 |   | 7,538              |   | 3,107 |   | 1987 |   | 1988 |   |
| Park 50                         |   | Park 50 Bldg 25                 |                | Industrial         |   |             |   | 1,161             |   | 4,146                                             |   | 680                            |   | 1,184                             |   | 4,802                 |   | 5,986              |   | 1,325 |   | 1989 |   | 1993 |   |
|                            |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **MINNEAPOLIS, MINNESOTA**      |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Broadway Business Center        |   | Broadway Business Ctr III       |                | Industrial         |   |             |   | 140               |   | 817                                               |   | 64                             |   | 144                               |   | 877                   |   | 1,021              |   | 126 |   | 1983 |   | 1998 |   |
| Broadway Business Center        |   | Broadway Business Ctr IV        |                | Industrial         |   |             |   | 194               |   | 1,163                                             |   | 204                            |   | 200                               |   | 1,360                 |   | 1,560              |   | 259 |   | 1983 |   | 1998 |   |
| Broadway Business Center        |   | Broadway Business Ctr VI        |                | Industrial         |   |             |   | 433               |   | 2,527                                             |   | 578                            |   | 447                               |   | 3,091                 |   | 3,538              |   | 497 |   | 1983 |   | 1998 |   |
| Broadway Business Center        |   | Broadway Business Ctr VII       |                | Industrial         |   |             |   | 233               |   | 1,377                                             |   | 82                             |   | 241                               |   | 1,451                 |   | 1,692              |   | 205 |   | 1983 |   | 1998 |   |
| Minneapolis                     |   | Chilies Ground Lease            |                | Grounds            |   |             |   | 921               |   | —                                            |   | 69                             |   | 990                               |   | —                |   | 990                |   | 2 |   | 1998 |   |   |   |
| Minneapolis                     |   | Olive Garden Ground Lease       |                | Grounds            |   |             |   | 921               |   | —                                            |   | (0                             | )      | 921                               |   | —                |   | 921                |   | — |   | 1998 |   |   |   |
| 10801 Red Circle Drive          |   | 10801 Red Circle Dr.            |                | Office             |   |             |   | 527               |   | 3,478                                             |   | 701                            |   | 527                               |   | 4,179                 |   | 4,706              |   | 1,460 |   | 1977 |   | 1997 |   |
|                            |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **MONROE, OHIO**                |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Monroe Business Center          |   | Monroe Business Center  Bldg. 1 |                | Industrial         |   |             |   | 660               |   | 5,458                                             |   | 304                            |   | 660                               |   | 5,763                 |   | 6,422              |   | 801 |   | 1992 |   | 1999 |   |
|                            |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **MORRISVILLE, NORTH CAROLINA** |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Perimeter Park                  |   | 507 Airport Blvd                |                | Industrial         |   |             |   | 1,327             |   | 8,464                                             |   | 780                            |   | 1,351                             |   | 9,220                 |   | 10,571             |   | 1,261 |   | 1993 |   | 1999 |   |
| Perimeter Park                  |   | 5151 McCrimmon Pkwy             |                | Industrial         |   |             |   | 1,318             |   | 8,241                                             |   | 420                            |   | 1,342                             |   | 8,637                 |   | 9,979              |   | 1,181 |   | 1995 |   | 1999 |   |
| Perimeter Park                  |   | 2600 Perimeter Park Dr          |                | Industrial         |   |             |   | 975               |   | 5,407                                             |   | 331                            |   | 991                               |   | 5,722                 |   | 6,713              |   | 660 |   | 1997 |   | 1999 |   |
| Perimeter Park                  |   | 5150 McCrimmon Pkwy             |                | Industrial         |   |             |   | 1,739             |   | 12,278                                            |   | 102                            |   | 1,773                             |   | 12,346                |   | 14,119             |   | 1,378 |   | 1998 |   | 1999 |   |
| Perimeter Park                  |   | 2400 Perimeter Park Dr.         |                | Office             |   |             |   | 760               |   | 6,322                                             |   | 973                            |   | 778                               |   | 7,277                 |   | 8,055              |   | 822 |   | 1999 |   | 1999 |   |
| Perimeter Park                  |   | 3000 Perimeter Park Dr          |                | Industrial         |   | 1,801            |   | 482               |   | 3,165                                             |   | 595                            |   | 491                               |   | 3,751                 |   | 4,242              |   | 532 |   | 1989 |   | 1999 |   |
| Perimeter Park                  |   | 2900 Perimeter Park Dr          |                | Industrial         |   | 1,361            |   | 235               |   | 2,346                                             |   | 582                            |   | 241                               |   | 2,921                 |   | 3,162              |   | 448 |   | 1990 |   | 1999 |   |
| Perimeter Park                  |   | 2800 Perimeter Park Dr          |                | Industrial         |   | 2,501            |   | 777               |   | 4,940                                             |   | 177                            |   | 791                               |   | 5,103                 |   | 5,894              |   | 617 |   | 1992 |   | 1999 |   |
| Perimeter Park                  |   | 100 Perimeter Park Drive        |                | Industrial         |   |             |   | 477               |   | 3,250                                             |   | 524                            |   | 477                               |   | 3,774                 |   | 4,251              |   | 439 |   | 1987 |   | 1999 |   |
| Perimeter Park                  |   | 200 Perimeter Park Drive        |                | Industrial         |   |             |   | 567               |   | 3,160                                             |   | 79                             |   | 567                               |   | 3,239                 |   | 3,806              |   | 384 |   | 1987 |   | 1999 |   |
| Perimeter Park                  |   | 300 Perimeter Park Drive        |                | Industrial         |   |             |   | 567               |   | 3,159                                             |   | 129                            |   | 567                               |   | 3,288                 |   | 3,855              |   | 392 |   | 1986 |   | 1999 |   |
| Perimeter Park                  |   | 400 Perimeter Park Drive        |                | Industrial         |   | 3,740            |   | 486               |   | 4,470                                             |   | 104                            |   | 486                               |   | 4,574                 |   | 5,060              |   | 540 |   | 1983 |   | 1999 |   |
| Perimeter Park                  |   | 500 Perimeter Park Drive        |                | Industrial         |   |             |   | 522               |   | 4,421                                             |   | 113                            |   | 522                               |   | 4,534                 |   | 5,056              |   | 559 |   | 1985 |   | 1999 |   |
| Perimeter Park                  |   | 800 Perimeter Park Drive        |                | Industrial         |   | 2,765            |   | 405               |   | 3,321                                             |   | 1,664                          |   | 405                               |   | 4,985                 |   | 5,390              |   | 624 |   | 1984 |   | 1999 |   |
| Perimeter Park                  |   | 900 Perimeter Park Drive        |                | Industrial         |   |             |   | 629               |   | 1,918                                             |   | 1,037                          |   | 629                               |   | 2,955                 |   | 3,584              |   | 355 |   | 1982 |   | 1999 |   |
| Perimeter Park                  |   | 1000 Perimeter Park Drive       |                | Industrial         |   |             |   | 405               |   | 3,268                                             |   | 948                            |   | 405                               |   | 4,217                 |   | 4,622              |   | 605 |   | 1982 |   | 1999 |   |
| Perimeter Park                  |   | 1100 Perimeter Park Drive       |                | Industrial         |   |             |   | 777               |   | 6,056                                             |   | 465                            |   | 794                               |   | 6,504                 |   | 7,298              |   | 761 |   | 1990 |   | 1999 |   |
| Perimeter Park                  |   | 1400 Perimeter Park Drive       |                | Office             |   |             |   | 666               |   | 4,614                                             |   | 351                            |   | 974                               |   | 4,658                 |   | 5,632              |   | 561 |   | 1991 |   | 1999 |   |
| Perimeter Park                  |   | 1500 Perimeter Park Drive       |                | Office             |   |             |   | 1,148             |   | 10,424                                            |   | 368                            |   | 1,177                             |   | 10,763                |   | 11,940             |   | 1,280 |   | 1996 |   | 1999 |   |
| Perimeter Park                  |   | 1600 Perimeter Park Drive       |                | Office             |   |             |   | 1,463             |   | 10,160                                            |   | 295                            |   | 1,492                             |   | 10,426                |   | 11,918             |   | 1,242 |   | 1994 |   | 1999 |   |
| Perimeter Park                  |   | 1800 Perimeter Park Drive       |                | Office             |   |             |   | 907               |   | 5,751                                             |   | 156                            |   | 970                               |   | 5,844                 |   | 6,814              |   | 689 |   | 1994 |   | 1999 |   |
| Perimeter Park                  |   | 2000 Perimeter Park Drive       |                | Office             |   |             |   | 788               |   | 5,860                                             |   | 574                            |   | 842                               |   | 6,380                 |   | 7,222              |   | 986 |   | 1997 |   | 1999 |   |
| Perimeter Park                  |   | 1700 Perimeter Center West      |                | Office             |   |             |   | 1,230             |   | 10,808                                            |   | 322                            |   | 1,260                             |   | 11,100                |   | 12,360             |   | 1,231 |   | 1997 |   | 1999 |   |
| Perimeter Park                  |   | 3900 N. Paramount Parkway       |                | Office             |   |             |   | 540               |   | 13,328                                            |   | 154                            |   | 574                               |   | 13,447                |   | 14,022             |   | 1,531 |   | 1998 |   | 1999 |   |
| Perimeter Park                  |   | 3900 S.Paramount Pkwy           |                | Office             |   |             |   | 1,575             |   | 12,528                                            |   | 1,001                          |   | 1,612                             |   | 13,492                |   | 15,104             |   | 2,035 |   | 2000 |   | 1999 |   |
| Perimeter Park                  |   | 5200 East Paramount             |                | Office             |   |             |   | 1,748             |   | 17,829                                            |   | 228                            |   | 1,797                             |   | 18,008                |   | 19,805             |   | 2,771 |   | 1999 |   | 1999 |   |
| Perimeter Park                  |   | 3500 Paramount Pkwy             |                | Office             |   |             |   | 755               |   | 13,022                                            |   | 2                              |   | 755                               |   | 13,024                |   | 13,779             |   | 1,831 |   | 1999 |   | 2000 |   |
| Perimeter Park                  |   | 2700 Perimeter Park             |                | Industrial         |   |             |   | 662               |   | 3,222                                             |   | 948                            |   | 662                               |   | 4,170                 |   | 4,832              |   | 314 |   | 2001 |   | 2001 |   |
| Perimeter Park                  |   | 5200 West Paramount             |                | Office             |   |             |   | 1,831             |   | 13,288                                            |   | 15                             |   | 1,831                             |   | 13,303                |   | 15,134             |   | 973 |   | 2000 |   | 2001 |   |
| Perimeter Park                  |   | 2450 Perimeter Park             |                | Office             |   |             |   | 669               |   | 4,003                                             |   | 0                              |   | 669                               |   | 4,003                 |   | 4,672              |   | 547 |   | 2001 |   | 2001 |   |
| Research Triangle Ind. Ctr      |   | 409 Airport Blvd Bldg A         |                | Industrial         |   | 763              |   | 296               |   | 1,291                                             |   | 2                              |   | 300                               |   | 1,289                 |   | 1,588              |   | 151 |   | 1983 |   | 1999 |   |
| Research Triangle Ind. Ctr      |   | 409 Airport Blvd Bldg B         |                | Industrial         |   | 476              |   | 175               |   | 772                                               |   | 34                             |   | 177                               |   | 804                   |   | 981                |   | 102 |   | 1986 |   | 1999 |   |
| Research Triangle Ind. Ctr      |   | 409 Airport Blvd bldg C         |                | Industrial         |   | 1,553            |   | 185               |   | 2,856                                             |   | 199                            |   | 193                               |   | 3,047                 |   | 3,240              |   | 373 |   | 1982 |   | 1999 |   |
| Woodlake Center                 |   | 100 Innovation Avenue           |                | Industrial         |   |             |   | 633               |   | 4,014                                             |   | 261                            |   | 633                               |   | 4,275                 |   | 4,908              |   | 583 |   | 1994 |   | 1999 |   |
| Woodlake Center                 |   | 101 Innovation Ave              |                | Industrial         |   |             |   | 615               |   | 4,106                                             |   | 98                             |   | 615                               |   | 4,203                 |   | 4,818              |   | 492 |   | 1997 |   | 1999 |   |
| Woodlake Center                 |   | 200 Innovation Drive            |                | Industrial         |   |             |   | 357               |   | 4,513                                             |   | 23                             |   | 357                               |   | 4,536                 |   | 4,893              |   | 687 |   | 1999 |   | 1999 |   |
| Woodlake Center                 |   | 501 Innovation Ave.             |                | Industrial         |   |             |   | 640               |   | 7,107                                             |   | 47                             |   | 640                               |   | 7,154                 |   | 7,794              |   | 1,564 |   | 1999 |   | 1999 |   |
| Woodlake Center                 |   | 1000 Innovation                 |                | Industrial         |   |             |   | 514               |   | 2,927                                             |   | 1                              |   | 514                               |   | 2,928                 |   | 3,442              |   | 134 |   | 1996 |   | 2002 |   |
| Woodlake Center                 |   | 1200 Innovation                 |                | Industrial         |   |             |   | 740               |   | 5,914                                             |   | —                         |   | 740                               |   | 5,914                 |   | 6,654              |   | 243 |   | 1996 |   | 2002 |   |

 

67

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| **Development**             |   | **Name**                      |                | **Building  Type** |   | **Encumbrances** |   | **Initial  Cost** |   | **Cost  Capitalized  Subsequent to  Development** |   | **Gross Book  Value 12/31/03** |   | **Accumulated  Depreciation (1)** |   | **Year  Constructed** |   | **Year  Acquired** |   |
|-----------------------------|--------|-------------------------------|---------------------|--------------------|--------|------------------|--------|-------------------|--------|---------------------------------------------------|--------|--------------------------------|--------|-----------------------------------|--------|-----------------------|--------|--------------------|--------|
| **Land**                    |   | **Buildings**                 | **to  Acquisition** | **Land/Land  Imp** |   | **Bldgs/TI**     |   | **Total**         |
| **NAPERVILLE, ILLINOIS**    |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Meridian Business Campus    |   | 1835 Jefferson                |                | Industrial         |   |             |   | 1,723             |   | 5,553                                             |   | —                         |   | 1,723                             |   | 5,553                 |   | 7,276              |   | 66 |   | 2003 |   | 2003 |   |
|                        |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **NASHVILLE, TENNESSEE**    |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Airpark Business Center     |   | 1420 Donelson Pike            |                | Industrial         |   | 550              |   | 1,331             |   | 5,417                                             |   | 626                            |   | 1,357                             |   | 6,017                 |   | 7,374              |   | 801 |   | 1985 |   | 1999 |   |
| Airpark Business Center     |   | 1410 Donelson Pike            |                | Industrial         |   | 631              |   | 1,411             |   | 6,917                                             |   | 155                            |   | 1,411                             |   | 7,073                 |   | 8,484              |   | 828 |   | 1986 |   | 1999 |   |
| Airpark Business Center     |   | 1400 Donelson Pike            |                | Industrial         |   | 492              |   | 1,276             |   | 5,057                                             |   | 269                            |   | 1,276                             |   | 5,327                 |   | 6,603              |   | 713 |   | 1996 |   | 1999 |   |
| Airpark Business Center     |   | 400 Airpark Center            |                | Industrial         |   | 1,752            |   | 419               |   | 2,188                                             |   | 8                              |   | 419                               |   | 2,196                 |   | 2,615              |   | 258 |   | 1989 |   | 1999 |   |
| Airpark Business Center     |   | 500 Airpark Center Dr.        |                | Industrial         |   | 2,880            |   | 923               |   | 2,465                                             |   | 909                            |   | 923                               |   | 3,374                 |   | 4,297              |   | 480 |   | 1988 |   | 1999 |   |
| Airpark Business Center     |   | 600 Airport Center Dr         |                | Industrial         |   | 2,782            |   | 729               |   | 3,341                                             |   | 52                             |   | 729                               |   | 3,393                 |   | 4,122              |   | 387 |   | 1990 |   | 1999 |   |
| Airpark Business Center     |   | 700 Airpark Center Dr.        |                | Industrial         |   | 2,702            |   | 801               |   | 2,849                                             |   | 359                            |   | 801                               |   | 3,209                 |   | 4,010              |   | 380 |   | 1992 |   | 1999 |   |
| Airpark Business Center     |   | 800 Airpark Center Dr.        |                | Industrial         |   | 2,478            |   | 924               |   | 4,021                                             |   | 241                            |   | 924                               |   | 4,263                 |   | 5,187              |   | 548 |   | 1995 |   | 1999 |   |
| Airpark Business Center     |   | 900 Airpark Center Dr         |                | Industrial         |   | 2,008            |   | 798               |   | 3,424                                             |   | 205                            |   | 798                               |   | 3,630                 |   | 4,427              |   | 458 |   | 1995 |   | 1999 |   |
| Airpark Business Center     |   | 1000 Airpark Center Dr.       |                | Industrial         |   |             |   | 1,300             |   | 9,650                                             |   | 26                             |   | 1,300                             |   | 9,676                 |   | 10,976             |   | 1,088 |   | 1997 |   | 1999 |   |
| Airpark Business Center     |   | 5270 Harding place            |                | Industrial         |   | 1,111            |   | 535               |   | 2,501                                             |   | 8                              |   | 535                               |   | 2,509                 |   | 3,045              |   | 283 |   | 1996 |   | 1999 |   |
| Airpark Business Center     |   | 1415 Donelson Pike            |                | Industrial         |   | 3,806            |   | 1,308             |   | 8,822                                             |   | 230                            |   | 1,308                             |   | 9,052                 |   | 10,361             |   | 1,010 |   | 1996 |   | 1999 |   |
| Airpark Business Center     |   | 1413 Donelson Pike            |                | Industrial         |   | 1,235            |   | 549               |   | 2,751                                             |   | 37                             |   | 549                               |   | 2,788                 |   | 3,336              |   | 318 |   | 1996 |   | 1999 |   |
| Airpark Business Center     |   | 5233 Harding Place            |                | Industrial         |   |             |   | 628               |   | 3,084                                             |   | 9                              |   | 628                               |   | 3,093                 |   | 3,721              |   | 574 |   | 1998 |   | 1999 |   |
| Airpark East                |   | Airpark East-Eagle Bldg       |                | Industrial         |   |             |   | 1,564             |   | 3,341                                             |   | 677                            |   | 1,564                             |   | 4,018                 |   | 5,582              |   | 106 |   | 2001 |   | 2002 |   |
| Cumberland Business Center  |   | Cumberland Business Center  I |                | Industrial         |   |             |   | 1,461             |   | 6,958                                             |   | (0                             | )      | 1,461                             |   | 6,958                 |   | 8,419              |   | 1,255 |   | 1999 |   | 1999 |   |
| Four-Forty Business Center  |   | 700 Melrose Avenue            |                | Industrial         |   | 3,326            |   | 938               |   | 6,481                                             |   | 1                              |   | 938                               |   | 6,481                 |   | 7,420              |   | 724 |   | 1997 |   | 1999 |   |
| Four-Forty Business Center  |   | 684 Melrose Ave               |                | Industrial         |   |             |   | 1,812             |   | 7,605                                             |   | 392                            |   | 1,812                             |   | 7,997                 |   | 9,809              |   | 1,060 |   | 1998 |   | 1999 |   |
| Four-Forty Business Center  |   | 782 Melrose Avenue            |                | Industrial         |   |             |   | 1,522             |   | 5,766                                             |   | 260                            |   | 1,522                             |   | 6,027                 |   | 7,549              |   | 738 |   | 1997 |   | 1999 |   |
| Four-Forty Business Center  |   | 784 Melrose Ave.              |                | Industrial         |   |             |   | 471               |   | 3,331                                             |   | 517                            |   | 471                               |   | 3,847                 |   | 4,319              |   | 653 |   | 1999 |   | 1999 |   |
| Greenbriar                  |   | Greenbriar Business Park      |                | Industrial         |   |             |   | 1,445             |   | 5,199                                             |   | 620                            |   | 1,445                             |   | 5,819                 |   | 7,264              |   | 1,329 |   | 1986 |   | 1994 |   |
| Haywood Oaks                |   | Haywood Oaks Bldg 2           |                | Industrial         |   |             |   | 395               |   | 1,932                                             |   | 106                            |   | 395                               |   | 2,039                 |   | 2,433              |   | 510 |   | 1988 |   | 1993 |   |
| Haywood Oaks                |   | Haywood Oaks Bldg 3           |                | Industrial         |   |             |   | 346               |   | 1,763                                             |   | 360                            |   | 346                               |   | 2,123                 |   | 2,470              |   | 587 |   | 1988 |   | 1993 |   |
| Haywood Oaks                |   | Haywood Oaks Bldg 4           |                | Industrial         |   |             |   | 435               |   | 2,115                                             |   | 209                            |   | 435                               |   | 2,325                 |   | 2,760              |   | 665 |   | 1988 |   | 1993 |   |
| Haywood Oaks                |   | Haywood Oaks Bldg 5           |                | Industrial         |   |             |   | 629               |   | 3,075                                             |   | 103                            |   | 629                               |   | 3,179                 |   | 3,808              |   | 803 |   | 1988 |   | 1993 |   |
| Haywood Oaks                |   | Haywood Oaks Bldg 6           |                | Industrial         |   |             |   | 924               |   | 6,394                                             |   | 383                            |   | 946                               |   | 6,756                 |   | 7,701              |   | 1,707 |   | 1989 |   | 1993 |   |
| Haywood Oaks                |   | Haywood Oaks Bldg 7           |                | Industrial         |   |             |   | 456               |   | 1,864                                             |   | 261                            |   | 456                               |   | 2,125                 |   | 2,581              |   | 449 |   | 1995 |   | 1995 |   |
| Haywood Oaks                |   | Haywood Oaks Bldg 8           |                | Industrial         |   |             |   | 617               |   | 3,536                                             |   | 78                             |   | 751                               |   | 3,480                 |   | 4,231              |   | 916 |   | 1997 |   | 1997 |   |
| Haywood Oaks East           |   | Haywood Oaks East             |                | Industrial         |   |             |   | 969               |   | 5,883                                             |   | 248                            |   | 969                               |   | 6,131                 |   | 7,100              |   | 1,009 |   | 2000 |   | 2000 |   |
| Lakeview Place              |   | Three Lakeview                |                | Office             |   |             |   | 2,126             |   | 13,966                                            |   | 1,619                          |   | 2,126                             |   | 15,585                |   | 17,711             |   | 2,445 |   | 1999 |   | 1999 |   |
| Lakeview Place              |   | One Lakeview Place            |                | Office             |   |             |   | 2,046             |   | 11,852                                            |   | 1,418                          |   | 2,123                             |   | 13,193                |   | 15,316             |   | 2,023 |   | 1986 |   | 1998 |   |
| Lakeview Place              |   | Two Lakeview Place            |                | Office             |   |             |   | 2,046             |   | 11,883                                            |   | 1,040                          |   | 2,046                             |   | 12,924                |   | 14,970             |   | 2,105 |   | 1988 |   | 1998 |   |
| Metro Center                |   | 545 Mainstream Dr.            |                | Office             |   |             |   | 847               |   | 6,326                                             |   | 494                            |   | 847                               |   | 6,821                 |   | 7,668              |   | 858 |   | 1983 |   | 1999 |   |
| Metro Center                |   | 566 Mainstream Dr.            |                | Industrial         |   |             |   | 454               |   | 3,937                                             |   | 496                            |   | 454                               |   | 4,433                 |   | 4,887              |   | 571 |   | 1982 |   | 1999 |   |
| Metro Center                |   | 621 Mainstream Dr.            |                | Industrial         |   |             |   | 428               |   | 2,868                                             |   | 223                            |   | 428                               |   | 3,092                 |   | 3,519              |   | 359 |   | 1984 |   | 1999 |   |
| Metro Center                |   | Riverview Business Center I   |                | Industrial         |   |             |   | 497               |   | 2,862                                             |   | 58                             |   | 497                               |   | 2,921                 |   | 3,418              |   | 510 |   | 2000 |   | 2000 |   |
| Metro Center                |   | Riverview Business Center  II |                | Industrial         |   |             |   | 685               |   | 2,723                                             |   | 203                            |   | 685                               |   | 2,927                 |   | 3,612              |   | 310 |   | 2001 |   | 2001 |   |
| Metropolitan Airport Center |   | Metro Airport Center Bldg 1   |                | Industrial         |   |             |   | 1,180             |   | 4,836                                             |   | 168                            |   | 1,190                             |   | 4,994                 |   | 6,184              |   | 1,295 |   | 1999 |   | 1999 |   |
| Metropolitan Airport Center |   | Metro Airport Bus Ctr C       |                | Industrial         |   |             |   | 1,053             |   | 6,615                                             |   | 111                            |   | 1,053                             |   | 6,726                 |   | 7,779              |   | 447 |   | 2001 |   | 2001 |   |
| Nashville Business Center   |   | 3300 Briley Park Blvd         |                | Industrial         |   |             |   | 936               |   | 6,603                                             |   | 0                              |   | 936                               |   | 6,603                 |   | 7,539              |   | 1,099 |   | 1997 |   | 1999 |   |
| Grassmere                   |   | Powertel Pk Lot at  Grassmere |                | Grounds            |   |             |   | 1,050             |   | —                                            |   | —                         |   | 1,050                             |   | —                |   | 1,050              |   | — |   | 2003 |   | 2003 |   |
| Royal Parkway Center        |   | 2515 Perimeter Park           |                | Industrial         |   |             |   | 731               |   | 4,766                                             |   | 201                            |   | 734                               |   | 4,963                 |   | 5,698              |   | 556 |   | 1990 |   | 1999 |   |
| Royal Parkway Center        |   | 500 Royal Parkway             |                | Industrial         |   |             |   | 603               |   | 4,644                                             |   | 8                              |   | 603                               |   | 4,652                 |   | 5,255              |   | 520 |   | 1990 |   | 1999 |   |
|                        |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **NEW HOPE, MINNESOTA**     |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
|                        |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **NORCROSS, GEORGIA**       |   |                          |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Gwinnett Park               |   | 1750 Beaver Ruin              |                | Industrial         |   |             |   | 640               |   | 6,793                                             |   | 427                            |   | 640                               |   | 7,220                 |   | 7,860              |   | 873 |   | 1997 |   | 1999 |   |
| Gwinnett Park               |   | 4258 Communications Drive     |                | Industrial         |   |             |   | 29                |   | 2,388                                             |   | 116                            |   | 29                                |   | 2,504                 |   | 2,533              |   | 277 |   | 1981 |   | 1999 |   |
| Gwinnett Park               |   | 4291 Communications Drive     |                | Industrial         |   |             |   | 4                 |   | 1,467                                             |   | 75                             |   | 16                                |   | 1,531                 |   | 1,546              |   | 168 |   | 1981 |   | 1999 |   |
| Gwinnett Park               |   | 1826 Doan Way                 |                | Industrial         |   |             |   | 51                |   | 3,065                                             |   | 122                            |   | 51                                |   | 3,187                 |   | 3,238              |   | 408 |   | 1984 |   | 1999 |   |
| Gwinnett Park               |   | 1650 International Blvd       |                | Industrial         |   |             |   | 69                |   | 2,211                                             |   | 641                            |   | 75                                |   | 2,847                 |   | 2,921              |   | 334 |   | 1984 |   | 1999 |   |
| Gwinnett Park               |   | 4245 International Blvd       |                | Industrial         |   |             |   | 192               |   | 10,874                                            |   | (0                             | )      | 192                               |   | 10,874                |   | 11,066             |   | 1,216 |   | 1985 |   | 1999 |   |
| Gwinnett Park               |   | 4250 International Blvd       |                | Industrial         |   |             |   | 193               |   | 3,042                                             |   | 140                            |   | 216                               |   | 3,159                 |   | 3,375              |   | 350 |   | 1986 |   | 1999 |   |
| Gwinnett Park               |   | 4295 International Blvd       |                | Industrial         |   |             |   | 58                |   | 2,330                                             |   | 35                             |   | 58                                |   | 2,365                 |   | 2,423              |   | 264 |   | 1984 |   | 1999 |   |
| Gwinnett Park               |   | 4320 International Blvd       |                | Industrial         |   |             |   | 44                |   | 2,058                                             |   | 391                            |   | 54                                |   | 2,439                 |   | 2,493              |   | 250 |   | 1984 |   | 1999 |   |
| Gwinnett Park               |   | 4350 International Blvd       |                | Industrial         |   |             |   | 78                |   | 3,061                                             |   | 354                            |   | 78                                |   | 3,416                 |   | 3,493              |   | 391 |   | 1982 |   | 1999 |   |
| Gwinnett Park               |   | 4355 International Blvd       |                | Industrial         |   |             |   | 233               |   | 2,969                                             |   | 264                            |   | 233                               |   | 3,233                 |   | 3,467              |   | 463 |   | 1983 |   | 1999 |   |
| Gwinnett Park               |   | 4405A International Blvd      |                | Industrial         |   |             |   | 97                |   | 2,680                                             |   | 768                            |   | 97                                |   | 3,448                 |   | 3,545              |   | 639 |   | 1984 |   | 1999 |   |
| Gwinnett Park               |   | 4405B International Blvd      |                | Industrial         |   |             |   | 118               |   | 3,900                                             |   | 233                            |   | 137                               |   | 4,114                 |   | 4,251              |   | 485 |   | 1984 |   | 1999 |   |

 

68

----

 
| **Development**                  |   | **Name**                        |                | **Building  Type** |   | **Encumbrances** |   | **Initial  Cost** |   | **Cost  Capitalized  Subsequent to  Development** |   | **Gross Book  Value 12/31/03** |   | **Accumulated  Depreciation (1)** |   | **Year  Constructed** |   | **Year  Acquired** |   |
|----------------------------------|--------|---------------------------------|---------------------|--------------------|--------|------------------|--------|-------------------|--------|---------------------------------------------------|--------|--------------------------------|--------|-----------------------------------|--------|-----------------------|--------|--------------------|--------|
| **Land**                         |   | **Buildings**                   | **to  Acquisition** | **Land/Land  Imp** |   | **Bldgs/TI**     |   | **Total**         |
| Gwinnett Park                    |   | 4405C International Blvd        |                | Industrial         |   |             |   | 21                |   | 800                                               |   | 82                             |   | 21                                |   | 883                   |   | 904                |   | 101 |   | 1984 |   | 1999 |   |
| Gwinnett Park                    |   | 1858 Meca Way                   |                | Industrial         |   |             |   | 20                |   | 1,828                                             |   | 171                            |   | 27                                |   | 1,991                 |   | 2,019              |   | 247 |   | 1975 |   | 1999 |   |
| Gwinnett Park                    |   | 4316 Park Drive                 |                | Industrial         |   |             |   | 262               |   | 1,424                                             |   | 206                            |   | 262                               |   | 1,629                 |   | 1,892              |   | 179 |   | 1980 |   | 1999 |   |
| Gwinnett Park                    |   | 4357 Park Drive                 |                | Industrial         |   |             |   | 12                |   | 2,251                                             |   | 417                            |   | 12                                |   | 2,669                 |   | 2,680              |   | 372 |   | 1979 |   | 1999 |   |
| Gwinnett Park                    |   | 4366 Park Drive                 |                | Office             |   |             |   | 6                 |   | 205                                               |   | 312                            |   | 22                                |   | 502                   |   | 524                |   | 59 |   | 1981 |   | 1999 |   |
| Gwinnett Park                    |   | 4386 Park Drive                 |                | Industrial         |   |             |   | 17                |   | 986                                               |   | 411                            |   | 17                                |   | 1,397                 |   | 1,415              |   | 187 |   | 1973 |   | 1999 |   |
| Gwinnett Park                    |   | 4436 Park Drive                 |                | Industrial         |   |             |   | 18                |   | 2,279                                             |   | 36                             |   | 26                                |   | 2,306                 |   | 2,333              |   | 257 |   | 1968 |   | 1999 |   |
| Gwinnett Park                    |   | 4437 Park Drive                 |                | Industrial         |   |             |   | 21                |   | 2,644                                             |   | 206                            |   | 21                                |   | 2,850                 |   | 2,871              |   | 346 |   | 1978 |   | 1999 |   |
| Gwinnett Park                    |   | 4467 Park Drive                 |                | Industrial         |   |             |   | 6                 |   | 1,630                                             |   | 95                             |   | 6                                 |   | 1,725                 |   | 1,731              |   | 214 |   | 1978 |   | 1999 |   |
| Gwinnett Park                    |   | 4487 Park Drive                 |                | Industrial         |   |             |   | 6                 |   | 3,407                                             |   | 374                            |   | 6                                 |   | 3,781                 |   | 3,787              |   | 486 |   | 1978 |   | 1999 |   |
| Gwinnett Park                    |   | 1835 Shackleford Court          |                | Office             |   |             |   | 29                |   | 6,309                                             |   | 711                            |   | 29                                |   | 7,020                 |   | 7,049              |   | 841 |   | 1990 |   | 1999 |   |
| Gwinnett Park                    |   | 1854 Shackleford Road           |                | Office             |   |             |   | 52                |   | 10,387                                            |   | 1,067                          |   | 52                                |   | 11,454                |   | 11,506             |   | 1,596 |   | 1985 |   | 1999 |   |
| Gwinnett Park                    |   | 4274 Shackleford Road           |                | Industrial         |   |             |   | 27                |   | 3,626                                             |   | 184                            |   | 32                                |   | 3,805                 |   | 3,837              |   | 437 |   | 1974 |   | 1999 |   |
| Gwinnett Park                    |   | 4275 Shackleford Court          |                | Office             |   | 384              |   | 8                 |   | 2,125                                             |   | 451                            |   | 12                                |   | 2,573                 |   | 2,584              |   | 322 |   | 1985 |   | 1999 |   |
| Gwinnett Park                    |   | 4344 Shackleford Road           |                | Industrial         |   |             |   | 286               |   | 2,221                                             |   | 196                            |   | 293                               |   | 2,410                 |   | 2,702              |   | 390 |   | 1975 |   | 1999 |   |
| Gwinnett Park                    |   | 4355 Shackleford Road           |                | Industrial         |   |             |   | 7                 |   | 1,904                                             |   | 141                            |   | 70                                |   | 1,983                 |   | 2,053              |   | 643 |   | 1972 |   | 1999 |   |
| Gwinnett Park                    |   | 4364 Shackleford Road           |                | Industrial         |   |             |   | 9                 |   | 982                                               |   | 6                              |   | 9                                 |   | 987                   |   | 997                |   | 110 |   | 1973 |   | 1999 |   |
| Gwinnett Park                    |   | 4366 Shackleford Road           |                | Industrial         |   |             |   | 20                |   | 2,567                                             |   | 315                            |   | 26                                |   | 2,875                 |   | 2,901              |   | 417 |   | 1981 |   | 1999 |   |
| Gwinnett Park                    |   | 4388 Shackelford Road           |                | Industrial         |   |             |   | 33                |   | 4,002                                             |   | 395                            |   | 43                                |   | 4,387                 |   | 4,430              |   | 472 |   | 1981 |   | 1999 |   |
| Gwinnett Park                    |   | 4444 Shackleford Road           |                | Industrial         |   |             |   | 31                |   | 2,632                                             |   | 358                            |   | 31                                |   | 2,989                 |   | 3,021              |   | 439 |   | 1979 |   | 1999 |   |
| Gwinnett Pavilion                |   | 1505 Pavillion Place            |                | Industrial         |   |             |   | 448               |   | 3,996                                             |   | 530                            |   | 455                               |   | 4,519                 |   | 4,974              |   | 976 |   | 1988 |   | 1999 |   |
| Gwinnett Pavilion                |   | 3883 Steve Reynolds Blvd.       |                | Industrial         |   |             |   | 612               |   | 4,928                                             |   | 27                             |   | 612                               |   | 4,955                 |   | 5,567              |   | 553 |   | 1990 |   | 1999 |   |
| Gwinnett Pavilion                |   | 3890 Steve Reynolds Blvd        |                | Industrial         |   |             |   | 519               |   | 3,026                                             |   | 0                              |   | 519                               |   | 3,026                 |   | 3,545              |   | 341 |   | 1991 |   | 1999 |   |
| Gwinnett Pavilion                |   | 3950 Steve Reynolds Blvd.       |                | Industrial         |   |             |   | 684               |   | 2,825                                             |   | 79                             |   | 684                               |   | 2,903                 |   | 3,588              |   | 334 |   | 1992 |   | 1999 |   |
| Northeast I85                    |   | 5755 Peachtree Industrial  Blvd |                | Office             |   |             |   | 800               |   | 3,652                                             |   | 229                            |   | 800                               |   | 3,881                 |   | 4,681              |   | 434 |   | 1997 |   | 1999 |   |
| Northeast I85                    |   | 5765 Peachtree Industrial  Blvd |                | Industrial         |   |             |   | 521               |   | 4,671                                             |   | 0                              |   | 521                               |   | 4,671                 |   | 5,192              |   | 523 |   | 1997 |   | 1999 |   |
| Northeast I85                    |   | 5775 Peachtree Industrial  Blvd |                | Industrial         |   |             |   | 521               |   | 4,695                                             |   | 36                             |   | 521                               |   | 4,730                 |   | 5,251              |   | 543 |   | 1997 |   | 1999 |   |
| Northwoods                       |   | 2915 Courtyards Drive           |                | Industrial         |   |             |   | 268               |   | 1,967                                             |   | 42                             |   | 268                               |   | 2,009                 |   | 2,276              |   | 226 |   | 1986 |   | 1999 |   |
| Northwoods                       |   | 2925 Courtyards Drive           |                | Industrial         |   |             |   | 333               |   | 3,243                                             |   | 291                            |   | 333                               |   | 3,534                 |   | 3,867              |   | 367 |   | 1986 |   | 1999 |   |
| Northwoods                       |   | 2975 Courtyards Drive           |                | Industrial         |   |             |   | 144               |   | 1,268                                             |   | 260                            |   | 144                               |   | 1,528                 |   | 1,672              |   | 167 |   | 1986 |   | 1999 |   |
| Northwoods                       |   | 2995 Courtyards Drive           |                | Industrial         |   |             |   | 109               |   | 894                                               |   | 6                              |   | 109                               |   | 900                   |   | 1,010              |   | 100 |   | 1986 |   | 1999 |   |
| Northwoods                       |   | 2725 Northwoods Pkwy            |                | Industrial         |   |             |   | 440               |   | 2,575                                             |   | 661                            |   | 440                               |   | 3,236                 |   | 3,676              |   | 441 |   | 1984 |   | 1999 |   |
| Northwoods                       |   | 2755 Northwoods Pkwy            |                | Industrial         |   |             |   | 249               |   | 2,887                                             |   | 150                            |   | 249                               |   | 3,037                 |   | 3,286              |   | 351 |   | 1986 |   | 1999 |   |
| Northwoods                       |   | 2775 Northwoods Pkwy            |                | Industrial         |   |             |   | 322               |   | 2,431                                             |   | 145                            |   | 322                               |   | 2,576                 |   | 2,898              |   | 273 |   | 1986 |   | 1999 |   |
| Northwoods                       |   | 2850 Colonnades Court           |                | Industrial         |   |             |   | 562               |   | 5,294                                             |   | 106                            |   | 562                               |   | 5,399                 |   | 5,961              |   | 591 |   | 1988 |   | 1999 |   |
| Northwoods                       |   | 3040 Northwoods Pkwy            |                | Industrial         |   |             |   | 298               |   | 1,806                                             |   | 311                            |   | 298                               |   | 2,117                 |   | 2,415              |   | 290 |   | 1984 |   | 1999 |   |
| Northwoods                       |   | 3044 Northwoods Circle          |                | Industrial         |   |             |   | 167               |   | 718                                               |   | 150                            |   | 167                               |   | 868                   |   | 1,035              |   | 85 |   | 1984 |   | 1999 |   |
| Northwoods                       |   | 3055 Northwoods Pkwy            |                | Industrial         |   |             |   | 213               |   | 1,560                                             |   | 110                            |   | 213                               |   | 1,670                 |   | 1,883              |   | 260 |   | 1985 |   | 1999 |   |
| Northwoods                       |   | 3075 Northwoods Pkwy            |                | Industrial         |   |             |   | 374               |   | 2,872                                             |   | 133                            |   | 374                               |   | 3,005                 |   | 3,379              |   | 379 |   | 1985 |   | 1999 |   |
| Northwoods                       |   | 3100 Northwoods Pkwy            |                | Industrial         |   |             |   | 393               |   | 2,550                                             |   | 157                            |   | 393                               |   | 2,707                 |   | 3,100              |   | 290 |   | 1985 |   | 1999 |   |
| Northwoods                       |   | 3155 Northwoods Pkwy            |                | Industrial         |   |             |   | 331               |   | 2,511                                             |   | 12                             |   | 331                               |   | 2,522                 |   | 2,854              |   | 281 |   | 1985 |   | 1999 |   |
| Northwoods                       |   | 3175 Northwoods Pkwy            |                | Industrial         |   |             |   | 250               |   | 2,076                                             |   | 42                             |   | 250                               |   | 2,118                 |   | 2,368              |   | 233 |   | 1985 |   | 1999 |   |
| Peachtree Corners Tech Center    |   | 3170 Reps Miller Road           |                | Industrial         |   |             |   | 500               |   | 3,671                                             |   | 18                             |   | 500                               |   | 3,689                 |   | 4,189              |   | 412 |   | 1998 |   | 1999 |   |
| Peachtree Corners Tech Center    |   | 3180 Reps Miller Road           |                | Industrial         |   |             |   | 500               |   | 2,951                                             |   | 38                             |   | 500                               |   | 2,989                 |   | 3,489              |   | 335 |   | 1998 |   | 1999 |   |
| Peachtree Corners Tech Center    |   | 3190 Reps Miller Road           |                | Industrial         |   |             |   | 525               |   | 2,371                                             |   | 534                            |   | 525                               |   | 2,905                 |   | 3,430              |   | 329 |   | 1998 |   | 1999 |   |
|                             |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **NORTHLAKE, ILLINOIS**          |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Northlake                        |   | Northlake I                     |                | Industrial         |   |             |   | 5,721             |   | 10,792                                            |   | —                         |   | 5,721                             |   | 10,792                |   | 16,513             |   | 400 |   | 2002 |   | 2002 |   |
|                             |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **NORTH OLMSTED, OHIO**          |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Great Northern Corp Center       |   | Great Northern Corp Center  I   |                | Office             |   |             |   | 1,048             |   | 7,182                                             |   | 662                            |   | 1,040                             |   | 7,852                 |   | 8,892              |   | 1,571 |   | 1985 |   | 1996 |   |
| Great Northern Corp Center       |   | Great Northern Corp Center  II  |                | Office             |   |             |   | 1,048             |   | 7,262                                             |   | 891                            |   | 1,048                             |   | 8,153                 |   | 9,201              |   | 1,762 |   | 1987 |   | 1996 |   |
| Great Northern Corp Center       |   | Great Northern Corp Center  III |                | Office             |   |             |   | 604               |   | 5,732                                             |   | 856                            |   | 604                               |   | 6,588                 |   | 7,192              |   | 1,551 |   | 1999 |   | 1999 |   |
|                             |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **OLIVETTE, MISSOURI**           |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| I-170 Center                     |   | I-170 Center                    |                | Industrial         |   |             |   | 950               |   | 4,206                                             |   | 679                            |   | 1,018                             |   | 4,816                 |   | 5,834              |   | 989 |   | 1986 |   | 1996 |   |
| Warson Commerce Center           |   | Warson Commerce Center          |                | Industrial         |   |             |   | 749               |   | 5,426                                             |   | 486                            |   | 749                               |   | 5,911                 |   | 6,660              |   | 903 |   | 1987 |   | 1998 |   |
|                             |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **ORLANDO, FLORIDA**             |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Business Centre at Lee Vista     |   | Lee Vista Distribution Ctr  I   |                | Industrial         |   |             |   | 819               |   | 4,559                                             |   | 436                            |   | 819                               |   | 4,995                 |   | 5,814              |   | 1,383 |   | 1998 |   | 1999 |   |
| Business Centre at Lee Vista     |   | Lee Vista Distribution Ctr  II  |                | Industrial         |   |             |   | 740               |   | 3,945                                             |   | 12                             |   | 740                               |   | 3,957                 |   | 4,697              |   | 832 |   | 1999 |   | 2000 |   |
| Business Centre at Lee Vista     |   | Lee Vista Service Center I      |                | Industrial         |   |             |   | 926               |   | 2,357                                             |   | 627                            |   | 926                               |   | 2,984                 |   | 3,910              |   | 202 |   | 2000 |   | 2001 |   |
| Business Centre at Lee Vista-Gen |   | Lee Vista Distrib. Center  III  |                | Industrial         |   |             |   | 841               |   | 3,580                                             |   | 167                            |   | 841                               |   | 3,748                 |   | 4,588              |   | 163 |   | 2001 |   | 2002 |   |
| Liberty Park @ Southcenter       |   | Southcenter I-Brede/Allied  BTS |                | Industrial         |   |             |   | 2,489             |   | 4,469                                             |   | —                         |   | 2,489                             |   | 4,469                 |   | 6,959              |   | 115 |   | 2002 |   | 2002 |   |

 

69

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| **Development**               |   | **Name**                       |                | **Building  Type** |   | **Encumbrances** |   | **Initial  Cost** |   | **Cost  Capitalized  Subsequent to  Development** |   | **Gross Book  Value 12/31/03** |   | **Accumulated  Depreciation (1)** |   | **Year  Constructed** |   | **Year  Acquired** |   |
|-------------------------------|--------|--------------------------------|---------------------|--------------------|--------|------------------|--------|-------------------|--------|---------------------------------------------------|--------|--------------------------------|--------|-----------------------------------|--------|-----------------------|--------|--------------------|--------|
| **Land**                      |   | **Buildings**                  | **to  Acquisition** | **Land/Land  Imp** |   | **Bldgs/TI**     |   | **Total**         |
| Parksouth Dist. Center        |   | Parksouth Dist. Ctr-Bldg B     |                | Industrial         |   |             |   | 565               |   | 4,906                                             |   | 22                             |   | 565                               |   | 4,927                 |   | 5,492              |   | 552 |   | 1996 |   | 1999 |   |
| Parksouth Dist. Center        |   | Parksouth Dist. Ctr-Bldg A     |                | Industrial         |   |             |   | 493               |   | 4,557                                             |   | 22                             |   | 493                               |   | 4,579                 |   | 5,072              |   | 520 |   | 1997 |   | 1999 |   |
| Parksouth Dist. Center        |   | Parksouth Dist. Ctr-Bldg D     |                | Industrial         |   |             |   | 593               |   | 4,142                                             |   | 0                              |   | 593                               |   | 4,142                 |   | 4,735              |   | 477 |   | 1998 |   | 1999 |   |
| Parksouth Dist. Center        |   | Parksouth Dist. Ctr-Bldg E     |                | Industrial         |   |             |   | 649               |   | 4,667                                             |   | 158                            |   | 649                               |   | 4,826                 |   | 5,474              |   | 548 |   | 1997 |   | 1999 |   |
| Parksouth Dist. Center        |   | Parksouth Dist. Ctr-Bldg F     |                | Industrial         |   |             |   | 1,030             |   | 5,543                                             |   | 916                            |   | 1,030                             |   | 6,459                 |   | 7,489              |   | 954 |   | 1999 |   | 1999 |   |
| Parksouth Dist. Center        |   | Parksouth Dist. Ctr-Bldg H     |                | Industrial         |   |             |   | 725               |   | 3,962                                             |   | 4                              |   | 725                               |   | 3,966                 |   | 4,691              |   | 434 |   | 2000 |   | 2000 |   |
| Parksouth Dist. Center        |   | Chase BTS-Orlando              |                | Industrial         |   |             |   | 598               |   | 2,049                                             |   | 1,168                          |   | 669                               |   | 3,146                 |   | 3,815              |   | 147 |   | 2000 |   | 2001 |   |
| Parksouth Dist. Center        |   | Parksouth-Benjamin Moore  BTS  |                | Industrial         |   |             |   | 708               |   | 2,070                                             |   | —                         |   | 708                               |   | 2,070                 |   | 2,778              |   | 48 |   | 2003 |   | 2003 |   |
|                          |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **PARK RIDGE, ILLINOIS**      |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Oakmont Corporate Center      |   | O’Hare Corporate Centre   |                | Office             |   |             |   | 1,476             |   | 8,819                                             |   | —                         |   | 1,476                             |   | 8,819                 |   | 10,295             |   | — |   | 1985 |   | 2003 |   |
|                          |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **PEPPER PIKE, OHIO**         |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Corporate Circle              |   | Corporate Circle               |                | Office             |   |             |   | 1,696             |   | 11,484                                            |   | 2,092                          |   | 1,698                             |   | 13,575                |   | 15,272             |   | 2,470 |   | 1983 |   | 1996 |   |
|                          |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **PLAINFIELD, INDIANA**       |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Plainfield Business Park      |   | Plainfield Building 1          |                | Industrial         |   | 6,168            |   | 1,104             |   | 11,190                                            |   | 10                             |   | 1,104                             |   | 11,200                |   | 12,304             |   | 1,089 |   | 2000 |   | 2000 |   |
| Plainfield Business Park      |   | Plainfield Building 2          |                | Industrial         |   |             |   | 1,387             |   | 9,691                                             |   | 0                              |   | 1,387                             |   | 9,691                 |   | 11,078             |   | 1,091 |   | 2000 |   | 2000 |   |
| Plainfield Business Park      |   | Plainfield Building 3          |                | Industrial         |   |             |   | 2,016             |   | 12,415                                            |   | —                         |   | 2,016                             |   | 12,415                |   | 14,431             |   | 170 |   | 2002 |   | 2002 |   |
|                          |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **PLANO, TEXAS**              |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Legacy Business Park          |   | Metasolv Building Phase I      |                | Office             |   |             |   | 1,527             |   | 5,849                                             |   | 706                            |   | 1,527                             |   | 6,555                 |   | 8,082              |   | 829 |   | 1997 |   | 1999 |   |
| Legacy Business Park          |   | Metasolv Building Phase II     |                | Office             |   |             |   | 1,181             |   | 11,236                                            |   | 65                             |   | 1,181                             |   | 11,301                |   | 12,482             |   | 1,515 |   | 1999 |   | 1999 |   |
|                          |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **PLYMOUTH, MINNESOTA**       |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Medicine Lake                 |   | Medicine Lake Indus. Center    |                | Industrial         |   | 3,352            |   | 1,158             |   | 6,701                                             |   | 838                            |   | 1,145                             |   | 7,551                 |   | 8,696              |   | 1,325 |   | 1970 |   | 1997 |   |
| Plymouth Office/Tech Center   |   | Plymouth Office/Tech Center    |                | Industrial         |   |             |   | 428               |   | 2,450                                             |   | 622                            |   | 431                               |   | 3,068                 |   | 3,499              |   | 501 |   | 1986 |   | 1998 |   |
| Plymouth Service Center       |   | Plymouth Service Center        |                | Industrial         |   |             |   | 345               |   | 2,009                                             |   | 742                            |   | 351                               |   | 2,745                 |   | 3,096              |   | 615 |   | 1978 |   | 1999 |   |
| Westpoint Buildings           |   | Westpoint Business Ctr         |                | Office             |   |             |   | 98                |   | 573                                               |   | 292                            |   | 114                               |   | 848                   |   | 963                |   | 168 |   | 1978 |   | 1999 |   |
| Westpoint Buildings           |   | Westpoint Bldg B&C         |                | Industrial         |   |             |   | 370               |   | 2,149                                             |   | 526                            |   | 370                               |   | 2,674                 |   | 3,045              |   | 495 |   | 1978 |   | 1999 |   |
| Westpoint Buildings           |   | Westpoint Bldg D&E         |                | Industrial         |   |             |   | 362               |   | 2,111                                             |   | 733                            |   | 362                               |   | 2,844                 |   | 3,206              |   | 683 |   | 1978 |   | 1999 |   |
|                          |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **RALEIGH, NORTH CAROLINA**   |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Brook Forest                  |   | Brook Forest I                 |                | Office             |   |             |   | 1,242             |   | 6,199                                             |   | 84                             |   | 1,242                             |   | 6,283                 |   | 7,525              |   | 798 |   | 2000 |   | 2000 |   |
| Centerview                    |   | Centerview 5540                |                | Office             |   |             |   | 773               |   | 6,307                                             |   | —                         |   | 773                               |   | 6,307                 |   | 7,079              |   | 41 |   | 1986 |   | 2003 |   |
| Centerview                    |   | Centerview 5565                |                | Office             |   |             |   | 513               |   | 4,831                                             |   | —                         |   | 513                               |   | 4,831                 |   | 5,344              |   | 33 |   | 1999 |   | 2003 |   |
| Centerview                    |   | Centerview 5580                |                | Office             |   |             |   | 768               |   | 5,675                                             |   | —                         |   | 768                               |   | 5,675                 |   | 6,443              |   | 39 |   | 1987 |   | 2003 |   |
| Crabtree Overlook             |   | Crabtree Overlook              |                | Office             |   |             |   | 2,164             |   | 20,949                                            |   | —                         |   | 2,164                             |   | 20,949                |   | 23,113             |   | 1,617 |   | 2000 |   | 2001 |   |
| Interchange Plaza             |   | 6525 West Campus Oval          |                | Office             |   |             |   | 842               |   | 3,451                                             |   | 1,917                          |   | 881                               |   | 5,329                 |   | 6,210              |   | 332 |   | 1993 |   | 1999 |   |
| Interchange Plaza             |   | 801 Jones Franklin Rd          |                | Office             |   | 4,963            |   | 1,351             |   | 7,800                                             |   | 251                            |   | 1,351                             |   | 8,051                 |   | 9,402              |   | 900 |   | 1995 |   | 1999 |   |
| Interchange Plaza             |   | 5520 Capital Ctr. Dr           |                | Office             |   |             |   | 842               |   | 4,412                                             |   | 507                            |   | 842                               |   | 4,919                 |   | 5,761              |   | 574 |   | 1993 |   | 1999 |   |
| Spring Forest Business Center |   | 3200 Spring Forest Road        |                | Industrial         |   |             |   | 561               |   | 5,253                                             |   | 544                            |   | 561                               |   | 5,797                 |   | 6,358              |   | 663 |   | 1986 |   | 1999 |   |
| Spring Forest Business Center |   | 3100 Spring Forest Road        |                | Industrial         |   |             |   | 616               |   | 4,232                                             |   | 344                            |   | 616                               |   | 4,576                 |   | 5,192              |   | 545 |   | 1992 |   | 1999 |   |
| Spring Forest Business Center |   | Spring Forest Bus Center  III  |                | Office             |   |             |   | 462               |   | 3,124                                             |   | 309                            |   | 462                               |   | 3,433                 |   | 3,895              |   | 189 |   | 2002 |   | 2002 |   |
| Walnut Creek                  |   | Walnut Creek Business Park  #1 |                | Industrial         |   |             |   | 419               |   | 3,112                                             |   | 7                              |   | 419                               |   | 3,119                 |   | 3,538              |   | 366 |   | 2001 |   | 2001 |   |
| Walnut Creek                  |   | Walnut Creek Business Park  #2 |                | Industrial         |   |             |   | 456               |   | 3,790                                             |   | 31                             |   | 456                               |   | 3,821                 |   | 4,277              |   | 346 |   | 2001 |   | 2001 |   |
| Walnut Creek                  |   | Walnut Creek Business Park  #3 |                | Industrial         |   |             |   | 679               |   | 4,357                                             |   | 767                            |   | 679                               |   | 5,124                 |   | 5,803              |   | 138 |   | 2001 |   | 2001 |   |
|                          |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **ROMEOVILLE, ILLINOIS**      |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Crossroads Business Park      |   | Chapco Carton Company          |                | Industrial         |   |             |   | 917               |   | 5,217                                             |   | —                         |   | 917                               |   | 5,217                 |   | 6,133              |   | 252 |   | 1999 |   | 2002 |   |
|                          |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **ROSWELL, GEORGIA**          |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Hembree Crest                 |   | 11545 Wills Road               |                | Industrial         |   |             |   | 1,225             |   | 6,479                                             |   | 158                            |   | 1,225                             |   | 6,637                 |   | 7,862              |   | 733 |   | 1998 |   | 1999 |   |
| Hembree Park                  |   | 105 Hembree Park Drive         |                | Industrial         |   |             |   | 288               |   | 1,796                                             |   | 302                            |   | 288                               |   | 2,098                 |   | 2,386              |   | 265 |   | 1988 |   | 1999 |   |
| Hembree Park                  |   | 150 Hembree Park Drive         |                | Industrial         |   |             |   | 824               |   | 3,761                                             |   | 242                            |   | 824                               |   | 4,003                 |   | 4,827              |   | 505 |   | 1985 |   | 1999 |   |
| Hembree Park                  |   | 200 Hembree Park Drive         |                | Industrial         |   |             |   | 160               |   | 2,064                                             |   | 154                            |   | 160                               |   | 2,219                 |   | 2,379              |   | 259 |   | 1985 |   | 1999 |   |
| Hembree Park                  |   | 645 Hembree Parkway            |                | Industrial         |   |             |   | 248               |   | 2,627                                             |   | 368                            |   | 248                               |   | 2,995                 |   | 3,243              |   | 469 |   | 1986 |   | 1999 |   |
| Hembree Park                  |   | 655 Hembree Parkway            |                | Industrial         |   |             |   | 248               |   | 2,762                                             |   | 258                            |   | 248                               |   | 3,020                 |   | 3,268              |   | 358 |   | 1986 |   | 1999 |   |
| Hembree Park                  |   | 250 Hembree Park Drive         |                | Industrial         |   |             |   | 686               |   | 5,269                                             |   | 422                            |   | 686                               |   | 5,690                 |   | 6,376              |   | 659 |   | 1996 |   | 1999 |   |
| Hembree Park                  |   | 660 Hembree Park Drive         |                | Industrial         |   |             |   | 785               |   | 5,083                                             |   | 365                            |   | 785                               |   | 5,449                 |   | 6,233              |   | 608 |   | 1998 |   | 1999 |   |
| Hembree Park                  |   | 245 Hembree Park Drive         |                | Industrial         |   |             |   | 616               |   | 6,388                                             |   | 653                            |   | 616                               |   | 7,041                 |   | 7,657              |   | 1,478 |   | 1999 |   | 1999 |   |
| Mansell Commons               |   | 993 Mansell Road               |                | Industrial         |   |             |   | 136               |   | 1,288                                             |   | (0                             | )      | 136                               |   | 1,288                 |   | 1,424              |   | 144 |   | 1987 |   | 1999 |   |
| Mansell Commons               |   | 995 Mansell Road               |                | Industrial         |   |             |   | 80                |   | 917                                               |   | 52                             |   | 80                                |   | 970                   |   | 1,050              |   | 129 |   | 1987 |   | 1999 |   |
| Mansell Commons               |   | 997 Mansell Road               |                | Industrial         |   |             |   | 72                |   | 666                                               |   | 48                             |   | 72                                |   | 714                   |   | 786                |   | 96 |   | 1987 |   | 1999 |   |

 

70

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| **Development**               |   | **Name**                       |                | **Building  Type** |   | **Encumbrances** |   | **Initial  Cost** |   | **Cost  Capitalized  Subsequent to  Development** |   | **Gross Book  Value 12/31/03** |   | **Accumulated  Depreciation (1)** |   | **Year  Constructed** |   | **Year  Acquired** |   |
|-------------------------------|--------|--------------------------------|---------------------|--------------------|--------|------------------|--------|-------------------|--------|---------------------------------------------------|--------|--------------------------------|--------|-----------------------------------|--------|-----------------------|--------|--------------------|--------|
| **Land**                      |   | **Buildings**                  | **to  Acquisition** | **Land/Land  Imp** |   | **Bldgs/TI**     |   | **Total**         |
| Mansell Commons               |   | 999 Mansell Road               |                | Industrial         |   |             |   | 104               |   | 955                                               |   | 9                              |   | 104                               |   | 965                   |   | 1,069              |   | 107 |   | 1987 |   | 1999 |   |
| Mansell Commons               |   | 1003 Mansell Road              |                | Industrial         |   |             |   | 136               |   | 1,365                                             |   | 121                            |   | 136                               |   | 1,486                 |   | 1,622              |   | 214 |   | 1987 |   | 1999 |   |
| Mansell Commons               |   | 1005 Mansell Road              |                | Industrial         |   |             |   | 72                |   | 948                                               |   | 4                              |   | 72                                |   | 952                   |   | 1,024              |   | 109 |   | 1987 |   | 1999 |   |
| Mansell Commons               |   | 1007 Mansell Road              |                | Industrial         |   |             |   | 168               |   | 2,135                                             |   | 278                            |   | 168                               |   | 2,412                 |   | 2,580              |   | 328 |   | 1987 |   | 1999 |   |
| Mansell Commons               |   | 1009 Mansell Road              |                | Industrial         |   |             |   | 264               |   | 2,546                                             |   | 298                            |   | 264                               |   | 2,844                 |   | 3,108              |   | 381 |   | 1986 |   | 1999 |   |
| Mansell Commons               |   | 1011 Mansell Road              |                | Industrial         |   |             |   | 256               |   | 2,662                                             |   | 395                            |   | 256                               |   | 3,057                 |   | 3,313              |   | 462 |   | 1984 |   | 1999 |   |
| North Meadow                  |   | 1100 Northmeadow Parkway       |                | Industrial         |   |             |   | 552               |   | 3,966                                             |   | 336                            |   | 557                               |   | 4,297                 |   | 4,853              |   | 510 |   | 1989 |   | 1999 |   |
| North Meadow                  |   | 1150 Northmeadow Parkway       |                | Industrial         |   |             |   | 464               |   | 3,239                                             |   | 169                            |   | 464                               |   | 3,408                 |   | 3,872              |   | 443 |   | 1988 |   | 1999 |   |
| North Meadow                  |   | 1125 Northmeadow Parkway       |                | Industrial         |   |             |   | 320               |   | 3,647                                             |   | 389                            |   | 320                               |   | 4,036                 |   | 4,356              |   | 526 |   | 1987 |   | 1999 |   |
| North Meadow                  |   | 1175 Northmeadow Parkway       |                | Industrial         |   |             |   | 328               |   | 3,418                                             |   | 509                            |   | 328                               |   | 3,927                 |   | 4,255              |   | 532 |   | 1987 |   | 1999 |   |
| North Meadow                  |   | 1250 Northmeadow Parkway       |                | Industrial         |   |             |   | 312               |   | 4,370                                             |   | 356                            |   | 312                               |   | 4,726                 |   | 5,038              |   | 627 |   | 1989 |   | 1999 |   |
| North Meadow                  |   | 1225 Northmeadow Parkway       |                | Industrial         |   |             |   | 336               |   | 3,518                                             |   | 262                            |   | 336                               |   | 3,780                 |   | 4,116              |   | 480 |   | 1989 |   | 1999 |   |
| North Meadow                  |   | 1325 Northmeadow Parkway       |                | Industrial         |   |             |   | 472               |   | 6,448                                             |   | 312                            |   | 472                               |   | 6,759                 |   | 7,231              |   | 934 |   | 1990 |   | 1999 |   |
| North Meadow                  |   | 1335 Northmeadow Parkway       |                | Industrial         |   |             |   | 946               |   | 8,195                                             |   | 237                            |   | 946                               |   | 8,432                 |   | 9,378              |   | 964 |   | 1996 |   | 1999 |   |
| North Meadow                  |   | 11390 Old Roswell Road         |                | Industrial         |   |             |   | 530               |   | 3,595                                             |   | 14                             |   | 530                               |   | 3,609                 |   | 4,139              |   | 406 |   | 1997 |   | 1999 |   |
| North Meadow                  |   | 1400 Hembree Road              |                | Industrial         |   |             |   | 545               |   | 3,267                                             |   | 41                             |   | 545                               |   | 3,308                 |   | 3,853              |   | 374 |   | 1998 |   | 1999 |   |
| North Meadow                  |   | Northmeadow BD IV              |                | Industrial         |   |             |   | 694               |   | 5,702                                             |   | 1                              |   | 694                               |   | 5,702                 |   | 6,396              |   | 609 |   | 1999 |   | 1999 |   |
| North Meadow                  |   | Northmeadow Service Ctr V      |                | Industrial         |   |             |   | 705               |   | 3,256                                             |   | (0                             | )      | 705                               |   | 3,256                 |   | 3,961              |   | 369 |   | 1999 |   | 1999 |   |
| North Meadow                  |   | Northmeadow BD VI              |                | Industrial         |   |             |   | 423               |   | 3,061                                             |   | 28                             |   | 423                               |   | 3,090                 |   | 3,513              |   | 597 |   | 2000 |   | 2000 |   |
| Northbrook                    |   | Northbrook Business Dist II    |                | Industrial         |   |             |   | 267               |   | 2,228                                             |   | 575                            |   | 267                               |   | 2,804                 |   | 3,071              |   | 240 |   | 2000 |   | 2000 |   |
| Other North Central Prop.     |   | 10745 Westside Parkway         |                | Office             |   |             |   | 925               |   | 7,177                                             |   | 291                            |   | 925                               |   | 7,469                 |   | 8,394              |   | 937 |   | 1995 |   | 1999 |   |
|                          |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **SEVEN HILLS, OHIO**         |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Rock Run                      |   | Rock Run - North               |                | Office             |   | 3,455            |   | 837               |   | 5,654                                             |   | 457                            |   | 878                               |   | 6,069                 |   | 6,948              |   | 1,239 |   | 1984 |   | 1996 |   |
| Rock Run                      |   | Rock Run - Center              |                | Office             |   | 4,483            |   | 1,046             |   | 6,991                                             |   | 913                            |   | 1,087                             |   | 7,863                 |   | 8,951              |   | 1,856 |   | 1985 |   | 1996 |   |
| Rock Run                      |   | Rock Run - South               |                | Office             |   | 3,557            |   | 877               |   | 5,925                                             |   | 445                            |   | 918                               |   | 6,329                 |   | 7,247              |   | 1,300 |   | 1986 |   | 1996 |   |
|                          |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **SHARONVILLE, OHIO**         |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Enterprise Park               |   | Enterprise Bldg 1              |                | Industrial         |   |             |   | 1,030             |   | 6,038                                             |   | 217                            |   | 1,051                             |   | 6,234                 |   | 7,285              |   | 1,568 |   | 1990 |   | 1993 |   |
| Enterprise Park               |   | Enterprise Bldg 2              |                | Industrial         |   |             |   | 733               |   | 3,927                                             |   | 676                            |   | 747                               |   | 4,589                 |   | 5,336              |   | 1,379 |   | 1990 |   | 1993 |   |
| Enterprise Park               |   | Enterprise Bldg A              |                | Industrial         |   |             |   | 119               |   | 728                                               |   | 125                            |   | 119                               |   | 854                   |   | 973                |   | 198 |   | 1987 |   | 1995 |   |
| Enterprise Park               |   | Enterprise Bldg B              |                | Industrial         |   |             |   | 119               |   | 1,242                                             |   | 56                             |   | 119                               |   | 1,298                 |   | 1,417              |   | 280 |   | 1988 |   | 1995 |   |
| Enterprise Park               |   | Enterprise Bldg D              |                | Industrial         |   |             |   | 243               |   | 2,003                                             |   | 17                             |   | 243                               |   | 2,020                 |   | 2,263              |   | 418 |   | 1989 |   | 1995 |   |
| Mosteller Dist. Center        |   | Mosteller Distribution Ctr  I  |                | Industrial         |   |             |   | 1,327             |   | 6,339                                             |   | 1,471                          |   | 1,327                             |   | 7,810                 |   | 9,137              |   | 1,727 |   | 1957 |   | 1996 |   |
| Mosteller Dist. Center        |   | Mosteller Distribution Ctr  II |                | Industrial         |   |             |   | 828               |   | 4,785                                             |   | 919                            |   | 828                               |   | 5,704                 |   | 6,532              |   | 1,296 |   | 1997 |   | 1997 |   |
| Perimeter Park                |   | Perimeter Park Bldg A          |                | Industrial         |   |             |   | 229               |   | 1,348                                             |   | 179                            |   | 229                               |   | 1,527                 |   | 1,756              |   | 312 |   | 1991 |   | 1996 |   |
| Perimeter Park                |   | Perimeter Park Bldg B          |                | Industrial         |   |             |   | 244               |   | 1,070                                             |   | 140                            |   | 244                               |   | 1,210                 |   | 1,454              |   | 272 |   | 1991 |   | 1996 |   |
|                          |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **SOLON, OHIO**               |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Fountain Parkway              |   | Fountain Parkway Bldg 2        |                | Industrial         |   |             |   | 1,138             |   | 8,773                                             |   | 37                             |   | 1,138                             |   | 8,810                 |   | 9,948              |   | 1,180 |   | 1998 |   | 1999 |   |
| Fountain Parkway              |   | Fountain Parkway Bldg 1        |                | Industrial         |   |             |   | 527               |   | 2,920                                             |   | 41                             |   | 527                               |   | 2,961                 |   | 3,488              |   | 459 |   | 1997 |   | 1998 |   |
| Solon                         |   | 30600 Carter                   |                | Industrial         |   |             |   | 819               |   | 3,450                                             |   | 411                            |   | 821                               |   | 3,859                 |   | 4,680              |   | 614 |   | 1971 |   | 1997 |   |
| Solon                         |   | 6230 Cochran                   |                | Industrial         |   |             |   | 600               |   | 2,505                                             |   | 714                            |   | 602                               |   | 3,218                 |   | 3,820              |   | 849 |   | 1977 |   | 1997 |   |
| Solon                         |   | 5821 Harper                    |                | Industrial         |   |             |   | 554               |   | 2,312                                             |   | 249                            |   | 555                               |   | 2,560                 |   | 3,115              |   | 472 |   | 1970 |   | 1997 |   |
| Solon                         |   | 6161 Cochran                   |                | Industrial         |   |             |   | 395               |   | 1,655                                             |   | 509                            |   | 396                               |   | 2,163                 |   | 2,559              |   | 435 |   | 1978 |   | 1997 |   |
| Solon                         |   | 5901 Harper                    |                | Industrial         |   |             |   | 349               |   | 1,441                                             |   | 175                            |   | 350                               |   | 1,615                 |   | 1,965              |   | 271 |   | 1970 |   | 1997 |   |
| Solon                         |   | 29125 Solon                    |                | Industrial         |   |             |   | 504               |   | 2,072                                             |   | 441                            |   | 526                               |   | 2,492                 |   | 3,018              |   | 402 |   | 1980 |   | 1997 |   |
| Solon                         |   | 6661 Cochran                   |                | Industrial         |   |             |   | 244               |   | 1,017                                             |   | 114                            |   | 245                               |   | 1,130                 |   | 1,375              |   | 183 |   | 1979 |   | 1997 |   |
| Solon                         |   | 6521 Davis                     |                | Industrial         |   |             |   | 128               |   | 537                                               |   | 124                            |   | 128                               |   | 660                   |   | 788                |   | 102 |   | 1979 |   | 1997 |   |
| Solon                         |   | 30301 Carter Street            |                | Industrial         |   |             |   | 650               |   | 5,000                                             |   | 425                            |   | 650                               |   | 5,425                 |   | 6,075              |   | 1,087 |   | 1972 |   | 1999 |   |
|                          |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **ST. LOUIS PARK, MINNESOTA** |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Cedar Lake Business Center    |   | Cedar Lake Business Center     |                | Industrial         |   |             |   | 332               |   | 1,939                                             |   | 111                            |   | 332                               |   | 2,050                 |   | 2,382              |   | 347 |   | 1976 |   | 1997 |   |
| Minneapolis-West              |   | 1600 Tower                     |                | Office             |   |             |   | 2,321             |   | 31,931                                            |   | 3,605                          |   | 2,321                             |   | 35,536                |   | 37,857             |   | 4,333 |   | 2000 |   | 2000 |   |
| North Plaza                   |   | North Plaza                    |                | Office             |   |             |   | 374               |   | 1,669                                             |   | 218                            |   | 374                               |   | 1,886                 |   | 2,260              |   | 319 |   | 1966 |   | 1998 |   |
| South Plaza                   |   | South Plaza                    |                | Office             |   |             |   | 397               |   | 1,736                                             |   | 167                            |   | 397                               |   | 1,903                 |   | 2,300              |   | 358 |   | 1966 |   | 1998 |   |
| Travelers Express Tower       |   | Travelers Express Tower        |                | Office             |   |             |   | 3,039             |   | 36,146                                            |   | 953                            |   | 3,091                             |   | 37,046                |   | 40,137             |   | 4,408 |   | 1987 |   | 1999 |   |
| Novartis                      |   | Novartis Warehouse             |                | Industrial         |   |             |   | 2,005             |   | 10,982                                            |   | 443                            |   | 2,005                             |   | 11,426                |   | 13,431             |   | 1,621 |   | 1960 |   | 1998 |   |
| SW Submkt-Minneapolis West BC |   | 5219 Building                  |                | Office             |   |             |   | 99                |   | 574                                               |   | 71                             |   | 102                               |   | 642                   |   | 744                |   | 92 |   | 1965 |   | 1998 |   |
|                          |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **ST. LOUIS, MISSOURI**       |   |                           |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Clayton                       |   | Interco Corporate Tower        |                | Office             |   |             |   | 6,150             |   | 37,279                                            |   | 365                            |   | 6,150                             |   | 37,644                |   | 43,794             |   | 1,096 |   | 1986 |   | 2002 |   |
| Craig Park Center             |   | Craig Park Center              |                | Industrial         |   |             |   | 254               |   | 2,319                                             |   | 378                            |   | 254                               |   | 2,697                 |   | 2,951              |   | 385 |   | 1984 |   | 1998 |   |
| Earth City                    |   | 3300 Pointe 70                 |                | Office             |   | 4,115            |   | 1,186             |   | 7,628                                             |   | 1,044                          |   | 1,186                             |   | 8,673                 |   | 9,859              |   | 1,416 |   | 1989 |   | 1997 |   |

 

71

----

 
| **Development**               |   | **Name**                        |                | **Building  Type** |   | **Encumbrances** |   | **Initial  Cost** |   | **Cost  Capitalized  Subsequent to  Development** |   | **Gross Book  Value 12/31/03** |   | **Accumulated  Depreciation (1)** |   | **Year  Constructed** |   | **Year  Acquired** |   |
|-------------------------------|--------|---------------------------------|---------------------|--------------------|--------|------------------|--------|-------------------|--------|---------------------------------------------------|--------|--------------------------------|--------|-----------------------------------|--------|-----------------------|--------|--------------------|--------|
| **Land**                      |   | **Buildings**                   | **to  Acquisition** | **Land/Land  Imp** |   | **Bldgs/TI**     |   | **Total**         |
| Hawthorn Office Park          |   | Hawthorn Office#1               |                | Office             |   |             |   | 2,600             |   | 15,239                                            |   | 149                            |   | 2,600                             |   | 15,389                |   | 17,989             |   | 721 |   | 1997 |   | 2002 |   |
| Lakeside Crossing             |   | Lakeside Crossing I             |                | Industrial         |   |             |   | 574               |   | 2,272                                             |   | 96                             |   | 574                               |   | 2,368                 |   | 2,942              |   | 56 |   | 2001 |   | 2002 |   |
| Lakeside Crossing             |   | Lakeside Crossing III           |                | Industrial         |   |             |   | 1,851             |   | 4,881                                             |   | 308                            |   | 1,851                             |   | 5,189                 |   | 7,040              |   | 119 |   | 2001 |   | 2002 |   |
| Lakeside Crossing             |   | Lakeside Crossing 6             |                | Industrial         |   |             |   | 1,074             |   | 2,125                                             |   | 387                            |   | 1,074                             |   | 2,513                 |   | 3,586              |   | 92 |   | 2002 |   | 2002 |   |
| Lakeside Crossing             |   | Lakeside Crossing 2             |                | Industrial         |   |             |   | 727               |   | 2,284                                             |   | —                         |   | 727                               |   | 2,284                 |   | 3,010              |   | 94 |   | 2002 |   | 2002 |   |
| Laumeier Office Park          |   | Laumeier I                      |                | Office             |   |             |   | 1,384             |   | 10,116                                            |   | 1,725                          |   | 1,384                             |   | 11,841                |   | 13,225             |   | 2,704 |   | 1987 |   | 1995 |   |
| Laumeier Office Park          |   | Laumeier II                     |                | Office             |   |             |   | 1,421             |   | 10,077                                            |   | 1,241                          |   | 1,421                             |   | 11,318                |   | 12,739             |   | 2,570 |   | 1988 |   | 1995 |   |
| Laumeier Office Park          |   | Laumeier IV                     |                | Office             |   |             |   | 1,029             |   | 7,414                                             |   | 853                            |   | 1,029                             |   | 8,267                 |   | 9,296              |   | 1,357 |   | 1987 |   | 1998 |   |
| Maryville Center              |   | 500-510 Maryville Centre        |                | Office             |   |             |   | 3,402             |   | 24,823                                            |   | 985                            |   | 3,402                             |   | 25,808                |   | 29,209             |   | 4,123 |   | 1984 |   | 1997 |   |
| Maryville Center              |   | 530 Maryville Centre            |                | Office             |   | 6,834            |   | 2,219             |   | 15,770                                            |   | 1,403                          |   | 2,219                             |   | 17,173                |   | 19,392             |   | 2,992 |   | 1990 |   | 1997 |   |
| Maryville Center              |   | 550 Maryville Centre            |                | Office             |   |             |   | 1,996             |   | 12,561                                            |   | 28                             |   | 1,996                             |   | 12,589                |   | 14,585             |   | 1,957 |   | 1988 |   | 1997 |   |
| Maryville Center              |   | 635-645 Maryville Centre        |                | Office             |   | 10,674           |   | 3,048             |   | 18,511                                            |   | 337                            |   | 3,048                             |   | 18,849                |   | 21,897             |   | 3,012 |   | 1987 |   | 1997 |   |
| Maryville Center              |   | 655 Maryville Centre            |                | Office             |   | 6,930            |   | 1,860             |   | 13,295                                            |   | 55                             |   | 1,860                             |   | 13,350                |   | 15,210             |   | 2,061 |   | 1994 |   | 1997 |   |
| Maryville Center              |   | 540 Maryville Centre            |                | Office             |   |             |   | 2,219             |   | 14,980                                            |   | 492                            |   | 2,219                             |   | 15,472                |   | 17,691             |   | 2,627 |   | 1990 |   | 1997 |   |
| Maryville Center              |   | 520 Maryville Centre            |                | Office             |   |             |   | 2,404             |   | 16,051                                            |   | 41                             |   | 2,404                             |   | 16,092                |   | 18,497             |   | 3,302 |   | 1998 |   | 1999 |   |
| Maryville Center              |   | 700 Maryville Centre            |                | Office             |   |             |   | 4,556             |   | 28,715                                            |   | 20                             |   | 4,556                             |   | 28,735                |   | 33,291             |   | 3,650 |   | 1999 |   | 2000 |   |
| Maryville Center              |   | 533 Maryville Centre            |                | Office             |   |             |   | 3,230             |   | 17,996                                            |   | 43                             |   | 3,230                             |   | 18,038                |   | 21,268             |   | 1,838 |   | 2000 |   | 2000 |   |
| Maryville Center              |   | 555 Maryville Centre            |                | Office             |   |             |   | 3,226             |   | 15,799                                            |   | 99                             |   | 3,226                             |   | 15,898                |   | 19,124             |   | 821 |   | 2000 |   | 2001 |   |
| Maryville Center              |   | 625 Maryville Centre            |                | Office             |   | 5,983            |   | 2,509             |   | 11,158                                            |   | 44                             |   | 2,509                             |   | 11,201                |   | 13,710             |   | 701 |   | 1996 |   | 2002 |   |
| Maryville Center Grounds      |   | Maryville Center Grounds        |                | Office             |   |             |   | —            |   | —                                            |   | —                         |   | —                            |   | —                |   | —             |   | 39 |   | — |   | — |   |
| St. Louis Business Center     |   | St. Louis Business Center A     |                | Industrial         |   |             |   | 194               |   | 1,782                                             |   | 459                            |   | 194                               |   | 2,241                 |   | 2,434              |   | 337 |   | 1987 |   | 1998 |   |
| St. Louis Business Center     |   | St. Louis Business Center B     |                | Industrial         |   |             |   | 250               |   | 2,290                                             |   | 1,054                          |   | 250                               |   | 3,344                 |   | 3,594              |   | 702 |   | 1986 |   | 1998 |   |
| St. Louis Business Center     |   | St. Louis Business Center C     |                | Industrial         |   |             |   | 166               |   | 1,524                                             |   | 409                            |   | 166                               |   | 1,934                 |   | 2,099              |   | 386 |   | 1986 |   | 1998 |   |
| St. Louis Business Center     |   | St. Louis Business Center D     |                | Industrial         |   |             |   | 168               |   | 1,542                                             |   | 376                            |   | 168                               |   | 1,918                 |   | 2,086              |   | 341 |   | 1987 |   | 1998 |   |
| Southridge                    |   | Southridge Business Center      |                | Industrial         |   |             |   | 1,158             |   | 4,234                                             |   | 759                            |   | 1,158                             |   | 4,993                 |   | 6,150              |   | 19 |   | 2002 |   | 2002 |   |
| West Port Center              |   | Westport Center IV              |                | Industrial         |   |             |   | 1,440             |   | 5,553                                             |   | (0                             | )      | 1,440                             |   | 5,553                 |   | 6,993              |   | 994 |   | 2000 |   | 2000 |   |
| West Port Center              |   | Westport Center V               |                | Industrial         |   |             |   | 493               |   | 1,602                                             |   | (0                             | )      | 493                               |   | 1,602                 |   | 2,095              |   | 305 |   | 1999 |   | 2000 |   |
| West Port Center              |   | Westport Place                  |                | Office             |   |             |   | 1,990             |   | 7,848                                             |   | 274                            |   | 1,990                             |   | 8,123                 |   | 10,113             |   | 1,968 |   | 1999 |   | 2000 |   |
| Westmark                      |   | Westmark                        |                | Office             |   |             |   | 1,497             |   | 10,941                                            |   | 2,391                          |   | 1,488                             |   | 13,342                |   | 14,830             |   | 3,584 |   | 1987 |   | 1995 |   |
| Westview Place                |   | Westview Place                  |                | Office             |   |             |   | 669               |   | 9,415                                             |   | 1,776                          |   | 669                               |   | 11,191                |   | 11,860             |   | 2,517 |   | 1988 |   | 1995 |   |
| Woodsmill Commons             |   | Woodsmill Commons II (400       | )                   | Office             |   |             |   | 1,718             |   | 6,740                                             |   | —                         |   | 1,718                             |   | 6,740                 |   | 8,458              |   | — |   | 1985 |   | 2003 |   |
| Woodsmill Commons             |   | Woodsmill Commons I (424        | )                   | Office             |   |             |   | 1,836             |   | 6,690                                             |   | —                         |   | 1,836                             |   | 6,690                 |   | 8,527              |   | — |   | 1985 |   | 2003 |   |
|                          |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **ST. PAUL, MINNESOTA**       |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| University Crossing           |   | University Crossing             |                | Industrial         |   |             |   | 874               |   | 5,072                                             |   | 807                            |   | 911                               |   | 5,842                 |   | 6,753              |   | 1,005 |   | 1990 |   | 1998 |   |
|                          |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **ST. PETERS, MISSOURI**      |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Horizon Business Ctr          |   | Horizon Business Center         |                | Industrial         |   |             |   | 344               |   | 2,492                                             |   | 144                            |   | 344                               |   | 2,636                 |   | 2,980              |   | 376 |   | 1985 |   | 1998 |   |
|                          |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **STRONGSVILLE, OHIO**        |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Commerce Parkway              |   | Commerce Parkway Bldg 1         |                | Industrial         |   |             |   | 594               |   | 3,754                                             |   | 857                            |   | 594                               |   | 4,611                 |   | 5,205              |   | 167 |   | 2002 |   | 2002 |   |
| Dymet                         |   | Dyment                          |                | Industrial         |   |             |   | 816               |   | 5,390                                             |   | 39                             |   | 816                               |   | 5,429                 |   | 6,245              |   | 890 |   | 1988 |   | 1997 |   |
| Johnson Controls              |   | Johnson Controls                |                | Industrial         |   |             |   | 364               |   | 2,409                                             |   | 134                            |   | 364                               |   | 2,542                 |   | 2,906              |   | 409 |   | 1972 |   | 1997 |   |
| Park 82                       |   | Park 82 Bldg 2                  |                | Industrial         |   |             |   | 322               |   | 2,918                                             |   | 595                            |   | 294                               |   | 3,541                 |   | 3,834              |   | 796 |   | 1998 |   | 1998 |   |
| Park 82                       |   | Park 82 Bldg 1                  |                | Industrial         |   |             |   | 243               |   | 1,977                                             |   | 279                            |   | 215                               |   | 2,285                 |   | 2,499              |   | 451 |   | 1998 |   | 1998 |   |
| Park 82                       |   | Park 82 Bldg 3                  |                | Industrial         |   |             |   | 298               |   | 2,702                                             |   | 712                            |   | 270                               |   | 3,442                 |   | 3,712              |   | 570 |   | 1999 |   | 1999 |   |
| Park 82                       |   | Park 82 Bldg 4                  |                | Industrial         |   |             |   | 360               |   | 5,494                                             |   | 95                             |   | 357                               |   | 5,592                 |   | 5,949              |   | 686 |   | 2000 |   | 2000 |   |
| Park 82                       |   | Park 82 Bldg 5                  |                | Industrial         |   |             |   | 351               |   | 4,450                                             |   | 197                            |   | 349                               |   | 4,649                 |   | 4,998              |   | 375 |   | 2000 |   | 2000 |   |
| Srague Rd. Industrial         |   | Mohawk Dr. Bldg. 1              |                | Industrial         |   |             |   | 564               |   | 4,474                                             |   | (0                             | )      | 564                               |   | 4,474                 |   | 5,038              |   | 343 |   | 2000 |   | 2000 |   |
|                          |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **SUNRISE, FLORIDA**          |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Sawgrass                      |   | Sawgrass Commerce Ctr Phase  II |                | Office             |   |             |   | 1,147             |   | 5,961                                             |   | (0                             | )      | 1,147                             |   | 5,961                 |   | 7,108              |   | 897 |   | 2000 |   | 2001 |   |
| Sawgrass                      |   | Sawgrass Pointe                 |                | Office             |   |             |   | 3,484             |   | 21,827                                            |   | 1,265                          |   | 3,484                             |   | 23,092                |   | 26,576             |   | 1,162 |   | 2001 |   | 2002 |   |
|                          |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **SUWANEE, GEORGIA**          |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
|                          |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **TAMPA, FLORIDA**            |   |                            |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Fairfield Distribution Center |   | Fairfield Distribution Ctr  I   |                | Industrial         |   |             |   | 483               |   | 2,666                                             |   | 8                              |   | 487                               |   | 2,669                 |   | 3,156              |   | 304 |   | 1998 |   | 1999 |   |
| Fairfield Distribution Center |   | Fairfield Distribution Ctr  II  |                | Industrial         |   |             |   | 530               |   | 4,913                                             |   | 11                             |   | 534                               |   | 4,920                 |   | 5,454              |   | 559 |   | 1998 |   | 1999 |   |
| Fairfield Distribution Center |   | Fairfield Distribution Ctr  III |                | Industrial         |   |             |   | 334               |   | 2,778                                             |   | 39                             |   | 338                               |   | 2,814                 |   | 3,151              |   | 315 |   | 1999 |   | 1999 |   |
| Fairfield Distribution Center |   | Fairfield Distribution Ctr  IV  |                | Industrial         |   |             |   | 600               |   | 2,567                                             |   | 874                            |   | 604                               |   | 3,437                 |   | 4,041              |   | 788 |   | 1999 |   | 1999 |   |
| Fairfield Distribution Center |   | Fairfield Distribution Ctr  V   |                | Industrial         |   |             |   | 488               |   | 3,548                                             |   | 57                             |   | 488                               |   | 3,606                 |   | 4,093              |   | 409 |   | 2000 |   | 2000 |   |
| Fairfield Distribution Center |   | Fairfield Distribution Ctr  VI  |                | Industrial         |   |             |   | 555               |   | 4,532                                             |   | 192                            |   | 555                               |   | 4,724                 |   | 5,279              |   | 358 |   | 2001 |   | 2001 |   |
| Fairfield Distribution Center |   | Fairfield Distribution Ctr  VII |                | Industrial         |   |             |   | 394               |   | 4,046                                             |   | 503                            |   | 394                               |   | 4,548                 |   | 4,942              |   | 589 |   | 2001 |   | 2001 |   |

 

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| **Development**              |   | **Name**                   |                | **Building  Type** |   | **Encumbrances** |   | **Initial  Cost** |   | **Cost  Capitalized  Subsequent to  Development** |   | **Gross Book  Value 12/31/03** |   | **Accumulated  Depreciation (1)** |   | **Year  Constructed** |   | **Year  Acquired** |   |
|------------------------------|--------|----------------------------|---------------------|--------------------|--------|------------------|--------|-------------------|--------|---------------------------------------------------|--------|--------------------------------|--------|-----------------------------------|--------|-----------------------|--------|--------------------|--------|
| **Land**                     |   | **Buildings**              | **to  Acquisition** | **Land/Land  Imp** |   | **Bldgs/TI**     |   | **Total**         |
| Highland Oaks                |   | Highland Oaks I            |                | Office             |   |             |   | 1,525             |   | 14,217                                            |   | 426                            |   | 1,525                             |   | 14,643                |   | 16,168             |   | 2,598 |   | 1999 |   | 1999 |   |
| Highland Oaks                |   | Highland Oaks II           |                | Office             |   |             |   | 1,605             |   | 11,886                                            |   | 1,474                          |   | 1,605                             |   | 13,360                |   | 14,965             |   | 1,528 |   | 1999 |   | 2000 |   |
|                         |   |                       |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **TWINSBURG, OHIO**          |   |                       |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Enterprise Parkway           |   | Enterprise Parkway #1      |                | Industrial         |   |             |   | 198               |   | 1,593                                             |   | 191                            |   | 198                               |   | 1,784                 |   | 1,982              |   | 243 |   | 1974 |   | 1998 |   |
| Enterprise Parkway           |   | Enterprise Parkway Bldg 2  |                | Industrial         |   |             |   | 610               |   | 7,426                                             |   | 3                              |   | 610                               |   | 7,428                 |   | 8,039              |   | 792 |   | 2000 |   | 2000 |   |
|                         |   |                       |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **WEST CHESTER, OHIO**       |   |                       |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| World Park Union Centre      |   | World Park at Union Ctr 12 |                | Industrial         |   |             |   | 306               |   | 3,484                                             |   | 3                              |   | 306                               |   | 3,488                 |   | 3,793              |   | 678 |   | 2000 |   | 2000 |   |
|                         |   |                       |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **WESTERVILLE, OHIO**        |   |                       |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Westerville Executive Campus |   | Liebert                    |                | Office             |   |             |   | 755               |   | 4,538                                             |   | 876                            |   | 755                               |   | 5,413                 |   | 6,169              |   | 1,551 |   | 1999 |   | 1999 |   |
|                         |   |                       |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **WESTMONT, ILLINOIS**       |   |                       |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Oakmont Corporate Center     |   | Oakmont Tech Center        |                | Industrial         |   |             |   | 1,501             |   | 8,750                                             |   | 445                            |   | 1,703                             |   | 8,993                 |   | 10,696             |   | 1,186 |   | 1989 |   | 1998 |   |
| Oakmont Corporate Center     |   | Oakmont Circle Office      |                | Office             |   |             |   | 3,177             |   | 14,231                                            |   | 1,128                          |   | 3,527                             |   | 15,008                |   | 18,536             |   | 2,148 |   | 1990 |   | 1998 |   |
|                         |   |                       |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| **WOODLAWN, OHIO**           |   |                       |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
| Glenwood Crossing            |   | Glenwood Crossing          |                | Retail             |   |             |   | 3,651             |   | 1,402                                             |   | 77                             |   | 3,651                             |   | 1,478                 |   | 5,130              |   | 308 |   | 1999 |   | 2000 |   |
|                         |   | McDonalds Ground Lease     |                | Grounds            |   |             |   | 480               |   | —                                            |   | —                         |   | 480                               |   | —                |   | 480                |   | — |   |   |   | 2000 |   |
|                         |   | Eliminations               |                |               |   |             |   | —            |   | —                                            |   | (26,226                        | )      | (181                              | )      | (26,045               | )      | (26,226            | )      | (10,743 | ) |   |   |   |   |
|                         |   |                       |                |               |   |             |   |              |   |                                              |   |                           |   |                              |   |                  |   |               |   |   |   |   |   |   |   |
|                         |   |                       |                |               |   | 208,649          |   | 630,608           |   | 4,197,485                                         |   | 266,074                        |   | 641,544                           |   | 4,452,624             |   | 5,094,168          |   | 677,357 |   |   |   |   |   |

 

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(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.

 
|                                       |   | **Real  Estate Assets** |      | **Accumulated  Depreciation** |   |
|--------------------------------------------|--------|-------------------------|-----------|-------------------------------|--------|
|                                       |   | **2003**                |      | **2002**                      |   | **2001** |   | **2003** |   | **2002** |   | **2001** |   |
|                                       |   |                    |      |                          |   |   |   |   |   |   |   |   |   |
| Balance at beginning of year               |   | $                       | 4,846,355 |                          | $      | 4,652,853 |   | $ | 4,570,563 |   | $ | 555,858 |   | $ | 425,721 |   | $ | 338,426 |   |
| Acquisitions                               |   | 233,248                 |      | 137,706                       |   | 13,927 |   | — |   | — |   | — |   |
| Construction costs and tenant improvements |   | 188,449                 |      | 275,020                       |   | 467,285 |   | — |   | — |   | — |   |
| Depreciation expense                       |   | —                  |      | —                        |   | — |   | 168,959 |   | 154,565 |   | 138,723 |   |
| Acquisition of minority interest           |   | 9,984                   |      | 13,163                        |   | 4,259 |   | — |   | — |   | — |   |
|                                       |   | 5,278,036               |      | 5,078,742                     |   | 5,056,034 |   | 724,817 |   | 580,286 |   | 477,149 |   |
|                                       |   |                    |      |                          |   |   |   |   |   |   |   |   |   |
| Deductions during year:                    |   |                    |      |                          |   |   |   |   |   |   |   |   |   |
| Cost of real estate sold or contributed    |   | (150,874                | )         | (204,248                      | )      | (386,495 | ) | (14,966 | ) | (5,668 | ) | (39,542 | ) |
| Impairment Allowance                       |   | (500                    | )         | (9,379                        | )      | (4,800 | ) |   |   |   |   |   |   |
| Write-off of fully amortized assets        |   | (32,494                 | )         | (18,760                       | )      | (11,886 | ) | (32,494 | ) | (18,760 | ) | (11,886 | ) |
| Balance at end of year                     |   | $                       | 5,094,168 |                          | $      | 4,846,355 |   | $ | 4,652,853 |   | $ | 677,357 |   | $ | 555,858 |   | $ | 425,721 |   |

 

73

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**SIGNATURES**

 

Pursuant to the requirements ofSection 13 or 15(d) of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized.

 
|           |   | DUKE REALTY  LIMITED PARTNERSHIP |
|----------------|--------|----------------------------------|
|           |   | By:                              | Duke Realty Corporation  Its General Partner |
|           |   |                             |
| March 9,  2004 |   | By:                              | /s/   Thomas L. Hefner |   |
|           |   |                             | Thomas L.  Hefner |
|           |   |                             | Chairman of  the Board,  and Chief Executive Officer  of the General Partner |
|           |   |                             |
|           |   | By:                              | /s/ Dennis  D. Oklak |   |
|           |   |                             | Dennis D.  Oklak |
|           |   |                             | President  and Chief Operating  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 the requirements ofthe Securities Exchange Act of 1934, this report has been signed below by thefollowing persons on behalf of the registrant and in the capacities and on thedates indicated.

 
| **Signature**            |   | **Date** |   | **Title**                                       |                                |
|--------------------------|--------|----------|--------|-------------------------------------------------|-------------------------------------|
|                     |   |     |   |                                            |                                |
| /s/ Thomas  L. Hefner *  |   |     | 3/9/04 |                                            | Chairman of  the Board,             |   |
| Thomas L.  Hefner        |   |     |   | Chief  Executive Officer                        |                                |
|                     |   |     |   |   and Director of the General Partner      |                                |
|                     |   |     |   |                                            |                                |
| /s/ Dennis  D. Oklak *   |   |     | 3/9/04 |                                            | President  and Chief Operating      |   |
| Dennis D.  Oklak         |   |     |   |   Officer of the General Partner           |                                |
|                     |   |     |   |                                            |                                |
| /s/ Matthew  A. Cohoat * |   |     | 3/9/04 |                                            | Executive  Vice President and Chief |   |
| Matthew A.  Cohoat       |   |     |   |   Financial Officer of the General Partner |
|                          |        |          |        |                                                 |                                     |  |  |  |

 

74

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| /s/  Barrington H. Branch*   |   |   | 3/9/04 |   | Director of  the General Partner |   |
|------------------------------|--------|--------|--------|--------|----------------------------------|--------|
| Barrington  H. Branch        |   |   |   |   |                             |   |
|                         |   |   |   |   |                             |   |
| /Gary A.  Burk               |   |   | 3/9/04 |   | Director of  the General Partner |   |
| Gary A. Burk                 |   |   |   |   |                             |   |
|                         |   |   |   |   |                             |   |
| /s/ Geoffrey  Button *       |   |   | 3/9/04 |   | Director of  the General Partner |   |
| Geoffrey  Button             |   |   |   |   |                             |   |
|                         |   |   |   |   |                             |   |
| /s/ William  Cavanaugh, III* |   |   | 3/9/04 |   | Director of  the General Partner |   |
| William  Cavanaugh, III      |   |   |   |   |                             |   |
|                         |   |   |   |   |                             |   |
| /s/ Ngaire  E. Cuneo *       |   |   | 3/9/04 |   | Director of  the General Partner |   |
| Ngaire E.  Cuneo             |   |   |   |   |                             |   |
|                         |   |   |   |   |                             |   |
| /s/ Charles  R. Eitel*       |   |   | 3/9/04 |   | Director of  the General Partner |   |
| Charles R.  Eitel            |   |   |   |   |                             |   |
|                         |   |   |   |   |                             |   |
| /s/ L. Ben  Lytle *          |   |   | 3/9/04 |   | Director of  the General Partner |   |
| L. Ben Lytle                 |   |   |   |   |                             |   |
|                         |   |   |   |   |                             |   |
| /s/ William  O. McCoy *      |   |   | 3/9/04 |   | Director of  the General Partner |   |
| William O.  McCoy            |   |   |   |   |                             |   |
|                         |   |   |   |   |                             |   |
| /s/ John W.  Nelley, Jr. *   |   |   | 3/9/04 |   | Director of  the General Partner |   |
| John W.  Nelley, Jr.         |   |   |   |   |                             |   |
|                         |   |   |   |   |                             |   |
| /s/ James E.  Rogers *       |   |   | 3/9/04 |   | Director of  the General Partner |   |
| James E.  Rogers             |   |   |   |   |                             |   |
|                         |   |   |   |   |                             |   |
| /s/ Jack R.  Shaw *          |   |   | 3/9/04 |   | Director of  the General Partner |   |
| Jack R. Shaw                 |   |   |   |   |                             |   |
|                         |   |   |   |   |                             |   |
| /s/ Robert  J. Woodward *    |   |   | 3/9/04 |   | Director of  the General Partner |   |
| Robert J.  Woodward          |   |   |   |   |                             |   |
|                         |   |   |   |   |                             |   |
| /s/ Darell  E. Zink, Jr. *   |   |   | 3/9/04 |   | Director of  the General Partner |   |
| Darell E.  Zink, Jr.         |   |   |   |   |                             |   |

 

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

 

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